JUDGMENT :

KAMAL KHATA, J.

1. These two Writ Petitions are filed by the same petitioners for different assessment years. The Writ Petition No. 8518 of 2009 pertains to Assessment Year (AY) 2002 – 03 and AY 2003 – 04 and the Writ Petition No. 9265 of 2009 pertains to AY 2004 – 05 and AY 2005 – 06. Since the facts and the issue arising in both these petitions is common we shall dispose of the same with a common order by adverting to facts from the Writ Petition No. 8518 of 2009 for brevity.

2. The petitioners, the present trustees of the American School of Bombay Education Trust, (‘ASB’ for short) have filed the present petition to set aside the impugned order dated 27th February 2009 passed by respondent no.4 and to direct the respondents to grant them the exemption to the income that was rejected by the impugned order under Section (u/s) 10(23C)(vi) of the Income Tax Act, 1961 (the Act) in relation to Assessment Year (A.Y.) 2002-03 to A.Y. 2005-06.

3. The ASB is constituted under the Indian Trusts Act, 1882, vide the trust deed, as amended in July-1995 and August-2008. The ASB was set up after the embassy of the United States of America was granted specific permission by the Ministry of External Affairs, New Delhi. The Trust is set-up solely for the purpose of education and not for the purpose of profit. The relevant extract of the recital of the Trust Deed is reiterated as under-

“A. The Settlor is desirous of establishing and/or conducting a school or other institution to provide education training and discipline to the beneficiaries under these presents and for providing financial and other assistance in connection therewith. B. The Settlor is further desirous that the school or other institutions shall be an institution existing solely for education purpose and not for the purpose of profit.” (emphasis applied)

4. Further, the Trustees hold the Trust Fund solely for the purpose of education as is set out by clause 3, which provides as under-

“3. The trustees shall henceforth hold and possessed of the said sum (hereinafter for brevity’s) sake referred to as the Trust Fund which expression shall unless repugnant to the subject or context, also include, any other property and investments on any kinds whatsoever into which the same or any part thereof may be converted invested or varied from time to time and those which may be acquired by the Trustees or come to their hands under, pursuant to or by virtue of these presents or by operation of law or testamentary disposition or legacies or otherwise howsoever in relation to these presents including all donations, gifts, bequests and legacies either in case or other properties, movable or immovable, or otherwise howsoever, which may be received by the Trustees from time to time for the purpose of these presents as also including any income, dividend, interest and accumulation of income including all rights and/or bonus shares and other rights, benefits or advantages acquiring or arising time to time or to the trust fund upon the trusts and with an subject to the powers, provisions, agreements and declaration hereinafter declared and contained of or concerning the same.”

5. During the years under consideration, ASB was supported by the South Asia International and Educational Services Foundation (SAIESF). SAIESF was set-up in 1996 in the United State of America wholly and exclusively for charitable and educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of the United States of America, and the primary purpose is to provide financial assistance to educational institution as provided in its constitution. SAIESF was a non profit organization, subject to scrutiny by the US Government and exempted from tax payment by US Federal Government u/s. 501(c)(3) of the Internal Revenue Code. The accounts of SAIESF were subject to detailed scrutiny by the IRS.