2015 (11) TMI 743

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....on by the assessee are in the nature of education despite it being a regular commercial/business activity. 3. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the activities of the assessee are not covered by the first proviso to Section 2(15) of the Income Tax Act, 1961. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the activities of sale of books and cassettes is an incidental activity without surplus motive despite the clear wording in the first proviso to Section 2(15), stating that the nature of use or application or retention of income from such activity is immaterial". 2. The solitary issue raised in this appeal, by way of aforesaid grounds, is with regard to applicability of proviso to section 2(15) of the Act, mainly on the income earned by the assessee trust from of sale/distribution of books, cassettes and CDs. 3. Brief facts, as culled out from the assessment order are that the assessee trust is engaged in Jeevan Vidya Philosophy by organizing discourses at different places and publishing books, cassettes and CDs on these subjects. The assessee....

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....as engaged in education. It was submitted that main object of the assessee is to spread knowledge, information and awareness by providing discourses and science and philosophy of Jeevan Vidya of Sadguru Shri Wamanrao Pai. For the purpose of attainment of this object, the activity of publishing and distributing books and cassettes of preachings of Sadguru was incidental to the object and integral part of the main object of the assessee trust. It was further submitted that merely because any charitable activity was carried out an organized manner, it does not make the activity to be trade, commerce or business. It was further submitted that there was 'no profit motive' of the assessee trust and all the activities were done in the charitable manner only. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of CST vs Sai Publication Fund, 258 ITR 70, wherein Hon'ble Court held that if the main activity of the trust is not business, then any transaction, incidental or ancillary would not amount to business, unless underlying intention is "profit motive". It was further submitted that the publication for the purpose of spreading message or public awareness of the prea....

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....he submission made by both the sides and the material placed before us for our consideration and also gone through various judgments relied by both the parties as well as by the Ld. CIT(A) while adjudicating the appeal of the Revenue on the issues involved. In our considered opinion, first issue to be decided here is whether the assessee is engaged in the activity of imparting education. If it is so, whether the newly inserted first proviso to section 2(15) of the Income-tax Act, can be applied to the facts of this case, and, if this proviso cannot be applied to the facts of this case, then whether the aforesaid activity of distribution of books, cassettes and CDs by the assessee trust can be said to be the trade, commerce or business, in the given facts and circumstances of the case or not. 8. We have pondered over all the issues. It is noticed that the CIT(A) has made detailed analysis in deciding all these three issues. 8.1 In our considered opinion, based upon analysis of the facts of this case, the assessee trust is engaged in the field of 'education'. In our considered view, based upon our understanding of law, there is no merit in the order of Assessing Officer to give....

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....uted as integral part of that activity, to attain the main object and without any profit motive, in that case it cannot be said that this activity has been carried out in the nature of trade, commerce or business, and accordingly, first proviso to section 2(15) shall not be applicable and the exemption granted to the assessee trust cannot be withdrawn on that reason alone. 9.1 In this regard, we shall take first guidance from the judgment of Hon'ble Supreme Court in the case of CST vs Sai Publication Fund 258 ITR 70 (SC). The Brief facts in this case were that this trust was set up by some devotees of Sai Baba of Shirdi for spreading his massages. In pursuance to this object, the assessee trust published and distributed books, pamphlets and other literatures containing massages of Sai Baba under the aegis of "Sai Publication", distributed by the trust to the devotees of Sai Baba, at cost price. Under these circumstances, a question arose whether this activity would amount to carrying on the business by the assessee trust. In that context, Hon'ble Apex Court held that if the main activity is not business, then any transactions incidental or ancillary would not normally amount to ....

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....sses and for holding interviews with respect to campus placement, the said activities cannot be stated to be rendering service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which as held earlier are not trade, commerce or business". In this case also, the rendition of services by the assessee is viewed in conjunction with the overall objectives of the assessee and once it is seen that these services are not in the nature of trade, commerce or business per se, the mere charging of fees for services so rendered, which were held to subservient to the charitable objectives, is held to have no effect on the overall charitable objects of the assessee; 10. Coming back to the facts of the case, it is noted that Ld. CIT(A) has examined the facts in detail and has given detailed findings with respect to nature of activities carried out by the assessee and eligibility of the assessee for availing exemption u/s 11 & 12, keeping in view nature of these activities and latest position of law applicable. It is seen that, as noted by Ld. CIT(A) in para 8.1, one of the objects of the Trust reads as fo....

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.... and expenditure account. If those donations are excluded then the trust would have suffered a deficit. This is an indicator of the fact that the activity undertaken was not with intent to make a profit. 8.7 Further the pricing of the books as well as the CD (books priced at Rs. 5 to Rs. 60 and CD at Rs. 50) would indicate that the intent was proportion of the teachings of the Sadguru and intent was not to make a profit. In fact the number of judicial pronouncements adverted to by the learner representative have clearly made out a case that presence of an intent to make profit is of paramount importance and it is a significant condition though one may urge that it is not the only condition. 8.8. On a careful consideration of facts I have come to the conclusion that the said activity is intrinsic to the main objects of the trust and not a business. Therefore, this ground (Ground no. 7) of the appellant is also allowed. The assessing officer is directed to allow the exemption under section 11 to the appellant trust". 12. We find that findings of Ld CIT(A) are factually correct and in line with the latest position of law, as discussed above. It is further analyzed by us that,....