TMI Blog2016 (9) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... judicate whether they fall into education activities in the absence of relevant material before us. However, assessee is imparting training to the bottom like employees, which may be similar to education. Hence, in our view, the assessee is involved in carrying on of charitable activities and not in any commercial activities as held by the AO. Thus, AO cannot deny the benefit u/s 11 of the Act. - Decided in favour of assessee Disallowance of 20% of expenditure due to the observation of the AO that assessee had not maintained proper books of account - Held that:- From the records, the books of the assessee was audited gives the impression that there exists books of account and we are in agreement with CIT(A) that because of books of account are audited, the AO has also a right to review the books of account. There is no dispute that the books of account was audited since, the assessee has submitted audited financial statement. Since the books are audited, there exists books of account. Considering the above, we find it appropriate to remit this issue back to the file of the AO to verify the books. We direct assessee to submit the books before the AO so that AO can verify the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02,760 iv. Participation fee Rs.17,70,000 v. Souvenir donation Rs.2,48,000 2.3. The main activities of the assessee were providing training, consultancy, professional services to its clients in lieu of fees. The assessee had charged fees to its clients, referred to as institutional members, over and above the membership fee. It was clear that the activities were not for benefit of general public and was limited to the members only on payment of fee for the specific services rendered e.g. participation fees, registration fees, advertisement and sponsoring fee, training programme fee, sale of books, membership fee etc. The expenses were attributable mainly to administration and salary and honorarium. No charity was involved in the expenses. 2.4 The Assessing Officer, therefore, concluded that the activities of the assessee were in the nature of business and commerce and no charity was involved in its activities. The Assessing Officer issued a show cause notice to the assessee on 07.12.2012, fixing the hearing on 17.01.2013. As requested, the hearing was adjourned to 25.01.2013. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignificant gain from such training was not monitory but self confidence and self satisfaction that the workers derive. 4.2 The AR also submitted that it was a well settled law that even when merely a section of society or public was benefited, exemption u/s 11 cannot be denied. The AR relied on the decision in the case of ICAI vs. DGIT [2013] 358 ITR 91 (Del). 4.3 The AR submitted that exemption u/s 11 could not be denied merely due to existence of profit so long as the proceeds were applied for its objects. The AR relied on various decisions in support of assessee s case, which were extracted by the CIT(A) in his order at pages 7 and 8. 5. After considering the submissions of the assessee, the CIT(A) as regards exemption u/s 11 of the Act, observed that there is no element of charity in the activities of assessee. Each and every activity of the assessee is charged for. Such charging of fees is not occasional but systematic and mandatory. The fees are also not fixed at a nominal level but in manner to generate regular adequate surplus. He, therefore, held that the assessee is engaged in an activity in the nature of trade or business. As a result, the assessee is adversely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) of the Income Tax Act, 1961. 5. The CIT(A) as well as the Assessing Officer erred in law and facts of the case that your assessee was in fact carrying on education and training to which proviso to section 2(15) are not applicable and not have denied exemption u/s 11 of the Income Tax Act, 1961. 6. CIT (A) as well as the Assessing Officer erred in law and on facts of the case in disallowing 20% of the expenditure claimed where the assessee had maintained regular books of accounts and vouchers which have been produced. 7. CIT (A) erred in law and on facts of the case in disallowing depreciation claimed by your assessee. 8. The assessee craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary. 7. Before us, the ld. AR submitted that the assessee is a registered charitable society and established with the main objective of educating people regarding concept of quality in executing day to day activities of employment and empowerment of the force though improvement of quality of people, product and services. The assessee was involved in educating people in the matters of qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process of analysis for finding the solution to the problems. In effect, the employer instead of hiring professional consultants for improving its productivity, relies on its own workers to do so. In the process, the appellant acts as a mentor for the workers in making them learn to think about and to analyse the problems from their work environment. 6.12 The decision of the Supreme Court envisages a strict definition of 'education', involving a set of scholastic instructions in a formal method of schooling that is glaringly lacking in the appellant's case. The appellant's activities also do not result in the imparting of any structured and formally recognized body of knowledge to the participants. I, therefore, hold that the activities of the appellant do not fall in the realm of 'education'. 9 Considered the submissions of both the counsels and material facts on record as well as the orders of revenue authorities. There is no dispute on the fact that the trust is functioning since 1982 and 12A registration is granted as well as enjoying exemption u/s 11. There is no change in trust nor method of accounting since inception. After amendment to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the activities as charitable but has not declared under which activity whether under education or general public utility. From the assessment order, the assessee has charged fee to various activities like seminars, participation fees of participants shows that assessee had engaged in some sort of lectures/training relating to the objects of the trust i.e. education and training to the bottom line employees in quality and improvement methods. It was not controverted by the department. It was only objected to charging of fees. In our considered view, the assessee has carried on the activities of imparting training to the bottom line employees and there is no element of profit in the said activity as the surplus generated out of the activities is again applied for the charitable activity only. Moreover, the assessee quoted various case laws in support of its claim that they are in the field of education. When analysed closely, all the institutions i.e. Ahmadabad Management Assocation, ICAI, Peter s education society, are educating people more on structured manner and acknowledging by issuing proper certificates. In the present case, we are not sure if such activities are being c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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