2020 (12) TMI 1034 - AT - Income Tax

Exemption of income u/s 11 12 - Whether activities of the assessee, like developing/ printing/publishing sale 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) ? - HELD THAT - As decided in own case 2017 (5) TMI 430 - DELHI HIGH COURT the assessee has been engaged in the activity of the education within the meaning of section 2(15) even for the assessment years 2011-12, 2012-13 2014-15 and consequently it is entitled for exemption under section 11. The Assessing Officer is directed to allow exemption under section 11 with all consequential benefits. - Decided against revenue.

Summary

Issues involved:
Appeal filed by revenue against CIT(A) orders regarding exemption of income under sections 11 and 12 for the activities of developing, printing, publishing, and selling textbooks and teaching materials by an educational society.

Analysis:
1. The revenue raised concerns regarding the classification of the assessee's activities under the definition of "education" and "charitable purpose" as per section 2(15) of the Income Tax Act, 1961. The Assessing Officer viewed the activities as business-oriented due to substantial profits earned from selling books, questioning their charitable nature.

2. The society, registered under section 12A, was engaged in publishing textbooks for various schools. The Assessing Officer contended that the society's activities primarily aimed at profit-making through the sale and distribution of books, which did not align with charitable objectives. The society's claim of providing books at subsidized rates and free distribution was also scrutinized.

3. The assessee argued that its core objective was to promote education by producing and distributing textbooks at affordable or no cost to economically disadvantaged students. The society's activities were focused on advancing education, not solely profit-making. However, the Assessing Officer, citing precedents, deemed the activities as business promotions and taxable under Chapter IV of the Income Tax Act.

4. The CIT(A) overturned the Assessing Officer's decision, citing previous rulings by the High Court and ITAT in favor of the assessee. The courts emphasized that the society's activities contributed to educational advancement, qualifying for exemption under sections 11 and 12. The courts highlighted the importance of consistency in granting exemptions based on the nature of the organization's activities.

5. Referring to past judgments, the CIT(A) and ITAT concluded that the society's activities fell within the scope of education, entitling it to exemption under section 11. The courts emphasized the educational nature of the society's operations, dismissing the revenue's appeals and directing the Assessing Officer to grant exemption with all related benefits.

6. The decision highlighted the significance of the society's educational contributions and the consistent application of exemption criteria over the years. The courts reiterated that the society's profit-making from educational activities did not negate its charitable purpose, emphasizing the importance of promoting education for disadvantaged students.

7. Ultimately, the appeals filed by the revenue were dismissed, affirming the society's eligibility for exemption under sections 11 and 12 based on its educational initiatives and contributions to the advancement of education for economically weaker sections of society.