ORDER C.L. Sethi, J.M. : 12th April, 2002 All these appeals bearing ITA Nos. 391 to 395/Gau/1995, filed by Department, are against consolidated order of CIT(A) dt. 25th Aug., 1995 passed in matter of assessment made under s. 143(3)/147 of IT Act, 1961 for asst. yrs. 1987-88 to 1991-92 and appeals being ITA Nos. 389/Gau/1995, 390/Gau/1995, 15/Gau/1996, 16/Gau/1996 and 17/Gau/1996 filed by Department, are against consolidated orders of CIT(A) dt. 25th Aug., 1995 for asst. yrs. 1987-88 and 1988-89 and consolidated order of CIT(A), dt. 5th Sept., 1995 for asst. yrs. 1989-90, 1990-91 and 1991-92 in matter of order of penalty passed under s. 221(1) of Act. 2 . All these appeals are being disposed of by this common order for sake of convenience. ITA No. 391/Gau/1995 to 395/Gau/1995; Asst. yrs. 1987-88 to 1991-92 3. Revenue has taken only one common ground of appeal for all five years under consideration which reads as follows : "For that CIT(A) erred in law as well as in facts in cancelling assessment made under s. 143(3)/147". 4 . From orders of assessment, it transpires that proceedings under s. 147 in all years were taken by learned AO on premises that in his opinion exemptions allowed to assessee under s. 10(22) of IT Act, 1961 were erroneous and therefore, income chargeable to tax has escaped assessment. learned CIT(A) has found that no material was brought on record to establish that assessee is not entitled for exemption under s. 10(22); assessee has satisfied all conditions of s. 10(22) of Act and thus, was legally entitled for exemption under s. 10(22) of Act and assessment for all years under appeals were completed on erroneous interpretation of s. 10(22) of Act and on wrong perception of facts. In view of above findings of learned CIT(A), premises itself on which learned AO assumed jurisdiction and initiated proceedings under s. 147 in case of assessee remained no longer valid and hence, he cancelled assessments under present appeals. 5 . We have heard both parties and have considered their rival contentions. We have perused orders of authorities below. We have perused written submissions filed by assessee. 6 . It is therefore, seen that issue involved in these all appeals is regarding claim of exemption under s. 10(22) of Act. On reading of provisions of s. 10(22) of Act, conditions for availability of exemption are : (i) Income should be that of university or other education institution, and (ii) Such institution or university must exist solely for educational purposes and not for purpose of profit. It is, therefore, clear that educational institution or university must exist solely not only for educational purposes but at same must exist not for purpose of profit. It is, therefore, for assessee to prove that educational institution exists solely for education purposes and not for purpose of profit. In order to be entitled to exemption under s. 10(22), assessee must strictly come within terms of provisions of s. 10(22) of Act. If assessee wanted to bring his case within any of exemptions it will be for him to make out case quite clearly within language of exemption granted. It is needless to say that onus of showing that particular class of income is exempt lies on assessee. AO is not supposed to disprove case of assessee unless and until onus lies on assessee is discharged by assessee. 7. On perusal of constitution of assessee, we find amongst others, following stipulation : 1. It is constitution of South Point Montessorie school. 2. school is established for literary purpose among children requiring preliminary education in their childhood, to spread knowledge concerning physical, intellectual, moral, social and mental development of children at their childhood and likewise. 3. It will have executive committee consisting of president, vice president, secretary, treasurer, assistant treasurer as office-bearers and even number of members not exceeding six, not less than four. 4. founder members of school are present principal and headmistress, who will respectively be permanent secretary and permanent treasurer of executive committee. 5. other members of executive committee will be selected from among guardians of children of institution by founder members of school. 6. executive committee shall conduct and manage all businesses of school and have full control of management and finance of school. However, it would be subject to rules and regulations contained in constitution and as well as any other rules and bye-laws that may be made from time to time by committee in general meetings. 7. Except two permanent members as stated above, other members of executive committee are liable to retire by rotation after period of one year but eligible for reselection. On reading aforesaid clauses of constitution of school, it is apparent that principal and head mistress, who are permanent members of executive committee in capacity of secretary and treasurer, respectively were founder members of school. There is nothing mentioned about constitution and nature of general body/assembly of school. Nothing is specified about members of general body of society, their eligibility, powers and functions. It is also seen that executive committee is not elected by general body of school, but its members are selected by two founder members. It is at whims and desire of two founder members who are permanent members of executive committee, to select other members of executive committee. It is, therefore, necessary to enquire into and find out very existence of artificial legal entity, i.e. society and to make enquiry in veil of constitution of school. There is no restriction to lift veil of this artificial legal entity and to pay regard to substance of it. veil may be lifted where taxing statute or beneficial statute is sought to be evaded. memorandum of association is to be examined and verified to find out manner of forming of society in instant case. It is stated by assessee in this constitution about only two founder members of school. It is, therefore, to be found out whether two members could form society under provisions of Societies Registration Act. It is to be examined whether it is permissible for two permanent members only to select other members of executive committee without being elected by general body in case of society registered under Societies Registration Act. enquiry as to essential ingredients to claim exemption under s. 10(22) is to be properly made at end of AO, so that all material facts and materials required to decide issue under appeal are brought on record. We further find that it is nowhere mentioned in constitution that school does not exist for purpose of profit. It is, therefore, to be ascertained from totality of facts and circumstances of case whether school exists for purpose of profit or not. true and correct nature of document (i.e. constitution of school in present case) is to be ascertained not from its form but from its substance. What is real and true intention behind said document is to be ascertained. soul and mind of society is vested in instrument under which it was constituted, and as such instrument i.e. constitution of school is to be examined by its substance and not its form. nomenclature given to it is not decisive. 8 . language of s. 10(22) of Act is plain and clear and availability of exemption should be evaluated each year to find out whether institution existed during relevant year solely for educational purpose and not for purpose of profit as stated by Hon ble Supreme Court in case of Aditanar Educational Institution vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310 (SC). decisive or acid test to find out whether object is to make profit is overall view of matter. In evaluating or appraising overall view of matter one should also bear in mind distinction/difference between corpus, objects and powers of concerned entity. To find out real and true objects of concerned entity, one should look to substance of matter rather than its form. On perusal of constitution it is noticed that it is object of two founder members of society to have permanent post of secretary and treasurer in executive committee and to select other members of committee at their will and desire without specifying therein objective test of such selection. It is, therefore, to be ascertained whether this unrestricted power of two founder members has any bearing on object of society to make profit or not out of its activities. AO may ascertain same also by examining members of executive committee constituted from time to time. AO as well as CIT(A) have not made correct and proper approach to matter in issue as they have failed to take into consideration overall view of case and substance of matter. 9 . As discussed above, we find that overall view of matter is to be evaluated or considered to find out whether assessee is entitled to exemption under s. 10(22) of Act. Hence, without going into question of admissibility or non-admissibility of exemption under s. 10(22) to assessee, we set aside orders of authorities below and to remit assessment back to file of AO to make de novo assessment and to adjudicate issue under appeal afresh in light of observations made above, and as well as in accordance with provision of law contained in that behalf. AO shall provide adequate opportunity of being heard to assessee, who shall be at liberty to furnish or produce such other materials and documents as it deems fit and proper in support of its claim. ITA Nos. 389/Gau/1995, 390/Gau/1995, 15/Gau/1996, 16/Gau/1996 and 17/Gau/1996; Asst. yr. 1987-88 to 1991-92 10. These appeal relate to issue of imposing penalty under s. 221 of Act for non-payment of tax demanded in pursuance to assessment made under s. 143(3)/147 of Act for asst. yrs. 1987-88 to 1991-92. Since assessments made by AO have been set aside by us for making de novo assessments, demands of tax raised therein have become infructuous and penalty imposed under s. 221 of Act is to be cancelled in view of provision as contained in s. 221(2) of Act. We, therefore, cancel penalty imposed under s. 221 of Act for all years under appeal. 1 1 . In result, appeal Nos. 391 to 395/Gau/1995 and 389 and 390/Gau/1995 filed by Department are allowed for statistical purpose and appeal Nos. 15 to 17/Gau/1996 filed by Department are dismissed. N.S. Saini, A.M. : 12th June, 2002 I have benefit of going through proposed order of learned Brother in this case. Though I agree with conclusion as arrived at by learned Brother in ITA Nos. 389 and 390/Gau/1995 and 15, 16 & 17/Gau/1996, but despite my best efforts and great pursuation to myself, I have not been able to agree with conclusion as arrived at by learned JM in ITA Nos. 391 to 395/Gau/1995. reasons for same are incorporated in present order of mine which is as under : 2 . In ITA Nos. 391 to 395/Gau/1995 Revenue has taken only one common ground of appeal for all five years under appeal which reads as under : "For that CIT(A) erred in law as well as in facts in cancelling assessment made under s. 143(3)/147." 3. brief relevant facts of case are as follows : assessee society was registered on 6th March, 1973 with Registrar Of Societies, Assam, Guwahati, vide registration No. 236 of 1972-73. assessee society is running school from 1973. school is recognized by Government of Assam and plot of land was also allotted to assessee society from Government of Assam vide allotment letter No. 16/85/9 dt. 10th April, 1985. assessee society s school syllabus is also recognized by Board of Secondary Education, Assam. AO found that primary object of assessee society is to promote primary education, spread knowledge concerning physical, moral, social and mutual development of children and to co-operate with national and international organisations having similar objectives for furtherance of its aims and objects. AO further observed that assessee society is managed by executive committee consisting of 8 to 10 persons. Shri D.K. Chanda, principal, and Smt. Minati Chanda, headmistress, who are founder members of assessee society are respectively permanent secretary and treasurer of assessee society. salary drawn by them is higher in comparison to salary of other teachers and staff. According to AO, all powers of administration, finance, selection and appointment of teaching staff, etc. are vested in these two founder members and other members of executive committee have no say in aforesaid matters. Shri D.K. Chanda and Smt. Minati Chanda also realised rent from assessee society for accommodation provided by them to school and hire and location of properties, he considered rent paid as much higher than market rent. Observing as above, AO concluded that, in his opinion, institution does not exist solely for educational purposes but also exists for purposes of profits. Thus, as assessee society does not fulfil necessary conditions so as to entitle it for exemption under s. 10(22) of Act, he completed assessments without granting exemption under s. 10(22) of Act. On appeal, CIT(A) in its elaborate order for reasons mentioned therein held that assessee society is eligible for grant of exemption under s. 10(22) of Act. In his opinion, as proceedings under s. 147 of Act were initiated by AO on erroneous interpretation of s. 10(22) of Act and hence, he cancelled assessments of all five years under present appeal. Being aggrieved by this order of CIT(A), Revenue is in appeal before us on grounds mentioned herein before. 4 . learned Departmental Representative vehemently supported order of AO and in his arguments he reiterated observations as made by AO in order of assessments. 5 . On other hand, learned Authorised Representative of assessee has filed paper book and also filed written submission. At outset, he raised one preliminary objection which finds place in para 2 of his outset, he raised one preliminary objection which finds place in para 2 of his written submission. According to him, finding of CIT(A) that assessee has satisfied all conditions for getting exemption under s. 10(22) has been accepted by Revenue and same has not been challenged under present appeals and Revenue has allowed said findings to become final. In case of CIT vs. Indira Balkrishna (1960) 39 ITR 546 (SC), apex Court has held that where Department has not filed any appeal against AAC s finding in favour of assessee, it is not open to Tribunal to go behind finding and arrive at different conclusion. Relying on above decision of Hon ble Supreme Court, he contended that as eligibility of assessee society for availing of exemption under s. 10(22) of Act is not in dispute in present appeals of Revenue as evidenced by ground of appeals taken in memorandum of appeal, same cannot be now interfered with. He submitted that in view of above final finding of CIT(A) which is not in dispute, as very basis on which AO had assumed jurisdiction over this case is no longer subsisting, hence, CIT(A) was fully justified in law in cancelling assessments made under s. 143(3)/147. From copy of letter from CIT, Shillong, which is placed at p. 6 of paper book, it was pointed out that CIT, Shillong, has also, vide its letter No. R-17/73-74/6638, dt. 10th July, 1974, after going through activities and constitution of assessee society, opined that assessee society is educational institution and its income is exempt under s. 10(22) of Act. Further, during all five years under consideration, assessee society had run school on same basis and on similar facts as it had run in subsequent years i.e. after asst. yr. 1991- 92. That grant of exemption under s. 10(22) by AO in subsequent years to assessee society on similar facts evidence that Revenue has conceded that assessee society is eligible for grant of exemption under s. 10(22) and makes these appeals of Revenue as infructuous in light of decision of Hon ble Gauhati High Court in case of Dhansiram Agarwalla vs. CIT (1996) 130 CTR (Gau) 559 : (1996) 217 ITR 4 (Gau), wherein jurisdictional High Court has held that though neither principle of res judicata nor rule of estoppel is applicable to assessment proceedings, yet rule of consistency does apply to such proceedings where there was no change. copy of intimation passed under s. 143(1)(a) in case of assessee society for asst. yrs. 1992-93, 1994-95 and 1996-97 is filed at page Nos. 7 to 9 of paper book. 6. In respect of provisions of s. 10(22) of Act, it was submitted that assessee society is running school and thus, it is educational institution. For above contentions reliance was placed on decisions in CIT vs. Sorabji Nusserwanji Parekh (1992) 107 CTR (Guj) 72 : (1993) 201 ITR 939 (Guj), Sole Trustee, Loka Shikshana Trust vs. CIT 1975 CTR (SC) 281 : (1975) 101 ITR 234 (SC), Katra Education Society vs. ITO 1977 CTR (All) 221 : (1978) 111 ITR 420 (All) and CIT vs. A.M.M. Arunachalam Educational Society (2000) 243 ITR 229 (Mad). As assessee society is carrying on primary activity of educational institution of imparting education by running school, in view of above cited legal decisions, same is educational institution within meaning of s. 10(22) of Act. 7 . copy of certificate of registration of society granted to assessee by Registrar of Societies, Assam, Guwahati, is filed at p. 1 of paper book and copy of constitution on basis of which assessee was granted registration under Societies Registration Act is also filed at pp. 10 to 23 of paper book. It was pointed out from object clause of assessee society as enumerated in art. 3 of constitution of assessee society that all objects of assessee society are educational and assessee society exists for purpose of education only and not for any other purposes whatsoever. Further, it was pointed out from arts. 4(d), 7, 8 and 12 of constitution of assessee society that surplus of assessee society can be utilised for educational purposes only and no portion of same can be utilised for any personal purposes of members of society and for that matter, any non-educational purposes whatsoever. There is no power to any member whosoever to divert fund of society for any purpose other than its objects which all are educational. Thus, view of CBDT s Circular No. F. 194/16-17-IT(AT) quoted in case of Birla Vidya Vihar Trust vs. CIT (1981) 24 CTR (Cal) 307 : (1982) 136 ITR 445 (Cal) at pp. 453-453, assessee society "exists solely for educational purposes and not for purposes of profit", and it is legally entitled for exemption under s. 10(22) of Act. 8. Further, it was submitted that CIT(A) has also not found in orders of assessments in respect of any of years under appeal that any person or individual was entitled to any portion of profit of assessee society or that any part of surplus generated by assessee society in any of years under consideration was utilised for non-educational purposes. It was pointed out from p. 7 of order of CIT(A) that total surplus earned by assessee society during years under appeal was invested in acquisition of fixed assets for school. In fact, surplus generated in years under appeal totals to Rs. 25,25,799 and more than that i.e. Rs. 36,70,089 were invested in same period for acquisition of fixed assets for school. Thus, it has been evidenced that surplus went towards procurement of fixed assets for school and building construction for school. 9. It was also submitted that remarks in orders of assessments regarding management and control of school are factually incorrect and are not based on any material on record. Moreover, same has no relevance for determining eligibility of exemption under s. 10(22) of Act to assessee society. It was contended that as no specific mistake in order of CIT(A) could be pointed out by Revenue, no interference with order of CIT(A) is warranted. 1 0 . I have carefully considered rival submissions and perused orders of both lower authorities and various decisions cited by learned Authorised Representative of assessee. 1 1 . In case of CIT vs. Indira Balkrishna (supra), Hon ble apex Court has held that there was no appeal by Department against findings of AAC that provisions of s. 9(3) were applicable and it was not open to Tribunal to go behind it. In instant case, I find that Department has not appealed against findings of CIT(A) that provisions of s. 10(22) were applicable. only ground taken in memorandum of appeal for all years under consideration is that CIT(A) erred in cancelling assessments made under s. 143/147. Even at time of hearing no leave of Tribunal was sought to raise issue of applicability of s. 10(22) as additional ground of appeal. In circumstances, in view of above decision of Hon ble apex Court, in my considered view, we cannot go behind findings of CIT(A) that income of assessee is exempt under s. 10(22) and can arrive at different conclusion. Thus, on facts of case, as whole of income of assessee is exempt under s. 10(22) and no income chargeable to tax has escaped assessment during years under appeal, in my considered opinion, CIT(A) was justified in cancelling assessments made under s. 147/143(3). My above view also finds support from decisions in cases of CIT vs. Central Provinces Railway Co. Ltd. (1979) 9 CTR (Bom) 247 : (1979) 119 ITR 161 (Bom) and Modi Charitable Fund Society & Anr. vs. ITO (1983) 36 CTR (All) 81 : (1983) 142 ITR 818 (All). 1 2 . Even on merits of case also, I do not find any reason to interfere with order of CIT(A). In instant case, AO has opined that assessee society does not exist solely for purposes of education but also exists for purposes of profits and for this reason he denied exemption under s. 10(22) of Act to assessee. CIT(A) has observed that assessee society exists solely for purposes of education and not for purposes of profits. Thus, dispute is, whether assessee society exists solely for purposes of education and not for purposes of profits or same exists for purpose of profits also. 1 3 . main issue in this case is in narrow compass and determination thereof depends upon true and correct interpretation of s. 10(22) of Act. Sec. 10(22) of Act as it stood at material time reads as under : 10."Income not included in total income In computing to total income of previous year of any person, any income falling within any of following clauses shall not be included . (22) Any income of university or other educational institution, existing solely for educational purposes and not for purposes of profits." 14. On examination of provisions of s. 10(22), conditions precedent to availability of exemption can be stated as thus : (a) Income should be that of university or other educational institution; and (b) Such institution or university must exist solely for educational purposes and not for purposes of profit. 15. In instant case, it has been admitted by both parties that assessee society is carrying on primary activity of educational institution of imparting education by running school. Hon ble Madras High Court in case of CIT vs. A.M.M. Arunachalam Educational Society (supra) has held that society which runs school could be treated as educational institution. status of assessee as registered society is evidenced by certificate of registration granted to assessee society by Registrar of Societies certifying under his hand that assessee society is registered under Societies Registration Act, 1860, which is placed at page No. 1 of paper book. No material has been brought on record by Revenue to show that assessee society was not formed in manner as required under Societies Registration Act or constitution on basis of which registration was granted to it by Registrar of Societies was not in accordance with provisions of Registration of Societies Act. Moreover, Revenue at no stage has disputed status of assessee which is registered society. Hence, in my considered opinion, assessee society is educational institution within meaning of s. 10(22) of Act. 16. Further, let us examine whether assessee society exists solely for educational purposes and not for purposes of profits. In case of Governing Body of Rangaraya Medical College vs. ITO (1979) 117 ITR 284 (AP), it was held that even if certain surplus results on working of society, it cannot be said that institution run by it was so run for purpose of profit so long as no person or individual was entitled to any portion of said profit and said profit was utilised for purpose of and promotion of objets of institution. 17. In this connection, reference may be made to circular of CBDT being Circular No. F. 194/16-17-IT(AT), reproduced from decision in Birla Vidya Vihar Trust vs. CIT (supra) at pp. 453-54) which states : "3. question for consideration is whether educational institution existing solely for education purposes but which shows some surplus at end of year is eligible for this exemption. If profit of educational institution can be diverted for personal use of proprietor thereof, then income of educational institution will be subject to tax. However, there may be cases where educational institution may be owned by trust or societies to whom provisions of s. 11 may be applicable. Where all objects of these trusts are educational and surplus, if any, from running educational institution is used for educational purposes only, it can be held that institution is existing for educational purposes and not for purposes of profit. However, if surplus can be used for non-educational purposes, it cannot be said that institution is existing solely for educational purposes and such institution will not be liable for exemption under s. 10(22). But, in such cases, applicability of s. 11 can be examined and if conditions laid down therein are satisfied, income will be exempt under s. 11." (Underline, italicised in print, supplied) Thus, society whose all objects are educational and surplus for running educational institution can be used for educational purposes only and not for any non-educational purpose, society or institution shall be held to be "existing for educational purposes and not for purposes of profit" and shall be entitled for exemption under s. 10(22) of Act. word "surplus" means excess of income over expenditure i.e. profit. 18. Further, in case of IAC vs. Matrusri Educational Society (1994) 49 TTJ (Hyd) 146 : (1994) 48 ITD 583 (Hyd), Hon ble Tribunal has held that society registered under Societies Registration Act like company under Companies Act, 1956, was artificial legal entity, its soul and mind vested in instrument under which it was constituted. Anything contrary to provisions in instrument under which it was constituted would be ultra vires and void ab initio and not binding upon it, such action could not be ratified by all members taken together until object clause wherein purpose of its existence lay were amended and approved under provisions of Act under which it was incorporated. purpose of existence of artificial legal entity like society should be enquired into and found in instrument under which it was constituted and when that proves that its sole purpose is education, no further enquiry would be necessary to grant exemption under s. 10(22). Here, it may be pertinent to point out observation of Hon ble Madras High Court in case of CIT vs. L.G. Ramamurthi & Ors. 1977 CTR (Mad) 416 : (1977) 110 ITR 453 (Mad), wherein it has been observed that "no Tribunal, if fact, has any right or jurisdiction to come to conclusion entirely contrary to one reached by another Bench of same Tribunal on same facts." 19. In view of above position of law, now let us examine that instrument under which assessee society is constituted and registered under Societies Registration Act, 1860 to ascertain purpose of its existence. copy of constitution of assessee society is filed at page Nos. 10 to 23 of assessee s paper book. Article (1) and (2) prescribe name and place of assessee society. Article (3) prescribe aims and objects of assessee society which all are educational. Article (4) relates to constitution of executive committee. Article (5) prescribes duties and powers of executive committee. Article (6) prescribes that except two permanent members other members of executive committee shall retire after period of one year but are eligible for reselection. art. (7) provides that surplus generated by assessee shall be transferred to fund account. Article (8) provides that amount of fund account shall be utilised only for development and promotion of object of school and it also specifically provides that no portion thereof shall be paid, transferred directly or indirectly by way of profit to any office-bearer or member of executive committee. At end art. (12) provides that in case of dissolution, properties remaining will be handed over according to ss. 13 and 14 of Societies Registration Act, 1860. 20. Thus, enquiry into constitution of assessee society reveals that all objects of assessee society are educational and surplus generated can be utilised for promotion of said object only. There is specific prohibition in constitution of assessee society to distribute or specific prohibition in constitution of assessee society to distribute or transfer any portion of its surplus to any member of executive committee. Even at time of dissolution of society, in accordance with ss. 13 and 14 of Societies Registration Act, 1860, all properties and assets of society shall be transferred to another society having similar or substantially similar objects and no portion of said properties or assets shall even at that time be distributed to any of members of society including founder members. 21. From facts on record, it is also observed that surplus generated in years under appeal totals to Rs. 25,25,799 and more than that i.e. Rs. 36,70,089 were invested in same period for acquisition of fixed assets for school. Thus there is no evidence that executive committee members have utilised profits of assessee society for their personal purposes. purpose (sic) had been shown to have been utilised for expansion of school activities. Further, surplus went towards procurement of fixed assets of school and building construction of school. 22. In view of above facts, as no person or individual is entitled to any portion of surplus of assessee society and further as all surplus of assessee society was utilised towards promotion of its objects which all are educational, in my considered opinion, it cannot be held that assessee society also exists for purpose of profit. My view also finds support from decision of Hon ble Orissa High Court in case of Secondary Board of Education vs. ITO (1972) 86 ITR 408 (Ori). As assessee society cannot be held to exist for purpose of profits during year under consideration and as same is educational institution existing solely for purpose of education, I find that assessee society satisfies all conditions of s. 10(22) of Act and is eligible for grant of exemption under that section. 2 3 . From reading of clauses of art. (5) of constitution of assessee society it shows that power like management and finance of school, appointment of teaching and other staff etc. are vested with executive committee of assessee society. As per cl. (k) of art. (5), decisions and resolutions of executive committee shall be passed by 2/3rd, majority of its members. As per cl. (a) of art. (4), such executive committee shall always consists of at least another eight persons apart from two founder members, viz. D.K. Chanda and Smt. Minati Chanda. said two founder members have no right to expel any member of executive committee. Thus, remarks of AO regarding control and management of school is in realm of surmises and conjecture and same is not based on any relevant materials. 24. Further, no material was brought on record to show that salary and rent paid by assessee society to principal and headmistress were unreasonable and excessive. It is observed that even AO has in computing total income of assessee allowed full deduction for salary and rent paid for all years under appeal. Therefore, in my considered view, observation of AO is without any merit. I also draw support for above view from decision in case of Maharishi Institute of Creative Intelligence vs. Asstt. CIT (1997) 58 TTJ (All) 558 : (1997) 62 ITD 169 (All). 25. My view also find supports from following decisions : (1) St. Joseph s Upper Primary School vs. ITO (1983) 16 TTJ (Hyd) 389 : (1983) 4 ITD 231 (Hyd) In this case assessee society which was registered under Societies Registration Act, had as its objects, promotion of educational institutions and was actually organizing and running upper primary school. One of school buildings was owned by headmistress who was also daughter-in-law of founder secretary. She had constructed building partly out of loan taken from society. society earned surplus and claimed exemption under s. 10(22) of Act. This was disallowed by ITO and AAC. Tribunal held that contention that benefit had enured to owner of building was not tenable since it was not shown that rent paid was more than market rent. Under Societies Registration Act, funds have to be utilised for running educational institution and hence this was case where surplus could not be diverted in any purpose other than objects of society. Tribunal directed for allowance of exemption under s. 10(22) to society. (2) In case of CIT vs. Cherupushpam Hospital Trust (1990) 181 ITR 512 (Ker), distinction between objects and power is drawn at p. 515. It is obvious that payments made as salary and rent are to be charged to working expenses of assessee society; payments, are made as incidental or ancillary power for attainment of main objects of assessee society which are educational. (3) In case of CIT vs. Pulikkal Medical Foundation (P) Ltd. (1994) 120 CTR (Ker) 457 : (1994) 210 ITR 299 (Ker), Hon ble High Court has held that as long as dominant purpose is philanthropic one, mere circumstances that managing director or director gets some advantage or exercises some patronage while running institution, will not be ground to hold that main purpose of institution is not philanthropic. These benefits would be merely incidental to carrying out of main or primary purpose and so, such benefit would not militate against philanthropic purpose of institution. As long as purpose of earning profits is to expend such profit for achievement of main philanthropic purpose, assessee may carry on any activity for profit. profit should be re-deployed in same institution or in another similar institution. (4) In case of Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC), it was held by five Judge Bench of Supreme Court that though objects specified in some clauses of memorandum of association of assessee would benefit members of assessee, benefit would be incidental to carrying out of main primary purpose and that if primary purpose of assessee was charitable subsidiary objects set out in those clauses would not militate against its charitable character. (5) In case of Aditanar Educational Institution vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310 (SC), it was held that overall view is to be taken and without being hyper-technical in granting exemption under s. 10(22) of Act. In evaluating or apprising above, one should also bear in mind distinction/difference between corpus, objects and power of concerned entity. (6) In case of Shanti Devi Progressive Education Society vs. Asstt. DIT (Exemption) (1999) 66 TTJ (Del)(TM) 181 : (1999) 68 ITD 1 (Del)(TM), it was observed that assessee formed society on basis of memorandum o f association and rules and regulations framed in this regard. society was registered by Registrar of Societies. memorandum of association has even taken care of distribution of assets in case of dissolution of society. Revenue authorities raised objection in regard to award of contract for construction of school building to concern which is family concern in which members of society have substantial interest. It is, however, pointed out that there was no evidence that concern, namely, Ahluwalia Construction Co. derived undue profit out of construction work. It is also seen that assessee neither distributed any profit nor applied profits for benefit of managing committee. In such case mere suspicion cannot replace hard facts. Hon ble Tribunal having regard to facts held that assessee is entitled to exemption under s. 10(22) of Act. 26. In circumstances, I am of considered opinion that order of CIT(A) was passed after proper appreciation of all facts of case. No mistake in order of CIT(A) could be brought on record by Revenue. Viewed thus, on facts of case, no interference with order of CIT(A) is called for and appeals of Department are dismissed. 27. In result, all five appeals of Department are dismissed. REFERENCE UNDER S. 255(4) OF IT ACT, 1961 C.L. SETHI, J.M. : 21st June, 2002 We having differed on point in above appeals (ITA Nos. 391 to 395/Gau/1995) filed by Department, refer following points of difference to Hon ble President of Tribunal under provisions of s. 255(4) of IT Act, 1961 for necessary orders as President may desire : (1) Whether on facts and circumstances of case and where C I T ( ) has cancelled assessment for all five years under consideration by observing "For want of such reasonings and narration of facts which would establish that appellant society was established for purpose of running school to earn profits, I hold that assessments for all these five years had been completed on erroneous interpretation of s. 10(22) of Act, wrong perception of fact and, therefore, accordingly cancelled" and where Revenue has raised grounds as follows : "(1) For that CIT(A) erred in law as well as in facts in cancelling assessment made under s. 143(3)/147. (2) For that any other ground or grounds may be allowed to be raised at time of hearing." It is justified on part of AM to hold that Department has not appealed against findings of CIT(A) that provision of s. 10(22) was applicable and as such this Tribunal cannot go behind findings of CIT(A) that income of assessee is exempt under s. 10(22) and can arrive at different conclusion ? (2) Whether, on facts and circumstances of case, JM is justified in remitting assessment back to file of AO to make de novo assessment as he found it fit and proper that overall view of matter is to be evaluated or considered to find out whether assessee is entitled to exemption under s. 10(22) of Act ? (3) Whether, on facts and circumstances of case, assessee is entitled to exemption under s. 10(22) of Act ? N.S. SAINI, A.M. 5th July, 2002 In these appeals there is difference of opinion between Members. In view thereof, issue is referred to Hon ble President of Tribunal under s. 255(4) of IT Act, 1961, for opinion of Third Member on issue which are framed as under : (1) Whether, on facts and circumstances of case, can appeal be disposed of by Tribunal without recording any finding on contention raised by respondent that Tribunal has no authority to go behind finding of CIT(A) in respect of eligibility of exemption under s. 10(22) of finding of CIT(A) in respect of eligibility of exemption under s. 10(22) of Act to assessee as Revenue has not filed any appeal against above finding of CIT(A) ? (2) Whether, on facts and circumstances of case, and more particularly in view of finding of CIT(A) that assessee society does not exist for purpose of profit and exist solely for purpose of education and in view of decision of apex Court in case of CIT vs. Indira Balkrishna (1960) 39 ITR 546 (SC), can Tribunal go behind finding of CIT(A) that income of assessee is exempt under s. 10(22) of Act and arrive at different conclusion ? (3) Whether, on facts and circumstances of case and in view of finding of CIT(A) which implies that whole of income of assessee is exempt under s. 10(22) and thus, no income chargeable to tax has escaped assessment, CIT(A) was justified in cancelling assessments made under s. 147/143 of Act ? (4) Whether, on facts and circumstances of case, there was any material on record to show that assessee society was not formed in manner as required under Societies Registration Act or constitution on basis of which registration was granted by Registrar of Societies to it was not in accordance with provisions of Societies of Registration Act ? (5) Whether, on facts and circumstances of case, order of CIT(A) can be set aside to verify manner of formation of assessee society ? (6) Whether, on facts and circumstances of case and in view of decision of Tribunal in case of IAC vs. Matrushri Educational Society (1994) 49 TTJ (Hyd) 146 : (1994) 48 ITD 583 (Hyd), purpose of existence of assessee society is to be enquired into and found from its constitution only for granting exemption under s. 10(22) of Act or any other enquiry is necessary for aforesaid purpose ? (7) Whether, on facts and circumstances of case, enquiry into constitution of assessee society evidence that assessee exists for any purpose other than purposes of education ? (8) On facts and circumstances of case, in terms of s. 10(22) of Act was there any material on record to show that assessee society exists for purpose of profits also ? (9) In view of decision of Tribunal in case of IAC vs. Matrushri Educational Society (supra) and in view of decision of apex Court in case of Aditanar Educational Institution vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310, 318 (SC), whether it can be held that unrestricted powers of two founder members of assessee society to select members of executive committee can have any bearing on object of assessee society ? (10) Whether, on facts and circumstances of case any interference with order of CIT(A) is warranted in respect of matter of eligibility of assessee for grant of exemption under s. 10(22) of Act ? Vimal Gandhi, President (As Thrid Member) 8th Feb., : 2007 On account of difference between Hon ble Members of Gauhati Bench of Tribunal, above appeals were referred to me under s. 255(4) of IT Act, 1961 (the Act). In fact, I find that there is no difference in five appeals, viz., ITA Nos. 389 and 390/Gau/1996 and ITA Nos. 15 to 17/Gau/1996. Both Members have agreed on orders proposed by learned JM and above appeals have already been disposed of. 1.1 learned Members did not agree even on questions which were required to be referred covering points of difference between Members. learned JM proposed three questions to which learned AM did not agree. He has proposed 10 different questions. With consent of learned representatives of parties. I framed following question covering controversy for hearing of appeals : "Whether, on facts and in circumstances of case, consolidated order of CIT(A) dt. 25th Aug., 1995 is required to be upheld, as proposed by learned AM or matter requires to be set aside for making de novo assessment, as proposed by learned JM ?" 2. facts of case are that assessee is society duly registered under Societies of Registration Act, 1860, and was running public school in periods relevant to asst. yrs. 1987-88 to 1991-92. society is also recognized by Government of Assam. It is also approved by Secondary Board of Education, Assam. It was treated as society existing for running school and was granted exemption under s. 10(22) of Act in past years. Even in five assessment years before me, society was granted exemption, but proceeding was reopened under s. 147 of Act. assessee did not challenge reopening of proceeding in appeal before CIT(A) and, therefore, details relating to reopening are neither available on record nor being discussed. 2.1 main order for denying exemption to assessee society under s. 10(22) of Act was passed on 30th March, 1994 for asst. yr. 1987-88 and it was applied in other four assessment years. In said order, learned AO has recorded that primary object of society is to promote preliminary education, spread knowledge concerning physical, moral, social and mutual development of children and to co-operate with national and international organizations having similar objectives for furtherance of its aims and objects. learned AO gave following reasons for denying exemption to assessee : (a) That principal, Sri D.K. Chanda, and his wife, Smt. Minati Chanda, are founder members and hold posts of principal and director of school, respectively. These people enjoy absolute control in matters of administration, finance, appointment of staff and also select other members of executive committee running school. (b) That it is not known in what manner Sri D.K. Chanda and his wife occupy posts of secretary and treasurer permanently in executive committee of assessee institution. (c) That norms of appointment of principal of school are also not known. Sri D.K. Chanda and his wife are drawing salary @ Rs. 2,500 per month, whereas salary of other teaching staff varied from Rs. 400 to Rs. 950 per month. It is thus clear that Sri Chanda and his wife are drawing much higher salary than other teachers. (d) That other members of executive committee have no say in management and affairs of school which is personal business of founder members. (e) That Sri D.K. Chanda and his wife have let out their accommodation to school and realized rent of Rs. 18,000 and Rs. 12,000, respectively. (f) That rent (hire) paid is considered to be much higher than market rent. assessee failed to establish that rent paid was reasonable and represented market rent. 2.2 For aforesaid reasons, AO held that institution did not exist solely for educational purposes but also for purposes of profits. It was observed that assessee did not fulfil necessary conditions for getting exemption under s. 10(22) of Act. school exists for purposes of earning income. It is merely name created for making profit and founder members made it educational institution so as to get income-tax benefit. In this way exemption was denied and total income of assessee was subjected to tax. 3. assessee against impugned assessments was in appeal before CIT(A). As already mentioned above, assessee did not challenge initiation of proceeding under s. 147 of Act. It challenged denial of exemption to assessee under s. 10(22) of Act. 4. In appellate proceedings, representative of assessee brought to notice of learned CIT(A) that executive committee of school consists of president, vice-president, secretary and treasurer and assistant treasurer who are office-bearers. It consisted of members not exceeding six but not less than four. Sri D.K. Chanda and his wife were founder members of society and thus enjoy permanent membership. learned representative then drew attention of various objections raised by AO in impugned order. These are noted by CIT(A) in paras 2.3 to 2.5 of order. Clarifications on objections of AO were given and are noted by learned CIT(A) in para 2.6 of order. It was pointed out that assessee society was registered with Registrar of Societies on 6th March, 1973. learned representative then drew attention of CIT(A) to three objects of society. These are reproduced in impugned order in paras 2.6 and 2.7. It was explained with reference to s. 10(22) of Act that assessee institution did not exist for profit but existing solely for education purposes. In order to meet objection of AO that salary to Sri D.K. Chanda and Smt. Minati Chanda was more than what was paid to other teachers, educational qualifications and details of salary paid to above persons from year to year were furnished and same are discussed in impugned order in paras 2.11 to 2.13 of order. With reference to details furnished, it was submitted that salary paid to Sri D.K. Chanda and other members of his family cannot be said to be unreasonable salary considering their qualifications and devotion to duty. None of them was given preferential treatment which was not given to other staff. It was pointed out that salary paid was as per resolution of executive committee dt. 28th Feb., 1982. It was explained that out of assets disclosed in balance sheet, landed property was standing in name of school. Evidence and record of Guwahati Municipal Corporation were filed in support of above claim. It was explained that profits/funds of society were used for promoting its main object and not for benefit of members of society. Details of investment made were furnished to learned CIT(A) and are noted in impugned order in paras 2.15 to 2.17. It was submitted that conclusion of AO that appellant-society existed only for Sri D.K. Chanda and his wife was erroneous. Clarification was also issued relating to rent realized by Sri D.K. Chanda and his wife. 4.1 It was further pointed out that AO himself has admitted in para 1, p. 2 of assessment order that appellant had come into existence solely for educational purposes. AO has further not established that appellant had carried on any other activity for profit in violation of s. 10(22) of Act. It was explained that profit earned as surplus and invested for acquisition of fixed assets cannot be considered as violation of s. 10(22) of Act. Reliance in this connection was placed on three decisions noted by CIT(A) in para 2.25 of his order, which are as under: (i) Governing Body of Rangaraya Medical College vs. ITO (1979) 117 ITR 284 (AP) (ii) Secondary Board of Education vs. ITO (1972) 86 ITR 408 (Ori) (iii) CIT vs. Sindhu Vidya Mandal Trust (1983) 32 CTR (Guj) 263 : (1983) 142 ITR 633 (Guj) (iv) CIT vs. Academy of General Education (1984) 38 CTR (Kar) 239 : (1984) 150 ITR 135 (Kar). These decisions are discussed by learned CIT(A) in paras 2.30 and 2.31 of order. sum and substance of decision in case of Governing Body of Rangaraya Medical College (supra) is that for certain surplus arising from operation, it cannot be held that institution is being run for purposes of profit so long as no person or individual is entitled to any portion of said profit and said profit is used for purposes and for promotion of object of institution. other decisions are also to same effect. 5 . learned CIT(A) held that assessee society was entitled to exemption under s. 10(22) of Act with following observations : "2.32. In case under appeal, apart from discussing mode of running institution i.e., appellant society, salaries to principal and headmistress and also other teaching members, payment of rent for school premises to principal and headmistress, AO has not been able to establish with cogent reasons and findings that institution of appellant society was being run for purposes of earning profit although AO had admitted in para 3 of p. 2 of his order that object of institution was to promote preliminary education, spread knowledge concerning physical, moral, social and mutual development of children and to co-operate with national and international organizations having similar objectives for furthering of its aims and objects. Over and above facts narrated in furthering of its aims and objects. Over and above facts narrated in foregoing paras, AO has not given any other reasons in support of his conclusion that institution did not exist solely for educational purposes, but also for purpose of profit. He has also failed to controvert and establish that school or institution had not been established for purposes as mentioned by him in para 3 of p. 2 of his order, (narrated herein before). For want of such reasonings and narration of facts which would establish that appellant society was established for purpose of running school to earn profit, I hold that assessments for all these five years had been completed on erroneous interpretation of s. 10(22) of Act, wrong perception of fact and, therefore, accordingly cancelled. 2.33. Since assessments have been cancelled, no other grounds are taken up." 6 . Revenue challenged above decision of CIT(A) before Tribunal by raising ground that CIT(A) erred in law as well as in fact in cancelling assessment made under s. 143(3)/147 of Act. learned Members after hearing appeals were unable to agree with proposed order. learned JM, who proposed leading order, was of view that it was for assessee to show that all conditions of s. 10(22) of Act were satisfied and thus assessee was legally entitled to exemption under above section. He noted provisions of s. 10(22) of Act in his order and observed that educational institution or university must exist solely not only for educational purposes but at same time must exist not for purposes of profit. onus was on assessee to prove that educational institution exists not for purposes of profit. assessee is claiming exemption and, therefore, AO is not supposed to disprove case of assessee. He thereafter noted constitution of assessee. He noted that principal and headmistress are permanent members of executive committee in capacity of secretary and treasurer respectively as founder members of school. On facts of case, he concluded that it was necessary to enquire into and find out very existence of artificial legal entity, i.e. society and to make enquiry in veil of constitution of school. There is no restriction to lift veil of this artificial legal entity and to pay regard to substance of it. veil may be lifted where taxing statute or beneficial statute is sought to be evaded. memorandum of association is to be examined and verified to find out manner of forming society in instant case. It is required to be ascertained from totality of facts and circumstances of case whether school exists for purposes of profit or not. What is real and true intention behind said document is to be ascertained. He referred to decision of Supreme Court in case of Aditanar Educational Institution vs. Addl. CIT (1997) 139 CTR (SC) 7 : (1997) 224 ITR 310 (SC) and has observed that to find out real and true object of entity, one should look into substance of matter rather than its form. With reference to assessee, learned JM observed, "it is object of two founder members of society to have permanent post of secretary and treasurer in executive committee and to select other members of committee at their will and desire without specifying therein objective test of such selection. It is, therefore, to be ascertained whether this unrestricted power of two founder members have any bearing on object of society to make profit or not out of its activities." To justify remand of matter, learned JM observed that AO as well as CIT(A) did not adopt correct and proper approach to matter in issue as they failed to take into consideration overall view of case and substance of matter. He, therefore, proposed that orders of Revenue authorities be set aside and matter remitted back to file of AO for de novo assessment. 7 . learned AM did not agree with order proposed by learned JM. He noted that assessee society was registered on 6th March, 1973 with Registrar of Societies, Assam. assessee started running school since 1973. school was recognized by Government of Assam and plot of land was allotted to society by Government on 10th April, 1985. school is also recognized by Board of Secondary Education, Assam. AO also found that object of assessee society was charitable. learned AM also noted objections raised by AO for denying exemption to assessee under s. 10(22) of Act. He also noted elaborate discussions made by learned CIT(A) while holding that assessee was eligible for exemption under s. 10(22) of Act. 7 . 1 learned AM further noted submissions of learned 7 . 1 learned AM further noted submissions of learned Departmental Representative and learned Authorized Representative of assessee in paras 4 and 5 of his proposed order. It was also noted that in subsequent years, i.e. after asst. yr. 1991-92, exemption under s. 10(22) of Act was granted to assessee by AO. He also noted arguments of assessee that when in subsequent years Revenue has conceded that assessee society is entitled to exemption under s. 10(22) of Act, then these appeals have become infructuous in light of decision of jurisdictional High Court in case of Dhansiram Agarwalla vs. CIT (1996) 130 CTR (Gau) 559 : (1996) 217 ITR 4 (Gau). case law relied upon by representative of assessee in support of his claim and circular of CBDT on this point are noted by learned AM in paras 6 and 7 of his proposed order. In para 8 of proposed order, he has specifically noted that it has not been found that any person or individual was entitled to any portion of profit of assessee society or that any part of surplus generated by assessee society in any previous year under consideration was to be utilized for non-educational purposes. learned AM also noted that investment made in acquiring fixed assets for school was more than surplus generated. It was thus evident that surplus fund went towards procurement of fixed assets for school and construction of building of school. In para 9, learned AM noted that remarks in assessment order regarding management and control of school were factually incorrect and based on no material. Moreover, objections raised by AO had no relevance for determining eligibility of exemption. After considering facts and circumstances of case and submissions of learned representatives of both parties, learned AM held that case of Revenue is based upon suspicion and that learned CIT(A) passed impugned order after appreciation of all facts of case. No interference with order of CIT(A) was called for. He thus dismissed all five appeals of Revenue. 8 . For reaching above conclusion, learned AM noted decision of apex Court in case of CIT vs. Indira Balkrishna (1960) 39 ITR 546 (SC) and held that Tribunal had no power to go behind ground raised in appeal. He held that Department did not challenge finding of CIT(A) that provisions of s. 10(22) of Act are applicable. In light of ground raised, he held that Tribunal had no power to go beyond conclusion of learned CIT(A) relating to exemption under s. 10(22) of Act. 9 . On question whether assessee was entitled to exemption under s. 10(22) of Act, learned AM took into account provisions of above section and conditions on which exemption was available. He noted decision of Hon ble Madras High Court in case of CIT vs. A.M.M. Arunachalam Educational Society (2000) 243 ITR 229 (Mad), wherein it was held that society which runs school would be treated as educational institution. He n o t e d that assessee was society registered under Societies Registration Act, 1860. Revenue did not show that registration was not granted to society in accordance with law. He, accordingly, treated assessee as society and educational institution for purposes of s. 10(22) of Act. He also relied upon decision in case of Governing Body of Rangaraya Medical College vs. ITO (supra) to hold that even if certain surplus resulted in working of society, it could not be said that society was being run for profit so long no individual was entitled to any part of said profit/surplus. learned AM also made reference to Circular No. F. 194/16-17 IT(AT) and highlighted following portion of circular : "Where all objects of these trusts are educational and surplus, if any, from running educational institution is used for educational purposes only, it can be held that institution is existing for educational purposes and not for purposes of profit. However, if surplus can be used for non- educational purposes, it cannot be said that institution is existing solely for educational purposes and such institutions will not be liable for exemption under s. 10(22)," to show that surplus of society cannot be used for non-educational purposes. learned AM referred to articles of assessee society and observed as under : "The art. (7) provides that surplus generated by assessee shall be transferred to fund account. Article (8) provides that amount of fund account shall be utilized only for development and promotion of object of school and it also specifically provides that no portion thereof shall be paid, transferred directly or indirectly by way of profit to any office-bearer or member of executive committee. At end art. (12) provides that in case of dissolution, properties remaining will be handed over according to ss. 13 and 14 of Societies Registration Act, 1860." 10. After enquiring into constitution of assessee society, learned AM observed that all objects of assessee society were educational and surplus generated could be utilized for promotion of said object only. There was specific provision (sic-prohibition) in constitution of assessee society to distribution or transfer of this surplus to any member during its existence or on dissolution of society. All properties and assets of society are to be transferred to another society having similar objects at time of dissolution of society. He also found that surplus generated in year under appeal was Rs. 25,25,799 against which assessee had invested more, i.e. Rs. 36,70,089 in fixed assets acquired for school. There was no evidence that executive committee members have utilized profit of assessee society for personal purposes. purpose of society had been expansion of school. He, accordingly, held that assessee was rightly allowed exemption under s. 10(22) of Act. He also discussed factual remarks made by AO in assessment orders regarding control and management of school but held them to be based on surmises and conjectures and not on any relevant material. In support of his conclusion, learned AM relied upon following decisions : (a) Secondary Board of Education vs. ITO (supra) (b) Maharishi Institute of Creative Intelligence vs. Asstt. CIT (1997) 58 TTJ (All) 65 8 : (1997) 62 ITD 169 (All) (c) St. Joseph s Upper Primary School vs. ITO (1983) 16 TTJ (Hyd) 389 : (1983) 41 ITD 231 (Hyd) (d) CIT vs. Cherupushpam Hospital Trust (1990) 181 ITR 512 (Ker) (e) CIT vs. Pulikkal Medical Foundation (P) Ltd. (1994) 120 CTR (Ker) 457 : (1994) 210 ITR 299 (Ker) (f) Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) (g) Aditanar Educational Institution vs. Addl. CIT (supra) (h) Shanti Devi Progressive Education Society vs. Addl. Director of IT (Exemption) (1999) 65 TTJ (Del)(TM) 181 : (1999) 68 ITD 1 (Del)(TM). 11. In light of above difference, matter has been brought before me. I have heard learned representatives of both parties. learned Departmental Representative drew my attention to order of CIT(A) and argued that assessee did not plead for cancellation of assessments. In spite of above, learned CIT(A) cancelled assessments. In fact, reopening of assessments was not challenged before CIT(A) and this fact cannot be disputed even by opposite party. learned Departmental Representative further submitted that in impugned order it was not appreciated by learned CIT(A) that onus to prove that school did not exist for profit was on assessee and same was not discharged. learned CIT(A) failed to record any finding that assessee institution did not exist for profit. Thus, onus was wrongly placed on Department to show that assessee was not entitled to exemption under s. 10(22) of Act, whereas exemption was being claimed by assessee. Accordingly, cancellation of assessments and grant of exemption to assessee by learned CIT(A) was challenged by learned Departmental Representative during course of hearing of appeal. 12. learned counsel for assessee, on other hand, supported impugned order of learned CIT(A), as also proposed order of learned AM. He reiterated submissions noted and accepted by learned AM. He argued that objections raised by AO in assessment orders relating to salary and rent received by Sri D.K. Chanda and his wife were factually incorrect as noted in detail by learned CIT(A). Under Societies Registration Act, it is necessary that 7 founder members be there and, therefore, learned JM was factually incorrect in holding that there were only two founder members in this case. learned counsel stated that object of society was to run school as clearly noted and appreciated by learned AM in his proposed order. Profit/surplus of society could only be used for purposes of school is clear from arts. 7, 8 and 12, which were as under : "(7) Any surplus or deficit in particular years as revealed in accounts will be transferred to fund account. Such surplus or deficit should be arrived at after meeting such expenditures as may be approved by executive committee. (8) amount of fund account shall be utilized only for development and promotion of object of school and no portion thereof shall be paid, transferred directly or indirectly by way of profit to any office-bearer or member of school. (12) If necessary, society will be dissolved and properties remain will be handed over according to ss. 13 and 14 of Societies Registration Act, 1860." 12.1 It is thus clear that object and purpose of society are to run school. It is existing for education and not for profit. learned counsel also pointed out that even learned JM did not rely upon any of findings recorded by AO (except erroneous finding that there were only two founder members) and embarked upon and directed to carry new enquiry and investigations not made by AO. observations of learned JM were against law as Tribunal cannot make out new case. He relied upon decisions of Andhra Pradesh High Court in case of CIT vs. G.M. Chennabasappa (1959) 35 ITR 261 (AP) and Bombay High Court in case of J.B. Greaves vs. CIT (1963) 49 ITR 107 (Bom). He also relied upon decision of Third Member in case of Nopany Education Trust vs. Addl. Director of IT (Exempt.) (2005) 92 TTJ (Kol)(TM) 1143 : (2005) 93 ITD 152 (Kol)(TM) where Third Member after considering all relevant case laws including decisions in cases of Aditanar Educational Institution vs. Addl. CIT (supra), CIT vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad), Governing Body of Rangaraya Medical College vs. ITO (supra) and CIT vs. Nagpur Hotel Owners Association (2001) 1 65 CTR (SC) 7 : (2001) 247 ITR 201 (SC) held that after meeting expenditure, if any surplus results incidentally from activity lawfully carried on by educational institution, it would not cease to be one existing solely for education purposes, since object was not to make profit, and surplus, if any, was incidental to dominant and primary object. learned counsel for assessee, accordingly, supported proposed order of learned AM. 1 3 . After careful consideration of rival submissions of parties, material on record, proposed orders of learned Members and facts of case, I see no good reason to agree with order proposed by learned JM. It is clear from perusal of constitution of assessee institution that its main object is to run and expand school. Thus, assessee is institution existing solely for educational purposes. There is no material on record to show that society is existing for purposes of profit. Even AO in assessment order, did not challenge fact that assessee was existing for educational purposes. Learned AO s objection that Sri D.K. Chanda and his wife were exercising excessive control or were taking more than reasonable remuneration or rent is factually incorrect. Correct figures and circumstances are noted by learned CIT(A) in impugned order. In fact, 2 or 3 circumstances mentioned by AO do not lead to conclusion that assessee is existing for purposes of profit. There are specific objects in constitution of assessee society prohibiting use of profit for benefit of any individual. It is to be used for purposes of school during its existence and even on dissolution of institution. Relevant objects have been noted above in detail and also in proposed order of learned AM. assessee society was granted exemption under s. 10(22) of Act in past and also in future and it was, therefore, for Revenue to show that said exemption was wrongly granted and assessee, in fact was existing for purposes of profit. No such case was made by Revenue. Burden of proof in this case was rightly placed by CIT(A). It is true that Revenue can for purposes of allowability of exemption under s. 10(22) evaluate each year to find out whether institution existed during relevant year solely for educational purposes or for purposes of profit. But then this has to be done by Revenue. assessee can only put all material facts, its activities and income from which reasonable inference is to be drawn by AO and case made out against assessee that it existed for profit. How can assessee prove that it is not existing for profit ? No attempt was made by AO in present case to deny exemption to assessee. learned CIT(A), on other hand, gathered relevant facts and evidence to show that assessee existed solely for educational purposes and not for profit. In my considered opinion, learned CIT(A) approached problem in proper perspective and rightly decided issue after elaborate discussion. I do not find any error in his approach. learned JM, on other hand, tried to give second innings to Revenue without justifying it on facts of case. He also wrongly stated that it was for assessee to show that it did not exist for purposes of profit. It is not deemed necessary to repeat all that has been stated by learned CIT(A) and by learned AM in their proposed orders. I agree with their reasonings and for additional reasons noted above, confirm impugned order of learned CIT(A). 13.1 During course of hearing before me, learned Departmental Representative vehemently contended that learned CIT(A) was wrong in cancelling assessments in this case when nobody sought cancellation of orders. I have considered above objection. It is true that CIT(A) has used words "assessment is cancelled", but his order is to be read as whole and when so done, he has held that assessee is entitled to exemption under s. 10(22) of Act and, therefore, this reassessment in this case was not necessary. I see no such illegality in order of CIT(A) vitiating order on above count and find no force in contention raised by learned Departmental Representative. In view of above discussions, I disagree with order proposed by learned JM. 14. order passed in this case may be placed before regular Bench for passing consequential order under law in accordance with majority view. By Bench : 22nd March, 2007 Hon ble President, Shri Vimal Gandhi, Tribunal, being Third Member, after hearing counsels of parties on 8th Feb., 2007 has opined that assessee is entitled for exemption under s. 10(22) of IT Act, 1961. reassessment in this case was not necessary and no illegality was found in order of learned CIT(A) and found no force in contention raised by learned Departmental Representative while disagreeing with opinion of learned JM. 2 . While taking majority view, appeals of Revenue are dismissed in favour of assessee. *** ASSISTANT COMMISSIONER OF INCOME TAX v. SOUTH POINT MONTESSORIE SCHOOL