ADITANAR EDUCATIONAL INSTITUTION ETC. versus ADDITIONAL COMMISSIONER OF INCOME TAX

Citation: [1997] 1 S.C.R. 948 · Decided: 05-02-1997 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
ADITANAR EDUCATIONAL INSTITUTION ETC. 
v. 
ADDITIONAL COMMISSIONER OF INCOME TAX 
FEBRUARY 5, 1997 
[B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.] 
Income Tax Act, 1961-Section 10(22)--lnterpretation and Scope 
of-Assessee, a Society established to rnn, manage or assist schoois, colleges 
C or other educational institutions solely for educational pwposes and in that 
regard to raise or collect funds, donations etc.-Held, is an educational in-
stitution within the ambit of the phrase-Entitlement of such an institution to 
exemption has to be evaluated annually . 
. D 
The assessee, (in appeal No. 2578-80/79) a society registered under 
the Societies· Registration Act 1960 with objects to establish, run, manage 
or assist colleges, schools and other educational organisations existing 
solely for educational purposes, received certain sums of money as dona· 
tions during the previous years relevant for the assessment year 1965-66 
to 1976-68. For these years, the assessee filed 'nil' returns. The Income Tax 
E Officer accepted the stand of the assessee that for all the three years in 
question, the taxable income was 'nil' as the assessee was an educational 
institution. The Commissioner of Income Tax however set aside the order 
of the Income Tax Officer and directed him to make fresh assessments 
after taking into consideration the voluntary contributions received. The 
p 
orders further stated that the exemption under section 10(22) would apply 
only to educational institutions as such and not to anyone who might be 
financing such an institution. On appeal by the assessee, the Income Tax 
Appellate Tribunal held that the assessee was an educational institution 
within the ambit of section 10(22) of the Act existing solely for educational 
purposes and not for earning profits. On further appeal by the assessee, 
G the High Court upholding that view of the Tribunal also observed that the 
applicability of Section 10(22) should be evaluated or investigated every 
year and only if it is found that the 'institution' exists for educational 
purposes in the relevant year and even if any profit results, which is only 
incidental to the purpose of education, the income would be exempt. 
H Aggrieved, the Revenue as also the. assessee filed the appeals. 
948 
ADITANAREDNL. INSIITUTIONv. ADDL.COMNR. OF INCOME TAX 
949 
The contention of the Revenue was that the assessee was not by itself A 
an educational institution and thereby not eligible for exemption under 
Section 10(22) of the Act. 
Dismissing the appeal filled by the Revenue and the cross appeal of 
the assessee, this Court 
B 
HELD : 1.1. An educational society or Trust or other similar body 
running an educational institution solely for educational purposes and not 
for purposes of profits could be regarded as 'other educational institution' 
coming within Section 10(22) of the Act. [954-F] 
Katra Education Society v. Income Tax Officer, 111 ITR 420 (All); CIT c 
v. Doon Foundation, 154 ITR 208 (Cal) andAgaiwal Shiksha Samiti Trust v. 
CIT, 168 ITR 751 (Raj), approved. 
. 
1.2. On facts, the assessee society comes within the scope of 'other 
' 
edu~ational institution' under section 10(22) of the Act and was not only a 
"' 
D 
financing body. The sole purpose of the existence of the Assessee society 
was to impart education at the levels of schools and colleges. The object was 
accomplished by establishing, running, managing or assisting colleges, 
schools or other educational institutions solely for educational purposes 
and in that regard, raise or collect funds, donations, gifts etc. [953-F] 
E 
2. As regard the assessee's appeals, the High Court rightly obs~rved 
that applicability of Section 10(22) is to be evaluated or investigated in each 
· year to ascertain whether the institution existed during the relevant year 
solely for educational purposes and not for purposes of profits. In the event 
of profits arising, the income would be exempt as it was incidental to the 
main purpose of education. [955-F] 
F 
Governing Body of Rangaraya Medical College v. ITO, 117 ITR 284 
(AP) and Secondary Board of Education v. ITO, 86 ITR 408 (Orissa), ap-
proved. 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2578-80 G 
of 1979 Elc. 
' 
From the Judgment and Order dated 23.2.79 of the Madras High 
Court in T.C. No. 114 of 1975. 
G.C. Sharma, J. Ramamurthy, P.A. Choudhary, T.A. Ramachandran, H 
' } 
950 
SUPREME COURT REPORTS 
(1997] 1 S.C.R. 
A Sr. Advs., Vineet Kumar, 

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