THE MARG FOUNDATION,MUMBAI vs. ITO (E) 2(4), MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M):

These appeals in ITA No.889/Mum/2017 & 890/Mum/2017 for A.Y.2014-15 & 2011-12 respectively arises out of the order by the ld. Commissioner of Income Tax (Appeals)-1, Mumbai in appeal Nos.CIT(A)- I/IT/E-II(167)/2014-15 & CIT(A)-I/IT/E-II(111)/2013-14 dated

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03/11/2016 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 05/03/2015 & 20/01/2014 respectively by the ld. Income Tax Officer(Exem)-2(4) & Dy. Director of Income Tax (Exemp.)-1(2), Mumbai respectively (hereinafter referred to as ld. AO).

Identical issues are involved in both the appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. The appeal for the Asst Year 2011-12 is taken up for adjudication and the decision rendered thereon would apply with equal force for Asst Year 2012-13 also except with variance in figures.

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but commercial in nature and are undertaken for earning profit. The CIT(Appeals) erred in coming to various conclusions on an erroneous and / or without any factual or legal basis. 7. The learned CIT (Appeals) erred in confirming the action of the Assessing Officer and holding that provisions of Section 11 of the Act were not applicable in the case of the Appellant Trust. 8. Without prejudice to ground nos. 1 to 7 and even assuming without conceding that activities of the Appellant Trust are commercial in nature, the CIT (Appeals) erred in holding that the unearned income in the nature of grants, etc. is chargeable to tax. The Appellants crave leave to add, to alter or amend the grounds of appeal which are without prejudice to one another.”

3.1. We find that the assessee is a trust registered with Director of Income Tax (Exemptions), Mumbai u/s 12AA of the Act and also is registered with the Charity Commissioner, Mumbai. The assessee trust had filed its return of income for the Asst Year 2011-12 on 30.9.2011 together with the Income & Expenditure Account, Balance Sheet and Audit Report in Form 10B declaring total income of Rs Nil after claiming exemption u/s 11 of the Act. On perusal of the financial statements of the assessee, the ld AO arrived at the prima facie conclusion that the activities of the assessee trust fall under the ambit of ‘advancement of

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any other object of general public utility’ u/s 2(15) of the Act, which defines the expression ‘ Charitable Purpose’ and accordingly, the assessee would be hit by the proviso inserted thereon from Asst Year 2009-10 onwards. The ld AO made the following observations in his assessment order:-

i. During the course of assessment proceedings the assessing officer observed that the activities of the assessee are primarily in the nature of "advancement of any other object of general public utility only. Therefore, the assessee was issued show cause notice which is reproduced in para 3 of the assessment order. In response to the said notice the assessee vide letter dated 30.12.2013 submitted reply which is reproduced in para 3.1 of the assessment order.

ii. The assessing officer after quoting the provisions of Section 2(15) of the Income Tax Act, 1961 in the assessment order has also reproduced Clause 7 of 'OBJECTS OF THE TRUST of assessee's trust deed in the assessment order However, after analyzing the activity of the assessee, it was noticed that the assessee is primarily engaged in doing publication and selling of the various books and CDs relating to various field.

iii. AO also examined the claim of the appellant regarding its educational activities and observed that word of 'education' word education is not defined in the Act. Therefore, it is necessary to take the definition of 'education' in right perception and in right direction for which it has been included in 'charitable purpose'. 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

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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 travelling one acquires fresh knowledge. Likewise, if one reads newspapers and magazines, sees pictures, visits art galleries, museums and zoos, who thereby add to his knowledge. Again, when one grows up and have dealings with other people, some of whom are not straight, one learns by experience and thus adds to his knowledge of the ways of the world. If one is not careful, his wallet is liable to be stolen or he may be liable to be cheated by some unscrupulous person. The thief who removes wallet and the swindler who cheats, teaches a lesson and in the process makes one a wiser though poorer. If one visits a night club, he gets acquainted with and add to his knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling as held in the case of Sole Trustee, Loka Shikshana Trust Vs. Commissioner Of Income-Tax, Mysore (101 ITR 234).

iv. Referring to the deed of trust, Assessing Officer noted that the word "education" is mentioned by the maker of the trust in a rather ceremonial or ritualistic fashion as a label for what he considers to be charitable objects. The set of objects, in clause 7 of the deed, does not appear to be stated there merely as a means of serving the charitable purpose of "education". Education was mentioned as the object in the deed only as a convenient cloak to conceal and serve the real and dominant purpose

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which was to run a profitable business without paying the tax on it. Mere making of profit as a consequence or incident of altruistic activity is not decisive of the real purpose or object of the activity, so also the carrying on of a business for profit does not cease to be so merely because losses are actually incurred in certain ms because those who carry it on call it "education". It seems that the educational effects of a publishing business are only indirect, problematical, and quite incidental so that, without imposing any condition or qualification upon the nature of information to be disseminated or material to be published, the mere publication of views cannot be said to serve a purely or even a predominantly educational purpose in its ordinary and usual sense.

3.2. We find that based on the aforesaid parameters concluded that the assessee trust is not engaged in any activity which can be constituted as ‘education’ and that it is merely engaged in publishing and selling of books and CDs which does not fall within the term ‘education’. The ld AO also observed that the various receipts derived by the assessee trust are as under:-

Income Amount % to the Total income By Interest Accrued/ 8,35,568 2.96% By Grants 21,50,000 7.62% By Sales Books 1,67,62,012 59.44% Magazines 3,37,532 1.20% DVD's and VCD's 54,591 0.19% By Contribution for 21,71,202 7.70%

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Publishing By Subscription 34,29,707 12,16% By Publishing 21,80,876 7.73% Advertisements By Income from Other 2,76,717 0.98% Sources Total Income 2,81,98,205 100%

3.2.1. The aforesaid receipts were duly applied for the objects of the trust in the following manner:-

Expenditure Amount % to the Expenditure 11,94,828 0.50% To Establishment expenses 1,11,30,181 4.66% To Legal and Professional Fees 82,725 0.03% To Audit Fees 6,66,443 0.28% TO Depreciation To Expenditure on Objects of the Trust 0 0.00% Religious (a) 22,53,50,912 94.30% (b) Educational 0 0.00% (c) Medical Relief 0 0.00% (d) Relief of Poverty 0 0.00% (e) Other Charitable Objects 0 0.00% (0 Expenditure on Artistes & Programmes & Recording (Net) 10,954 0.00% To Deficit of SRTT Endowment Fund Written off 5,30,338 0.22% To Inventory Change 100% 23,89,75,381 Total Expenditure

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SCHEDULE 6 : EXPENDITURE ON OBJECTS OF THE TRUST 1 Design, Printing and Production 1,25,14,043 Expenses Less: Printing and Production transferred to 7,84,587 1,17,29,456 2 Freight, Packing and Forwarding 12,06,930 Charges 3 Salaries 59,99,359 Less: Transferred to SRTT 1,90,331 58,09,028 4 Contribution to Provident and Other 13,78,292 5 Staff Welfare Expenses 2,25,254 6 Honorarium 3,50,000 7 Telegram, Postage and telephone charges 3,88,616 8 Traveling and Conveyance 5,76,165 9 Joint Publication Expenses 3,69,437 10 Royalty 42,750 11 Commission on Sale 3,34,155 12 Advertisement and Publicity 40,600 13 Provision for Doubtful Debts 2,25,35,912

3.3. From the aforesaid income and expenditure account, the ld AO observed that the concentration of the assessee is on the activity of publishing of books which account for 59.44% of its total income and 94.30% of its total expenditure under the head ‘educational’ and accordingly concluded that the activities of the trust falls in the category of ‘advancement of any other object of general public utility’ u/s 2(15) of

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the Act. We find that the ld AO also observed that the assessee is engaged only in publication and selling of books & CDs of various kinds which is commercial in nature having a profit motive. Accordingly, the ld AO concluded that the assessee is not entitled for exemption u/s 11 of the Act in respect of surplus derived by the trust in its income and expenditure account and accordingly sought to bring to tax the sum of Rs 20,46,825/- as a regular private person engaged in commercial activities.

3.4. We find that the assessee had pleaded that it has the main object of promotion of Education in the field of art, culture and literature by various modes. Education in its general sense is a form of learning in which the knowledge, skills and habits of a group of people are transferred from one generation to the next through teaching, training or research. Education is a process either formal or informal that shapes the potential of a maturing organism. Informal education results from the constant effect of environment and its strength in shaping values and habits cannot be overestimated. Formal education is a conscious effort by human society to impart the skills and modes of thought considered essential for social functioning. Education is defined to mean the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life. Education can therefore be a formal education delivered in schools / colleges or universities or it can also be an informal education delivered through unstructured methods. 'Education' is not restricted to subjects of academics within schools and colleges but the term is wide enough to embrace within itself spreading of knowledge in various fields like art, culture and literature. Considering the activities of the assessee Trust, the same can be considered as falling within the meaning of "Classical Education". India has a rich art and cultural background and

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each part of the country has its own Art and Cultural treasures. The literature available in many languages is informative as well as educative and ought to be passed on from generation to generation. The object of the trust is to educate people in the non-conventional areas of art, culture and literature by spreading knowledge by publishing books, etc. The assessee Trust has carried on its activities, in pursuance of its objects, which are 'educational' in nature. The subjects of art, music and literature are part of formal education, degree courses offered by various universities.

3.4.1. We find that the assessee had pleaded that it is not carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to trade, commerce or business and hence the proviso to section 2(15) of the Act does not apply to it all. It was vehemently pleaded that the activities of the assessee are in the ordinary course of advancement/achievement of its educational objects which includes publishing of educational books and magazines/journals on the subjects of art, culture and literature. The books published by the assessee trust find place in college libraries and universities and act as a reference material for academic courses and are widely used by the students undertaking special studies in the field of Indian Art & Culture. It was also stated that the book of Shri Rabindranath Tagore enabled the trust to fetch some marginal surplus due to various grants received for the same because it was a commemorative publication. In certain cases, due to the demand, the assessee trust reprinted the books. Since substantial cost of research and designing was incurred in earlier years, the books reprinted result in marginal surplus in the year of sale of those books. The assessee trust published quarterly magazines/journals during the year, containing serious information about various facets of Indian

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Art, the cultural events of India etc. This activity of publishing of books was carried out without any commercial motive and is part of its object of imparting education. The proceeds collected from sale of books / magazines etc were utilised towards the objects of the trust. The assessee submitted that it had received contributions aggregating to Rs 21,71,202/- during the year which represents grants received for publishing specific books. Advertisements are published in the quarterly magazines/journals. The advertisement revenue subsidizes the cost of publishing the magazines/journals.

3.5. We find that the ld CITA disregarded all the contentions of the assessee and upheld the action of the ld AO.

3.6. We find that the ld DR before us had filed a written submission dated 15.2.2018 which is already on record. We find that the ld DR mainly placed reliance on the decision of Hon’ble Apex Court in the case of Sole Trustee, Lok Shikshana Trust vs CIT reported in 101 ITR 234 (SC) for elaborating the meaning of the term ‘education’. The ld DR mainly emphasised on the point that the predominant activity is only publishing and sale of books and magazines for the assessee trust which is commercial in nature with a profit motive and hence does not fall within the definition of amended definition of ‘charitable purpose ‘ u/s 2(15) of the Act read together with its proviso thereon. The ld DR also pleaded that the books published by the assessee trust cater only to the upscale clientele and does not cater to the general public at large.

3.7. We find that the assessee trust was formed on 1.7.2009 being hived off from the famous National Centre for Performing Arts (NCPA) , the premier cultural organisation established in 1969 committed to preserving and promoting India’s rich and vibrant artistic heritage in the fields of

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music, dance, theatre, film, literature and photography, as well as presenting new and innovative work by Indian and International Artists from a diverse range of genres including drama, contemporary dance, orchestral concerts, opera, jazz and chamber music. We find from the Trust deed that the Settlor had created the assessee as a public charitable trust for the preservation and promotion of art, culture, literature, science and encouraging creativity and art initiatives. The main objects of the assessee trust are as under:-

“7. OBTECTS OF THE TRUST The objects of the Trust shall be wholly for public and charitable purposes Without prejudice to the generality of die foregoing objects or' purposes, the following shall be deemed to be the principal objects of the Trust: 7.1 Propagation, research, advancement, preservation and education in all fields of art, science/ literature, including but not limited to painting, sculpture, weaving, ceramics, crafts, design, photography, theatre, cinema, dance, music, architecture, archaeology, history, natural history and all related historical, geographical and social sciences and disciplines with special reference to the Indian subcontinent but more widely to Asia, and in particular the spread of knowledge in the aforesaid fields by publication of magazines, books, papers, brochures, journals, catalogues, calendars, diaries, production of films or promulgation by any other media now known or hereafter devised and by any other means and programmes; 7.2 To work towards educative purposes including but not limited to arrangements for talks, lectures, seminars, courses, assistance to scholars, teachers, universities, colleges, schools or other educational institutions, assistance to museums, starting and establishment of such institutions or museums, establishment of trusts, and grant of- fellowships, scholarships, grants, awards and monetary or other assistance to any person, group of persons, institute or any other entity having objects similar to those of the Trust or for the purposes mentioned in the Article 7.1. The Trust shall not exist for purposes of profit; 7.3 To undertake any other activity which is ancillary to and in furtherance of the objects of the Trust;

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7.4 To undertake the advancement of any other object of general public utility or importance as may be decided by the Board of Trustees from time to time; 7.5 To do all such lawful acts, deeds or things as are incidental, conducive and necessary to the attainment of any of the above objects. PROVIDED ALWAYS that the objects of the Trust hereby created shall not be restricted to any community, caste, creed, colour, race, religion, sex or language or be used to promote any political or other ideology and the Trust shall be for the benefit of the public generally.”

3.7.1. We find that the assessee trust in pursuance of its charitable objects had resorted to come out with various publication of books , magazines / journals which would depict the rich cultural heritage of India together with its art, literature, science, history, architecture, archeology, theatre, cinema, dance, music etc. In this regard, the following documents enclosed in the paper book filed by the assessee assumes greater significance and would be relevant for adjudication of the activities of the assessee trust so as to consider whether the same is charitable in nature or not :- a) Letter from Universities/private scholars seeking permission for using publications of the assessee trust as reference material – enclosed in pages 1 to 16 of the paper book dated 18.12.2017. The details of the same are as under:-

Sr.No Date of receipt of mail from Name of the Name of the book from which the university/institution/ University/ Scholar article will be used by the Scholars requiring the article University/Person

1 18/12/2008 Concordia Persian Masters: Five University, Montreal centuries of paintings 2 19/01/2009 IBS abroad, Delhi The Idea of Delhi 3 20/07/2009 University of Wu Hung (1998), "Paradise Edinburg , UK Images in Early Chinese Art"

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4 14/02/2011 Kalamanzoo College Krishna and Navagunjara Library Marg Bol. 54 Issue 1 5 31/05/2011 Bharatnatayam Bansari Shah, CEPT university, Ahmedabad 6 08/04/2015 Yashwaswini Silent Splendour: Places of the Deccan Sharma, Cardiff University 7 14/08/2015 Concordia Temple Towns of Tamil University, Montreal Nadu

b) Articles from books published by assessee trust used by various universities as part of its curriculum – enclosed in pages 17 to 69 of the paper book dated 18.12.2017. The details of the same are as under:- (i) Book titled as ‘The Idea of Delhi’ edited by Romi Khosla together with picturesque beauty of Delhi with its write up – enclosed in pages 17 to 31 of the paper book dated 18.12.2017. (ii) Book on ‘Temple Towns of Tamil Nadu’ – enclosed in pages 32 to 33 of the paper book dated 18.12.2017. (iii) Book on ‘Persian Masters- five centuries of painting’ - enclosed in pages 34 to 51 of the paper book dated 18.12.2017 (iv) Book on ‘ The Flowering of a Foreign Faith - New Studies in Chinese Buddhist Art’ - enclosed in pages 52 to 67 of the paper book dated 18.12.2017 (v) Book on ‘Silent Splendour Palaces of the Deccan (14th-19th Centuries)’ - enclosed in pages 68 to 69 of the paper book dated 18.12.2017 c) Details of various libraries and institutions who have subscribed to the publications of the assessee trust in the form of statement showing the number of libraries ,universities (both inland and foreign), museums, art

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galleries, government bodies and individuals , using the same – enclosed in pages 70 to 106 of the paper book dated 18.12.2017. d) Details of sample of famous publications of the assessee trust - enclosed in pages 107 to 110 of the paper book dated 18.12.2017. e) Copies of sample letters written to Grantees seeking for financial support for publications – enclosed in pages 111 to 145 of the paper book dated 18.12.2017.

3.7.2. We find that over the years, the assessee trust had published over 240 magazines and 120 books thereby making them a veritable encyclopedia of art and culture. The profile of Marg Publications reveal that their publications enjoy a loyal readership and a very high reputation nationally and internationally, being read not only in the major cities, but also in remote towns in India and across 30 countries abroad. Their readers include Indophiles, connoisseurs and art dealers, executives, scholars, architects, designers, and students all over the world. We find that for some of the publications of assessee trust, grants are received from Ministry of Culture, Government of India. The evidences in this regard are enclosed in pages 118 to 120 of the paper book dated 18.12.2017.

3.8. It is not in dispute that the assessee had derived receipts from publishing and sale of books, magazines / journals and CDs. But it would be pertinent to examine as to what type of books and magazines were published and sold by the assessee and that whether the same is in consonance with its objects enumerated in the Trust Deed. The various publications of the assessee trust as detailed in the earlier paragraphs supra clearly make the assessee fall within the ambit of the expression ‘Classical Education’. Needless to mention that the expression ‘Classical Education’ also falls within the ambit of ‘Education’ which is admittedly

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‘Charitable purpose’ u/s 2(15) of the Act. Once the activities of the assessee trust falls within the ambit of ‘Education’ u/s 2(15) of the Act, the applicability of proviso to section 2(15) of the Act has no role to play as the same is applicable only if the charitable object is ‘advancement of any other object of general public utility’. Reliance in this regard is placed on the Circular of Central Board of Direct Taxes (CBDT) vide Circular No. 11/2008 dated 19.12.2008.

3.9. We find that the entire grants received for publications are also reflected as ‘Sales’ in the Income and Expenditure Account of the assessee. Now whether the publication and sale of books and magazines / journals could be construed as charitable in nature need to be ascertained. We find that this issue has been squarely addressed by the Hon’ble Delhi High Court in the case of Delhi Bureau of Text Books vs Director of Income Tax (Exemptions) reported in 394 ITR 387 (Del) wherein it was held that the assessee society engaged in printing, publication and distribution of school text books at subsidized rates or even free and generated profits out of these activities , it could not be concluded that assessee ceased carrying on charitable activity of education. We find that this judgement had duly distinguished the case law relied upon by the ld DR in 101 ITR 234 (Lok Shikshana Trust case) and had also considered all the arguments advanced by the ld DR in the case before us. The questions raised before the Hon’ble Delhi High Court are as under:- Questions of law 2. While admitting these appeals on 16th December 2015 this Court framed the following questions of law: "(i) Whether ITAT was correct in law and on facts in setting aside the order passed by CIT (A) and thereby denying exemption to the Assessee under Sections 11 and 12 of the Income Tax Act? (ii) Whether the ITAT was correct in law and on facts in holding that the activities

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carried out by the Assessee fall under the 4th limb i.e., "the advancement of any other object of General Public Utility" of the definition of the term "charitable purpose" under Section 2 (15) of the Act and not under the 2nd limb "education"? (iii) Whether ITAT could re-examine the issue already decided by it vide order dated 30.09.1980 in favour of the Assessee for AY 1975- 76 and 1976-77, without referring the same to the large Bench particularly when there is no change in the activities carried out by the Assessee throughout these years?" 3.9.1. We find that the assessee before the Hon’ble Delhi High Court was engaged in printing and publication of text books for Class I to VIII of Government Schools, Municipal Corporation of Delhi ('MCD') schools, New Delhi Municipal Council ('NDMC') Schools and Delhi Cantonment Schools which were provided at subsidized rates. We find that the Hon’ble Delhi High Court also considered the yet another decision rendered by the Hon’ble Apex Court in the case of Assam State Text Book Production & Publication Corpn Ltd vs CIT reported in 319 ITR 317 (SC). We find that the Hon’ble Delhi High Court disposed of the questions raised before it by holding as under:- Is the Assessee engaged in the activity of 'education'? 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 non-profit 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 Assessee to the students at subsidized rates. Even the textbooks books, reading materials and school bags are being distributed free to deserving students. The essential activity of the Assessee is connected with 'education' and nothing else.

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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 travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes our wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling." 22. The preparation and distribution of text books certainly contributes to the process of training and development of the mind and the character of students. There does not have to be a physical school for an institution to be eligible for exemption. What is important is the activity. It has to be intrinsically connected to 'education'. 23.1 In Assam State Text Book Production and Publication Corpn. Ltd. (supra), the facts were more or less similar. There, the Assessee which was initially constituted as 'Central Text Book Committee' changed its name to the 'Assam Text Book Committee' with ten members nominated by the State Government. The Board was then converted into a corporation in 1972. The entire share capital of the corporation was owned by the Government of Assam. 23.2 There again, the AO sought to deny exemption on the ground that the Corporation was not an 'educational institution' under Section 10 (22) of the Act. According to the AO, during the relevant AYs, the Assessee "had income exclusively from publication and selling of text books to the students" and, therefore, the exemption was not available. 23.3 The High Court agreed with the AO and concluded that "the Assessee did not exist solely for educational purposes; that it did not solely impart education and that its income during the relevant assessment years was only from publishing and sale of text books." The High Court construed this as 'profit-earning activity'.

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23.4 The Supreme Court disagreed with the High Court. It noted that "the aim of the said Corporation is to implement the State's policy on education". It took note of the fact that in the year 1975, the CBDT had granted exemption under Section 10 (22) of the Act to the Tamil Nadu Text Books Society, which had performed activity similar to the Assessee. The Supreme Court also referred to the decision in Rajasthan State Text Book Board (supra) as well as the decision of the Orissa High Court in Secondary Board of Education (supra). It concurred with the approval of the following operative portion of the judgment in Rajasthan State Text Book Board (supra): "It is not disputed before us that the aims and objects of the Tamil Nadu Text Book Society and those of the Respondent-Assessee are almost identical. It is also not shown to us that the surplus amount, if any, of the Respondent-Assessee, is used for any other purpose or distributed to other members. The Commissioner of Income-tax (Appeals) as well as the Tribunal have noticed that even if some amount remains surplus, that is utilised only for the purposes of education. Thus, having regard to the concurrent findings of fact recorded by the Commissioner of Income-tax (Appeals) and the Tribunal and also taking note of the letter of the Central Board of Direct Taxes itself, it is not possible for us to say that the order of the Tribunal is erroneous in any way. In this way, no question of law arises for consideration much less a substantial question of law." 23.5 The Supreme Court in Assam State Text Book Production and Publication Corpn. Ltd. (supra) concluded as under: "Following the judgement of the Rajasthan High Court, we are of the view that, in this case, the High Court, in its impugned judgement, 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 judgement 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 judgements mentioned 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." 24. In Institute of Chartered Accountants of India (supra), the question that arose before this Court was whether the Petitioner-Institute could be denied exemption in view of the proviso to Section 2 (15) of the Act since it

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was engaged in activity of 'advancement of any other object of general public utility.' Although the Court held that the Petitioner could not be recognized as an educational institute, it accepted the plea that the Petitioner there was engaged in advancement of any other object of the general public utility. The Court concluded that merely because there was profit generated as a result of the activity it could not be concluded that the 'institute' should be disentitled to exemption. It was held that "a very narrow view had been taken that the Institute was holding coaching classes and that this amounted to business" and that therefore, 'the question whether the Institute carried on business had not been examined with proper perspective." 25. In CIT v. M.P. Rajya PathyaPustak Nigam [2009] 181 Taxman 50 the Madhya Pradesh High Court held as under: "17. From a perusal of the aforesaid decisions, it is lucid that for the entitlement for getting exemption for the assessment year, it is required to see the activities of the Assessee. That is the acid test. If the income/profit is applied for non-educational purposes, it is decided only at the end of the financial year. It is to be seen whether the Assessee is engaged in any kind of educational activities. The authorities which we have referred to above have laid down the criteria under what circumstances an Assessee can claim exemption being involved in educational purposes and how the income is spent." 26. In Council for the Indian School Certificate Examinations v. DGIT (Exemptions) [2014] 362 ITR 436/[2012] 20 taxmann.com 505/206 Taxman 466 (Delhi) the Court held the Council for the Indian School Certificate Examinations to be an educational institution and quashed the order which denied it exemption under Section 10 (23c) (vi) of the Act. It was reiterated as under: "It is, therefore, clear that courts have laid emphasis on the activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient." 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 was again ploughed back into the

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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. 28. 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 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.

3.10. Respectfully following the aforesaid decision of Hon’ble Delhi High Court supra, we hold that the activities of the assessee trust to be charitable in nature falling under the ambit of ‘Education’ and not ‘advancement of any other object of general public utility’ and hence proviso to section 2(15) of the Act does not apply to the assessee. Consequentially the assessee would be eligible for exemption u/s 11 of the Act. Accordingly, the grounds raised by the assessee are allowed. 4. In the result, both the appeals of the assessee are allowed.

Order pronounced on 30/03/2021 by way of proper mentioning in the notice board.

Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 30/03/2021 KARUNA, sr.ps

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Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. 6. //True Copy//

BY ORDER,

(Asstt. Registrar) ITAT, Mumbai