TMI Blog2015 (5) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings are to be taken and to decide as to whether the assessee is entitled for the benefit of section 11 and 12 of the I.T. Act as the case may be. After examining the Income and Expenditure Statement of the assessee for the asstt. year in dispute, we are of the view that the assessee has not incurred any expenditure for charitable purpose, as per their aims and objects. Therefore, the activities of the assessee is not charitable in nature and is commercial in nature. In view of the aims and objects of the assessee-society and the activities done by the assessee, we are of the view that the printing and stationery of the books fall under the general public utility limb of definition u/s. 2(15) of the I.T. Act, 1961 and not an education, because the activities of the society is not pertaining to systematic instructions school or training. After going through the orders passed by the Revenue Authorities as well as the documentary evidence filed by the assessee in the shape of Paper Book, we are of the considered view that assessee has not proved that activities done by the assessee for the asstt. years in dispute is charitable in nature, as per the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that exemption' U/S 11 is deniable because the Assessee was not doing any charitable activities. The Assessee is bound to prove that it's activity is charitable in nature as per provisions of Section 2(15) of the Act and also is not commercial in nature. Therefore, Ld.CIT (A) has erred in allowing the benefit of Section 11 to the Assessee. 2. On the facts in the circumstances of the case, the Ld.CIT (A) has erred in granting relief to the Assessee by ignoring the fact that the activities of the Assessee do not fall under the definition of 'Education' as per provisions of Section 2(15) of the Act in view of decision of Hon'ble Supreme court in the case of Sole Trustee Loka Shikshana Trust vs. CIT (1975) 101 ITR 234. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The brief facts relating to the issues in dispute are that the assessee is in the status of Resident filed its Return of Income on 31/10/2006 declaring Nil income. The return of the assessee was processed u/s 143(1) on 24/03/2007. The AO took up the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books etc. Assessee further submitted that the objective of the assessee to make available at subsidized cost or even at the free of cost text books to children of economically weaker families and similarly to make teaching material available to teachers at subsidized cost or even free of cost so as to promote better teaching in Delhi Schools with the prior approval of Delhi Administration. No reply was furnished with regard to the issue whether the assessee is maintaining separate books of accounts. 2.4 After considering the submissions filed by the assessee alongwith the documentary evidence, the AO is of the view that activities of the assessee are by way of publication and sale of books was by which the assessee is earning huge profit margin by more than 40% is incidental business activities. By no stretch of imagination can this activity of publishing, printing and sale of books oat a huge profit margin be called charitable activity. As per the provisions of section 11(4A) of the Income Tax Act, 1961 the assessee is required to maintain separate books of account for the activity of selling of books, but no separate books are maintained by the assessee for its activities. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finally held that the assessee has no charitable activity under Chapter 4 of the Income Tax Act, 1961 by completing the assessment u/s. 143(3) of the I.T. Act on 31.12.2008. 3. Aggrieved by the assessment order dated 31.2.2008, the assessee filed the Appeal before the Ld. CIT(A) who vide impugned order 22.2.2010 partly allowed the appeal filed by the assessee for statistical purposes and mainly held that once exemption has been granted by way of exemption given by the DIT(E) u/s. 12A of the I.T. Act, the AO cannot override this exemption while passing the order of the assessment order ignoring the fact that the Registration u/s. 12A of the Act is accumulated by certain terms and conditions which have to be met by the assessee. Secondly, he has held that the exemption u/s. 11 and 12 denied to the assessee deserve to be restored and the finding of the AO that the assessee is carrying on business merits deletion. He also do not find any merit in the findings of the AO that as accumulation has not been done for the objects of the trust, and that the benefit of section 11(2) are not allowable to the assessee. 4. Now the Revenue is aggrieved by the impugned order dated 22.2.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 As regards the violation of provisions of section 11(4A) of the I.T. Act, Ld. CIT(DR) has stated that as per record the assessee has not replied to the query of the AO regarding the maintenance of separate books of accounts for its activities. Therefore, the assessee has violated the provisions of section 11(4A) of the Act and has is not entitled or exemption u/s. 11 of the I.T. Act. In view of the Indian Machine Tools Mfrs. Association vs. ADIT 70 ITD 304; 71 TTJ 944. 5.3 She further stated that assessee has also accumulated without specifying any purposes and creation of provisions. During the year under consideration assessee showed an accumulation of ₹ 15670997 as per Form 10 filed along with return, which shows that accumulation is without specifying any purpose and is excess of 15% according to section 11(2) of the I.T. Act. She also stated that printing and publication of books falls under general public utility limb of definition u/s. 2(15) of the I.T. Act, not education. Because the assessee is engaged in the publication of text books from Class I to VIII of the Govt. schools, MCD schools, NDMC schools and Delhi Cantonment Schools. The books are claimed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws to support the order of Ld. First Appellate Authority. Ld. Counsel of the assessee also draw our attention towards the written submission filed before the Ld. First Appellate Authority as well as the documents attached with the Paper Books and stated that the ITAT, Delhi E Bench has already decided the issue in dispute in favor of the assessee for the asstt. year 1975-76 and 1976-77 on 30.9.1980 in assessee s own case, therefore, the appeal filed by the Revenue may be dismissed and the order of the Ld. First Appellate Authority may be upheld. He also tried to distinguish the case laws cited by the Ld. CIT(DR) in her written submission filed during the course of hearing of the present appeals and stated that the activities of the assessee-society is charitable in nature and the objects of the assessee-society fall under the purview of the education limb of section 2(15) of the I.T. Act. He also stated that the assessee is engaged in the publication of text books from Class I to VIII of the government schools, MCD schools, NDMC schools and Delhi Cantonments Schools. The books are published and sold on subsidized rates and nominal profits to the schools students and whole deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has earned a huge profit from the activities of sale and purchase of books from 21.76% to 43.90% for the assessment years in dispute. For the sake of convenience the details thereof is as under:- Selling the books to both Delhi Schools and Retailers at a substantial profit A.Y. Sale of Books Cost Profit Profit % 2006-07 7,95,37,473 5,57,93,090 2,37,44,383 42.5 2007-08 8,28,52,577 6,13,01,456 2,15,51,121 35.16 2008-09 12,98,57,215 9,68,96,166 4,25,81,374 43.95 2009-10 13,03,72,304 10,51,51,795 2,28,87,322 21.76 7.2 Keeping in view of the aforesaid Income and Expenditure Statement as well as showing Profit Margin Table, we are of the considered view that the activities of the assessee society are in the nature of business, not in the nature of charitable purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of books falls under general public utility limb of definition u/s. 2(15) of the I.T. Act, 1961, but not an education. Because the assessee society is engaged in the publishing of text books from Class I to VIII of the Govt. schools, MCD schools, NDMC schools and Delhi Cantonment Schools. The books are claimed to be published and sold on subsidized rates and nominal profit to schools students and whole sale dealers. According to the assessee the object of the society fall under the purview of the education limb of section 2(15) of the I.T. Act, 1961. After going through the aims and objects of the society, alongwith the relevant provisions of section 2(15) of the I.T. Act, we are of the considered view that meaning of word education and the context in which it is used under the Income Tax Act, 1961 has been explained by the Hon ble Supreme Court of India in the case of Sole Trustee, LokaShikshana Trust vs. CIT [1975] 101 ITR 234(SC). The relevant finding of the Hon ble Supreme Court is reproduced as under:- The scene in which the word education has been used in section 2(15) in the systematic instruction, schooling or training given the young is preparatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1239/Del/1979 and 4440/Del/1979 for the asstt. years 1975-76 and 1976-77 title vs. ITO, Trust Circle, Delhi vs. Delhi Bureau of Text Books vide order dated 30.9.1980. We are of the view that in the order dated 30.9.1980 the Bench has not considered Income and Expenditure Statement filed by the assessee for the asstt. yearfs 1975-76 and 1976-77 and other relevant evidence, therefore, the facts of the present case are not identical to the facts of that case and are distinguishable. 7.7 Keeping in view of the aforesaid discussions, we are of the considered view that the activities of the society of publishing of books would fall under the general public utility limb and where this is systematically run for profit, section 11 exemption cannot be allowed to it. 7.8 Thirdly, it is admitted fact that the assessee has not maintained separate books of accounts for its activities of sale and purchase of books for the assessment year in dispute and thus has violated the provisions of section 11(4A) of the I.T. Act. Ld. CIT(A) has not appreciated these facts and has wrongly allowed the exemption u/s. 11 12 of the Act which is contrary to the provisions of law, in view of the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act. Ld. Counsel of the assessee has also not filed any evidence that the assesee has filed Income Expenditure Statements for the asstt. years 1975-76 and 1976-77 before the Tribunal in ITA No. 1239/Del/1979 and ITA no. 4448/Del/1979 for asstt. years 1975-76 and 1976-77 vide order dated 3.9.1980.The Tribunal in its order at Page 18 has held that though the assessee is not running any educational institution as such .. 7.12 Keeping in view of the facts and circumstances, as explained above, we are of the considered view that impugned order passed by the Ld. CIT(A) is contrary to the law and facts and on the file by holding that once registration has been granted u/s. 12A of the I.T. Act, AO cannot override exemption while passing the assessment order. We have discussed in detail in the forgoing paragraphs on assessee-trust u/s 12AA of the Act as has been granted in the present appeal, then it will not be precluded to the AO to examine in details the every object of the society and to give finding in the assessment order as to whether the assessee has complied with the requirement of section 11 of the Act or not as to when the assessee is seeking exemption u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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