TaxTMI 
TaxTMI 
2017 (11) TMI 2002
X X X X Extracts X X X X
X X X X Extracts X X X X
....f publication of books in Hindi language for post graduate student of Universities in India as per the Education Policy decision of the Ministry of Education & Social Welfare, Department of Education, Government of India. 3.1 The Board is functioning in public interest with no motive of profit or for profit. The Board is functioning under the management, Control & Supervision of the Government of Rajathan. As per the directions of Shiksha Aur Samaj Kalyan Mantralaya (Shiksha Vibhag), Bharat Sarkar, Delhi the assessee appellant was to carry on its activities under Centrally Sponsored Scheme of publication of books at the University level in different languages by the creation of a Revolving Fund. 3.2 The assessee appellant filed its return of income for the assessment year 2010-11 on 28.9.2009 and claimed exemption u/s 10(23)(iv) of the Act. 3.3 The respondent vide order dt. 30.11.2012 passed u/s 143(3) of the Act held that the assessee appellant's income is not earned on account of educational activities and hence no benefit can be granted u/s 10(23C)(iiiab) or u/s 10(23C)(iv) of the Act. The ld. AO also held that the assessee appellant is carrying on the publication and s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iv) shows that any University or other educational institution existing solely for educational purposes qualify under the clause. The University and the educational institution should not be for the purposes of profit. The second requirement is negative in nature, whereas the first requirement is positive. We cannot accept the contention of the Revenue and the reasoning given in the impugned order that the petitioner is not an educational institution because it is an examination body and its principal work is to conduct examination and charge examination fee, etc. The words "educational institution" used in Section 10(23C)(vi) and the phrase "educational purpose" have been interpreted and examined in several cases. We have a direct decision of Orissa High Court in the case of Secondary Board of Education v. ITO, MANU/OR/0151/1972 : (1972) 86 ITR 408 (Ori). The Secondary Board of Education was conducting examinations and a question arose whether it was an educational institute or not. It was held that the Secondary Board of Education exists solely for educational purpose and, therefore, an educational institution. The aforesaid Board had been created to control secondary education, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient. 8. When we apply the aforesaid principle to the admitted nature of activity undertaken by the petitioner, we have no hesitation in quashing the impugned order dated 08.10.2008 and holding that the petitioner is an educational institution. Writ of certiorari is accordingly issued. The petitioner/ authorised representative will appear before the competent authority on 10.04.2012, when a hearing will be provided and thereafter an order in accordance with law will be passed within 60 days of the said hearing. We may clarify that we have not examined other issues and with reference to the order dated 23.03.2010 rejecting the application filed by the petitioner under Section 10(23C)(iv) of the Act for exemption. These issues and questions are left open. The writ petition is disposed of. No costs. 6.1 He also relied....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of its income and the pattern of its expenditure. The ITAT failed to notice that the surplus amount was again ploughed back into the main activity of 'education'. The question to be asked was whether the activity of the Assessee contributed to the training and development of the knowledge, skill, mind and character of students? In the considered view of the Court, the answer to that question had to be, in the facts and circumstances outlined above, in the affirmative. 6.2 He also relied upon the decision of Patna High Court in Bihar State Text Book Publication Corpn. vs. CIT (2011) 241 CTR 403 (Patna) wherein it has been held as under:- 7. The spirit of the quondam section 10(22) was to exempt the income of a university or other educational institutions existing solely for the educational purpose and not for the purpose of profit. As stated hereinabove, this provision has been omitted with effect from 1.4.1999, and has been substituted by section 10(23C) of the Act. It is evident on a perusal of the relevant provision of section 10(23C), that the spirit of exemption from taxability of the income of the university or other educational institution without profi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts trade and business, would then be in the nature of trade receipts and taxable. In other words, the basic question to be determined is whether a subsidy from payment from public funds is in the nature of capital or revenue. In the case of the former, it is not taxable, and is taxable in case of the latter. 6.3 He also relied upon the decision of Supreme Court in Assam State Text Book Production & Publication Corpn. vs. CIT, Gauhati (2009) 319 ITR 317 (SC) wherein it has been held as under:- 3. On going through the records, we find that the High Court has not taken into account the prior history of the case, particularly in the context of incorporation of the Corporation under the Companies Act, 1956, as a Government Company. Initially, as stated above, the assessee was a State-controlled Committee and Board, which were attached to the office of the Director of Public Instruction, State of Assam. It is only in the year 1972 that the Government Company got constituted under Section 617 of the Companies Act, 1956. That, prior to 1972, the entire funding for the working of the Committee/Board was done by the State of Assam and that even the ownership of the assets remaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der: 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 respondentassessee, is used for any other purpose or distributed to other members. The Commissioner of Income-tax (Appeals) as well as the Tribunal have noticed that even if some amount remains surplus, that is utilised only for the purposes of education. Thus, having regard to the concurrent findings of fact recorded by the Commissioner of Income-tax (Appeals) and the Tribunal and also taking note of the letter of the Central Board of Direct Taxes 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 consideration much less a substantial question of law. 6.4 He also relied upon the decision of Rajasthan High Court in CIT vs. Rajasthan State Text Book Board (2000) 113 Taxman 204 (Raj.) wherein it has been held as under:- "It could be seen from the orders of the Commissioner (Appeals) as well as the tribunal that, in a similar situation, in the case of Tamil N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ious year u/s 10(22). The ITO exercised his jurisdiction illegally in issuing the aforesaid notices which were liable to be quashed." 6.6 He also relied upon the decision of Madhya Pradesh High Court in CIT vs. Madhya Pradesh Rajya Pathya Pustak Nigam (2009) 318 ITR 497 (MP) wherein it has been 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. We have already referred to the memorandum of association and also stated about reasonings assigned by the CIT (Appeals) to deny the exemption and the analysis made by the Tribunal to dislodge the finding of the first appellate authority. It is worth noting that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ived by any person on behalf of-[iiiab) any university or other educational institution existing solely for educational purposes and not for purposes of profit and which is wholly or substantially financed by the Government; or..." Hence in light of the above the undersigned and the opinion of the then AO rant it is reported that no exemption u/s 10(23C)(iiiab) should allowed to the assessee. In continuation with the letter dt. 23.12.2013, it is further clarified that the assessee's submission that it should be allowed exemption u/s 10(23C) (iiiab) and 10(23C)(iv) and addition so made by the AO may also be deleted is not correct on the basis of following issues:- 1. The assessee in its return of income has no where claimed exemption u/s 10(23C)(iv) rather it has claimed exemption u/s 10(23C)(iiiab). (copy of computation enclosed). Hence, the assessee cannot be granted such exemption without claiming it. 2. The assessee is also not eligible for exemption u/s 10(23C)(iiiab) as discussed in letter dt.23.12.2013. 3. The assessee is not eligible for exemption u/s 10(23C)(iv) because for that following two requirements should not be complied w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling. 8.1 He also relied upon the decision of Rajasthan High Court in Commissioner of Income Tax vs. Maharaja Sawai Mansinghji Museum Trust reported in 1988 (169) ITR 379 wherein it has been held as under:- 7. It is amply clear from a bare reading of it that the "educational institution" must exist "solely" for educational purposes. "Solely' means exclusively and not primarily. Simply because certain persons may add something to their knowledge by visiting the museum, it cannot be said that the museum exists "solely" for educational purposes. The emphasis in Section 10(22) is on the word "solely". 8.2 He contended that the appeal deserves to be dismissed. 9. We have heard counsel for the parties. 10. Before proceeding with the matter, it will not be out of place to mention that Rajasthan Hindi Granth Academy is establishe....