TaxTMI 
TaxTMI 
2021 (4) TMI 447
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....sst Year 2011-12 is taken up for adjudication and the decision rendered thereon would apply with equal force for Asst Year 2012-13 also except with variance in figures. 2. The assessee has raised the following grounds of appeal:- "This appeal is against the order of the learned Commissioner of Income tax (Appeals), Mumbai - 1 and relates to the Assessment Year 2011-2012, on the following grounds each of which is without prejudice to any other: 1. The learned CIT (Appeals) erred in holding that the Appellant Trust's activities did not fall within the provisions of sections 11 - 13 of the Act, the said activities being charitable in nature as per section 2(15) of the Act. 2. The learned CIT (Appeals) erred in confirming and the Assessing Officer erred in holding that the activities carried out by the Appellant Trust do not fall within the meaning of the word "education" in section 2(15) of the Act. 3. The learned CIT (Appeals) erred in confirming and the Assessing Officer erred in holding that activities of the Trust are in the nature of "advancement of any other object of general public utility". 4. The CIT (Appeals) erred in holdi....
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..... 2(15) of the Act, which defines the expression 'Charitable Purpose' and accordingly, the assessee would be hit by the proviso inserted thereon from Asst Year 2009-10 onwards. The ld. AO made the following observations in his assessment order:- i. During the course of assessment proceedings the assessing officer observed that the activities of the assessee are primarily in the nature of "advancement of any other object of general public utility only. Therefore, the assessee was issued show cause notice which is reproduced in para 3 of the assessment order. In response to the said notice the assessee vide letter dated 30.12.2013 submitted reply which is reproduced in para 3.1 of the assessment order. ii. The assessing officer after quoting the provisions of Section 2(15) of the Income Tax Act, 1961 in the assessment order has also reproduced Clause 7 of 'OBJECTS OF THE TRUST of assessee's trust deed in the assessment order However, after analyzing the activity of the assessee, it was noticed that the assessee is primarily engaged in doing publication and selling of the various books and CDs relating to various field. iii. AO also examined the claim of the a....
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.... the object in the deed only as a convenient cloak to conceal and serve the real and dominant purpose which was to run a profitable business without paying the tax on it. Mere making of profit as a consequence or incident of altruistic activity is not decisive of the real purpose or object of the activity, so also the carrying on of a business for profit does not cease to be so merely because losses are actually incurred in certain ms because those who carry it on call it "education". It seems that the educational effects of a publishing business are only indirect, problematical, and quite incidental so that, without imposing any condition or qualification upon the nature of information to be disseminated or material to be published, the mere publication of views cannot be said to serve a purely or even a predominantly educational purpose in its ordinary and usual sense. 3.2. We find that based on the aforesaid parameters concluded that the assessee trust is not engaged in any activity which can be constituted as 'education' and that it is merely engaged in publishing and selling of books and CDs which does not fall within the term 'education'. The ld. AO also ob....
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.... Royalty 42,750 11 Commission on Sale 3,34,155 12 Advertisement and Publicity 40,600 13 Provision for Doubtful Debts 2,25,35,912 3.3. From the aforesaid income and expenditure account, the ld. AO observed that the concentration of the assessee is on the activity of publishing of books which account for 59.44% of its total income and 94.30% of its total expenditure under the head 'educational' and accordingly concluded that the activities of the trust falls in the category of 'advancement of any other object of general public utility' u/s. 2(15) of the Act. We find that the ld. AO also observed that the assessee is engaged only in publication and selling of books & CDs of various kinds which is commercial in nature having a profit motive. Accordingly, the ld. AO concluded that the assessee is not entitled for exemption u/s. 11 of the Act in respect of surplus derived by the trust in its income and expenditure account and accordingly sought to bring to tax the sum of Rs. 20,46,825/- as a regular private person engaged in commercial activities. 3.4. We find that t....
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....t all. It was vehemently pleaded that the activities of the assessee are in the ordinary course of advancement/achievement of its educational objects which includes publishing of educational books and magazines/journals on the subjects of art, culture and literature. The books published by the assessee trust find place in college libraries and universities and act as a reference material for academic courses and are widely used by the students undertaking special studies in the field of Indian Art & Culture. It was also stated that the book of Shri Rabindranath Tagore enabled the trust to fetch some marginal surplus due to various grants received for the same because it was a commemorative publication. In certain cases, due to the demand, the assessee trust reprinted the books. Since substantial cost of research and designing was incurred in earlier years, the books reprinted result in marginal surplus in the year of sale of those books. The assessee trust published quarterly magazines/journals during the year, containing serious information about various facets of Indian Art, the cultural events of India etc. This activity of publishing of books was carried out without any commerc....
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....haritable purposes Without prejudice to the generality of die foregoing objects or' purposes, the following shall be deemed to be the principal objects of the Trust: 7.1 Propagation, research, advancement, preservation and education in all fields of art, science/literature, including but not limited to painting, sculpture, weaving, ceramics, crafts, design, photography, theatre, cinema, dance, music, architecture, archaeology, history, natural history and all related historical, geographical and social sciences and disciplines with special reference to the Indian subcontinent but more widely to Asia, and in particular the spread of knowledge in the aforesaid fields by publication of magazines, books, papers, brochures, journals, catalogues, calendars, diaries, production of films or promulgation by any other media now known or hereafter devised and by any other means and programmes; 7.2 To work towards educative purposes including but not limited to arrangements for talks, lectures, seminars, courses, assistance to scholars, teachers, universities, colleges, schools or other educational institutions, assistance to museums, starting and establishment of such in....
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.... College Library Krishna and Navagunjara Marg Bol. 54 Issue 1 5 31/05/2011 Bansari Shah, CEPT university, Ahmedabad Bharatnatayam 6 08/04/2015 Yashwaswini Sharma, Cardiff University Silent Splendour: Places of the Deccan 7 14/08/2015 Concordia University, Montreal Temple Towns of Tamil Nadu b) Articles from books published by assessee trust used by various universities as part of its curriculum - enclosed in pages 17 to 69 of the paper book dated 18.12.2017. The details of the same are as under:- (i) Book titled as 'The Idea of Delhi' edited by Romi Khosla together with picturesque beauty of Delhi with its write up - enclosed in pages 17 to 31 of the paper book dated 18.12.2017. (ii) Book on 'Temple Towns of Tamil Nadu' - enclosed in pages 32 to 33 of the paper book dated 18.12.2017. (iii) Book on 'Persian Masters-five centuries of painting' - enclosed in pages 34 to 51 of the paper book dated 18.12.2017 (iv) Book on 'The Flowering of a Foreign Faith - New Studies in Chinese Buddhist Art' - enclosed in pages 52 to 67 of the paper book dated 18.12.2017 (v) Book on &....
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....e Act, the applicability of proviso to section 2(15) of the Act has no role to play as the same is applicable only if the charitable object is 'advancement of any other object of general public utility'. Reliance in this regard is placed on the Circular of Central Board of Direct Taxes (CBDT) vide Circular No. 11/2008 dated 19.12.2008. 3.9. We find that the entire grants received for publications are also reflected as 'Sales' in the Income and Expenditure Account of the assessee. Now whether the publication and sale of books and magazines/journals could be construed as charitable in nature need to be ascertained. We find that this issue has been squarely addressed by the Hon'ble Delhi High Court in the case of Delhi Bureau of Text Books vs. Director of Income Tax (Exemptions) reported in 394 ITR 387 (Del) wherein it was held that the assessee society engaged in printing, publication and distribution of school text books at subsidized rates or even free and generated profits out of these activities, it could not be concluded that assessee ceased carrying on charitable activity of education. We find that this judgment had duly distinguished the case law relied ....
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....its inception, i.e., from AY 1971-72 onwards. The fact that the Assessee is a non-profit organisation is not in dispute. Its essential activities are administered by the BODs comprising of officers of the Government of India as well as GNCTD, in its ex officio capacity. The textbooks are provided by the Assessee to the students at subsidized rates. Even the textbooks books, reading materials and school bags are being distributed free to deserving students. The essential activity of the Assessee is connected with 'education' and nothing else. 21. In Sole Trustee, LokaShikshana Trust (supra), the Supreme Court explained as under:-- "The sense in which the word "education" has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word "education" has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire....
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.... its income during the relevant assessment years was only from publishing and sale of text books." The High Court construed this as 'profit-earning activity'. 23.4 The Supreme Court disagreed with the High Court. It noted that "the aim of the said Corporation is to implement the State's policy on education". It took note of the fact that in the year 1975, the CBDT had granted exemption under Section 10(22) of the Act to the Tamil Nadu Text Books Society, which had performed activity similar to the Assessee. The Supreme Court also referred to the decision in Rajasthan State Text Book Board (supra) as well as the decision of the Orissa High Court in Secondary Board of Education (supra). It concurred with the approval of the following operative portion of the judgment in Rajasthan State Text Book Board (supra): "It is not disputed before us that the aims and objects of the Tamil Nadu Text Book 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 Commissioner of Income-tax (Appeals) as well....
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....y narrow view had been taken that the Institute was holding coaching classes and that this amounted to business" and that therefore, 'the question whether the Institute carried on business had not been examined with proper perspective." 25. In CIT v. M.P. Rajya Pathya Pustak Nigam [2009] 181 Taxman 50 the Madhya Pradesh High Court held as under: "17. From a perusal of the aforesaid decisions, it is lucid that for the entitlement for getting exemption for the assessment year, it is required to see the activities of the Assessee. That is the acid test. If the income/profit is applied for non-educational purposes, it is decided only at the end of the financial year. It is to be seen whether the Assessee is engaged in any kind of educational activities. The authorities which we have referred to above have laid down the criteria under what circumstances an Assessee can claim exemption being involved in educational purposes and how the income is spent." 26. In Council for the Indian School Certificate Examinations v. DGIT (Exemptions) [2014] 362 ITR 436/[2012] 20 taxmann.com 505/206 Taxman 466 (Delhi) the Court held the Council for the Indian School Certifi....