Circular No. 712

122. Whether since section 10(22) does not impose any restriction regarding mode of investments of funds, such institutions are not required to invest their funds in modes specified under section 11(5)

What this is

Circular No. 712 was issued by the Central Board of Direct Taxes on 25 July 1995. Its subject is 122. Whether since section 10(22) does not impose any restriction regarding mode of investments of funds, such institutions are not required to invest their funds in modes specified under section 11(5).

This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.

What it does

Says that a university or other educational institution claiming exemption under section 10(22) need not park its funds in the modes listed in section 11(5). Section 10(22) exempts the income of a university or other educational institution existing solely for educational purposes and not for profit, and imposes no condition on how funds are invested. Institutions that met section 10(22) were nevertheless being refused exemption for investing outside section 11(5). The Board rejects that. The clarification does not extend to an institution claiming exemption under section 11.

Why it was issued

Representations came from institutions that satisfied section 10(22) but were denied exemption because their funds were not invested in the section 11(5) modes.

Who it reaches

Universities and educational institutions claiming exemption under section 10(22)
Trusts claiming under section 11, who are expressly outside this relief
Assessing Officers assessing educational institutions

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.10	s.11, s.19
s.11	s.332, s.333, s.334, s.335, s.337, s.338, s.339, s.340, s.341, s.342, s.344, s.345, s.350, s.355

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

122. Whether since section 10(22) does not impose any restriction regarding mode of investments of funds, such institutions are not required to invest their funds in modes specified under section 11(5)
1. Under section 10(22 ) of the Income-tax Act, any income of a University or other educational institution, existing solely for educational purposes and not for purposes of profit, is exempt from tax.
2. The Board have received representations from various institutions which fulfil the conditions laid down under section 10(22) of the Act, but are denied exemption because their funds are not invested in accordance with the provisions of section 11(5) of the Act. It is hereby clarified that since section 10(22) does not impose any restriction regarding mode of investment of funds, such institutions are not required to invest their funds in the modes specified under section 11(5) of the Income-tax Act. This clarification will not apply to the institutions seeking exemption under section 11 of the Act.

Circular : No. 712, dated 25-7-1995.

What to watch

The relief is only from the section 11(5) investment modes; the institution must still exist solely for educational purposes and not for profit.
An institution claiming under section 11 gets nothing from this circular and remains bound by section 11(5).
Section 10(22) was itself omitted and educational institutions were moved to the section 10(23C) scheme, which carries its own investment conditions, so the note holds for the years section 10(22) governed.

Where you meet it

In an assessment of an educational institution where exemption has been denied on the sole ground that its funds sit outside the section 11(5) list.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 116/2026 [F. No.195/13/2025-ITA-I] / SO 4706(E) : Notification in the case of Maharashtra Electricity Regulatory Commission — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 25 August 2026
Notification No. 112/2026 [F. No. 300196/6/2026-ITA-I] / SO 4458(E) : Notification in the case of District Legal Service Authority, Panchkula — Ministry of Finance 11 August 2026
Notification No. 109/2026 [F. No. 300196/39/2025-ITA-I] / SO 4321(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Odisha Joint Entrance Examination Committee — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 107/2026 [F. No. 300196/65/2018-ITA-I] / SO 4319(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 106/2026 [F. No. 300196/65/2018-ITA-I] / SO 4318(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of Noida Special Economic Zone Authority — [भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3 4 August 2026
Notification No. 104/2026 [F.No.300196/1/2026-ITA-I] / SO 4308(E) : Notification section 536 (1) of the Income Tax Act, 2025 (30 of 2025) in the case of District Legal Service Authority, Charkhi Dadri — Ministry of Finance 3 August 2026

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A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.