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ADIT (Exemption) -II (1) , Mumbai Versus Jeevan Vidya Mission

Applicability of proviso to section 2(15) - income earned by the assessee trust from of sale/distribution of books, cassettes and CDs - exemption u/s 11 denied - Held that:- Since the assessee is engaged in imparting education, in that case if the books, cassettes etc. have been distributed as integral part of that activity, to attain the main object and without any profit motive, in that case it cannot be said that this activity has been carried out in the nature of trade, commerce or business, .....

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commerce or business, especially in the absence of any profit motive. In view of these facts and circumstances, 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 .....

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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 the activities of sale of books and cassettes at a price carried on by the assessee are in the nature of education despite it being a regular commercial/business activity. 3. That on the facts and in the circumstances of the case and .....

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such activity is immaterial . 2. The solitary issue raised in this appeal, by way of aforesaid grounds, is with regard to applicability of proviso to section 2(15) of the Act, mainly on the income earned by the assessee trust from of sale/distribution of books, cassettes and CDs. 3. Brief facts, as culled out from the assessment order are that the assessee trust is engaged in Jeevan Vidya Philosophy by organizing discourses at different places and publishing books, cassettes and CDs on these sub .....

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It was further observed that since the activities were organized as regular activities, the assessee was asked to explain as to why this may not be treated as business activities u/s 2(15) of the Income Tax Act, 1961 and income may not be treated as taxable income. In response, the assessee submitted inter alia that as per clause 5.3 of the Trust Deed, one of the objects of the trust was to publish and market in the form of books or otherwise the discourses, science and philosophy of Jeevan Vidy .....

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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 A .....

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ad knowledge, information and awareness by providing discourses and science and philosophy of Jeevan Vidya of Sadguru Shri Wamanrao Pai. For the purpose of attainment of this object, the activity of publishing and distributing books and cassettes of preachings of Sadguru was incidental to the object and integral part of the main object of the assessee trust. It was further submitted that merely because any charitable activity was carried out an organized manner, it does not make the activity to .....

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was further submitted that the publication for the purpose of spreading message or public awareness of the preaching, is incidental to the objects of the trust and cannot be termed as business in nature. The Ld. CIT(A) considered all the submissions of the assessee trust and after considering the same, Ld. CIT(A) decided the appeal in favour of the assessee by holding that assessee was imparting education. It was further held that assessee was not engaged in the business and accordingly, the As .....

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should be liable to pay tax thereon. However, in response to our query to Ld. DR that whether the assessee was engaged in activity of imparting education, the response of the Ld. DR was very fair by stating that Ld. CIT(A) has given 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.com12 .....

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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 requested for upholding the order of Ld. CIT(A). 7. We have gone through .....

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d to the facts of this case, and, if this proviso cannot be applied to the facts of this case, then whether the aforesaid activity of distribution of books, cassettes and CDs by the assessee trust can be said to be the trade, commerce or business, in the given facts and circumstances of the case or not. 8. We have pondered over all the issues. It is noticed that the CIT(A) has made detailed analysis in deciding all these three issues. 8.1 In our considered opinion, based upon analysis of the fac .....

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ding, the term education is of wide scope and amplitude, especially in the context of section 2(15). In this fast evolving society, the term education has assumed greater role and significance, then ever. Education has got pivotal role in evolution of a society. Therefore, keeping this crucial aspect in mind, the legislature in its wisdom had decided to place this activity within the definition clause of the term charitable purpose , as per section 2(15) of the Income-tax Act, wherein it has bee .....

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on 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, .....

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in imparting education, in that case if the books, cassettes etc. have been distributed as integral part of that activity, to attain the main object and without any profit motive, in that case it cannot be said that this activity has been carried out in the nature of trade, commerce or business, and accordingly, first proviso to section 2(15) shall not be applicable and the exemption granted to the assessee trust cannot be withdrawn on that reason alone. 9.1 In this regard, we shall take first .....

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se circumstances, a question arose whether this activity would amount to carrying on the business by the assessee trust. In that context, Hon ble Apex Court held that if the main activity is not business, then any transactions incidental or ancillary would not normally amount to business , unless an independent intention to carry on business in the incidental or ancillary activity is established. It was further held that publication for the purpose of spreading messages is incidental to the main .....

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g proviso to section 2(15), the position of law, as was laid down by Hon ble Supreme Court in the case of Sai Publication Fund, supra, remains the same. In support of our view, we rely upon the judgment of Hon ble Delhi High Court in GS1 Vs Director General of Income Tax (Exemptions) 360 ITR 138, wherein it was held that the proviso to second limb will not apply in the case of a rendition of a service per se, for a cess, fee or any other consideration, or to a trade, commerce or business, but th .....

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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 Accou .....

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In this case also, the rendition of services by the assessee is viewed in conjunction with the overall objectives of the assessee and once it is seen that these services are not in the nature of trade, commerce or business per se, the mere charging of fees for services so rendered, which were held to subservient to the charitable objectives, is held to have no effect on the overall charitable objects of the assessee; 10. Coming back to the facts of the case, it is noted that Ld. CIT(A) has exam .....

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Jeevan Vidya and Sadguru s sayings 10.1. It has been rightly observed by Ld. CIT(A) that when an activity is integrated to the object itself, then the said activity cannot be called as business, particularly in view of the fact that there does not appear to be any intention to make a surplus out of the said activity. The publication of books is one of the objects and intimately connected with the main object of the assessee trust i.e. to spread awareness and educate the people with respect to Je .....

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resaid 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 .....

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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 the appellant trust that was on account of the donations which were credited to the income and expenditure account. If those donations are excluded then the trust would have suffered a deficit. This is an indicator of the fact that the activity undertaken was not with intent to make a profit. 8.7 Further the pricing of the boo .....

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ation of facts I have come to the conclusion that the said activity is intrinsic to the main objects of the trust and not a business. Therefore, this ground (Ground no. 7) of the appellant is also allowed. The assessing officer is directed to allow the exemption under section 11 to the appellant trust . 12. We find that findings of Ld CIT(A) are factually correct and in line with the latest position of law, as discussed above. It is further analyzed by us that, activity of distribution of books .....

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