TMI Blog2017 (8) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... r charitable purposes. The Ld. departmental representative could not controvert the decisions relied upon by the Ld. AR. The revenue also could not place before us any evidence to show that the objects of the assessee are not ‘education’. NO infirmity in the order of the Ld. CIT (A) in holding that assessee is entitled for deduction or exemption under section 11 and 12 of the income tax act as assessee is carrying on the activity of education only and income generated there from is also used for the charitable objects of education only. - Decided in favour of assessee. - ITA No. 6259/Del/2012 - - - Dated:- 11-4-2017 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Sh. FR Meena, Sr. DR For The Assessee : Sh Ajay Vohra, Sr. Adv Sh. Rohit Garg, Adv Sh. VK Sabharwal, Adv. ORDER PER PRASHANT MAHARISHI, A . M . 1 . This is an appeal filed by the revenue against the order of the ld CIT ( A )- XXI, New Delhi dated 15 . 10 . 2012 for the Assessment Year 2009 - 10 . 2 . The revenue has raised the following grounds of appeal :- 1 . On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying on educational activities . 5 . Ld AR submitted written submission as under :- Brief Facts : * The assessee is a society registered under the Societies Registration Act, 1860 . The assessee - society has been formed solely for the aims and objects contained in its Memorandum of Association ( refer pages - 32 - 33 of the paperbook ). On perusal of the stated objects, it would be seen that the assessee - society : * Provides a forum for national and international experts in Hydrocarbon Industry for exchange of views and sharing of knowledge, expertise and experience . * Hold regular national / international conferences and seminars in India and abroad for regular exchange of information and latest developments in Petroleum Industry . * Update and explore areas of growth in the fields of exploration, drilling, production and processing, refining, pipeline, transportation, petrochemicals, natural gas, LNG, research development etc . In furtherance of its objects, the assessee - society organises international and national seminars / conferences . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces and seminars in India and abroad for regular exchange of information and latest developments in Petroleum Industry . * Update and explore areas of growth in the fields of exploration, drilling, production and processing, refining, pipeline, transportation, petrochemicals, natural gas, LNG, research development etc . It will kindly be appreciated that under section 2 ( 15 ) of the Act, education , per se, is regarded as one of the charitable activities . The expression education ‟ has not been defined under the Act but has attainder acceptable connotation in the ligh of decided judicial precedents discussed hereunder : The Supreme Court in the case of Sole Trustee, LokeShiksha Trust v . CIT : 101 ITR 234held that for an activity to be regarded as education, the same must : a ) involve systematic instruction, schooling or training; b ) develop the knowledge, skill, mind and character of students Following the aforesaid decision, the Delhi High Court in the case of Delhi Music Society vs . DGIT : 246 CTR 327 / 204 Taxman 231 ( Del ) held that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange, Petrotech has so far organised four successful Industry Educational tours for the benefit of Indian Oil Gas Industry . The tours provided an opportunity to the participants to update themselves on technologies of the future pertaining to the hydrocarbon sector . * Granting of Doctorate fellowship to deserving academia for pursuing research, leading to award of Ph . D and facilitating closer link between the industry and academia . It is, thus, respectfully submitted that the activities carried by the assessee - society are clearly in the nature of education . Without prejudice to the aforesaid, it is submitted that in case the assessee society is held not to be engaged in education but carrying on activities falling in the last limb of section 2 ( 15 ) of the Act, viz, advancement of any other object of general public utility, then, too, the order of the CIT ( A ) needs to be upheld . The Respondent assessee seeks to support the order of the CIT ( A ) in terms of rule 27 of the Income tax ( Appellate Tribunal ) Rules, 1963, on the following grounds : The proviso inserted in section 2 ( 15 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling in the last limb of the definition of charitable purpose ‟ if they carry on commercial activities in the nature of business, trade or commerce . Construing the expression business ‟ , the Hon ‟ ble Supreme Court in the case of Distributers Baroda P . Ltd .( 83 ITR 377 ) has held that business ‟ refers to real, substantial, organized course of activity for earning profits as profit motive ‟ is essential requisite for conducting business . Following the above decision, the Special Bench of the Tribunal, in the case of BJP vs . DCIT : 258 ITR 1 ( Del .) ( AT ) , has held that an activity to be treated as business ‟ should have a semblance of trade, an attribute of commercial activity and an expectation to earn income over a reasonable period . The Tribunal further held that the expressions trade ‟ and commerce ‟ are narrower in scope than the expression business ‟. The expressions trade ‟ or commerce ‟ signify economic / commercial activity with motive of earning profit . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and business ‟ , connote and indicate a series of organized activities primarily undertaken on commercial lines for profit motive . Reliance, in this regard, is placed on the following decisions : * ICAI v . DGIT ( E ): 358 ITR 91 ( Del . HC ) * PHD Chambers of Commerce Industry v . DIT ( E ): 357 ITR 296 ( Del . HC ) * Hamdard Laboratories India vs . DGIT : 216 Taxman 201 ( Del . HC ) * India trade Promotion Organization vs . DGIT ( E ): 371 ITR 333 ( Del . HC ) * GS1 India vs . DGIT ( Exemptions ): 262 CTR 585 ( Del . HC )) * Bureau of Indian Standards vs . DGIT ( Exemptions ): 27 taxmann . com 127 ( Del . HC ) * DIT v . Ahmedabad Management Association : 366 ITR 85 ( Guj . HC ) * DivyaYogMandir Trust vs . JCIT : 153 ITD 368 ( Del .) * Mehrangarh Museum Trust vs . ACIT : 67 SOT 1 ( Jodh .) * Water and Land Management Training and Research Institute vs . DGIT ( E ): 40 ITR ( T ) 559 ( Hy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as charitable ‟ , irrespective of the fact that profit is redeployed into the activities . If, however, the trust / institution does not undertake / carry on commercial activities, then the trust / institution would continue to be regarded as charitable and the character of the trust / institution would not be affected merely because some profit results from the activities or fees / remuneration is charged for rendering any service . Applying the aforesaid legal position to facts of the assessee - society ‟ s case, it is the respectfully submitted that none of the objectives and / or the activities is commercial in nature so as to fall within the mischief of proviso to section 2 ( 15 ) of the Act, inasmuch asthe mandate of the assessee is to work as a non - profit society for the objects specified in the MOA . This is patently clear from the following clauses of the MOA of the assessee : 4 . 5 . 8 All the incomes, earning, immovable and / or movable properties of the Society shall be solely utilised and applied towards the promotion of the objects only as set forth in this Memorandum of Associatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, refining, petro - chemicals, research and development and health, safety and environment, the said Society organizes international and national seminars / conferences on the said topics pertaining to Hydro Carbon Industry for the Oil Industry and academia on no profits no losses basis and as covered under the provisions of law contained u / s 2 ( 15 ) of the Income Tax Act, 1961, because of providing education in the field of Oil Industry in order to explore areas of growth in the field of Petroleum Technology and related areas viz . exploration, drilling, production, refining, petro - chemicals, research and development and health safety and environment, to provide them latest techniques and technology by way of organizing National and International Seminars / Conferences as and when needed, therefore, is having the character of charitable activities only, and as such covered under the 2nd limb of Section 2 ( 15 ) of the Act, which is education though it has been mentioned as 1st lirnb in submissions of appellant but it makes no difference as it has been emphasized by the Circular No . 11 / 2008 dated 19 . 12 . 2008 that amendment in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity . 4 . 1 As such activity of the appellant has been found in the nature of education, the exemption u / s . 11 and 12 of the IT Act cannot be disallowed . The same is therefore, allowed and additions made in this regard are hereby deleted . The AO is directed to grant relief accordingly . Grounds No . I to 8 of the appeal are allowed . 7 . We have carefully perused the memorandum of Association and bylaws of the society, which are placed before us, and page No . 30 of the paper book . According to that, the assessee is required to provide a forum for national and international experts in oil and gas industry exchange view and share their knowledge expert eyes and experience . Further, it is also formed to identify new areas for cooperation and technology transfer relating to petroleum industry and to find out new ways to assimilate and harness the petroleum resources of the world for the benefit of mankind . Therefore on looking at the clause No . 3 of the memorandum of As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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