TMI Blog2014 (10) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... registration u/s.12A(a) of the I.T. Act as per the order of the CIT, Pune vide his order dated 21-01-1985 and the same is continuing and has not been cancelled or withdrawn - Merely because the receipts are more from the Poultry activity, it cannot be a ground to conclude that the dominant purpose of the activity is not education in poultry management - CIT(A) was rightly of the view that the assessee has created facilities of high standard by utilising surplus generated over the years along with donations etc., and that no money has been diverted for purposes other than the objective of the trust or that provisions contained in section 13 of the I.T. Act have not been violated could not be controverted by the revenue –thus, the assessee is entitled for exemption u/s 11 – Decided against revenue. - ITA No. 1488/PN/2012 - - - Dated:- 30-4-2014 - Shri R.S. Padvekar and Shri R.K. Panda, JJ. For the Appellant : Shri Nikhil Pathak For the Respondent : Shri S.P. Walimbe ORDER Per: R K Panda: This appeal filed by the Revenue is directed against the order dated 19-12-2011 of the CIT(A)-I, Pune relating to Assessment Year 2006-07. 2. Facts of the case, in bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be provided to the poor and the needy by way of cheaper education and subsidized education. According to the Assessing Officer if the students are made to pay more than what is to be spent on them for imparting education then there is no relief provided to the needy and the poor. In such circumstances, the education is merely a business activity to earn profit. Further, according to him fee from the students does not amount to voluntary contribution. There is complete absence of element of voluntary . Keeping this in mind and rejecting the various explanations given by the assessee the Assessing Officer concluded that the assessee is basically doing business in the garb of education to earn profit and such profit is taxable under the Income-tax Act. Relying on the decision of Hon ble Supreme Court in the case of Safdarjang Enclave Education Society reported in (1992) 3 SCC 390 the Assessing Officer concluded that the poultry farm run by the assessee is nothing but business. He accordingly denied the benefit of section 11 and treated the assessee as business entity and determined the income of the assessee at ₹ 1,19,40,814/-. 3. In appeal, the Ld.CIT(A) based on the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business. 4.7.2. There is no dispute to the fact that the appellant Trust was registered as a society since 10.10.1984. It has been formed for the purposes already described in para 4.2 of this order, which are primarily to run a poultry management and research institute. It is registered with Charity Commissioner, Pune, since 12.2.1985 and with the Commissioner of Income tax, Pune u/s 12AA since 21.1.1985. The appellant has also contended that the trust deed has been approved by the Charity Commissioner and the Commissioner of Income tax (while granting registration u/s 12A) and the purposes for which the trust was created were held to be of charitable nature. As per the arguments of the Authorised Representative made during appeal, the Assessing officer has not brought on record any instance exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technology to the existing and prospective poultry farmer, entrepreneurs, professionals, technocrats etc. and it is also registered with the Charity Commissioner. The appellant also informed in response to the above query that as a part of the above objective i.e. to impart practical training to the students enrolled for the various courses relating to poultry management, the institute has a full-fledged poultry farming unit located in the campus to cater to the need of the students to have hands on practical experience on the various aspect of the poultry farming. The income generated from this farming unit was claimed to have been shown in the accounts of the trust and therefore, it was claimed that the activity of the poultry farming is incidental to the attainment of the main objectives of the trust. It was also claimed that the appellant has fulfilled the legal requirement, as provided in sec. 11(4A) of the IT. Act to maintain separate books of accounts forties activity. On the issue of registration u/s. 10(23C), it was stated that the appellant has made an application with the Chief Commissioner of Income and the same is in the process. It was also claimed that the said appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence exemption u/s 11 cannot be allowed. As against this the appellant has made extensive and elaborate submissions and has also filed a detailed paper book containing supporting evidences. The relevant portion of the assessment order and -the' submissions of the appellant have already been quoted above for ready and detailed reference and it can be seen if required. It has been claimed by the Authorised Representative that the definition of charitable purposes given in sec. 2(15) of the IT. Act is an inclusive definition and the items specifically mentioned as of charitable purposes are (i) relief of the poor, (il) education, (iii) medical relief and (iv) advancement of any other object of general public utility. It was pointed out that the word 'education' has not been qualified by any other word and therefore, education in itself generally has to be treated as of charitable purposes, if it fulfills all the other conditions laid in the Act for getting the exemption u/s 11 of the IT. Act. On the different issues raised by the Assessing Officer in the assessment order, it was contended that separate books are maintained for training, poultry farm and research. To emph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been judicially given widest meaning and business run for the purpose of main objective has to be treated to be falling in that definition. The appellant has relied for the same to the Circular No, 621, reported in 195 ITR 154 to contend that the amendment brought by Finance Act, 1991 in sec. 10(23C) and sec.11(4A) has permitted a trust or an institution to carry on business activity if the business activities are incidental to the attainment of its objective. It is claimed that the Circular has declared that the trust will not lose exemption if the above conditions are fulfilled. For similar claim Circular No. 642 has also been relied. All the extracts of these circulars are available in the submissions of the appellant quoted above. Thereafter the appellant has explained various activities which have been carried out by appellant trust to hold that the view of the Assessing Officer is not correct. The appellant has also relied on certain judgments to contend that the quantum and the extent of the business activity is not important. In respect of the business carried out, the importance is only on the fact whether the business is incidental to the main objective of the trust or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer that education per se is not of charitable purposes and that the appellant is engaged in the activity of making money white running the institution, are without any substance or basis. Education per se has been held to be of the purpose of charity, if it complies to all other conditions prescribed in Jaw. Education cannot be a charitable activity only if the same is provided free of cost or at subsidized rate. The law laid u/s 2(15) does not seem to say so. In fact the appellant in this respect has also demonstrated by submitting details in respect of fees charged by it for different courses and the facilities provided, that the education is indeed substantially subsidized. The appellant firm has undisputedly created facilities of high standard (as could be seen from the documents placed on record) by utilizing the surplus generated over the years along with donations etc. There is no fact found by the Assessing Officer that any money has been diverted for other than the objective of the trust or any of the provisions contained in sec 13 of the IT. Act has been violated, and therefore, there is no other material on the record on the strength of which exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity is applied for educational purpose and when the primary objects of the trust is to provide education for women, benefit of exemption u/s.10(23C) was valid. Referring to the decision of the Hon ble Bombay High Court in the case of Tolani Education Society Vs. DDIT (Exemptions) and others reported in 351 ITR 184 he submitted that the Hon ble High Court in the said decision has held that when the sole and dominant nature of the activity was education and the assessee existed solely for the purpose of imparting education, the incidental surplus which was generated and which had resulted in additions to the fixed assets towards upgrading the facilities of the college including for the purchase of library books and the improvement of infrastructure, the assessee was entitled to exemption u/s.10(23C)(vi). Referring to the decision of the Mumbai Bench of the Tribunal in the case of DDIT (Exemptions) Vs. Samudra Institute of Maritime studies trust vide ITA No.5760/Mum/2010 order dated 30-11-2011 he submitted that under somewhat identical circumstances the Assessing Officer had denied the exemption u/s.11 on the ground that the various courses which are not approved and recognised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities and to promote educational research development in respect therewith . 7.1 We find similar view has been taken by the Assessing Officer for A.Y. 2005-06 in the order passed u/s.143(3) on 30-08-2007. The submission of the Ld. Counsel for the assessee that these orders have not been disturbed either by reopening the assessments u/s.147 or by taking action u/s.263 could not be controverted by the Ld. Departmental Representative. The submission of the Ld. Counsel for the assessee that in subsequent years also the returns filed were accepted by the Revenue although u/s.143(1) could not be controverted by the Ld. Departmental Representative. 7.2 It is an undisputed fact that the assessee trust has been granted registration u/s.12A(a) of the I.T. Act as per the order of the CIT, Pune vide his order dated 21-01-1985 and the same is continuing and has not been cancelled or withdrawn. Further, it is not the case of the Assessing Officer that the assessee trust is not engaged in the field of education, training and research. Merely because the receipts are more from the Poultry activity, the same in our opinion cannot be a ground to conclude that the dominant purpose of the acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
