ITO(E), New Delhi V. M/s. Delhi Bureau of Text Books, New Delhi

ITA 674/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5245 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Rule of consistency; Benefit of exemption
• Section: 143(3); 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.S. SYAL, HONBLE VICE PRESID ENT & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-674/DEL/2014 ( ASSESSMENT YEAR: 2010-11) ITO (E) TRUST WARD III NEW DELHI. VS DELHI BUREAU OF TEXT BOOKS 25/2, INSTITUTIONAL AREA, PANKHA ROAD, D-BLOCK, JANAKPURI, NEW DELHI. AAATD4122G ASSESSEE BY MS. PREM LATA BANSAL, SR. ADV. SH. RAM AVTAR BANSAL, ADV. REVENUE BY MS. RACHNA SINGH, CIT DR ORDER PER SHRI K.N. CHARY, J.M. THIS IS AN APPEAL CHALLENGING THE ORDER DATED 12.1 1.2013 IN APPEAL NO. 93/2013-14 PASSED BY THE LD. CIT (A)-XXI , NEW DELHI. 2. BRIEFLY STATED FACTS, AS STATED BY THE ASSESSEE, ARE THAT THE SOCIETY M/S DELHI BUREAU OF TEXT BOOKS WAS SET UP B Y THE THE MINISTRY OF EDUCATION, GOVERNMENT OF INDIA AS WELL AS THE DELHI ADMINISTRATION TO ENSURE TIMELY SUPPLY OF PRESCRIBE D TEXT BOOKS AT A FAIR PRICES TO THE SCHOOL STUDENTS AND TO IMPROVE THE QUALITY OF DATE OF HEARING 09.08.2017 DATE OF PRONOUNCEMENT 11.08.2017 2 ITA NO. 674/DEL/2014 PRIMARY AND SECONDARY SCHOOL EDUCATION IN THE DELHI SCHOOLS. IT WAS REGISTERED AS A SOCIETY REGISTERED UNDER THE SO CIETYS REGISTRATION ACT 1860 VIDE REGISTRATION NO. S4482/1 969-70 DATED 28.3.1970. IT IS ALSO REGISTERED U/S 12A OF IT ACT VIDE REGISTRATION NO. DLI(C) 1107) 1973-74. ENTIRE BOARD OF DIRECTORS OF THE SOCIETY AND ITS CHAIRMAN ARE EX-OFFICIO BEING SENIOR FULL T IME OFFICER IN THE DELHI ADMINISTRATION AND ITS EDUCATION DEPARTMENT. THE ASSESSEE SOCIETY WAS CONSTITUTED AS DELHI BUREAU OF TEXT BO OKS WHICH WAS ATTACHED TO THE DEPARTMENT OF DIRECTORATE OF EDUCAT ION OF GOVERNMENT OF NCT AND THE BOARD OF DIRECTORS ARE NO MINATED BY THE DELHI ADMINISTRATION. THE SOCIETY IS MAINLY EN GAGED IN AIDING AND PROMOTING ADVANCEMENT OF EDUCATION PARTICULARLY ELEMENTARY AND SECONDARY EDUCATION BY DEVELOPING OF TEXT BOOKS AND OTHER TEACHING MATERIAL, EVALUATION AND RESEARCH FOR IMPR OVEMENT OF CURRICULA, TEXT BOOKS AND OTHER INSTRUCTIONAL MATER IAL ETC. THE SOCIETY ALSO DISTRIBUTES FREE BOOKS/READING MATERIA L AND SCHOOL BAGS TO NEEDY STUDENTS IN ORDER TO PROMOTE ADVANCEM ENT OF EDUCATION. THE BUREAU IS CARRYING ON THE COMPOSITE ACTIVITY OF PRODUCTION, PUBLICATION AND DISTRIBUTION OF TEXT BO OKS AND ALSO DOING OTHER PROMOTIONAL ACTIVITIES LIKE FREE OF COS T DISTRIBUTION OF 3 ITA NO. 674/DEL/2014 TEXT BOOKS TO CHILDREN OF ECONOMICALLY WEAKER FAMIL IES AND NEEDY STUDENTS, FREE OF COST TEACHING MATERIAL TO TEACHER S TO PROMOTE BETTER TEACHING IN DELHI SCHOOLS, PROVIDE FREE BOOK S IN BRAILLE FOR BLIND STUDENTS AND FREE OF COST DISTRIBUTION OF DIA RIES, SCHOOL BAGS, EXERCISE BOOKS AND DICTIONARIES FOR THE WELFARE OF STUDENTS AS DECIDED BY DIRECTORATE OF EDUCATION, DELHI ADMINIST RATION, GOVERNMENT OF DELHI FROM TIME TO TIME AS PART OF TH E MAIN ACTIVITY. FOR THE AY 2010-11, THE ASSESSEE FILED THEIR RETURN OF INCOME DECLARING NIL INCOME AND THE ASSESSING OFFICER COMP LETED THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 ( FOR SHORT HEREINAFTER REFERRED TO AS THE ACT) AT AN INCOME OF RS. 11,50,77,460/- VIDE ORDER DATED 08.03.2013 DENYING THE BENEFIT OF SECTION 11 AND 12 OF THE ACT ON THE GROUND THAT THE ASSESSEE SOCIETY HAS NOT DONE ANY CHARITABLE ACTIVITY AND HA S DONE ONLY BUSINESS ACTIVITIES, AND ON THAT PREMISE, HE BROUGH T THE ENTIRE RECEIPTS TO TAX AFTER ALLOWING EXPENDITURE. 3. IN THE APPEAL PREFERRED BY THE ASSESSEE CHALLENG ING THE ADDITION MADE BY THE AO, LD. COMMISSIONER OF INCOME TAX HELD THAT THE ASSESSEE WAS NOT DOING ANY COMMERCIAL OR B USINESS 4 ITA NO. 674/DEL/2014 ACTIVITY AND SINCE THE ASSESSEE HAS BEEN IN THE FIE LD OF EDUCATION IN PRINTING AND PUBLISHING THE TEXT BOOKS FOR THE G OVERNMENT SCHOOLS OF DELHI, THEY ARE COVERED BY THE DEFINITIO N U/S 2(15) OF THE ACT. LD. COMMISSIONER OF INCOME TAX FURTHER HE LD THAT FOR THE AY 1975-76 TO 1976-77 THE ASSESSEE WAS CONTINUOUSLY HELD TO HAVE BEEN COVERED BY THE DEFINITION OF CHARITABLE P URPOSE AND CONTINUED TO BE SO EVEN THEREAFTER BY THE ORDERS OF THE LD. CIT (A) FOR THE ASSESSMENT YEARS 2006-07 TO 2009-10, AS SUC H IT WAS BUT REASONABLE TO EXTENT THE BENEFIT OF EXEMPTION U/S 1 1 OF THE ACT TO THE ASSESSEE. 4. CHALLENGING THE SAID FINDING OF THE LD. CIT (A) THE REVENUE IS BEFORE US IN THIS APPEAL ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT VARIOUS A CTIVITIES OF THE ASSESSEE, LIKE DEVELOPING/PRINTING/PUBLISHING & SAL E OF TEXT BOOKS AND OTHER TEACHING MATERIAL, ETC. FALL WITHIN THE EXPRESSION OF EDUCATION READ WITH DEFINITION OF CHARITABLE PURPOSE AS PER SECTION 2(15) OF THE INCOME TAX ACT , 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE ASSES SEE IS ENTITLED TO EXEMPTION OF INCOME U/S 11 & 12 PARTICULARLY WHE N ASSESSEES ACTIVITIES ON ACCOUNT OF DEVELOPING/PRINTING/PUBLISHING AND SALE OF TEXT BOO KS AND OTHER TEACHING MATERIAL, ETC. CONSTITUTE BUSINESS ACTIVIT Y AND THE SAME COULD NOT BE CONSIDERED AS CHARITABLE ACTIVITY AS P ER LAW. 3. THE ASSESSEE CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 5 ITA NO. 674/DEL/2014 5. IT IS THE ARGUMENT OF THE LD. DR THAT THOUGH INI TIALLY THE TRIBUNAL HELD THE ASSESSEE TO HAVE BEEN CONDUCTING THE CHARITABLE ACTIVITIES, BUT SUBSEQUENTLY FOR THE YEARS BETWEEN 2006-07 TO 2009-10 HELD OTHERWISE AND IN VIEW OF THE FACT THAT THE ASSESSEE HAS BEEN MAKING HUGE PROFITS IN THEIR ACTIVITIES IT IS NOT AT ALL REASONABLE TO HOLD THEM AS INVOLVED IN THE CHARITAB LE ACTIVITIES. PER CONTRA, IT IS THE ARGUMENT OF THE LD. DR THAT T HIS FINDING OF THE ASSESSING OFFICER IS PURELY BASED ON CONJECTURES AN D SURMISES AND WITHOUT APPRECIATING THE FULL FACTS OF THE CASE AND FOR ARRIVING AT THE ABOVE CONCLUSION THE ASSESSING OFFICER HAS WRON GLY APPLIED THE RATIO OF HONBLE SUPREME COURT DECISION IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHNA TRUST V CIT 101 ITR 234 AS I T ONLY SUPPORTED THE CASE OF THE ASSESSEE SOCIETY. THE RE LIANCE PLACED BY THE AO ON OTHER CASES IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE SOCIETY. ACCORDING TO THE LD. AR, ASSESSING OFFICER HAS ALLEGED THAT THERE WAS A HUGE PROFIT ON THE SAL E OF BOOKS AGAINST THE COST WITHOUT APPRECIATING THE FACT THAT THE SOCIETY IS FULLY OWNED BY THE DELHI GOVERNMENT IMPLEMENTING TH E GOVERNMENT POLICIES AND IS ENGAGED IN EDUCATIONAL A CTIVITIES AND WITHOUT ANY PROFIT MOTIVE, AND, THEREFORE, CONCLUSI ON DRAWN BY THE 6 ITA NO. 674/DEL/2014 ASSESSING OFFICER IS ARBITRARY, ILLEGAL, UNJUSTIFIE D AGAINST THE PROVISIONS OF LAW. HE FURTHER SUBMITS THAT THE LD. ASSESSING OFFICER HAS ALLEGED THAT THE ASSESSEE WAS SUPPOSED TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS SINCE ACTIVITY OF PRODUC TION, PUBLICATION AND DISTRIBUTION OF TEXT BOOKS IS NOT A BUSINESS ACTIVITY AND IS COMPOSITE PART OF MAIN OBJECTIVE OF ADVANCEMENT OF EDUCATION PARTICULARLY ELEMENTARY AND SECONDARY EDU CATION, THE ASSESSEE IS NOT REQUIRED TO MAINTAIN SEPARATE BOOKS OF ACCOUNT U/S 11(4A) OF THE INCOME TAX ACT. IT IS FURTHER SU BMITTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDE D THE APPEAL IN THE ASSESSMENT YEAR 2006-07, 2007-08, 2008-09 AN D 2009-10 VIDE APPEAL NO. 236/08-09 DATED 22.02.2010, NO. 100 /09- 10 DATED 31.03.2010 AND VIDE APPEAL NO. 195/11-12/1579 DATED 18.10.2012 AND VIDE APPEAL NO. 195/11-12/1579 DATED 18.10.2012 IN THE OWN CASE OF THE ASSESSEE, WHEREIN THE LD. CIT(A) HAD HELD THAT THE ACTIVITIES OF THE SOCIETY CLEARLY FALL WITHIN THE PROVISIONS OF SECTION 11 & 12 OF THE INCOME TAX ACT AND THE EXEMPTION WRONGLY DENIED TO THE ASSESSEE BE RESTOR ED AND HELD THE ASSESSEE SOCIETY HAS NOT CARRYING ON ANY BUSIN ESS ACTIVITIES. ACCORDING TO HIM THE ASSESSING OFFICER WAS NOT JUST IFIED IN DENYING 7 ITA NO. 674/DEL/2014 THE EXEMPTION TO THE SOCIETY WHICH IS ARBITRARY, IL LEGAL, UNJUSTIFIED AND AGAINST THE PROVISIONS OF LAW AND THE LD. ASSES SING OFFICER HAS ERRED IN LAW AND FACTS IN NOT FOLLOWING THE JUDGEME NT OF ITAT IN APPEAL NOS. 1239 (DEL) 1979 & 4448 (DEL) 1979 DATED 30.09.1980 FOR THE ASSESSMENT YEAR 1975-76 AND 1976 -77 IN ASSESSEES CASE IN WHICH IT HAS BEEN HELD THAT THE ASSESSEE SOCIETY IS AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME TAX ACT. IT IS SUBMITTED THAT THE ASSES SEE SOCIETY IS NOT INVOLVED IN CARRYING OUT ANY ACTIVITY IN THE NA TURE OF TRADE, COMMERCE AND BUSINESS AND THE SOCIETY WAS ESTABLISH ED BY THE DELHI GOVERNMENT KEEPING IN VIEW THE AVOWED PURPOSE OF SPREADING EDUCATION, AS SUCH, THE ASSESSEE S ACTIV ITIES CLEARLY FALL WITHIN THE PROVISIONS OF SECTION 11 AND 12 AND THE ASSESSING OFFICER HAS WRONGLY DENIED THE EXEMPTION AND THE AS SESSEE SOCIETY IS ENTITLED U/S 11 READ WITH SECTION 2(15) OF THE INCOME TAX ACT. SHE SUBMITTED THAT EVEN IN RESPECT OF THE ASSE SSMENT YEARS 2006-07 TO 2009-10 IN ASSESSEES OWN CASE THE HONB LE HIGH COURT HELD THAT THE ASSESSEE HAS BEEN ENGAGED IN THE ACTI VITY OF EDUCATION U/S 2(15) OF THE ACT AND SINCE A PARTICUL AR EXEMPTION WAS EXTENDED TO THE ASSESSEE CONSISTENTLY FOR LONG 34 YEARS, IN THE 8 ITA NO. 674/DEL/2014 ABSENCE OF ANY CHANGE OF CIRCUMSTANCES THERE IS NO JUSTIFICATION FOR THE REVENUE TO TAKE A DIFFERENT VIEW. SHE PROD UCED BEFORE US A COPY OF THE HONBLE JURISDICTIONAL HIGH COURT IN IT A NO. 807 & 810 TO 812 OF 2015 DATED 03.05.2017. 6. WE HAVE CAREFULLY GONE THROUGH THE RECORD. THER E IS NO DENIAL OF THE FACT, AS OBSERVED BY THE HONBLE HIGH COURT, THAT FOR ABOUT 34 YEARS THE ASSESSEE HAS BEEN ENGAGED IN THE FIELD OF EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF TH E ACT AND CONSEQUENTLY ELIGIBLE THE EXEMPTION U/S 11 OF THE A CT. VIDE PARAGRAPH NOS. 20 TO 28 OF THE ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2006-07 TO 2009-10 THE HONBLE HIG H COURT, WHILE REFERRING TO THE DECISIONS IN SOLE TRUSTEE LO KA SHIKSHANA TRUST VS. COMMISSIONER OF INCOME TAX (1975) 101 ITR 234 (SC), ASSAM TEXT BOOK PRODUCTION & PUBLICATION CORPORATIO N LIMITED VS. CIT (2009) 319 ITR 317 (SC), CIT VS. RAJASTHAN STATE TEXT BOOK BOARD (2000) 244 CTR 667 (RAJ), SECONDARY BOAR D OF EDUCATION VS. ITO (1972) 86 ITR 408 (ORI), INSTITUT ION OF CHARTERED ACCOUNTANTS OF INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) (2012) 347 ITR 99 (DEL), COMMISSIONER OF INCOME 9 ITA NO. 674/DEL/2014 TAX VS. M.P. RAJYA PATHYA PUSTAK NIGAM (2009) 226 C TR 497 (MP), GENERAL OF INCOME TAX (EXEMPTIONS) (2014) 362 ITR 4 36 (DEL), EXAMINED THE QUESTION OF INTERPRETATION PLACED ON T HE WORD EDUCATION OCCURRING IN SECTION 2(15) OF THE ACT, AND REACHED THE CONCLUSION THAT MERELY BECAUSE THE ASSESSEE HAD GEN ERATED PROFITS OUT OF THE ACTIVITY OF PUBLISHING AND SELLING OF SC HOOL TEXT BOOKS, IT CANNOT BE SAID THAT THEY CEASED TO CARRY ON THE ACT IVITY OF EDUCATION AND BY FOLLOWING THE RULE OF CONSISTENCY, AS EXPLAINED IN PARASHURAM POTTERY WORKS LTD. VS. INCOME TAX OFFICE R (1977) 106 ITR 1 (SC), RADHASOAMI SATSANG SAOMI BAGH VS. COMMI SSIONER OF INCOME TAX (1992) 193 ITR 321 (SC), HOYSTEAD VS. C OMMISSIONER OF TAXATION (1926) AC 155 (PC), CIT VS. EXCEL INDUS TRIES (2013) 262 CTR 261 (SC) THE HONBLE HIGH COURT HELD THAT T HE REVENUE IN THE ABSENCE OF ANY CHANGE OF CIRCUMSTANCES CANNOT T AKE A DIFFERENT VIEW FROM THAT TAKEN IN THE EARLIER YEARS . NOW TURNING TO THE CASE ON HAND IT IS NOT THE CASE OF REVENUE THAT ANY CHANGE IN THE CIRCUMSTANCES HAD TAKEN PLACE. WE, THEREFORE, WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AGREE WITH THE SUBMISSIONS MADE BY THE L D. AR AND RETURN A FINDING THAT THE ASSESSEE HAS BEEN ENGAGED IN THE ACTIVITY 10 ITA NO. 674/DEL/2014 OF EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND CONSEQUENTLY THEY ARE ENTITLED FOR AN EXEMPTION U/S 11 OF THE ACT. WITH THIS VIEW OF THE MATTER, WE DISMISSED THE GROU NDS OF APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.08.2017 SD/- SD/- (R.S. SYAL) (K. NARSIM HA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 11.08.2017 *KAVITA ARORA COPY FORWARDED TO: 1. ASSESSEE 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 09.08.2017 DRAFT PLACED BEFORE AUTHOR 10.08.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 11.8.17 APPROVED DRAFT COMES TO THE SR.PS/PS 11.8.17 KEPT FOR PRONOUNCEMENT ON 11.8.17 FILE SENT TO THE BENCH CLERK 11.8.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK.