ITO (E), NEW DELHI vs. EKLAVYA FOUNDATION, NEW DELHI

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ITA 5176/DEL/2015Status: DisposedITAT Delhi18 June 2018AY 2011-127 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee society is purely engaged in charitable activities without profit motive, and the sale of books is part of its educational purpose. The Tribunal relied on its own previous orders and the Delhi High Court's affirmation.

What were the facts?

The assessee, Eklavya Foundation, a registered charitable trust, was engaged in activities including selling and publishing books. The Assessing Officer held that the sale of books constituted business and attracted the proviso to Section 2(15) of the Income Tax Act, denying exemption.

What were the issues?

Whether the sale of books by a charitable trust engaged in educational activities amounts to business, thereby attracting the proviso to Section 2(15) and disentitling it from exemption.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11,Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “D” NEW DELHI

Before: SHRI G.D. AGRAWAL & SHRI AMIT SHUKLA

For Appellant: Shri Amit Jain, Sr.D.R
For Respondent: Shri Somil Aggarwal & Deepesh

The aforesaid appeal has been filed by the Revenue against the impugned order dated 04.06.2015, passed by ld. CIT (Appeals)-XL, New Delhi for the Assessment Year 2011- 12. In the grounds of appeal following grounds have been taken:- “On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in holding that the assessee society is involved in imparting education despite the fact that the assessee society was engaged in the activities of selling & publishing books which is in the nature of business, trade within the meaning of amended provisions of section 2(15) of the Income Tax Act, 1961.”

2. At the outset, ld. counsel for the assessee submitted that this issue stands covered by the decision of the Tribunal in assessee’s own case for the Assessment Years 2009-10 & 2010-11 in and 2870/Del/2014, order dated 18.09.2017. He further informed that the decision of the Tribunal has been affirmed by the Hon'ble High Court also in ITA No.232/2018, vide judgment and order dated 23.02.2018 and ITA No.267/2018, judgment and order dated 4.4.2018. Thus, in the light of the aforesaid judgment of Hon'ble Delhi High Court in assessee’s own case, the appeal of the Revenue should be dismissed.

3. Learned DR also admitted that the issue involved in the aforesaid appeal is covered against the Revenue by the orders of the Tribunal and the Hon'ble High Court in the earlier years.

4.

The facts in brief are that the assessee’s society was registered as a charitable trust u/s.12A vide order dated 15.12.1984. The main objects of the Trust were to evolve and implement educational system for social change and general upliftment of Indian Society, to evolve a education methodology and curriculum for building up a scientific historical understanding of the structure of society and its development and development problem involving skils, the spirit of inquiry and scientific temper in society to build up a people’s science movement. During the course of assessment proceedings, Assessing Officer noted that assessee’s receipts were from following activities:-

(a) Receipt of Rs.10,25,414.00 for teaching learning materials Eklavya. (b) Receipt of Rs.15,07,245/- from Sandarbh. (c) Receipt of Rs.71,52,674/- from sale of Dklavya Publications. (d) Receipt of Rs.19,59774/- from sale of other books. (e) Receipt of Rs.5,49,775/- from sale of teaching learning materials.

(f) Apart from this the assessee has earned income of Rs.4.13 lakhs from royalty and misc. receipts, and has also receipts of 4.15 crore being grants from Govt. and other organizations.

(g) The assessee had also been involved in various projects such as ‘shiksha Protsahan Kendra; ‘Striving to reach new heights’ etc. which are under specific grants received from Govt./other entities.”

5.

Learned Assessing Officer observed that the assessee is claiming the activities as education which also includes publishing of books and magazine for children and related resource material and therefore, the receipts from such activities does not fall within the ambit of educational purpose. After detailed discussion, he held that sale of books by the assessee is a business, and therefore, proviso to Section 2(15) is attracted. Accordingly, he denied the claim of exemption u/s.11 on sale of books and other publication.

6.

Ld. CIT (A) held that similar matter had come up before the ld. CIT(A) in the Assessment Year 2009-10 and 2010-11, wherein exemption was denied to the assessee precisely on same grounds. Thus, following the earlier orders of the ld. CIT (A), he directed the Assessing Officer to allow the exemption u/s. 11(1) with all consequential benefits.

7.

We find that this issue had been discussed in detail by the Tribunal in assessee’s own case in the Assessment Years 2009-10 & 2010-11 wherein the Revenue’s appeal were dismissed. The relevant observation and the finding of the Tribunal after considering the detailed observation of the ld. CIT(A) and CBDT circular no.11/2008 dated 19.12.2008 reads as under:-

“7 Keeping in view the perfect finding given by the Ld. First Appellate Authority on the issue involved in the appeal filed by the department, we are of the considered view that the Ld. First Appellate Authority has rightly concluded that Eklavya

Foundation is engaged in social cause without any profit motive and Assessing Officer alleged that it is not the educational institution and is carrying out business activities and it is not maintaining separate books of accounts, all these allegations are misconceived notions of the A.O. After going through the impugned order we find that the Ld. First Appellate Authority has rightly allowed the appeal of me assessee, after taking into consideration the impugned order, ease laws cited, paper book filed. We find no infirmity in the impugned order which accepted the contentions of the assessee that Eklavya Society is engaged in charitable purpose as defined u/s 2(1 5) of the Act.

8. After going through the rules and regulations of Eklavya Foundation it appears that the society is purely engaged for charitable purpose and the society is also granted registration u/s 12A of the Act vide order no. 1696 of DIT(E) dt. 15.12.1984 and notified u/s 80G(5) of the Act dt. 27lh August, 2007.

We extract the utilization of Society’s Income and Properties towards Aims and Objects as per the Memorandum of Association (provided at page no.93 of assessee’s paper book.

“V. Utilization of Society’s Income and Properties towards Aims and Objects:-

All the incomes, earnings, movable and/or immovable properties of the Society shall be solely utilised and applied towards the promotion of its aims and objects only as set forth in this Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividends, bonus, profit or in any manner whatsoever to the present or past members of the society or to any person or persons making claims through any one or more of the present or the past members. No member of the society shall have any personal claim on any movable and/or immovable property o]' the society or make any profit, whatsoever, by virtue of his/her membership.”

8.1 A perusal of the above Clause clearly shows that the society is solely engaged in charitable activities and is not running with any profit motive.

8.2. In the totality of the facts and circumstances of the case the appeal of the Revenue is dismissed.”

8.

The aforesaid order of the Tribunal has now been confirmed by the Hon'ble High Court also by two separate orders (supra). Thus, consistent with the binding judicial precedent for the earlier years as confirmed by the Hon'ble Jurisdictional High Court, we do not find any merit in the grounds by the Revenue and the same is dismissed.

9.

In the result, the appeal of the Revenue is dismissed.

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