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2019 (8) TMI 228 - AT - Income TaxExemption u/s 10(23C)(iiiad) entitlement - charitable activity u/s 2(15) - surplus/excess of income - assessee is an educational institution working as authorized learning centre of PTU [ Punjab Technical University] - HELD THAT:- Assessee is an authorized learning centre of PTU under the distance education programme. As per the module of operation, the assessee as a learning centre affiliated with PTU is obligated to carry out educational programmes as prescribed by the university and make necessary provisions as connected with responsibility for education delivery. The assessee society being an authorized learning centre has to honour the obligations set out by PTU for providing education to enrolled students and has to employ teachers for taking classes of enrolled students. In fact, the assessee which is an educational institution is imparting education through distance learning route in the society by running a learning centre affiliated to PTU. We are unable to persuade ourselves to subscribe the observations of the lower authorities that the distance learning provided by the assessee to the students in its capacity as a learning centre of PTU would not fall within the realm of the definition of the term ‘education’ as envisaged in Sec. 2(15). As per the literal meaning “education” is a process for facilitating learning or the acquisition of knowledge, skills, values and habits. Insofar the activities of the assessee society in its status as that of a learning centre are concerned, we find that the assessee in order to facilitate delivery of education provides the infrastructure along with the faculty as specified by the university; carries out timely completion of the courses; maintains records of the students; designs presentations, projects, assignments; conducts internal exams and provide internal assessment; conduct seminars and open house discussions from time to time and does all necessary acts as required by the university, therein rendering it responsible for delivery of education to the students. Impact of deduction of TDS u/s 194H by PTU - agreement between centre and university that centre will get 45% of semester fee paid to University - HELD THAT:- Now when as per the PTU distance education programme/arrangement between PTU and the assessee learning centre, it has been specifically stated that the assessee would be entitled to the share of 45% of the semester fee collected by the university (after separating exam fee), therefore, the mere fact that PTU had deducted TDS under Sec. 194H while making the said payment to the assessee would in no way lead to recharacterization of the said amount in the hands of the assessee. In sum and substance, the nature of receipt/amount in the hands of the assessee learning centre would continue to be governed and regulated as per its arrangement with the university, and not by the nomenclature given by the university i.e. PTU while making the said payment. Tribunal after deliberating at length on the aforesaid facts observed that the lower authorities had erred in concluding that the services rendered by the assessee were to be equated with that of a coaching institute. In fact, it was observed by the Tribunal that as the assessee was rendering formal education, therefore, it clearly fell within the realm of charitable activities as defined under Sec. 2(15). As the assessee in the case before us was providing formal education, therefore, the lower authorities had erred in taking a contrary view and had wrongly concluded that the surplus shown by the assessee was not eligible for exemption under Sec. 10(23C)(iiiad) - Decided in favour of assessee.
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