THE DIRECTOR OF INCOME-TAX vs. KARNATAKA TEXT BOOK SOCIETY,

THE DIRECTOR OF INCOME-TAX

THE ASSISTANT DIRECTOR OF

Facts giving rise to filing of this appeal briefly stated are that assessee is a society promoted by Government of Karnataka to acquire and to take over the business and other activities of Government of Karnataka relating to preparation, printing, publication and distribution of school text books, as well as to publish, print, sale, supply or otherwise being text books, note books and other books and literature on all subjects in different languages and to make the same available at reasonable prices before commencement of the academic session. The society is also required to get books in different languages written by committee of experts on various subjects as per the syllabi approved by Government of Karnataka and other competent authority etc. The assessee filed its return of income for the assessment year 2007-08 and deducted unspent amount of Rs.7,42,50,576/- to the utilized in the financial year 2007- 2008 out of total grant received by the government to the extent of Rs.13,01,21,594/-. The aforesaid amount was claimed as exemption under Section 11 read with

Being aggrieved, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) inter alia by placing reliance n the decision of the Supreme Court in the case of ‘ASSAM TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD. VS. CIT’, [2009] 319 ITR 317 held that state text books societies are entitled for exemption under Section 10(22) of the Act, which was similar to Section 10(23C) of the Act before its amendment. Thus, it was held that the assessee was held entitled to exemption under Section 10(23C)(iiiab) of the Act and the

Learned counsel for the revenue submitted that the assessee would not fall within the category of educational institution and the assessee is carrying on an activity which falls under Section 10(23C)(iv) of the Act and therefore, the approval from the prescribed authority is mandatory. It is further submitted that since, the assessee has not obtained any approval, therefore, the Commissioner of Income Tax (Appeals) as well as Income Tax Appellate Tribunal erred in setting aside the order passed by the Assessing Officer. It is further submitted that the judgment relied upon by the tribunal in the case of ASSAM TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD., supra is in the context of Section 10(22), which has now been omitted by virtue of an amendment.

On the other hand, learned Government Advocate has supported the order passed by the Commissioner of Income Tax (Appeals) as well as the Income Tax Appellate Tribunal.

We have considered the submissions made on both the sides and have perused the record. The Supreme Court in ASSAM TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD., supra has interpreted the definition of an educational institution in para 6. The relevant extract of which is reproduced below for the facility of reference: Following the judgment of the Rajasthan High Court, 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

In view of the aforesaid enunciation of law by the Supreme Court, it is evident that all State controlled educational committees / boards that have been constituted to implement the educational policy of the States have to be treated as educational institutions.

In view of the aforesaid enunciation of law by the Supreme Court, the assessee, which has been constituted to implement the educational policy of the State has to be