DCIT(E), circle-1(1), New Delhi V. Delhi Bureau of Text Books, New Delhi

ITA 7075/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4339 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MANINDER KAUR
• Assessee Lawyers: ANUBHA MALWANI
• Keywords: Rule of consistency
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.7075/DEL/2018 ASSESSMENT YEAR: 2013-2014 DCIT(E), CIRCLE-1(1), NEW DELHI. VS. DELHI BUREAU OF TEXT BOOKS, 25/2, INSTITUTIONAL AREA, PANKHA ROAD, D-BLOCK, JANAKPURI, NEW DELHI. TAN/PAN: AAATD4122G (APPELLANT) (RESPONDENT) APPELLANT BY: DR. MANINDER KAUR, SR.D.R. RESPONDENT BY: MS. ANUBHA MALWANI, CA DATE OF HEARING: 27 09 2021 DATE OF PRONOUNCEMENT: 27 09 2021 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 09.08.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XL, DELHI FOR THE ASSESSMENT YEAR 2016-17. 2. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSE E WAS ACCORDED REGISTRATION U/S.12A VIDE LETTER/ORDER DAT ED 27.12.1973. THE ASSESSEE SOCIETY WAS ALSO NOTIFIED U/S.10(23)(C)(IV) AS IT WAS ENGAGED IN PUBLICATION OF TEXT BOOKS FROM CLASS I TO VIII FOR GOVERNMENT SCHOOLS, MCD SC HOOLS, NDMC SCHOOLS AND DELHI CANTONMENT SCHOOLS, ITS BOOK S HAS BEEN PUBLISHED AND SOLD AT SUBSIDIZED RATES WITH NO MINAL I.T.A. NO.7075/DEL/2018 2 PROFIT TO THE STUDENTS AND WHOLESALE DEALERS. THE A SSESSEE- SOCIETY ALSO CLAIMS TO HAVE DISTRIBUTED FREE BOOKS/ READING MATERIAL AND SCHOOL BAGS TO NEEDY STUDENTS. THE SOC IETY IS RUNNING AND MANAGED BY THE OFFICIALS OF EDUCATION DEPARTMENT OF GOVERNMENT OF DELHI. THE ASSESSING OF FICER NOTED THAT THE ASSESSEE HAD SHOWN SALE OF BOOKS OF RS.52,11,53,089/- AGAINST COST OF RS.33,43,20,570/- AND OTHER EXPENDITURE OF RS.1,67,52,841/-. THUS, THERE WAS A SURPLUS/PROFIT OF MORE THAN RS.17 CRORE WHICH IS AL MOST A PROFIT MARGIN OF 32.63%. THE ASSESSING OFFICER HELD THAT SINCE ASSESSEE HAS EARNED PROFIT, THEREFORE, IF EVEN THE REGISTRATION HAS BEEN GRANTED TO THE ASSESSEE U/S.12A THAT IS NO T SACRO SANCT, AND THEREFORE, HE HAS SATISFIED THAT ENTIRE SALE OF PURCHASE OF BOOKS IS A BUSINESS ACTIVITY NOT ELIGIB LE FOR PRESUMPTION U/S. 11 AND 12 OF THE ACT. ACCORDINGLY, HE COMPUTED THE INCOME AS BUSINESS PROFIT AND DETERM INED THE TAXABLE INCOME AT RS.21,25,36,966/-. FROM THE PERUS AL OF THE IMPUGNED APPELLATE ORDER, IT IS SEEN THAT ISSUE HAD ARISEN IN THE CASE OF THE ASSESSEE IN RESPECT OF EARLIER YEAR S STARTING FROM ASSESSMENT YEARS 2006-07 TO 2009-10 WHICH ARE PENDING BEFORE THE HONBLE HIGH COURT AND FOR THE ASSESSMENT YEAR 2010-11 WHICH WAS BEFORE THE ITAT. FURTHER ALREADY HONBLE HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND FOLLOWING THIS ORDER OF THE HONBL E DELHI HIGH COURT. THIS TRIBUNAL HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN THE EARLIER YEARS. THE RE LEVANT OBSERVATION OF THE HONBLE DELHI HIGH COURT AND THE TRIBUNAL I.T.A. NO.7075/DEL/2018 3 HAS BEEN INCORPORATED IN THE IMPUGNED APPELLATE ORD ER AND FOLLOWING THE SAME THE LD. CIT(A) HAS ALLOWED THE A SSESSEES APPEAL. 4.1.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND A LSO THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO REFERRED TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN ITA NOS . 807,810 TO 812 OF 2015 AND CM NO. 24170 OF 2015 VIDE ORDER DAT ED 03.05.2017 [(2017) 81 TAXMANN.COM 412 (DELHI)] AND ORDER OF THE HON'BLE ITAT DELHI IN APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2010-11 IN ITA NO. 674/DEL/2014. TIRE HON'BLE DELHI HIGH COURT IN THE ORDER DATED 03.05.2017 (SUPRA) HAVE HE LD AS UNDER: '27. REVERTING TO THE CASE ON HAND, THE COURT FINDS THAT WHAT THE ITAT HAS HELD IN THE IMPUGNED ORDER IS CONTRARY TO THE SETTLED LAW AS EXPLAINED IN THE ABOVE DECISIONS. TH E ITAT CAME TO THE ERRONEOUS CONCLUSION THAT MERELY BECAUSE THE ASSESSEE HAD GENERATED PROFITS OUT OF THE ACTIVITY OF PUBLIS HING AND SELLING OF SCHOOL TEXT BOOKS IT CEASED CARRYING ON THE ACTIVITY OF' EDUCATION.' THE ITAT FAILED TO ADDRESS THE ISSUE IN THE BACKGROUND OF THE SETTING UP OF THE ASSESSEE, ITS C ONTROL AND MANAGEMENT AND THE SOURCES OF ITS INCOME AND THE PA TTERN OF ITS EXPENDITURE. THE ITAT FAILED TO NOTICE THAT THE SURPLUS AMOUNT WAS AGAIN PLOUGHED BACK INTO THE MAIN ACTIVI TY OF 'EDUCATION'. THE QUESTION TO BE ASKED WAS WHETHER T HE ACTIVITY OF THE ASSESSEE CONTRIBUTED TO THE TRAINING AND DEV ELOPMENT OF THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENT S? IN THE CONSIDERED VIEW OF THE COURT, THE ANSWER TO THAT QU ESTION HAD TO BE, IN THE FACTS AND CIRCUMSTANCES OUTLINED ABOV E, IN THE AFFIRMATIVE. 28. THE COURT, ACCORDINGLY, CONCLUDES THAT THE ITA T WAS INCORRECT IN SETTING ASIDE THE ORDER PASSED BY THE CIT (A) AND IN I.T.A. NO.7075/DEL/2018 4 DENYING EXEMPTION TO THE ASSESSEE UNDER SECTION 11 AND SECTION 12 OF THE ACT. THE ITAT ERRED IN HOLDING TH AT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE FELL UNDER T HE 4TH LIMB OF SECTION 2 (15) OF THE ACT, I.E., 'THE ADVANCEMENT O F ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' AND THAT ITS ACTI VITIES WERE NOT SOLELY FOR PURPOSE OF ADVANCEMENT OF' EDUCATION'. Q UESTIONS (I) AND (II) FRAMED BY THE COURT ARE, THEREFORE, ANSWER ED IN THE NEGATIVE, I.E., IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE. CONSISTENCY 29. ON THE ISSUE OF CONSISTENCY, THE COURT NOTES T HAT IN THE PRESENT CASE, CONTINUOUSLY FROM AYS 1971-72 TILL 20 05-06, EXEMPTION HAD BEEN GRANTED TO THE ASSESSEE UNDER SE CTIONS 11 AND 12 OF THE ACT. WHEN FOR AYS 1975-76 AND 1976-77 THE AO SOUGHT TO TAKE A DIFFERENT VIEW, THE ITAT REVERSED THAT VIEW AND THE DECISION OF THE ITAT WAS NOT CHALLENGED FURTHER BY THE REVENUE. APART FROM THE FACT THAT THE ASSESSEE WAS EARNING MORE PROFITS FROM ITS ESSENTIAL ACTIVITY OF EDUCATI ON, THERE WAS NO CHANGE IN THE CIRCUMSTANCES CONCERNING THE SAID ACTIVITY SINCE AY 2005-06 TO WARRANT A DIFFERENT APPROACH IN THE AYS IN QUESTION. 33. THE DECISIONS RELIED UPON BY MR. KAUSHIK APPEAR TO HAVE TURNED ON THEIR PECULIAR FACTS. THE QUESTION THAT A ROSE WAS WHETHER MERELY BECAUSE THE REVENUE DID NOT FILE APP EALS AGAINST THE DECISIONS AGAINST IT IN SOME OF THE AYS , IT COULD BE PRECLUDED FROM CHALLENGING THE DECISIONS ON THE ISS UE AGAINST IT IN THE SUBSEQUENT AYS. THE FACTS HERE ARE STARK, TH OUGH. HAVING ADOPTED A CONSISTENT STAND FOR OVER 34 YEARS, AND W ITH THERE BEING NO CHANGE IN THE CIRCUMSTANCES, THERE WAS NO JUSTIFICATION FOR THE REVENUE TO TAKE A DIFFERENT VIEW IN THE MAT TER ONLY BECAUSE IT WAS POSSIBLE TO DO SO.' I.T.A. NO.7075/DEL/2018 5 4.1.3 FOR ASSESSMENT ORDER 2010-11, IN APPELLANT'S OWN CASE, THE HON'BLE ITAT DELHI IN ITA NO. 674/DEL/2014 HAVE HELD AS UNDER: '6. WE HAVE CAREFULLY GONE THROUGH THE RECORD. THER E IS NO DENIAL OF THE FACT, AS OBSERVED BY THE HON'BLE HIGH COURT, THAT FOR ABOUT 34 YEARS THE ASSES SEE HAS BEEN ENGAGED I N THE FIELD OF EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND CONSEQUENTLY ELIGIBLE THE EXEMPTION U/S 11 OF THE A CT. VIDE PARAGRAPH NOS. 20 TO 28 OF THE ORDER IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 2006-07 TO 2009-10 THE HON'BLE HIGH COURT, WHILE REFERRING TO THE DECISIONS IN SOLE TRU STEE (1975) 101 ITR 234 (SC), ASSAM TEXT BOOK PRODUCTION & PUBL ICATION CORPORATION LIMITED VS. CIT (2009) 319 ITR 317 (SC) , CIT VS. RAJASTHAN STATE TEXT BOOK BOARD (2000) 244 CTR 667 (RAJ), SECONDARY BOARD OF EDUCATION VS. ITO (1972) 86 ITR 408 (ORI), INSTITUTION OF CHARTERED ACCOUNTANTS OF INDIA VS. D IRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) (2012) 347 ITR 9 9 (DEL), COMMISSIONER OF INCOME TAX VS. M.P. RAJYA PATHYA PU STAK NIGAM (2009) 226 CTR 497 (MP), GENERAL OF INCOME TA X (EXEMPTIONS) (2014) 362 ITR 436 (DEL), EXAMINED THE QUESTION OF INTERPRETATION PLACED ON THE WORD 'EDUCATION' OCCUR RING IN SECTION 2(15) OF THE ACT, AND REACHED THE CONCLUSIO N THAT MERELY BECAUSE THE ASSESSEE HAD GENERATED PROFITS OUT OF T HE ACTIVITY OF PUBLISHING AND SELLING OF SCHOOL TEXT BOOKS, IT CANNOT BE SAID THAT THEY CEASED TO CARRY ON THE ACTIVITY OF EDUCAT ION AND BY FOLLOWING THE RULE OF CONSISTENCY, AS EXPLAINED IN PARASHURAM POTTERY WORKS LTD. VS. INCOME TAX OFFICER (1977) 10 6 ITR 1 (SC), RADHASOAMI SATSANG SAOMI BAGH VS. COMMISSIONER OF I NCOME TAX (1992) 193 ITR 321 (SC), HOYSTEAD VS. COMMISSIO NER OF TAXATION (1926) AC 155 (PC), CIT VS. EXCEL INDUSTRI ES (2013) 262 CTR 261 (SC) THE HON'BLE HIGH COURT HELD THAT T HE REVENUE IN THE ABSENCE OF ANY CHANGE OF CIRCUMSTANCES CANNO T TAKE A I.T.A. NO.7075/DEL/2018 6 DIFFERENT VIEW FROM THAT TAKEN IN THE EARLIER YEARS . NOW TURNING TO THE CASE ON HAND IT IS NOT THE CASE OF REVENUE T HAT ANY CHANGE IN THE CIRCUMSTANCES HAD TAKEN PLACE. WE, TH EREFORE, WHILE RESPECTFULLY FOLLOWING THE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT AGREE WITH THE SUBMISSION S MADE BY THE LD. AR AND RETURN A FINDING THAT THE ASSESSEE H AS BEEN ENGAGED IN THE ACTIVITY OF EDUCATION WITHIN THE MEA NING 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 T HE MATTER, WE DISMISSED THE GROUNDS OF APPEAL OF THE REVENUE.' 4.14. SINCE THE CASE ARE SIMILAR TO THOSE FOR ASSE SSMENT YEARS 2006-07, 2007-08, 2008-09 AND 2010-11, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT AND HO NBLE ITAT DELHI, IT IS HELD THAT THE ASSESSEE HAS BEEN ENGAGE D IN THE ACTIVITY OF THE EDUCATION WITHIN THE MEANING OF SEC TION 2(15) AND CONSEQUENTLY IT IS ENTITLED FOR EXEMPTION UNDER SECTION 11. THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTIO N UNDER SECTION 11 WITH ALL CONSEQUENTIAL BENEFITS. GROUND OF APPEAL NO.1 IS ALLOWED. 3. IN VIEW OF THE AFORESAID FACTS PRECISELY ON SIMI LAR ISSUE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TH E ASSESSEE FOR THE EARLIER YEARS HAVE HELD THAT ASSESSEE IS EL IGIBLE FOR EXEMPTION U/S.11 AND 12 OF THE ACT. FOLLOWING THE S AME, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE BY GRANTING EXEMPTION U/S.11 AND 12. EVEN DURING THIS YEAR ALSO, THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTA NCES OF THE CASE AND SIMILAR REASONS HAVE BEEN GIVEN BY THE ASS ESSING OFFICER, AND THEREFORE, CONSISTENT WITH THE EARLIER ORDER PRECEDENTS WHICH HAS BEEN FOLLOWED BY THE LD. CIT(A ), WE I.T.A. NO.7075/DEL/2018 7 DIRECT THE ASSESSING OFFICER TO ALLOW THE EXEMPTION U/S.11 AND 12. 4. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMIS SED. ABOVE DECISION WAS ANNOUNCED ON CONCLUSION OF VIRTU AL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 27 TH SEPTEMBER, 2021 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 27/09/2021 PKK: