The Tax Publishers2020 TaxPub(DT) 3725 (Pat-HC) : (2020) 428 ITR 0143 : (2020) 317 CTR 0354 : (2021) 276 TAXMAN 0173

INCOME TAX ACT, 1961

Section 10(23C)(iiiab)

Where State Government was extending cash subsidy to assessee for print and sale of text books at low rates to reach children of deprived sections of society, considering fact that assessee was carrying on the activity which squarely fell within the definition of section 10(15) (charitable purpose) and was dependent upon finance of the State, assessee was eligible for deduction under section 10(23C)(iiiab).

Charitable trust - Exemption under section 10(23C) - Cash subsidy given to assessee by State Government - Print and sale of text books at low rates to reach children of deprived sections of society

Assessee was wholly owned company of Government of Bihar and was engaged in printing, publishing and distribution of textbooks under the State. Assessee was incorporated solely for educational purpose. Sole issue was as to whether assessee was entitled to exemption in terms of section 10(23C)(iiiab). State Government was extending cash subsidy to assessee for print and sale of text books at low rates to reach children of deprived sections of society. Revenue alleged that subsidy received by assessee was taxable. Held: In Bihar State Text Book Publishing Corporation, with respect to very same assessee, under identical circumstances, Court quashed and set aside order passed by revenue. It was not clear as to why AO ignored such fact, by not taking cognizance thereof, particularly when attention whereof was invited. Equally it was not clear as to why revenue persisted in opposing instant petition and not withdraw its action, particularly when said view of Court was to their knowledge; never assailed; and attained finality. In said decision, Court also examined the legislative development, i.e., repealing of the existing sections 10(22) and introducing a new provision, i.e., section 10(23C(iiiab)). It held that the instant assessee was carrying on the activity which squarely fell within the definition of section 10(15) of the Act (charitable purpose) and was dependent upon the finance of the State. It was further held that, fact that in pursuit of its charitable purpose, assessee registered some income in its balance sheet would not per se make it to be a profit-making organization.

Followed:Bihar State Text Book Publishing Corporation v. The CIT 2011 TaxPub(DT) 0994 (Pat-HC)

REFERRED : Visvesvaraya Technological University v. Asstt. CIT 2016 TaxPub(DT) 1933 (SC) M/s. Queen's Educational Society v. CIT (2015) 8 SCC 47 (SC) : 2015 TaxPub(DT) 1436 (SC) Assam State Text Book Production and Publication Corporation Limited v. CIT, Gauhati-I (2009) XVII SCC 391 (SC) : 2009 TaxPub(DT) 2091 (SC) American Hotel & Lodging Association Educational Institute v. CBDT & Ors. (2008) 10 SCC 509 : 2008 TaxPub(DT) 2007 (SC) Islamic Academy of Education & Anr. v. State of Karnataka & Ors. (2003) 6 SCC 697 (SC) Aditanar Educational Institution v. Addl. CIT (1997) 3 SCC 346 (SC) : 1997 TaxPub(DT) 1051 (SC) and Addl. CIT, Gujarat v. Surat Art Silk Cloth Manufacturers Association (And Other References) (1980) 2 SCC 31 (SC) : 1980 TaxPub(DT) 0848 (SC)

FAVOUR : In assessee's favour

A.Y. :



IN THE PATNA HIGH COURT

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