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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: Sh. H. S. SidhuDr. B. R. R. Kumar
Per Dr. B.R.R. Kumar, Accountant Member:
The present appeals have been filed by the revenue against the orders of the ld. CIT(A)-40, Delhi, dated 25.10.2017.
2. Since, the issues involved in all these appeals are common, they were heard together.
3. In following grounds have been raised by the revenue: “1. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in holding that various activities of the assessee, like to 242/Del/2018
2. Delhi Bureau of Text Books developing/printing/publishing & sale of text books and other teaching material, etc. fall within the expression of ‘education’ read with definition of ‘charitable purpose’ as per section 2(15) of the Income Tax Act, 1961.
2. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has erred in holding that the assessee is entitled to exemption of income u/s 11 & 12 particularly when assessee’s activities on account of developing/printing/publishing and also text books and other teaching material, etc. constitute business activity and the same could not be considered as charitable activity as per law.”
The entire facts have been taken from the record of the ld. CIT (A).
The assessee is registered under section 12A vide order dated 27.12.1973. The society was notified under section 10(23C)(vi) up to assessment year 2002-03. The society is engaged in publication of texts books from class I to VIII of Government Schools, MCD Schools, NDMC Schools and Delhi Cantonment Schools.
The society is run and managed by the officials of Education Department of Government of Delhi. It was noted by the Assessing Officer that the books are claimed to be published and sold at subsidized rates with nominal profit to schools students and wholesale dealers. It was also stated that the assessee society has claimed that it has distributed free books/ reading material to needy students. The Assessing Officer held that the activities of the assessee are prima facie in the nature of business activities by way of sale and purchase of books. It was observed that during the year under consideration the assessee had a profit of Rs. 1,00,16,078/- which, as per the Assessing Officer, made it is apparent that the books are being sold at a huge profit margin. Hence the assessee was held to be engaged in the said activities for the purpose of earning to 242/Del/2018 3 Delhi Bureau of Text Books profit. The assessee was asked to show how the activity of publication and sale/purchase of books was covered within the meaning of charitable purpose as per the amended definition contained in 2(15) which is effective from assessment year 2009-10.
The assessee explained that the main object of the assessee society is to provide, aid and to promote the advancement of education, particularly elementary and secondary education and for this purpose, the assessee has undertaken to produce, publish and distribute high quality text books and other instructional material. It was also submitted that it was the objective of the assessee to make available text books at subsidized cost or even free of cost to children of economically weaker families. The Assessing Officer also noted that the assessee is not maintaining separate books of accounts of this activity.
The Assessing Officer while relying upon the decision of the Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust vs. CIT (101 ITR 234) held that the activity of the assessee does not fall under the category of education. It was also held that the whole of the activity of the assessee society during the year has been only business activity and the assessee has not carried on any charitable activity. As regards distribution of free books/ reading material and school bags to needy students, it was held to be business promotion. The activity of the assessee was held to be not eligible for exemption under section 11 and 12 and to be taxable as business income under Chapter IV of the Income Tax Act. It was also held that the assessee not complied with the provisions of section 11 (4A) for the activities of sale/purchase of books. It was also noted that appeal has been preferred before the Hon'ble ITAT in the assessee's own case for assessment years 2006-07 to 2010-11 which were yet to be decided at that stage. Income was computed at Rs. 5,13,58,420/-.
Aggrieved by the assessment order, the assessee filed appeal before the ld. CIT (A).
Submissions made by the assessee before the ld. CIT (A) are as under: "It is kindly submitted that appeals in respect of assessment years 2006-07, 2007-08, 2008-09 & 2009-10 were pending before the Hon'ble Delhi High Court & for the assessment year 2010-11 the appeal was pending before ITAT & for the assessment years 2011-12, 2012-13, 2013-14 are pending before yourself The issues in all the cases are same/identical.
Hon'ble Delhi High Court has set aside the common ITAT order dated 23.04.2015 for assessment years 2006-07, 2007-08, 2008-09 & 2009-10 through an order dated 03.05.2017. The appeals filed by the assessee have been allowed by the Hon'ble Delhi High Court.
Further Hon'ble ITAT has also dismissed the appeal filed by revenue against the order of CIT(A)for assessment year 2010-11 vide order dated 11.08.2017.”
Major issues raised by AO during assessment proceedings are as under: “1. The assessee is engaged primarily in the business of publishing and sale/ purchase of books & the same is not covered under 2nd limb- education of the definition of "Charitable Purpose" as per the definition contained in Section 2(15) of the Income Tax Act, 1961 & has considered the activity as a business activity & further observed that-
Books are being sold at huge margin of profit.
Since no separate books of accounts are maintained for the above alleged business activity, the entire income of the assessee are taxed. 4. Orders of ITAT for assessment years as on the date of passing the assessment order are against the assessee, hence all the income need to be taxed.”
All the issues raised by the A.O. has been covered & discussed at length by the Hon’ble Delhi High Court & ITAT in their Orders & has been decided in the favour of the assessee. The activity carried on by the assessee are considered within the purview of education & relief has been provided to DBTB.
The ld. CIT (A) held that the Assessing Officer has denied exemption by holding that the assesee is engaged in the business of publishing and sale/purchase of books which is not covered under "education" as per the definition of charitable purpose under section 2(15). The activity has been considered to be business activity since books were being sold at huge profit. The appellant has submitted that the Hon'ble Delhi.
High Court vide order dated 03.05.2017 in 810 to 812 of 2015 and CM No. 24170 of 2015 have allowed exemption under sections 11 and 12. Reliance has also been placed on the decision of the Hon'ble ITAT in appellant's own case for assessment year 2010-11 in ITA No. 674/Del/2014 wherein on similar facts it has been held that the assessee has been engaged in the activity of the education within the meaning of section 2(15) and it is entitled for exemption under section 11. The ld. CIT (A) held that the assessee is eligible for exemption u/s 11 within the meaning of 2(15) of the I.T. Act. to 242/Del/2018 6 Delhi Bureau of Text Books 15. We have gone through the entire record.
The matter stands squarely covered by the order of the Co-ordinate Bench of the Tribunal for the assessment year 2010-11 and the judgment of Hon’ble Jurisdictional High Court in the case of the assessee for the assessment years 2006-07, 2007-08, 2008-09 & 2009-10.
The Hon'ble Delhi High Court in the order dated 03.05.2017 in 810, 811, 812/2015 CM No. 24170 of 2015 have held as under:
"27. Reverting to the case on hand, the Court finds that what the ITAT has held in the impugned order is contrary to the settled law as explained in the above decisions. The ITAT came to the erroneous conclusion that merely because the Assessee had generated profits out of the activity of publishing and selling of school text books it ceased carrying on the activity of 'education.' The ITAT failed to address the issue in the background of the setting up of the Assessee, its control and management and the sources of its income and the pattern of its expenditure. The ITAT failed to notice that the surplus amount urns again ploughed back into the main activity of 'education'. The question to be asked was whether the activity of the Assessee contributed to the training and development of the knowledge, skill, mind and character of students? In the considered view of the Court, the answer to that question had to be, in the facts and circumstances outlined above, in the affirmative.
The Court, accordingly, concludes that the ITAT was incorrect in setting aside the order passed by the CIT (A) and in denying exemption to the Assessee under Section 11 and to 242/Del/2018 7 Delhi Bureau of Text Books Section 12 of the Act. The ITAT erred in holding that the activities carried out by the Assessee fell under the 4th limb of Section 2 (15) of the Act, i.e., 'the advancement of any other object of general public utility' and that its activities were not solely for purpose of advancement of 'education'. Questions (i) and (ii) framed by the Court are, therefore, answered in the negative, i.e., in favour of the Assessee and against the Revenue.
Consistency 29. On the issue of consistency, the Court notes that in the present case, continuously from AYs 1971-72 till 2005-06, exemption had been granted to the Assessee under Sections 11 and 12 of the Act. When for AYs 1975-76 and 1976-77 the AO sought to take a different view, the ITAT reversed that view and the decision of the ITAT was not challenged further by the Revenue. Apart from the fact that the Assessee was earning more profits from its essential activity of education, there was no change in the circumstances concerning the said activity since AY 2005- 06 to warrant a different approach in the AYs in question. …………………………………
The decisions relied upon by Mr. Kaushik appear to have turned on their peculiar facts. The question that arose was whether merely because the Revenue did not file appeals against the decisions against it in some of the AYs, it could be precluded from challenging the decisions on the issue against it in the subsequent AYs. The facts here are stark, though. Having adopted a consistent stand for over 34 years, and with to 242/Del/2018 8 Delhi Bureau of Text Books there being no change in the circumstances, there was no justification for the Revenue to take a different view in the matter only because it was possible to do so."
For assessment order 2010-11, in assessee's own case, subsequent to the order of the Hon’ble Jurisdictional High Court, the Co-ordinate Bench of ITAT Delhi in held as under:
"6. We have carefully gone through the record. There is no denial of the fact, as observed by the Hon'ble High Court, that for about 34 years the assessee has been engaged in the field of education within the meaning of section 2(15) of the Act and consequently eligible the exemption u/s 11 of the Act. Vide paragraph Nos. 20 to 28 of the order in assessee's own case for the assessment years 2006-07 to 2009-10 the Hon'ble High Court, while referring to the decisions in Sole Trustee (1975) 101 ITR 234 (SC), Assam Text Book Production & Publication Corporation Limited vs. CIT (2009) 319 ITR 317 (SC), C1T vs. Rajasthan State Text Book Board (2000) 244 CTR 667 (Raj), Secondary Board of Education vs. ITO (1972) 86 ITR 408 (Ori), Institution of Chartered Accountants of India vs. Director General of Income Tax (Exemptions) (2012) 347 ITR 99 (Del), Commissioner of Income Tax vs. M.P. Rajya Pathya Pustak Nigam (2009) 226 CTR 497 (MP), General of Income Tax (Exemptions) (2014) 362 ITR 436 (Del), examined the question of interpretation placed on the word 'education' occurring in section 2(15) of the Ad, and reached the conclusion that merely because the assessee had generated profits out of the activity of publishing and selling of School text books, it cannot be said that they ceased to carry on the activity of education and by following the rule of consistency, as explained in Parashuram Pottery Works Ltd. vs. Income Tax Officer (1977) 106 ITR 1 (SC), Radhasoami Satsang Saomi Bagh vs. Commissioner of Income Tax (1992) 193 ITR 321 (SC), Hoystead vs. Commissioner of Taxation (1926) AC 155 (PC), CIT vs. Excel Industries (2013) 262 CTR 261 (SC) the Hon'ble High Court held that the Revenue in the absence of any to 242/Del/2018 9 Delhi Bureau of Text Books change of circumstances cannot take a different view from that taken in the earlier years. Now turning to the case on hand it is not the case of Revenue that any change in the circumstances had taken place. We, therefore, while respectfully following the decision of the Hon'ble Jurisdictional High Court agree with the submissions made by the Ld. AR and return a finding that the assessee has been engaged in the activity of education within the meaning of section 2(15) of the Act and consequently they are entitled for an exemption u/s 11 of the Act. With this view of the matter, we dismissed the grounds of appeal of the revenue."
19. Since the facts of the case are similar to those for assessment years 2006-07, 2007-08, 2008-09 and 2010-11, respectfully following the decision of the Hon'ble Delhi High Court, we hereby hold that the assessee has been engaged in the activity of the education within the meaning of section 2(15) even for the assessment years 2011-12, 2012-13 & 2014-15 and consequently it is entitled for exemption under section 11. The Assessing Officer is directed to allow exemption under section 11 with all consequential benefits.
In the result, all the appeals of the revenue are dismissed. Order Pronounced in the Open Court on 09/12/2020.