Income Tax Appellate Tribunal - Mumbai
Shri Bhanbai Nenshi Mahila Vidyalaya vs Sixth Income-Tax Officer on 31 March, 1986
Equivalent citations: [1986]18ITD115(MUM)
ORDER
A.V. Balasubramanyam, Judicial Member
1. The question raised in this appeal is whether the assessee is an educational institution for the sake of Section 10(22) of the Income-tax Act, 1961 ('the Act').
2. The assessee is a trust. It is running a hostel for girls. It is deriving income by way of rent, interest, donations, some fees from students, subscriptions from members, etc. In the assessment for 1980-81 passed under Section 143(3) of the Act, the ITO held the trust to be eligible for the benefit under Section 11 of the Act. The taxable income was found to be nil. However, the ITO's order reads that the claim under Section 10(22) was not accepted by him as the trustees are not running a school. Aggrieved by the same, the assessee appealed. The AAC, by order dated 19-5-1983 concurred with the view taken by the ITO. The assessee is on further appeal to the Tribunal.
3. The submissions of Shri J.I. Patel, on behalf of the assessee, were the following. He took us through the aims and objects of the trust to say that the assessee is an educational institution as it directly supports girls of a particular section in their educational pursuits and that the income of the trust is mainly spent in charity to fulfil the objects of the trust which are to help and assist students to get educated. Arguing further, he said that 'education' has to be taken in a liberal sense so as to include even the indirect help given by the trust to girls needing education by which the main object of the trust is subserved and that running a school or college is not a necessary condition for claiming total exemption under Section 10(22). Rulings cited by him will be referred at the appropriate stage. Shri Roongta, arguing for the department, stated that trust giving free help to candidates desiring education may be said to exist for 'charitable purpose' under Section 2(15) of the Act and that a trust providing facility, financial help, etc., in a charitable manner to students prosecuting education cannot be treated as an institution of education to gain blanket exemption under Section 10(22). He adopted the distinction between the income of the educational institution and the income of the trust which may have income from various sources.
4. The assessee cannot make good its point unless it is in a position to show that it is an educational institution, existing solely for educational purposes and not for purposes of profit. Unless all the three conditions are satisfied the claim cannot be sustained.
5. The object of the trust is mainly to help, organise and arrange women of Shree Cutchi Vishwa Oswal Jain Gnati. Resources permitting, the benefit can be extended to women of other communities :
to educate or cause to educate them physically, mentally, intellectually, economically, culturally, morally and with the purpose of overall growth in practical, physical, moral, fine arts, medical, commercial, industry, agriculture and technical or any other pertaining field.
as set out in Clause 4 of the constitution of the trust. To fulfil these objects, the trust can do the following activities :
1. In Bombay, in Cutch or at any other place to establish or conduct, obtain or be helpful to montessory, primary, secondary or high school, teachers training school, centre or class, laboratory centre or class regarding agriculture, vocation, industry, school, centre or class regarding medical, physical school or class, library, students' hostel, boarding, research centre and any activity or institution regarding education.
2. To give educational instruments, scholarships, loans or any other aid or help to the females, girls taking education in vidyalaya or in its institutions or in any other manner.
3. To arrange or participate in educational seminar or programmes for development of women society.
4. To publish literature regarding women society.
5. To do such work and activity to promote or help education or educational activities.
6. The assessee is not running any school or college. It is maintaining a girls' hostel. The majority pf the inmates are admitted free and in some cases hostel fees are collected in part. Help is given to the pupils by supply of free books or giving school fees, coaching, etc. Shri J.I. Patel contended that even indirect help and assistance given to students for prosecuting education would be an activity for the purpose of education and that a trust engaged in such indirect activity also should be treated as an educational institution. Dictionary meaning of the word 'educational' is 'pertaining to education; tending or intending to educate, instruct or inform,' Shri Patel points out.
7. The word 'education' is found in Section 2(75) which defines 'charitable purposes'. As to the true scope of 'education' in Section 2(15), the statement of the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 is the last word. As explained 'education' connotes 'processing of training and developing knowledge, skill, mind and character of students by normal schooling'. Such schooling or training and systematic instruction to pupils can only through schools and colleges. If 'education' is so understood for its inclusion in the phrase 'charitable purposes' to get some limited or qualified relief under Section 11 in the case of a trust, it would be illogical to suggest wide or extended meaning when it appears (with its grammatic variations) in Section 10(22) where the relief is total. The assessee-trust which is not running any school as it appears to us, it is, at present, is not even directing its attention to establish one cannot be conceived of as an educational institution. Running a free hostel for school-going girls, helping them with free books, tuition fees, etc., may be an encouragement to indigent or deserving pupils who are interested in prosecuting education and a trust helping them can only be said to aid the prosecution of studies but not directly responsible in the giving of education which a school imparts.
8. Shri J.I. Patel showed from the accounts that more than 90 per cent of the income is spent for the inmates in the hostel for providing food, books, etc. This may be an answer to the last condition that the trust is not existing for the purpose of profit. But is the trust an educational institution is a different question.
9. We were referred to the decision of the Orissa High Court in the case of Secondary Board of Education v. ITO [1972] 86 ITR 408 by Shri J.I. Patel. The Secondary Board of Education created under an enactment had a fund. One of the sources of income of the Board was from profits from compilation, publication and sale of text books. The income of the Board was held to be exempt under Section 10(22). There, actually, the point with which we are concerned in this appeal was not posed. The question considered by their Lordships was whether the Board existed solely for the purpose of education as it had been conceded by the revenue that the Board was an educational institution. On that concession, their Lordships proceeded, to see if it existed solely for educational purposes and not for purposes of profit.
10. The other case referred on behalf of the assessee was the decision of the Andhra Pradesh High Court in the case of Governing Body of Rangaraya Medical College v. ITO [1979] 117 ITR 284. In this case, a medical college was managed and run by the assessee (a society). This makes all the difference.
11. The AAC followed the decision of the Tribunal in the case of Bombay & Mangrol Jain Sabha [IT Appeal No.2751 (Bom.) of 1974-75] to uphold the ITO's action in not granting exemption under Section 10(22). Shri Patel argued that the above decision has been reviewed by the Tribunal in its subsequent decision in IT Appeal Nos. 5269 and 6082 (Bom.) of 1983 and IT Appeal Nos.3938 and 5549 (Bom.) of 1982 (for the assessment year 1975-76). It is true that the Tribunal has, in its subsequent order for the assessment year 1975-76, held that the trustees of Bombay Mangrol Jain Sabha, Bombay, is an institution entitled to exemption under Section 10(22). The order shows that this trust was running a girls' high school in Bombay. So, on facts, this decision is clearly distinguishable.
12. What remains to be referred is the decision of the Tribunal in the case of Trustees of the Tagore Educational Society v. Seventh ITO [1984] 10 ITD 279 (Bom.). Shri Patel laid much stress on the following :
...The educational activity may take many forms. Imparting of education may be one of them but not the only one. Grant of scholarship to students to assist them in prosecuting their studies is also an educational activity and an institution which is engaged solely in such activity and which has kept before it an aim of itself starting schools and colleges, provided it succeeds in obtaining the necessary premises, would be an educational institution within the meaning of Section 10(22).
[Emphasis supplied] (p.283) The above cannot be taken shorn off the context. The aim of the assessee was to start schools and colleges. It had even paid money to obtain a plot and could not obtain possession owing to some problem. Hence, no school or college could be started. But, in the meanwhile, it was granting freeship and scholarships to deserving students to assist and prosecuting their studies. It is in this context Trustees of the Tagore Educational Society's case (supra) was held to be entitled to the benefit of Section 10(22). This case is certainly not a parallel to the appeal on hand. The objects in the memorandum of the trust made in 1952 envisage conducting of schools and classes and to this day it remains only in cold print. As we have pointed out, its activity has been no more than to help girls of a class or community by way of free hostel facility, providing books or paying tuition fees. In the circumstances, the assessee cannot be held to be an 'educational institution'. We uphold the finding of the authorities below that the assessees income is not exempt under Section 10(22).
13. In the result, the appeal fails. It is dismissed.