ITAT Holds Surplus From Textbook Sales as Educational, Not Commercial; Allows S.11 Exemption

The Income Tax Appellate Tribunal (ITAT) has held that the surplus generated by an educational institution from the sale of textbooks should be considered as income from educational activities and not as commercial income. As a result, the tribunal allowed the institution to claim tax exemption under Section 11 of the Income Tax Act. The tax department had sought to treat the surplus from textbook sales as a business profit, which would have made it taxable. However, the ITAT observed that the sale of textbooks is an activity that is incidental and integral to the main objective of providing education. The tribunal concluded that as long as the surplus is used for the educational purposes of the institution, it retains its character as educational income and is eligible for the tax exemption available to charitable institutions.