HIGH COURT OF MADHYA PRADESH
Commissioner of Income-tax, Bhopal
M.P. Rajya Pathya Pustak Nigam
DIPAK MISRA AND R.K. GUPTA, JJ.
MAIT NOS. 56 OF 2003, 188, 189, 190, 191, 194, 196 & 197 OF 2007
APRIL 2, 2009
Section 10(22) of the Income-tax Act, 1961 - Educational institutions - Assessment year 1995-96 - Whether for deciding entitlement of assessee to get exemption under section 10(22), there has to be detailed analysis of facts pertaining to activities carried out by assessee from year-to-year and it has to be seen whether assessee is engaged in any kind of educational activity - Held, yes - Assessee was a registered society - As per memorandum of association, its main objects were to aid and promote advancement of education in general and of primary and secondary education in particular; and to print, publish, distribute and sell text books approved, sanctioned or assigned by Government - For relevant assessment year, assessee claimed exemption under section 10(22) - Assessing Officer disallowed its claim holding that it was not engaged in educational activity - On appeal, Commissioner (Appeals) upheld order of Assessing Officer - On second appeal, Tribunal held that assessee was entitled to exemption - Whether since authorities below had really not applied their minds to relevant issue and there had been no dissection of role played by assessee and whether its activity had any nexus with educational purpose as per principles laid down by Apex Court and various High Courts, matter was to be remitted back to Assessing Officer to consider case afresh - Held, yes
The assessee was a registered society. As per memorandum of association, its main objects were to aid and promote advancement of education in general and of primary and secondary education in particular; and to print, publish, distribute and sell text books approved, sanctioned or assigned by the Government. For the relevant assessment year, it claimed exemption under section 10(22). The Assessing Officer rejected its claim holding that it was engaged only in printing and selling of books and, hence, could not be said to be engaged in the activity of education. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. However, on second appeal, the Tribunal allowed the assessee’s claim.
On the revenue’s appeal to the High Court :
In view of catena of decisions, it is lucid that for deciding the entitlement of the assessee for getting exemption under section 10(22) for the assessment year, one 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 activity. [Para 17]
In view of the aforesaid analysis and regard being had to the concept of educational purpose as was understood in the context of section 10(22), the forums below had really not applied their minds to the relevant issue. It was worth noting that there had been no dissection of role played by the assessee and whether its activity had any nexus with educational purpose as per the principles laid down by the Apex Court and the various High Courts. There had to be detailed analysis of facts pertaining to the activities carried out by the assessee from year-to-year and thereafter, arrive at a conclusion whether the assessee was entitled to get the benefit of exemption. Be it noted, the exemption need not be in entirety or totality. There can be a case where there can be a partial exemption if the income of the previous year falls within the basic conceptuality of section 10(22). Bereft of the aforesaid analysis, the orders were unsustainable. Hence, it would be apposite to set aside the orders passed by the forums in all the appeals and to remit the matter back to the Assessing Officer to consider the case after affording an opportunity of hearing to the assessee. It would be open to the assessee to file requisite documents to bring the case within the parameters of law. [Para 18]
Consequently, the appeal was to be allowed to the extent indicated above. [Para 19]
CASES REFERRED TO
Sole Trustee Lok Shikshana Trust v. CIT  101 ITR 234 (SC) [Para 9], Aditanar Educational Institution v. Addl. CIT  224 ITR 310/90 Taxman 528 (SC) [Para 10], Oxford University Press v. CIT  247 ITR 658/115 Taxman 69 (SC) [Para 11], Secondary Board of Education v. ITO  86 ITR 408 (Orissa) [Para 13], CIT v. Academy of General Education  150 ITR 135/16 Taxman 418 (Kar.) [Para 14], Katra Education Society v. ITO  111 ITR 420 (All.) [Para 14], Governing Body of Rangaraya Medical College v. ITO  117 ITR 284 (AP) [Para 14], Gujarat State Co-operative Union v. CIT  195 ITR 279 (Guj.) [Para 15] and American Hotel & Lodging Association Educational Institute v. CBDT  301 ITR 86/170 Taxman 306 (SC) [Para 16].
Rohit Arya and Sanjay Lal for the Appellant. H.S. Shrivastava and Sandesh Jain for the Respondent.