Commissioner Of Income Tax Bhopal vs. M/S M.P.Pathya Pustak Nigam

Except unnecessary details, the facts of the case lie in narrow compass. Suffice it to say that the assessee is a Society registered under the M.P. Societies Registration Act, 1959. The assessee claimed exemption under Section 10(22) of the Act for the assessment year 1994-95. Keeping in view the memorandum of association of the assessee, the Assessing Officer denied such exemption to the assessee vide order dated 26.02.2002 (Annexure A-1). Feeling aggrieved by the same, the assessee preferred appeal before the Commissioner of Income Tax (Appeals) [hereinafter referred to as “the CIT(A)], which was allowed vide order dated 21.01.2003 (Annexure A-2). The learned Tribunal vide order dated 22.06.2007 (Annexure A-3) affirmed the order of the CIT(A) and dismissed the appeal of the Revenue on the basis of its decision rendered in ITA No.363/Ind/1999 pertaining to the same assessee decided on 25.10.2002 wherein it was observed that since the assessee is playing a role in imparting education in the absence of which educational institution cannot be run which is in line with its aims and objects, therefore, limited profit for smooth running of an institution or society is not prohibited and the same would not render the assessee society as wholly commercial. In this manner, the present appeal has been filed by the Revenue.

Learned counsel for the appellant placed reliance upon a Division Bench decision of this Court in ITA No.164/2012 (Commissioner of different assessment years of the assessee-Corporation involving identical Gauhati-I (2009) 185 Taxman 58(SC), which has been relied upon by the Division Bench in M.P. Text Book Corporation (supra), has observed that all the State-controlled Educational Committee(s)/Board(s) have been constituted to implement the Educational policy of the State(s) and therefore, they should be treated as educational institution. The relevant extract of the Supreme Court judgment reads as under:- “Following the judgment of the Rajasthan High Court (CIT v. Rajasthan State Text Book Board, 244 ITR 667, we are of the view that, in this case, the High Court, in its impugned judgment, has not considered the historical background in which the Corporation came to be constituted; secondly, the High Court ought to have considered the source of funding, the share-holding pattern and aspects, such as Return on Investment; thirdly, it has not considered the letters issued by C.B.D.T. which are referred to in the judgment of the Rajasthan High Court granting benefit of exemption to various Board/Societies in the country under Section 10(22) of the Act; fourthly, it has failed to consider the judgments mentioned ( 4 ) hereinabove; and lastly, it has failed to consider the letter of the Central Government dated 9th July, 1973, to the effect that all State-controlled Educational Committee(s)/Board(s) have been constituted to implement the Educational policy of the State(s), consequently, they should be treated as Educational Institution. For the afore-stated reasons, we are of the view that, instead of remanding Government dated 9th July, 1973, referred to above.”

Following the decision of the Supreme Court in Assam State Text Book Production (supra), the Division Bench of this Court in M.P. Text Book Corporation (supra) remanded the matter to the Assessing Officer for de novo consideration. The relevant extract of the judgment of Division Bench is reproduced as under:- “5. The counsel for the department did not point out any contrary decision on the proposition answered by the Supreme Court in the aforesaid decisions as in the case of Assam State Text Book Production and Publication Corpn. Ltd. (supra). Although the substantial questions of law need not be answered but the operative arrangement as directed by the Supreme Court may have to be adopted even in these appeals of remanding the matter to the Assessing Officer for denovo consideration in the light of the decision of the Supreme Court and the decisions of the Rajasthan High Court and Orrisa High Court referred to therein, which have been affirmed by the Supreme Court.

To this limited extent, the appeals will have to be allowed.

Counsel for the respondent/assessee submits that since he would get opportunity before the Assessing Officer denovo, the appeals be disposed of leaving all questions left open, to be decided afresh by the concerned Authorities on the basis of the above referred decisions, in particular, the decision of the Supreme Court.

We are conscious of the fact that the provision contained in Sub- section (22) of Section 10 has been omitted from the Act w.e.f. 1.4.1999 but the assessment year involved in the present case is 1994-95. In this view of the matter, the present case is squarely covered by the judgment in Assam State Text Book Production (supra) and Division Bench judgment of this Court in M.P. Text Book Corporation (supra).

In view of the aforesaid, the impugned order passed by the learned Tribunal is set aside. The matter is remanded to the Assessing Officer for de novo consideration. All questions are left open.

Accordingly, the present appeal stands allowed and disposed of in the same terms as in M.P. Text Book Corporation (supra).