Judgment :-

Heard learned counsel on both sides.

Appellant-Corporation [Assessee] was initially constituted as `Central Text Book Committee, which was attached to the office of the Director of Public Instruction. In 1950, the name was changed to `Assam Text Book Committee with ten members nominated by the State Government. In the year 1968, the Government re-constituted the said Committee as `Board of Text Book Production and Research. The said Board was converted into Corporation in 1972 and the name was changed to `Assam State Text Book Production and Publication Corporation Limited vide Notification dated 26th July, 1972 [for short, "the Corporation"]. All the assets of the said Board stood transferred to the Corporation with effect from 1st July, 1972. The Corporation had paid-up share capital of Rupees one crore and the break-up of the share holding was as follows:

NAME SHARES FACE VALUE

1. Governor of Assam, 9998 nos. Rs.99,98,000/- represented by the Secretary, Education

Department, Govt. of Assam

2. Financial Commissioner & 1 nos. Rs.1,000/- Secretary, Finance Department, Govt. of Assam

3. The Chairman, Board of 1 nos. Rs.1,000/- Secondary Education, Assam

As can be seen from the share holding pattern, quoted above, almost the entire share capital of the Corporation was owned by the Government of Assam and, consequently, the said Corporation became a Government Company, as defined under Section 617 of the Companies Act, 1956. In other words, the control of the Government ceased to exist after 26th July, 1972, and the erstwhile Board came to be corporatorised under the Companies Act, 1956. The main object of the Government Company was to do research, printing and publishing of text books for school students as per the norms prescribed and approved by the Education Department, State of Assam.

In these appeals, we are concerned with Assessment Years 1981-1982 to 1996-1997, except Assessment Year 1989-1990. The question which arose before the Assessing Officer was whether the Corporation could be termed as an `Educational Institution in terms of Section 10(22) of the 1961 Act"? According to the Assessing Officer, since the assessee, during the relevant years, had income exclusively from publication and selling of text books to the students, exemption under Section 10(22) of the Income Tax Act, 1961 [for short, "the Act"], as it stood at the material time, was not admissible. According to the Assessing Officer, the assessee did not exist solely for educational purposes, particularly in view of Clause 21 of the Memorandum of Association which provides for distribution of dividends, hence, its income was not exempt under Section 10(22) of the Act. This decision of the Assessing Officer was upheld by Commissioner of Income Tax (Appeals]. In the Tribunal, there was difference of opinion between Member [Judicial] and Member [Accountant]. By decision of the majority, it was held that the Corporation was an Educational Institution and, consequently, the Corporation was entitled to the benefit of exemption under Section 10(22) of the Act for the relevant Assessment Years in question. However, in appeal filed by the Department, the High Court came to the conclusion that the income of the Corporation, during the relevant Assessment Years, was not exempt, particularly in view of the fact that the assessee did not exist solely for educational purposes; that it did not solely impart education and that its income during the relevant assessment years was only from publishing and sale of text books, which, according to the High Court, constituted a profit earning activity. Against the said decision, the assessee has come to this Court by way of civil appeals.

On going through the records, we find that the High Court has not taken into account the prior history of the case, particularly in the context of incorporation of the Corporation under the Companies Act, 1956, as a Government Company. Initially, as stated above, the assessee was a Sta