Law:

Section:

Section 10(22) of the Income-tax Act, 1961 - Educational institutions - Assessment year 1996-97 - Assessee was a society which had been running a school since 1960 - It had been granted exemption under section 10(22) since 1960 on ground that it was a society which existed solely for educational purposes and not for any profit motive - Even for years subsequent to assessment year in question, assessee had been granted exemption under section 10(22) - In relevant assessment year, Assessing Officer found three discrepancies in accounts maintained by assessee, which led Assessing Officer to come to conclusion that assessee-society was not only existing solely for educational purposes, but also for profit motive and, therefore, he denied exemption to assessee under section 10(22) - Whether even if there were minor contradictions or deviations in accounts of assessee, that by itself could not substantiate allegation that assessee did not exist solely for educational purposes or that it existed partly for profit motive - Held, yes - Whether in absence of any cogent reason, it could not be accepted that for one particular year merely on basis of some discrepancy in accounts of assessee, its objects changed from educational purposes to making a profit - Held, yes - Whether, therefore, assessee was entitled to exemption under section 10(22) - Held, yes FACTS The assessee was a society which had been running a school since 1960. All along, the assessee was granted exemption under section 10(22) on the ground that it was a society which was existing solely for educational purposes and not for any profit motive. Even for the years subsequent to the assessment year in question, assessee had been granted exemption under section 10(22). In the assessment year 1996-97, the Assessing Officer pointed out that there were three discrepancies in the accounts main-tained by the assessee, which led the Assessing Officer to come to conclusion that the assessee-society was not only existing solely for educational purposes, but also for a profit motive. The first discrepancy pertained to a donation of Rs. 50,000 made by 'B' in cash and when the assessee was asked to explain as to why…

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