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Section 10(22) of the Income-tax Act, 1961 - Exemption - Income of educational institution - Assessment year 1966-67 - Assessee, a public charitable trust, spent a small amount of its income for educational purposes, leaving huge surplus for other charitable purposes - Whether in such circumstances assessee-trust could not be said to be solely for educational purposes so as to attract section 10(22), and, therefore, sections 11 to 13 alone had to be applied - Held, yes FACTS For the assessment year 1966-67, the assessee was assessed as a public charitable trust. The ITO determined the total income of the assessee and after allowing 25 per cent to be accumulated and thereafter deducting the expenditure incurred towards charitable purposes, found certain excess of income over expenditure and brought the same to tax. On appeal, the AAC held that the object of the trust was running of educational institution and that the trust satisfied the requirements of section 10(22) and that once section 10(22) was applicable, there was no question of consideration of the income under sections 11 to 13. He, therefore, concluded that in view of the applicability of section 10(22), the entire income was exempt from tax. On the revenue's appeal, the Tribunal held that the assessee, which was a public charitable trust, was carrying on business under lease of shandy and cinema theatre and out of that income was maintaining two schools. The Tribunal, therefore, held that in the circumstances the income of the trust could not be said to be the income of the educational institution for the purpose of exemption under section 10(22) because though the schools existed only for educational purposes but income was the income of the trust and was not solely for educational purposes. Consequently, the Tribunal held that the assessee did not fall under section 10(22) and directed the AAC to consider the issue regarding non compliance of the provisions of section 11(2)(a) and (b) . On reference: HELD From the decisions in Katra Education Society v. ITO [1978] 111 ITR 420 (All.) and Addl. CIT v. Aditanar Educational Institution[1979] 118ITR 235 (Mad.) it was clear that to claim exemption under…

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