2022 (11) TMI 194 - AT - Income Tax
Exemption u/s 11 - primary objects of the trust which permitted the assessee trust to give training in skill development to the said hotels - HELD THAT:- The terms and conditions of MOU reproduced above indicate that training services of certain nature beneficial to the two hotels were being provided. The beneficiaries were not the employees directly but these two hotels which were seeking professional expertise and assistance of the assessee for enhancement of their own revenue by managerial level training programs of the recruits. In case of the both hotels the programs were intended to cater to the industrial and management trainees recruited by the hotel with off the job and on the job trainings.
Assessee was providing training programs customized to the convenience of the service taker organizations. The beneficiaries were to be identified by the two hotels and the beneficiaries were to continue providing services to the two hotels consequent to their recruitment with the two hotels only.
There is no force in the claim of assessee that these training programs were incidental to the main activities. Rather the aforesaid terms of MOU make it appear that the assessee’s main activity was to give training of Managerial Nature to the two hotels and they were far beyond the objects relied by the assessee’s AR to impress that ultimately the beneficiary were the workers. The object heavily relied by the of assessee to cover the activity is “(vii) In general to open, establish, finance, assist and contribute institutions, commercial, technical education pertaining to fine arts or industries such as workshops, factories and other institutions for imparting education in workmanship and for providing employment and means of earning adequate wages for the unemployed and needy.”
However, same no where seems to be fulfilled by the terms and conditions of aforesaid referred MOU. The intention of these objects seems to be to give some sort of technical training of workmanship to those who are seeking employment and cannot be extended to give on the job training to those persons who have been recruited by some organization.
Assessee was merely responsible for organizing qualified trainers for conducting the above mentioned training program and all the remaining infrastructural facilities were to be of the two hotels. That indicates that assessee was in some way providing trainers alone and not using its own infrastructure to give any sort of training of workmanship at its premises and resources. Merely because at the end of training of the recruit they were to be given a certificate by the assessee does not change the nature of its activity from commercial to charitable.
As can be observed from the assessment order that the AO had primarily started the enquiry from the fact that TDS on professional services were deducted by the commercial hotels and the service tax was charged by the assessee.
On behalf of the appellant at the time of assessment or before CIT(A) or here before the Tribunal, no explanation has been given as to under what circumstances the assessee allowed to deduct the TDS by the two hotels assuming that it was paying for professional services rendered by the assessee. At the same time, there is no explanation why the assessee has made a service tax charged on the receipts. If it was merely providing training of the nature “educative” in accordance with its object.
The findings of Ld. Tax Authorities below require no interference. There is no substance in the ground raised. The appeal of assessee is dismissed.