M/s M.P.Rajya Pathya Pustak Nigam, Bhopal V. The DCIT, 1(1), Bhopal

ITA 386/IND/2011

• Counselvise Citation: 38622714 RSA 2011
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 1999-2000
• Appeal Filed On: 26-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Keywords: Gift; Charitable institution; Retrospective amendment; Additional evidence; Question of law; Reasonable cause; Benefit of exemption; Revised return
• Section: 12A; 139(5); 12AA; 10B; 69; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH,JM & SHRI R.C. SHARMA,AM ITA NOS.375 TO 394/IND/2011 A.YS. 1988-89 TO 2006-07 AND 2008-09 M.P.RAJYA PATHYA PUSTAK NIGAM, PUSTAK BHAWAN, BEHIND CENTRAL SCHOOL, ARERA HILLS, BHOPAL PAN- AAAAM0318C ... APPELLANT VS. DY. COMMISSIONER OF INCOME TAX 1(1), BHOPAL ... RESPONDENT DEPARTMENT BY : SHRI KESHAVE SAXENA, CIT(DR) ASSESSEE BY : SHRI PRAKASH JAIN, CA DATE OF HEARING : 23.03.2012 DATE OF PRONOUNCEMENT : 25.04.2012 O R D E R PER R.C.SHARMA, A.M. THESE APPEALS FILED BY THE ASSESSEE ARISE OUT OF OR DER OF CIT(A)-I, BHOPAL, DATED 28.11.2011 FOR THE ASSESSME NT YEARS 1988 89 TO 2006-07 AND 2008-09 -: 2: - 2 2. THE FOLLOWING COMMON GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE IN ITA NO. 375 TO 385/IND/2011 :- 1) THAT IMPUGNED ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT INTERPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2.1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE LD. CIT(A) ERRED IN NOT ALLOWING THE BENEFIT OF SECTION 11 TO 13 BY STATING THE FACT THAT THE AUDIT REPORT IN FORM 10B WAS NOT FILE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O. AND FILING OF THE AUDIT REPORT IS MANDATORY AND NOT DIRECTORY IN NATURE. 2.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN STATING THE FACT THAT AUDIT REPORT IN FORM 10B IS DATED 10.10.2010 AND AS SUCH SAME IS NOT AVAILABLE WITH THE APPELLANT AT THE TIME OF FILING OF RETURN. AS A MATTER OF FACT THE AUDIT REPORT IS DATED -: 3: - 3 10.12.2010 AND READY AT THE TIME OF ASSESSMENT PROCEEDINGS. 2.3] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) AND LD. A.O. ERRED IN NOT FOLLOWING THE DIRECTION OF HON'BLE I.T.A.T. WHERE IN IT WAS DIRECTED TO CONSIDER THE ASSESSEES CLAIM FOR BENEFIT OF REGISTRATION U/S 12AA AT THE TIME OF COMPLETING THE SET- ASIDE/REMAND ASSESSMENT PROCEEDINGS. 3.1] THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE OF THE LD. A.O. AND LD.CIT(A) ERRED IN DENYING THE EXEMPTION U/S 10(22) WITHOUT FOLLOWING THE DIRECTION GIVEN BY THE HON'BLE HIGH COURT OF MADHYA PRADESH WHILE REMANDING THE CASE. 3.2] THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE A.O.S ACTION OF UN-AUTHORISEDLY ATTEMPTED TO FIND FAULT WITH THE LETTER DATED AUGUST 19, 1975 IN THE CASE OF TAMIL NADU TEXT BOOK SOCIETY -: 4: - 4 WHICH HAVE RELIED BY THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION VS. CIT 319 ITR 317. 3.3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS NOT AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 10(22) BY UNAUTHORISEDLY DISTINGUISHING THE RATIO OF FOLLOWING DECISIONS:- (I) SECONDARY BOARD OF EDUCATION VS. ITO, 86 ITR 408 (ORISSA). (II) CIT VS. RAJASTHAN STATE TEXT BOOK BOARD, 244 ITR 667 (RAJ.) (III) ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD. VS. CIT, 319 ITR 317 (SC.) (IV) TAMIL NADU TEXT BOOK SOCIETY TO WHO CBDT HAD ISSUED LETTER DATED AUGUST 19,1975 F.NO. 184/296 OF1975, REFERRED IN THE DECISION OF RAJASTHAN STATE BOOK BOARD AND ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD.(SUPRA). (V) ITO VS.DELHI BUREAU OF TEXT BOOKS (1980) 10 TTJ 481(I.T.A.T., DELHI). -: 5: - 5 (VI) BIHAR STATE TEXT BOOK PUBLISHING CORPORATION VS. CIT (2011) 241 CTR (PAT) 403. AS A MATTER OF FACT THE ACTIVITIES OF ABOVE APPELLANT / RESPONDENTS ARE IDENTICAL TO THE ASSESSEE THEREFORE ABOVE DECISIONS ARE BINDING ON THE LD. CIT(A) AND LD. A.O. 3. WHEREAS THE FOLLOWING COMMON GROUNDS HAVE BEEN T AKEN BY THE ASSESSEE IN ITA NO. 386 TO 394/IND/2011 :- 1) THAT IMPUGNED ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT INTERPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2.1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE LD. CIT(A) ERRED IN NOT ALLOWING THE BENEFIT OF SECTION 11 TO 13 BY STATING THE FACT THAT THE AUDIT REPORT IN FORM 10B WAS NOT FILE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE A.O. AND FILING OF THE AUDIT -: 6: - 6 REPORT IS MANDATORY AND NOT DIRECTORY IN NATURE. 2.2] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN STATING THE FACT THAT AUDIT REPORT IN FORM 10B IS DATED 10.10.2010 AND AS SUCH SAME IS NOT AVAILABLE WITH THE APPELLANT AT THE TIME OF FILING OF RETURN. AS A MATTER OF FACT THE AUDIT REPORT IS DATED 10.12.2010 AND READY AT THE TIME OF ASSESSMENT PROCEEDINGS. 2.3] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) AND LD. A.O. ERRED IN NOT FOLLOWING THE DIRECTION OF HON'BLE I.T.A.T. WHERE IN IT WAS DIRECTED TO CONSIDER THE ASSESSEES CLAIM FOR BENEFIT OF REGISTRATION U/S 12AA AT THE TIME OF COMPLETING THE SET- ASIDE/REMAND ASSESSMENT PROCEEDINGS. -: 7: - 7 3.1] THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE OF THE LD. A.O. AND LD.CIT(A) ERRED IN DENYING THE EXEMPTION U/S 10(23C)(IIIAB)/ 10(23C) (IV) WITHOUT FOLLOWING THE DIRECTION GIVEN BY THE HON'BLE HIGH COURT OF MADHYA PRADESH WHILE REMANDING THE CASE. 3.2] THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE A.O.S ACTION OF UNAUTHORISEDLY ATTEMPT TO FIND FAULT WITH THE LETTER DATED AUGUST 19, 1975 IN THE CASE OF TAMIL NADU TEXT BOOK SOCIETY WHICH HAVE RELIED BY THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION VS. CIT 319 ITR 317. 3.3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING -: 8: - 8 THAT THE APPELLANT IS NOT AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 10(23C)(IIIAB/ 10(23C)(IV) BY UNAUTHORISEDLY DISTINGUISHING THE RATIO OF FOLLOWING DECISIONS:- (I) SECONDARY BOARD OF EDUCATION VS. ITO, 86 ITR 408 (ORISSA). (II) CIT VS. RAJASTHAN STATE TEXT BOOK BOARD, 244 ITR 667 (RAJ.) (III) ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LTD. VS. CIT, 319 ITR 317 (SC.) (IV) TAMIL NADU TEXT BOOK SOCIETY TO WHO CBDT HAD ISSUED LETTER DATED AUGUST 19, 1975 F.NO. 184/296 OF 1975, REFERRED IN THE DECISION OF RAJASTHAN STATE BOOK BOARD AND ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION LIMITED (SUPRA). (V) ITO VS.DELHI BUREAU OF TEXT BOOKS (1980) 10 TTJ 481(I.T.A.T., DELHI). (VI) BIHAR STATE TEXT BOOK PUBLISHING CORPORATION VS. CIT (2011) 241 CTR (PAT) 403. AS A MATTER OF FACT THE ACTIVITIES OF ABOVE APPELLANT / RESPONDENTS ARE IDENTICAL TO THE -: 9: - 9 ASSESSEE THEREFORE ABOVE DECISIONS ARE BINDING ON THE LD. CIT(A) AND LD. A.O. 3.4] THAT ON THE FACT IN THE CIRCUMSTANCES OF THE CASE OF LD.CIT(A) ERRED IN THE HOLDING THAT THE APPELLANT SOCIETY IS NOT SUBSTANTIALLY FINANCED BY THE STATE GOVERNMENT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE SOCIETY IS FULLY OWNED AND CONTROLLED BY THE STATE GOVERNMENT WHICH IS EVIDENT FROM THE REGULATION OF THE SOCIETY AND IS AS MUCH AS THAT ITS PRESIDENT IS MINISTER OF EDUCATION AND ITS MANAGING DIRECTOR IS APPOINTED BY THE GOVERNMENT WHO IS GENERALLY SENIOR IAS. MOREOVER 90% OF THE BOOKS ARE TAKEN BY THE STATE GOVERNMENT UNDER THE SCHEME OF SARVA SIKSHA ABHIYAN FOR FREE DISTRIBUTION. 3.5] THAT THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT NO PART OF THE SURPLUS IS DISTRIBUTED TO ANYONE AND USED FOR THE EDUCATIONAL PURPOSE AS PER THE DIRECTIONS OF STATE GOVERNMENT WITHOUT ANY EXCEPTION. -: 10: - 10 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PE RUSED. THE BRIEF FACTS OF THIS CASE ARE THAT ASSESSEE IS A SOCIETY ORIGINALLY REGISTERED IN THE NAME OF M. P. STATE CO RPORATION OF TEXT BOOK PRODUCTION AND EDUCATIONAL RESEARCH FROM 07.08.1968. SINCE 1ST OCTOBER, 1974, ITS NAME WAS C HANGED TO MADHYA PRADESH PATHYA PUSTAK NIGAM. AS PER THE MEMORANDUM OF ASSOCIATION, OBJECTS OF THE ASSESSEE SOCIETY ARE TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND OF PRIMARY AND SECONDARY EDUCATION IN PARTICULA R, TO PRODUCE SCHOOL TEXT BOOKS, BOOKS FOR TEACHERS, WOR K BOOKS FOR PUPILS, OTHER EDUCATIONAL REGISTERS USEFUL IN P ERFORMING TEACHING, LEARNING AND EVALUATION IN THE EDUCATION AL INSTITUTIONS, TO PRINT, PUBLISH, STOCK, DISTRIBUTE TO SELL OR ENTER INTO ANY ARRANGEMENT FOR PRINTING, PUBLISHING, STO CKING, DISTRIBUTION AND SALE OF TEXT BOOKS APPROVED, SANCT IONED OR ASSIGNED BY THE GOVT. OR OTHER APPROPRIATE AUTHORITY . 5. FURTHER, THE ASSESSEE SOCIETY IS CONTROLLED BY THE GOVT. OF MADHYA PRADESH AND BOARD OF GOVERNORS CONSIST OF MI NISTER OF EDUCATION, MADHYA PRADESH, MINISTER OF STATE/DEPUTY MINISTER OF EDUCATION, MADHYA PRADESH, SECRETARY OF -: 11: - 11 EDUCATION DEPARTMENT, SECRETARY TO FINANCE DEPARTME NT, DIRECTOR OF PUBLIC INSTRUCTIONS, MADHYA PRADESH, CH AIRMAN OF BOARD OF SECONDARY EDUCATION, MADHYA PRADESH, DIREC TOR OF S.C.E.R.T., BHOPAL, DIRECTOR OF STATE INSTITUTE OF SCIENCE EDUCATION, CONTROLLER OF PRINTING AND STATIONARY ,M ADHYA PRADESH, TWO EXPERTS IN THE FIELD OF SCHOOL EDUCATI ON, WHO ARE INTERESTED IN SCHOOL EDUCATION, NOMINATED BY THE GO VERNMENT FROM AMONGST THE MEMBERS OF THE CORPORATION, MANAGI NG DIRECTOR WHO IS APPOINTED BY THE STATE GOVERNMENT O UT OF SENIOR IAS OFFICER. 6. O RIGINAL ASSESSMENTS UNDER APPEAL WERE COMPLETED BY THE ASSESSING OFFICER AND THE CLAIM OF DEDUCTION U/S 10(22)/10(23C) WAS REJECTED BY THE ASSESSING OFFICE R. HOWEVER, IN THE SUBSEQUENT APPEALS BEFORE THE HON'BLE I.T.A. T. SUCH CLAIM WAS ALLOWED TO THE APPELLANT SOCIETY. IN FURTHER DE PARTMENTAL APPEAL BEFORE THE HON'BLE HIGH COURT OF MADHYA PRAD ESH, JABALPUR, THE ISSUE OF CLAIM OF DEDUCTION U/S 10(22 )/10(23C) WAS REMANDED BACK TO THE FILE OF THE ASSESSING OFF ICER VIDE ORDER DATED 2.4.2009. -: 12: - 12 7. THE ASSESSEE SOCIETY DURING THE ORIGINAL ASSESSMENT PROCEEDINGS DID NOT CLAIM ANY EXEMPTION U/S 11 OF I T ACT. IN FACT, NO SUCH CLAIM WAS MADE IN THE RETURN OF INCOM E. HOWEVER, LATER ON THE APPELLANT SOCIETY APPLIED FOR GRANT OF REGISTRATION U/S 12AA OF I.T ACT. SUCH APPLICATION WAS INITIALLY REJECTED BY LD. CIT, BHOPAL HOWEVER, HON'BLE IT AT DIRECTED TO GRANT THE REGISTRATION U/S 12AA AND ACCORDINGLY, SU CH REGISTRATION WAS GRANTED RETROSPECTIVELY W.E.F .07. 08.1968. ON BEING GRANTED SUCH REGISTRATION, THE ASSESSEE SOCIE TY ALSO CLAIMED BENEFIT OF SECTION 11 TO 13 DURING THE APPE LLATE PROCEEDINGS AND BEFORE HON'BLE ITAT. 8. THE ASSESSEE SOCIETY HAS ALSO FILED AN APPLIC ATION FOR GRANT OF EXEMPTION U/S 10(23C)(VI) OF IT ACT F OR ASSESSMENT YEARS 2000-01 TO 2007-08 BEFORE LD.CCIT, BHOPAL. HOWEVER, THE APPELLANT SOCIETY WAS NOT GRANTED EXEM PTION U/S 10(23C)(VI) OF IT ACT AND ITS APPLICATION WAS REJEC TED VIDE ORDER DATED 10.03.2008. 9. THE ASSESSING OFFICER, IN THE SET-ASIDE PROCEEDING S OBSERVED THAT ON AN EXAMINATION OF THE MEMORANDUM O F ASSOCIATION OF THE SOCIETY FILED BY THE ASSESSEE, I T IS FOUND THAT -: 13: - 13 THE SOCIETY HAS THE FOLLOWING OBJECTS:- (1) TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND OF PRIMARY AND SECONDARY EDUCATION IN PARTICULAR; (2) TO PRODUCE SCHOOL TEXT BOOKS, HAND-BOOKS FOR TEACHERS WORK BOOKS OF PUPILS AND OTHER EDUCATIONAL ,LITERATURE USEFUL FOR FURTHERANCE OF TEACHING,LEARNING AND EVALUATION IN EDUCATIONAL INSTITUTIONS; (3) TO ENCOURAGE AND PROCURE EXPERT AUTHORS HAVING KNOWLEDGE AND EXPERIENCE OF MODEM METHODS OF EDUCATION TO WRITE IN DIFFERENT LANGUAGES TEXT BO OKS ON VARIOUS SUBJECTS SUITED TO THE REQUIREMENT OF THE CURRICULA AND SYLLABI PRESCRIBED BY GOVERNMENT OR OTHER APPROPRIATE AUTHORITY IN THAT BEHALF FOR VA RIOUS COURSES OF EDUCATION AND SO APPLY FOR AND OBTAIN THE APPROVAL OR SANCTION OF GOVERNMENT OR OTHER APPROPRIATE AUTHORITY THERETO; (4) TO PRINT, PUBL ISH, STOCK DISTRIBUTE AND SELL OR ENTER INTO ANY -: 14: - 14 ARRANGEMENT FOR PRINTING, PUBLISHING, STOCKING, DISTRIBUTION AND SALE OF TEXT BOOKS APPROVED, SANCTIONED OR ASSIGNED BY GOVERNMENT OR OTHER APPROPRIATE AUTHORITY AND ANY OTHER PUBLICATIONS WHICH THE CORPORATION MAY DECIDE TO PUBLISH WITH A VIEW TO MAKING THE SAME AVAILABLE AT A FAIR AND REASONABLE PRICE ; (5) TO UNDERTAKE RESEARCH FOR THE IMPROVEMENT IN CURRICULA AND SYLLABI FOR PRIMARY AND SECONDARY EDUCATION OR ANY OTHER BRANCH OF EDUCATION; (6) TO UNDERTAKE RESEARCH IN TEXT BOOK PRODUCTION , EVALUATION TECHNIQUES, AND ANCILLARY AIDS AND EDUCATIONAL LITERATURE CONCERNING THE VARIOUS METHODS OF EDUCATION AND AIDS FOR EDUCATION AND OTHERWISE DIRECTED TOWARD SECURING IMPROVEMENT IN THE GENERAL EDUCATIONAL STANDARD; (7) TO REGULATE AND FIX PRICES OF THE PUBLICATIONS OF THE SOCIETY CONSISTENT WITH ITS OBJECTS; (8) TO FRAME, DEVELOP AND RECOMMEND TO THE -: 15: - 15 GOVERNMENT AND OTHER APPROPRIATE AUTHORITIES CURRICULA AND SYLLABI FOR THE PURPOSE OF IMPROVEMENT IN THE GENERAL EDUCATIONAL STANDARD; (9) TO ADVISE GOVERNMENT AND OTHER APPROPRIATE AUTHORITIES IN ALL MATTERS CONCERNING SYLLABI CURRICULA EVALUATION EXAMINATION REFORM AND PRODUCTION OF TEXT BOOKS AND ANCILLARY AIDS AND EDUCATIONAL LITERATURE; (LO) TO ASSESS UTILITY OF TEXT BOOKS, TEACHERS HA ND BOOKS AND OTHE R EDUCATIONAL AIDS AND OTHER EDUCATIONAL LITERATURE WHETHER PRODUCED BY THE CORPORATION OR NOT; (L L) TO UNDERTAKE PRINTING SALE AND DISTRIBUTIO N OF BOOKS AND LITERATURE USEFUL OR NECESSARY FOR ADVANCEMEN T OF EDUCATION IN ALL ITS BRANCHES; (12) TO ESTABLISH AND MAINTAIN LIBRARIES TO FACIL ITATE RESEARCH IN GENERAL AND IN CURRICULA, SYLLABI, EVALUATION AND TEXT BOOK PRODUCTION IN PARTICULAR ; (13) TO INVEST AND DEAL WITH THE FUNDS OF THE SOC IETY; (14) TO ACQUIRE BY GIFT, PURCHASE, EXCHANGE, LEAS E, HIRE OR -: 16: - 16 OTHERWISE HOWSOEVER ANY LANDS, BUILDING, EASEMENT S RIGHTS III COMMON AND ANY PROPERTY MOVEABLE OR IMMOVABLE INCLUDING A PRINTING PRESS OR ANY ESTAT E OR INTEREST FOR THE FURTHERANCE OF ALL OR ANY OF THE OBJECTS OF THE SOCIETY ; (15) TO CONSTRUCT, MAINTAIN, REPAIR, EXTEND, ALTE R, IMPROVE OR DEVELOP ANY BUILDINGS OR WORKS NECESSARY OR CONVENIENT FOR THE PURPOSE OR THE SOCIETY; (16) TO BORROW AND RAISE MONEY ON THE SECURITY OR A MORTGAGE, CHARGE, HYPOTHECATION OR PLEDGE OVER ALL OR ANY OF THE IMMOVEABLE OR MOVEABLE PROPERTIES BELONGING TO THE SOCIETY OR I N ANY OTHER MANNER WHATSOEVER; (16) TO BORROW AND RAISE MONEY ON THE SECURITY OR A MORTGAGE, CHARGE, HYPOTHECATION OR PLEDGE OVER AL L OR ANY OF THE IMMOVABLE OR MOVABLE PROPERTIES BELONGING TO THE SOCIETY OR IN ANY OTHER MANNER WHATSOEVER; (17) TO SELL, MORTGAGE, CHARGE, LEASE EXCHANGE AN D TRANSFER OF DISPOSE OF ALL OR, ANY PROPERTY MOVEA BLE -: 17: - 17 OR IMMOVEABLE OF THE SOCIETY; (18) TO PAYOUT OF THE FUNDS BELONGING TO THE SOCI ETY OR OUT OF ANY PARTICULAR PART OF SUCH FUNDS ALL EXPENSES OF OR INCIDENTAL TO THE FORMATION OF THE SOCIETY INCLUDING ALL RENTS RATES, TAXES, A OUTGO INGS AND THE SALARIES OF THE EMPLOYEES; (19) TO DRAW MAKE, ACCEPT, ENDORSE AND NEGOTIATE CHARGES, HUNDIES, PROMISSORY NOTES OR OTHER NEGOTIABLE INSTRUMENTS; (20) FOR THE PURPOSES AFORESAID, TO SIGN EXECUTE AND DELIVER SUCH ASSURANCES AND DEEDS AS MAY BE NECESSARY : (21) TO UNDERTAKE ON AGENCY BASIS OR OTHERWISE TH E FOLLOWING FUNCTIONS FOR OR ON BEHALF OF THE GOVT. OF MADHYA PRADESH OR THE GOVERNMENT OF INDIA:- (I) STOCKING, UTILIZATION AND ACCOUNTING FOR THE GIFT PAPER RECEIVED BY THE GOVERNMENT OF INDIA OR THE GOVT. OF MADHYA PRADESH. (II) IMPLEMENTING ANY SCHEME FOR THE FREE SUPPLY OR -: 18: - 18 BOOKS; (III) ASSISTING AND ADVISING THE GOVERNMENT OF MA DHYA PRADESH BOARD OF SECONDARY EDUCATION, THE DIRECTOR OF PUBLIC INSTRUCTION OR OTHER APPROPRIA TE AUTHORITY IN SANCTIONING SCHOOL TEXT BOOKS FOR STANDARDS I TO XII SUBMITTED BY PRIVATE AUTHORS, OR PUBLISHERS; (IV) AND GENERALLY TO DO AND EXECUTE ALL SUCH LA WFUL ACTS, DEEDS, MATTERS AND THINGS AS ARE CONDUCIVE OR INCIDENTAL TO ON FOR THE ATTAINMENT OF THE ABO VE OBJECTS OR ANY OF THEM.' THEREAFTER, ASSESSING OFFICER COMMENTED THAT THE OB JECT NO. 1 ABOVE NAMELY 'TO AID AND PROMOTE ADVANCEMENT OF EDUCATION IN GENERAL AND OF PRIMARY AND SECONDARY EDUCATION IN PARTICULAR' THOUGH SPEAKS OF AIDING & PROMOTING ADVANCEMENT OF EDUCATION, IT IS VERY GENERAL IN NAT URE. IT DOES NOT SPECIFICALLY SPEAK OF IMPARTING OF EDUCATION TH ROUGH OPENING & RUNNING OF SCHOOLS /COLLEGES /INSTITUTIONS. THE ASSESSING OFFICER FURTHER STATED THAT THE OBJE CTS OF THE ASSESSEE-SOCIETY HAVE NOT BEEN CLASSIFIED INTO MAIN & ANCILLARY -: 19: - 19 OBJECTS BUT FROM A PLAIN READING IT APPEARS THAT TH E OBJECTS AT S.NOS. 1 TO 2 & 21 ABOVE ARE THE MAIN OBJECTS AND T HE OBJECTS AT S.NOS. (13) TO (20) ABOVE ARE ANCILLARY TO OR INCID ENTAL TO ATTAINMENT OF THE MAIN OBJECTS. THE REMAINING OBJEC TS [ (2) TO(12) & 21] OF THE SOCIETY THOUGH REFER TO EDUCATION RELA TED ACTIVITIES, THEY CANNOT BE SAID TO BE PERTAINING TO EDUCATION I N THE NARROW SENSE OF GIVING SYSTEMATIC INSTRUCTION IN A FORMAL ENVIRONMENT OR TO THE PROCESS OF TRAINING AND DEVELOPING THE KN OWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCH OOLING. ON THE OTHER HAND SOME OF THESE OBJECTS PERTAIN TO UND ERTAKING OF COMMERCIAL ACTIVITIES OF PRINTING & SALE OF TEXT BO OKS. THE OBJECT NOS. 1 TO 12 & 21 ABOVE ARE DISTRIBUTIVE I.E., THEY ARE INDEPENDENT OF EACH OTHER. THERE IS NOTHING IN THE CONSTITUTION OF THE SOCIETY TO PREVENT THE GOVERNING BODY FROM APPL YING ENTIRE INCOME TO THE NON EDUCATIONAL OBJECTS & ACTIVITIES. 10. THE ASSESSING OFFICER FURTHER OBSERVED THAT ON THIS ISSUE, THE ASSESSEE IN ITS WRITTEN REPLY DATED 6.12.2010 H AS STATED THAT : 'THE ASSESSEE INSTITUTION EXISTS SOLELY FOR THE PUR POSE OF EDUCATION. AS THE HON'BLE ITAT, INDORE IN THE A Y 1995-96 -: 20: - 20 GAVE THE FOLLOWING FINDING IN THE ASSESSEE'S CASE: 'THE TEST FOR GRANTING EXEMPTION U/S 10(22) OF THE ACT, IN OUR VIEW IS AS TO WHETHER THE ASSESSEE IS PLA YING A ROLE IN IMPARTING EDUCATION, IN THE ABSENCE OF WHI CH EDUCATIONAL INSTITUTION OF THE KIND CANNOT BE RUN OR IN OTHER WORDS AS TO WHETHER BY PRESCRIBING SYLLABUS AND SUPPLYING THE STUDY MATERIAL BASED ON IT, EXTENDI NG FINANCIAL AID, THE ASSESSEE IS MAKING IT POSSIBLE TO RUN THOSE EDUCATIONAL INSTITUTIONS TO IMPART AFFORDAB LE EDUCATION TO THE STUDENTS. CONSIDERING THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ANSW ER OF THESE QUESTIONS COMES IN POSITIVE. THE ASSESSEE I S THEREFORE, AN EDUCATIONAL INSTITUTION SOLELY EXIST S FOR EDUCATIONAL PURPOSES AND ENTITLED TO THE CLAIMED EXEMPTIONS WHICH THE DEPARTMENT IN EARLIER YEARS H AD BEEN RIGHTLY GRANTING UNDER THE SIMILAR SET OF FAC TS & CIRCUMSTANCES. THERE MAY BE SEVERAL PRIVATE PUBLIC ATION HOUSES WHICH MAY ALSO BE PUBLISHING STUDY MATERIAL ETC. HELPFUL IN STUDY TO THE STUDENTS IN THE SCHOO L BUT WHEN IT IS DONE WITH AN AIM AND OBJECT TO EARN -: 21: - 21 PROFIT, THESE CANNOT BE TERMED AS EXISTING SOLELY FOR EDUCATION PURPOSE AND NOT FOR PURPOSE OF PROFIT. EARNING OF A LIMITED PROFIT FOR SMOOTH RUNNING OF AN INSTITUTION OR SOCIETY IS NOT PROHIBITED, WH AT IS TO BE SEEN IS THE APPROACH OF THE SOCIETY FROM IT S ACTIVITIES AND CONDUCT AS TO WHETHER IT IS COMMERCIAL OR SOLELY FOR EDUCATIONAL PURPOSE. THE ISSUE INVOLVED IN GR OUND 1 TO 4 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE WITH THE DIRECTION TO THE AO TO ALLOW THE CLAIMED EXEMP TION TO THE ASSESSEE. ' THEREFORE THE ASSESSEE IS AN EDUCATIONAL INSTITUTI ON EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FO R PROFIT. THE SIMILAR INSTITUTIONS ENGAGED IN PRINTING AND P UBLISHING OF PRESCRIBED TEXT BOOKS APPROVED BY RESPECTIVE ST ATE GOVT. ARE ALSO IN EXISTENCE IN OTHER STATES LIKE R AJASTHAN ORISSA DELHI ETC. THE HON'BLE HIGH COURT OF RAJASTHAN IN C1T VS. RAJASTHAN STATE TEXT BOOK BOARD (F2000) 113 TAXMAN 204), AND HON'BLE HIGH COURT OF ORISSA ILL -: 22: - 22 SECONDARY EDUCATION BOARD VS. ITO [1972] 86 ITR 408 ) AND THE DELHI BENCH OF THE TRIBUNAL IN ITO VS DELHI BUREAU OF TEXT BOOKS ([1980) 10 TTJ 481) HAVE UPHELD THE INSTITUTIONS AS OTHER EDUCATIONAL INSTITUTION ELIGIBLE FOR EXEMPTION U/S 10(22) OF THE ACT UNDER SIMILAR FACTS AND CIRCUMSTANCES AS OF THE PRESENT CASE. ALSO C.B.D.T. HAS GRANTED EXEMPTION TO THE TAMILNADU TEXT-BOOKS SOCIE TY WHICH ALSO UNDERTAKES A SIMILAR ACTIVITY OF PRINTI NG AND PUBLISHING OF TEXT BOOKS AS PER THE LETTER DATED 19-08- 1975 AND FILE NO. 184/26/75. IN THAT CASE THE C.B.D.T. HELD TAMILNADU TEXTBOOKS SOCIETY WAS AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR THE PURPOSE OF EDUC ATION WITHIN THE MEANING OF SECTION 10(22) OF THE ACT. IN THE SECONDARY BOARD OF EDUCATION VS ITO (1972) 86ITR 408, ORISSA THE PETITION BOARD CONSTITUTED UNDER T HE ORISSA EDUCATION ACT, 1953, DERIVED INCOME FROM COMPILATION, PUBLICATION, PRINTING AND SALE OF TEX TBOOKS AND THE ENTIRE SURPLUS WAS DIRECTED TOWARDS THE DEVELOPMENT AND EXPANSION OF EDUCATIONAL PURPOSE O NLY AND WAS WANTED EXEMPTION U/S 10(22) OF THE ACT. -: 23: - 23 ALSO THE JUDGMENT OF HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS ASSAM STATE BOOK PRODUCTION & PUBLICATION CORPORATION LTD., 288 ITR 352 (GAU), HAS BEEN SET ASIDE AND REMANDED BACK TO THE FILE O F AD BY THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ASSAM STATE BOOK PRODUCTION & PUBLICATION CORPORATION LTD. VS CIT, [2009J 319 ITR 317 (SC). THE HON'BLE SUPREME COURT OF INDIA HAS HELD AS UNDE R :- 'HELD, REVERSING THE DECISION OF THE HIGH COURT, TH AT THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S 10(22). THE ASSESSEE WAS A GOVERNMENT COMPANY AND ,IT WAS CONTROLLED BY THE STATE OF ASSAM, THE CENTRAL BOAR D OF DIRECT TAXES HAD GRANTED SIMILAR EXEMPTION BY LETT ER DATED AUGUST 19, 1975 TO THE TAMIL NADU TEXT BOOK SOCIETY WHICH PERFORMED ACTIVITIES TO THOSE OF THE ASSESSEE AND THE CENTRAL GOVERNMENT HAD BY LETTER DATED JULY 9, 1973', STATED THAT ALL STATE CONTROLLED EDUCATION COMMITTEE / BOARDS HAVE BEEN CONSTITUTED TO IMPLEMENT THE EDUCATIONAL POLICY OF THE STATE AND -: 24: - 24 CONSEQUENTLY THEY SHOULD BE TREATED AS EDUCATIONAL INSTITUTION.' SINCE MP, TEXT BOOK CORPORATION IS ALSO WORKING ON THE SAME LINES AS CITED IN THE ABOVE CASE, IT IS AN EDUCATIO NAL INSTITUTION EXISTING SOLELY FOR THE PURPOSE OF EDUCATION. ' 10. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT T HE ASSESSEES CONTENTION AND HELD THAT THE MAIN ACTIVI TY OF THE ASSESSEE SOCIETY IS MERELY PRINTING AND SALE OF BOO KS ON COMMERCIAL BASIS, THEREFORE, ASSESSEE IS NOT ELIGIB LE FOR CLAIM OF EXEMPTION U/S 10(22)/10(23C) OF INCOME-TAX ACT, 1961. 11. IN ALL THE YEARS UNDER CONSIDERATION STARTING F ROM ASSESSMENT YEAR 1988-89 TO 2006-07 THE ISSUES INVOL VED ARE COMMON. CONSOLIDATED ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER DATED 30 TH DECEMBER, 2010, WHEREIN ASSESSEES CLAIM FOR EXEMPTION U/S 10(22) WAS DECLI NED ON THE PLEA THAT THE ASSESSEE DOES NOT DEPEND UPON ON GOVE RNMENT GRANTS. THE ASSESSING OFFICER OBSERVED THAT AS PER ANNUAL REPORTS FOR FINANCIAL YEAR 2002-03 TO, 2005-06, INI TIALLY THE SOCIETY STARTED ITS OPERATION BY TAKING A LOAN OF R S. 10 LAKHS FROM THE STATE GOVERNMENT AND RS. 4.75 LAKHS FROM T HE M.P. -: 25: - 25 BOARD OF SECONDARY EDUCATION. THE ASSESSING OFFICER FURTHER OBSERVED THAT WORK OF SOCIETY WAS CARRIED OUT FROM ITS OWN FINANCIAL SOURCES AND IT DID NOT GET ANY FINANCIAL AID FROM THE CENTRAL OR STATE GOVERNMENT. THEREFORE, THE ASSESSE E SOCIETY IS NOT WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVE RNMENT AND DOES NOT QUALIFY FOR EXEMPTION U/S 10(23C)(IIIAB ). 12. THE ASSESSEES ELIGIBILITY FOR CLAIM OF DEDUCTI ON U/S 10(23C) (VI) FOR ASSESSMENT YEAR 1999-2000 AND SUBS EQUENT YEAR WAS DECLINED ON THE PLEA THAT APPLICATION FILE D BY THE ASSESSEE IN FORM NO. 56D FOR GRANT OF APPROVAL U/S 10(23C)(VI) FOR ASSESSMENT YEAR 2000-01 TO 2007-08 STANDS REJEC TED BY THE CCIT, BHOPAL, VIDE ORDER DATED 10.3.2008. THUS, THE ASSESSEE SOCIETY WAS HELD TO BE NOT ELIGIBLE FOR AN Y EXEMPTION U/S 10(23C)(VI) OF THE INCOME-TAX ACT, 1961. 13. THE ASSESSEES CLAIM FOR EXEMPTION U/S 11 & 12 WAS ALSO DECLINED ON THE PLEA THAT IN NONE OF THE RETURN OF INCOME FILED U/S 139 FOR THE ASSESSMENT YEAR 1988-89 TO 2006-07, THE ASSESSEE HAD MADE SUCH CLAIM. BY RELYING ON THE VER DICT OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED, 204 ITR 182, THE ASSESSING OFFICER OBSERVED THAT NO CLAIM FOR -: 26: - 26 DEDUCTION OTHER THAN BY WAY OF FILING A REVISED RET URN CAN BE ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OF FICER ALSO OBSERVED THAT AS PER PROVISIONS OF SECTION 12-A(1)( B),READ WITH RULE 17-B, THE ASSESSEE WAS REQUIRED TO GET ITS ACC OUNTS AUDITED AND SUBMIT THE REPORT OF AUDIT IN FORM NO.1 0-B ALONGWITH RETURN OF INCOME, WHICH HAS NOT BEEN DONE IN THE INSTANT CASE. 14. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBSERVING THAT N OT ONLY CLAIM U/S 11 WAS NOT MADE IN THE RETURN BUT ALSO THE ESSE NTIAL CONDITION OF STATUTORY AUDIT IN FORM NO.10-B WAS NO T CONDUCTED BEFORE FILING OF RETURN. THE LD. CIT(A) A LSO OBSERVED THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S 10(22)/ 10(23C) CANNOT BE ACCEPTED IN VIEW OF THE FACT THAT THE ASS ESSEE WAS NEITHER IMPARTING ANY FORMAL EDUCATION NOR DOING AN Y ORIGINAL WORK OF PRINTING OF TEXT BOOKS. 15. CONTENTION OF LD. AUTHORIZED REPRESENTATIVE WAS THAT OBJECTS OF THE ASSESSEE SOCIETY ARE TO AID AND PROM OTE ADVANCEMENT OF EDUCATION IN GENERAL AND PRIMARY OR SECONDARY EDUCATION, AND TO PRODUCE SCHOOL TEXT BOO KS AND -: 27: - 27 BOOKS FOR TEACHERS AND WORK BOOKS FOR BHOPAL AND OT HER EDUCATIONAL INSTITUTIONS, WHICH IS USEFUL IN PERFOR MING TEACHING, LEARNING AND EVALUATION IN THE EDUCATIONA L INSTITUTION. TO PRINT, TO PUBLISH, TO DISTRIBUTE AN D SELL OR ENTER INTO ANY ARRANGEMENT FOR PRINTING, PUBLISHING, STOC KING, DISTRIBUTION AND SELL OF TEXT BOOKS APPROVED, SANCT IONED OR ASSIGNED BY THE M. P. GOVERNMENT OR OTHER APPROPRIA TE AUTHORITIES. 16. WITH REGARD TO ASSESSEES ELIGIBILITY U/S 11, T HE CONTENTION OF LD. AUTHORIZED REPRESENTATIVE WAS AS UNDER :- THE SAID GROUND RELATES TO THE DENIAL OF EXEMPTION U/S 11 OF THE I.T.ACT EVEN WHEN THE ASSESSEE IS HOLDING REGISTRATION U/S 12AA. 1.1(I) THE LD.A.O. DENIED THE BENEFIT OF SECTION 1 1 TO 13 ON THE TWO GROUNDS WHICH IN BRIEF ARE AS UNDER:- (A) THE ASSESSEE HAS NEITHER CLAIMED BENEFIT OF SECTION 11 TO 13 IN THE RETURN FILED U/S 139 NOR BY FILING A REVISED RETURN U/S 139(5) OF THE I.T.ACT. -: 28: - 28 (B) AS PER THE PROVISION OF SECTION 12A(1)(B) READ WITH RULE 17B OF THE I.T.RULES THE ASSESSEE HAS NOT F ILED AUDIT REPORT IN FORM 10B ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEARS 1988-89 TO 2006-07. 1.1(II) THE LD.CIT (A) CONFIRMED THE DENIAL OF EXEMPTION BY HOLDING AS UNDER:- PAGE 10 OF THE CIT(A) ORDER:- IT MAY BE NOTICED THAT SECTION 12A(I)(B) OF IT ACT STIPULATED SPECIFIC CONDITION THAT PROVISIONS OF SECTION 11 & 12 SHALL NOT APPLY UNLESS IN A CASE WHERE TOTAL INCOME OF THE TRUST OR INSTITUTION AS COMPUTED UNDER THIS ACT EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX AND THE TRUST OR THE INSTITUTION GETS ITS ACCOUNTS AUDITED AS DEFINED IN EXPLANATION BELOW SUB-SECTION (2) OF THE SECTION 88 AND SUCH PRESCRIBED AUDIT REPORT IS ALSO FILED WITH THE RETURN OF INCOME .FURTHER , AS PER RULE 17B OF IT RULES THE PRESCRIBED -: 29: - 29 AUDIT REPORT IS TO BE FURNISHED IN FORM NO. 17B. TWO ESSENTIAL REQUIREMENT FOR CLAIM OF BENEFIT U/S 11 & 12 OF IT ACT ARE, PRESCRIBED AUDIT OF BOOKS OF ACCOUNT AND FURNISHING OF PRESCRIBED AUDIT REPORT IN FORM NO. 10B ALONGWITH RETURN , IT HAS BEEN LAID DOWN IN VARIOUS DECISIONS OF THE HONBLE COURTS THAT SUCH AUDIT REPORT CAN BE FILED EVEN DURING THE ASSESSMENT PROCEEDINGS/ APPELLATE PROCEEDINGS. BUT VERY CRUCIAL ISSUE WHICH IS ALSO LAID DOWN IS THAT SUCH AUDIT IN PRESCRIBED FORM SHOULD BE COMPLETED WITHIN THE STIPULATED PERIOD I.E. BEFORE FILING OF RETURN. HOWEVER, IN THE CASE OF APPELLANT IT IS NOTICED THAT THE PRESCRIBED AUDIT REPORT IN FORM NO.10B AS PER RULE 17B IS DATED 10.10.2010 AND PRIME FACIE IT SHOWS THAT WHEN THE ORIGINAL RETURNS FOR THE RELEVANT ASSESSMENT YEARS WERE FILED, THE PRESCRIBED AUDIT REPORTS -: 30: - 30 IN FORM NO.10B WERE NOT AVAILABLE WITH THE APPELLANT. THEREFORE , IT IS A CASE, WHERE, EVEN PRESCRIBED AUDIT IN FORM NO.10B WAS NO CONDUCTED/COMPLETED BEFORE FILING OF RETURN. IN THESE CIRCUMSTANCES , IN THE APPELLANTS CASE, NOT ONLY THE CLAIM U/S 11 WAS NOT MADE IN THE RETURNS BUT ALSO THAT ESSENTIAL CONDITION OF STATUTORY AUDIT IN FORM NO.10B WAS NOT CONDUCTED BEFORE FILING OF RETURN. THE AUDIT OF THE ACCOUNTS AS PER THE PROVISION LAID DOWN IN THE ACT AND OBTAINING THE PRESCRIBED CERTIFICATE IS THE REQUIREMENT WHICH FURNISHES SUBSTANTIAL FOUNDATION FOR CLAIMING AN ALLOWANCE AND SUCH REQUIREMENT IS OF MANDATORY NATURE WHEREAS FURNISHING OF AUDIT REPORT WITH THE RETURN OF INCOME IS OF DIRECTORY NATURE. THIS POSITION OF LAW HAS BEEN CLEARLY LAID DOWN IN VARIOUS JUDGEMENTS INCLUDING IN THE CASE OF ZENITH PROCESSING MILLS VS. CIT -: 31: - 31 REPORTED IN 219 ITR 721 (GUJ.) ADMITTEDLY, THE PRESCRIBED AUDIT REPORT IN FORM NO.10B WAS NOT AVAILABLE WHEN THE ORIGINAL RETURNS WERE FILED IN AS MUCH AS ALL SUCH AUDIT REPORTS ARE DATED 10.10.2010. IT INDICATE THAT THE BASIC AND MANDATORY CONDITION OF CONDUCTING OF AUDIT AND OBTAINING THE PRESCRIBED REPORT BEFORE FILING OF THE RETURN WAS NOT CARRIED OUT BY THE APPELLANT. IN THESE CIRCUMSTANCES, WHEN AN ESSENTIAL REQUIREMENT AND VERY FOUNDATION FOR CLAIM OF BENEFIT WAS LACKING IN THE APPELLANT CASE, THE CLAIM OF THE APPELLANT FOR EXEMPTION U/S 11 CANNOT BE ACCEPTED. THE GROUND OF APPEAL IS ACCORDINGLY, DISMISSED . 1.2 FROM THE ABOVE IT IS CLEAR THAT THE LD.CIT(A) DISMISSED THE APPEAL MERELY FOR THE REASON THAT TH E AUDIT REPORT IN FORM NO.10B ARE NOT AVAILABLE AT TH E TIME OF FILING OF RETURN OF INCOME FOR RESPECTIVE ASSESSMENT YEARS AS SAME IS DATED 10.10.2010 BY REFERRING TO THE JUDGEMENT OF HONBLE GUJARAT HIGH -: 32: - 32 COURT IN THE CASE OF ZENITH PROCESSING MILLS VS. C IT REPORTED IN 219 ITR 721 (GUJ.). IN THIS REGARD WE HAVE TO SUBMIT AS UNDER:- (I) THAT IN THE CASE OF ZENITH PROCESSING MILLS TH ERE IS NOTHING THAT THE AUDIT REPORT IN FORM NO.10B SHOULD BE OBTAINED BY THE ASSESSEE PRIOR TO THE FILING OF RETURN OF INCOME. (II) THE LD.CIT (A) FAILED TO APPRECIATE THE FACT T HAT THE REASON FOR NOT OBTAINING AND ENCLOSING AUDIT REPORT ALONG WITH THE RETURN OF INCOME WAS THAT THE REGISTRATION U/S 12AA(1) (B) (I) OF THE IT ACT WAS GRANTED BY THE LD.CIT (A) IN COMPLIANCE TO THE DIRE CTION GIVEN BY THE HONBLE ITAT VIDE ITA NO. 300/IND/2009 ORDER DATED 23/09/2009.WITH RETROSPECTIVE EFFECT FROM 07.08.1968 VIDE ORDER DATED 23.10.2009 AND AFTER RECEIPT OF THE ORDER THE APPELLANT GOT AUDITE D ITS BOOKS OF ACCOUNTS FOR 20 YEARS I.E. FROM THE ASSESSMENT YEARS 1988-89 TO 2008-09. -: 33: - 33 (III) IT IS NOT EASY FOR A SOCIETY OWNED BY THE STA TE GOVERNMENT TO GET ITS ACCOUNTS AUDITED FOR LAST 20 YEARS PARTICULARLY WHEN THE LIST OF THE AUDITORS AR E GIVEN BY THE C & AG. MOREOVER, IN THE GOVERNMENT ORGANIZATION THERE ARE VARIOUS FORMALITIES FOR APPOINTMENT OF AUDITOR AND FIX THEIR REMUNERATION, IT REQUIRE APPROVAL AND SANCTION OF VARIOUS AUTHORITI ES. (IV) THE ABOVE REASONS ARE REASONABLE CAUSE FOR DEL AY IN OBTAINING THE AUDIT REPORT IN FORM NO.10B. THE SAID PRACTICAL DIFFICULTY IN OBTAINING DELAY AUDIT REPOR T IS ALSO REALIZED BY THE CBDT AND THEREFORE VIDE INSTRUCTION NUMBER 1/1148 [F .NO.2687/482/77-IT (PART)] DATED 09.02.1978 ISSUED FOLLOWING DIRECTION S:- THE BOARD HAVE CONSIDERED WHETHER THE REQUIREMENT UNDER S.12A(B) OF FILING AUDIT REPORT ALONG WITH THE RETURN OF INCOME IS MANDATORY SO AS TO DISENTITLE THE TRUST FROM CLAIMING EXEMPTION UNDER SS. 11 AND 12CASE -: 34: - 34 OF OMISSION TO FURNISH SUCH REPORT IN THE PRESCRIBED FORM ALONG WITH THE RETURN. NORMALLY, IT SHOULD BE POSSIBLE FOR A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION TO FILE THE AUDITORS REPORT ALONG WITH THE RETURN OF TOTAL INCOME, WHERE SUCH TRUST OR INSTITUTION CLAIMS EXEMPTION UNDER SS, 11 AND 12, HOWEVER , IN CASES WHERE FOR REASONS BEYOND THE CONTROL OF THE ASSESSEE SOME DELAY HAS OCCURRED IN FILING THE SAID REPORT THE EXEMPTION AS AVAILABLE TO SUCH TRUST UNDER SS. 11 AND 12 MAY NOT BE DENIED MERELY ON ACCOUNT OF DELAY IN FURNISHING THE AUDITORS REPORT AND THE ITO SHOULD RECORD REASONS FOR ACCEPTING A BELATED AUDIT REPORT. (IV) THERE ARE PLETHORAS OF CASE LAWS INCLUDING JURISDICTIONAL HIGH COURT WHERE IN IT WAS HELD THA T FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INC OME IS NOT MANDATORY SOME OF WHICH ARE AS UNDER:- -: 35: - 35 (A) IN THE CASE OF CIT VS. MEDICAPS LTD (2010) 323 ITR 554 (M.P.) THE HONBLE JURISDICTIONAL HIGH COURT HE LD AS UNDER:- PAGE 557 PARA 10 ON THE ISSUE OF FILING THE AUDIT REPORT AT THE APPELLATE STAGE, THE TRIBUNAL BY PLACING RELIANCE UPON THE VARIOUS JUDGMENTS, HELD THAT FILING THE AUDIT REPORT IS PROCEDURAL AND DIRECTORY IN NATURE AND THE SAME CAN BE FILED AT THE APPELLATE STAGE. IT IS ALSO WORTH NOTING THAT BEFORE THE TRIBUNAL, THE COMPLETE DETAILS WERE DISCLOSED IN RESPECT OF THE PRODUCTION IN THE SECOND UNIT. ASREGARDS THE CLAIM UNDER SECTION 80-IA(2) THE STATEMENT HAVE BEEN FOUND TO BE SUPPORTED BY THE DATE AND FIGURES AND THE TRIBUNAL HAS FOUND THAT THE PROPER BOOKS OF ACCOUNT WERE -: 36: - 36 MAINTAINED AND WERE AUDITED AND THE AUDIT REPORT IN PRESCRIBED FORMS WERE FILED. LD. COUNSEL APPEARING FOR THE APPELLANT COULD NOT POINT OUT ANY ERROR OR INFIRMITY IN THE AFORESAID FACTS RECORDED BY THE TRIBUNAL AND THE CONCLUSIONS DRAWN BY IT. IN VIEW OF THE AFORESAID POSITION ON FACTS, THE TRIBUNAL HAS NOT COMMITTED ANY ERROR OF LAW IN HOLDING THAT THE RESPONDENT WAS ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80-IA(2) OF THE INCOME- TAX ACT. (B) CIT VS. HARDEODAS AGARWALLA TRUST (1992) 198 ITR 511 (CAL) IN THE INSTANT CASE IT WAS HELD THAT BALANCE SHEET AND INCOME AND EXPENDITURE STATEMENT OF A TRUST OR INSTITUTION WOULD NECESSARILY CONTAIN -: 37: - 37 THE PARTICULARS OF THE APPLICATION OF INCOME AND NON-USER OF INCOME OR PROPERTY AND THE CERTIFICATE OF THE AUDITOR ONLY AFFIRMS THE SAME. THE ASSESSING OFFICER CAN RELY ON THE CERTIFICATE FOR ALLOWING THE BENEFIT OF EXEMPTION. THIS IS A PROCEDURAL MATTER FOR THE PURPOSE OF ENABLING THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT ON THE BASIS OF THE CERTIFICATE OF THE AUDITOR WITHOUT EVEN ASKING THE ASSESSEE TO FURNISH SUPPORTING DOCUMENTS IN SUPPORT OF THE CLAIMS AND CONTENTIONS MADE IN THE RETURN. IT WAS FURTHER OBSERVED THAT, THE REQUIREMENT UNDER SECTION 12A (B) OF FILING AUDIT REPORT ALONGWITH THE RETURN OF INCOME, BEING A PROCEDURAL NATURE, IS NOT MANDATORY SO AS TO DISENTITLE THE TRUST FROM CLAIMING -: 38: - 38 EXEMPTION UNDER SECTION 11 AND SECTION 12 IN CASE OF OMISSION TO FURNISH SUCH REPORT IN THE PRESCRIBED FORM ALONGWITH THE RETURN. HOWEVER, IF AN ASSESSEE FAILS TO OBTAIN THE AUDIT REPORT IN THE PRESCRIBED FORM BEFORE THE ASSESSMENT IS COMPETED , HE MAY NOT ORDINARILY BE ENTITLED TO GET THE BENEFIT OF EXEMPTION. BUT WHERE THE ASSESSEE IS NOT GIVEN AN OPPORTUNITY TO FILE THE AUDIT REPORT IN THE PRESCRIBED FORM WHICH IS AVAILABLE WITH THE ASSESSEE BEFORE THE ASSESSMENT IS COMPLETED, THEN BEFORE THE APPELLATE AUTHORITY SUCH AUDIT REPORT CAN BE FILED VALIDLY SO AS TO COMPLY WITH THE REQUIREMENT OF SECTION 12A. IN SUCH A CASE, THE APPEAL BEING A CONTINUATION OF THE ORIGINAL PROCEEDINGS, THE APPELLATE AUTHORITY HAS THE POWER TO ACCEPT THE AUDIT -: 39: - 39 REPORT AND DIRECT THE ASSESSING OFFICER TO REDO THE ASSESSMENT. (C) SIMILAR VIEWS ARE EXPRESSED BY THE JURISDICTIONAL H IGH COURT AS WELL AS OTHER HIGH COURT IN THE CASE OF CI T VS. DEVRADHAN MADHAVLAL GENDA TRUST (1998) 230 ITR 714 (M.P.),CIT VS. ANDHRA PRADESH STATE ROAD CORPORATION (2006) 285 ITR 147 (A.P.) , CIT V S. RAIBAHADUR BISSESSWARLAL MOTILAL MALWASIE TRUST (1992) 195 ITR 825 (CAL), CIT VS. SHAHZADANAND CHARITY TRUST (1998) 145 CTR 492 (P&H) ,CIT VS. DR.L.M.SINGHVI (2007) 207 CTR (RAJ) 452: (2007) 289 ITR 425 (RAJ) AND APPLYING THE RAT IO OF DECISION IN CIT VS. GUJRAT OIL AND ALLIED INDUS TRIES (1993) 109 CTR (GUJ) 272: (1993) 201 ITR 325 (GUJ) AND CIT VS. BERGER PAINTS ( INDIA) LTD (2002) 17 4 CTR (CAL) 269: (2002) 254 ITR 503 (CAL) , THE ALLAHABAD HIGH COURT IN CIT VS. LUCKNOW PUBLIC EDUCATIONAL SOCIETY (2009) 318 ITR 223 (ALL ) -: 40: - 40 HELD FILING OF AUDIT REPORT IN FORM NO.10B IS DIREC TORY AND NOT MANDATORY. (V) IT IS UNDISPUTED FACT THAT THE APPELLANT SOCIET Y HAS FILED AUDITED ACCOUNTS FOR ALL THE YEARS ALONG WITH THE RETURN OF INCOME AND SO ALSO THE TAX AUDIT REPORT WHEREVER APPLICABLE. THE ONLY DEFICIENCY WAS THAT APPELLANT HAS NOT FILED AUDIT REPORT IN FORM NO.10B ALONG WITH THE RETURN OF INCOME. THE REASON FOR NON FILING OF AUDIT REPORT IN FORM 10B WAS THAT IT WAS NOT KNOWN TO THE ASSESSEE SOCIETY THAT IT IS ENTITLED FOR BENEFIT OF SECTION 11 TO 13 BY GETTING REGISTRATION UNDER SECTION 12AA. FIRST TIME IN THE YEAR 2007-08 THE COUNSEL OF THE ASSESSEE WHO WAS DEALING WITH ITS APPEAL BEFORE THE ITAT ADVICE THE SOCIETY TO OBTAINED REGISTRATION UNDER SECTION 12AA . ACCORDINGLY THE SOCIETY APPLIED FOR REGISTRATION UN DER SECTION 12AA AND THE LD.COMMISSIONER OF INCOME TAX GRANTED REGISTRATION ON 23.10.2009 SINCE THE INCEPTION OF THE SOCIETY I.E. W.E.F. 07.08.1968 AS PER -: 41: - 41 THE DIRECTION OF HONBLE ITAT, THEREFORE THE ASSESS EE SOCIETY COULD NOT FILED AUDIT REPORT IN PRESCRIBED FORM 10B ALONG WITH THE RETURN OF INCOME. THIS IS A REASONABLE CAUSE FOR NON FILING OF AUDIT REPORT ALO NG WITH THE RETURN OF INCOME. (VI) IT IS ALSO UNDISPUTED THAT DURING THE COURSE OF REMAND ASSESSMENT PROCEEDING NO OPPORTUNITY TO FILE AUDIT REPORT IN FORM 10B WAS ALLOWED TO THE APPELLANT SOCIETY WHICH IS CLEAR FROM THE REMAND ASSESSMENT ORDER ITSELF. WHEN A PARTICULAR PROVISIO N OF THE IT ACT IS DIRECTORY IN THAT CASE THE LD.A.O. SHOULD ALLOW AN OPPORTUNITY TO CURE THE DEFECT. IF THE LD.A.O. COULD HAVE BRING THIS FACT IN THE NOTICE OF THE ASSESSEE DURING THE COURSE OF REMAND ASSESSMENT PROCEEDINGS SAME COULD HAVE FILED BEFORE HIM AS SAME WAS READY TO FILE. (VII) IT IS FURTHER SUBMITTED THAT APPELLANT SOCIETY DU RING THE COURSE OF REMAND ASSESSMENT PROCEEDINGS REQUESTED THE LD.A.O.THAT AUDIT REPORT IN FORM NO. -: 42: - 42 10B IS READY AND BE ACCEPTED, BUT THE LD.A.O. WAS HEISTED TO ACCEPT THE SAME DUE THE REASON THAT SAM E WERE NOT FILED ALONG WITH THE RETURN OF INCOME OF RESPECTIVE YEARS. HOWEVER THE AUDIT REPORT IN FORM 10B ALONG WITH APPLICATION UNDER RULE 46A BEING ADDITIONAL EVIDENCE IS FILED BEFORE THE LD.CIT (A) WHICH WAS ACCEPTED BY THE LD. CIT (A) AFTER GIVING DUE OPPORTUNITY TO THE LD.A.O. REFER PAGE 4 PARA 4 .3 OF THE CIT (A) S ORDER. (VIII) IT IS TO BE NOTED THAT THE REQUIREMENT OF THE ASSESSING OFFICER FOR FILING OF REPORT IN FORM 10B FOR THE ASSESSMENT YEARS 2007-08 AND ONWARDS IS UNWARRANTED IN VIEW OF BOARD CIRCULAR NO.3 OF 2 007 ,DATED 25 TH MAY ,2007 WHEREIN IT IS CLARIFIED THAT NO ENCLOSURE SHOULD BE ENCLOSED ALONGWITH THE RETURN OF INCOME. IN VIEW OF ABOVE FACTS, CASE LAWS AND BOARD CIRCULARS REFERRED HEREIN ABOVE IT IS CLEAR THAT T HE -: 43: - 43 APPELLANT SOCIETY IS ENTITLE FOR EXEMPTION U/S 11 & 12 OF THE IT ACT, YOU ARE THEREFORE REQUESTED TO A LLOW THE SAME. 17. ON THE OTHER HAND , CONTENTIONS OF THE LD. CIT DR WAS THAT THE ASSESSEE WAS ONLY PRODUCING SCHOOL TEXT BO OKS FIXED FOR TEACHERS AND WAS NOT CARRYING ON ANY EDUCATIONA L INSTITUTION. UNDER THESE CIRCUMSTANCES, HON'BLE M.P . HIGH COURT HAS NOT APPROVED ASSESSEES CLAIM FOR DEDUCTI ON U/S 10(22)/10(23C) AND THE ORDER OF TRIBUNAL WAS SET-AS IDE BY REMANDING THE CASE TO THE ASSESSING OFFICER. HE FUR THER SUBMITTED THAT THE ASSESSEE HAS NEVER CLAIMED ANY E XEMPTION U/S 11, 12 & 13 AND THIS CLAIM WAS MADE FOR THE FIR ST TIME IN THE SECOND ROUND, ONLY AFTER TRIBUNAL HAS GRANTED R EGISTRATION U/S 12AA IN THE YEAR 2009 WITH RETROSPECTIVE EFFECT FROM THE DATE OF ESTABLISHMENT OF THE ASSESSEE I.E. 1968. AS PER THE LD. CIT DR U/S 11, 12 & 13, IT IS NOT ONLY MANDATORY TO GET THE ACCOUNTS AUDITED BUT THE REPORT OF SUCH AUDIT IN TH E PRESCRIBED FORM 10-B DULY SIGNED AND VERIFIED BY C. A. SHOULD BE FILED WITH THE RETURN. SINCE THE ASSESSEE GOT RE GISTRATION -: 44: - 44 U/S 12AA ONLY IN THE YEAR 2009, THEREFORE, ALL THE YEARS UNDER CONSIDERATION I.E. ASSESSMENT YEAR 1988-89 TO 2006- 07 AND 2007-08, PRESCRIBED AUDIT REPORT IN FORM 10-B WAS O BTAINED BY THE ASSESSEE ONLY ON 10.10.2010, WHICH IS VIOLATION OF STATUTORY PROVISIONS U/S 12A(1)(B) WHICH REQUIRED G ETTING AFORESAID AUDIT REPORT FROM THE AUDITOR BEFORE FILI NG OF RETURN. 18. FURTHER CONTENTION OF THE LD. CIT DR WAS THAT THE ASSESSEE IS NOT APPROVED BY PRESCRIBED AUTHORITY AN D, THEREFORE, EXEMPTION U/S 10(23C)(VI) IS NOT AVAILAB LE TO THE ASSESSEE FROM ASSESSMENT YEAR 1999-2000 ALWAYS. FUR THER SINCE THE ASSESSEE IS NOT FULLY OR SUBSTANTIALLY FI NANCED BY THE GOVERNMENT, THEREFORE, EVEN BENEFIT U/S 10(23C)(III AB) IS NOT AVAILABLE TO THE ASSESSEE. RELIANCE WAS PLACED ON T HE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SOLE TRUSTE E LOKA SHIKSHAN TRUST, 101 ITR 234, WHEREIN EDUCATION HAS BEEN DEFINED AS PROCESS OF TRAINING AND DEVELOPING THE K NOWLEDGE, SKILL, MIND AND THE CHARACTER OF THE STUDENTS BY NO RMAL SCHOOLING. HE FURTHER SUBMITTED THAT IN THE LATER D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM STAT E TEXT BOOK PRODUCTION AND PUBLICITY CORPORATION LIMITED, 319 ITR -: 45: - 45 317, THE PRINTING AND PUBLICATION OF TEXT BOOKS FOR STUDENTS BY GOVERNMENT CONTROLLING COMPANY WAS HELD AS EDUCATIO NAL INSTITUTION, NEITHER MEANING OF WORD EDUCATION U/ S 2(15) OF THE ACT WAS EXAMINED NOR DECISION OF LOKA SHIKSH AN TRUST, 101 ITR 234 WAS CONSIDERED. 19. IN VIEW OF THE ABOVE SUBMISSIONS, HE CONTENDED THAT SINCE THE ASSESSEE WAS NOT IMPARTING EDUCATION TO T HE STUDENTS THROUGH NORMAL SCHOOLING, THEREFORE, AS PE R DECISION OF LOK SHIKSHAN TRUST (SUPRA), EXEMPTION IS NOT AVA ILABLE TO THE ASSESSEE. HE FURTHER CONTENDED THAT THERE WAS H UGE PROFITS TO THE ASSESSEE EVERY YEAR, THEREFORE, SUCH EDUCATI ONAL INSTITUTION CANNOT BE SAID TO BE NOT FOR THE PURPOS E OF PROFIT. 20. HE FURTHER SUBMITTED THAT THE CASE CITED BY THE ASSESSEE OF BIHAR STATE TEXT BOOKS PUBLISHING 56 ITR 178, GO ES AGAINST THE ASSESSEE, BECAUSE IN THAT CASE GOVERNMENT EXTEN DED CASH INCENTIVE TO THE ASSESSEE FOR PRINTING AND SELLING OF TEXT BOOKS AT LOW RATE TO REACH THE CHILDREN OF DEPRIVED SECTI ON OF THE SOCIETY TO CARRY OUT THE DIRECTIVES PRINCIPLES OF C HAPTER IV OF THE CONSTITUTION, BUT IN THE PRESENT CASE, THE ASSE SSEE DID NOT GET ANY GOVERNMENT SUBSIDY NOR IT HAS SUPPLIED TEX T BOOKS TO -: 46: - 46 THE CHILDREN OF DEPRIVED SECTION AT CHEAPER RATE. H ENCE, CASE LAWS APPLY AGAINST THE ASSESSEE, WHO FAILED TO FULF IL CONDITIONS LAID DOWN U/S 10(23C)(IIIAB) OF THE INCOME-TAX ACT, 1961. 21. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW AS WELL AS ORDER OF THE CO-ORDINATE BENCH AS WELL A S DECISION OF THE JURISDICTIONAL HIGH COURT AS REFERRED ABOVE. WE HAVE ALSO DELIBERATED UPON THE JUDICIAL PRONOUNCEMENTS REFERR ED BY RESPECTIVE A.R. AND D.R. DURING THE COURSE OF HEARI NG BEFORE US AS WELL AS DECISIONS REFERRED BY LOWER AUTHORITI ES IN THEIR RESPECTIVE ORDERS, IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FOUND THAT THE ASSESSEES CLAIM FOR EXEMPTION U/S 10(22)/10(23C), WAS DECLINED BY LOWER AUTHORITIES ON THE PLEA THAT THE ASSESSEE SOCIETY IS EARNING PROFIT YEAR TO YEAR AND THAT PRINTING AND PUBLISHIN G OF PRESCRIBED TEXT BOOK AND PROVIDING TO THE STUDENTS AT A CHEAPER RATE IS NOT AN EDUCATIONAL ACTIVITY. 22. FIRST WE DEAL WITH THE OBSERVATION OF THE LOWER AUTHORITIES TO THE EFFECT THAT PRINTING AND PUBLISHING OF PRESC RIBED TEXT BOOK AND PROVIDING THE SAME TO THE STUDENTS IS NOT EDUCATIONAL ACTIVITY. IN THIS REGARD, THERE IS A LA TEST DECISION OF -: 47: - 47 THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM STAT E TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION, 319 IT R 317 DATED 20 TH OCTOBER, 2009, WHICH IS SUBSEQUENT TO THE DATE OF DECISION OF THE JURISDICTIONAL HIGH COURT IN ASSESS EES CASE, WHICH WAS DATED 21.4.2009. SINCE THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, W AS PRIOR TO DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ASSAM STATE TEXT BOOK (SUPRA) IN THE FITNESS OF THINGS, T HE LOWER AUTHORITIES WHILE AGAIN DECIDING THE ISSUE IN REMAN D PROCEEDINGS SHOULD HAVE TAKEN INTO ACCOUNT THE VERD ICT LAID DOWN BY THE HON'BLE SUPREME COURT IN THE LATTER DEC ISION IN THE CASE OF ASSAM STATE TEXT BOOK PRODUCTION AND PU BLICATION CORPORATION (SUPRA). HON'BLE SUPREME COURT, IN THIS CASE, WAS DECIDING THE CASE OF SOCIETY WHICH WAS ENGAGED IN S IMILAR ACTIVITY TO THAT OF THE ASSESSEE I.E. PRINTING AND PUBLISHING OF SCHOOL TEXT BOOKS. IT WAS ALSO ENGAGED IN PRINTING AND PUBLISHING OF TEXT BOOK FOR SCHOOL STUDENTS CONFIRM ING TO THE NORMS PRESCRIBED BY THE EDUCATION DEPARTMENT OF STA TE. THE MAIN ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHE THER THE ASSESSEE CORPORATION COULD BE TERMED AS EDUCATIONAL -: 48: - 48 INSTITUTION IN TERMS OF SECTION 10(22) OF THE INCOM E-TAX ACT, 1961. THE ASSESSING OFFICER HELD THAT SINCE THE ASS ESSEE HAD INCOME EXCLUSIVELY FROM PUBLICATION AND SELLING OF TEXT BOOKS TO THE STUDENTS, EXEMPTION U/S 10(22) WAS NOT ADMIS SIBLE AND THE ASSESSING OFFICER HELD THAT THE ASSESSEE DID NO T EXIST SOLELY FOR EDUCATIONAL PURPOSES. THE ASSESSING OFFICER ALS O STATED THAT IN VIEW OF THE CLAUSE 21 OF THE MEMORANDUM OF ASSOCIATION, WHICH PROVIDES FOR DISTRIBUTION OF DIV IDENDS, HENCE, ITS INCOME WAS NOT EXEMPT U/S 10(22) OF THE ACT. THIS DECISION OF THE ASSESSING OFFICER WAS UPHELD BY THE LD.CIT(A). IN A FURTHER APPEAL, BY THE ASSESSEE, IT WAS HELD B Y THE TRIBUNAL THAT THE CORPORATION WAS AN EDUCATIONAL IN STITUTION AND CONSEQUENTLY ENTITLED TO THE BENEFIT OF EXEMPTI ON U/S 10(22) OF THE ACT. HOWEVER, IN AN APPEAL FILED BY T HE DEPARTMENT AGAINST THE ORDER OF TRIBUNAL THE HON'BL E HIGH COURT HELD THAT THE ASSESSEE DID NOT EXIST SOLELY F OR EDUCATIONAL PURPOSES AND THAT ITS INCOME WAS ONLY F ROM PUBLISHING AND SELLING OF TEXT BOOKS, WHICH CONSTIT UTED A PROFIT EARNING ACTIVITY, THEREFORE, THE ASSESSEE WAS NOT E NTITLED FOR EXEMPTION U/S 10(22) OF THE ACT. IN FURTHER APPEAL FILED BY THE -: 49: - 49 ASSESSEE AGAINST THE ORDER OF HON'BLE HIGH COURT, T HE HON'BLE SUPREME COURT SET ASIDE THE ORDER OF HIGH COURT AND OBSERVED THAT THE HIGH COURT HAS NOT TAKEN INTO ACC OUNT THE PRIOR HISTORY OF THE CASE, THE AIM OF THE SAID CORP ORATION TO IMPLEMENT THE STATES POLICY ON EDUCATION. HON'BLE SUPREME COURT OBSERVED THAT IN THE YEAR 1975, IN A SIMILAR SITUATION, THE CENTRAL BOARD OF DIRECT TAXES ( C.B.D.T.) HAD G RANTED EXEMPTION U/S 10(22) OF THE ACT VIDE LETTER DATED 1 9 TH AUGUST, 1975, TO THE TAMIL NADU TEXT BOOK SOCIETY, WHICH PE RFORMED ACTIVITIES SIMILAR TO THOSE OF THE ASSESSEE. HON'BL E SUPREME COURT FURTHER OBSERVED THAT HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJASTHAN STATE TEXT BOOK BOARD , 244 ITR 667, HAS REFERRED THE LETTER DATED 19 TH AUGUST, 1975, WHILE ALLOWING ASSESSEES CLAIM FOR EXEMPTION U/S 10(22). THE HON'BLE SUPREME COURT OBSERVED THAT BEFORE THE RAJA STHAN HIGH COURT SIMILAR QUESTION AROSE AS TO WHETHER RAJ ASTHAN STATE TEXT BOOK BOARD WAS ENTITLED TO EXEMPTION U/ S 10(22) OF THE INCOME-TAX ACT, 1961. IN THIS CASE ALSO BEFO RE THE RAJASTHAN HIGH COURT, THE ARGUMENT ON BEHALF OF THE REVENUE WAS THAT THE ASSESSEE WAS MAKING PROFIT ON ACCOUNT OF -: 50: - 50 PUBLISHING AND SALE OF TEXT BOOKS AND, CONSEQUENTLY , IT WAS NOT ENTITLED TO THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT. HOWEVER, THE HIGH COURT NOTICED THE LETTER ISSUED B Y THE CBDT ON 19 TH AUGUST, 1975, IN THE CASE OF TAMIL NADU TEXT BOOK SOCIETY, WHICH, IN SIMILAR CIRCUMSTANCES, HAD GRANT ED EXEMPTION TO THE TAMIL NADU TEXT BOOK SOCIETY AS AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTI ON 10(22) OF THE ACT. THE JUDGMENT OF THE HIGH COURT FURTHER REC ITES THAT UNDER SIMILAR SITUATION, THE CBDT HAD ALSO EXTENDED THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT TO THE O RISSA SECONDARY BOARD EDUCATION REPORTED AT 86 ITR 408. A FTER TAKING INTO ACCOUNT THESE CIRCULARS/LETTERS ISSUED BY THE CBDT, RAJASTHAN HIGH COURT CAME TO THE CONCLUSION T HAT THE ASSESSEE IN THAT CASE, NAMELY, RAJASTHAN STATE TEXT BOOK BOARD, WAS ENTITLED TO CLAIM THE BENEFIT OF EXEMPTI ON U/S 10(22) OF THE ACT. THE COURT OBSERVED THAT IT IS NO T DISPUTED BEFORE US THAT THE AIMS AND OBJECTS OF THE TAMIL NA DU TEXT BOOKS SOCIETY AND THOSE OF THE RESPONDENT-ASSESSEE ARE ALMOST IDENTICAL. IT IS ALSO NOT SHOWN TO US THAT T HE SURPLUS AMOUNT, IF ANY, OF THE RESPONDENT-ASSESSEE, IS USED FOR ANY -: 51: - 51 OTHER PURPOSE OR DISTRIBUTED TO OTHER MEMBERS. THE CIT(A) AS WELL AS THE TRIBUNAL HAVE NOTICED THAT EVEN IF SOME AMOUNT REMAINS SURPLUS, THE SAME WAS UTILIZED ONLY FOR THE PURPOSES OF EDUCATION. 23. BY CONSIDERING THE ABOVE JUDGMENTS AND CBDT LET TER, THE HON'BLE SUPREME COURT SET-ASIDE THE ORDER OF THE HI GH COURT AND MATTER WAS REMANDED TO THE ASSESSING OFFICER TO CONSIDER IT DE NOVO IN THE LIGHT OF THE JUDGMENT OF RAJASTHA N HIGH COURT AND ORISSA HIGH COURT, PARTICULARLY, WITH REFERENCE TO THE LETTER OF CBDT DATED 19 TH AUGUST, 1975, REFERRED TO IN THE JUDGMENT OF RAJASTHAN HIGH COURT IN THE CASE OF RAJ ASTHAN STATE TEXT BOOK BOARD REPORTED AT 244 ITR 667, AS A LSO THE LETTER OF CENTRAL GOVERNMENT DATED JULY 9, 1973. HOWEVER, IN THE ASSESSEES CASE, AFTER VERIFICATION OF AUDITED ACCOUNTS, WE FOUND THAT IN NONE OF THE PERIOD OF SE VEN YEARS I.E. 2000-01 TO 2007-08, SURPLUS OF ASSESSEE EXCEED ED 15 % OF THE GROSS RECEIPTS. AS PER THE OBJECT CLAUSE AN ACT IVITY ACTUALLY UNDERTAKEN BY THE ASSESSEE, WE FOUND THAT THE ASSES SEE SOCIETY IS PRINTING, PUBLISHING AND PROVIDING TEXT BOOKS TO THE STUDENTS OF CLAUSE I TO XII AS PRESCRIBED BY THE GO VERNMENT OF -: 52: - 52 MADHYA PRADESH AT CHEAPER RATE. THE PRICE OF THE TE XT BOOK IS FIXED AT 70:30 FORMULA THAT IS TO SAY OUT OF SELLIN G PRICE OF TEXT BOOK 70% IS THE COST OF PAPER AND PRINTING AND 15% . COMMISSION OF THE BOOK SELLER/VENDOR AND BALANCE OF 15 % IS RETAINED BY THE ASSESSEE ON ACCOUNT OF ESTABLISHMEN T EXPENSES. AFTER MEETING OUT ESTABLISHMENT EXPENSES, IF THE SURPLUS ARISES, THE SAME IS INCIDENTAL AND WHICH IS ALSO UTILIZED AS GRANT/AID TO THE GOVERNMENT SCHOOL FOR THE CONSTRUCTION OF BUILDING, REPAIR AND RENOVATION ETC . AND ALSO FOR GIVING SCHOLARSHIP TO THE STUDENTS OF WEAKER SE CTIONS AND MERIT HOLDER AS PER THE DIRECTIONS OF THE GOVERNMEN T OF M.P. THROUGH DISTRICT COLLECTOR, WHICH IS CLEAR FROM THE AUDITED ACCOUNTS OF THE SOCIETY FOR THE FINANCIAL YEAR 1987 -88 TO 2007- 08, AS PLACED IN THE RECORD. 24. AFTER CAREFUL ANALYSIS OF THE GROSS RECEIPTS AN D EXPENDITURE AS PER THE AUDITED ACCOUNTS, WE FOUND T HAT YEAR- WISE EXCESS OF INCOME OVER EXPENDITURE AND PERCENTA GE THEREOF, WORKS OUT TO BE AS UNDER :- S.NO. F.Y. GROSS RECEIPTS EXCESS OF INCOME OVER EXPENDITURE PERCENTAGE OF INCOME OVER -: 53: - 53 RECEIPT 01. 2007 - 08 126674 6577 144196585 11.38% 02. 2005 - 06 738791535 545133818 7.38 % 03. 2004 - 05 722303396 66977658 9.27% 04. 2003 - 04 583113633 49472558 8.48 % 05. 2002 - 03 487091387 37037975 7.60 % 06. 2001 - 02 496300946 12043170 2.43 % 07. 2000 - 01 377317263 30556884 8.10 % 25. THE CLOSE SCRUTINY OF THE AUDITED ACCOUNTS ALSO REVEALS THAT NO PART OF THE SURPLUS GENERATED BY THE ASSESS EE WAS PARTED BY IT FOR THE PURPOSE OTHER THAN AID TO GOVE RNMENT SCHOOLS FOR CONSTRUCTION OF BUILDING, REPAIRING OF BUILDING, FURNITURE, SCHOLARSHIPS TO THE STUDENTS ETC. IT IS ALSO CLEAR FROM THE AUDITED ACCOUNTS OF THE SOCIETY THAT IT HAS NOT DISTRIBUTED ANY PROFIT TO ANYBODY IN ANY OF THE ASSESSMENT YEAR S UNDER CONSIDERATION. OUR THIS OBSERVATION IS FURTHER FORT IFIED BY THE FACT THAT ALL THE SHARES OF THE SOCIETY IS WITH TH E GOVERNMENT OF M.P. AND BOARD OF GOVERNORS OF THE SOCIETY, HIS MINISTERS AND SECRETARIES OF VARIOUS DEPARTMENTS OF M.P. GOVE RNMENT AND THERE IS NO PROVISION FOR DISTRIBUTION OF PROFI T, IN THE REGISTRATION OF THE SOCIETY ITSELF. FURTHERMORE, A S PER THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF HARYANA STAT E COUNSELLING SOCIETY, 223 CTR 402, MAA SARASWATI EDU CATION -: 54: - 54 TRUST, 234 CTGR 400 AND VANITA VISHRAM TRUST, 327 I TR 121, MERELY BECAUSE AN EDUCATIONAL INSTITUTION ACCUMULAT ES INCOME, IT DOES NOT GO OUT OF THE PURVIEW OF SECTIO N 10(22)/10(23C)(VI). FURTHERMORE, THERE IS NOTHING I N THE INCOME TAX ACT TO SUPPORT THE PROPOSITION THAT EDUC ATIONAL INSTITUTION CANNOT GENERATE ANY SURPLUS. GENERATING SURPLUS, WHICH IS INCIDENTAL TO THE CARRYING ON ACTIVITY OF EDUCATION AND NOT WITH THE MOTIVE TO EARN PROFIT, WILL NOT DISQUA LIFY AN INSTITUTION FROM THE BENEFIT OF SECTION 10(23C). 26. THE OPERATIVE PART OF THE RAJASTHAN HIGH COURT S JUDGMENT READS AS UNDER (PAGE 669 OF 244 ITR) : IT IS NOT DISPUTED BEFORE US THAT THE AIMS AND OBJ ECTS OF THE TAMIL NADU TEXT BOOKS SOCIETY AND THOSE OF T HE RESPONDENT-ASSESSEE ARE ALMOST IDENTICAL. IT IS ALS O 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 CIT(A) AS WELL A S THE TRIBUNAL HAVE NOTICED THAT EVEN IF SOME AMOUNT REMAINS SURPLUS, THAT IS UTILIZED ONLY FOR THE PURP OSES -: 55: - 55 OF EDUCATION. THUS , HAVING REGARD TO THE CONCURREN T FINDINGS OF FACT RECORDED BY THE CIT(A) AND THE TRIBUNAL AND ALSO TAKING NOTE OF THE LETTER OF THE CBDT ITSELF, IT IS NOT POSSIBLE FOR US TO SAY THAT THE O RDER 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. 27. APPLYING THE PROPOSITION OF LAW AS DISCUSSED BY HON'BLE SUPREME COURT VIS--VIS DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN STATE TEXT BOOK BOARD (SUPRA) AND THE ORISSA HIGH COURT IN THE CASE OF ORISSA SECONDARY B OARD EDUCATION (SUPRA), AND ALSO LETTER OF CBDT DATED 19 TH AUGUST, 1975, AND LETTER OF CENTRAL GOVERNMENT DATED 9 TH JULY, 1973, WE CAN SAFELY CONCLUDE THAT SINCE THE PRESENT ASSES SEE WHICH IS WHOLLY OWNED BY GOVERNMENT OF M.P. AND BOARD OF GOVERNORS CONSISTING OF MINISTRY OF EDUCATION ETC. AND CHAIRMAN AND BOARD OF SECONDARY EDUCATION, M.P., DI RECTOR OF STATE, INSTITUTE OF SCIENCE & EDUCATION, AND THE OBJECTION OF WHICH WAS TO PROVIDE TEXT BOOKS TO THE STUDENTS OF CLASS I TO -: 56: - 56 XII AS PRESCRIBED BY THE GOVERNMENT OF M.P. AT CHEA PER RATE AND WITHOUT MOTIVE TO EARN PROFIT, IS ELIGIBLE FOR CLAIM OF EXEMPTION U/S 10(22) FOR THE ASSESSMENT YEARS 1988- 89 TO 1998 TO 1999. IT IS PERTINENT TO MENTION HERE THAT W.E.F. 1.4.1999 SECTION 10(22) WAS SUBSTITUTED BY SECTION 10(23C), CL.(IIIAB) OF WHICH STIPULATES THAT A UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT, WHICH IS WHOLLY AND SUBSTANTIALLY FINANCED BY THE GOVERNMENT ARE ELIGIB LE FOR CLAIM OF EXEMPTION. SUB CLAUSE (VI) OF SECTION 10(23C) PR OVIDES THAT UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTIN G SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PRO FIT, OTHER THAN THOSE MENTIONED IN SUB CLAUSE (IIIAB) OR SUB C LAUSE (IIIAD) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORI TY. THUS, THE APPROVAL IS REQUIRED ONLY IN CASES WHERE THE UN IVERSITY AND OTHER EDUCATIONAL INSTITUTION IS NOT WHOLLY OR SUBS TANTIALLY FINANCED BY THE GOVERNMENT. IN THE INSTANT CASE, WE FOUND THAT ENTIRE FUND HAS BEEN INVESTED BY THE STATE GOV ERNMENT EITHER IN THE FORM OF INITIAL CONTRIBUTION OR THROU GH ACCUMULATION OF SURPLUS, THEREFORE, THE ASSESSEE WA S NOT -: 57: - 57 REQUIRED TO BE APPROVED BY PRESCRIBED AUTHORITY FOR THE PURPOSE OF CLAIM OF EXEMPTION U/S 10(23-C). ASSESSE ES CASE IS FALLING WITHIN SUB CLAUSE (IIIAB), WHICH READS AS U NDER :- ANY UNIVERSITY OR EDUCATIONAL INSTITUTION EXISTIN G SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF P ROFIT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY T HE GOVERNMENT/ THUS, FROM ASSESSMENT YEAR 1999-2000 TO 2008-09, TH E ASSESSEE IS ENTITLED FOR CLAIM OF EXEMPTION U/S 10( 23C)(IIIAB). 28. AS THE OBJECT OF THE ASSESSEE SOCIETY VIS--VI S, ITS CONSTITUTION REMAINS THE SAME FOR THE ASSESSMENT YE AR 1999- 2000 AND ONWARDS, THE CLAIM OF DEDUCTION ON ACCOUNT OF ASSESSEE BEING OTHER EDUCATIONAL INSTITUTION IS TO BE ALLOWED U/S 10(23C)(IIIAB) OF THE INCOME-TAX ACT, 1961. 29. AS PER THE AUDITED ACCOUNTS OF THE ASSESSEE, WE FOUND THAT OUT OF ITS SURPLUS, THE ASSESSEE HAS PAID ROYA LTY TO THE BOARD OF SECONDARY EDUCATION, GOVERNMENT OF M.P. AN D MANY AUTHORS OF THE BOOKS. THE ASSESSEE HAD CONTRIBUTED FOR CONSTRUCTION OF SCHOOL BUILDING AND HAD ALSO DISTRI BUTED FREE BOOKS TO THE DESERVING STUDENTS. THE ASSESSEE PUBLI SHES ONLY -: 58: - 58 TEXT BOOKS, SO THAT STUDENTS GET BOOKS AT A CHEAPER PRICE. THE ASSESSEE CANNOT BE COMPARED WITH GENERAL/PRIVATE PU BLISHERS AND BOOK SELLERS. THUS, THE OBSERVATION OF THE ASSE SSING OFFICER TO THE EFFECT THAT ACTIVITY OF THE ASSESSEE SOCIETY IS MERELY PRINTING AND SALE OF BOOKS AS A COMMERCIAL V ENTURE IS CONTRARY TO THE MATERIAL PLACED ON RECORD. WE FOUND THAT M.P. STATE COUNCIL FOR EDUCATIONAL RESEARCH AND TRAINING IS WORKING WITH THE ASSESSEE SOCIETY WHICH IS AN ACADE MIC COUNCIL. AS PER THE AUDITED ACCOUNTS, WE FOUND THAT THE ASSESSEE HAS PAID SUBSTANTIAL AMOUNT OF ROYALTY TO THE AUTHORS AND MPBSE. OBSERVATIONS OF THE LOWER AUTHOR ITIES TO THE EFFECT THAT ROYALTY IS ONLY PAID TO MPBSE IS NO T CORRECT. IT IS CLEAR FROM THE FOLLOWING YEAR-WISE CHART INDICAT ING PAYMENT OF ROYALTY BY THE ASSESSEE. FINANCIAL YEAR AMOUNT OF ROYALTY PAID (IN RS.) 2007 - 08 48,09,507 2006 - 07 16,00,000 2005 - 06 16,10,623 2004 - 05 10,04,050 2003 - 04 10,04,050 2002 - 03 9,73,313 2001 - 02 11,30,196 1999 - 2000 12,10,054 -: 59: - 59 1998 - 99 28,37,672 1997 - 98 10,70,794 1996 - 97 7,73,362 1995 - 96 7,82,584 1994 - 95 12,65,307 30. THE OBSERVATION OF LD. LOWER AUTHORITIES TO THE EFFECT THAT THE ASSESSEE SOCIETY IS NOT SUBSTANTIALLY FINANCED BY THE GOVERNMENT OF M.P. IS MISPLACED, IN VIEW OF THE AUD ITED ACCOUNTS PLACED IN PAPER BOOK WHICH INDICATE THAT T HE STATE GOVERNMENT UNDER THE SCHEME OF SARVA SHIKSHA ABHIY AN ADVANCED FOLLOWING AMOUNT TO THE APPELLANT AGAINST SUPPLY OF NISHULK PATHYA PUSTAK VITRAN YOJNA :- FINANCIAL YEAR ENDED ON AMOUNT OF ADVANCE 31.03.2008 60, 04,17,713 31.03.2007 35,96,23,390 31.03.2006 52,45,85,713 31.03.2005 40,43,93,518 31. WE FOUND THAT EVEN AFTER DIRECTION OF THE HON'B LE HIGH COURT AND I.T.A.T. IN THE REMAND PROCEEDINGS, BOTH THE LOWER -: 60: - 60 AUTHORITIES HAVE NOT CONSIDERED THE MAIN OBJECT OF THE SOCIETY WHICH IS TO PRINTING AND PUBLISHING OF TEXT BOOKS TO THE STUDENTS OF CLASS I TO XII AT CHEAPER RATE TO COMPL Y WITH THE STATUTORY REQUIREMENT OF ARTICLE 21-A AND 41 OF THE CONSTITUTION OF INDIA, WHICH MAKE THE RIGHT OF EDUC ATION AS FUNDAMENTAL RIGHTS OF CHILDREN, WHICH READS AS UNDE R :- 21-A- RIGHT TO EDUCATION THE STATE SHALL PROVI DE FREE AND COMPULSORY EDUCATION TO ALL CHILDREN OF THE AGE OF 6 TO, 14 YEARS IN SUCH MANNER AS THE STATE MAY BY LAW DETERMINE. ARTICLE 41 : THE STATE SHALL WITHIN THE LIMITS OF ITS ECONOMIC CAPACITY AND DEVELOPMENT MAKE EFFECTIVE PROVISION FOR SECURITY THE RIGHT TO WORK, TO EDUCATION AND TO PU BLIC ASSISTANCE IN CASE OF UNEMPLOYMENT, OLD AGE SICKNE SS DISABILITIES AND IN OTHER CASES OF UNDESERVED WANT . PROVIDING OF SCHOOL TEXT BOOKS AND INCIDENTAL PUBLI CATION AT CHEAPER RATES IS DEFINITELY TO AID KIND PROMOTE ADV ANCEMENT OF EDUCATION TO THE CHILDREN. 32. TO COMPLY WITH THE STATUTORY REQUIREMENT ON ART ICLE 21A -: 61: - 61 AND 41, THE ASSESSEE SOCIETY IS FOLLOWING SYLLABUS PRESCRIBED BY THE M. P. GOVERNMENT AND PRINTING AND PUBLISHING BOOKS FOR THE USE OF STUDENTS OF CLASS I TO XII OF THE ST ATE OF M. P. THE ASSESSEE SOCIETY IS DOING THIS JOB UNDER THE PO LICY OF THE GOVERNMENT IN THE ABSENCE OF WHICH, AN INSTITUTION OF THAT TYPE CANNOT BE RUN. THUS, THE ASSESSEE IS DIRECTLY AND INDIRECTLY FULFILLING THE OBJECTIVE LAID DOWN UNDER ARTICLE 21A AND 41 OF THE CONSTITUTION OF INDIA, WHICH PROVIDES THAT IT IS THE PRIMARY DUTY OF STATE TO SECURE THE RIGHT TO ED UCATION AND TO ESTABLISH EDUCATIONAL INSTITUTION, ADMISSION OF STUDENTS ETC. FURTHERMORE, THE EDUCATION IS SUBJECT MATTER OF CON CURRENT LIST UNDER SCHEDULE VII 111 OF THE CONSTITUTION OF INDIA AND TO ACHIEVE THIS DATE, THE STATE GOVERNMENT FRAMED A PO LICY AND TO IMPLEMENT IT EFFECTIVELY IT HAS CONSTITUTED BODIES LIKE THE ASSESSEE SOCIETY. IT IS ALSO EVIDENT FROM RECORD TH AT THE ASSESSEE SOCIETY IS CONSTITUTED BY THE STATE GOVERN MENT WITH THE OBJECT TO PROVIDE TEXT BOOKS TO THE STUDENTS OF CLASS I TO XII AT A CHEAPER RATE AND THE STATE GOVERNMENT HAS ACHIEVED THIS OBJECT VERY SUCCESSFULLY, WHICH IS CLEAR FROM THE FACT THAT SELLING PRICE OF THE BOOK PRINTED BY THE SOCIETY IS JUST 1/3 RD IN -: 62: - 62 COMPARISON TO THE TEXT BOOKS PUBLISHED BY THE PRIVA TE PUBLISHERS. THE ASSESSEE HAS ALSO PLACED ON RECORD LIST CONTAINING DETAILS REGARDING SELLING PRICE OF THE B OOKS PUBLISHED BY THE SOCIETY VIS--VIS PRIVATE PUBLISHE RS IN PART III AS PLACED AT PAGE 931 & 932 OF THE PAPER BOOK. IT I S ALSO EVIDENT FROM THE AUDITED ACCOUNTS FOR THE ASSESSMEN T YEAR 1988-89 TO 2008-09 THAT THE ASSESSEE SOCIETY HAS NO T INCURRED ANY EXPENDITURE FOR NON-EDUCATIONAL PURPOSES. EVEN BOTH THE LOWER AUTHORITIES HAVE NOT GIVEN ANY FINDING NOR BR OUGHT ANY MATERIAL ON RECORD EVEN DURING REMAND ASSESSMENT PROCEEDINGS, TO SUGGEST THAT THE ASSESSEE HAS INCUR RED ANY EXPENDITURE FOR NON-EDUCATIONAL PURPOSES. THUS, WE FOUND THAT ENTIRE FUND OF THE ASSESSEE SOCIETY WAS UTILIZ ED ONLY FOR THE EDUCATIONAL PURPOSES AND NOTHING WAS BROUGHT ON RECORD BY ANY OF THE LOWER AUTHORITIES TO INDICATE THAT TH E ASSESSEE SOCIETY HAS UTILIZED FUND FOR PURPOSE OTHER THAN ED UCATIONAL ACTIVITIES. AS PER OBJECT CLAUSE NO. (2), THE ASSES SEE IS PRODUCING SCHOOL TEXT BOOKS AND HAND BOOKS FOR TEAC HES, WORK BOOKS FOR PUPILS AND OTHER EDUCATIONAL LITERATURE, WHICH IS USEFUL FOR FURTHERANCE OF TEACHING, LEARNING AND FO R EVALUATION -: 63: - 63 ANY EDUCATIONAL INSTITUTION. IN ADDITION TO PRINTIN G OF TEXT BOOKS, THE ASSESSEE ALSO ENCOURAGES AND PROCURES EX PERTS AUTHORS TO WRITE TEXT BOOKS ON VARIOUS SUBJECTS AS PER THE SYLLABUS PRESCRIBED BY THE GOVERNMENT FOR VARIOUS C OURSES OF EDUCATION. AS PER OBJECT NO.(14), PRINTING, PUBLISH ING AND SALE OF BOOKS., IS APPROVED BY GOVERNMENT AND PAGE (5) A ND (6) PRESCRIBED FOR UNDERTAKING RESEARCH FOR EDUCATION. 33. IT IS PERTINENT TO MENTION HERE THAT LIKE ASSES SEE SOCIETY WHICH IS ENGAGED IN PRINTING AND PUBLISHING OF TEXT BOOKS AS PRESCRIBED BY THE STATE OF M.P., SIMILAR TYPE OF IN STITUTION IS ALSO WORKING IN OTHER STATES LIKE TAMIL NADU, RAJAS THAN, DELHI, ORISSA, BIHAR. IN CASE OF SIMILAR INSTITUTIONS EXEM PTIONS HAVE BEEN ALLOWED BY THE TRIBUNAL AND HIGH COURT. HON'BL E RAJASTHAN HIGH COURT HAS DEALT WITH IN DETAIL THE A CTIVITY OF RAJASTHAN STATE TEXT BOOK CODE, 224 ITR 668 AND ALL OWED EXEMPTION U/S 10(22) OF INCOME-TAX ACT, 1961. HON'B LE HIGH COURT HAS OBSERVED AT PAGE 668 THAT THE FACTS IN T HE CASE OF TAMIL NADU TEXT BOOK SOCIETY ARE SIMILAR. IN THE CA SE OF TAMIL NADU TEXT BOOK SOCIETY, THE C.B.D.T. ITSELF HAS TAK EN THE VIEW VIDE ITS LETTER DATED 19.8.1975 THAT TAMIL NADU TEX T BOOK -: 64: - 64 SOCIETY IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT. THE SAID LETTER READS AS UNDER :- ON CAREFUL CONSIDERATION OF FACTS INVOLVED THE BO ARD IS OF OPINION THAT THE TAMILNADU TEXT BOOK SOCIETY WOULD BE AN EDUCATIONAL INSTITUTION EXISTING SOLELY FOR THE PURPOSE OF EDUCATION WITHIN THE MEANING OF SECTION 10(22) OF THE INCOME-TAX ACT. 34. IT IS CLEAR FROM THE ABOVE LETTER THAT CBDT ITS ELF HAS RECOGNIZED THE RIGHT OF EXEMPTION U/S 10(22), TO SU CH INSTITUTION ENGAGED IN PRINTING AND PUBLISHING OF B OOKS FOR STUDENTS. 35. NOW COMING TO THE DECISION RELIED ON BY THE ASS ESSING OFFICER IN THE CASE OF SORABJI, 201 ITR 939, WHEREI N OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CAS E OF LOKA SHIKSHANA TRUST, 101 ITR 234, WAS REFERRED. THE SAM E IS RESTRICTED TO SECTION 2(15) OF THE ACT, WHICH IS AP PLICABLE FOR CHARITABLE PURPOSES. HOWEVER, THE EXPRESSION IN SEC TION 10(22) WITH REGARD TO EDUCATIONAL INSTITUTION IS WIDER AND INCLUDES ACTIVITIES OF EDUCATIONAL PURPOSES. THUS, THE CLAIM OF EXEMPTION U/S 10(22) CANNOT BE RESTRICTED TO ONLY T HOSE -: 65: - 65 ASSESSEES, WHO ARE RUNNING EDUCATIONAL INSTITUTION. THUS, FOR FALLING WITHIN THE PURVIEW OF EDUCATIONAL INSTITUTI ON, IT IS NOT MANDATORY THAT THE ASSESSEE SHOULD CARRY ON EDUCATI ONAL INSTITUTION BY ITSELF. IT WILL BE SUFFICIENT THAT T HE ASSESSEE IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES. EVEN IN C ASE OF SORABJI (SUPRA) AS RELIED ON BY THE LD.CIT(A), HON' BLE COURT HAS OBSERVED AS UNDER :- TRUE IT IS, THAT IT IS NOT NECESSARY FOR THE INST ITUTION TO RUN EDUCATION ITSELF. THE EDUCATIONAL INSTITUTION MAY BE RUN BY SOME ONE BUT THE INCOME OF THE INSTITUTION SHOULD BE UTILIZED FOR IMPARTING EDUCATION. 36. IN THE ABOVE CASE, IT WAS FOUND THAT THE ASSESS EE WAS GIVING SCHOLARSHIPS OR GRANT TO THE STUDENTS WITHOU T HAVING ANY CONTROL WHATSOEVER ON SUCH STUDENTS. THE COURT OBSERVED THAT SINCE NO EDUCATIONAL ACTIVITIES IN THE SENSE O F NORMAL SCHOOLING OR ACTUAL IMPARTING OF KNOWLEDGE OR LEARN ING TO THE STUDENTS WAS CARRIED ON BY THE TRUST AND THE INSTIT UTE WAS SIMPLY GIVING SCHOLARSHIPS TO THE NEEDY PARSI STUDE NTS FOR TECHNICAL EDUCATION WITHOUT GETTING ANY CONTROL OVE R SUCH STUDENTS OR WITHOUT IMPARTING ANY KNOWLEDGE TO THE SAID -: 66: - 66 STUDENTS, THE ASSESSEE WAS HELD TO BE NOT ENTITLED FOR EXEMPTION U/S 10(22). IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHAN TRUST (SUPRA), THE ISSUE BEFORE SC WAS CLA IM OF EXEMPTION U/S 11, WHERE THE ASSESSEE TRUST WAS DOIN G PRINTING, PUBLISHING, NEWS PAPERS AND JOURNALS FOR EARNING PROFIT, IT WAS HELD THAT SUCH PRINTING AND PUBLICATION OF NEWS PAPER WAS NOT EDUCATION WITHIN THE MEANING OF SEC 2(15). HOWEVER, THE FACTS OF INSTANT CASE ARE QUITE DISTINGUISHABLE WHERE ASSESSEE WAS PRINTING AND PUBLISHING TEXT BOOKS FOR STUDENTS OF CLASS I TO XII WITHOUT ANY PROFIT MOTIVE. THUS, IT WILL NOT HELP THE REVENUE FOR HOLD ING THAT PRESENT ASSESSEE WAS NOT FALLING WITHIN THE DEFINIT ION OF OTHER EDUCATIONAL INSTITUTION. HOWEVER, IN THE INSTANT CASE BEFORE US, UNDISPUTEDLY, THE ASSESSEE SOCIETY WAS ESTABLIS HED ONLY FOR THE PURPOSE OF ADVANCEMENT OF EDUCATION BY PRINTING AND PUBLISHING OF TEXT BOOKS AS PRESCRIBED BY THE GOVER NMENT. AS DISCUSSED ABOVE, ALL SUCH INSTITUTIONS WORKING IN A LL OTHER STATES OF INDIA WERE HELD TO BE ELIGIBLE FOR CLAIM OF EXEMPTION U/S 10(22). THUS, THERE WAS NO JUSTIFICATION ON THE PART OF LOWER AUTHORITIES FOR DECLINE OF CLAIM OF EXEMPTION U/S -: 67: - 67 10(22)/10(23C). EVEN IN THE CASE OF ACADEMY OF GENE RAL EDUCATION, 150 ITR 135, IT WAS OBSERVED THAT THE AS SESSEE ITSELF NEED NOT IMPART EDUCATION TO THE STUDENTS AN D IT NEED NOT BE NECESSARILY SCHOOL OR COLLEGE FOR THE CLAIM OF BENEFIT. IT WAS FOUND THAT IN ITS ACCOUNT EVEN THOUGH THE ASSES SEE HAS NOT INCLUDED INCOME OF COLLEGES, ESTABLISHED UNDER SEPARATE TRUST. HOWEVER, IT WAS FOUND THAT THE ASSESSEE HAS GIVEN GRANTS TO SOME OF THOSE SCHOOLS, IT WAS HELD THAT T HE ASSESSEE WAS ENTITLED FOR CLAIM OF EXEMPTION U/S. 10(22). 37. IN LETTER F.NO.184/26/75-INCOME-TAX ACT, 1961,- 1 DATED THE 19 TH AUGUST, 1975, OF THE CBDT, IT WAS OBSERVED BY THE CBDT THAT ON CAREFUL CONSIDERATION OF FACTS INVOLV ED, THE BOARD IS OF THE OPINION THAT THE TAMIL NADU TEXT BO OK SOCIETY WOULD BE AN EDUCATIONAL INSTITUTION EXITING SOLELY FOR THE PURPOSE OF EDUCATION WITHIN THE MEANING OF SECTION 10(22) OF THE INCOME-TAX ACT. 38. APPLYING THE FACTS OF THE ASSESSEE TO THE FACTS DISCUSSED BY THE CBDT, WE HAVE NO HESITATION TO HOLD THAT ASS ESSEE IS ENTITLED FOR CLAIM OF EXEMPTION U/S 10(22). AS A MA TTER OF FACT, RECENTLY HON'BLE SUPREME COURT IN THE CASE OF ASSAM STATE -: 68: - 68 TEXT BOOKS PRODUCTION PUBLICATION (SUPRA), HAS MADE A REFERENCE TO THE SAID LETTER, AT PAGE 21 OF THE HON 'BLE SUPREME COURT STATED AS UNDER :- HOWEVER, THE HIGH COURT NOTICED THE LETTER ISSUED BY THE CBDT ON AUGUST 19,1975, IN THE CASE OF TAMIL NADU TEXT BOOK SOCIETY, WHICH AS STATED ABOVE IN THE SIMILAR ` CIRCUMSTANCES HAD GRANTED EXEMPTION TO THE TAMIL N ADU TEXT BOOK SOCIETY AS EDUCATIONAL INSTITUTION WITHI N THE MEANING OF SECTION 10(22) OF THE ACT. THE JUDGMENT OF THE HIGH COURT FURTHER RECITES THAT UNDER A SIMILAR SI TUATION, THE CBDT HAD ALSO EXTENDED THE BENEFIT OF EXEMPTIO N U/S 10(22) OF THE ACT TO THE ORISSA SECONDARY BOARD EDUCATION AS REPORTED IN SECONDARY BOARD EDUCATION VS. ITO, (1972) 86 ITR 408 (ORISSA), FOLLOWING THESE CIRCULARS/LETTERS ISSUED BY THE CBDT, THE RAJASTHA N HIGH COURT CAME TO THE CONCLUSION THAT THE ASSESSEE IN THAT CASE NAMELY THE RAJSTHAN HIGH COURT CAME TO THE CONCLUSION THAT THE ASSESSEE IN THAT CASE NAMELY T HE RAJASTHAN STATE TEXT BOOK WAS ENTI9TLED TO CLAIM T HE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT. 39. IN VIEW OF THE ABOVE DISCUSSION AND APPLYING TH E JUDICIAL PRONOUNCEMENTS TO THE FACTS OF THE INSTANT CASE VIS --VIS AIMS AND OBJECTS REFERRED ABOVE, WE HOLD THAT LOWER AUTH ORITIES WERE NOT JUSTIFIED IN DECLINING CLAIM OF EXEMPTION TO TH E ASSESSEE -: 69: - 69 SOCIETY U/S 10(22)/10(23C) OF THE INCOME-TAX ACT, 1 961, IN RESPECT OF ALL THE YEARS UNDER CONSIDERATION, FOR T HE DETAILED REASONS DISCUSSED HEREINABOVE. 40. NOW COMING TO THE ALTERNATE CLAIM OF THE ASSESS EE U/S 11 OF THE INCOME-TAX ACT, 1961, CONTENTION OF THE ASSE SSEE WAS THAT REGISTRATION U/S 12AA(1)(B)(I) WAS GRANTED BY CIT IN COMPLIANCE TO THE DIRECTION GIVEN BY THE HONBLE IT AT VIDE ORDER DATED 23.9.2009 WITH RETROSPECTIVE EFFECT FRO M 7.8.1968 VIDE ORDER DATED 23.10.20090, AND AFTER RECEIPT OF THE ORDER, THE ASSESSEE GOT ITS ACCOUNT AUDITED FOR LAST 20 YE ARS I.E. FROM A.Y. 1988-89 TO 2008-09. HOWEVER, THE AO HAS DECLIN ED ASSESSEES CLAIM BY OBSERVING THAT THE ASSESSEE HAS NOT CLAIMED ANY BENEFIT U/S 11 & 13 IN THE RETURN FILED U/S 139 NOR BY FILING A REVISED RETURN U/S 139(5). AS PER A O, THE ASSESSEE SHOULD HAVE FILED THE AUDITED REPORT IN FO RM 10B ALONGWITH THE RETURN OF INCOME FOR THE A.YS. 1988-8 9 TO 2006- 07, WHICH THE ASSESSEE FAILED, ACCORDINGLY, EXEMPTI ON U/S 11 CANNOT BE CONSIDERED EVEN THOUGH THE ASSESSEE HAS O BTAINED REGISTRATION U/S 12AA W.E.F. 7.8.1968. THE CIT(A) F URTHER CONFIRMED THE ORDER OF AO BY OBSERVING THAT THE PRE SCRIBED -: 70: - 70 AUDIT REPORT IN FORM 10B AS PER RULE 17B IS DATED 10.10.2010, WHICH, PRIMA FACIE, SHOWS THAT ORIGINAL RETURNS FOR THE RELEVANT ASSESSMENT YEARS WERE FILED WITHOU T THE PRESCRIBED AUDIT REPORT IN FORM NO.10-B WHICH WAS N OT AVAILABLE WITH THE ASSESSEE. 41. THUS, IT IS CLEAR FROM THE ORDER OF THE LOWER A UTHORITIES THAT ASSESSEES CLAIM U/S 11 WAS NOT CONSIDERED ON MERITS MERELY FOR THE REASON THAT AUDIT REPORT IN FORM 10B WERE NOT AVAILABLE AT THE TIME OF FILING OF RETURNS FOR THE RESPECTIVE ASSESSMENT YEARS AS THE SAME WAS DATED 10.10.2010. 42. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FO UND FROM THE RECORD THAT IN THE ORIGINAL RETURNS, THE ASSESS EE HAS ONLY CLAIMED ONLY U/S 10(22)/10(23C). HOWEVER, WHEN THE CIT HAS GRANTED REGISTRATION U/S 12AA WITH RETROSPECTIVE EF FECT FROM 7.8.1968 IN COMPLIANCE TO THE DIRECTIONS GIVEN BY T HE ITAT IN ITS ORDER DATED 23.9.2009, THAT THE ASSESSEE HAS OB TAINED THE PRESCRIBED REPORT IN FORM 10-B AS PER RULE 17-B OF THE INCOME-TAX RULES. EVEN THOUGH ALONGWITH RETURNS OF ALL THE YEARS THE ASSESSEE HAD FILED AUDITED ACCOUNTS WHICH WERE DULY AUDITED FOR TAX PURPOSES AS WELL AS PER REQUIR EMENTS OF -: 71: - 71 THE C & AG BUT NO AUDIT REPORT WAS OBTAINED IN FORM NO.10-B. FURTHERMORE, SINCE THE ASSESSEE WAS OWNED BY THE ST ATE GOVERNMENT, IT WAS A LENGTHY PROCESS FOR APPOINTMEN T OF AUDITOR, WHEN THE LIST OF SUCH AUDITORS WAS GIVEN O NLY BY C & AG, THE ASSESSEE HAS TO GO THROUGH VARIOUS FORMALIT IES FOR APPOINTMENT OF AUDITORS AND FIXING THEIR REMUNERATI ON, WHICH REQUIRED PROPER APPROVAL AND SANCTION OF VARIOUS AU THORITIES. AS SOON AS THE ASSESSEE HAS GOT THE REGISTRATION U/ S 12AA, THE ASSESSEE HAS ALSO STARTED TO OBTAIN NECESSARY APPRO VAL AND ALSO THE AUDIT REPORT IN PRESCRIBED FORM 10B FOR TH E CLAIM OF EXEMPTION U/S 11. THUS, WE FOUND THAT THERE WAS REA SONABLE CAUSE FOR DELAY IN OBTAINING THE AUDIT REPORT. IN T HE INTEREST OF JUSTICE, WE CONDONE THE DELAY IN OBTAINING THE AUDI T REPORT AND DIRECT THE AO TO EXAMINE THE ASSESSEES CLAIM FOR E XEMPTION U/S 11 ON MERITS, AFTER VERIFYING THE VARIOUS CONDI TIONS WHICH ARE REQUIRED TO BE FULFILLED, MORE PARTICULARLY THE UTILIZATION OF RECEIPTS FOR THE PURPOSE OF OBJECTS OF SOCIETY AS D ISCUSSED HEREIN ABOVE TO THE EXTENT OF 85 %. ASSESSEE IS ALS O DIRECTED TO SUBMIT THE OTHER DETAILS AS DESIRED BY THE AO FOR V ERIFYING ITS CLAIM OF EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 19 61. WE -: 72: - 72 DIRECT ACCORDINGLY. 43. IT IS PERTINENT TO MENTION HERE THAT THE ASSESS EE IS ELIGIBLE FOR EXEMPTION U/S 11 ONLY FOR THE ASSESSME NT YEARS 1999-2000, 2003-04, 2004-05 AND 2006-07, WHICH WAS RESTORED BY THE TRIBUNAL TO THE AO VIDE ORDER DATED 4.11.2009 WITH PRECISE DIRECTION TO THIS EFFECT AND ALSO FOR THE A.Y./ 2001-02, WHICH WAS RESTORED TO THE AO VIDE ORDER OF TRIBUNAL DATED 22 ND APRIL, 2010. IN RESPECT OF OTHER YEARS, THE ASSESS EE IS NOT ENTITLED TO AGITATE THE CLAIM OF EXEMPTION U /S 11 IN THE SET-ASIDE PROCEEDINGS. WE DIRECT ACCORDINGLY. 44. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2012. (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH APRIL, 2012. CPU* 920