TMI Blog2014 (8) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... itable purpose" even if it incidentally involves the carrying on of the commercial activities - the activities of the assessee would fall within the definition of "charitable purpose" as per section 2(15) of the Act and would be entitled to exemption u/s 11 of the Act – Decided against Revenue. - TAX APPEAL No. 707 of 2013 - - - Dated:- 13-6-2014 - SHAH M. R. AND DHOLARIA R. P., JJ. M. R. Shah J.- Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income-tax Appellate Tribunal, D Bench, Ahmedabad (hereinafter referred to as the Tribunal ) dated March 22, 2013, in I. T. A. No. 159/Ahd/2013 (since reported in Ahmedabad Management Association v. Joint DIT (Exemption) [2013] 28 ITR (Trib) 349 (Ahd)) for the assessment year 2009-10 by which the Tribunal has allowed the said appeal preferred by the respondent-assessee holding that the activities of the assessee were in the field of education and the assessee was eligible for exemption under section 11(1) of the Income-tax Act (hereinafter referred to as the Act ) and, consequently, quashed and set aside the order passed by the Assessing Officer confirmed by the Commissioner of Income-tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AMA recognizes merit for all its programs and, hence, no concession in fees is granted on the basis of any economic criteria. 2.1. Thereafter, notice under sections 143(1) and 143(2) of the Act was issued and letter calling for certain details was issued on June 24, 2011, requiring the assessee to submit the details. During the course of the assessment proceedings, the assessee submitted a list of more than 800 programmes, seminars and courses conducted during the year and also submitted the total expenses incurred in respect of each programme. It was the case on behalf of the assessee that it is entitled to exemption under section 11 in view of the amended definition of section 2(15) of the Act as the assessee-Ahmedabad Management Association-is dedicated to pursue the objects of continuing education, training and research on various facets of management and related areas and for the said purpose the assesseeassociation undertakes multifaceted activities comprising conducting various continuing education diploma and certificate programmes, management development programmes, public talks, seminars, workshops and conferences. It was also submitted that the association-assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of this court in the case of Gujarat State Co-operative Union v. CIT reported in [1992] 195 ITR 279 (Guj), the Tribunal held the issue in favour of the assessee and has held that the activities of the assessee were in the field of education and, therefore, the assessee is eligible for exemption under section 11 of the Act. 2.4. Being aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue has preferred the present tax appeal to consider the following substantial question of law : Whether the Appellate Tribunal has substantially erred in holding that the activities of the assessee are in the field of education and that the assessee was eligible for exemption under section 11(1) of the Act? Shri Manish Bhatt, learned counsel appearing on behalf of the appellant-Revenue, has vehemently submitted that the learned Tribunal has materially erred in holding the issue in favour of the assessee and in holding that the activities of the assessee are in the field of education and, therefore, the assessee is eligible for exemption under section 11(1) of the Act. It is submitted that the present case is for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be said to be an educational activity for charitable purpose as defined under section 2(15) of the Act, and, therefore, the assessee is not eligible for exemption under section 11 of the Act. 3.3. It is submitted that as such applying the ratio of the above decisions, the assessee is not carrying its activities within the meaning of educational for charitable purpose. It is submitted that it has no nexus with the formal schooling or the assessee is not having any affiliation with the Government or control over the students and, therefore, the activities of the assessee are not the activities as defined under section 2(15) of the Act. 3.4. It is further submitted by Shri Bhatt, learned counsel appearing on behalf of the appellant-Revenue, that as such the case of the assessee falls in the fourth limb of the definition of section 2(15) of the Act, that the activities of the assessee are for the advancement of any other object of general public utility and, therefore, the proviso to section 2(15) of the Act would be applicable. It is submitted that as the assessee is carrying its activity for advancement in other object of general public utility , which is in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal has not committed any error in holding that the activities of the assessee are in the field of education and, therefore, the assessee is eligible for exemption under section 11(1) of the Act. 4.1. It is submitted by Shri Patel, learned advocate appearing on behalf of the assessee, that as such the assessee is founded as public charitable trust by the illustrious visionary of India Dr. Vikram Sarabhai and is dedicated to pursue the objects of continuing education, training and research on various facets of management and related areas for the past 50 years. It is submitted that the summarized position of the various activities of the assessee and its revenues has been highlighted by the Assessing Officer in paragraph 5 of the assessment order. It is submitted that as per the same, nearly 80 per cent., i.e., ₹ 3,32,51,021, out of the total income, i.e., ₹ 4,11,90,642, is derived out of continuing education diploma and certificate programme, around ₹ 65,73,962 comes from management development programme and ₹ 13,65,659 is generated from workshops and conferences. It is submitted that the assessee organizes public talks and seminars, which are comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature was eligible for exemption from tax under section 11 of the Act or alternatively under section 10(23C) of the Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility in terms of the fourth limb of the definition of charitable purpose and, therefore, section 2(15) of the Act was amended, vide the Finance Act, 2008, by adding a proviso which states that the advancement of any other object of general public utility shall not be a charitable purpose if it involves the carrying on of-(a) any activity in the nature of trade, commerce or business ; or (b) any activity of rendering any service in relation to any trade, commerce or business ; for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity. It is submitted that, therefore, the newly inserted proviso to section 2(15) of the Act will not apply in respect of the first three limbs of section 2(15) of the Act, i.e., relief of the poor, education or medical relief, it will constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te appearing on behalf of the assessee, that a close reading of the aforesaid Circular clearly highlights the following aspects, which go to support the assessee's submissions that it is not hit by the amended provisions of section 2(15) of the Act as sought to be contended by the Assessing Officer ; (i) The amended provisions will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education (as in the case of AMA) or medical relief, it will constitute charitable purpose even if it incidentally involves the carrying on of commercial activities. (ii) The proviso to section 2(15) of the Act will apply only to entities whose purpose is advancement of any other object of general public utility , i.e., the fourth limb of the definition of charitable purpose contained in section 2(15) of the Act. It has been further clarified that the advancement of any other object of general public utility shall not be a charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce or business or any activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, schooling or training given to the young is preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word 'education' has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge . . . but that is not the sense in which the word 'education' is used in clause (15) of section 2. What 'education' connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling. 4.5. It is submitted that, therefore, the observations of the hon'ble Supreme Court in the case of Loka Shikshana Trust (supra) do not confine the word education only to scholastic instructions but other forms of education also that are included in the word education . 4.6. It is submitted that as such the Tribunal has rightly held that the activities of the assessee is for educational purpose and, therefore, is entitled to exemption under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total as appearing in income and expenditure account 4,11,90,642 2,61,82,842 In response to the query encompassing the details of various activities of the assessee mentioned below 1, 2 3 Continuing education diploma and certificate programs 4 Management development programs. 5 6 Public talks and seminars. 7 8 Workshops and conferences. the assessee submitted that 'public talks and seminars' (as per separate list submitted) are organized completely free of charge for the benefit of the public at large and, hence, in respect of the same, there is only expense, no income. The consolidated expense for all such talks is ₹ 11,59,959. In respect of the continuing education, diploma and certificate programs, management development programs and workshops and conferences, fees are charged from the participants and the same are duly reflected under the income column. AMA recognizes merit for all its programs and hence no concession in fees is granted on the basis of any economic criteria. 5.2. Relying upon the decision of the hon'ble Supreme Court in the case of Loka Shikshana Trust (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the nature of use or application, or retention of the income from such activity. The Revenue has denied the exemption claimed by the assessee under section 11 of the Act mainly relying upon the amended section 2(15) of the Act by submitting that the case of the assessee would fall under the fourth limb of the definition of charitable purpose , i.e., advancement of any other object of general public utility and, therefore, the assessee shall not be entitled to exemption from tax under section 11 of the Act. Therefore, the first question, which is posed for consideration of this court is, whether the proviso to section 2(15) of the Act would be applicable in case where it is found that the activity of the assessee is an educational activity and whether the activities of the assessee can be said to be educational activities or not ? 5.4. Now, while considering whether the activities of the assessee can be said to be educational activities or not the decision of this court as well as the hon'ble the Supreme Court is required to be referred to and considered. In the case of Gujarat State Co-operative Union (supra) it is held by the Division Bench of this court that mere existen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion', persons other than 'young'. The expression 'schooling' also means 'that schools, instructs or educates' (The Oxford English Dictionary Volume IX, page 217). The Supreme Court has observed that the word 'education' also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word 'education'. By giving further illustrations of a traveller gaining knowledge, victims of swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge the hidden mysteries of life, the Supreme Court has indicated that the word 'education' is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate the proper confines of the word education in the context of the provisions of section 2(15) of the Act. It will not be proper to construe these observations in a manner in which they are construed by the Tribunal when it infers from these observations, in paragraph 17 of its judgment, that the word ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Division Bench of this court in the case of Gujarat State Co-operative Union (supra) reproduced hereinabove and the activities of the assessee such as continuing education diploma and certificate programme ; management development programme ; public talks and seminars and workshops and conferences, etc., we are in complete agreement with the view taken by the Tribunal that the activities of the assessee is educational activities and/or is in the field of education. 5.7. Now, in view of the aforesaid finding that the activities of the assessee is in the field of education, whether the assessee is entitled to exemption under section 11 of the Act or not and whether in the facts and circumstances of the case the assessee can be denied exemption under section 11 of the Act relying upon and/or considering the proviso to section 2(15) of the Act is concerned so far as the amendment in section 2(15) of the Act amended, vide the Finance Act, 2008, and the insertion of the proviso to section 2(15) of the act is concerned, as such the same has been explained, vide Circular No. 11 of 2008, dated December 19, 2008. It is clarified that where industries or trade association claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to exemption under section 11 of the Act. In view of the above, we are in complete agreement with the view taken by the Tribunal that the activities of the assessee are related to education and, therefore, is entitled to exemption under section 11 of the Act. At this stage, it is required to be noted that right from the assessment year 1995-96 till 2008-09 the activities of the assessee has been considered by the Revenue as educational activities. Considering various activities of the assessee as narrated by the Assessing Officer in paragraphs 4 and 5 of the assessment order and considering the decision of the Division Bench of this court in the case of Gujarat State Co-operative Union (supra) we confirm the view taken by the Tribunal that the activities of the assessee-Ahmedabad Management Associationis related to education and, therefore, is entitled to exemption under section 11 of the Act as claimed. Under the circumstances, the question raised in the present tax appeal is answered against the Revenue and in favour of the assessee. Consequently, the present tax appeal deserves to be dismissed and is, accordingly, dismissed. However, in the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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