Income Tax Appellate Tribunal - Delhi
Income-Tax Officer vs S.R.M. Foundation Of India on 14 April, 1987
Equivalent citations: 1987 21 ITD 598 Delhi
Bench: K Srivastava, V Elhence
ORDER
V.P. Elhence, Judicial Member
1. These eight appeals, filed by the department, arise out of the orders of the learned Commissioner of Income-tax (Appeals) IX, New Delhi for the A.Y. 1974-75-1976-77 and 1978-79-1982-83. There is no appeal for the A.Y. 1977-78.
2. The common question raised is whether in respect of its income the assessee is entitled to the claim of exemption under Section 10(22) of the Income-tax Act, 1961 as an educational institution, existing solely for educational purposes and not for purposes of profit.
3. The assessee S.R.M. Foundation of India, T-714, New Friends Colony, New Delhi-65 has 'been assessed in the status of an AOP (Association of Persons). The Spiritual Regeneration Movement Foundation of India is a society registered under the Societies Registration Act. It was founded in 1963 by Maharishi Mahesh Yogi. It is registered under Section 12A of the Income-tax Act, 1961 with the Commissioner of Income-tax, Lucknow and a certificate under Section 80G was also issued in its favour. The assessee foundation claimed exemption of its income under Section 10(22) which provides for the exemption of "the income of a university or other educational institution existing solely for educational purposes and not for the purposes of profit". However the Inspecting Asstt. Commissioner (Assessments) took the view that the assessee was neither a university nor other educational institution recognized by any university or any State or Central Government. He was also of the view that the activities of the assessee foundation did not satisfy the requirements enunciated by the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. He noticed among other things that the assessee foundation had charged fee for education and also received donations from the trainees (course participants) for incurring expenses though it was claimed that donations were made towards the corpus. The assessee's claim for exemption under Section 10(22) was accordingly rejected and the total receipts of the assessee for the assessment years in question (including the donations) were treated as income. The alternative submission that the assessee was an institution established for charitable purposes and so its income was exempt under Section 11, was also rejected. It may be mentioned here that for the A. Y. 1977-78 the claim for exemption under Section 10(22) was also rejected by the I AC (Asst.) similarly but no appeal was filed by the assessee against the same as the alternative claim under Section 11 had been allowed.
4. In appeal, the learned Commissioner of Income-tax (Appeals) after examining the assessee's Memorandum of Association and its activities, took the view that they satisfied the tests laid down by the Supreme Court in the case of Sole Trustees, Loka Shikshana Trust (supra) and that as a Society running an educational institution, it qualified as "other educational institution" and so he directed the assessing officer to grant to the assessee the exemption claimed under Section 10(22). Accordingly he did not deal with the assessee's alternative claim of exemption under Section 11.
5. That is how the department is aggrieved and has come in appeals before us. Shri D.K. Sharma, the learned Departmental Representative, strongly relied upon the orders of the assessing officer as also on the ctecision of the Supreme Court in the case of Sole Trustees, Loka Shikshana Trust (supra). He argued that in that case the Supreme Court had interpreted education as imparted during the normal schooling. According to him the instruction in Transcendental Meditation (T.M. for short) imparted to the trainers and the trainees could not be termed as education in the Indian context. Shri Sharma submitted that the learned CIT(A) had been swayed by the concept of T.M. and had therefore, missed the real issue. Reference was also made by him to the decision of the Appellate Tribunal in the case of Rajneesh Foundation v. ITO [1983] 4 ITD 409 (Bom.) wherein it was held that the propagation of the instructions and teachings of Acharya Rajneesh did not amount to education. The learned departmental representative also argued that the words "or other educational institution" in Section 10(22) had to be interpreted on the principle of ejusdem generis with reference to the word 'a university'. Alternatively he argued that the matter be sent back to the CIT(A) for a decision afresh. On the other hand Dr. V Gauri Shanker the learned counsel for the assessee referred to the decision of the Hon'ble Madras High Court in Addl. GIT v. Aditanar Educational Institution [1979] 118 ITR 235 for the proposition that the principle of ejusdem generis had no application in interpreting the language of Section 10(22). Regarding the expression "or other educational institution" he referred to the following decisions-
(i) Royal Choral Society v. IRC [1943] 25 TC 263 (CA) ;
(ii) Katra Education Society v. ITO [1978] 111 ITR 420 (All.) ;
(iii) CIT v. Sindhu Vidya Mandal Trust [1983] 142 ITR 633 (Guj.) ;
(iv) ITO v. Devanga Educational Association [1984] 8 ITD 490 (Mad.) ; and
(v) Trustees of the Tagore Educational Society v. Seventh ITO [1984] 10 ITD 279 (Bom.).
He referred to the implications of T.M. as discussed by V.R. Krishna Iyer of the Supreme Court in the case of Hiralal Mallick v. State of Bihar AIR 1977 SC 2236 at 2243. He also referred to Chamber's Twentieth Century Dictionary, Iyer's Law Lexicon. Supreme Court's decision in the case of Sole Trustees, Loka Shikshana Trust (supra) and" the decision of the Hon'ble Calcutta High Court in the case of Birla Vldhya Vihar Trust [1982] 136 ITR 445 as to the meaning of education. In this connection he also referred to the following English decisions-
(i) Osmund v. Attorney General & Mason [1944] 1 All. E.R. 262 (A)
(ii) In re. Delius' Wilt Trusts [1957] 1 All E.R. 854 (Ch. D.).
Reference was also made by him to (i) the assessee foundation's Memorandum of Association (ii) Copy of Syllabus recommended by the assessee (Hi) Sample copy of the report of the Director Teachers' Training Course Rishikesh (iv) Copy of the biodata of the participants of Teacher's Training Course (v) Copy of the daily curriculam (vi) List of branches of the assessee foundation (vii) Copies of sample certificates from various schools and the details of the institutions where TM has been initiated. The learned counsel for the assessee sought to support the order of the learned CIT(A). Lastly he submitted that as an educational institution, the assessee foundation existed solely for educational purposes and not for the purposes of profit.
6. We have given our careful consideration to the able arguments addressed to us on both the sides. It is to be examined whether the following prerequisites of Section 10(22) are satisfied in the present case :
(i) The assessee foundation should be an educational institution ;
(ii) It should be existing solely for educational purposes ; and
(iii) It should not be existing for purposes of profit. As held by the Hon'ble Madras High Court in the case of Aditanar Educational Institution (supra) on the language of Section 10(22) the principle of ejusdem generis can have no application. We have therefore, only to fall back on the expression "or other educational institution". There is no requirement prescribed under Section 10(22) that the institution should be recognized by a University or State or Central Government. Thus the assessing officer's insistence on any such recognition was not justified. That a Society like the assessee foundation can qualify for being called an institution is also clear from the decision of the High Court of Justice (King's Bench Division) in the case of Royal Choral Society (supra); of the Madras High Court in the case of Aditanar Educational Institution (supra) and of the Hon'ble Allahabad High Court In the case of" Katra Education Society (supra) where the assessee was a Society. It is not necessary that an institution should have a building. The word "institution" has not been defined in the Act. Thus the assessee can be treated as an institution. The further point which arises is whether it is an educational institution. This brings us to the import and meaning of the word "education". This very point came up for consideration before the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra). It was held there that the sense in which the word "education" has been used in Section 2(75) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The Supreme Court held that what education connotes is the process of training and developing knowledge, skill, mind and character of students by normal schooling. The SRM foundation is dedicated to offering peace, harmony and happiness to everyone in all walks of life through the system of transcendental Deep Meditation. This system been developed by His Holiness Maharishi Mahesh Yogi whereby every normal man, regardless of caste, creed and denomination can easily reach the deeper levels of consciousness, unfold latent faculties and realise more complete happiness. The objects for which the assessee foundation was formed have been enumerated in Clause 3 of its Memorandum of Association as follows :
(i) To spread the system of Transcendental Deep Meditation as propounded by His Holiness Mahesh Yogi.
(ii) To train and educate people in all walks of life and in all countries to go daily into Deep Meditation for a few minutes, and thereby to develop their spiritual, mental, and other faculties and thus to become conscientiously useful citizens of human world, rediating love, peace and happiness all around.
(iii) To conduct research in the field of physical and mental health and social behaviour.
(iv To improve the physical and mental health and social behaviour of the people.
(v) To advance the study of, and propagate, Indian Culture all over the world.
(vi) Holding of lectures for the purpose of instructing the people all over the world in the Knowledge and practice of Indian Philosophy, and the Indian Way of Life.
(vii) To conduct research into the psychical and psychological effects of Transcendental Deep Meditation.
(viii) To establish Academies of Meditation.
(ix) To alleviate fears and tensions of the people and to promote Peace of mind.
The copy of the syllabus recommended by the assessee lists 33 lessons of what is termed as the Science of Creative Intelligence (SCI). The nature and benefits of TM have been inimitably expressed by V.R. Krishna Iyer J. while dealing with the mind culture in the case of Hiralal Mallick (supra). It has been described as a science and having a therapeutic effect on the human body and mind. It mentions that extensive studies of TM have been made in many prisons in the USA, Canada, Germany and other countries. It also mentions that a few trial courts in the United States have actually prescribed TM as a recipe for rehabilitation. It has been pointed out in the literature bearing on the subject that TM is not religion and is like physics applied to human consciousness. The Court of Appeals in U.K. in the case of Re. Osmund (supra) held that the system of psychological healing amounted to medical education. In fact in the case of Delius' Will Trusts (supra) the Chancery Division was dealing with aesthetic education. The assessee has given a list of 23 branches which it had in 1980, strewn throughout in India. The assessee has also given a list of numerous schools throughout India where TM instructions are imparted to the students as part of their normal schooling. The order of the learned CIT(A) also gives the names of the various Indian and foreign institution and universities where TM has been adopted as a part of the curriculum. The systematic instruction in TM is initially imparted to the trainers (a copy of their sample biodata has been placed by the assessee on the paper book) and then the trainers (qualified instructors) impart instruction to the trainees. We are of the view that the text of "Systematic Schooling" laid down by the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra), was satisfied by the assessee if we look at its functions and activities. The facts in the case of Rajneesh Foundation (supra) were entirely different. There the Trust Deed envisaged embarking on a number of activities not related to its primary object. There was intermingling of several institutions, each carrying on a different activity but put together not having a common denominator called "education". This decision cannot, therefore, be taken advantage of by the department. In the case of Birla Vidya Vihar Trust (supra) some of the objects of the assessee trust were other than educational. There is no purpose other than educational so far as the assessee foundation is concerned. Therefore, the second ingredient or prerequisite of Section 10(22) is also satisfied. That the assessee foundation does not exist for the purposes of profit is clear from the objects clause of the assessee's Memorandum of Association and in more specific terms, under item 8 at pages 6 & 7 of the said Memorandum of Association, which is in the following terms :-
(8) To undertake and promote any activity that enables the progress of the Societies programme to be self-sufficient through Agriculture, Horticulture, Dairy Farming or conducting household, cottage, Small and Large Scale Industries etc. with the sole motive of bringing fulfilment to the Goals of the Society and without any profit motive ;
This is also clear from the balance sheet & income and expenditure account. We have already noticed that for the A.Y. 1977-78 the assessee had no necessity of agitating the refusal of exemption under Section 10(22) in appeal as it had been granted alternative relief under Section 11. Thus having regard to the cumulative effect of all the relevant facts and circumstances and the position discussed above, we are clearly of the view that the assessee foundation duly established the requirements and qualified for the grant of exemption under Section 10(22). We accordingly uphold the orders of the Commissioner of Income-tax (Appeals). Since the claim of the assessee for exemption under Section 10(22) had been allowed by the learned Commissioner of Income-tax (Appeals), which view we are upholding, no exception can be taken by the department to the fact that the alternative claim of exemption under Section 11 had not been examined by the learned CIT(A).
7. The appeals filed by the department accordingly fail and are dismissed.
Income-Tax Officer vs S.R.M. Foundation Of India on 14 April, 1987
Equivalent citations: 1987 21 ITD 598 Delhi
Bench: K Srivastava, V Elhence
ORDER
V.P. Elhence, Judicial Member
1. These eight appeals, filed by the department, arise out of the orders of the learned Commissioner of Income-tax (Appeals) IX, New Delhi for the A.Y. 1974-75-1976-77 and 1978-79-1982-83. There is no appeal for the A.Y. 1977-78.
2. The common question raised is whether in respect of its income the assessee is entitled to the claim of exemption under Section 10(22) of the Income-tax Act, 1961 as an educational institution, existing solely for educational purposes and not for purposes of profit.
3. The assessee S.R.M. Foundation of India, T-714, New Friends Colony, New Delhi-65 has 'been assessed in the status of an AOP (Association of Persons). The Spiritual Regeneration Movement Foundation of India is a society registered under the Societies Registration Act. It was founded in 1963 by Maharishi Mahesh Yogi. It is registered under Section 12A of the Income-tax Act, 1961 with the Commissioner of Income-tax, Lucknow and a certificate under Section 80G was also issued in its favour. The assessee foundation claimed exemption of its income under Section 10(22) which provides for the exemption of "the income of a university or other educational institution existing solely for educational purposes and not for the purposes of profit". However the Inspecting Asstt. Commissioner (Assessments) took the view that the assessee was neither a university nor other educational institution recognized by any university or any State or Central Government. He was also of the view that the activities of the assessee foundation did not satisfy the requirements enunciated by the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. He noticed among other things that the assessee foundation had charged fee for education and also received donations from the trainees (course participants) for incurring expenses though it was claimed that donations were made towards the corpus. The assessee's claim for exemption under Section 10(22) was accordingly rejected and the total receipts of the assessee for the assessment years in question (including the donations) were treated as income. The alternative submission that the assessee was an institution established for charitable purposes and so its income was exempt under Section 11, was also rejected. It may be mentioned here that for the A. Y. 1977-78 the claim for exemption under Section 10(22) was also rejected by the I AC (Asst.) similarly but no appeal was filed by the assessee against the same as the alternative claim under Section 11 had been allowed.
4. In appeal, the learned Commissioner of Income-tax (Appeals) after examining the assessee's Memorandum of Association and its activities, took the view that they satisfied the tests laid down by the Supreme Court in the case of Sole Trustees, Loka Shikshana Trust (supra) and that as a Society running an educational institution, it qualified as "other educational institution" and so he directed the assessing officer to grant to the assessee the exemption claimed under Section 10(22). Accordingly he did not deal with the assessee's alternative claim of exemption under Section 11.
5. That is how the department is aggrieved and has come in appeals before us. Shri D.K. Sharma, the learned Departmental Representative, strongly relied upon the orders of the assessing officer as also on the ctecision of the Supreme Court in the case of Sole Trustees, Loka Shikshana Trust (supra). He argued that in that case the Supreme Court had interpreted education as imparted during the normal schooling. According to him the instruction in Transcendental Meditation (T.M. for short) imparted to the trainers and the trainees could not be termed as education in the Indian context. Shri Sharma submitted that the learned CIT(A) had been swayed by the concept of T.M. and had therefore, missed the real issue. Reference was also made by him to the decision of the Appellate Tribunal in the case of Rajneesh Foundation v. ITO [1983] 4 ITD 409 (Bom.) wherein it was held that the propagation of the instructions and teachings of Acharya Rajneesh did not amount to education. The learned departmental representative also argued that the words "or other educational institution" in Section 10(22) had to be interpreted on the principle of ejusdem generis with reference to the word 'a university'. Alternatively he argued that the matter be sent back to the CIT(A) for a decision afresh. On the other hand Dr. V Gauri Shanker the learned counsel for the assessee referred to the decision of the Hon'ble Madras High Court in Addl. GIT v. Aditanar Educational Institution [1979] 118 ITR 235 for the proposition that the principle of ejusdem generis had no application in interpreting the language of Section 10(22). Regarding the expression "or other educational institution" he referred to the following decisions-
(i) Royal Choral Society v. IRC [1943] 25 TC 263 (CA) ;
(ii) Katra Education Society v. ITO [1978] 111 ITR 420 (All.) ;
(iii) CIT v. Sindhu Vidya Mandal Trust [1983] 142 ITR 633 (Guj.) ;
(iv) ITO v. Devanga Educational Association [1984] 8 ITD 490 (Mad.) ; and
(v) Trustees of the Tagore Educational Society v. Seventh ITO [1984] 10 ITD 279 (Bom.).
He referred to the implications of T.M. as discussed by V.R. Krishna Iyer of the Supreme Court in the case of Hiralal Mallick v. State of Bihar AIR 1977 SC 2236 at 2243. He also referred to Chamber's Twentieth Century Dictionary, Iyer's Law Lexicon. Supreme Court's decision in the case of Sole Trustees, Loka Shikshana Trust (supra) and" the decision of the Hon'ble Calcutta High Court in the case of Birla Vldhya Vihar Trust [1982] 136 ITR 445 as to the meaning of education. In this connection he also referred to the following English decisions-
(i) Osmund v. Attorney General & Mason [1944] 1 All. E.R. 262 (A)
(ii) In re. Delius' Wilt Trusts [1957] 1 All E.R. 854 (Ch. D.).
Reference was also made by him to (i) the assessee foundation's Memorandum of Association (ii) Copy of Syllabus recommended by the assessee (Hi) Sample copy of the report of the Director Teachers' Training Course Rishikesh (iv) Copy of the biodata of the participants of Teacher's Training Course (v) Copy of the daily curriculam (vi) List of branches of the assessee foundation (vii) Copies of sample certificates from various schools and the details of the institutions where TM has been initiated. The learned counsel for the assessee sought to support the order of the learned CIT(A). Lastly he submitted that as an educational institution, the assessee foundation existed solely for educational purposes and not for the purposes of profit.
6. We have given our careful consideration to the able arguments addressed to us on both the sides. It is to be examined whether the following prerequisites of Section 10(22) are satisfied in the present case :
(i) The assessee foundation should be an educational institution ;
(ii) It should be existing solely for educational purposes ; and
(iii) It should not be existing for purposes of profit. As held by the Hon'ble Madras High Court in the case of Aditanar Educational Institution (supra) on the language of Section 10(22) the principle of ejusdem generis can have no application. We have therefore, only to fall back on the expression "or other educational institution". There is no requirement prescribed under Section 10(22) that the institution should be recognized by a University or State or Central Government. Thus the assessing officer's insistence on any such recognition was not justified. That a Society like the assessee foundation can qualify for being called an institution is also clear from the decision of the High Court of Justice (King's Bench Division) in the case of Royal Choral Society (supra); of the Madras High Court in the case of Aditanar Educational Institution (supra) and of the Hon'ble Allahabad High Court In the case of" Katra Education Society (supra) where the assessee was a Society. It is not necessary that an institution should have a building. The word "institution" has not been defined in the Act. Thus the assessee can be treated as an institution. The further point which arises is whether it is an educational institution. This brings us to the import and meaning of the word "education". This very point came up for consideration before the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra). It was held there that the sense in which the word "education" has been used in Section 2(75) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The Supreme Court held that what education connotes is the process of training and developing knowledge, skill, mind and character of students by normal schooling. The SRM foundation is dedicated to offering peace, harmony and happiness to everyone in all walks of life through the system of transcendental Deep Meditation. This system been developed by His Holiness Maharishi Mahesh Yogi whereby every normal man, regardless of caste, creed and denomination can easily reach the deeper levels of consciousness, unfold latent faculties and realise more complete happiness. The objects for which the assessee foundation was formed have been enumerated in Clause 3 of its Memorandum of Association as follows :
(i) To spread the system of Transcendental Deep Meditation as propounded by His Holiness Mahesh Yogi.
(ii) To train and educate people in all walks of life and in all countries to go daily into Deep Meditation for a few minutes, and thereby to develop their spiritual, mental, and other faculties and thus to become conscientiously useful citizens of human world, rediating love, peace and happiness all around.
(iii) To conduct research in the field of physical and mental health and social behaviour.
(iv To improve the physical and mental health and social behaviour of the people.
(v) To advance the study of, and propagate, Indian Culture all over the world.
(vi) Holding of lectures for the purpose of instructing the people all over the world in the Knowledge and practice of Indian Philosophy, and the Indian Way of Life.
(vii) To conduct research into the psychical and psychological effects of Transcendental Deep Meditation.
(viii) To establish Academies of Meditation.
(ix) To alleviate fears and tensions of the people and to promote Peace of mind.
The copy of the syllabus recommended by the assessee lists 33 lessons of what is termed as the Science of Creative Intelligence (SCI). The nature and benefits of TM have been inimitably expressed by V.R. Krishna Iyer J. while dealing with the mind culture in the case of Hiralal Mallick (supra). It has been described as a science and having a therapeutic effect on the human body and mind. It mentions that extensive studies of TM have been made in many prisons in the USA, Canada, Germany and other countries. It also mentions that a few trial courts in the United States have actually prescribed TM as a recipe for rehabilitation. It has been pointed out in the literature bearing on the subject that TM is not religion and is like physics applied to human consciousness. The Court of Appeals in U.K. in the case of Re. Osmund (supra) held that the system of psychological healing amounted to medical education. In fact in the case of Delius' Will Trusts (supra) the Chancery Division was dealing with aesthetic education. The assessee has given a list of 23 branches which it had in 1980, strewn throughout in India. The assessee has also given a list of numerous schools throughout India where TM instructions are imparted to the students as part of their normal schooling. The order of the learned CIT(A) also gives the names of the various Indian and foreign institution and universities where TM has been adopted as a part of the curriculum. The systematic instruction in TM is initially imparted to the trainers (a copy of their sample biodata has been placed by the assessee on the paper book) and then the trainers (qualified instructors) impart instruction to the trainees. We are of the view that the text of "Systematic Schooling" laid down by the Supreme Court in the case of Sole Trustee, Loka Shikshana Trust (supra), was satisfied by the assessee if we look at its functions and activities. The facts in the case of Rajneesh Foundation (supra) were entirely different. There the Trust Deed envisaged embarking on a number of activities not related to its primary object. There was intermingling of several institutions, each carrying on a different activity but put together not having a common denominator called "education". This decision cannot, therefore, be taken advantage of by the department. In the case of Birla Vidya Vihar Trust (supra) some of the objects of the assessee trust were other than educational. There is no purpose other than educational so far as the assessee foundation is concerned. Therefore, the second ingredient or prerequisite of Section 10(22) is also satisfied. That the assessee foundation does not exist for the purposes of profit is clear from the objects clause of the assessee's Memorandum of Association and in more specific terms, under item 8 at pages 6 & 7 of the said Memorandum of Association, which is in the following terms :-
(8) To undertake and promote any activity that enables the progress of the Societies programme to be self-sufficient through Agriculture, Horticulture, Dairy Farming or conducting household, cottage, Small and Large Scale Industries etc. with the sole motive of bringing fulfilment to the Goals of the Society and without any profit motive ;
This is also clear from the balance sheet & income and expenditure account. We have already noticed that for the A.Y. 1977-78 the assessee had no necessity of agitating the refusal of exemption under Section 10(22) in appeal as it had been granted alternative relief under Section 11. Thus having regard to the cumulative effect of all the relevant facts and circumstances and the position discussed above, we are clearly of the view that the assessee foundation duly established the requirements and qualified for the grant of exemption under Section 10(22). We accordingly uphold the orders of the Commissioner of Income-tax (Appeals). Since the claim of the assessee for exemption under Section 10(22) had been allowed by the learned Commissioner of Income-tax (Appeals), which view we are upholding, no exception can be taken by the department to the fact that the alternative claim of exemption under Section 11 had not been examined by the learned CIT(A).
7. The appeals filed by the department accordingly fail and are dismissed.
