Director of Income Tax (Exemption) vs Raunaq Education Foundation

Madan B. Lokur, J.—The Revenue is aggrieved by an order dated 6th January, 2006 passed by the Income Tax Appellate Tribunal, Delhi

Bench A in ITA No. 2590/Del/2002 relevant for the assessment year 1987-88 and ITA No. 2591/Del/2002 relevant for the assessment year

1998-99. The sole question that has arisen in this appeal is whether the assessed who is entitled to exemption u/s 10(22) of the Income Tax Act,

1961 can claim the benefit thereof for the purpose of income deemed to be chargeable to tax u/s 68 of the Act. According to the Assessing

Officer, the undisclosed income could not be exempted u/s 10(22) of the Act and the Commissioner of Income Tax (Appeals) upheld the view

taken by the Assessing Officer. On further appeal, the Tribunal considered the provisions of Sections 4 and 5 of the Act read with Section 2(24)

and 2(45) as well as Section 10(22) of the Act and came to the conclusion that the use of the word ''income'' in Sub-section (22) of Section 10 of

the Act is wide enough to include deemed income u/s 68 of the Act. Learned Counsel for the assessed has drawn our attention to Orissa State

Warehousing Corporation Vs. Commissioner of Income Tax, wherein the Supreme Court has interpreted Section 10(29) of the Act which uses

the expression ''derived from'' which expression is missing in Section 10(22) of the Act. The Supreme Court held that the expression ''derived

from'' is intended to give a restrictive meaning to the word ''income'' as used in Section 10(29) of the Act and, Therefore, proceeding on that basis,

the Supreme Court decided against the assessed.

We find that the words ''derived from'' (or some other similar words) do not occur in Section 10(22) of the Act and, Therefore, the word

''income'' as occurring in Section 10(22) cannot be given restrictive meaning and must be given its natural meaning or the meaning ascribed to it in

Section 2(24) of the Act.

It is well settled that exemption provision must be strictly construed but when it is found an exemption is available then it must be given its full

play. This has recently been held by the Supreme Court in P.R. Prabhakar Vs. Commissioner of Income Tax, Coimbatore, in the following words:

It is now a well-settled principle of law that although the exemption provisions are to be construed strictly as regards the applicability thereof to the

case of the assessed once it is found that the same is applicable, the same are required to be interpreted liberally. See Tata Iron and Steel Co. Ltd.

Vs. State of Jharkhand and Others, ; Government of India and Others Vs. Indian Tobacco Association, and Commnr. of Central Excise, Raipur

Vs. Hira Cement,

It is also trite law that an exemption is to be granted unless it is expressly taken away. See Adityapur Industrial Area Development Authority Vs.

Union of India (UOI) and Others, .

In view of the above, we do not find any infirmity in the decision of the Tribunal. No substantial question of law arises for consideration.

Dismissed.