High Court of
Gauhati
Commissioner of Income-tax
v.
P.G. AGARWAL AND M.B.K. SINGH, JJ.
IT
APPEAL NOS. 88 OF 2003, 7 TO 10, 12, 15 TO 21, 23 AND 24 OF 2004
NOVEMBER
13, 2006
Section 10(22) of the Income-tax Act, 1961 - Educational institutions - Assessment years 1981-82 to 1988-89 and 1990-91 to 1996-97 - Whether basic requirement of section 10(22) is existence of educational purposes, that is, imparting of education by way of teaching or training, etc. - Held, yes - Whether assessee-company, doing activities of preparing, printing, production, publication, sale, supply of text books, supplementary books, etc., could not be considered as an educational institution and, consequently, it was not entitled to deduction under section 10(22) - Held, yes
Facts
The assessee-company
was incorporated with the main objects, inter alia,
to prepare, print, publish, sale, supply or otherwise deal in text books,
supplementary books and literature for primary, secondary and teachers’
education and to deal in any magazines, pamphlets, leaflets posters, journals,
etc, to carry on business of press. In view of the said activities, the assessee contended that it was an educational institution
existing solely for educational purposes and, hence, claimed exemption from the
payment of income-tax under section 10(22). The Assessing Officer
disallowed the claim of the assessee. On appeal, the
Commissioner (Appeals) upheld the disallowance. However, on second appeal, the
Tribunal held that the assessee was an educational
institution existing solely for educational purposes and, thus, eligible for
exemption under section 10(22).
On revenue’s appeal:
Held
On a careful examination of the main objects
and the objects incidental or ancillary to the main objects of the assessee, it was clear that the assessee
had been doing the activities of production, printing and publication and sale
of books and other commercial activities which were not the activities of an
educational institution established solely for educational purposes within the
meaning of section 10(22).
The main objects of the assessee were neither to run
any educational institution nor to impart training, teaching through any
colleges, etc. In fact, the assessee did not involve
in any activities of teaching, imparting training by itself. The intention of
the Legislature is to give exemption only to the university or educational
institution which are existing solely for educational
purposes and not for the purposes of profit. [
The basic requirement of section 10(22) is the existence of educational
purposes, that is, imparting of education by way of teaching or training, etc.
In the absence of such training activities, the provision of section 10(22)
are not applicable to any firm or corporation. [
The activities of the assessee,
by any stretch of imagination, could not be considered as that of an
educational institution established for imparting teaching, training, etc. If
the assessee was to be taken as an educational
institution within the meaning of section 10(22) for doing the activities of production, printing, sale of text
books to the primary and secondary schools, etc., it would open the flood gates
to others whose activities are to supply approved note books, school dresses,
etc., for claiming exemption of income-tax under section 10(22). [
The assessee had not
done anything relating to teaching, training or education either by itself or
through any school in any relevant assessment year except to print, publish and
sale of text books at the subsidized rate. Therefore, it could not be held that
the assessee was an educational institution within
the meaning of section 10(22).
[
In the result, the orders of the Tribunal were
to be quashed and the appeal was to be allowed. [
Case Review
Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310/90
Taxman 528 distinguished on facts [
Oxford University Press v. CIT [2001] 247 ITR 658/115 Taxman
69 followed [
Cases referred to
Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310/90
Taxman 528 (SC) [Para 9],
U. Bhuyan for the Appellant. K.H.
nn