9911796707
TMI Blog2020 (9) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... l purpose. Also, it is wholly or substantially financed by the Government. However, whether it generates profit or is established to generate profit, needs to be examined. It is also not in dispute that petitioner received a notice dated 28.1.2010 (Annexure-1) issued under Section 148 of Income Tax Act, 1961 (hereinafter referred to be as 'the Act'), by the Assistant Commissioner of Income Tax, Circle-2, Patna, informing his reasons to believe that income assessable is chargeable to tax for the assessment year 2006-07 and as to why it be not so done. Petitioner assailed the said notice by filing the instant petition on 30.11.2010 and vide interim order dated 21.12.2010, this Court, directed the Revenue not to take any coercive action pursuant to any order of re-assessment which may be passed in such proceedings. It is a matter of record that pending consideration of the present petition, assessment proceedings were concluded with the passing of assessment order dated 23.12.2010 by Additional Commissioner of Income Tax, Range-2, Patna, (Annexure-10) which is placed on record vide separate application. As is evident from the said order, the petitioner received subsidy @ 50% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax-I, Patna but also by Hon'ble Apex Court in a case titled as Assam State Text Book Production and Publication Corporation Limited Vs. Commissioner of Income Tax [(2009)XVII SCC 391]. At this stage, we may take note of the statutory provisions which we are called upon to examine with its applicability to the attending facts and circumstances. It stands extracted hereinbelow : "Income not included in total Income. 10. In computing the total Income of a previous year of any person, any income falling within any of the following clauses shall not be included......... .......(23C) any income received 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." The said provision was introduced with effect from 1.4.1999 with the enactment of the Finance (No.2) Act, 2019. Prior to it, the statutory provision read differently and the Hon'ble Apex Court in (2015) 8 SCC 47 titled as Queen's Educational Society Vs. Commissioner of Income Tax examined the legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied the purpose of education should not be submerged by a profit making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on "for profit". No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not be cease to be one existing solely for educational purposes. (5) The ultimate test is whether on an overall view of the matter in the concerned assessment year the object is to make profit as opposed to educating persons." 7. To the above principles, one further test as laid down in CIT vs. Surat Art Silk Cloth Manufacturers' Assn. (1980) 2 SCC 31)and culled out in American Hotel and Lodging Association Educational Institute vs. Central Board of Direct Taxes and Others (2008 (10) SCC 509)may be added which is as follows: "In order to ascertain whether the institute is carried on with the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n's Educational Society (supra), it also cannot be said that the purpose and object of the petitioner is not to carry on the activity of education; established primarily for educational purpose; and that, the purpose and object is not profit making. Judicial notice can be taken on the fact that in the State of Bihar, petitioner Corporation is distributing books free of cost to children studying in various Government schools. This Court, in Bihar State Text Book Publishing Corporation (supra), with respect to the very same petitioner, under identical circumstances, quashed and set aside the order passed by the Revenue, as confirmed by the Tribunal. We fail to understand as to why the Assessing Officer ignored such fact, by not taking cognizance thereof, particularly when attention whereof was invited. Equally we fail to understand as to why the Revenue persisted in opposing the instant petition and not withdraw its action, particularly when the said view of this Court was to their knowledge; never assailed; and attained finality. In the said decision, this Court also examined the legislative development, i.e., repealing of the existing Sections 10(22) and introducing a new pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 remained vested in the State of Assam and that even the ownership of the assets remained vested in the State of Assam which stood transferred to the Corporation in 1972, when it got incorporated under the Companies Act, 1956. 9. The operative part of the Rajasthan High Court's judgment reads as under: (ITR p.669) "It is not disputed before us that the aims and objects of the Tamil Nadu Textbook 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 as the Tribunal have noticed that even if some amount remains surplus, that is utilized only for the purposes of education. Thus, having regard to the concur ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
