1. These four appeals relating to the assessment years 1975-76 to 1978-79, filed by the assessee against the consolidated order of the AAC, deal with the same issue and are, therefore, for the sake of convenience, disposed of by a common order.
2. The assessee is a trust settled by Dr. Jagdish Parikh by deed of trust dated 8-8-1974. The objects of the trust were as follows : I. To open, establish, maintain, acquire, support aid or grant monetary assistance to universities, schools, colleges, polytechnic institutions, research laboratories or other vidyapith or organisation or institution imparting education and training to students in such line and course as the trustees may, from time to time, determine.
II. To establish and support professorship, fellowship, lecturership, prizes, awards, etc., at schools, colleges or other educational institutions or organisations on such terms and conditions as the trustees may deem fit or without any terms and conditions.
III. To open, establish, maintain or support hostels and/or boarding houses and grant free or concessional boarding and lodging to students without any distinction of caste, creed, religion or sex studying in schools, colleges, vidyapith or other educational institutions whatsoever.
IV. To give and grant monetary assistance to students or research scholars or workers either by way of scholarship, grant or loan or otherwise studying or working in schools, colleges, vidyapith, or other educational institutions or organisations whom the trustees may deem to be deserving thereof to enable them to receive such education and training and qualifications as the trustees may approve.
V. To give or supply or distribute books, food, clothes, and other requirements of life and/or give school, college or tuition fees to poor or deserving students or scholars or grant all monetary assistance to them for the aforesaid purposes.
VI. To promote education, research, and learning in all its branches.
VII. To organise a comprehensive service and provide facilities which will help students, teachers, professional men and women, social workers, etc., in their efforts for higher education or research.
VIII. To build up funds which will enable the foundation to grant scholarships and financial aid or loans to deserving individuals for higher studies for research or for training in different fields of education.
IX. To organise a service and an information bureau for assistance to foreign students and scholars visiting India and to Indian students and scholars going abroad which would enable them to form suitable contacts and to avail themselves of such contacts to further their objectives.
X. To set up a service to find employment for men and women possessing qualifications and to act in general as a liaison between them and their respective fields of employment.
XI. To organise and provide testing and recruiting service for students and teachers deserving higher education or employment in their respective fields.
XII. To take over, to act as trustees of and to administer trusts, foundations, institutions, corporate funds or particular endowments, whose objects are in conformity with the objects of the foundation.
XIII. To arrange exchange of individual and groups between India and other countries for promotion of better understanding and co-operation.
XIV. Organise seminars, conferences, programmes, etc., for educational purposes and organise and offer consultation.
XV. Any other activity conducive and incidental to the above objects.
XVI. To spend or apply moneys and other amounts on any other public charitable purpose which is recognised as a charitable purpose within the meaning of Section 2(75) of the Income-tax Act, 1961, or any other modification thereof.
And it is intended and directed that if at any time hereafter it is held that any of the objects or purposes, towards which the corpus or income of the trust property or any part or parts thereof hereby directed to be applied or expended, is not strictly public charitable object or purpose according to law, then and in that case, the trustees shall apply and expend the trust property or such part or parts thereof of the income or such part or parts thereof towards the execution and carrying out such of the objects or purposes as aforesaid as may be public charitable according to law.
Provided further that the trustee shall apply the trust property or such part or parts thereof or the income thereof or such part of the income thereof for all or any of the aforesaid objects of this trust insofar as these objects relate to anything done or to be done within the taxable territories as defined in the Income-tax Act, 1961, or any statutory modifications or re-enactment for the time being thereof in force.
It was claimed before the ITO in the course of the assessment proceedings that the activities of the assessee-trust entitled the assessee-trust to claim of exemption under Section 10(22) of the Income-tax Act, 1961 ('the Act') or alternatively under Section 11 of the Act. The ITO, however, held that the assessee was conducting programmes for training in which the participants were only from a few limited companies, which had made donations for the purpose and this cannot be said to be either religious or charitable or even an object of general public utility. Another objection of the ITO was that clause IX of the objects of the trust deed, which was to organise a service and an information bureau for assistance to foreign students and scholars visiting India and to Indian students and scholars going abroad and clause XIII of the objects clause V to arrange exchanges of individuals and groups between India and other coxmtries for promotion of better understanding and co-operation could not be said to be an object of charitable purpose or general public utility. He, therefore, held that since some of the objects of the trust were not for charitable purposes or on objects of general public utility and the trustees had the discretion to apply the income of the trust to any of the objects of the trust, the claim of exemption was not admissible.
He, therefore, subjected the assessee-trust to tax. On appeal, the AAC held that even for the services, which the assessee-trust was rendering for securing admission for Indian students in foreign institutions, it was charging fees and, therefore, it cannot be said that the activities of the assessee-trust amounted to advancement of an object of a charitable purpose or general public utility. He, therefore, while accepting the loss as claimed for the assessment years 1975-76 and 1978-79 amounting to Rs. 6,565 and Rs. 1,440, respectively, and the income as shown as per income and expenditure statement for the assessment years 1976-77 and 1977-78 amounting to Rs. 3,113 and Rs. 31,621, agreed with the ITO that the assessee-trust was not entitled to exemption. The assessee-trust is aggrieved and has, therefore, come up in the present appeals before us.
3. The assessee's learned counsel, Shri Patel, filed before us additional grounds of appeal to claim firstly, that the assessee-trust was an educational institution existing solely for educational purposes and not for the purposes of profit and was, therefore, entitled to the exemption as laid down under Section 10(22). Alternatively, it was argued by him, according to the original grounds of appeal, that the objects of the assessee-trust were charitable or, alternatively, objects of general public utility and the assessee-trust was, therefore, entitled to exemption as laid down under Section 11. Shri Patel at the outset pointed out that whether the assessee-trust was held entitled to exemption or not, there was no tax effect either for the assessment years 1975-76, 1976-77 or 1978-79, since for the assessment years 1975-76 and 1978-79 there were losses, which were accepted in appeal by the A AC, while for the assessment year 1976-77, there was a small profit of only Rs. 3,113, which was more than offset by the loss of Rs. 6,565 for the immediately preceding assessment year.
Proceeding further Shri Patel submitted that even for the assessment year 1977-78, the so-called income of Rs. 31,621 could not have arisen to the assessee-trust but for Rs. 30,255.70 collected for the course conducted in collaboration with the Iran Centre of Management Studies for which the Iran Centre of Management Studies waived their charges considering that the assessee-trust was a charitable institution. It was pointed out by Shri Patel that the assessee-trust was registered under the Bombay Public Trust Act, whose accounts were being regularly audited as required by law and where there was no possibility of the funds being misused for any personal needs of any of the trustees.
Coming to the activities of the assessee-trust, Shri Patel mentioned that the main activities of the trust were counselling of Indian students who wanted admission in institutions abroad for which purpose the assessee-trust was also conducting some of the entrance examinations on behalf of the foreign institutions in order to save the Indian students the botheration of having to go abroad for entrance test and for all these services the assessee-trust charged a nominal amount, which were the estimated expenses on conducting the test, correspondence, etc., so that the assessee-trust could carry out the activities on no profit no loss basis. Besides in the field of business management the assessee-trust besides sponsoring Indian students for admission in foreign institutions was arranging courses in India in co-operation with the Asian Institute of Management, Manila, Philippines, United States International University, ralifornia, International Management Development Institute, Lausanne, Switzerland, Iran Centre of Management Studies, etc., and whenever the consultancy courses were organised in collaboration with these bodies, the programme was widely advertised so that contributions were asked for from various companies, whose executives wanted to benefit from these programmes and out of the contributions received, the expenses of air ticket and stay of the foreign consultants, who were invited to participate in the programmes and sometimes the Indian business management consultants were met. Shri Patel submitted that the assessee's programme of education was on a higher plane, i.e., it could only be utilised by persons who already had knowledge of management and wanted further specialised knowledge and in the very nature of things the programmes invited or attracted only those people who could benefit from these courses and not everybody, but this did not mean that what the assessee-trust was doing did not amount to education and, therefore, the assessee-trust could not be treated as an educational institution entitled to exemption under Section 10(22). Reference in this connection was made by him to the ruling of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT  101 ITR 234 and it was pointed out that this could be the first step for a university or All-India Institute of Management, etc., i.e., in other words, this constituted part of function of a university.
According to Shri Patel, the function of the assessee-trust does not become different simply because the regular imparting of education or instruction is done by another body and not by the assessee-trust.
4. Shri Patel then addressed us on the alternative argument in the original grounds of appeal and pointed out that even the Commissioner for the purposes of Section 80G of the Act had given a certificate dated 23-4-1983 certifying that the assessee is an institution/fund established in the taxable territories for a charitable purpose, it satisfies the requirements of Section 80G and any sum within the prescribed limits paid by an assessee as donation to this institution/fund will be exempt under Sub-section (1) of Section 80G.Proceeding further he submitted that the objects of the trust were not only to help students get placements in institutions abroad and organise management courses in collaboration with foreign institutions but also undertake host of other activities for the benefit of the general public without distinction of caste, creed, religion, etc. In this connection he pointed out that apart from giving information to Indian students desiring placement in foreign institutions and even conducting admission tests for them on behalf of foreign institutions, in some cases, the assessee-trust was also providing financial assistance to needy students so that the students of merit, who could not afford these studies, were not denied the benefit of higher education. He then referred to the ruling of the Hon'ble Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs. Association  121 ITR 1 wherein their Lordships laid down that the test to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit and where the predominant object of the activity is not to earn profit but to carry out the object of general public utility, it would be a charitable purpose. Viewed in this context, he pointed out that but for the Iran Centre of Management Studies waiving the amount due to them, there would have been no profits for any of the four years under consideration in the present appeals and there would have been either deficits or very small surpluses, which would have been more than offset by the deficits of the earlier years. This clearly shows, according to Shri Patel, that the predominant object of the assessee-trust was the carrying out of a charitable purpose or an object of general public utility. He, therefore, submitted that in any case the assessee-trust was entitled to exemption as laid down under Section 11.
5. On the other hand, the learned departmental representative, Shri Vohra, submitted to us that even according to the ruling of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra) 'education' means systematic instruction, schooling or training given to the young in preparation for the work in life and connotes the whole course of scholastic instruction, which a person received. Proceeding further Shri Vohra referred to the observations of their Lordships appearing at page 241 of the judgment wherein they remarked that 'education' has not been used in that wide and extended sense according to which every acquisition of further knowledge constitutes education.
Viewed in this context, according to Shri Vohra, the primary object of the assessee-trust was to enable Indian students to obtain placements in educations of higher learning abroad and even conduct entrance examination on behalf of some of the institutions even provide financial assistance in some cases and arrange short-term courses in collaboration with foreign educational institutions of a few days' duration and on the basis of this activity it cannot be said that the assessee-trust is a university or an educational institution. Reference in this connection was made by him to the ruling of the Hon'ble Madras High Court in the case of Addl. CIT v. Victoria Technical Institute  120 ITR 358 wherein even the activity to impart or assist in imparting instructions to persons in scientific or artistic principles which underlie the industrial and commercial occupations of the people as well as instructions in the manual and other practices involved in the application of such principles, etc., did not amount to the society carrying out such activities being an educational institution or having its objects as education. He, therefore, vehemently argued before us that the assessee's claim of being an educational institution or being an institution for educational purposes and, consequently, being entitled to the exemption as laid down under Section 10(22) was not admissible and could not be allowed.
6. Shri Vohra then referred to the assessee's next claim of exemption as laid down under Section 11. He submitted that the activity was to invite business management experts of international renown for programmes in India in which participants belonged to companies, who contributed to the cost of those programmes, i.e., in other words, this was an activity of a commercial nature. Proceeding further he submitted that even in respect of the counselling activities for Indian students to obtain admissions in foreign institutions and in conducting entrance examinations on behalf of the foreign institution, the assessee-trust was charging a fee from the students and this itself showed that here again this was not an object of general public utility but what was involved was carrying on of an activity for profit, that is, a sort of a business. According to Shri Vohra, this would apply to other activities also of the assessee-trust because for most of the activities the assessee was charging a fee from the participants and, therefore, what was involved was the carrying on of an activity for profit. Summing up, Shri Vohra vehemently argued before us that the assessee-trust is not entitled to exemption either under Section 10(22) or under Section 11 and the assessee's claim of exemption under both the sections was not admissible and was rightly not allowed by the revenue authorities.
7. We have carefully considered the rival submissions. It is not under dispute that the activity of the assessee-trust is not to impart education as explained by their Lordships of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra). On the other hand, the main objects of the assessee-trust were to help the various students to obtain admissions in institutions of higher learning and even render financial help in deserving cases and arrange seminars, etc., by inviting experts from institutions of higher learning abroad, so that in these seminars of a few days' duration people who were already well versed in business management could get specialised knowledge and benefit from the latest information and technique on the subject. Considering all these and in view of the ruling of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra) the object of the assessee-trust cannot be said to be 'education' within the meaning of Section 2(15) of the Act. The assessee-trust is, therefore, not entitled to the claim of exemption as laid down under Section 10(22) and this claim of exemption was rightly not allowed by the authorities below.
8. The Hon'ble Supreme Court in the case of Swat Art Silk Cloth Mfrs.
Association (supra) has laid down that the test to be applied is whether the predominant purpose of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Viewed in this context it is found that but for the Iran Centre of Management Studies waiving the amount due to it for participating in the programme sponsored by the assessee-trust with its collaboration, there would have been practically no income to the assessee-trust taking all the four years into consideration because the surplus in the two years 1976-77 and 1977-78 would have been almost offset by the deficits of the immediately preceding and the succeeding years. It is further not under dispute that the assessee-trust is registered under the Bombay Public Trust Act and even according to the certificate issued by the Commissioner dated 23-4-1983, it is an institution/fund established in the taxable territories for a charitable purpose. Considering all these, we have no hesitation in coming to the conclusion that the predominant object of the assessee-trust was to carry out the object of general public utility with a view to subserve the charitable purpose rather than to earn profit. The assessee-trust was, therefore, entitled to exemption under Section 11. The ITO is, therefore, directed to work out the exemption provided the other conditions laid down for this purpose are satisfied for each of the four years under appeal before us.