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2019 (9) TMI 141 - ITAT AMRITSARDenial of registration u/s. 12AA - Charitable activity u/s 2(15) - quality education - running an existing institution - further, adoption of a running school and claiming business losses - denial of registration on the ground that, the assessee’s returns for the last three years are as applicable to a business concern, i.e., the assessee-society considers itself as a business entity, which now wishes to declare itself as a charitable institution, i.e., in the garb of running a school - if the educational activity carried out in pursuance of its’ objects by the assessee-society, could be, on account of its pricing, discounted, i.e., not regarded as ‘education’, given its’ definition u/s. 2(15) ? HELD THAT:- We are unable to appreciate as to how the take over has been regarded as fuzzy or not in advancement of the objects of the society. The continuing affiliation with CBSE, not doubted, and qua which we have reasonably satisfied ourselves, including the no takeover of any land (immovable property), put pays all doubts with regard to the acquisition of a running school or, rather, adoption of a running school. Prima facie, the affiliation to a recognized university, which is not in doubt, should allay any doubt in the matter. In fact, ‘quality’ is an aspect which, though integral to education, as it indeed is to any other human endeavor, is something the assessment of which is outside the scope of the instant proceedings. Then, it would raise a question as to whether any ‘education’ can be regarded as not so on account of poor quality, besides the issue of its’ definition, i.e., as to what constitutes ‘quality education’. - Without doubt, the cost of education, as of any other service, can not be properly compared without taking into account its’ quality; rather, the quality of both the input resources as well as the output. If the educational activity carried out in pursuance of its’ objects by the assessee-society, could be, on account of its pricing, discounted, i.e., not regarded as ‘education’, given its’ definition u/s. 2(15)? - Held that:- Education, as defined u/s. 2(15), makes the same an irrelevant consideration. One could argue for a need for effecting some change/s in law, which has to be read, and given effect to, as expressed. The issue, i.e., education being pursued as an economically sound and prosperous activity, has been extensively considered by the Tribunal in Lord Shiva Educational Welfare Society v. CIT(E) [2018 (9) TMI 954 - ITAT AMRITSAR] , holding, with reference to judicial precedents, that the activity of ‘education’ cannot be impugned on account of it being carried out on commercial basis. Finally, the assessee may have returned its’ income as a business enterprise in the past. Where assessed as a business loss, the assessee cannot claim set-off against income for the years for which it is regarded as a charitable institution, claiming exemption u/s. 11 on the application of income for charitable purpose/s from property held under trust. Even as we may not be construed as having issued any factual finding in the matter – the said aspect having not been argued, there does not appear to be any bar for set off against income that in not subject of exemption, as, for instance, assessable u/s. 11(4A). The import of the fore-going observation, however, is that the same by itself cannot be held against the assessee so as to deny it registration, where otherwise eligible. Thus no case for non-grant of registration is made out - direct registration u/s. 12AA - Decided in favour of assessee.
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