OUP had sought exemption on the ground that the publishing firm has acted in India as a part of the Oxford University.
The court has held that Oxford University Press derived its earnings from printing and publishing books and selling the same as well as publications of other publishers.
This activity is, in effect, tantamount to carrying on the business of selling or supplying books for profits, and such income could not be regarded as income of a university existing solely for educational purposes merely because the assessee-press claimed to be a part of the Oxford University which does not at all exist in India, the court ruled.
Under Section 10(22) of the IT Act, any income of a university or other educational institution existing solely for educational purposes and not for the purpose of profit is not included in the total income and hence exempt from tax. Thus according to the court's interpretation, a university or educational institution, whether established in India or abroad, has to retain its character in India to qualify for exemptions under the act.
If a University or an educational institution, though existing outside India as a university or educational institution for educational purposes, does not so exist in India, it would not be entitled to claim exemption of its income from other activity carried on by it in India, by virtue of section 10(22) of the Act, it was held.
In fact according to the Bombay High Court, the undertaking provided by OUP that 60 per cent of its income would be applied for educational purposes in India and the balance will be remitted to the United Kinngdom, goes on to prove that the assessee-press does not exist solely for educational purposes but exists merely for purposes of profit.
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OUP, a part of the Oxford University, was constituted under the British government with a stipulation that earnings derived from its activities would be used wholly and solely for educational purposes.
The assessee had filed income tax return up to the assessment year 1976-77. /HTML>