Appeal details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 1486 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-02-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Assessment Year
2007-2008
Appeal Filed On
09-08-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAA AM0318C I.T.A.NO. 459/IND/2012 A.Y. : 2007 - 08 M.P.RAJYA PATHYA PUSTAK NIGAM, ACIT, 1(1), BHOPAL VS BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI PRAKASH JAIN, C. A. RESPONDENT BY : SMT. MRIDULA BAJPAI, CIT DR DATE OF HEARING : 15 . 0 1 .201 3 DATE OF PRONOUNCEMENT : 28 . 0 2 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) DATED 4.11.2009 , FOR THE ASS ESSMENT YEAR 2007-08, IN THE MATTER OF ORDER PASSED U/S 143 (3) OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. IN THIS APPEAL, THE ASSESSEE HAS BASICALLY AGGRIEVE D FOR DENYING EXEMPTION U/S 10(23C)(IIIAB)/10(23C(VI) OF THE INCOME-TAX ACT, 1961, WITHOUT FOLLOWING DIRECTION G IVEN BY HON'BLE HIGH COURT OF MADHYA PRADESH, WHILE REMANDI NG THE CASE. THE ASSESSEE IS ALSO AGGRIEVED FOR THE CIT(A )S ORDER FOR HOLDING THAT THE ASSESSEE IS NOT AN EDUCATIONAL INS TITUTION WITHIN THE MEANING OF SECTION 10(23C)(IIIAB)/10(23C (VI). 3. AT THE OUT-SET, THE LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD THE ORDER OF THE TRIBUNAL DATED 25 TH APRIL, 2012, PASSED FOR THE ASSESSMENT YEAR 1988-89 TO 200 6-07 AND 2008-09. CONTENTION OF THE LD. AUTHORIZED REPRESENT ATIVE WAS THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVE RED BY THE ORDER OF THE TRIBUNAL ITSELF IN ASSESSEES OWN CASE FOR ALL THESE YEARS. AS THERE WAS SOME DELAY IN FILING APPEAL FOR THE ASSESSMENT YEAR 2007-08, IT COULD NOT BE CLUBBED WI TH THE OTHER APPEALS HEARD BY THE TRIBUNAL ON EARLIER OCCA SION. WE FOUND THAT THERE WAS DELAY IN FILING THIS APPEAL FO R ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS EXPLAINED THE REASON OR DELAY. KEEPING IN VIEW THE SUBSTANCE OF JUSTICE, WE CONDON E THE DELAY. AS ALL THE YEARS RAISED IN THE APPEAL HAVE A LREADY BEEN -: 3: - 3 DECIDED BY THE TRIBUNAL IN ITS ORDER DATED 25 TH APRIL, 2012, WE RESTORE THIS APPEAL ALSO TO THE FILE OF ASSESSING O FFICER FOR DECIDING AFRESH IN TERMS OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 25 TH APRIL, 2012, PASSED IN I.T.A.NOS. 375 TO 394/IND/2011. PRECISE OBSERVATION AND CONCLUSION OF THE TRIBUNAL ON THE VERY SAME ISSUE, WHICH HAVE BEEN RA ISED IN THIS APPEAL READS AS UNDER :- 21. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE CO- ORDINATE BENCH AS WELL AS DECISION OF THE JURISDICTIONAL HIGH COURT AS REFERRED ABOVE. WE HAV E ALSO DELIBERATED UPON THE JUDICIAL PRONOUNCEMENTS REFERRED BY RESPECTIVE A.R. AND D.R. DURING THE COURSE OF HEARING BEFORE US AS WELL AS DECISIONS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS, IN THE CONTEXT OF FACTUAL MATRIX OF THE CAS E. 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 PRI NTING -: 4: - 4 AND PUBLISHING OF PRESCRIBED TEXT BOOK AND PROVIDIN G 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 PUBLISH ING OF PRESCRIBED TEXT BOOK AND PROVIDING THE SAME TO T HE STUDENTS IS NOT EDUCATIONAL ACTIVITY. IN THIS REGAR D, THERE IS A LATEST DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION, 319 ITR 317 DATED 20 TH OCTOBER, 2009, WHICH IS SUBSEQUENT TO THE DATE OF DECISION OF THE JURISDICTIONAL HIGH COURT I N ASSESSEES CASE, WHICH WAS DATED 21.4.2009. SINCE THE DECISION OF THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, WAS PRIOR TO DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ASSAM STATE TEXT BOOK (SUPRA) IN THE FITNESS OF THINGS, THE LOW ER AUTHORITIES WHILE AGAIN DECIDING THE ISSUE IN REMAN D PROCEEDINGS SHOULD HAVE TAKEN INTO ACCOUNT THE VERDICT LAID DOWN BY THE HON'BLE SUPREME COURT IN -: 5: - 5 THE LATTER DECISION IN THE CASE OF ASSAM STATE TEXT BOOK PRODUCTION AND PUBLICATION CORPORATION (SUPRA) . HON'BLE SUPREME COURT, IN THIS CASE, WAS DECIDING THE CASE OF SOCIETY WHICH WAS ENGAGED IN SIMILAR ACTIVITY TO THAT OF THE ASSESSEE I.E. PRINTING AND PUBLISHING OF SCHOOL TEXT BOOKS. IT WAS ALSO ENGAGE D IN PRINTING AND PUBLISHING OF TEXT BOOK FOR SCHOOL STUDENTS CONFIRMING TO THE NORMS PRESCRIBED BY THE EDUCATION DEPARTMENT OF STATE. THE MAIN ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHETHER THE ASSESSEE CORPORATION COULD BE TERMED AS EDUCATIONAL INSTITUTION IN TERMS OF SECTION 10(22) OF THE INCOM E- TAX ACT, 1961. THE ASSESSING OFFICER HELD THAT SINC E THE ASSESSEE HAD INCOME EXCLUSIVELY FROM PUBLICATIO N AND SELLING OF TEXT BOOKS TO THE STUDENTS, EXEMPTIO N U/S 10(22) WAS NOT ADMISSIBLE AND THE ASSESSING OFFICER HELD THAT THE ASSESSEE DID NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES. THE ASSESSING OFFICER ALSO STATED THAT IN VIEW OF THE CLAUSE 21 OF THE MEMORANDUM OF ASSOCIATION, WHICH PROVIDES FOR -: 6: - 6 DISTRIBUTION OF DIVIDENDS, HENCE, ITS INCOME WAS NO T 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 BY THE TRIBUNAL THAT THE CORPORATION WAS AN EDUCATIONAL INSTITUTION AND CONSEQUENTLY ENTITLED TO THE BENEFI T OF EXEMPTION U/S 10(22) OF THE ACT. HOWEVER, IN AN APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF TRIBUNAL THE HON'BLE HIGH COURT HELD THAT THE ASSESSEE DID NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES AND THAT ITS INCOME WAS ONLY FROM PUBLISHING AND SELLING OF TEXT BOOKS, WHICH CONSTITUTED A PROFIT EARNING ACTIVITY, THEREFORE, T HE ASSESSEE WAS NOT ENTITLED FOR EXEMPTION U/S 10(22) OF THE ACT. IN FURTHER APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF HON'BLE HIGH COURT, THE HON'BL E SUPREME COURT SET ASIDE THE ORDER OF HIGH COURT AND OBSERVED THAT THE HIGH COURT HAS NOT TAKEN INTO ACCOUNT THE PRIOR HISTORY OF THE CASE, THE AIM OF T HE SAID CORPORATION TO IMPLEMENT THE STATES POLICY ON -: 7: - 7 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 GRANTED EXEMPTION U/S 10(22) OF THE ACT VIDE LETTER DATED 1 9 TH AUGUST, 1975, TO THE TAMIL NADU TEXT BOOK SOCIETY, WHICH PERFORMED ACTIVITIES SIMILAR TO THOSE OF THE ASSESSEE. HON'BLE SUPREME COURT FURTHER OBSERVED THAT HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CI T 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 RAJASTHAN HIGH COURT SIMILAR QUESTION AROSE AS TO WHETHER RAJASTHAN STATE TEXT BOOK BOARD WAS ENTITLED TO EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT, 1961. IN THIS CASE ALSO BEFORE THE RAJASTHAN HIGH COURT, THE ARGUMENT ON BEHALF OF THE REVENUE WAS THAT THE ASSESSEE WAS MAKING PROFIT ON ACCOUNT OF PUBLISHING AND SALE OF TEXT BOOKS AND, CONSEQUENTLY , IT WAS NOT ENTITLED TO THE BENEFIT O F -: 8: - 8 EXEMPTION U/S 10(22) OF THE ACT. HOWEVER, THE HIGH COURT NOTICED THE LETTER ISSUED BY 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 RECITES THAT UNDER SIMILAR SITUATION, THE C BDT HAD ALSO EXTENDED THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT TO THE ORISSA SECONDARY BOARD EDUCATION REPORTED AT 86 ITR 408. AFTER TAKING INTO ACCOUNT THESE CIRCULARS/LETTERS ISSUED BY THE CBDT, RAJASTHAN HIGH COURT CAME TO THE CONCLUSION THAT TH E ASSESSEE IN THAT CASE, NAMELY, RAJASTHAN STATE TEXT BOOK BOARD, WAS ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT. THE COURT OBSERVED THAT IT IS NOT DISPUTED BEFORE US THAT THE AIMS AND OBJECTS OF THE TAMIL NADU TEXT BOOKS SOCIETY AND THOSE OF THE RESPONDENT-ASSESSEE ARE ALMOST IDENTICAL. IT IS ALSO NOT SHOWN TO US THAT THE SURP LUS -: 9: - 9 AMOUNT, IF ANY, OF THE RESPONDENT-ASSESSEE, IS USED FOR ANY 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 LETTER, THE HON'BLE SUPREME COURT SET-ASIDE THE OR DER OF THE HIGH COURT AND MATTER WAS REMANDED TO THE ASSESSING OFFICER TO CONSIDER IT DE NOVO IN THE LIG HT OF THE JUDGMENT OF RAJASTHAN HIGH COURT AND ORISSA HIGH COURT, PARTICULARLY, WITH REFERENCE TO THE LET TER OF CBDT DATED 19 TH AUGUST, 1975, REFERRED TO IN THE JUDGMENT OF RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN STATE TEXT BOOK BOARD REPORTED AT 244 ITR 667, AS ALSO 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 PERI OD OF SEVEN YEARS I.E. 2000-01 TO 2007-08, SURPLUS OF -: 10: - 10 ASSESSEE EXCEEDED 15 % OF THE GROSS RECEIPTS. AS PE R THE OBJECT CLAUSE AN ACTIVITY ACTUALLY UNDERTAKEN B Y THE ASSESSEE, WE FOUND THAT THE ASSESSEE SOCIETY IS PRINTING, PUBLISHING AND PROVIDING TEXT BOOKS TO TH E STUDENTS OF CLAUSE I TO XII AS PRESCRIBED BY THE GOVERNMENT OF MADHYA PRADESH AT CHEAPER RATE. THE PRICE OF THE TEXT BOOK IS FIXED AT 70:30 FORMULA TH AT IS TO SAY OUT OF SELLING PRICE OF TEXT BOOK 70% IS TH E 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 ESTABLISHMENT EXPENSES. AFTER MEETING OUT ESTABLISHMENT EXPENSES, IF THE SURPLUS ARISES, THE SAME IS INCIDENTAL AND WHICH IS ALSO UTILIZED AS GRANT/AID TO THE GOVERNME NT SCHOOL FOR THE CONSTRUCTION OF BUILDING, REPAIR AND RENOVATION ETC. AND ALSO FOR GIVING SCHOLARSHIP TO THE STUDENTS OF WEAKER SECTIONS AND MERIT HOLDER AS PER THE DIRECTIONS OF THE GOVERNMENT OF M.P. THROUGH DISTRICT COLLECTOR, WHICH IS CLEAR FROM THE AUDITED ACCOUNTS OF THE SOCIETY FOR THE FINANCIAL YEAR 1987 -88 -: 11: - 11 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 THAT YEAR-WISE EXCESS OF INCOME OVER EXPENDITURE AN D PERCENTAGE THEREOF, WORKS OUT TO BE AS UNDER :- S.NO. F.Y. GROSS RECEIPTS EXCESS OF INCOME OVER EXPENDITURE PERCENTAGE OF INCOME OVER RECEIPT 01. 2007-08 1266746577 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 TH E ASSESSEE WAS PARTED BY IT FOR THE PURPOSE OTHER THA N AID TO GOVERNMENT SCHOOLS FOR CONSTRUCTION OF BUILDING, REPAIRING OF BUILDING, FURNITURE, SCHOLAR SHIPS TO THE STUDENTS ETC. IT IS ALSO CLEAR FROM THE AUDI TED ACCOUNTS OF THE SOCIETY THAT IT HAS NOT DISTRIBUTED ANY PROFIT TO ANYBODY IN ANY OF THE ASSESSMENT YEARS UNDER CONSIDERATION. OUR THIS OBSERVATION IS FURTHE R -: 12: - 12 FORTIFIED BY THE FACT THAT ALL THE SHARES OF THE S OCIETY IS WITH THE GOVERNMENT OF M.P. AND BOARD OF GOVERNORS OF THE SOCIETY, HIS MINISTERS AND SECRETARIES OF VARIOUS DEPARTMENTS OF M.P. GOVERNMENT AND THERE IS NO PROVISION FOR DISTRIBUTI ON OF PROFIT, IN THE REGISTRATION OF THE SOCIETY ITSEL F. FURTHERMORE, AS PER THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF HARYANA STATE COUNSELLING SOCIETY, 223 CTR 402, MAA SARASWATI EDUCATION TRUST, 234 CTGR 400 AND VANITA VISHRAM TRUST, 327 ITR 121, MERELY BECAUSE AN EDUCATIONAL INSTITUTION ACCUMULATES 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 EDUCATIONAL 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 DISQUALIFY AN INSTI TUTION FROM THE BENEFIT OF SECTION 10(23C). -: 13: - 13 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 OBJECTS OF THE TAMIL NADU TEXT BOOKS SOCIETY AND THOSE OF THE RESPONDENT- ASSESSEE ARE ALMOST IDENTICAL. IT IS ALSO 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 AS THE TRIBUNAL HAVE NOTICED THAT EVEN IF SOME AMOUNT REMAINS SURPLUS, THAT IS UTILIZED ONLY FOR THE PURPOSES OF EDUCATION. THUS , HAVING REGARD TO THE CONCURRENT 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 ORDER OF THE TRIBUNAL IS ERRONEOUS IN ANY WAY. IN THIS WAY, NO QUESTION OF LAW ARISES FOR -: 14: - 14 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 I N THE CASE OF ORISSA SECONDARY BOARD 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 ASSESSEE WHICH IS WHOLLY OWNED BY GOVERNMENT OF M.P. AND BOARD OF GOVERNORS CONSISTING OF MINISTRY OF EDUCATION ETC. AND CHAIRM AN AND BOARD OF SECONDARY EDUCATION, M.P., DIRECTOR OF STATE, INSTITUTE OF SCIENCE & EDUCATION, AND THE OBJECTION OF WHICH WAS TO PROVIDE TEXT BOOKS TO THE STUDENTS OF CLASS I TO XII AS PRESCRIBED BY THE GOVERNMENT OF M.P. AT CHEAPER RATE AND WITHOUT MOTIVE TO EARN PROFIT, IS ELIGIBLE FOR CLAIM OF EXE MPTION -: 15: - 15 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 TH AT A UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTIN G SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT, WHICH IS WHOLLY AND SUBSTANTIALL Y FINANCED BY THE GOVERNMENT ARE ELIGIBLE FOR CLAIM O F EXEMPTION. SUB CLAUSE (VI) OF SECTION 10(23C) PROVIDES THAT UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S AND NOT FOR THE PURPOSE OF PROFIT, OTHER THAN THOSE MENTIONED IN SUB CLAUSE (IIIAB) OR SUB CLAUSE (IIIA D) AND WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY. THUS, THE APPROVAL IS REQUIRED ONLY IN CASES WHERE THE UNIVERSITY AND OTHER EDUCATIONAL INSTITUTION IS NOT WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT. IN THE INSTANT CASE, WE FOUND THAT ENTIRE FUND HAS BEEN INVESTED BY THE STATE GOVERNMENT EITHER IN THE FORM OF INITIAL CONTRIBUTI ON OR -: 16: - 16 THROUGH ACCUMULATION OF SURPLUS, THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO BE APPROVED BY PRESCRIBED AUTHORITY FOR THE PURPOSE OF CLAIM OF EXEMPTION U/S 10(23-C). ASSESSEES CASE IS FALLING WITHIN SUB CLAUSE (IIIAB), WHICH READS AS UNDER :- ANY UNIVERSITY OR EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT F OR PURPOSES OF PROFIT AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMENT/ THUS, FROM ASSESSMENT YEAR 1999-2000 TO 2008-09, THE 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 ASSESSMEN T YEAR 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 PAI D -: 17: - 17 ROYALTY TO THE BOARD OF SECONDARY EDUCATION, GOVERNMENT OF M.P. AND MANY AUTHORS OF THE BOOKS. THE ASSESSEE HAD CONTRIBUTED FOR CONSTRUCTION OF SCHOOL BUILDING AND HAD ALSO DISTRIBUTED FREE BOOKS TO THE DESERVING STUDENTS. THE ASSESSEE PUBLISHES ONLY TEXT BOOKS, SO THAT STUDENTS GET BOOKS AT A CHEAPER PRICE. THE ASSESSEE CANNOT BE COMPARED WITH GENERAL/PRIVATE PUBLISHERS AND BOOK SELLERS. THUS, THE OBSERVATION OF THE ASSESSING OFFICER TO T HE EFFECT THAT ACTIVITY OF THE ASSESSEE SOCIETY IS MER ELY PRINTING AND SALE OF BOOKS AS A COMMERCIAL VENTURE IS CONTRARY TO THE MATERIAL PLACED ON RECORD. WE FOUND THAT M.P. STATE COUNCIL FOR EDUCATIONAL RESEARCH AN D TRAINING IS WORKING WITH THE ASSESSEE SOCIETY WHICH IS AN ACADEMIC 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 AUTHORITIES TO THE EFFECT THAT ROYALTY IS ONLY PAID TO MPBSE IS NOT CORRECT. IT IS CLEAR FROM THE FOLLOWING YEAR-WISE CHART INDICATING -: 18: - 18 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 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 SUBSTANTIAL LY FINANCED BY THE GOVERNMENT OF M.P. IS MISPLACED, IN VIEW OF THE AUDITED ACCOUNTS PLACED IN PAPER BOOK WHICH INDICATE THAT THE STATE GOVERNMENT UNDER THE SCHEME OF SARVA SHIKSHA ABHIYAN ADVANCED FOLLOWING AMOUNT TO THE APPELLANT AGAINST SUPPLY OF NISHULK PATHYA PUSTAK VITRAN YOJNA :- -: 19: - 19 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 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 COMPLY WITH THE STATUTORY REQUIREMENT OF ARTICLE 21-A AND 41 OF THE CONSTITUT ION OF INDIA, WHICH MAKE THE RIGHT OF EDUCATION AS FUNDAMENTAL RIGHTS OF CHILDREN, WHICH READS AS UNDE R :- 21-A- RIGHT TO EDUCATION THE STATE SHALL PROVIDE FREE AND COMPULSORY EDUCATION TO ALL CHILDREN OF THE AGE OF 6 TO, 14 YEARS IN SUCH MANNER AS THE STATE MAY BY LAW -: 20: - 20 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 PUBLIC ASSISTANCE IN CASE OF UNEMPLOYMENT, OLD AGE SICKNESS DISABILITIES AND IN OTHER CASES OF UNDESERVED WANT. PROVIDING OF SCHOOL TEXT BOOKS AND INCIDENTAL PUBLICATION AT CHEAPER RATES IS DEFINITELY TO AID K IND PROMOTE ADVANCEMENT OF EDUCATION TO THE CHILDREN. 32. TO COMPLY WITH THE STATUTORY REQUIREMENT ON ARTICLE 21A AND 41, THE ASSESSEE SOCIETY IS FOLLOWI NG SYLLABUS PRESCRIBED BY THE M. P. GOVERNMENT AND PRINTING AND PUBLISHING BOOKS FOR THE USE OF STUDEN TS OF CLASS I TO XII OF THE STATE OF M. P. THE ASSESSE E SOCIETY IS DOING THIS JOB UNDER THE POLICY 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 LA ID -: 21: - 21 DOWN UNDER ARTICLE 21A AND 41 OF THE CONSTITUTION O F INDIA, WHICH PROVIDES THAT IT IS THE PRIMARY DUTY O F STATE TO SECURE THE RIGHT TO EDUCATION AND TO ESTAB LISH EDUCATIONAL INSTITUTION, ADMISSION OF STUDENTS ETC. FURTHERMORE, THE EDUCATION IS SUBJECT MATTER OF CONCURRENT LIST UNDER SCHEDULE VII 111 OF THE CONSTITUTION OF INDIA AND TO ACHIEVE THIS DATE, THE STATE GOVERNMENT FRAMED A POLICY 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 GOVERNMENT WITH THE OBJECT TO PROVIDE TEXT BOOKS TO THE STUDENTS OF CLASS I TO XII AT A CHEAPER RATE AN D THE STATE GOVERNMENT HAS ACHIEVED THIS OBJECT VERY SUCCESSFULLY, WHICH IS CLEAR FROM THE FACT THAT SEL LING PRICE OF THE BOOK PRINTED BY THE SOCIETY IS JUST 1/ 3 RD IN COMPARISON TO THE TEXT BOOKS PUBLISHED BY THE PRIVATE PUBLISHERS. THE ASSESSEE HAS ALSO PLACED ON RECORD LIST CONTAINING DETAILS REGARDING SELLING PR ICE OF THE BOOKS PUBLISHED BY THE SOCIETY VIS--VIS PRIVAT E -: 22: - 22 PUBLISHERS IN PART III AS PLACED AT PAGE 931 & 932 OF THE PAPER BOOK. IT IS ALSO EVIDENT FROM THE AUDITED ACCOUNTS FOR THE ASSESSMENT YEAR 1988-89 TO 2008- 09 THAT THE ASSESSEE SOCIETY HAS NOT INCURRED ANY EXPENDITURE FOR NON-EDUCATIONAL PURPOSES. EVEN BOTH THE LOWER AUTHORITIES HAVE NOT GIVEN ANY FINDING NO R BROUGHT ANY MATERIAL ON RECORD EVEN DURING REMAND ASSESSMENT PROCEEDINGS, TO SUGGEST THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE FOR NON- EDUCATIONAL PURPOSES. THUS, WE FOUND THAT ENTIRE FUND OF THE ASSESSEE SOCIETY WAS UTILIZED ONLY FOR THE EDUCATIONAL PURPOSES AND NOTHING WAS BROUGHT ON RECORD BY ANY OF THE LOWER AUTHORITIES TO INDICATE THAT THE ASSESSEE SOCIETY HAS UTILIZED FUND FOR PURPOSE OTHER THAN EDUCATIONAL ACTIVITIES. AS PER OBJECT CL AUSE NO. (2), THE ASSESSEE IS PRODUCING SCHOOL TEXT BOOK S AND HAND BOOKS FOR TEACHES, WORK BOOKS FOR PUPILS AND OTHER EDUCATIONAL LITERATURE, WHICH IS USEFUL F OR FURTHERANCE OF TEACHING, LEARNING AND FOR EVALUATIO N ANY EDUCATIONAL INSTITUTION. IN ADDITION TO PRINTIN G OF -: 23: - 23 TEXT BOOKS, THE ASSESSEE ALSO ENCOURAGES AND PROCURES EXPERTS AUTHORS TO WRITE TEXT BOOKS ON VARIOUS SUBJECTS AS PER THE SYLLABUS PRESCRIBED BY THE GOVERNMENT FOR VARIOUS COURSES OF EDUCATION. AS PER OBJECT NO.(14), PRINTING, PUBLISHING AND SALE O F BOOKS., IS APPROVED BY GOVERNMENT AND PAGE (5) AND (6) PRESCRIBED FOR UNDERTAKING RESEARCH FOR EDUCATI ON. 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 INSTITUTION IS ALSO WORKING IN OTHE R STATES LIKE TAMIL NADU, RAJASTHAN, DELHI, ORISSA, BIHAR. IN CASE OF SIMILAR INSTITUTIONS EXEMPTIONS H AVE BEEN ALLOWED BY THE TRIBUNAL AND HIGH COURT. HON'BLE RAJASTHAN HIGH COURT HAS DEALT WITH IN DETAIL THE ACTIVITY OF RAJASTHAN STATE TEXT BOOK CO DE, 224 ITR 668 AND ALLOWED EXEMPTION U/S 10(22) OF INCOME-TAX ACT, 1961. HON'BLE HIGH COURT HAS OBSERVED AT PAGE 668 THAT THE FACTS IN THE CASE OF TAMIL NADU TEXT BOOK SOCIETY ARE SIMILAR. IN THE CA SE -: 24: - 24 OF TAMIL NADU TEXT BOOK SOCIETY, THE C.B.D.T. ITSEL F HAS TAKEN THE VIEW VIDE ITS LETTER DATED 19.8.1975 THAT TAMIL NADU TEXT BOOK SOCIETY IS ENTITLED FOR EXEMPTION U/S 10(22) OF THE INCOME-TAX ACT. THE SAI D LETTER READS AS UNDER :- ON CAREFUL CONSIDERATION OF FACTS INVOLVED THE BOARD 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), T O SUCH INSTITUTION ENGAGED IN PRINTING AND PUBLISHING OF BOOKS FOR STUDENTS. 35. NOW COMING TO THE DECISION RELIED ON BY THE ASSESSING OFFICER IN THE CASE OF SORABJI, 201 ITR 9 39, WHEREIN OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CASE OF LOKA SHIKSHANA TRUST, 101 ITR 234, WAS REFERRED. THE SAME IS RESTRICTED TO SECTION 2(15) O F THE -: 25: - 25 ACT, WHICH IS APPLICABLE FOR CHARITABLE PURPOSES. HOWEVER, THE EXPRESSION IN SECTION 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 THOSE ASSESSEES, WHO ARE RUNNING EDUCATIONAL INSTITUTION. THUS, FOR FALLING WITHIN THE PURVIEW O F EDUCATIONAL INSTITUTION, IT IS NOT MANDATORY THAT T HE ASSESSEE SHOULD CARRY ON EDUCATIONAL INSTITUTION BY ITSELF. IT WILL BE SUFFICIENT THAT THE ASSESSEE IS EXISTING SOLELY FOR EDUCATIONAL PURPOSES. EVEN IN CASE 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 INSTITUTION TO RUN EDUCATION ITSELF. THE EDUCATION AL INSTITUTION MAY BE RUN BY SOME ONE BUT THE INCOME OF THE INSTITUTION SHOULD BE UTILIZED FOR IMPARTIN G EDUCATION. 36. IN THE ABOVE CASE, IT WAS FOUND THAT THE ASSESSEE WAS GIVING SCHOLARSHIPS OR GRANT TO THE -: 26: - 26 STUDENTS WITHOUT HAVING ANY CONTROL WHATSOEVER ON SUCH STUDENTS. THE COURT OBSERVED THAT SINCE NO EDUCATIONAL ACTIVITIES IN THE SENSE OF NORMAL SCHOOLING OR ACTUAL IMPARTING OF KNOWLEDGE OR LEARNING TO THE STUDENTS WAS CARRIED ON BY THE TRUS T AND THE INSTITUTE WAS SIMPLY GIVING SCHOLARSHIPS TO THE NEEDY PARSI STUDENTS FOR TECHNICAL EDUCATION WITHOUT GETTING ANY CONTROL OVER SUCH STUDENTS OR WITHOUT IMPARTING ANY KNOWLEDGE TO THE SAID 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 CLAIM OF EXEMPTION U/S 11, WHERE THE ASSESSEE TRUST WAS DOING 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 -: 27: - 27 PROFIT MOTIVE. THUS, IT WILL NOT HELP THE REVENUE F OR HOLDING THAT PRESENT ASSESSEE WAS NOT FALLING WITHI N THE DEFINITION OF OTHER EDUCATIONAL INSTITUTION. HOWEVER, IN THE INSTANT CASE BEFORE US, UNDISPUTEDL Y, THE ASSESSEE SOCIETY WAS ESTABLISHED ONLY FOR THE PURPOSE OF ADVANCEMENT OF EDUCATION BY PRINTING AND PUBLISHING OF TEXT BOOKS AS PRESCRIBED BY THE GOVERNMENT. AS DISCUSSED ABOVE, ALL SUCH INSTITUTIONS WORKING IN ALL OTHER STATES OF INDIA W ERE HELD TO BE ELIGIBLE FOR CLAIM OF EXEMPTION U/S 10(2 2). THUS, THERE WAS NO JUSTIFICATION ON THE PART OF LOW ER AUTHORITIES FOR DECLINE OF CLAIM OF EXEMPTION U/S 10(22)/10(23C). EVEN IN THE CASE OF ACADEMY OF GENERAL EDUCATION, 150 ITR 135, IT WAS OBSERVED THAT THE ASSESSEE ITSELF NEED NOT IMPART EDUCATION TO THE STUDENTS AND IT NEED NOT BE NECESSARILY SCHOOL OR COLLEGE FOR THE CLAIM OF BENEFIT. IT WAS FOUND THAT IN ITS ACCOUNT EVEN THOUGH THE ASSESSEE HAS NOT INCLUDED INCOME OF COLLEGES, ESTABLISHED UNDER SEPARATE TRUST. HOWEVER, IT WAS FOUND THAT THE -: 28: - 28 ASSESSEE HAS GIVEN GRANTS TO SOME OF THOSE SCHOOLS, IT WAS HELD THAT THE ASSESSEE WAS ENTITLED FOR CLAI M 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 INVOLVED, THE BOARD IS OF THE OPINION THAT THE TAMIL NADU TEXT BOOK SOCIETY WOULD BE AN EDUCATIONAL INSTITUTION EXITING SOLELY FOR THE PURP OSE OF EDUCATION WITHIN THE MEANING OF SECTION 10(22) O F 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 ASSESSEE IS ENTITLED FOR CLAIM OF EXEMPTI ON U/S 10(22). AS A MATTER OF FACT, RECENTLY HON'BLE SUPREME COURT IN THE CASE OF ASSAM STATE 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 -: 29: - 29 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 NADU TEXT BOOK SOCIETY AS EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 10(22) OF THE ACT. THE JUDGMENT OF THE HIG H COURT FURTHER RECITES THAT UNDER A SIMILAR SITUATIO N, THE CBDT HAD ALSO EXTENDED THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT TO THE ORISSA SECONDARY BOAR D EDUCATION AS REPORTED IN SECONDARY BOARD EDUCATION VS. ITO, (1972) 86 ITR 408 (ORISSA), FOLLOWING THE SE CIRCULARS/LETTERS ISSUED BY THE CBDT, THE RAJASTHAN 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 NAMEL Y THE RAJASTHAN STATE TEXT BOOK WAS ENTITLED TO CLAIM THE BENEFIT OF EXEMPTION U/S 10(22) OF THE ACT. 39. IN VIEW OF THE ABOVE DISCUSSION AND APPLYING THE JUDICIAL PRONOUNCEMENTS TO THE FACTS OF THE INS TANT CASE VIS--VIS AIMS AND OBJECTS REFERRED ABOVE, WE -: 30: - 30 HOLD THAT LOWER AUTHORITIES WERE NOT JUSTIFIED IN DECLINING CLAIM OF EXEMPTION TO THE ASSESSEE SOCIET Y U/S 10(22)/10(23C) OF THE INCOME-TAX ACT, 1961, IN RESPECT OF ALL THE YEARS UNDER CONSIDERATION, FOR T HE DETAILED REASONS DISCUSSED HEREINABOVE. 40. NOW COMING TO THE ALTERNATE CLAIM OF THE ASSESSEE U/S 11 OF THE INCOME-TAX ACT, 1961, CONTENTION OF THE ASSESSEE WAS THAT REGISTRATION U/ S 12AA(1)(B)(I) WAS GRANTED BY CIT IN COMPLIANCE TO T HE DIRECTION GIVEN BY THE HONBLE ITAT VIDE ORDER DATE D 23.9.2009 WITH RETROSPECTIVE EFFECT FROM 7.8.1968 VIDE ORDER DATED 23.10.20090, AND AFTER RECEIPT OF THE ORDER, THE ASSESSEE GOT ITS ACCOUNT AUDITED FOR LAST 20 YEARS I.E. FROM A.Y. 1988-89 TO 2008-09. HOWEVER, THE AO HAS DECLINED 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 AO, THE ASSESSEE SHOULD HAVE FILED THE AUDITED REPORT IN FO RM 10B ALONGWITH THE RETURN OF INCOME FOR THE A.YS. -: 31: - 31 1988-89 TO 2006-07, WHICH THE ASSESSEE FAILED, ACCORDINGLY, EXEMPTION U/S 11 CANNOT BE CONSIDERED EVEN THOUGH THE ASSESSEE HAS OBTAINED REGISTRATION U/S 12AA W.E.F. 7.8.1968. THE CIT(A) FURTHER CONFIRMED THE ORDER OF AO BY OBSERVING THAT THE PRESCRIBED 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 WITHOUT THE PRESCRIBED AUDIT REPORT IN F ORM NO.10-B WHICH WAS NOT AVAILABLE WITH THE ASSESSEE. 41. THUS, IT IS CLEAR FROM THE ORDER OF THE LOWER AUTHORITIES THAT ASSESSEES CLAIM U/S 11 WAS NOT CONSIDERED ON MERITS MERELY FOR THE REASON THAT AUD IT REPORT IN FORM 10B WERE NOT AVAILABLE AT THE TIME O F FILING OF RETURNS FOR THE RESPECTIVE ASSESSMENT YEA RS AS THE SAME WAS DATED 10.10.2010. 42. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT IN THE ORIGINAL RETURNS, THE ASSESSEE HAS ONLY CLAIMED ONLY U/S 10(22)/10(23C). HOWEVER, WHEN THE CIT HAS GRANTED REGISTRATION U/S -: 32: - 32 12AA WITH RETROSPECTIVE EFFECT FROM 7.8.1968 IN COMPLIANCE TO THE DIRECTIONS GIVEN BY THE ITAT IN ITS ORDER DATED 23.9.2009, THAT THE ASSESSEE HAS OBTAINED 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 REQUIREMENTS OF THE C & AG BUT NO AUDIT REPORT WAS OBTAINED IN FORM NO.10- B. FURTHERMORE, SINCE THE ASSESSEE WAS OWNED BY THE STATE GOVERNMENT, IT WAS A LENGTHY PROCESS FOR APPOINTMENT OF AUDITOR, WHEN THE LIST OF SUCH AUDITORS WAS GIVEN ONLY BY C & AG, THE ASSESSEE HAS TO GO THROUGH VARIOUS FORMALITIES FOR APPOINTME NT OF AUDITORS AND FIXING THEIR REMUNERATION, WHICH REQUIRED PROPER APPROVAL AND SANCTION OF VARIOUS AUTHORITIES. AS SOON AS THE ASSESSEE HAS GOT THE REGISTRATION U/S 12AA, THE ASSESSEE HAS ALSO STARTE D TO OBTAIN NECESSARY APPROVAL AND ALSO THE AUDIT REPORT IN PRESCRIBED FORM 10B FOR THE CLAIM OF -: 33: - 33 EXEMPTION U/S 11. THUS, WE FOUND THAT THERE WAS REASONABLE CAUSE FOR DELAY IN OBTAINING THE AUDIT REPORT. IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY IN OBTAINING THE AUDIT REPORT AND DIRECT THE AO TO EXAMINE THE ASSESSEES CLAIM FOR EXEMPTION U/S 11 ON MERITS, AFTER VERIFYING THE VARIOUS CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED, MORE PARTICULAR LY THE UTILIZATION OF RECEIPTS FOR THE PURPOSE OF OBJE CTS OF SOCIETY AS DISCUSSED HEREIN ABOVE TO THE EXTENT OF 85 %. ASSESSEE IS ALSO DIRECTED TO SUBMIT THE OTHER DETAILS AS DESIRED BY THE AO FOR VERIFYING ITS CLAI M OF EXEMPTION U/S 11 OF THE INCOME-TAX ACT, 1961. WE DIRECT ACCORDINGLY. 43. IT IS PERTINENT TO MENTION HERE THAT THE ASSESS EE IS ELIGIBLE FOR EXEMPTION U/S 11 ONLY FOR THE ASSESSMENT 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./ 200 1-02, WHICH WAS RESTORED TO THE AO VIDE ORDER OF TRIBUNAL -: 34: - 34 DATED 22 ND APRIL, 2010. IN RESPECT OF OTHER YEARS, THE ASSESSEE 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 ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. 4. AS THE FACTS AND CIRCUMSTANCES, DURING THE YEAR UNDER CONSIDERATION ARE PARI MATRIA AND WHICH HAVE ALREADY BEEN DEALT WITH BY THE TRIBUNAL IN THE AFORESAID OR DER, RESPECTFULLY FOLLOWING THE SAME, THIS APPEAL IS ALS O RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECID ING AS PER THE DIRECTION GIVEN IN THE AFORE MENTIONED ORDER. WE DI RECT ACCORDINGLY. -: 35: - 35 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2013. SD/ - SD/ - (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH FEBRUARY , 2013. CPU* 28282
