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TMI Blog2021 (4) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, designers, and students all over the world. We find that for some of the publications of assessee trust, grants are received from Ministry of Culture, Government of India. 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 in the case of Delhi Bureau of Text Books vs. Director of Income Tax (Exemptions) [ 2017 (5) TMI 430 - DELHI HIGH COURT] 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. Respectfully following the aforesaid decision we hold that the activities of the assessee trust to be charitable in nature falling under the ambit of 'Education' and not 'advancement of any other object of general public utility' and hence proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the activities of the Appellant Trust are hit by proviso to section 2(15) of the Act. 5. The CIT (Appeals) erred in holding that the only activity carried on by the Appellant Trust is of publishing and sale of books . 6. The learned CIT (Appeals) erred in confirming and the Assessing Officer erred in holding that the activities of the Trust are not charitable but commercial in nature and are undertaken for earning profit. The CIT(Appeals) erred in coming to various conclusions on an erroneous and/or without any factual or legal basis. 7. The learned CIT (Appeals) erred in confirming the action of the Assessing Officer and holding that provisions of Section 11 of the Act were not applicable in the case of the Appellant Trust. 8. Without prejudice to ground Nos. 1 to 7 and even assuming without conceding that activities of the Appellant Trust are commercial in nature, the CIT (Appeals) erred in holding that the unearned income in the nature of grants, etc. is chargeable to tax. The Appellants crave leave to add, to alter or amend the grounds of appeal which are without prejudice to one another. 3. We have heard the rival submissions and perused the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducational activities and observed that word of 'education' word education is not defined in the Act. Therefore, it is necessary to take the definition of 'education' in right perception and in right direction for which it has been included in 'charitable purpose'. 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 one acquires fresh knowledge. Likewise, if one reads newspapers and magazines, sees pictures, visits art galleries, museums and zoos, who thereby add to his knowledge. Again, when one grows up and have dealings with other people, some of whom are not straight, one learns by experience and thus adds to his knowledge of the ways of the world. If one is not careful, his wallet is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts derived by the assessee trust are as under:- Income Amount % to the Total income By Interest Accrued/ 8,35,568 2.96% By Grants 21,50,000 7.62% By Sales Books 1,67,62,012 59.44% Magazines 3,37,532 1.20% DVD's and VCD's 54,591 0.19% By Contribution for 21,71,202 7.70% Publishing By Subscription 34,29,707 12,16% By Publishing Advertisements 21,80,876 7.73% By Income from OtherSources 2,76,717 0.98% Total Income 2,81,98,205 100% 3.2.1. The aforesaid receipts were duly applied for the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Contribution to Provident and Other 13,78,292 5 Staff Welfare Expenses 2,25,254 6 Honorarium 3,50,000 7 Telegram, Postage and telephone charges 3,88,616 8 Traveling and Conveyance 5,76,165 9 Joint Publication Expenses 3,69,437 10 Royalty 42,750 11 Commission on Sale 3,34,155 12 Advertisement and Publicity 40,600 13 Provision for Doubtful Debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be considered as falling within the meaning of Classical Education . India has a rich art and cultural background and each part of the country has its own Art and Cultural treasures. The literature available in many languages is informative as well as educative and ought to be passed on from generation to generation. The object of the trust is to educate people in the non-conventional areas of art, culture and literature by spreading knowledge by publishing books, etc. The assessee Trust has carried on its activities, in pursuance of its objects, which are 'educational' in nature. The subjects of art, music and literature are part of formal education, degree courses offered by various universities. 3.4.1. We find that the assessee had pleaded that it is not carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to trade, commerce or business and hence the proviso to section 2(15) of the Act does not apply to it 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 boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r only to the upscale clientele and does not cater to the general public at large. 3.7. We find that the assessee trust was formed on 1.7.2009 being hived off from the famous National Centre for Performing Arts (NCPA), the premier cultural organisation established in 1969 committed to preserving and promoting India's rich and vibrant artistic heritage in the fields of music, dance, theatre, film, literature and photography, as well as presenting new and innovative work by Indian and International Artists from a diverse range of genres including drama, contemporary dance, orchestral concerts, opera, jazz and chamber music. We find from the Trust deed that the Settlor had created the assessee as a public charitable trust for the preservation and promotion of art, culture, literature, science and encouraging creativity and art initiatives. The main objects of the assessee trust are as under:- 7. OBJECTS OF THE TRUST The objects of the Trust shall be wholly for public and charitable 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, researc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s enclosed in the paper book filed by the assessee assumes greater significance and would be relevant for adjudication of the activities of the assessee trust so as to consider whether the same is charitable in nature or not:- a) Letter from Universities/private scholars seeking permission for using publications of the assessee trust as reference material - enclosed in pages 1 to 16 of the paper book dated 18.12.2017. The details of the same are as under:- Sr.No Date of receipt of mail from the university/institution/ Scholars Name of the University/ Scholar requiring the article Name of the book from which article will be used by the University/Person 1 18/12/2008 Concordia University, Montreal Persian Masters: Five centuries of paintings 2 19/01/2009 IBS abroad, Delhi The Idea of Delhi 3 20/07/2009 University of Edinburg , UK Wu Hung (1998), Paradise Images in Early Chinese Art 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal that their publications enjoy a loyal readership and a very high reputation nationally and internationally, being read not only in the major cities, but also in remote towns in India and across 30 countries abroad. Their readers include Indophiles, connoisseurs and art dealers, executives, scholars, architects, designers, and students all over the world. We find that for some of the publications of assessee trust, grants are received from Ministry of Culture, Government of India. The evidences in this regard are enclosed in pages 118 to 120 of the paper book dated 18.12.2017. 3.8. It is not in dispute that the assessee had derived receipts from publishing and sale of books, magazines/journals and CDs. But it would be pertinent to examine as to what type of books and magazines were published and sold by the assessee and that whether the same is in consonance with its objects enumerated in the Trust Deed. The various publications of the assessee trust as detailed in the earlier paragraphs supra clearly make the assessee fall within the ambit of the expression 'Classical Education'. Needless to mention that the expression 'Classical Education' also falls within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether ITAT could re-examine the issue already decided by it vide order dated 30.09.1980 in favour of the Assessee for AY 1975-76 and 1976-77, without referring the same to the large Bench particularly when there is no change in the activities carried out by the Assessee throughout these years? 3.9.1. We find that the assessee before the Hon'ble Delhi High Court was engaged in printing and publication of text books for Class I to VIII of Government Schools, Municipal Corporation of Delhi ('MCD') schools, New Delhi Municipal Council ('NDMC') Schools and Delhi Cantonment Schools which were provided at subsidized rates. We find that the Hon'ble Delhi High Court also considered the yet another decision rendered by the Hon'ble Apex Court in the case of Assam State Text Book Production Publication Corpn Ltd. vs. CIT reported in 319 ITR 317 (SC). We find that the Hon'ble Delhi High Court disposed of the questions raised before it by holding as under:- Is the Assessee engaged in the activity of 'education'? 20. The Court first considers the question of the interpretation placed on the word 'educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of training and developing the knowledge, skill, mind and character of students by normal schooling. 22. The preparation and distribution of text books certainly contributes to the process of training and development of the mind and the character of students. There does not have to be a physical school for an institution to be eligible for exemption. What is important is the activity. It has to be intrinsically connected to 'education'. 23.1 In Assam State Text Book Production and Publication Corpn. Ltd. (supra), the facts were more or less similar. There, the Assessee which was initially constituted as 'Central Text Book Committee' changed its name to the 'Assam Text Book Committee' with ten members nominated by the State Government. The Board was then converted into a corporation in 1972. The entire share capital of the corporation was owned by the Government of Assam. 23.2 There again, the AO sought to deny exemption on the ground that the Corporation was not an 'educational institution' under Section 10 (22) of the Act. According to the AO, during the relevant AYs, the Assessee had income exclusively from publication and selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding pattern and aspects, such as return on Investment; thirdly, it has not considered the letters issued by C.B.D.T. which are referred to in the judgment of the Rajasthan High Court granting benefit of exemption to various Board/Societies in the country under Section 10(22) of the Act; fourthly, it has failed to consider the judgments mentioned hereinabove; and lastly, it has failed to consider the letter of the Central Government dated 9th July, 1973, to the effect that all State-controlled Educational Committee(s)/Board(s) have been constituted to implement the educational policy of the State(s); consequently, they should be treated as educational institution. 24. In Institute of Chartered Accountants of India (supra), the question that arose before this Court was whether the Petitioner-Institute could be denied exemption in view of the proviso to Section 2(15) of the Act since it was engaged in activity of 'advancement of any other object of general public utility.' Although the Court held that the Petitioner could not be recognized as an educational institute, it accepted the plea that the Petitioner there was engaged in advancement of any other object of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;education.' The ITAT failed to address the issue in the background of the setting up of the Assessee, its control and management and the sources 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. 28. The Court, accordingly, concludes that the ITAT was incorrect in setting aside the order passed by the CIT (A) and in denying exemption to the Assessee under Section 11 and Section 12 of the Act. The ITAT erred in holding that the activities carried out by the Assessee fell under the 4th limb of Section 2(15) of the Act, i.e., 'the advancement of any other object of general public utility' and that its activities were not solely for purpose of advancement of 'education'. Questions (i) and (ii) framed by the Court are, therefore, answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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