The Tax Publishers2009 TaxPub(DT) 2091 (SC) : (2010) 031 (I) ITCL 0493 : (2009) 319 ITR 0317 : (2009) 227 CTR 0105 : (2009) 185 TAXMAN 0058 : (2009) 031 DTR 0025

Assam State Text Book Production & Pubucation Corporation Ltd. v. CIT

INCOME TAX ACT, 1961

Exemption under section 10(22)- Educational institution-Activities of printing, publishing,sale of text books,etc.

Assessee was initially constituted as Central Text Book Committee, which was attached to the office of the Director of Public Instruction. Its name was changed to Assam Text Book Committee with ten members nominated by the State Government. The Government reconstituted the said Committee as Board of Text Book Production and Research. All the assets of the said Board stood transferred to the corporation and entire share capital of the corporation was owned by the Government of Assam. Thus, it became a Government company as defined under section 617 of the Companies Act, 1956. The main object of the Government company was to do research, printing and publishing of text books for school students as per the norms prescribed and approved by the Education Department and it claimed the benefit of exemption under section 10(22). AO disallowed exemption on the ground that assessee had income exclusively from publication and selling of text books to students and further, it did not exist solely for educational purposes, particularly in view of clause 21 of the memorandum of association which provided for distribution of dividends. CIT (A) confirmed the decision of AO. Tribunal held that assessee was an educational institution and it was entitled to the benefit of exemption under section 10(22). Held:The High Court was held that income of assessee was not exempt, particularly in view of the facts that it did not exist solely for educational purposes; that it did not solely impart education; and that its income during the relevant assessment years was only from publishing and sale of text books, which constituted a profit earning activity.

The High had not considered the historical background in which the corporation came to be constituted; secondly, the High Court ought to have considered the source of funding, the shareholding pattern and other aspects, such as return on investment; thirdly, it had not considered the letter dated 19-8-1975 issued by the CBDT which granted benefit of exemption to various boards/ societies in the country under section 10(22); fourthly, it had failed to consider the judgments rendered in the case of CIT v. Rajasthan State Text Book Board (supra) and Secondary Board of Education v. ITO [1972] 86 ITR 408; and lastly, it had failed to consider the letter of the Central Government dated 9-7-1973, to the effect that all the State controlled educational committee(s)/board(s) had been constituted to implement the educational policy of the State(s) and, consequently, they has to be treated as educational institutions. [Para 4]

Therefore, matter was remitted to AO to consider it de novo in the light of the aforesaid judgments, particularly with reference to the letter of the CBDT dated 19-8-1975 as also the letter of the Central Government dated 9-7-1973. [Para 5]

Income-tax Act, 1961 Section 10(22)

Case Law Analysis:CIT v. Assam State Text Book Production & Publication Corpn. Ltd. [2008] 169 Taxman 19, set aside.

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