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2016 (1) TMI 212 - ITAT DELHI

2016 (1) TMI 212 - ITAT DELHI - TMI - Exemption u/s. 11 denied - whether mere grant of registration u/s. 12A does not entitle the Assessee for exemption u/s. 11 and that the real activity of the society has to be looked into? - whether these activities of the Society would fall within the term of “Education” for the purpose of Section 2(15)? - Held that:- The activities carried out by the assessee fall within the term ‘Education’. The Revenue was wrong coming to the conclusion that, only when As .....

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annot be called a business receipt or fee taken for business activity or for service in relation to any trade, commerce or business. There is no profit motive in the case of the assesseen, hence, the Proviso in question is not attracted in the case of the assessee. Hence, direct the Assessing Officer to grant exemption u/s. 11 of the I.T. Act. - Decided in favour of assessee. - ITA No. 816/Del/2015 - Dated:- 16-10-2015 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER For The Appellant by : Sh.J.P. Ja .....

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The exemption certificate u/.s. 80G was also granted u/s. 80G on 14.9.2011. The Assessee filed its return of income on 17.8.2010 for the assessment year 2010-11 claiming exemption u/s. 11 of the Income Tax Act, 1961. The AO in his order passed u/s. 143(3) on 6.2.2013 held that the activities of the Assessee are not covered under the provisions of the Act after the amendment to Section 2(15) and hence, exemption u/s. 11 cannot be granted. He further held that mere grant of registration u/s. 12A .....

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tation to the term Education in the judgment of Supreme Court in case of Trustee Loka Shikshana Trust vs. CIT 101 ITR 234 and other decisions. . The Ld. CIT(A) held that the Assessee is not engaged in the activity of providing education as defined u/s. 2(15) of the I.T. Act and therefore, the aims and objectives of the Trust fall under the category of advancement of any other object of general public utility and that the proviso to 2(15) is attracted. In view of the fact that the receipt of the .....

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e of mutuality do not apply. He upheld the order of the AO. 6. Aggrieved, the Assessee is in appeal before me on the following grounds:- 1. That the assessment order passed by Ld. Assessing Officer is bad in law and is not based on facts. 2. That treatment of the activities of the society as business activity instead of activities covered u/s 2(15) is bad in law and is not based on facts. 3. That Ld. Assessing Officer has erred in law and on facts in not treating the activities of the society as .....

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e society. 7. That the Ld. CIT (Appeal) has erred in law and on facts while. dismissing the appeal. 7. I have heard Sh. J.P. Jain, Ld. Counsel for the Assessee and Mrs. Rakhi Vimal, Ld. DR on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case and on perusal of the documents on record and the orders of the authorities below as well as case laws cited, I hold as follows. 8. The assessee-society affiliates schools, through which it pursues its objects. 65 s .....

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ife and to bring other schools under its guidance and to guide, take care and control in order to bring homogeneity in their activities and improvements with coordination. c) To inculcate patriotism, discipline, self-reliance and dignity towards labour among the students and to do all necessary activities for their moral development. d) To do all necessary activities to achieve the objectives of the society and compile, distribute and publish necessary literature and material and to form sub-com .....

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09 at Baleram Brijbhushan Saraswati Shishu Mandir Inter College, D Block, Shastri Nagar, Meerut. List of participants enclosed. (Page No. 6 to 7of Paper Book) 2) Sanskriti Gyan Pariksha:- Sanskriti Gyan Pariksha conducted by Vidya Bharti Sanskriti Shiksha sanstha" Kurukshetra was conducted on 24th December in which 27040 students took part from class 6th to 12tyh from 59 affiliated schools. List of school wise/Class wise students participants enclosed. (Page no. 8 to 13 of Paper Book) 3) Ap .....

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ion of magazine:- Society publishes one magazine, 'DARPAN', every year in which educatlve-motlvatlng, innovative and imaginative entries are contributed by students and teachers. Magazine also contain statistics pertaining to affiliated institutions and activities of the societvand affiliated schools. (Page no. 20 of Paper Book) 6) Setting and Preparation of examination papers:- The society provides examination papers to the affiliated institutions twice in a year for which a workshop of .....

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inners as declared by umpires is enclosed (Page No-25 of Paper Book) b) The winners ofthe state sports meet participate in regional sports meet organized by Vidhya Bharti Akhil Bhartiya Shiksha Sansthan, Lucknow. 89 students participated in regional sports meet organised at Krishna Bal Vidya Mandir Inter College Mangupura Distt. Muradabad (Page No. 26). c) One student Sudhir Kumar of Class XI from Surajbhan Saraswati Vidya Mandir Inter College, Shikarpur, Distt. Bulandshahr participated in Natio .....

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Fair and Quiz Programme:- a) Society annually organizes a science fair and quiz programme for the students of affiliated institutions. b) During the year it was organized at Dayawati Deewan Singh Shukl Saraswati Vidya Mandir, Inter College, Gulawati Road, Sikandrabad, District Bulanshahar (UP), from 31st October, 2009 to 1st of November, 2009 in which 483 students participated and 31st October, 2009 to 1st of November, 2009 in which 483 students participated and 66 students were selected for re .....

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List of meritorious students alongwith the scholarship eligibility test papers to whom scholarship was given is enclosed (Page No. 35 to 43 of Paper Book) 11) Financial assistance to educational institutions:- During the year society provided financial assistance to two institutions. List is enclosed (Page No. 44 of Paper Book) 12) Group Insurance:- The society arranges group insurance from L1C for the willing teachers and Principals. Part of the premium is paid by the society. List of beneficia .....

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standard of education, financial management, general administration and infrastructure. On the basis of inspection report the suggestions for improvement are given by the inspection team to the principal of the institution and the management of the institution. A sample inspection report is enclosed. (Page no. 48 to 74 of Paper Book) 15) Other activities:- In addition to the above activities of the society, the office bearers of the society and senior officials from Vidhya Bharti Akhil Bhartiya .....

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the purpose of Section 2(15) of the Act. 12. The term Education as interpreted by the various Courts including the Hon ble Supreme Court of India is discussed below. The expression education has not been defined under the provisions of Income Tax Act. The Hon ble Supreme Court in the case of Lok Shikshana Trust (supra), has been pleased to explain the meaning of the word education in the context of section 2(15) of the Act. As per this decision education is the process of training and developin .....

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ional institution within the meaning of section 10(23C)(vi) of the Act. In the case of ITO vs. SRM Foundation of India (supra) the Delhi Bench of the Tribunal, where the assessee was engaged in spreading the system of transcendental meditation (TM) has held that irrespective of the fact that the assessee has its own prescribed syllabus, trained teachers, branches all over India to spread system of transcendental deep meditation among people in all walks of life, the same constituted imparting of .....

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directly, it can be held to impart education. In my view, the Education can be imparted, even through affiliated schools also. A perusal of the activities listed above demonstrates the same. The acitivty of the assessee-society in my view is educational acitvity. 14. Even otherwise, we find that Ld. CIT(A), Ghaziabad has recorded that the AO has concluded that the aims and objects of the Society-Trust falls under the category advancement of any other objects of general public utility . The exemp .....

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, with retrospective effect from April 1, 2009. There are four main factors that need to be taken into consideration before classifying the activity of the assesseee as "charitable" under the residuary category, i.e.," advancement of any other object of general public utility" under section 2(15) of the Act. The four factors are (i) the activity should be for advancement of general public utility; (ii) the activity should not involve any activity in the nature of trade, comme .....

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the statutory amendment is no longer relevant and apposite. It is evident from Circular No. 11 of2008 that a new proviso to section 2(15) of the Act is applicable to assessees who are engaged in commercial activities, i.e., carrying on business, trade or commerce, in the garb of "public utility" to avoid tax liability. The legal terms "trade, commerce, or business" in section 2(15) mean activity undertaken with a view to make or earn profit. Profit motive is determinative an .....

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the purpose and object behind the fee, etc., are several factors which will decide the seminal question, is it business? Charitable activities require operational/running expenses as well as capital expenses to be able to sustain and continue in the long run. There is no statutory mandate that a charitable institution falling under the last clause should be wholly, substantially or in part must be funded by voluntary contributions. A practical and pragmatic view is required to examine the data, .....

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