TMI Blog2015 (11) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with the education imparted by the assessee-University should come within the realm of services imparted for the attainment of the object of the trust. But in the present case, a sample letter from Bharat Petroleum Corporation Ltd. placed on record clearly shows that the expert advice services were sought from Dr. V.V.Mahajani for the corporate R & D Centre, Greater Noida. The letter dated 29th October, 2010 has been reproduced hereinabove was addressed to the Director, Institute of Chemical Technology (the assessee). Therefore, it is not right on the part of the assessee to allege that it is not rendering any services, rather, its Professors are rendering the services. The juristic person like the assessee can only execute its work either through its trustees or employees. Since the employees of the assessee trust (juristic person) are rendering consultancy / advice services for a fee and the part of the fee is also coming to the chest of the assessee, therefore, in our opinion, the activity of the assessee is not covered by the provisions of section 2(15) of the Act and the assessee is not entitled to any exemption for the consultancy fees. Assessing Officer is justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receiving the consultancy fee and handing over the share of the professors to them, the appellant has no other role to play in the said activity. No expenditure is incurred by the appellant for earning of such income. The role of the appellant Institute is restricted to giving permission to its professors to undertake consultancy assignment, from which the appellant is able to mobilize resources for its own objects. This is one of the ways to mobilize resources for the appellant Institute, in view of the expectations of the UGC, which has issued separate guidelines of incentive for resource mobilization during 11 th plan from 2007 to 2012 , which, as one of its objectives has To encourage university to provide consultancy ON PAYMENT BASIS not only to the industries but to the government, and other bodies and society at large on vital issues of national importance (a copy of the UGC guidelines in this regard has been submitted). Therefore the activity of mobilization of resources through consultancy services automatically becomes an ancillary / incidental object of any University / Institute. Hence, in my view, the AO was not justified in observing that the provision of consulta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities. From the details of the consultancy fees received it is seen that the research / training is held practically every month and that too it is mostly held on the last day of the month. Further, on perusal of the TDS claims made by the assessee, it is seen that major Companies have deducted tax u/s 194C and 194J, which is in respect to TDS deducted for payment made on account of contracts and TDS on account of professional and technical services provided. Here, it is also pertinent to mention that nowhere in the objects of the institute, mention regarding providing of consultancy is made nor anywhere is it mentioned that providing consultancy services is an incidental objects to the main objects of the institute. Against the receipts of the Consultancy fees of ₹ 91,19,356/-, the assessee has shown payment of ₹ 38,01,185/- made to the professors, which shows that it is mainly an activity of consulting by professors under the roof of institutes and there is no major role of students of educational purpose as stated vide the assessee s submission. 4.4 Considering the continuity, magnitude, quantum and frequencies of the activities, which is read in conjunction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity; Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is [twenty-five lakh rupees] or less in the previous year;] Since the case pertains to the assessment year 2010-2011, therefore, the amendment which came into force with effect from 01.04.2016, is not reproduced hereinabove. 5.2 Section 11(4) provides as under:- For the purposes of this section property held under trust includes a business undertaking so held, and where a claim is made that the income of any such undertaking shall not be included in the total income of the persons in receipt thereof, the [Assessing] Officer shall have power to determine the income of such undertaking in accordance with the provisions of this Act relating to assessment; and where any income so determined is in excess of the income as shown in the accounts of the undertaking, such excess shall be deemed to be applied to purposes other than charitable or religious purposes. 5.3 Section 11(4A) provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, but the industry or business house, as the case may be, be given the freedom to have a particular member of the teaching staff of their choice for being appointed as consultant. 6. Permission may be granted by the Head of the Department with reference to other universities, research institutions and investigational research work undertaken on behalf of government, business or industry. 11. All honoraria received for consultation work shall be shared between the University and the consultant on the basis of 1/3 and 2/3. 12. Total amount received by a teacher after deducting the University s share in any one year as (i) honoraria for consultation work, (ii) honoraria for expert advise or opinion, industrial training during vacation etc. and (iii) the sitting fees for attending meetings of Boards of Directors of companies in the Public or Private Sector taken together should not exceed ₹ 50,000/- provided, however, that the Executive Council may grant permission to a teacher to accept an amount in excess of ₹ 50,000/- per annum, on the merits of the case and on such terms and conditions as the Executive Council may lay down. 15. Sitting fees fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of ₹ 4.0 lakhs. In addition, service tax as applicable on the entire amount i.e. ₹ 6.00 Lakhs shall be paid by BPCL. We shall also bear all expenses for Air travel, and local hospitality such as accommodation in Noida / Delhi, local transport. We shall appreciate very much your consent to have services of Dr.V.V.Mahajani. Sd/- N.V.Choudhary. 5.7 The Assessing Officer, after relying upon the provisions of section 2(15) r.w.s. 11(4A) of the Act, submits that the income accrued to the assessee on account of consultancy work given by the Professors is required to be taxed separately and is not an exempt income within the meaning of law. Per contra, the assessee contends that the income of the assessee is an exempt income, and therefore, is required to be exempt. It was also contended that for providing consultancy services by the Professors is an incidental activity of imparting education, and therefore, in furtherance of advancement of the education. It was also contended that the assessee is not doing anything rather the Professors are independently providing consultancy services to various Government and other organizations and it was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. The judgment of Narain Swadeshi Weaving Mills (supra) clearly provides that no general principle could be laid down which would be applicable to all cases and that each case must be decided on its own circumstances according to ordinary common sense principles. 5.9 The Assessing Officer, after scrutinizing the record, has held that considering the continuity, magnitude, quantum and frequencies of the activities, which is read in conjunction with the organized manner in which the same are being conducted, it is thus obvious that the same are being conducted with an intention to make profits in the shield of charitable activities. The profit generated out of the said consultancy services is not required to be exempted. The Circular of the University dated 31.07.1985 clearly postulates various things including para 2A, which provides that the consultancy work should not interfere with the normal teaching / research work of the department / university and other duties which may be assigned to staff by University authorities. The Circular further provides in para 12, 15 and 16 that the annual fees should not be more than ₹ 50,000 per month or ₹ 6,00,000 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not on the consultancy fees, but it was on the sale of prasadam, and therefore, not applicable to the facts of the present case. 5.12 In the case of Tolani Education Society (supra) relied upon by the assessee, was a case for admission of the student rather it was a case of generation of surplus income. Surplus income of the trust is separately dealt with u/s 11, therefore, the same is not attracted. 5.13 The other two judgments viz. in the case of Indian Chamber of commerce (supra) and Divya Yog Mandir Trust (supra) are not applicable in the case of the assessee. Though it is submitted that the even if the consultancy fees is treated as business income, there is no question of taxing the same, because the entire amount has been spent for the purpose of education. This argument advanced by the assessee is not applicable to the assessee in view of the provisions of law. 5.14 The Hon ble High Court of Punjab Haryana in the case of Regional Computer Centre Vs.: Commissioner of Income Tax [2009] 311 ITR 182 (P H) in the identical facts and circumstances had held that the assessee is not entitled for exemption under the Act. The relevant paragraphs of the judgment are repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act could not be availed of in respect of any income being profit and gains of business unless it is proved that the business was being carried on by a trust wholly for public religious purposes and the business consisted of printing and publication of books or publication of books or is of a kind notified by the Central Government in this behalf in the Official Gazette. It further required that separate books of account were maintained by the trust or institution in respect of such business and that the business was carried on by an institution wholly for charitable purposes and the work in connection with the business was mainly carried on by the beneficiaries of the institution. 14. The argument of Mr. Mukhi that the business was being carried on by the beneficiaries of the assessee RCC is liable to be rejected because the requirement of Sub-section (4A)(b) of Section 11 is not that the business is carried on for the benefits of the institution but it is required to be carried on by the beneficiaries of the institution. The beneficiaries like the Punjab University, Punjab Engineering College, various Government departments are not carrying on the business merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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