JUDGMENT
G.G. Sohani, C.J.
1. As directed by this court under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), the Income-tax Appellate Tribunal, Patna Bench, Patna, has referred the following question of law to this court for its opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that income of St. Xavier’s School, Doranda, Ranchi, was exempt under Section 10(22) of the Income-tax Act, 1961 ?”
2. The material facts giving rise to this reference briefly are as follows :
The assessee is a society registered under the Societies Registration Act, 1860, and is assessed in the status of an association of persons. The assessee runs a school known as “St. Xavier’s School”, Doranda. While framing the assessment of the assessee for the assessment year 1973-74, the Income-tax Officer upheld the contention of the assessee that the income of the school, run by the assessee, was from an educational institution existing solely for educational purposes and not for the purposes of profit. The Income-tax Officer, therefore, held that the income of the said institution was exempt under Section 10(22) of the Act. The order of assessment was, however, set aside by the Commissioner of Income-tax in exercise of the powers conferred upon him by Section 263 of the Act. The Commissioner held that the Income-tax Officer “failed to distinguish between an educational institution and a society which runs, among its various objects, as one of the objects an educational institution”. The Commissioner, therefore, directed the Income-tax Officer to frame the assessment of the asses-see for the relevant assessment year afresh.
3. Aggrieved by the order passed by the Commissioner of Income-tax, the assessee preferred an appeal before the Tribunal. The Tribunal found that, apart from the income of the school, the assessee did not have any other income and that the school was an educational institution existing solely for educational purposes and not for profit. The Tribunal, therefore, held that the income of St. Xavier’s School was exempt under Section 10(22) of the Act. Aggrieved by the order passed by the Tribunal, the Revenue sought a reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.
4. Learned counsel for the Revenue contended that the object of the assessee-society was, as disclosed by the memorandum of association, not only the running of a school but to carry on other activities as well and hence the assessee could not be held to be an educational institution existing solely for educational purposes. It was, therefore, urged that the income of the assessee could not be held to be exempt under Section 10(22) of the Act. In reply, it was contended on behalf of the assessee that, in view of the finding of the Tribunal that St. Xavier’s School was an educational institution solely run for educational purposes and not for profit, the Tribunal was right in holding that the income of the assessee-society from the school was exempt under Section 10(22) of the Act.
5. The short question for consideration is whether the income of the assessee from St. Xavier’s School run by the assessee can be held to be exempt under Section 10(22) of the Act. The Tribunal has found that St. Xavier’s School exists for educational purposes only and not for purposes of profit. Section 10 of the Act provides that, in computing the total income of a previous year of any person, any income falling within any of the clauses specified in that provision, shall not be included. One of the clauses specified by Clause (22) of Section 10 is income of a university or other educational institution existing solely for educational purposes and not for purposes of profit. It is thus clear that, if the income of any person falls in a clause covered by Clause (22) of Section 10 of the Act, then such income is not includible in the total income of that person. The fact that that person has or can have income from sources not falling under Clause (22) of Section 10 of the Act would not be relevant for deciding whether the income of such person from an educational institution would or would not be exempt. If such income falls under the clause specified in Clause (22) of Section 10, then it would be exempt and would not be liable to be included in the total income of that person while framing his assessment for the relevant assessment year. In this connection, I may usefully refer to the following observation of the Calcutta High Court in Birla Vidhya Vihar Trust v. CIT [ 1982 ] 136 ITR 445, 454 :
“In our opinion, from the language and the context in which the expression has been used in Sub-section (22) of Section 10, it is clear that the income may be the income of any person but the source of this particular income which is not liable to be includible under Sub-section (22) of Section 10 must be the income of a university or other educational institutions which fulfils the other requirements of that sub-section, that is to say, the educational institution through which the income is generated must exist solely for educational purposes and the educational institutions be not run for profit. A person may have income from different sources. But if a particular income is from an educational institution or a university which exists solely for educational purposes and not for purposes of profit, then that income or the recipient of the other incomes would be entitled to exemption …”
6. I respectfully agree with the aforesaid observations. In the instant case, it has been found by the Tribunal that St. Xavier’s School, Doranda, a school run by the assessee, was an educational institution existing solely for educational purposes and not for purposes of profit. In view of these findings, the Tribunal, in my opinion, was right in holding that the income of the assessee from, the aforesaid school was exempt under Section 10(22) of the Act.
7. For all these reasons, my answer to the question referred to this court by the Tribunal is in the affirmative and against the Revenue. In the circumstances of the case, parties shall bear their own costs of the reference.
8. Let a copy of this judgment be communicated by the office of this court to the Assistant Registrar, Income-tax Appellate Tribunal, Patna.
B.N. Agrawal, J.
9. I agree.