Jagannatha Shetty, J.
1. These tax reference cases are under s. 256(1) of the I.T. Act, 1961. The common questions referred for the opinion of this court are :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the income of the assesses-trust is exempt under section 10(22) of the Income-tax Act since the assessee is an educational institution
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in confirming the AAC's view that the assesses-trust would be entitled to exemption under section 11 and also in not permitting the Department from taking the ground on this issue ?'
2. The assessee is a society registered under the Societies Registration Act of 1860. The Society came to be registered on September 3, 1946. The objects of the society, inter alia, are as follows :
'(i) to constitute the existing Saraswath Students's Fund into a registered body.
(ii) to extend financial assistance to poor and deserving Saraswath Student's Study in South Kanara District and outside by instituting scholarships by way of loans or otherwise, awarding grants for the purchase of books or other educational requisites and the payment of examination fees and other charges.
(iii) to undertake the management of any moneys or funds for educational or allied purposes intended for members of the Saraswath Community on trust and on such conditions as the fund may agree to.
(iv) to further the object of extending financial help to Saraswath Students by such other ways and means as may be necessary and proper.'
3. For the assessment years 1977-78 to 1979-80, the assessee, while filing returns, claimed exemption under s. 10(22) of the Act. Alternatively, the Society claimed that its income, at least to the extent of the application to charitable purposes, must be exempt under s. 11. The ITO while rejecting the primary contention accepted the alternative claim. He granted relief under s. 11 while computing the income of the assessee although the order of assessment does not specifically state so in so many words.
4. The assessee appealed to the AAC. During the pendency of those appeals, the Appellate Tribunal disposed of the appeal relating to the assessment year 1975-76. There the Tribunal accepted the claim of the assessee under s. 10(22) of the Act. It was also observed by the Tribunal in that order that the assessee was entitled to deduction of 25 per cent of its income under s. 11. The AAC, following that judgment of the Tribunal, allowed the appeals for all the three years with a direction to the ITO to allow deductions under s. 11 of the Act.
5. The Revenue appealed to the Tribunal. But the Tribunal could not do anything better. It had to follow its earlier decision for the assessment year 1975-76 holding that the assessee was an educational institution falling within the ambit of s. 10(22). Before the Tribunal, the Revenue appears to have objected to the direction issued by the AAC to the ITO to allow deduction of 25 per cent under s. 11. Although the order of the Tribunal is not clear, it appears to us that the question raised was that the assessee was not entitled to the benefit of s. 11. The Tribunal rejected that contention on the ground that the Revenue did not object before the ITO for treating the assessee as a charitable institution for the purpose of application of s. 11. The Tribunal noted that the ITO while computing the assessment had followed the order of the AAC for the year 1975-76 wherein he has held that the assessee was entitled to the benefit of s. 11.
6. It is this order of the Tribunal that has given rise to the questions set out above.
7. Before proceeding further, it will be necessary to clarify and narrow down scope of the enquiry in this matter. If the assessee is held entitled to the benefit of exemption under s. 10(22), it will be unnecessary to go into the question as to whether the assessee will be entitled to exemption under s. 11 or not. The exemption under s. 10(22) is in respect of the whole of the income of the assessee and not restricted to such income applied or accumulated for charitable or religious purposes as provided under s. 11. The scope of s. 10(22) is very much wider than that of s. 11
8. If the main question regarding the applicability of s. 10(22) is determined against the assessee then there may not be much difficulty for the assessee to avail of the benefit under s. 11 since there is no dispute that the assessee is deriving income from property held under trust wholly for charitable or religious purposes. The trust is concerned with the promotion of education and allied purposes of Saraswath Community. Since it was registered on September 3, 1946, the trust is excluded from the prohibition contained under s. 13(1)(b) of the I.T. Act, 1961, although it has been created or established for the benefit of a particular religious community or caste. The assessee can, therefore, safely be said to be a trust entitled to the benefit of s. 11 since it is concerned with the promotion of education or allied purposes of the poor students belonging to the Saraswath Community. Section 2(15) defines 'charitable purpose' to include 'relief of object of general public utility'. The main object of the trust is to extend financial assistance to poor and deserving students belonging to Saraswath Community by way of loans, scholarships and grants for purchase of books or other educational requisites, the payment of examination fees and other charges. There can, therefore, be no dispute with regard to the relief given to the assessee by the ITO under s. 11.
9. The only question, therefore, is whether the assessee could fall within the scope and ambit of s. 10(22).
Section 10(22) reads as under :
'10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included - ......
(22) any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit.'
10. The assessee in the instant case is existing not for the purposes of profit. There is no dispute on this aspect of the matter. The assessee, however, must prove that it is an educational institution which exists solely for educational purposes.
11. Mr. G. Sarangan, learned counsel for the Revenue, contended that the 'educational institution' used in s. 10(22) must be an educational institution in which education should be imparted to students. It must teach students and it must have teachers for such purposes. In support of this contention, the learned counsel relied upon the observations of the Supreme Court in S. Azeez Basha v. Union of India : 1SCR833 , at 671. There the Supreme Court while examining the scope of article 30(1) of the Constitution has observed that there is a good deal in common between the educational institutions which are not universities and those which are universities. Both teach students and both have teachers for the purpose. But what distinguishes a university from any other educational institution is that a university grants degrees of its own while other educational institutions cannot. It is this granting of degrees by a university which distinguishes it from the ordinary run of educational institutions, The counsel argued that the 'university or other educational institution' used in s. 10(22) must be given the same meaning and if the assessee is not engaged in teaching students or imparting education to students, it cannot get the relief under s. 10(22).
12. The counsel, however, does not dispute that the assessee is an institution.
13. It is well established that the assessee itself need not impart education to students. It need not necessarily be a school or college. This court in CIT v. Academy of General Education (184) 150 ITR 135 has observed (at p. 139) :
'... We may state at the outset that the assessee in order to claim the benefit of s. 10(22) need not necessarily be a school or a college, where education is imparted. Nor should such school or college be different from the assessee who claims the benefit of s. 10(22). That would be clear if we peruse the provisions of the various sub-sections of s. 10 viz. ss. 10(3), 10(4), 10(4A), 10(4B), 10(20), 10(20A), 10(22), 10(22A) and 10(23). It will be, therefore, obvious that the income of the assessee is exempt under s. 10(22) if the assessee is an educational institution or an establishment which primarily engages itself in educational activities. The institution, however, may incidentally take other activities for the benefit of the students or in furtherance of their education. It may invest its funds in any manner, but the income generated therefrom must be utilised exclusively for educational activities. If these requirements are complied with, the assessee's income shall be exempt under s. 10(22) of the Act.'
14. There are also several decisions of other High Court stating that the assessee in order to claim the benefit of s. 10(22) need not itself impart education to students. The society running a school or college is entitled to claim exemption under s. 10(22). The Allahabad High Court in Katra Education Society v. ITO : 111ITR420(All) :
'The word 'institution' has not been defined in the Act. There is no reason why an educational society cannot be regarded as an educational institution if that educational society is running educational institution or institutions.'
15. Similar was the view taken by the Madras High Court in Addl. CIT v. Aditanar Educational Institution : 118ITR235(Mad) .
16. The Andhra Pradesh High Court in Governing Body of Rangaraya Medical College v. ITO : 117ITR284(AP) , also held that the assesses-society running a college with no motive of profit or personal gain was entitled to claim exemption in respect of its income under s. 10(22).
17. But, in the instant case, the facts are otherwise. The primary object of the assessee is just to finance the students to pursue their education. Its sole object is to extend assistance in case or kind to poor or deserving students belonging to the Saraswath Community. It has no object to establish any educational institution to impart education to students. The activities of the assessee are, indeed, charitable purposes as defined under s. 2(15). But to say that it is an educational institution would be a misnomer.
18. Mr. Shivaram has strongly relied upon the decision of the Orissa High Court in Secondary Board of Education v. ITO : 86ITR408(Orissa) . In that case, the Orissa High Court has upheld the plea of the Secondary Board of Education for claiming exemption of its fund from income-tax under s. 10(22) on the ground that the income and expenditure of the Board were purposes. This case, in our opinion, stands on a different footing. The Secondary Board of Education was concerned with the controlling of the educational institutions and holding examinations for students. Its primary object was to impart education to students through the colleges controlled by it. It was not just concerned with extending financial assistance to students as in the present case. The ratio of the decision, therefore, in our opinion, cannot be extended to the present case.
19. It seems to us that the assessee which extends financial assistance to students for their educational purposes would squarely and fairly fall under s. 11 and not under s. 10(22).
20. In the result, we answer the first question in the negative and in favour of the Revenue. The second question must be answered in the affirmative and against the Revenue.