M/s M.P.Pathya Pustak Nigam., Bhopal V. The CIT, Bhopal

ITA 300/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0077 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-09-2009
• Assessment Year: misc
• Appeal Filed On: 10-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Keywords: Charitable institution; Source of fund; Question of law; Set aside
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE (S.M.C.-I) BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER PAN NO. : AAAAM0318C I.T.A.NO.300/IND/2009 U/S 12AA(1)(B)(II) M.P.PATHYA PUSTAK NIGAM, COMMISSIONER OF INCOME-TA X, JAIL ROAD, VS BHOPAL. BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI PRAKASH JAIN, C.A. RESPONDENT BY : SHRI V.K.KARAN, ADDL. CIT DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX, BHOPAL, DATED 15 TH APRIL, 2009, REFUSING TO GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE INCOME-TAX ACT, 1961. -: 2 :- 2 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PA RTIES, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND PERUSE D THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE ASSESSEE SOCIETY HAD APPLIED FOR REGISTRATION U /S 12AA OF THE INCOME-TAX ACT, 1961. THE APPLICATION WAS REJECTED BY THE LD. COMMISSIONER. HOWEVER, THE TRIBUNAL SET-ASIDE THE O RDER OF THE LD. COMMISSIONER AND RESTORED THE MATTER TO HIS FILE WI TH THE DIRECTION TO RE- DECIDE THE REGISTRATION APPLICATION. THE LD. COMMIS SIONER, THEREFORE, TOOK UP THE MATTER AGAIN FOR CONSIDERATION. IT IS STATED TH AT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE M.P. SOCIETIES REGISTRATION AC T AND IS OWNED BY THE GOVERNMENT OF M.P. THE MAIN OBJECT OF THE ASSESSEE SOCIETY ARE TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND OF PRIMARY AND SECONDARY EDUCATION IN PARTICULAR, TO PRODUCE SCHOOL TEXT BOO KS AND BOOKS OF TEACHERS AND WORK BOOKS OF STUDENTS AND OTHER EDUCATIONAL RE GISTERS USEFUL IN PERFORMING, TEACHING, LEARNING AND EVALUATION IN TH E EDUCATIONAL INSTITUTION, TO PRINT, PUBLISH, STOCK, DISTRIBUTE AND SALE OR EN TER INTO ANY ARRANGEMENT FOR PRINTING, PUBLISHING, THE STOCKING, DISTRIBUTION AN D SALE OF TEXT BOOKS APPROVED/SANCTIONED OR ASSIGNED BY THE GOVERNMENT O R ANY OTHER -: 3 :- 3 APPROPRIATE AUTHORITY AND ANY OTHER PUBLICATION THA T THE CORPORATION MAY DECIDE TO PUBLISH WITH A VIEW TO MAKE THE SAME AVAI LABLE AT THE FAIR AND REASONABLE PRICE, TO UNDERTAKE RESEARCH ANY TEXT BO OK, PRODUCTION, TO REGULAR AND FIXED PRICE OF PUBLICATION OF THE SOCIETY, CONS ISTENT WITH ITS OBJECTS TO UNDERTAKE PRINTING, SALE AND DISTRIBUTION OF BOOKS AND LITERATURE USEFUL OR NECESSARY FOR ADVANCEMENT OF EDUCATION IN ALL ITS B RANCHES, TO IMPLEMENT ANY SCHEME FOR FREE SUPPLY OF BOOKS AND TO ASSIST A ND ADVISE GOVERNMENT OF M.P., BOARD OF SECONDARY EDUCATION, DIRECTOR OF PUB LIC INSTITUTION OR OTHER APPROPRIATE AUTHORITIES IN SANCTIONING SCHOOL TEXT BOOKS FOR ALL STANDARDS UP TO XIITH SUBMITTED BY PRIVATE AUTHORITIES OR PUBLIS HERS ETC. ONE OF THE OBJECTS OF THE ASSESSEE SOCIETY IS ALSO TO MAKE AVA ILABLE AT SUBSIDIZED COST AND/OR EVEN AT FREE OF COST TEXT BOOK TO CHILDREN O F ECONOMICALLY WEAKER FAMILIES SO AS TO PROMOTE BETTER TEACHINGS IN THE S CHOOLS OF THE STATE. APART FROM THE ABOVE MAIN OBJECTIVES, THE ASSESSEE IS ALS O PROMOTING SCHOOLS OF STATE AND GIVING GRANTS THROUGH RESPECTIVE COLLECTO RS FOR CONSTRUCTION OF SCHOOL BUILDINGS. DURING SEVERAL YEARS, THE ASSESSE E GOT CONSTRUCTION OF GOVERNMENT SCHOOL BUILDINGS. THE ASSESSEE IS ALSO E NGAGED IN THE FOLLOWING ACTIVITIES :- -: 4 :- 4 (1) TO MAKE FREELY AVAILABLE LOW PRICE TEXT BOOK TO MAS S COMMUNITY SPECIFICALLY TO 1-12 CLASS STUDENTS. (2) M.P.PATHYA PUSTAK NIGAM IS ALSO IN THE COURSE OF PR OMOTING SCHOOL EDUCATION IS GIVING GRANTS FOR CONSTRUCTION OF SCHOOL BUILDING, PROVIDING EQUIPMENTS FOR LABORATORIES THR OUGH RESPECTIVE COLLECTORS OF THE DISTRICT. SINCE 1983 T HE SOCIETY INSTITUTION IS GIVING THE SAID GRANTS FOR PROMOTION OF SCHOOL EDUCATION IN THE STATE. (3) TO MAKE AVAILABLE BRAIL LIPIS BOOKS TO THE BLIND SCHOOL GOING CHILDREN OF THE COMMUNITY. (4) TO MAKE CO-OPERATIVE IN FAVOUR OF PHYSICALLY CHALL ENGED SCHOOL GOING CHILDREN BY GIVING UNIQUE SNAKE LADDER GAME PRINTED AT THE LAST PAGES OF ABOUT 65000000 BOOKS P RINTED AND DISTRIBUTED THIS YEAR TO THE SOCIETY LIVING BEL OW POVERTY LINE OF THE COMMUNITY. (5) TO MAKE AWARE ABOUT SAMAGRA SWACHATA ABHIYAN OF GOVERNMENT OF INDIA TO THE COMMUNITY THROUGH PRINTI NG LAST -: 5 :- 5 PAGES IN AROUND 65000000 LAKHS BOOKS AND DISTRIBUTI NG TO THE COMMUNITY. (6) M.P. PATHYA PUSTAK NIGAM IS ALSO IMPARTING IMPORTAN T ROLE FOR AWARENESS TO THE ENVIRONMENT THROUGH PARTICIPAT ING IN MOGHLI UTSAV AND BAL RANGE PROGRAMMES ORGANIZED BY GOVERNMENT OF MP FOR THE CHILDREN OF M.P. AND OTHER STATES. (7) M.P.PATHYA PUSTAK NIGAM IS CONDUCTING SPORTS AND CU LTURAL EVENTS IN THE PRIMARY & SECONDARY SCHOOLS FOR OVERA LL DEVELOPMENT I.E. MENTAL, PHYSICAL & INTELLECTUAL OF THE STUDENTS. FOR CONDUCTING THESE ACTIVITIES THE SOCIE TY INSTITUTION IS REGULARLY GIVING GRANTS TO VARIOUS S CHOOLS OF THE STATE. 4. LD. COMMISSIONER CONSIDERING OBJECTS OF THE ASSESSE E AND ITS ACTIVITIES NOTED THAT IN THE ASSESSMENT YEAR 1995-9 6, THE TRIBUNAL HAS ALLOWED EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT, 1961, BECAUSE THE ASSESSEE BEING OTHER EDUCATIONAL INSTITUTION EXISTE D SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROFIT. THE LD. CIT, HOWEVER, NOTED THAT THE VIEW OF THE TRIBUNAL WAS NOT ACCEPTED BY THE DE PARTMENT AND THE APPEAL -: 6 :- 6 IS PENDING BEFORE THE HIGH COURT. IT IS ALSO NOTED THAT THE CCIT HAS NOT ALLOWED EXEMPTION U/S 10(23C)(VI) OF THE INCOME-TAX ACT, 1961. IT IS ALSO NOTED IN THE IMPUGNED ORDER THAT HON'BLE SUPREME CO URT IN THE CASE OF LOKA SHIKSHANA TRUST REPORTED IN 101 ITR 234, CONSIDERED THE WORD EDUCATION HELD THAT EDUCATION IN SECTION 2(15) CONNOTES THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING. THE LD. COMMISSIONER CONSIDERING THE OB JECTS OF THE SOCIETY THAT IT EXISTS FOR PRINTING AND SALE OF TEXT BOOKS HELD THAT THE ASSESSEE IS UNDERTAKING COMMERCIAL ACTIVITIES, WHICH ARE NON-CH ARITABLE IN NATURE. THE LD. COMMISSIONER ALSO NOTED THAT MAIN ACTIVITY OF T HE ASSESSEE SOCIETY IS SALE OF TEXT BOOK AND THE RECEIPTS FROM SALE OF TEXT BOO KS RANGES FROM 82.09% TO 96.68 % DURING THE LAST EIGHT YEARS. HE HAS ALSO OB SERVED THAT SOURCE OF INCOME OF THE ASSESSEE SOCIETY ARE NOT THE FORMAL E DUCATIONAL ACTIVITIES WHERE NORMALLY SCHOOLING IS INVOLVED. THE ASSESSEE IS NOT IMPARTING ANY FORMAL EDUCATION. IT WAS ALSO CONSIDERED THAT IN TH E CASE OF THE ASSESSEE THE TERM ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL P UBLIC UTILITY MENTIONED IN THE DEFINITION OF CHARITABLE PURPOSES IN SECTION 2(15) IS ALSO NOT APPLICABLE, BECAUSE IT IS ENGAGED IN COMMERCIAL ACT IVITIES LIKE OTHER -: 7 :- 7 PUBLISHER, WHO ARE PUBLISHING THE TEXT BOOKS. THE L D. COMMISSIONER BY APPLYING PROVISO TO SECTION 2(15) HELD THAT ACTIVIT IES OF THE ASSESSEE ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THEREFOR E, THE ASSESSEE IS NOT ENTITLED FOR REGISTRATION U/S 12AA OF THE INCOME-TA X ACT, 1961. APPLICATION WAS, ACCORDINGLY, REJECTED THROUGH IMPUGNED ORDER. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITY BELOW. THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT HONBLE M.P. HIGH COURT, WHILE DEALI NG WITH THE APPEAL FOR THE ASSESSMENT YEAR 1995-96 IN WHICH THE TRIBUNAL H AS GRANTED EXEMPTION TO THE ASSESSEE U/S 10(22) OF THE ACT, SET-ASIDE THE O RDERS AND REMIT THE MATTER TO THE FILE OF THE A.O. TO RECONSIDER THE CASE. COP Y OF THE ORDER IS FILED. HE HAS SUBMITTED THAT HON'BLE HIGH COURT OBSERVED THAT IT HAS TO BE SEEN WHETHER THE ASSESSEE IS ENGAGED IN ANY KIND OF EDUC ATIONAL ACTIVITIES AND THAT UNDER WHAT CIRCUMSTANCES, THE ASSESSEE COULD CLAIM EXEMPTION BEING INVOLVED IN EDUCATIONAL PURPOSES. IT HAS TO BE SEEN HOW THE INCOME SPENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SECTION 10(22) AND SECTION 2(15) ARE DIFFERENT SECTIONS. HE HAS FURTHE R SUBMITTED THAT HON'BLE M.P. HIGH COURT IN PARA 17 OBSERVED THAT IT HAS TO BE SEEN WHETHER -: 8 :- 8 INCOME/PROFIT IS APPLIED FOR NON-EDUCATIONAL PURPOS ES. THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPIES OF THE AUDIT ACCOUNTS OF THE ASSESSEE SOCIETY FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 TO SHOW THA T THE ASSESSEE HAS NOT INCURRED EXPENDITURE OF SINGLE PENNY FOR NON-EDUCAT IONAL PURPOSES. HE HAS SUBMITTED THAT IN THE ABOVE ASSESSMENT YEAR, THE AS SESSEE SOCIETY HAD GIVEN FOLLOWING GRANTS TO GOVERNMENT SCHOOLS FOR CONSTRUC TION OF BUILDING ETC. ASSESSMENT YEAR AMOUNT OF GRANT 2008-09 1,78,70,043/- 2007-08 2,17,07,040/- 2006-07 1,59,45,000/- 2005-06 1,28,11,000/- 6. BY REFERRING TO THE AUDITED ACCOUNTS, HE HAS SUBMIT TED THAT ASSESSEE SOCIETY HAS NOT DISTRIBUTED ANY PROFIT TO ANYBODY. MOREOVER, THE QUESTION OF DISTRIBUTION OF PROFIT ALSO DOES NOT ARISE IN VIEW OF THE FACT THAT ALL THE SHARES OF THE SOCIETY IS WITH THE GOVERNMENT OF M.P. HE HA S SUBMITTED THAT THE ASSESSEE IS NOT MERELY GETTING THE TEXT BOOKS PRINT ED AND SELLING THEM, BUT AS A MATTER OF FACT IS THE BIGGEST EDUCATIONAL INSTITU TION PROMOTING THE EDUCATION -: 9 :- 9 POLICY OF THE GOVERNMENT IN PUBLIC INTEREST. ACCORD ING TO THE OBJECT NO.2, IT PRODUCES SCHOOL TEXT BOOKS, THE BOOKS FOR TEACHERS, WORK BOOKS FOR STUDENTS AND OTHER EDUCATIONAL LITERATURE USEFUL FOR IMPARTI NG TEACHING, LEARNING AND FOR EVALUATION IN EDUCATIONAL INSTITUTION. THE ASSE SSEE DOES NOT GET PRINTED EACH AND EVERY BOOK, BUT IT ENCOURAGES AND PROCURES EXPERT AUTHORS TO WRITE TEXT BOOKS ON VARIOUS SUBJECTS SUITED TO THE REQUIR EMENTS OF THE CURRICULAR AND SYLLABUS PRESCRIBED BY THE GOVERNMENT FOR EDUCA TIONAL COURSES AFTER GETTING SANCTION OF THE GOVERNMENT. ACCORDING TO OB JECT NO. 4, THE PRINTING AND PUBLISHING AND SALE OF BOOKS ARE PROVED BY THE GOVERNMENT. THE ASSESSEE ALSO EXISTS FOR UNDERTAKING RESEARCH FOR E DUCATION. HE HAS SUBMITTED THAT THE LD. CIT(A) HAS TAKEN THE MEANING OF EDUCAT ION IN NARROW WAY. HE HAS RELIED UPON THE DECISION OF HON'BLE ORISSA HIGH COURT IN THE CASE OF SENIOR SECONDARY BOARD OF EDUCATION VS. ITO, 86 ITR 408, IN WHICH THE BOARD HAS BEEN TAKEN AS TRUST FOR EDUCATION TRUST. HE HAS ALSO RELIED UPON THE DECISION IN THE CASE OF ADITNAR EDUCATIONAL INS TITUTION, 224 ITR 310, SINDHY VIDYA MANDAL TRUST, 142 ITR 633 AND SURAT AR T SILK CLOTH, 121, ITR 1. HE HAS SUBMITTED THAT THE ASSESSEE IS NOT A PRIVATE INSTITUTION. IT SELLS TEXT BOOKS ON CHEAPER RATES AS COMPARED WITH THE PR IVATE BOOK SELLERS. THUS, -: 10 :- 10 THE EDUCATIONAL ACTIVITIES ARE PROMOTED BY THE ASSE SSEE. THE INCIDENTAL SURPLUS GOES TO THE ASSESSEE AS WELL AS FOR CONSTRU CTION OF THE GOVERNMENT SCHOOL BUILDINGS. THEREFORE, THE ASSESSEE ULTIMATEL Y CARRIED THE EDUCATIONAL ACTIVITIES. THE LEARNED COUNSEL FOR THE ASSESSEE AL SO REFERRED TO PARAS 17 & 18 OF THE JUDGMENT OF THE HIGH COURT IN WHICH IT WA S OBSERVED THAT THERE HAS BEEN NO DISSECTION OF THE ROLE PLAYED BY THE CORPOR ATION AND WHETHER ITS ACTIVITIES HAS ANY NEXUS WITH THE EDUCATIONAL PURPO SES, AS PER THE PRINCIPLES LAID DOWN BY THE APEX COURT AND VARIOUS HIGH COURTS . THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO THE MAIN OBJECTS OF T HE ASSESSEE SUBMITTED THAT IT IS THE BIGGEST EDUCATIONAL INSTITUTION PROMOTING TH E EDUCATIONAL POLICY OF THE M.P.GOVERNMENT, PRODUCING SCHOOL TEXT BOOKS AND EDU CATIONAL LITERATURES FOR FURTHERANCE OF TEACHINGS, LEARNING AND FOR EVAL UATION OF ANY EDUCATIONAL INSTITUTION. HE HAS FURTHER RELIED UPON THE DECISIO N IN THE CASE OF AMERICAN HOTEL AND LODGING ASSOCIATION EDUCATIONAL INSTITUTI ON VS. CBDT, 301 ITR 86, IN WHICH IT WAS HELD THAT ONCE THE INSTITUTION COMES WITHIN THE PHRASE EXISTS SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PROFIT, NO OTHER CONDITION LIKE APPLICATION OF INCOME REQUIRED TO BE COMPLIED WITH. THE PRESCRIBED AUTHORITY WAS ONLY REQUIRED TO EXAMINE THE NATURE, ACTIVITIES AND GENUINENESS -: 11 :- 11 OF THE INSTITUTION. HE HAS RELIED UPON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ACADEMY OF GENERAL EDU CATION, 150 ITR 135. THE HON'BLE HIGH COURT CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOKA SHIKSHANA TRUST AND OTHER CASES HAS HELD THAT IT WAS ENTITLED TO EXEMPTION U/S 10(22) OF THE ACT. IN THI S CASE, IT WAS HELD THAT THE ASSESSEE WAS REGISTERED SOCIETY AND IT CARRIED ON O RGANIZATIONAL ACTIVITIES AS PER THE OBJECTS SET OUT IN THE MEMORANDUM. IT IS PR IMARY OBJECT WAS TO ESTABLISH SUPPORT, MANAGE OR CONDUCT SCHOOLS OR OTH ER EDUCATIONAL INSTITUTIONS. IT HAD INCOME OF ITS OWN. IN THE BALA NCE SHEET, THE INCOME OF 22 COLLEGES OR INSTITUTION ESTABLISHED UNDER SEPARATE TRUST HAVE NOT BEEN INCLUDED NOR INCOME OF NINE SCHOOLS, WHICH WERE RUN DIRECTLY BY THE ASSESSEE. THE ASSESSEE OUT OF ITS INCOME HAD GIVEN OUT RIGHT GRANTS TO SOME OF THOSE SCHOOLS AND HAD NOT SPENT ITS INCOME FOR A NY PURPOSE UN-CONNECTED WITH THE EDUCATION. IT WAS, THEREFORE, EDUCATIONAL INSTITUTION EXISTING PURELY FOR EDUCATIONAL PURPOSES AND NOT PROFIT. HE HAS ALS O RELIED UPON THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN TEXT BOOK BOARD, 244 ITR 667, IN WHICH IT WAS HELD THAT THE A SSESSEE IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT, 1961. T HE LEARNED COUNSEL FOR -: 12 :- 12 THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE IS E NGAGED IN EDUCATIONAL ACTIVITIES AND THAT ITS INCOME IS NOT APPLIED FOR A NY NON-EDUCATIONAL PURPOSE AND ASSESSEE IS DOING CHARITABLE ACTIVITIES HAVING NEXUS WITH EDUCATION, THEREFORE, THE ASSESSEE IS ENTITLED FOR REGISTRATIO N U/S 12AA OF THE INCOME-TAX ACT, 1961. HE HAS REFERRED TO PAPER BOOK PAGE NOS. 146 TO 200, WHICH ARE VARIOUS CORRESPONDENCES THROUGH WHICH GRANTS HAVE B EEN GIVEN TO THE GOVERNMENT SCHOOLS FOR CONSTRUCTION OF GOVERNMENT S CHOOL BUILDINGS AS PER DIRECTION OF THE STATE GOVERNMENT UNDER THE SUPERVI SION OF THE COLLECTORS. HE HAS ALSO RELIED UPON THE ORDER OF I.T.A.T. DELHI BENCH IN THE CASE OF ITO VS. DELHI BUREAU OF TEXT BOOKS, 10 TTJ 481 IN WHICH IT WAS HELD THAT SINCE THE ASSESSEE IS ENGAGED IN EDUCATION AND SALE OF TE XT BOOKS TO PROMOTE ADVANCEMENT OF EDUCATION, IT IS CARRYING ON CHARITA BLE ACTIVITIES AND IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT, 1961, AS WELL AS EXEMPTION U/S 11 READ WITH SECTION 2(15) OF THE INC OME-TAX ACT, 1961. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE STRONGLY DEFENDED THE ORDER OF THE LD. COMMISSIONER AND SUBM ITTED THAT THE ASSESSEE IS ENGAGED IN COMMERCIAL ACTIVITIES. THEREFORE, ACT IVITIES OF THE ASSESSEE ARE NON-CHARITABLE IN NATURE. HE HAS SUBMITTED THAT MAI N BUSINESS OF THE ASSESSEE -: 13 :- 13 IS TO PRINT AND SELL TEXT BOOKS AND THAT THE OBSERV ATIONS OF THE HON'BLE HIGH COURT WHILE REMANDING THE MATTER TO THE FILE OF THE A.O. U/S 10(22) OF THE INCOME-TAX ACT, 1961, ARE IN FAVOUR OF THE REVENUE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT MAIN OBJECTS OF THE A SSESSEE ARE DISTRIBUTION OF THE BOOKS ONLY. HE HAS RELIED UPON THE DECISION OF KERALA HIGH COURT IN THE CASE OF IDEAL PUBLICATION TRUST VS. CIT, 305 ITR 14 3, IN WHICH IT WAS HELD THAT THE ASSESSEE TRUST ENGAGED IN PUBLICATION OF N EWS PAPERS, UTILIZING ITS ENTIRE PROFITS ALL ALONG FOR SETTING UP NEW PUBLICA TION UNITS FROM VARIOUS CENTERS AND NO PART OF IT HAVING BEEN UTILIZED ON T HE SAID PART FOR CHARITABLE PURPOSES AS REFERRED TO IN ITS OBJECT CLAUSE, IT WA S NOT ENTITLED ANY EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 1961. HE HAS ALSO REL IED UPON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. OXFORD UNIVERSITY PRESS, 221 ITR 77, IN WHICH IT WAS HELD THAT ASSESSEE PRESS WA S ENGAGED IN PRINTING AND SELLING BOOKS IN INDIA WAS NOT ENTITLED FOR EXEMPTI ON U/S 10(22) BY REASON ONLY OF ITS BEING A PART OF OXFORD UNIVERSITY EXIST ING IN UNITED KINGDOM AND DOES NOT EXIST IN INDIA. HE HAS RELIED UPON THE DEC ISION OF HON'BLE SUPREME COURT IN THE CASE OF LOKA SHIKSHANA TRUST VS. CIT, (SUPRA) AS IS ALSO RELIED UPON BY THE LD. COMMISSIONER. THE LD. DEPARTMENTAL REPRESENTATIVE -: 14 :- 14 SUBMITTED THAT PROFIT ELEMENT IS INVOLVED IN THE CA SE OF THE ASSESSEE, BECAUSE EVERY YEAR EXPENSES ARE GOING DOWN AND THE ASSESSEE IS ACCUMULATING HUGE PROFIT. HE HAS SUBMITTED THAT THE RATES OF TEXT BOO KS OF THE ASSESSEE CANNOT BE COMPARED WITH PRIVATE PUBLISHER. HE HAS SUBMITTED T HAT THE DECISIONS REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE PRESENT CASE. 8. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PA RTIES, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NO T IN DISPUTE THAT IN EARLIER YEARS, THE TRIBUNAL HAS GRANTED EXEMPTION TO THE AS SESSEE U/S 10(22) OF THE INCOME-TAX ACT, 1961, HOLDING IT TO BE EDUCATIONAL INSTITUTION. HOWEVER, THE HON'BLE M.P. HIGH COURT RESTORED THE MATTER TO THE FILE OF THE A.O. FOR RECONSIDERATION. IT WAS OBSERVED BY THE HONBLE HIG H COURT THAT THE ACID TEST IS WHETHER THE INCOME/PROFIT IS APPLIED FOR NON-EDU CATIONAL PURPOSES AND WHETHER THE ACTIVITIES OF THE ASSESSEE HAVE ANY NEX US WITH THE EDUCATIONAL PURPOSES. THE LEARNED COUNSEL FOR THE ASSESSEE BY R EFERRING TO THE AUDITED ACCOUNTS FROM THE ASSESSMENT YEAR 2005-06 TO 2008-0 9 AS MENTIONED ABOVE HAS BEEN ABLE TO DEMONSTRATE THAT THE ASSESSEE HAS GRANTED GRANTS TO THE GOVERNMENT SCHOOLS FOR CONSTRUCTION OF THE GOVERNME NT SCHOOL BUILDINGS -: 15 :- 15 ETC. AND THAT THE PROFITS OF THE ASSESSEE HAVE NOT BEEN DISTRIBUTED TO ANY OTHER PERSON FOR ANY NON-EDUCATIONAL PURPOSES. THE LEARNE D COUNSEL FOR THE ASSESSEE HAS, THEREFORE, PROVED ON RECORD THAT ALL THE AMOUNTS AND FUNDS/SURPLUS OF THE ASSESSEE ARE SPENT BY THE ASSE SSEE FOR ACHIEVING ITS OBJECTS. HON'BLE SUPREME COURT IN THE CASE OF BAR C OUNCIL OF MAHARASHTRA, 130 ITR 28 AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF BAR COUNCIL OF U.P., 143 ITR 584, HELD THAT SECTION 11 AND 10(23C) (IV) ARE NOT MUTUALLY EXCLUSIVE AND THEY CAN HAVE SIMULTANEOUS APPLICATIO NS IF NECESSARY INGREDIENTS ARE FULFILLED. HON'BLE ORISSA HIGH COUR T IN THE CASE OF SECONDARY BOARD OF EDUCATION,86 ITR 408, HELD :- UNDER THE ORISSA SECONDARY EDUCATION ACT, 1953, TH E SECONDARY BOARD OF EDUCATION, ORISSA, HAS A FUND. O NE OF THE SOURCES OF INCOME OF THE BOARD IS PROFITS FR OM COMPILATION, PUBLICATION, PRINTING AND SALE OF TEXT BOOKS. THE PROFITS SO EARNED ENTER INTO THE BOARD FUND. TH E INCOME AND EXPENDITURE OF THE BOARD IS CONTROLLED A ND THE ENTIRE EXPENDITURE IS TO BE DIRECTED TOWARDS -: 16 :- 16 DEVELOPMENT AND EXPANSION OF EDUCATIONAL PURPOSES. EVEN IF THERE IS SOME SURPLUS, IT REMAINS AS A PART OF THE SINKING FUND TO BE DEVOTED TO THE CAUSE OF EDUCATIO N AS AND WHEN NECESSARY. THIS BEING THE OBJECTIVE AND TH ERE BEING VARIOUS WAYS OF CONTROL OF THE INCOME AND EXPENDITURE, THE BOARD OF SECONDARY EDUCATION CANNO T BE SAID TO BE EXISTING FOR PURPOSES OF PROFIT. IT EXIS TS SOLELY FOR PURPOSES OF EDUCATION. THE INCOME OF THE BOARD IS, THEREFORE, EXEMPT FROM INCOME-TAX UNDER SECTION 10( 22) OF THE INCOME-TAX ACT, 1961. 9. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN STATE TEXT BOOK BOARD, 244 ITR 667, CONSIDERING THE BOARDS CIRCULAR HELD, DISMISSING THE APPEAL, THAT IN A SIMILAR SIT UATION, IN THE CASE OF THE TAMIL NADU TEXT BOOK SOCIETY, TH E CENTRAL BOARD OF DIRECT TAXES, AS PER THE LETTER DA TED AUGUST 19, 1975, AND FILE NO.184/26/75 STATED THAT THE TAMIL NADU TEXT BOOK SOCIETY WAS AN EDUCATIONAL -: 17 :- 17 INSTITUTION, EXISTING SOLELY FOR THE PURPOSE OF EDU CATION, WITHIN THE MEANING OF SECTION 10(22) OF THE INCOME- TAX ACT, 1961. IT WAS NOT DISPUTED THAT THE AIMS AND OB JECTS OF THE TAMIL NADU TEXT BOOK SOCIETY AND THOSE OF THE RESPONDENT-ASSESSEE WERE ALMOST IDENTICAL. IT WAS A LSO NOT SHOWN THAT THE SURPLUS AMOUNT, IF ANY, OF THE RESPO NDENT- ASSESSEE WAS USED FOR ANY OTHER PURPOSE OR DISTRIBU TED TO OTHER MEMBERS. THE COMMISSIONER (APPEALS) AS WELL A S THE TRIBUNAL HAD NOTICED THAT EVEN IF SOME AMOUNT REMAINED AS SURPLUS, THAT WAS UTILIZED ONLY FOR THE PURPOSES OF EDUCATION. THUS, HAVING REGARD TO THE CONCURRENT FINDINGS OF FACTS, RECORDED BY THE CIT( A) AND THE TRIBUNAL AND ALSO TAKING NOTE OF THE LETTER OF THE CENTRAL BOARD OF DIRECT TAXES ITSELF, THE ORDER OF THE TRIBUNAL WAS NOT ERRONEOUS IN ANY WAY. NO QUESTION OF LAW AROSE FOR CONSIDERATION MUCH LESS A SUBSTANTIAL QUESTION OF LAW. -: 18 :- 18 10. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF ACADEMY OF GENERAL EDUCATION (SUPRA) BY REFERRING TO DECISION IN THE C ASE OF LOKA SHIKSHANA TRUST (SUPRA) HELD THAT THE ASSESSEE OUT OF ITS INC OME HAD GIVEN OUT-RIGHT GRANTS TO SOME OF THOSE SCHOOLS AND HAS NOT SPENT I TS INCOME FOR ANY PURPOSE UN-CONNECTED WITH EDUCATION. IT WAS, THEREFORE, AN EDUCATIONAL INSTITUTION EXISTING PURELY FOR EDUCATIONAL PURPOSES AND NOT FO R PROFIT. 11. I.T.A.T., DELHI BENCH IN THE CASE OF ITO VS. DELHI BUREAU OF TEXT BOOKS (SUPRA) CONSIDERING THE AFORESAID DECISION OF THE HON'BLE SUPREME COURT AND HON'BLE ORISSA HIGH COURT AND CONSIDERING THE OBJECTS OF THE ASSESSEE, WHICH ARE SIMILAR TO THAT OF THE PRESENT ASSESSEE UNDER APPEAL HELD THOUGH THE ASSESSEE IS NOT RUNNING ANY EDUCATIONAL INSTITUTION AS SUCH BUT ALL THE SAME IT S AIMS AND OBJECTS ARE TO PROVIDE HIGH QUALITY TEXT BOOKS AND OTHER INSTRUCTIONAL MATERIAL SUCH AS TEACHERS HANDBOOKS, WORK BOOKS ETC. EITHER AT SUBSIDIZED RATES OR EVEN FREE OF COST TO THE CHILDR EN -: 19 :- 19 OF ECONOMICALLY WEAKER SECTIONS OF SOCIETY AND EVEN SIMILARLY PLACED TEACHERS. THE ACTIVITY OF THE ASSESSEE IS DIRECTLY CONNECTED WITH THE EDUCATION, BECAUSE WITHOUT THE RIGHT TYPE OF TEXT BOOKS PROVIDED BY THE SOCIETY, THE IMPARTING OF EDUCATION IN THE SCHOOLS WOULD NOT ONLY BECOME DIFFICULT BUT IMPOSSIBLE. IN THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL AND CHARACTER OF STUDENTS, THE PROVISIONS OF RIGHT TYPE OF TEXT BOOK S FORMS AN IMPORTANT PART. WE, THEREFORE, FIND NO REASON WHY THE DEPARTMENT SHOULD CONTEND THAT BY PROVIDING HIGH QUALITY TEXT BOOKS TO THE STUDENTS A ND INSTRUMENTAL MATERIAL SUCH AS HANDBOOKS, WORKBOOKS TO THE TEACHERS, THE ASSESSEE SHOULD NOT BE CONSIDERED TO BE CARRYING ON THE ACTIVITY FOR ADVANCEMENT OF EDUCATION. IT IS NOT DISPUTED BEFORE US THAT THE PROPERTY OF THE ASSESSEE IS HELD UNDER -: 20 :- 20 TRUST AND SINCE THE ASSESSEE IS CARRYING ON THE ACTIVITY OF EDUCATION AS PROVIDED UNDER SECTION 2(15). WE HAVE NO DOUBT IN OUR MIND THAT THE ASSESSEE HAS BEEN RIGHTLY GRANTED EXEMPTION U/S 11 READ WITH SECTION 2(15). 12. IN THE SAME ORDER, THE TRIBUNAL ALSO CONSIDERED THE BOARDS CIRCULAR AND HELD THAT THE ASSESSEE NOT ONLY ENTITL ED FOR EXEMPTION U/S 11 READ WITH SECTION 2(15) IS ALSO ENTITLED TO EXEMPTI ON U/S 10(22) OF THE INCOME-TAX ACT, 1961. IN THE CASE OF SARAFA ASSOCIA TION VS. CIT, REPORTED IN 294 ITR 262, HON'BLE MADHYA PRADESH HIGH COURT NOTE D THAT THE ASSESSEE WAS A TRUST, THE OBJECT OF WHICH WAS PROMOTION OF L OCAL BUSINESS IN SILVER, GOLD AND ORNAMENTS AND PROTECTION OF LEGITIMATE RIG HTS OF BUSINESSMEN. IT WAS HELD THAT THE COMMISSIONER WAS REQUIRED TO EXAM INE THE DEED AS A WHOLE AND CONSIDER THE EFFECT OF VARIOUS BALANCE SH EETS ON RECORD. THE LD. CIT WAS, ACCORDINGLY DIRECTED TO RE-DECIDE THE APPL ICATION FOR REGISTRATION. 13. IT IS ALSO ESTABLISHED FROM THE MATERIAL ON RECORD THAT THE ASSESSEE WAS PROVIDING FREE BOOKS TO THE WEAKER SECTIONS AS WELL AS AT SUBSIDIZED -: 21 :- 21 RATES. THE SURPLUS IS GRANTED FOR CONSTRUCTION OF T HE SCHOOL BUILDINGS. THE RATES QUOTED BY THE ASSESSEE IN RESPECT OF THE TEXT BOOK AS COMPARED WITH THE OTHER PUBLISHERS ARE AT THE VERY LOW RATE. THUS, TH E MATERIAL ON RECORD CLEARLY INDICATED THAT NO AMOUNT IS SPENT BY THE ASSESSEE F OR NON-EDUCATIONAL PURPOSE AND THE ENTIRE AMOUNT WAS SPENT FOR PROMOTI NG THE EDUCATIONAL POLICY OF THE GOVERNMENT AND THAT THE ACTIVITY OF T HE ASSESSEE IS DIRECTLY CONNECTED WITH THE EDUCATION, BECAUSE WITHOUT THE R IGHT TYPE OF TEXT BOOKS PROVIDED BY THE ASSESSEE, THE IMPARTING OF EDUCATIO N IN THE SCHOOL WOULD NOT ONLY BECOME DIFFICULT BUT IMPOSSIBLE. IN THE PROCES S OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS, THE PROVISIONS OF RIGHT TYPE OF TEXT BOOK FORMS AN IMPO RTANT PART. THUS, THE ACTIVITIES OF THE ASSESSEE HAVE DIRECT NEXUS WITH T HE EDUCATIONAL PURPOSES. THE DECISIONS CITED BY THE LD. DEPARTMENTAL REPRES ENTATIVE, THUS, WOULD NOT SUPPORT THE CASE OF THE REVENUE. IN THE CASE OF LOK A SHIKSHANA TRUST (SUPRA), THE QUESTION WAS WHETHER THE INCOME OF THE TRUST ARE AT THE RELEVANT TIME WAS PUBLISHING NEWS PAPERS AND JOURNALS PURSUA NT TO CLAUSE (2)(C) WAS EXEMPT FROM TAX UNDER SECTION 11 READ WITH SECTION 2(15) OF THE INCOME-TAX ACT, 1961. IN THE CONTEXT OF THESE FACTS, THE ISSUE WAS DECIDED AGAINST THE -: 22 :- 22 ASSESSEE. THE FACTS IN THE CASES RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE CLEARLY DISTINGUISHABLE FORM THE FACTS OF THE PRESENT CASE. I MAY ALSO NOTE THAT HON'BLE RAJASTHAN HIGH COURT I N ITS RECENT DECISION IN THE CASE OF RAJASTHAN STATE TEXT BOOKS BOARD (SUPRA ) BY CONSIDERING THE CIRCULAR OF THE BOARD DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE. IT IS WELL SETTLED THAT THE BOARDS CIRCULARS ARE BINDING ON T HE REVENUE DEPARTMENT. THE LD. COMMISSIONER ALSO REFERRED TO THE PROVISO T O SECTION 2(15) OF THE INCOME-TAX ACT, 1961, WHICH IS INSERTED IN THE ACT, WITH EFFECT FROM 1.4.2009. THE CHARITABLE PURPOSE HAS BEEN DEFINED I N SECTION 2(15) OF THE ACT TO INCLUDE (A) RELIEF OF THE POOR, (B) EDUCATIO N, (C) MEDICAL RELIEF AND (D) THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY. HOWEVER, THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IS NOT TREATED AS A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF R ENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A C ESS OR FEES OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. THE DEFINITION OF CH ARITABLE PURPOSE U/S 2(15) IS INCLUSIVE OF RELIEF OF THE POOR, EDUCATION, MEDI CAL RELIEF AND THE -: 23 :- 23 ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. AS NOTED ABOVE, THE ASSESSEE IS A SOCIETY WHOLLY OWNED BY THE GOVER NMENT OF MADHYA PRADESH AND ITS MAIN OBJECTS ARE TO AID AND PROMOTE ADVANCEMENT OF THE EDUCATION AND THE RELATED ACTIVITIES FOR THE BETTER MENT OF THE EDUCATIONAL SYSTEM AND ASSESSEE IS PROVIDING TEXT BOOKS ON SUBS IDIZED RATES TO THE POOR AND EVEN FREE OF COST TO THE WEAKER SECTION AND ALS O PROVIDING GRANTS FOR CONSTRUCTION OF THE SCHOOL BUILDINGS, THEREFORE, IN SUCH ACTIVITIES, THE ASSESSEE COULD NOT BE STATED TO BE INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS ACTIVITIES. THUS, THE FINDINGS OF THE LD. CIT ARE NOT IN ACCORDANCE WITH THE FACTS AVAILABLE ON RECORD. 14. CONSIDERING THE FACTS AND CIRCUMSTANCES AND MATERIA L ON RECORD, I AM OF THE VIEW THAT THE ASSESSEE EXISTS FOR EDUCATI ONAL PURPOSES AS WELL AS FOR PROMOTING EDUCATIONAL POLICY OF THE GOVERNMENT OF MADHYA PRADESH AND ITS ACTIVITIES HAVE NEXUS WITH EDUCATIONAL PURPOSES . THEREFORE, THE DOMINANT PURPOSE OF THE ASSESSEE SOCIETY IS ADVANCEMENT OF A N OBJECT OF EDUCATIONAL ACTIVITIES AS WELL AS ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY. THEREFORE, THE ASSESSEE FULFILLS THE CONDI TIONS OF SECTION 2(15) OF THE INCOME-TAX ACT, 1961. THUS, THE LD. COMMISSIONER SH OULD HAVE SATISFIED -: 24 :- 24 HIMSELF ABOUT THE OBJECTS OF THE ASSESSEE SOCIETY A ND GENUINENESS OF ITS ACTIVITIES. THE FINDINGS OF THE LD. COMMISSIONER AR E, HOWEVER, OTHERWISE TO THE FACTS AVAILABLE ON RECORD. THE ORDER OF THE LD. COMMISSIONER IS, THEREFORE, NOT SUSTAINABLE IN LAW. I , ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER OF THE LD. COMMISSIONER AND DIRECT HIM TO GRA NT REGISTRATION TO THE ASSESSEE U/S 12A/12AA OF THE INCOME-TAX ACT, 1961, WITHIN ONE MONTH FROM THE DATE OF RECEIPT OF THIS ORDER 15. THE LEARNED COUNSEL FOR THE ASSESSEE LASTLY SUBMIT TED THAT THERE IS A DELAY IN FILING THE REGISTRATION APPLICATION IN W HICH CONDONATION IS SOUGHT AND IT IS PRAYED THAT THE SAME REGISTRATION MAY BE GRANTED FROM THE CREATION OF THE ASSESSEE SOCIETY, BECAUSE APPLICATION WAS FI LED BEFORE 1.06.2007. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF ANAND MA RGA PRACHARAK SANGH VS. CIT, 218 ITR 254, HELD THAT WHERE THE APPLICATI ON FOR REGISTRATION IS ADMITTED BELATEDLY AND THE REGISTRATION HAS BEEN GR ANTED BY CONDONING THE DELAY, THE REGISTRATION SHALL HAVE RETROSPECTIVE EF FECT FROM THE DATE OF CREATION OF THE TRUST. THIS BENCH HAS TAKEN CONSIST ENT VIEW IN SEVERAL CASES THAT WHEN REGISTRATION IS GRANTED, THE DELAY SHOULD BE CONDONED IN FILING THE APPLICATION. THE LD. COMMISSIONER IS, THEREFORE, FU RTHER DIRECTED TO CONDONE -: 25 :- 25 THE DELAY IN FILING THE APPLICATION AND GRANT REGIS TRATION TO THE ASSESSEE IN ACCORDANCE WITH LAW AS PRAYED BY THE ASSESSEE. 16. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2009. SD/- BHAVNESH SAINI JUDICIAL MEMBER DATED : 23 RD SEPTEMBER, 2009. CPU* 17229