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2016 (6) TMI 979 - ITAT MUMBAI

2016 (6) TMI 979 - ITAT MUMBAI - [2016] 49 ITR (Trib) 533 - Eligibility of benefit of registration u/s 12A - Whether Pre-School would fall in the term ‘education’ as envisaged u/s 2(15)? - Held that:- In the case of Life Shines Educational & Charitable Trust (2015 (10) TMI 1478 - ITAT CHENNAI ) held that “pre-schooling’ shall fall within meaning and scope of the ‘education’ as used u/s 2(15). Thus, in view of the aforesaid discussion and facts of this case, we do not find any justification in th .....

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registration u/s 12A and we direct the DIT to grant the benefit of registration u/s 12A. Accordingly, the assessee is hereby granted the benefit of u/s 12A with effect from the date when the application was filed by the assessee. The AO is at liberty under the law to examine the aspect of application of income solely for the purpose of education and also to examine that the assessee is carrying out the activity of education only and AO is also permitted to examine compliance of other provisions .....

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passed by the Director of Income Tax (Exemption) Mumbai dated 29.11.2012, u/s 12AA(1)(b)((ii) r.w. section 12A of the Act, on the following grounds: 1.The learned Director of Income-tax (Exemptions), Mumbai (DIT) erred in passing an order under section 12AA read with section 12A rejecting appellant's application for grant of registration. 2. The DIT erred in holding that the appellant is running the pre-school essentially as a business or commercial activity rather than as a charitable one. .....

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ring its application for grant of registration. 5. The appellant submits that merely because preschooling is not recognized or regulated by any authority would not imply that the relevant activity cannot be regarded as "education" within the meaning of section 2(15). 6. The appellant submits that it had filed full details and explanation before the DIT in support of its application for grant of registration including the charitable nature of its objects and the DIT erred in rejecting i .....

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behalf of the Assessee and by Shri Goli Sriniwas Rao, Departmental Representative (DR) on behalf of the Revenue. 3. The brief facts and background of this case as culled out from the orders of the lower authorities and evidences produced before us are that the assessee is a trust as its name suggest, which has been constituted by the trust deed dated 10th day of February 2012, with the following objects as mentioned at para 3 of the trust deed: Objects of the Trust The settler hereby declares an .....

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s duly registered with the Charity Commissioner of Mumbai on 17.05.2012. The Ld. DIT rejected the application for grant of registration on following two reasons: (i). The assessee is running the pre-school which is stage prior to normal schooling, and therefore, its activities cannot be treated as falling within the gamut of Education as per section 2(15) of the Act. The justification given by the Ld. DIT is that as compared to formal education imparted in course of normal schooling, pre-schooli .....

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rust. 3.3. Being aggrieved, the assessee filed an appeal before the Tribunal. 3.4. During the course of hearing, Ld. Counsel vehemently and exhaustively made his arguments to assail the reasoning given by the Ld. DIT for denying the benefit of registration. It has been submitted by the Ld. Counsel that Ld. DIT has ignored the object mentioned in the trust deed wherein it is specifically provided that the trust has been constituted for the purpose of imparting high quality education to all types .....

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n in isolation from it. Ld. Counsel also relied upon the judgment of Chennai Bench of the Tribunal in the case of Life Shines Educational & Charitable Trust vs. ACIT in ITA No.2818 and 2819 (MDS) of 2014 60 taxmann.com 155 for the proposition that activity of running a pre-school and collecting the fee for imparting education to children shall be covered within the meaning of the term education as envisaged u/s 2(15). 3.5. Further, with regard to the second reason given by Ld. DIT, our atten .....

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p; establishment as well as arrangement of competent faculties so as to provide good quality of education for the students. Therefore, all the facts should be seen in totality and not in isolation. It was lastly submitted by him that in any case it was beyond the jurisdiction of Ld. DIT to examine these facts at this stage. It would be domain of the AO to examine whether the receipts from education activity have been applied solely in the activity of education or not. In case the AO is not satis .....

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e do not agree with either of the reasons given by the Ld. DIT for refusing the benefit of registration to the assessee trust, in view of our observations and discussion made in following paras . 3.8. Whether Pre-School would fall in the term education as envisaged u/s 2(15): We have gone through the reasoning given by the Ld. DIT and we find that the view adopted by him is not only contrary to law and facts, but we also find it to be highly myopic and regressive. In today s world the education .....

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schooling, schooling, higher education, professional education, vocational training, professions training etc etc. After completing the school education, students go for higher education which may be obtained through college, university or they may choose to go for a professional course even after completing the professional qualification. There are many post qualification courses. That is to convey that education may begin at any stage and it may go on throughout the life of a person. Under the .....

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t today for all the schools imparting quality educations. It is because sending a child to pre-school is like preparing a sapling of the tree to be planted in the fields. Recently, Mumbai Bench of the Tribunal in the case of ADIT (Exemption) vs Jeevan Vidya Mission (ITA Nn 770/M/2014 Dt 30-09-2015 analysed scope of the term Education as envisaged by the legislature while mentioning it u/s 2(15). Observation given in the order may be useful here and therefore reproduced hereunder: 8.1 In our cons .....

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under section 11 and 12. As per our understanding, the term education is of wide scope and amplitude, especially in the context of section 2(15). In this fast evolving society, the term education has assumed greater role and significance, then ever. Education has got pivotal role in evolution of a society. Therefore, keeping this crucial aspect in mind, the legislature in its wisdom had decided to place this activity within the definition clause of the term charitable purpose , as per section 2 .....

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t when the first proviso was inserted to section 2(15), the activity of education was not covered therein and only other object of general public utility alone was covered therein. The first proviso was brought in to curtail the scope of charitable purpose with respect to the activities of general public utility, by excluding the same from this definition, if it involved carrying on of any activity in the nature of trade, commerce or business. Further, even after huge litigation with respect to .....

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eaning and scope of the education as used u/s 2(15). Thus, in view of the aforesaid discussion and facts of this case, we do not find any justification in the view adopted by the Ld. DIT that preschooling is not part of education activity. In our considered view pre-schooling is very much integral part of the term education as has been envisaged u/s 2(15) of the Act and we hold so. 3.10. Whether charging of fee and retaining surplus amounts to commercial activity, disentitling an assessee from t .....

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on u/s 11 and 12 by the educational institutions, the assessee must carry out all its activities free of cost i.e. without charging anything from anyone. Rather as per section 2(15), the term charitable purpose includes interalia education . Thus the intention of the legislature is unambiguously clear that carrying out the activity of education itself is charitable. Thus, when the carrying out of the activity of education itself is a charitable purpose, then at the stage of granting registration .....

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for the purpose of education or not. But, since the registration is granted at the very inception of an institution, therefore the law has not put this duty upon the shoulders of the Ld. CIT/DIT. This obligation has been put by the legislature upon the shoulders of the AO who shall examine these facts at the stage of assessment of the trust and in case he is not satisfied with this aspect and find that the income of the trust has been applied for activities which are not permitted under the law, .....

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