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Income Tax Appellate Tribunal, DELHI BENCH “B” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER AMIT SHUKLA, JM The aforesaid appeal has been filed by the Revenue against the impugned order dated 09.08.2018, passed by Ld. Commissioner of Income Tax (Appeals)-XL, Delhi for the Assessment Year 2016-17.
The Assessing Officer has noted that the assessee was accorded registration u/s.12A vide letter/order dated 27.12.1973. The assessee society was also notified u/s.10(23)(c)(iv) as it was engaged in publication of text books from class I to VIII for government Schools, MCD Schools, NDMC Schools and Delhi Cantonment Schools, its books has been published and sold at subsidized rates with nominal profit to the students and wholesale dealers. The assessee- society also claims to have distributed free books/reading material and school bags to needy students. The society is running and managed by the officials of Education Department of Government of Delhi. The Assessing Officer noted that the assessee had shown sale of books of Rs.52,11,53,089/- against cost of Rs.33,43,20,570/- and other expenditure of Rs.1,67,52,841/-. Thus, there was a surplus/profit of more than Rs.17 crore which is almost a profit margin of 32.63%. The Assessing Officer held that since assessee has earned profit, therefore, if even the registration has been granted to the assessee u/s.12A that is not sacro sanct, and therefore, he has satisfied that entire sale of purchase of books is a business activity not eligible for presumption u/s. 11 and 12 of the Act. Accordingly, he computed the income as ‘business profit’ and determined the taxable income at Rs.21,25,36,966/-. From the perusal of the impugned appellate order, it is seen that issue had arisen in the case of the assessee in respect of earlier years starting from Assessment Years 2006-07 to 2009-10 which are pending before the Hon’ble High Court and for the Assessment Year 2010-11 which was before the ITAT. Further already Hon’ble High Court has decided the issue in favour of the assessee and following this order of the Hon’ble Delhi High Court. This Tribunal has already decided this issue in favour of the assessee in the earlier years. The relevant observation of the Hon’ble Delhi High Court and the Tribunal has been incorporated in the impugned appellate order and following the same the ld. CIT(A) has allowed the assessee’s appeal.
“4.1.2 I have considered the assessment order and also the submissions of the appellant. I have also referred to the decision of the Hon'ble Delhi High Court in to 812 of 2015 and CM No. 24170 of 2015 vide order dated 03.05.2017 [(2017) 81 taxmann.com 412 (Delhi)] and order of the Hon'ble ITAT Delhi in appellant's own case for assessment year 2010-11 in ITA No. 674/Del/2014. Tire Hon'ble Delhi High Court in the order dated 03.05.2017 (supra) 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 was 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 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 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."
4.1.3 For assessment order 2010-11, in appellant's own case, the Hon'ble ITAT Delhi in have 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 asses see 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), CIT 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 Act, 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 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." 4.14. Since 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 and Hon’ble ITAT Delhi, it is held that the assessee has been engaged in the activity of the education within the meaning of Section 2(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. Ground of appeal no.1 is allowed.”
3. In view of the aforesaid facts precisely on similar issue Hon’ble Jurisdictional High Court in the case of the assessee for the earlier years have held that assessee is eligible for exemption u/s.11 and 12 of the Act. Following the same, the Tribunal has decided the issue in favour of the assessee by granting exemption u/s.11 and 12. Even during this year also, there is no change in the facts and circumstances of the case and similar reasons have been given by the Assessing Officer, and therefore, consistent with the earlier order precedents which has been followed by the ld. CIT(A), we direct the Assessing Officer to allow the exemption u/s.11 and 12.
Accordingly, the appeal of the Revenue is dismissed. Above decision was announced on conclusion of Virtual Hearing in the presence of both the parties on 27th September, 2021