Commissioner of Income Tax vs Sheth Sorabji Nasarwanji Parekh

M.B. Shah, J.—The assessee-Sheth Sorabji Nasarwanji Parekh, is a registered trust and had claimed exemption u/s 10(22) of the Income Tax Act, 1961, in respect of its income for the assessment year 1974-75. The Income Tax Officer rejected the claim of the assessee. In appeal, the Appellate Commissioner reversed the order of the Income Tax Officer holding that the assessee was entitled to exemption as claimed. The Tribunal relying upon its previous decision also held that the assessee was entitled to exemption as claimed by it. Hence, at the instance of the Revenue, the Income Tax Appellate Tribunal has referred the following question u/s 256(1) of the Income Tax Act, 1961, for our opinion :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the income of the assessee is entitled to exemption under sub-section (22) of section 10 of the Income Tax Act, 1961 ?"

At the time of hearing of this reference, it is admitted by learned counsel for the parties that, in the case of the assessee in respect of the assessment year 1972-73, a similar question was referred to this court and this court has decided the said question against the assessee, by its judgment in Commissioner of Income Tax Vs. Sorabji Nusserwanji Parekh, . After considering various contentions raised by the parties, the court has held as under (at page 953) :

"Now, adverting to the case before us, it is clear that the trust in question though primarily founded to establish a school or college for imparting education to Zoroastrian students, it has not been successful in establishing any school or college. Admittedly, since 1956, no educational activity in the sense of normal schooling or actual imparting or knowledge or learning to the students is carried on by the trust. Admittedly, since 1956, the institute was simply giving scholarships to needy Parsi students for technical education without keeping any control over such students or without actually imparting any knowledge to the said students. Therefore, it cannot be said that the trust was carrying on educational activities or that it was an educational institution established for educational purposes. Therefore, the said trust was not entitled to total exemption u/s 10(22) of the Act. Therefore, the Tribunal was not right in holding that the trust was entitled total exemption."

We entirely agree with the aforesaid observations of this court.

In the result, the question is answered in the negative, i.e., in favour of the Revenue and against the assessee. Reference stands disposed of accordingly, with no order as to costs.