TMI Blog2017 (8) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... himself to construe the word "education" as occurring in section 2(15) in its widest sense. It is only the actual conduct of educational courses, where accredited, conducted under the auspices of a formal set up, so as to be recognised in the field of education, which would stand to be regarded as so. The assessee's objects and activity thus only fall within the purview of the residuary category of section 2(15), i.e., advancement of any other object of general public utility, so that the first proviso thereto shall apply, clearly debarring the assessee on account of its receipt for the year for being subject to exemption under section 11 of the Act. - Decided against assessee. - I. T. A. No. 1385/Mds/2015 - - - Dated:- 20-3-2017 - Sanjay Arora (Accountant Member) and G. Pavan Kumar (Judicial Member) For the Appellant : A. V. Sreekanth, Departmental Representative For the Respondent : T. Vasudevan, Advocate ORDER 1. This is an appeal by the Revenue directed against the order by the Commissioner of Income-tax (Appeals)-VIII, Chennai ( the CIT(A) for short) dated June 30, 2014, allowing the assessee's appeal contesting its assessment under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or historic interest, and the advancement of any other object of general public utility : Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity : Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year ; (emphasis, by italics, ours) While the Assessing Officer (AO) considers the charitable purpose to be falling under the last limb, the learned Commissioner of Income-tax (Appeals) regards the assessee as pursuing the object of education , so that, aggrieved, the Revenue is in appeal. 4. 4. We have heard the parties, and perused the material on record. The controversy 4.1 The basis of the denial of the claim for exemption under section 11 by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those connected or concerned with fibre reinforced plastics or other composites. C. To institute supervise, advise upon and advance the standards of materials, manufacturing processes, applications, user acceptance standards and related technical and non-technical subjects including education. The home page of its website (copy on record) declares its avowed objective as follows : The institute was formed with an objective to promote Indian composites industry through collaboration and exchange of information with other likeminded professional societies, Government and non-Government organisations, research and development laboratories and educational institutions operating both in India and abroad. Further, it introduces itself therein as : FRP Institute is a registered non-profit professional society based in Chennai, India. This organisation was formed in 1999 and has members ranging from a large multinational corporations to small fabricators spread all over the country. The member list include raw material suppliers, fabricators, machinery manufacturers, scientists, composite specialists, consultants, designers, defence laboratories, educational in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.37 Total 88.60 13.64 The law 4.3 The hon'ble apex court in Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC), relied upon by the Revenue (refer ground 2.6), had the occasion to consider the scope of the word education as used in section 2(15) of the Act. It clarified that the word education in section 2(15) of the Act, connotes the process of training and developing the knowledge, skill, mind and the character of students by normal schooling, and has not been used in the wide and extensive sense according to which every acquisition of further knowledge constitutes education, discounting thus the use of the term in a generic sense, stating that if not so construed, everything is education in the great school of life. In its words (page 241 of the Reports) : The sense in which the word 'education' has been used in section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word 'education' has not been used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 722 (SC) ; Lok Sabha debates, etc., to prima facie, include all objects which promote the welfare of the general public. It is because it is so widely worded that it can be taken advantage of even by commercial concerns which, while serving a public purpose, get fully paid for the benefits provided by them, that the words not involving the carrying on of any activity for profit were added to the definition. The same, thus, qualifies only the last (fourth) limb of the defining purposes, i.e., as charitable purposes, as the provision of section 2(15) then stood, the other being relief to the poor ; education ; and medical relief , as finally confirmed by the apex court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC). Analysis/findings 4.4 The matter is thus no longer res integra, and to fall under the limb of education as a charitable purpose as contemplated under section 2(15), the same must necessarily involve an organised activity in the field of education. It may assume different forms, not necessarily confined to class room study, as open universities that have come about in recent times but has to have an element of schola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of its members and public at large. Its members are drawn primarily from various industries, ranging from multinational corporations to small fabricators, i.e., which are associated with FRP. It is and works as a professional body, engaging with any segment related with FRP products or technology in whatever capacity, viz. raw-material suppliers, processors, manufacturers, designers, consultants, end-users, even scientists and educational institutions, aiming to include potential users thereof, being a modern day substitute for wood. Its engagement with educational institutions is, again, with a view to develop the aware ness about FRP as a field of study, perhaps providing some assistance in formulating its scope and ambit, as also explore the possibilities for entrepreneurship, being a fast developing technology with varied and growing applications. After all, training and development of manpower is a prerequisite for the propagation and continuous development of the relevant industry and technology. It is these educational institutions, executing and conducting the educational courses, which is an integrated process involving transmission of knowledge in a systematic manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is besides the point, which makes the application of the said income for charitable purpose also as of no consequence. Further, there is no receipt during the year from education activity, which could perhaps be on account of no courses conducted during the year, unlike a six day training programme in the immediately preceding year, fetching some receipt. This fact by itself would not be material inasmuch, assuming it to be education, can neither be said to be undertaken on a regular basis so as to imbue the institution with the character of an educational institution, and is among the several activities undertaken by the assessee. In sum 5. The assessee's objects clause clearly specifies the objects for which it is set up. The various public pronouncements and projections by it (through the media), as their reading shows, are also in consonance therewith. It is the objects clause in the constitution with reference to which its character, or the predominant character, i.e., in case of some ambivalence and divergence therein, absent in the present case, shall have to be determined. This is more so in the instant case as it is not disputed that the activities are being ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ology in its relevant field, which it engages in to exploit commercially. The same cannot even remotely be regarded as in pursuit of education except where carried out by an educational institution itself, engaged in the activity of providing education. The assessee has also not shown to have the capacity for educational activity in regular manner, i.e., as a principal activity, the essence of which is scholastic instruction, howsoever executed, imparted in a systematic manner. As pointed out by the Revenue, there is no income or expenditure with reference to this activity in its statement. This is only understandable as the academic institutions are only one among the various stake-holders with which the assessee engages, so that even a receipt from this activity during the year would have no material impact. In fact, as we observe, the engagement with the educational institutions is on the fringe, though, as it appears, is slated to be expanded in future. Its operations as aforesaid are primarily as that carried out by the industrial/professional association/body. The learned Commissioner of Income-tax (Appeals) has in our view misguided himself to construe the word education a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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