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2016 (5) TMI 875 - ITAT DELHI

2016 (5) TMI 875 - ITAT DELHI - [2016] 49 ITR (Trib) 388 - Denial of exemption u/s 11 & 12 - activities of the assessee institution questioned - whether activities carried out by the assessee fell outside the purview of charitable purpose as per section 2(15)? - Held that:- AO is found to have referred to the activities in the assessment order. However, he has not cared to factually examine the same. Satisfied by enumerating the activities, he has failed to examine the supporting facts and requi .....

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meeting specific requirements and following a course program as approved and recognized - A perusal of the finding arrived at by the CIT(A) makes it clear that the details of the various courses conducted by the assessee alongwith rules and regulations adhered to by it depicting its operating procedures were all considered and examined in extenso and neither these findings have been upset in the present proceedings nor anything upsetting these has been referred to by the Revenue in the Rema .....

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presumed to have given their giving approvals as per industry standard requirements by way of their Agreements/approvals etc on a year to year basis after due care and diligence, considering the adherence of standards and requirements to be met in the industry specific skill/qualification requirements. - Considering the peculiar facts and circumstances of the case and the position of the law which is further found supported by the decision of the Hon’ble Bombay High Court in the case of DIT .....

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dicial Member The present appeal has been filed by the revenue assailing the correctness of the order dated 28.2.2012 of CIT (A) -XII New Delhi pertaining to 2008-09 assessment year on the following grounds :- 1. "On the facts & in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing exemption u/s 11 & 12 of the Act because the activities carried out by the assessee fell outside the purview of charitable purpose as per section 2(15) of the Act. 2. On the f .....

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supported by audit report in Form No. 10B, balance sheet, income and expenditure account with relevant schedules. 3. The main objects of the society are as under :- "3.1. To impart specialized training in the field travel & tourism to existing Travel & Tourism Industry personnel national & International levels. 3.2. To impart basic and advanced level training in the field of Travel & Tourism to young graduate and undergraduate aspirants to the Travel & Tourism Industry a .....

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avel I & tourism industry . 3.1. In the scrutiny proceedings, the AO required the assessee to justify that the activities were covered within the meaning of education as per the definition of charitable purposes contained in Section 2(15) of the Income Tax Act 1961. The triggering factor for this query was the fact on record that the assessee had provided coaching / training for the period under consideration for which purposes a sum of ₹ 70,36,300/- had been received. The coaching/tra .....

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assessment proceedings have been duly considered. After going through all these submissions, it is seen that crux of assessee's submissions are contained in letter dt. 10.12.2010 and relevant portion of such submissions, pertaining to the issue under reference (para-5 above), are extracted below:- "As already explained in our earlier submissions the Society is broadly conducting eight courses / training programmes. All these courses educate the desirous students about the various aspec .....

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lopment Institute [ITDI] based in Canada. ITDI imparts diploma and certificate courses in travel/tourism / aviation / cargo disciplines as a part of distance learning programme through its Authorised Centres. Bird Education Society for Travel & Tourism {BESTT} is one of the authorized centres. Distance learning programme is a career oriented training programme for the aviation '1 learning sector providing students with industry wide knowledge and globally recognized qualifications. Every .....

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s attached herewith ..... "Certificate course in Travel & Tourism" is a course which is being conducted in conjunction with Miranda House, University of Delhi and has the approval of University Grant Commission .... "Computerized Reservation System" course is recognized by the New Delhi Young Men's Christian Association [YMCA] under its Human Potential development Programme. These courses are being offered to the YMCA sponsored students at a subsidized fee. "Tall .....

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time bound schedule before taking up examination. The course may not be presently approved by a government regulatory authority in the field of education as the same is still to form a part of regular college curriculum as the infrastructure required to conduct these courses is not there but as the demand for professionals in the field of travel and tourism grows this field I will get the due recognition". 3.3. Since the courses admittedly were not accredited by UGC/Secondary Board, etc. i .....

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t was concluded that IATA gave authorization on year to year basis and it was basically a business venture for spreading IATA s Authorized Training Centres. 3.4. In the circumstances, it was hold that equipping the persons with the rules and regulations for ticketing, air ticketing, air travel, cargo etc. could not be considered educating them. Reliance was placed upon in the case of Sole Trustee Lok Shikshan Trust vs. CIT 101 ITR 234 (SC) and Saurashtra Education Foundation vs. CIT (2005) 273 I .....

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xemption u/s 11 & 12 the corpos donations in terms of the provisions of section 2(24)(iia) were held to attract taxability leading to the assessment being concluded at an income of ₹ 2,30,71,122/-. 4. Aggrieved, the assessee travelled in appeal before CIT(A) and submitted that the assessee in the year under consideration carried on the same activities as carried on in the earlier years namely the activities of providing vocational training in the field of travel and tourism by offering .....

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rogrammes of one year duration and Certificate programmes of shorter duration aimed at providing not only techno managerial knowledge and skills, development of personality but also cross cultural orientation. As an IATA authorized training centre it was submitted it not only was approved by IATA but also Director General of Civil Aviation (DGCA) and it had been imparting training at a very highly subsidized fee, to young men and women in the field of travel and tourism in association with the f .....

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s, it was submitted were distinguishable and instead the issue was supported by Oxford Academy for careers Development vs. Chief CIT reported in 315 ITR 382(All). It was further submitted that the AO has incorrectly interpreted the provision of section 2(15) of the Act and the amendment carried out by the Finance Act 2008 w.e.f 1.4.2009 and the relevant legislative intentions which infact had been explained by the CBDT Instruction No. 1 dated 27th March, 2009 reported in 310 ITR 42(St) relevant .....

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ind for reasons to be brought out in detail hereinafter that in the peculiar facts and circumstances of the case, nothing has been placed before us to upset the detailed finding of fact arrived at by the CIT(A). We find that the claim of the assessee made before the CIT(A) that the arguments advanced before the AO are being re-iterated has not been upset. We find that in the facts of the present appeal, the distinction on facts drawn from the decision relied upon by the AO were confronted to the .....

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efore the CIT(A) relying upon the assessment order itself has submitted that the registration granted to the assessee till date has not been withdrawn. The assessee it is seen is a society registered under the Societies Registration Act XXI of 1860 vide Registration No. S-33130 of 1998 dated 15th June 1998. It is also a fact that the assessee was granted registration u/s 12A of the Act vide order No. DIT(E)/2001-02/B- 858/131 dated 29th May, 2002 effective from 1st April, 2002. The ld.CIT(A) tak .....

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tently put up a claim that it is a charitable society - trust and relying upon the judicial precedent as considered by the aforesaid decisions of the Hon ble Allahabad High Court namely Oxford Academy for careers Development and the decision of the Delhi High Court in the case of Delhi Music Society has submitted that there is a pre-defined training program which is strictly adhered to. The requisite information and details have specifically been called for by the First Appellate Authority and h .....

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d hereinafter. 8. A perusal of the record shows that the AO has mis-directed himself by envisaging a very narrow scope of the term Education as appearing in section 2(15) of the Income Tax Act. The facts qua the issue which have already been addressed are not being repeated and on the nature of activities conducted by the assessee there is no dispute the dispute is solely on the ground that the education is not recognised by UGC/Board etc. under the aegis of the Government. We find that the narr .....

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tion 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. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and having dealings with other people, some of whom are not straight, yo .....

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education in the great school of life. But that is not the sense in which the word education is used in cl.(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. 9. The import and the context of the above observations of the Hon ble Apex Court came to be considered by the Hon ble Gujarat High Court in the case of Gujarat State Co-operative Union vs. CIT reported in 195 ITR 279 ( .....

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sting of 18 weeks, 12 weeks, 10 weeks and 24 weeks duration respectively. The activities of conducting of seminars and running four cooperative training centres; conducting special courses for employee of urban cooperative banks, district co-operative banks and market class, and also seminars. The assessee therein also conducted co-operative education program, consumer education programme, women co-operative education programme etc. amongst its list of activities in the context of these aforesai .....

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s. 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, Vo!. IX, p. 217). The Supreme Court has observed that the word "education" also connotes the whole course of scholas .....

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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 schools, colleges and similar institutions and does not .....

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quot; 11. Reverting to the facts of the present case, the AO is found to have referred to the activities in the assessment order. However, he has not cared to factually examine the same. Satisfied by enumerating the activities, he has failed to examine the supporting facts and requirements qua the specific courses; duration of the course; the course fee and the assessee s explanation and instead of examining and considering the same which evidently was filed and made available he has instead jum .....

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tification Certificate Course in Travel and Tourism Certificate Course in Travel & Tourism in collaboration with Miranda House Computerized Reservation Systems in collaboration with YMCA lATA/UFTAA Foundation lATA/GDS Fares Ticketing Tally Financial Accounting Programme Soft Skills 12. A perusal of the finding arrived at by the CIT(A) makes it clear that the details of the various courses conducted by the assessee alongwith rules and regulations adhered to by it depicting its operating proce .....

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was directed to file details of the various courses conducted by it along with rules and regulations articulated by it depicting its operating procedures, These details were furnished by the appellant and I have examined the same. It was observed that for each and every course conducted by the appellant there is a pre-defined training program which is strictly adhered to, The training program clearly sets the rules and regulations as regards eligibility criteria for course, registration and fee .....

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regards Dangerous Goods Regulations Course the course content/set is prepared by Director General of Civil Aviation (DGCA), education and training i provided by the appellant, examination paper is approved by DGCA, examination is conducted by appellant. and the Diploma Certificate approved by DGCA is awarded by appellant to the successful candidates/students. As regards Certificate Course in Travel & Tourism in collaboration with Miranda House the course content is set Miranda House, educat .....

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s courses conducted by it, it is seen there are some students who have been unsuccessful in the examinations. These students then re-appeared for re-examination with the appellant in the next term of the relevant course. A proper attendance record is being, maintained by the appellant for all the students as well as the teachers and visiting facilit : The appellant has also set operating standards for the various courses conducted by it. These operating standards clearly ear mark for each course .....

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hips hold as under considering the facts of that case: "11. Even if these tests are applied to the case of the petitioner, the petitioner fulfils them. As has already been noticed, the petitioner is teaching and promoting all form of music and dance, western, Indian or any other. In accordance with the object, it is running a music school in Delhi, collecting tuition fee and admission fee from the students. Teachers have been employed and they have been paid salaries. Expenditure is also in .....

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Key Board, Wind Instruments, Drums and Vocal. The school faculty comprises of 30 teachers with 25 of them being Grade 8 and above in western music. There is reference to scholarships that are open to the students including waiver of fees from 25% to 90%. It has been stated that several students of the school have gone on for higher musical studies to places like Moscow, London, New York, Prague and Rome. The schedule of fees effective from April, 2011 i also made part of the annexure. There are .....

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demonstrations arranged for the benefit of the students from time to time and that attendance in such workshops would be compulsory, that students who report late by more than 20 minutes may be marked absent and so on. There is also a rule that the students; who are irregular in attending the classes or absent them elves frequently for long periods without prior intimation, would be removed from the rolls and if any of the students are found lacking in application or discipline, they are liable .....

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wledge, skill, mind and character of the students by "normal schooling". It cannot be doubted that, having regard to the manner in which the petitioner runs the music school, that there is imparting of systematic instruction, schooling or training given to the students so that they attain proficiency in the field of their choice - vocal or instrumental in western classical music. .................. 16. Another aspect to be noticed is that normally coaching centres are run for shorter p .....

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lid objection as not only considering the aforesaid decision but also considering the approvals/recognition of sector specific competent Authority like DGCA at the national level and IATA at the global level who are presumed to have given their giving approvals as per industry standard requirements by way of their Agreements/approvals etc on a year to year basis after due care and diligence, considering the adherence of standards and requirements to be met in the industry specific skill/qualific .....

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oon Foundation [1985] 154 ITR 208/22 Taxman 9. Interpreting the provisions of Section 10(22) of the Act, the High Court observed as under:- "We are also unable to accept the contention of Mr. Maitra that an educational institution to be eligible for exemption under Section 10(22) should be affiliated to any university or any board. Section 10(22) does not impose such a condition. So long as the income is derived from an educational institution existing solely for educational purposes and no .....

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, a university or board. " This judgment takes care of the objection of the prescribed authority that the petitioner is not affiliated to, or recognized by any university or board in India and that it merely awards certificates or grades which are issued by the Trinity College and Royal School of Music, London. Since Section 10 (23C)(vi) also uses the same language as Section 10(22), the same principle should govern the interpretation of that provision also. " 16. We further find that .....

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nducting various classes for students of class X, XI and XII for CA Entrance Examination. Apart from that it was also holding refresher courses for teachers teaching in various schools. Further the issue under consideration in the facts of that case was exemption claimed u/s 10(22) of the Act. We find that in the circumstances, reliance on the said decision was misplaced. In fact the Hon ble Gujrat High Court itself has held that there is a difference in the concept of education as envisaged u/s .....

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are being carried on by the assessee herein without imparting formal education and without being affiliated to or accountable to any authority. Such a trust can certainly be considered as qualifying for exemption under section 11 (1)(a) read with section 2(15), hut the term 'the educational institution' contemplated by section I0 (22) is a narrower concept. Though 'educational institution' and the educational activities are closely interconnected; in section 11 (1)(a), read with .....

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e continues to enjoy exemption u/s 12A, a finding which has not been assailed by the Revenue. Accordingly, considering the decision of the ITAT in the case of Surat City Gymkhana vs. ACIT reported in 76 ITD 127 (Ahd.) which has been upheld by the Hon ble Gujarat High Court and stands affirmed by the Hon ble Apex Court in the case of ACIT vs. Surat City Gymkhana (SC), we find that it is also worth referring to at this juncture. Thus, reference to the following discussions from the order of ITAT i .....

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titution is established accompanied with the accounts of the institution relating to such prior year or years for which such accounts have been made up. The grant of registration by the CIT under section 12A does not constitute an empty formality which is to be completed in a routine and mechanical fashion by the CIT without any scrutiny regarding the charitable nature of the trust or institution required to be registered under the 1. T. Act. If goes without saying that registration under sectio .....

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tions 11 to 13 are fulfilled by the assessee. In our opinion it is beyond the powers of the Assessing Officer to reject the claim of exemption under section 11 by looking into the objects of the association and holding the same as non-charitable in nature. In support of the view being taken by us here, reliance is placed on the judgment of Calcutta High Court in Ananda Marga Pracharaka Sangh v. CIT [1996J 218 ITR 254.At page 270 of the report their Lordships observed as follows: "It may be .....

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s of the latest accounts of the applicant-trust or institution for as far as back as three years to accompany each application. The requirement of obtaining the details as also the copies of the past accounts cannot be said to be a ceremonial one. The purpose is to examine the objects of creation a' well as an empirical study of the past activities of the applicant for three years where the application is made belatedly so that the Commissioner could come to a conclusion on examination of al .....

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