a) The assessee-institution, engaged in educational activities, had filled its return of income claiming exemption under section 10(22). The Assessing Officer (AO) noted that the assessee was receiving part fees from students in India while part of fees was collected in foreign exchange abroad by an arrangement with an organization, SAIESF USA which was out of purview of audit in India to find how the funds were utilized by said organization.
b) AO observed that the expenditure incurred by SAIESF on behalf of the assessee was not allowable as accounts of SAIESF were not audited either by CPA in USA or by any Chartered Accountant in India. Thus, he disallowed the exemption claimed by the assessee.
c) Thus, he denied claim of exemption under section 10(22). On appeal, CIT(A) reversed the order of AO. Aggrieved-revenue filed the instant appeal before the ITAT.
The ITAT held in favour of assessee as under
1) The provisions of section 10(22) for claiming exemption provides that the requirement is that the university or the educational institution must exist solely for educational purposes in India.
2) In other words, the recipient of the income must have the character of an educational institution in India and its character outside India or it being a part of university existing outside India was not relevant for deciding whether its income would be exempt under section 10(22).
3) In the instant case, there was no charge by AO or now by department that the assessee did not exist solely for the purpose of education, hence, there was no infirmity in the order of the Commissioner (Appeals), allowing the claim of exemption to assessee-institution under section 10(22).