TMI Blog2017 (11) TMI 2002X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the purpose of publication of Hindi Granth i.e. for education. In that view of the matter, in our considered opinion, in view of decisions referred by Mr. Ranka, this is an educational institution activity. We are of the opinion that this academy is running only with a view to publish educational books and we have no hesitation in accepting the submissions of Mr. Ranka that this is only for the purpose of academy which is educational in nature. Assessee will be entitled for the benefit u/s 10(23)(iiiab). Even from the table, looking to the turnover, the profit is negligible, therefore, it is clear that the institution has no profit motive. - Decided in favour of the assessee. - D. B. Income Tax Appeal No. 302 / 2016 - - - Dated:- 1-11-2017 - HON'BLE MR. JUSTICE K. S. JHAVERI And HON'BLE MR. JUSTICE VIJAY KUMAR VYAS For the Appellant : Mr. Siddharth Ranka with Mr. Saurav Harsh For the Respondent : Mr. Sameer Jain with Mr. Daksh Pareek JUDGMENT 1. By way of this appeal, the appellant has challenged the judgment and order of the tribunal whereby the tribunal has partly allowed the appeal filed by the assessee and modified the order of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed for charitable purposes [which may be approved by the prescribed authority], having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States; or 5. Counsel for the appellant Mr. Ranka contended that present appellant assessee is registered and granted exemption u/s 12AA vide certificate on 7.11.2007 and carrying on their activity only for the purpose of publication of the educational books which are given to the educational institutions where summary of income of the assessee is as under:- Nature of Income Gross Receipts % of Gross Receipts Interest Income 55,86,364/- 30.79% Misc. Income 99,025/- 0.55% Grant-in-Aid from Government of Rajasthan 1,24,10,000/- 68.40% Surplus on publication books 49,178/- 0.27% Total Receipts 1,81,44,567/- 100.00% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of profit. We may note that there is no allegation in the impugned order dated 08.10.2008 that the petitioner is engaged in activities for purposes of profit. 5. An institution established for educational purpose need not conduct teaching classes, is no longer a matter of doubt or ambiguity and was examined by the Supreme Court in Assam State Text Book Production and Publication Corporation Ltd. v. CIT, MANU/SC/1925/2009 : (2009) 319 ITR 317 (SC). The said corporation was engaged in publication of text books for the students and had claimed exemption under Section 10(22) of the Act. The Revenue disputed and claimed that the corporation was not an educational institution. The Supreme Court reversed the finding of the High Court and held that the said corporation was engaged in educational purposes and, therefore, an educational institution entitled exemption under Section 10(22) of the Act. The said corporation was not engaged or conducting teaching classes or directly imparting education through teachers. In the said case the Supreme Court noticed the judgment of Orissa High Court in the case of Orissa Secondary Board Education and approved the ratio and principle enunci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n took its activity outside the ambit of a charitable purpose‟. He submitted that the ITAT was justified in negativing the plea by relying on the decision in Sole Trustee, Loka Shikshana Trust v. CIT (supra). While Mr. Kaushik was unable to dispute that the activity of the Appellant involved education‟, he maintained that the Appellant did not satisfy the requirement of the proviso under Section 2 (15) of the Act viz., that the activity should not be related to trade, commerce or business‟. 20. The Court first considers the question of the interpretation placed on the word education‟ occurring in Section 2 (15) of the Act. The exclusive activity of the Assessee is the publication and printing of text books and their distribution to Government schools and schools of the MCD, NDMC, etc. This activity has continued uninterruptedly since the time of its inception, i.e., from AY 1971-72 onwards. The fact that the Assessee is a nonprofit organisation is not in dispute. Its essential activities are administered by the BODs comprising of officers of the Government of India as well as GNCTD, in its ex officio capacity. The textbooks are provided by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, enshrined in Chapter- IV of the Constitution and summarized hereinabove. It strives to carry out the directive principles of Chapter -IV of the Constitution and as per the direction of the State Government supplies books to students at low prices, the subsidy coming from the State Government. In such a situation, its charitable nature and character is in no doubt, and is dependent on the State finance. The fact that, in pursuit of its charitable purpose, it registers some income in its balance-sheet will not per se make it to be a profit- making organization. An organization of this size has to maintain its infrastructure and the staff which needs money. This kind of seemingly apparent income is really not Per Se indicative of profit- making. We are of the view that the activities of the assessee are covered by section 10(23C)(iiiab) of the Act. The motive, the aims and objective, the purpose and the nature of its activities have to be adjudged, and are the relevant basic indicia. 8. We must consider the question of applicability of section 10(23C)(iiiad) to the present case. The admitted position is that the gross receipts of the assessee exceeds Rs. one crore. Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That, in the year 1975, in a similar situation, Central Board of Direct Taxes [for short, C.B.D.T. ] had granted exemption under Section 10(22) of the Act vide letter dated 19th August, 1975, to Tamil Nadu Text Books Society, which performed activities similar to those of the assessee. The letter dated 19th August, 1975, is referred to in the judgment of the Rajasthan High Court in the case of Commissioner of Income Tax v. Rajasthan State Text Book Board reported in MANU/RH/0287/1999 : 244 I.T.R. 667. As can be seen from the facts of that case, a similar question came up for consideration before the Rajasthan High Court, namely, whether Rajasthan State Text Book Board was entitled to exemption under Section 10(22) of the Income Tax Act, 1961? One of the arguments advanced in that case on behalf of the Revenue was that the assessee was making profit on account of publishing and sale of text books and, consequently, it was not entitled to the benefit of exemption under Section 10(22) of the Act. However, the High Court noticed the letter issued by C.B.D.T. on 19th August, 1975 in the case of Tamil Nadu Text Book Society which, as stated above, in similar circumstances had granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, was used for any other purpose or distributed to other members. The Commissioner (Appeals) as well as the Tribunal had noticed that even if some amount remained surplus, that was utilised only for the purposes of education. Thus, having regard to the concurrent finding of act recorded by the Commissioner(Appeals) and the tribunal has also taking note of the letter of the CBDT itself, it was not possible to say that the order of the tribunal was erroneous in any way. In this way, no question of law arose for consideration, much less a substantial question of law. 6.5 He also relied upon the decision of Orissa High Court in Secondary Board of Education vs. ITO (1972) 86 ITR 408 (Orissa) wherein it has been held as under:- Under the Orissa Secondary Education Act, 1953, the Board has a fund. There were various sources of income constituting the fund. One of the sources of income was earning profits by compilation, publication, printing and sale of text books. The profits so earned entered into the Board fund. The income and expenditure of the Board was controlled and the entire expenditure was to be directed towards development and expansion of educational purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of educational institutions- Assessing Officer declined to grant relief claimed by assessee u/s 10(23C)(iiiab)- material on record disclosed that Government had financed assessee-institutions and its share was 25 per cent. Further, it was not existing for fake of profit making-whether when 25 per cent of finance to assesseeinstitutions flowed from Government, it constituted substantial finance and it satisfied all legal requirement provided u/s 10(23C) (iiiab)-whether, therefore, assessee would be entitled to benefit provided u/s 10(23C) (iiiab). 7. However, counsel for the respondent Mr. Jain strongly contended that while considering the matter, the CIT(A) has considered the matter and observed as under:- 3.3 The submission of the appellant was forwarded to the AO for his comments. The AO has stated in the remand report dt. 23.12.2013, which is as under:- In this connection it is submitted that the assessee Rajasthan Hindi Granth Academy is claiming exemption u/s 10(23C)(iiiab) of the Income Tax Act, 1961. The assessee has produced various documents and material before you in support of his claim. The same have been duly verified and considered by the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is not eligible for any exemption claimed by it u/s 10(23C)(iiiab) and 10(23C)(iv). 7.1 He further contended that by no stretch of imagination, the activities carried by the appellant assessee cannot be considered as educational institutions and publication of educational books is not educational activity and, therefore, they will not be covered under the provisions of 10(23C) (iiiab)/10(23C)(iv) of the Income Tax Act. 8. Counsel for the respondent has relied upon the decision of the Supreme Court in The Sole Trustee Loka Shikshana Trust vs. The Commissioner of Income Tax, Mysore reported in 1975 (101) ITR 234 wherein Supreme Court held as under:- 5. The sense in which the word education has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word education has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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