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ITO Ward-1 New Delhi Versus Science Olympiad Foundation

Scope of term charitable purpose u/s 2(15) of the Act Educational institution - scope of imparting education - to pursue educational activities - improvement of educational standard of science students by making available superior course material and methodology for examination in this behalf Held that:- Assesses books of accounts are audited and upheld by AO - No discrepancy or question about genuineness of the books and affairs of the assessee have been called into question - In earlier as .....

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they are no more educational activities as regular classes are not held Relying upon COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS Versus DIRECTOR GENERAL OF INCOME TAX [2012 (3) TMI 289 - DELHI HIGH COURT] - assessee though being only in conducting examinations is still to be regarded as educational institution. - Also in Assam State Text Book Production and Publication Corporation Limited Versus Commissioner of Income Tax, Gauhati-I [2009 (10) TMI 60 - SUPREME COURT] it has bee .....

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of AO to give a restricted meaning to the scope of meaning of term educational activities - AO's necessity of holding of regular classes or wholesome educational activities to be only eligible to be called educational activities eligible for benefits u/s 11 cannot be sustained - a charitable or educational institution can charge fees for rendering services, it is so as the surplus is accumulated which is further to be applied for charitable objects of the institution - in case of winding up, su .....

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mber This is a Revenue appeal, following grounds are raised: (i) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in ignoring the fact that the assessee is not imparting education to the students and its activities are not within the ambit of charitable purpose as per section 2(15) of the Income Tax Act,1961. (ii) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that the assessee is an educational institutio .....

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objects it developed course resource material (CRM) for the students who keen in learning science education. By this education model, the willing students are registered with the institution. This registration is done through recognized schools and colleges spread across India. Such schools include mainly Kendriya Vidyalaya, Jawahar Navodaya Vidyalaya, Government Schools, DAV schools and other recognized schools across all over India. Such schools from where students are registered total upto mo .....

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see foundation. Thus, the foundation s income is received not directly from students but CBSE affiliated and other schools through their principals all over India. The foundation has developed a centre at Gurgaon to help, organize, develop and promote these unique science educational programmes for desirous students of school level in the various disciplines of science such as mathematics, physics, chemistry, biology and computer sciences. In addition the assesse activities, assessee organizes O .....

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tional activities. All the details relating to the educational activities and programmes are claimed to have been filed before the Assessing Officer. 2.2. A survey u/s 133A of the IT Act 1961 was conducted on 12.01.2010, where the statements of the officers of the foundation namely Shri Anil Goel, M/s Jareen Anil Khan, Shri Anil Ahlawat and Shri Mahavir Singh were recorded in the survey report AO has mentioned as under: i. During the course of survey the assessee has not produced salary register .....

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are, overlapping. This needs further verification. 2.3. During the course of assessment proceedings, Assessing Officer was of the view that the assesses activities though earlier held to be educational in nature, is neither educational nor charitable in nature and they were commercial in nature. AO denied the exemption u/s 11 by following observations: 7. In view of the para 6 I have considered the details filed by the assessee carefully and found that the assessee has failed to submit any supp .....

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ks/ periodicals which is a must for taking up the examination being conducted by the assessee company. The main object s as per specified in memorandum and actual activities being carried on by the assessee are contradictory in it self. No charity seems to be carried on by the assessee as per records/documents furnished by the assessee during the survey/ assessment proceedings. Further, as per information furnished no faculty/teaching facilities has been ever provided by the assessee company. Me .....

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does not have any linkage with increasing the talent of the students by the assessee company. Therefore, the activities carried out by the company are not within the ambit of charitable purpose as per the u/s 2(15) of the Act. 8. The assessee company is not recognized by the any directorate of education/ any university or any other Govt. body. The results of examinations are also not being recognized by any Govt. Institute for giving admissions to their recognized courses. Hence, this cannot be .....

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tatements recorded during survey operations, records of the assessee company and considering the details filed during assessment proceedings the undersigned is of the firm opinion that the company is not a charitable entity and should be assessed as commercial accompany. As a result total surplus of Rs.3,87,27,293/- is taxed as profit and income assessed at Rs.3,87,27,293/-. Penalty proceedings u/s 271(1) (c) and 272 A are being initiated separately. Issue necessary forms. 2.4. Aggrieved assesse .....

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ntral Govt. Schools and Hyderabad University. The foundation helped in standardization and uniformities of basic knowledge level in the field of science by CRM. The activities, course, examination and coordination with large spectrum of govt. approved schools and their teachers helped in removing the disadvantages at the school level due to variations caused by geographical, language and school curriculum across India. It helped students in learning subjects like maths and other science streams .....

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stly, as stated hereinabove, this is not so but still in view of the above of the judgment of the various High Courts conducting examination will also make it eligible for exemption as charitable institution. In the cases of Secondary Board of Education vs. ITO 36 ITR 408 (Orissa) the High Court has held that the secondary Board of Education which is conducting examination only will be an educational institution within the meaning of section 2(15) of the Act. Similarly publication of text books .....

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ution and eligible of exemption within the meaning of section 2(15) of the Act. Various case laws cited by the Ld. AR also supports the above interpretation. 4.9 The Supreme Court in the case of American Hotel & Lodging Association 301 ITR 86 (SC) has also held that the services in the form curriculum and reproduction of text books, factually development programme can be said to be educational and therefore eligible for exemption. 4.10 Similarly in the case of CIT vs. M. P. Rajya Pathya Push .....

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not necessary that it should conduct teaching classes. Conducting examination was also approved as an educational purpose for claiming exemption. In the relevant paragraph Hon ble Delhi High Court has held as under:- 7. Recently, the M. Pvt. High Court in CIT vs. M. P. Rajya Pathya Pustak Nigam, (2009) 226 CTR (MP) 497 examined a similar question and after referring to several decisions has held that the term educational purpose was not restricted merely to holding of teaching class or lectures .....

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is sufficient. 8. When we apply the aforesaid principle to the admitted nature of activity under taken by the petitioner, we have no hesitation in quashing the impugned order dated 8.10.2008 and holding that the petitioner is an educational institution. 4.12 The main object of the institution as approved by the Govt. of India is to pursue educational activities. In terms of the approval granted by the Govt. of India it has been specifically provided in the Memorandum that the institution will be .....

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claiming exemption u/s 11 of the Act. 4.13 The Assessing Officer has referred to the survey report carried out at the premises of the appellant institution u/s 13A of the Act. In this regard he has referred to the survey report dated 13th January,2011. On the basis of this survey report has drawn adverse inference against the appellant institution. The observations made in the survey report are as under: i. During the course of survey the assessee has not produced salary register, vouchers, rega .....

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. This needs further verification. 4.14 It is found that the assessee has clarified each of the contention raised in the survey report. The assessee has filed a letter dated 18th January, 2011 with the Assessing Officer in which it has replied and clarified each of the issues stated in the survey report. 4.15 Furthermore, during the course of assessment proceedings all issues raised by the Assessing Officer in his order and in his remand report have been duly replied by the assessee including de .....

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se of Council for the India School Certificate Examination, as discussed above, grounds No. 3 and 4 of the appellant are allowed. 2.5. Aggrieved revenue is before us in appeal. 3. Ld. DR relied on the order of ld AO and contends that i. assessee is not carrying out any charitable activity as it failed to produced any evidence in this behalf. ii. The activities of the assessee are only commercial in nature, substantial fee is charged for only conducting examination. iii. No direct or indirect edu .....

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oes not amount to education. viii. The assessee is not recognized by any Directorate of Education/ any university or any other Government body and hence it cannot be equated with any other body which conduct examination since all other bodies are recognized by the Government or through any legislation. 4. Ld. counsel for the assessee in reply reiterated the facts and contends that ld. AO ignored the history of past assessments framed u/s 143(3) wherein after proper verification of record, its ac .....

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ducational activities i.e. establish, run and operate on non-profit basis schools, regional centres of the Foundation for brilliant students and to hold, organize, promote and sponsor conventions, seminars & conferences. Its objects, inter alia, include helping students in their aptitude for higher professional studies. The main objects of the company specifically provides that the foundation will be a non-profit organization and if upon winding up or dissolution there remains any surplus th .....

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they are upheld as correct, complete and properly maintained. The is being assessed regularly including u/s 143(3). The provision of Section 11(1)(a) reads as under:- 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- [(a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such pur .....

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onuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility. 4.5. A simple reading of the above provision reveals that charitable purpose includes education . The word education has not been restricted or qualified by any conditionality. This clearly implies that word education is to be construed as regarded in common parlance with an unrestricted and broad connotations. Thus so long as the activity relates to education, the .....

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large all Kendriya Vidyalaya, Jawahar Navodaya Vidyalaya, Government schools, DAV schools and other recognized schools across India. The total number of schools from which these students have been registered are more than 7,400. For the purpose of imparting this education and learning each school carries out the registration of the student on behalf of the appellant foundation. The course resource material (CRM) is imparted to the students through respective school teachers, spread across India .....

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India and spent on these educational objects. The appellant foundation has also developed a centre at Gurgaon to help, organize, promote educational programmes for students studying at the schools level in various disciplines of science such as mathematics, physics, chemistry, biology and computer science. In addition thereto the appellant foundation organizes Olympiads to identify the best students, the best teacher. For this purpose the foundation has tied up with Kendriya Vidyalaya Sangathan .....

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learn and solve challenging problems, to learn and expose to new topics provoking their ingenuity in dealing with them and to generate scientific temper. 4.9. The foundation has helped in improving the teaching standards and the methodologies as well. In order to help the needy and the meritorious students the foundation is giving scholarships and prizes to such students. The bonafide educational activities are further proved that it has also tied up with the National University of Singapore whi .....

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foundation is engaged in. Despite the above details the Assessing Officer has made certain observations which in view of the above explanations are factually incorrect. It has been erroneously stated by the Assessing Officer that the assessee has failed to submit any supporting evidence in support of charitable activities. 4.12. It is pleaded that despite denial of benefits of sec 11. assessee s registration u/s 12A still continues on the same objecs and activities. There is no change in the as .....

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in wholesome imparting of education by holding classes on regular basis. Merely offering course material and conducting examinations does not amount to educational activity . While giving these findings ld. AO has conveniently ignored the material available on record. 4.13. It has been summarily held that activities of the assessee are commercial in nature because fee is charged for CRM and examination. Ld. AO has offered no comment about the reasonableness of fee charged for these educational s .....

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ictional Delhi High Court as well as Supreme Court of India. 4.14. The direct judgment on the issue is in the case of Council for the Indian Schools Certificate Examination vs. Director General of Income Tax decided by the jurisdictional Delhi High Court on 20th March, 2012. In this case an issue has arisen whether the counsel for Indian School Certificate Examination is an educational institution. In the said case it was a case whether the petitioner was not conducting any classes and was not e .....

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d not conduct teaching classes. Assessee has been held to be an educational institution. The facts of assessee s case are similar. 4.15. Hon ble Supreme Court in the case of Assam State Text Book Production and Publication Corporation Ltd. vs. CIT 319 ITR 317 (SC). It was the allegation of the revenue in that case that the State Corporation was engaged in publication of its text books and as such it was not engaged in conducting teaching classes or directly imparting education through teaching a .....

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isen whether it was an educational institution or not. It was held that the activities of conducting examinations undertaken by the Board will qualify for the purpose of education. 4.17. Hon ble Rajasthan High Court in the case of CIT vs. Rajasthan Text Books Board 2444 ITR 667 (Raj.) whereby it was held that the State Text Book though not imparting education by teaching students or holding classes but publication of text book will qualify for exemption. 4.18. Hon ble Supreme Court in the case o .....

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97 whereby it was held that the term educational purpose was not restricted merely to holding of teaching classes or lecture but educational purposes was equally served when educational text books were published. It was also held that holding of regular classes for imparting of education directly to the student is not mandatory for an institution to qualify for exemption. 4.20. Ld counsel contends that the facts of assesses case are on a far better footing as it is engaged in multifold education .....

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d above vindicate the assesses stand that it s all activities are educational in nature and eligible for exemption. There is no force in the allegations of ld. AO that family members are making huge profits. These allegations are not substantiated by any cogent reasons and material available on record. Such type of generalized allegations bereft of cogent reasoning have no force in the eyes of law and cannot be relied to deny the exemption. It is further evident from the fact that surplus is uti .....

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into question.In earlier assessments u/s 143(3) assesses activities have been held to be educational and charitable activities and benefits of sec 11 have been allowed to the assessee. Registration under sec 12A has not been withdrawn. It has been demonstrated by the assessee s counsel that nature of its educational activities, modalities of working, methodology of affiliation with CBSE and other Boards, fee structure, examination pattern remain same as in earlier year. 5.1. Ld AO has taken a di .....

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