1976 (4) TMI 79 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of sales of embroidery books.
2. Exemption eligibility under G.O. Ms. No. 40, Revenue dated 6th Jan., 1969.
3. Classification of embroidery books as reading books or text books.

Issue-wise Detailed Analysis:

1. Treatment of Sales of Embroidery Books:
The primary contest in this appeal revolves around the treatment of sales of embroidery books amounting to Rs. 4,908.70 in the assessment for 1971-72. The appellants claimed these sales as exempt, arguing that they were sales of books. The authorities initially excluded these sales from the assessable turnover, recognizing them as reading books eligible for exemption. However, the Deputy Commissioner of Commercial Taxes later contested this classification, leading to a revision of the assessment. The AAC upheld the revised assessment, likening the embroidery books to 'tea reviews and catalogues' from a Kerala High Court decision, which were not considered reading books.

2. Exemption Eligibility Under G.O. Ms. No. 40, Revenue Dated 6th Jan., 1969:
G.O. Ms. No. 40 exempts sales of "reading books including text books" from tax. The appellants argued that their embroidery books qualify for this exemption. The Tribunal analyzed the intrinsic contents of the books, noting that they contain substantial reading material, instructional content, and practical sketches aimed at imparting knowledge in sewing, embroidery, and tailoring. The Tribunal found that these books serve as instructional guides and are used as text books in various courses related to tailoring, thus meeting the criteria for exemption under the G.O.

3. Classification of Embroidery Books as Reading Books or Text Books:
The Tribunal critically examined the embroidery books, noting that they contain detailed instructional material, sketches, and diagrams to facilitate learning. The books were found to be used extensively in educational courses and examinations related to tailoring and embroidery, classifying them as text books. The Tribunal emphasized that these books contain significant reading material, making them eligible for exemption as reading books. The Tribunal also considered the common parlance understanding of the terms "reading books" and "text books," concluding that the embroidery books fit within these definitions.

Conclusion:
The Tribunal concluded that the embroidery books in question contain substantial reading material and instructional content, qualifying them as reading books and text books under G.O. Ms. No. 40, Revenue dated 6th Jan., 1969. The appeal was allowed, and the disputed turnover was granted exemption from tax. The Tribunal distinguished the Kerala High Court decision cited by the AAC, noting that the embroidery books differ significantly from the 'tea reviews and catalogues' in that case. The Tribunal's decision was based on the intrinsic content of the books, their use in educational courses, and the common parlance understanding of the terms "reading books" and "text books."