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Income Tax Officer (E) Trust Ward-II, Delhi Versus Society for Driver Training Institute

2015 (12) TMI 694 - ITAT DELHI

Claim of exemption u/s 11 denied - CIT(A) allowed the claim - Held that:- It is seen that the assessee society was formed by Ashok Leyland Ltd., an Automobile conglomerate, on the request of Govt. Of NCT of Delhi to impart training to drivers of buses & trucks including DTC buses to make Delhi roads safe. The various training courses are designed and prescribed by Government of India, Ministry of Shipping, Road-Transport & Highways. The course content comprises of classroom instruction, training .....

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e and PSV Badges are issued/renewed by the Transport Authority. A major part of the activity of the society is training of DTC drivers from grants received from Ministry of Shipping, Road Transport & Highways, Govt. of India (MORTH). Indisputably, substantial activity of the assessee revolves around providing training to drivers of buses and trucks. The training programmes are designed/ approved by the Ministry of Shipping, Road Transport and Highways which also gives grants to the assessee soci .....

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and the Hon’ble High Court of Delhi in Institute of Chartered Accountants of India and Another v. DIT (Exemptions) and Others (2013 (7) TMI 205 - DELHI HIGH COURT ) we find no reason to interfere with the impugned order of the Ld. CIT (A). - Decided in favour of assessee. - ITA No. 5110/Del/2013 - Dated:- 30-11-2015 - Shri J. Sudhakar Reddy Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Shri Sujit Kumar, Sr. DR For the Respondent : Shri Rakesh Gupta, Advocat .....

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of different courses and training conducted during the period under consideration. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in applying the ratio of judgment of Hon'ble High Court in the case of Bureau of Indian Standard and allowing the relief to the assessee by holding that the activities of the assessee are charitable in nature within the meaning of section 2(15) of the Act. 3. In the facts and circumstances of the case and in law the Ld. C .....

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1 vide order dated 28.07.2006. Return for the assessment year under consideration was earlier processed u/s 143(1) of the Act at NIL income and the case was later selected for scrutiny. During the assessment proceedings u/s 143(3), the AO while denying the assessee s claim of exemption u/s 11 observed on pages 6 & 7 of the Assessment Order as under: In the instant case, during the period under consideration the Society was involved to impart training to drivers of buses & trucks includin .....

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ions stipulated in both the above mentioned provisions to section 2(15) stand satisfied and assessee is hit by the proviso to section 2(15). It is evident that the dominant activities carried on by the assessee have to be considered under 'advancement of any other object of general public utility' as per the definition of 'charitable purpose' contained u/s. 2(15) of the IT Act, 1961. From the fact mentioned above, it is gathered that the assessee is in receipt of fees from render .....

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the assessee during the period under consideration is not charitable, therefore, the assessee would not be entitle for exemption of income u/s. 11 & 12 of the IT act and the whole of the surplus generated from business activities of the assessee is liable to tax under section 164 at MMR (Minimum Marginal Rate) only depreciation on the fixed assets purchases during the year will be allowed. 3. However, the Ld. CIT (A allowed the assessee s appeal by observing as under: In this regard I have g .....

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business or commercial, merely because testing procedure involves charging of fees. The ratio of the above mentioned judgment is clearly attracted on the facts of the case, because the appellant is charging the fee for training the Drivers of different categories. So, it does not involve trade, commerce or business as assessee is in receipt of fee from rendering services for training the drivers of Buses and Trucks and it falls under the last limb of the Sec. 2(15) which is advancement of any o .....

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ders any service in relation to trade commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assesees, who claim that their object is &# .....

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Indian Standards, as discussed above, it is held that its activity do not have element of trade, commerce or business. Accordingly, grounds No. 1,2 and 6 are allowed. Ground No. 3:-The appellant has taken the ground that its activity falls under the category of education. For this appellant has relied on the judgment of Hon ble Gujarat High Court in the case of Gujarat State Co-operative Union vs. CIT, 195 ITR 279.,(Guj), wherein, judgment of Hon'ble Supreme Court in the case of Sole Truste .....

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hicles in a very systematic manner to increase the skill which is in the nature of increasing the capability and perfection. This activity falls under the purview of 'education', as has been contended by the appellant and reliance on the judgment of the Hon'ble Gujarat High Court and Hon'ble Supreme Court, as discussed above, is appreciated. In view of the above, ground No. 3 of the appeal is also allowed. 4. Now, in this present appeal, the Department has challenged the finding .....

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very year and hence it cannot be said that there is no profit motive. The Ld. DR further emphasised that after the amendment to the proviso to Section 2(15) of the Income Tax Act, 1961 w.e.f. 01.04.2009, the profit motive was no more important. The Ld. DR further submitted that charitable trusts with general object of public utility are required to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or busin .....

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e submitted that the proviso to section 2(15) is not applicable to the assesseee s case at all. He placed reliance on the decision of the Hon ble High Court of Gujarat in Gujarat State Cooperative Union vs. CIT 195 ITR 279 (Guj). He submitted that in view of the judgment of the Hon ble High Court of Gujarat the assessee society is a purely educational society and the proviso to section 2(15) is not applicable to the assesee society. 6. We have heard the rival submissions and have also perused th .....

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which the word 'education' has been used in section 2(15) in the systematic instruction, 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 .....

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o indicate as to what the Word 'education' appearing in section 2(15) of the Act which defines 'charitable purposes' is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word 'education', persons other than 'young'. The expression 'schooling' also means 'that schools, instructs or educates' (The Oxford English Dictionary, Vol. IX, page 217). The Supreme Court has observed that the word ' .....

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d '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 Para 17 of its judgment, that the word 'education is limited to schoo .....

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the Supreme Court in the said decision. Though, in the context of the provisions of section 10(22), the concept of education need not be given any wide or extended meaning, it surely would encompass systematic dissemination of knowledge and training in specialized subjects as is done by the assessee. The changing times and the ever widening horizons of knowledge may bring in changes in the methodology of teaching a shift for the better in the institution set up. Advancement of knowledge brings .....

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ed). Even if it were to be held that the observations of the Supreme Court would apply only to the schools, colleges and similar institutions as held by the Tribunal, we are satisfied from the nature of the activities of the assess- Cooperative Union of running colleges and training centres for courses for the purposes of imparting training and / or awarding diplomas and certificates that the assessee is an educational institution existing solely for educational purposes and not for the purposes .....

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ell as various activities carried on by the Institute, it was clear that the Institute did not carry on any business, trade or commerce. The activity of imparting education in the field of accountancy and conducting courses both at pre-qualification as well as post-qualification level were activities in furtherance of the object for which the Institute had been established. 8. It is seen that the assessee society was formed by Ashok Leyland Ltd., an Automobile conglomerate, on the request of Gov .....

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