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[2007] 295 ITR 520 (MAD.) HIGH COURT OF MADRAS Commissioner of Income-tax v. Seethakathi Trust P. D. DINAKARAN AND P.P.S. JANARTHANA RAJA, JJ. T.C. (A) NOS. 2608 AND 2609 OF 2006 DECEMBER 4, 2006 Section 10(22) of the Income-tax Act, 1961 - Educational institutions Benefit conferred under section 10(22) cannot be denied on ground of violation of section 11(5) In view of the CBDT circular dated 25-7-1995 educational institutions are entitled to exemption under section 10(22) and, consequently, the benefit conferred under section 10(22) cannot be denied on the ground of violation of section 11(5). N. Murali Kumaran for the Appellant. JUDGMENT P.D. Dinakaran, J.-The above tax case appeals are directed against the common order of the Income-tax Appellate Tribunal in I.T.A. Nos. 1188 and 1189/Mds/2004 dated March 8, 2006, raising the following substantial questions of law : "1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to exemption under section 10(22) of the Income-tax Act ? 2. When the assessee has utilised the funds of the trust for purposes that are not in consonance with the objects of the trust, is not the Assessing Officer right in denying exemption to the assessee under section 10(22) of the Income-tax Act ?" The Revenue is the appellant. The relevant assessment years are 1996-97 and 1997-98. The assessee is a public charitable trust, which runs three educational institutions and a medical centre. They claimed exemption under section 10(22) of the Income-tax Act for three assessment years, viz., 1995-96, 1996-97 and 1997-98. For the assessment year 1996-97, the assessee filed a return on February 5, 1997, declaring excess of expenditure over income of Rs. 1,05,25,645. Since the similar expenditure was disallowed for the assessment year 1995-96, the Assessing Officer denied the exemption for the assessment year 1996-97 also by order dated March 31, 2003. The Assessing Officer was of the opinion that the assessee has violated the provisions of section 11(5) read with section 13(1)(d) of the Act and accordingly, denied the benefits of sections 11 and 12 of the Act, consequent to which,…

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