The activity of printing and publishing books for educational purposes, including literature on culture and values, qualifies as 'education' under Section 2(15) of the Income Tax Act, 1961, rather than 'general public utility', and remains eligible for tax exemption even if the entity generates a surplus from its activities.

ORDER

PER PRASHANT MAHARISHI, VICE – PRESIDENT

1. ITA No. 2146/Bang/2025 is filed by M/s. Rashtrotthana Sahitya and Mudrana Trust (the Assessee/Appellant) against the Appellate Order passed by the National Faceless Appeal Centre (NFAC), Delhi (the Ld.CIT(A)) dated 17.07.2025 wherein the Appeal filed by the Assessee against the Assessment Order dated 23.03.2021 passed u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Income Tax Act, 1961 (the Act) of the National e-Assessment Centre, Delhi (the Ld. Assessing Officer) was dismissed. The Assessee is aggrieved with the same and is in appeal before us. The only dispute in this case is denial of exemption u/s. 11 and 12 of the Act to the Assessee Trust.

2. Brief facts of the case shows that Assessee Trust filed its return of income on 09.10.2018 disclosing NIL income after claiming deduction u/s. 11. The case of the Assessee was selected for scrutiny on limited issue that the Assessee has accumulated substantial surplus u/s. 11(2) vis-a-vis gross receipts. The notice u/s. 143(2) of the Act was issued. The Assessee is already granted registration u/s. 12AA, by the Commissioner of Income Tax (Exemption), Karnataka on 08.07.1987.

3. The object of the Assessee as per trust deed was printing and publication of books of educative value for the benefit of people and rendering educational activities. The Ld. Assessing Officer was of the view that the printing and publication of books, the Assessee was having total receipt of Rs. 8,40,28,752/- and has arisen surplus of Rs. 1,49,15,806/-. Thus, according to the Ld. Assessing officer, the activity carried out is falling in the category of “advancement of the object of general public utility”.Therefore, the notice was issued to the Assessee to show cause as to why the exemption claimed by the Assessee u/s. 11 of the Act should not be disallowed. The main reason for issue of show cause notice was that the receipts of the Assessee of printing and publication of books is required to be taxed as per the provisions of section 13(8) of the Act.

4. The Assessee submitted that for Assessment Year 2003-04, the coordinate bench in ITA No. 48/Bang/2006 dated 31.01.2017 has decided this issue in favour of the Assessee and allowed the claim of the Assessee in the status of charitable trust. It was stated that the services of printing activity are rendered to the public, it is an educational activity and therefore the exemption cannot be denied.

5. The Ld. Assessing Officer held that the trust whose charitable purpose is an object of general public utility has ventured in the nature of trade and commerce and has also received a fee as a consideration for the services rendered which is in excess of 20% of the gross receipts, proviso to section 2(15) of the Act gets invoked. Accordingly, he held the Assessee Trust is not eligible for exemption u/s. 11 and 12. Accordingly, he found that surplus of Rs. 1,49,15,806/- is chargeable to tax as business income. Assessment Order was passed on 23.03.2021.

6. Assessee preferred Appeal before the Ld. CIT(A) wherein Assessee submitted the same facts which Assessee submitted before the Ld. Assessing Officer. The Ld. CIT(A) held that the trust is solely engaged in the business of printing and publication of books and magazines, for which consideration was received. There is no record of funds being spent on education or other objects. The computation sheet annexed to the Assessment Order shows that no amount was applied for charitable purpose under the revenue or capital account. Therefore, there was no valid claim u/s. 11(2) for accumulation nor w