THE COMMISSIONER OF INCOME TAX CENTRAL-EXEMPTION vs. EKLAVYA FOUNDATION

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ITA/232/2018HC DelhiDLHC01034312201823 February 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the ITAT's order. The Tribunal had upheld the CIT(A)'s decision, which in turn accepted the assessee's claim that its income from publishing educational books for promoting reading habits was derived from charitable activities. The CIT(A) had considered the assessee's aims and objects and noted that grants covered book development and other expenses, with only printing, binding, and distribution charges being recovered. The Court found no grounds to interfere with this concurrent finding of fact by the lower authorities. Therefore, the appeal filed by the Commissioner of Income Tax Central-Exemption was dismissed.

What were the facts?

The appeal challenges the Income Tax Appellate Tribunal's (ITAT) order, which upheld the CIT(A)'s decision. The assessee, Eklavya Foundation, claimed its income was derived from charitable activities and thus eligible for benefits under Sections 2(15) and 11 of the Income Tax Act, 1961. The assessee's activity involved publishing educational books for Jharkhand and Bihar to foster reading habits. The Assessing Officer (AO) taxed these receipts, arguing that the expenses were high and the books, not being textbooks, did not qualify as educational. The CIT(A) and ITAT disagreed, considering the assessee's aims and objects. The CIT(A) noted that grants funded book development and other expenses, with the assessee recovering only printing, binding, and distribution costs.

What were the issues?

1. Whether the assessee's income derived from the publication and distribution of educational books, aimed at inculcating reading habits, constitutes income from charitable activities eligible for exemption under Section 2(15) read with Section 11 of the Income Tax Act, 1961, despite the Assessing Officer's contention that the books were not textbooks and expenses were considerable. Assessee's Contention: The assessee argued that its activities, including the publication of books to promote reading, align with its aims and objects and qualify as charitable under Section 2(15). The CIT(A) and ITAT accepted this view, noting that grants covered development and other costs, and only printing, binding, and distribution charges were recovered. Revenue's Contention: The Revenue, through the Assessing Officer, contended that the expenses incurred on the books were substantial and that the published books, not being textbooks, did not fall within the definition of 'education' for charitable purposes.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11

AI-generated summary — verify with the full judgment below

$~17 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 232/2018 THE COMMISSIONER OF INCOME TAX CENTRAL- EXEMPTION

..... Appellant

Through Mr. Ruchir Bhatia, Adv.

versus

EKLAVYA FOUNDATION

..... Respondent

Through None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

23.02.2018

The Income Tax Appellate Tribunal’s (ITAT) order upholding the CIT(A)’s decision that the assessee’s income was out of charitable activities and was thus entitled to benefit under Section 2 (15) read with Section 11 of the Income Tax Act, 1961 (‘the Act’), has been challenged. The subject matter of the present appeal is publication of education books aimed at inculcating the reading habit. These books are targeted for the States of Jharkhand and Bihar. The Assessing Officer (AO) brought to tax the amounts claimed to be charitable receipts holding that the expenses incurred on the books were considerable and that the published books were not text books and therefore, could not be said to fall within the description of education.

Both the CIT (A) and ITAT disagreed and took into account the aims and objects of the assessee’s society. The CIT(A) observed that the assessee’s activity was funded by grants, which covered the development cause for the books that it published and distributed, as well as other expenses and what it recovered was printing, binding and distribution charges. Having regard to these findings, the Court is of the opinion that no substantial question of law arises. The appeal is dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J FEBRUARY 23, 2018 rc

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