TMI Blog2015 (11) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, the Assessing Officer was not correct in denying the benefit of exemption. Ld. CIT(A) has rightly reversed the order and was justified in granting the benefit of exemption to the assessee trust - Decided in favour of assessee. - ITA No. : 770/Mum/2014 - - - Dated:- 30-9-2015 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER For The Appellant b :y Shri S S Rana For The Respondent b :y Shri Anil J Sathe PER ASHWANI TANEJA, AM: Present appeal is filed by the Revenue against the order passed by Learned Commissioner of Income Tax (Appeals)-1, (hereinafter referred to as CIT(A)), dated 11.11.2013 for assessment year 2009-10. The grounds raised by the Revenue are reproduced hereunder :- 1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the Assessing Officer has no jurisdiction to invoke the proviso to Section 2(15) without communicating to the authority registering u/s 12A despite the existence of third proviso to section 143(3) of the Income-tax Act, 1961. 2. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no other business was carried on. It was further submitted that this activity was incidental to the attainment of the objects of the trust. It was further submitted that a separate bank account was maintained and, therefore, compliance was made u/s 11(4A) of the Act. Lastly, it was submitted by the assessee, before the Assessing Officer, that the trust was held as educational trust by the Office of Charity Commissioner. Copy of the order of Charity Commissioner was also submitted before the Assessing Officer. In response, it was submitted by the Assessing Officer that, selling books and cassettes was systematic and regular activity of the assessee and therefore it had the characteristics of business . Since, no separate bank account was maintained by the trust, therefore no deduction was allowable u/s 11(4A) or 11(4). Consequently, the Assessing Officer held that activity of the assessee did not fall under the definition of education as contemplated u/s 2(15), and he disallowed the exemption u/s 11 of the Income-tax Act. Consequently, entire income of the assessee trust was brought to tax. 4. Being aggrieved, the assessee carried the matter in appeal before the Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n detailed findings while holding that assessee was engaged in activities of imparting education and nothing wrong could be found, on facts, in these findings of Ld. CIT(A). The Ld. DR also placed reliance on the judgment of Prabodhan Prakashan vs ITO, (36 Taxman.com125) (Mumbai Tribunal), wherein it was held that where the assessee trust was publishing a newspaper on commercial lines of the object to establish large publishing house, the said activity not being charitable in nature, assessee s claim for exemption of income u/s 11 was to be rejected. 6. In response, the Ld. Counsel for the assessee vehemently supported order of the Ld. CIT(A). The crux of the argument of Ld. Counsel was that the assessee trust was engaged in imparting education and therefore proviso to section 2(15) was not applicable in the case of the assessee. It was further submitted that assessee was carrying out the activity of distribution of books, cassettes and CDs as integral part of its main object of spreading awareness and educating the people about the preachings on Jeevan Vidya . He has placed reliance on the judgment of Hon ble Supreme Court in the case of CST vs Sai Publication Fund (supra). He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, thus showing that the intention of the legislature, very clearly, is to promote education, which is further fortified by the fact that when the first proviso was inserted to section 2(15), the activity of education was not covered therein and only other object of general public utility alone was covered therein. The first proviso was brought in to curtail the scope of charitable purpose with respect to the activities of general public utility, by excluding the same from this definition, if it involved carrying on of any activity in the nature of trade, commerce or business. Further, even after huge litigation with respect to blanket exemption to educational institutions, when the amendment was made by the Finance Act, 2009, the activity of the education was kept outside the purview of newly inserted proviso. Thus, impliedly, it can be said that, it is clear that the legislature has given great significance to the utility of education in our country. 9. Now, keeping aforesaid discussion on conceptual framework in mind, let us analyse the facts of the present case and decide the remaining issues involved here. In our considered view, since the assessee is engaged in impa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice per se, for a cess, fee or any other consideration, or to a trade, commerce or business, but that this clause can come into play for the purpose of excluding an assessee who carries on business, trade or commerce to feed the charitable activities . In other words, the scope of second limb, as held by High Court, extends only to such cases in which a business is carried out to feed the charitable activities. It would thus follow that even for invoking second limb of first proviso to Section 2(15), it is sine qua non that the assessee has extended services to business, trade or commerce and such services have been extended in the course of business carried on by the assessee. It is thus clear that even in a situation in which an assessee receives a fees or consideration for rendition of a service to the business, trade or commerce, as long as such a service is subservient to the charitable cause and is not in the nature of business itself, the disability under second limb of first proviso to Section 2(15) will not come into play; 9.3. Similarly, in The Institute of Chartered Accountants of India Vs DGIT (Exemptions) 358 ITR 9, Hon ble Delhi High Court has held that, even th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust that its aforesaid activity cannot be said to be in the nature of trade, commerce or business in the context of words used in section 2(15), it is noted that the Ld. CIT(A) has given proper analysis and detailed findings after analyzing the facts of the case. We deem it appropriate to reproduce these findings for the sake of ready reference :- 8.5 I have carefully considered the facts of the appellant s case as well as the arguments of the learned A/R as well as the various judicial pronouncements cited by the authorized representative. For the reasons and as per facts of the case, in foregoing paragraphs, it is held that activity of publication of books, was one of the charitable objects of the trust. It is in pursuance of those objects that the appellant undertook the activity of distribution of books. 8.6 It is also abundantly clear that the application of the proviso and the decision as to whether a particular activity can be treated as trade business or commerce will depend on the fact of the case. No generalization in this regard can be made. The learned A/R has submitted that even though, there may have been a surplus in the income and expenditure account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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