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2016 (10) TMI 985 - ITAT DELHI

2016 (10) TMI 985 - ITAT DELHI - TMI - Non granting registration u/s 12A - partition of education society without seeking necessary approvals / sanctions from competent authority in terms of societies registration act - DIT (E) observed that the courses run by the trust (the appellant) are neither recognised nor a part of regular curriculum of any university / education programme; and further, that these were just skill development / enhancement courses / programme which cannot be termed as educ .....

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ts are clearly in the nature of charitable purposes, and more particularly, are to be regarded as “education”. - We have also already held that the courses and programs actually run by the aforesaid units of the appellant trust are to be regarded as “education”. Thus, the activities of the appellant trust are genuine. We have also found that Ld. DIT(E) has failed to bring out relevant and adequate materials on the basis of which it can be reasonably held that the activities of the appellant .....

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pellant trust. Thus Ld. DIT(E) failed to make out a case for rejection of registration u/s 12AA / 12A of I.T. Act. Therefore, we direct Ld. DIT(E) to grant registration u/s 12AA/12A - Decided in favour of assessee - ITA No.:- 3748/Del/2014 - Dated:- 26-8-2016 - SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI ANADI N MISHRA, ACCOUNTANT MEMBER For The Assessee : Shri A.K. Srivastava, FCA For The Department : Mrs. Meenakshi Singh, CIT(DR) ORDER PER ANADI N MISHRA, A.M. This appeal filed by the assessee .....

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s enrolled for various degree courses under University of Delhi, in the field of Annimation, Radio & TV Broadcasting Arts, Theatre Art etc., as well as observing that the applicant Trust was imparting certain courses (stated in the order),grossly erred in holding that the activities of the Trust do not fall under the definition of education and the Trust is not imparting education. 3. That the Learned Director of Income Tax (Exemptions) erred in holding that the MOU between R K Convent Schoo .....

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l Society was not legally entitled to part with its assets without seeking necessary approvals! sanctions from the Competent Authority, without citing the exact default, if any, is not relevant in disposing the applicant Trusts' request for registration u/s 12A of the Income-tax Act, 1961. 5. That the observations of the Learned Director of Income Tax (Exemptions) are contradictory, based on surmises and conjectures and are not supported with any evidence. 2. All the grounds of appeal are ag .....

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om each of the four trustees and ₹ 51,000/- received from Mr. Deepak Bansal, author of the trust on different dates. The appellant trust appl ied for registration u/s 12AA/ 12A of I.T. Act vide appl ication dated 18.10.2013. The Ld. DIT(E) called for certain information on 17 different points vide letter dated 28.10.2013 (page 11 of paper book filed by the appellant). The appellant submitted reply vide letter dated 18.11.2013 (pages 12 to 18 of paper book submitted by appellant). Further d .....

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of the appl icant trust were non genuine. The Ld. DIT(E) came to this conclusion on the basis of following grounds : i) The trust has been created by Shri Deepak Bansal primarily to take over part of the activities of R.K. Convent School Education Society being run under the presidentship of Shri N.C. Bansal father of Shri Deepak Bansal. The whole transaction, Ld. DIT(E) held was in the nature of division of the assets of a family unit - father giving a share in his property to his son. For comi .....

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arrying out its educational activities since many years. The society has parted with its some of the activities since many years. The society has parted with its some of the activities - R.K. Films and Media Academy and R. K. College of Systems and Management and authorized the applicant trust to carry out the same. Further, some of the assets of the society too have been transferred to the trust at its book value. In this regard, a reference is made to a document submitted by the applicant duri .....

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Delhi, is willing to take over the entire said unit to be run under the banner of his proposed Educational Trust to be duly registered as a social & charitable trust. After negotiating on the issue it was resolved that if the aim and objects of the proposed Educational Trust to be authorized by Sh. Deepak Bansal, are the same and if the society can legally transfer its assets of the unit to the said newly created Educational Trust of Shri Deepak Bansal, then believing the credibility of Sh. .....

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, at Punjabi Bagh, be also wasted with the proposed Educational Trust of Shri Deepak Bansal, if so mutually agreed That the chairman & the President of the Society Sh. N. C. Bansal be and is hereby authorized to finalize the Memorandum of Understanding with the proposed Educational Trust of Shri Deepak Bansal after its due registration & to give effect to the mutually agreed terms. " 5.2 It is thus clear that the trust has actually been created/formed by Shri Deepak Bansal, primaril .....

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he necessary affiliation.. The courses are being run from the same premises with the same faculty and the same infrastructure. In fact, the activities already being run by the society are being passed off as the activity of the applicant trust. The reasons can be many - the society wishes to keep its turnover below a threshold limit to escape the requirement of law/scrutiny of returns which is linked to the turnover, or a father in his low for his son wants to settle his son in business as happe .....

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the whole arrangement not being genuine, it was in the interest of Revenue that such transactions are not allowed to be passed off as genuine charitable activities so that the tax benefit meant for true charitable institute is not usurped by scheming / opportunist entrepreneurs iii) The Ld. DIT(E) held that R.K. Convent School Education Society being registered under Societies Registration Act and also under section 12AA of I.T. Act was not legally allowed to part with its assets (to the applica .....

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orised arrangement (with R.K. Convent School Education Society) cannot be held to be carrying out genuine activities. iv) The Ld. DIT (E) observed that the courses run by the trust (the appellant) are neither recognised nor a part of regular curriculum of any university / education programme; and further, that these were just skill development / enhancement courses / programme which cannot be termed as education. The Ld. DIT(E) made a reference to the decision of Hon ble Supreme Court in the cas .....

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ition of further knowledge constitutes education. 3. During the course of hearing in ITAT we have heard both sides. We have also perused the materials on record. Ld. AR of the appellant contended that the impugned order dated 30.04.2014 of the Ld. DIT(E) was bad in law being based on irrelevant considerations, and exceeded the authority vested in her in deciding the issue of registration u/s 12AA/ 12A of I.T. Act. In support of this contention, he argued that seeking information on as many as 17 .....

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;H) (HC) (Mag.)(2012), CIT vs. Baba Deep Singh Educational Society (2012) 206 Taxman 131 (P &H) (HC) (MAg.), CIT vs. Red Rose School (2007) 162 Taxman 19 (All.), Prayer for India v. ITO (2011) 7 ITR (Trib.) 201 (Chennai), Director of Income Tax v. Foundation of Opthalmic & Optometry Research Education Centre (2013) 355 ITR 361 (Delhi), CIT (E) v. Sai Ashish Charitable Trust , Jaipal Singh Sharma Trust vs. CIT Ghaziabad I.T. No. 6475/Del/2014 , Shriram Education Foundation vs. DIT(E) ITA .....

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at the observation of Ld. DIT(E) that the activities carried out by the appellant trust did not amount to education was contradictory in itself ; the Ld. DIT(E) having herself stated in paragraph 3 of her order that the activities of R.K. Convent School Education society (which was earlier carrying out these activities) were educational activities. Ld. AR of the appellant further rel ied on decisions of Delhi Bench of ITAT in Divya Yog Mandir Trust, Haridwar ITA No. 387/Del/2013 B Bench order da .....

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upport and run schools, colleges, social service centres, industrial training centres, skill development centres, coaching institutes, boarding houses, day shelters, research and training centres and other institutions of education, having objects similar to those of this trust for imparting elementary and higher education, technical, industrial or commercial knowledge or training amongst public. R.K. Education Trust (the appellant) has been formed by Mr. Deepak Bansal, son of Mr. N.C. Bansal (P .....

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management committee of R.K. Convent School Education Society, in meeting held on 18.3.2013, whereby R.K. Convent School Education Society transferred the assets and affairs of the aforesaid two educational units of R.K. Convent School Education Society to the appellant trust. R.K. Convent School Education Trust was registered u/s 12AA r.w.s. 12A of I.T. Act and was carrying out its educational activities for many years before take over of the aforesaid two educational units by the appellant tr .....

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and training through certain courses in the fields of Mass Communication & Journal ism(6 months course), Mass Communication and Journalism (1 year courses), Acting (2 months course), Acting (3 months course), Acting (6 months course) Radio Jockey and News Reading & Anchoring (Hindi) (3 months course), Radio Jockey and News Reading & Anchoring (English) (3 months course) and Advertising and Public Relations (6 months course). Ld. DIT(E) has noted the details of these courses in parag .....

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ourses being imparted with the association of University of Delhi and Shyam Lal College. Our aforesaid educational activity is classified as charitable within the meaning of section 2(15) of the Act . 5. A careful perusal of sections 12A/12AA of I.T. Act shows that the relevant factors to be considered at the time of registering the applicant u/s 12AA/12A of I.T. Act are, objects of the appl icant, and genuineness of its activities. The Ld. DIT(E), in her impugned order, has given her opinion on .....

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K. Convent School Education Society. The Ld. DIT(E) has observed in para 3 of her order that R.K. Convent School Education Society was running its educational activities (emphasis added) through colleges / institutes which included the educational units taken over by the appellant trust. She has also noted in para 5.1 of her order that R.K. Convent School Education Society was registered u/s 12AA of I.T. Act and had been carrying out its educational activities since many years. In the absence o .....

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trust was denied registration by Ld. DIT(E). It is seen that the Ld. DIT(E) has placed reliance on decision of Hon ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust vs. CIT (supra). Though the Ld. DIT(E) has in paragraph 5.7 of her impugned order reproduced a portion of the relevant para of the aforesaid decision, it will be useful to peruse the entire paragraph of the Supreme Court decision. When the entire paragraph is reproduced, we find that in this case the Hon ble Supreme .....

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ing 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 have dealings with the people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous .....

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ining and developing the knowledge, skill, mind and character of student by normal schooling. 6.1. On careful reading, it is obvious that what the Hon ble Supreme Court disapproved, was exaggerated and farfetched interpretation of the word education . If the ratio of the decision of Hon ble Supreme Court is correctly understood, Hon ble Apex Court has actually approved the interpretation of the word education in the sense of systematic instruction, schooling or training and in the sense of schol .....

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lhi and Shyam Lal College. The objects for which the trust was founded are stated in clause 3 of the trust deed (pages 4 & 5 of paper book filed by appellant). Besides other objects, the objects of the trust, include to establish, maintain, support and run schools, colleges, social service centres, industrial training centres, skill development centres, coaching institutes, boarding houses, day shelters, research and training centres and other institutions of education, having objects simila .....

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Supreme Court in the case of Sole Trustee vs. Lok Shikshana Trust vs. CIT(Supra) to not accept the activities as charitable was appl icable to the facts of that case alone. The ratio of that case, when applied to the facts of the case before us advances the case of the appellant. Ld. DIT(E), by not referring to the entire paragraph from the order of Hon ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust vs. CIT (supra) ; and by referring to only part of the paragraph, may have r .....

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mparting of yoga yoga training through well structured yoga shivir/ camps fell under the category of imparting education. It may be noted that when this decision was del ivered, the word yoga was not included in section 2 (15) of I.T. Act under which charitable purpose is defined. In a case decided by Hon ble Jurisdictional High Court in the case of Delhi Music Society v. Director General of Income-tax (2012) 17 Taxmann. Com 49/204 Taxman 231/(2013) 357 ITR 265 (Delhi) the Hon ble High Court hel .....

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Trust (supra) is also relevant, wherein also Delhi Bench of ITAT has held that imparting of yoga training fell under the category of imparting education which is one of the charitable objects defined u/s 2 (15) of I.T. Act. 7. A combined reading of the judicial precedents in Sole Trustee, Lok Shikshna Trust vs. CIT (supra) ; Divya Yog Mandir Trust vs. Jt. CIT (supra), Delhi Music Society vs. Director General of Income Tax (supra) and Shivanand Yog Vedant Natraj Society vs. ITO (supra) leads us t .....

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onal institution in a systematic manner with regular classes, vacations, attendance requirements, enforcement of discipline and so on ; requirements for the activities to be regarded as education are met. Any form of educational activity involving imparting of systematic training in order to develop the knowledge, skill, mind and character of student is also to be regarded as education . 8. It is irrelevant whether or not the educational courses or programmes are part of regular curriculum of an .....

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ity of Delhi and Shyam Lal College. The Ld. DIT(E) has not refuted this. She has neither highlighted any relevant consideration nor brought out any adverse material on the basis of which it can be reasonably held that the activities of the appellant trust cannot be termed as education considering that we have already held, after considering judicial precedents that the word education is to be interpreted widely and liberal ly. In the case before us, we have already noted earlier in paragraphs 4 .....

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ent authority ; this is quite contrary to her own finding in paragraph 5.2 of her impugned order, where she herself has noted that these courses were being successful ly run by R.K. Convent School Educational Society before being taken over by the appellant trust. She has also noted in paragraph 4.3 of her impugned order that details regarding nature of courses run by appel lant trust and about association with University of Delhi and Shyam Lal College were furnished. Be that as if may. There is .....

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avourable to the assessee should be adopted. It is also settled law that beneficial provisions should be interpreted liberally. Many times, when the courts are adjudicating a tax dispute, they have to reconcile conflicts between publ ic interest and private interest. Revenue, representing publ ic interest and assessee, representing private interest do many times present situations in matters relating to tax disputes in which the adjudication has to factor in the conflicting requirements of publi .....

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) applying for registration. When private parties (such as those who apply for registration u/s 12A / 12AA of I.T. Act) wish to carry out charitable activities for the larger benefit of society i.e. in public interest; there is l ittle confl ict between private interest and public interest. In situations when there is l ittle conflict between private interest and public interest, law should be interpreted liberally, subject to reasonable limits, in a way which advances public interest through ch .....

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st are to be regarded as education . 11. As far as genuineness of activities is concerned Ld. DIT(E) has once again taken an adverse view against the appellant trust on the basis of inadequate/irrelevant facts. For the purposes of registration u/s 12A / 12AA of I.T. Act , it is of no relevance that the aforesaid educational units taken over by the appellant trust were earlier run by R.K. Convent School Educational Society and that assets and affairs of the aforesaid two educational units were tr .....

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he appellant trust was in the nature of division of assets of a family is ill founded in the absence of any comprehensive discussion on what were the total assets of the family and how these assets were distributed amongst different members of the family. Merely because some assets and activities were transferred from R.K. Convent School Education Society to appellant trust, it cannot be said that the transfer amounted to transfer of family assets even if President of transferor society and auth .....

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ts to justify it. In the absence of adequate facts relevant for this purpose the view of the Ld. DIT(E) that the transfer of activities and assets from R.K. Convent School Education Society to the appellant trust was in the nature of division of family assets has to be rejected as being fanciful, imaginary and unconceivable. Even if, for the sake of argument, it is treated as division of assets of the family, even then there is nothing in sections 12AA / 12A of I.T. Act which makes the appellant .....

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ns. Ld. DIT(E) has also not specified in her impugned order whether any action has been taken against R.K. Convent School Education Society for the alleged failure of the said society to obtain necessary approvals / sanctions from the competent authority in terms of Societies Registration Act and from Directorate of Income Tax (Exemptions). Further even if R.K. Convent School Education Society transferred the assets without necessary approvals / sanctions from competent authority in terms of Soc .....

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approach mustbe disapproved. The partisan approach of authorities to be guided merely by what is in the interest of Revenue may cause unnecessary hardships to persons and must be avoided. In general, in coming to conclusions and in taking decisions ; authorities concerned must also be guided by what is in the interest of justice and not merely by what is in the interest of Revenue. In the facts and circumstances of a case, questions of fact and questions of law and mixed questions of law and fac .....

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ant trust were genuine. Ld. DIT(E) has failed to bring out relevant and adequate materials on the basis of which it can be reasonably held that the activities of the appellant trust were not genuine. 12. We have already noticed that objects of the appellant trust included to establish, maintain, support and run schools, colleges, social service centres, industrial training centres, skill development centres, coaching institutes, boarding houses, day shelters, research and training centres and ot .....

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