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TMI Blog2018 (4) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, the assessee had applied for grant of registration submitting an application in Form No.10A on 27.1.2017. The Ld.CIT(E) after raising relevant queries to satisfy himself of the genuineness of the objects and activities of the assessee and after considering the reply filed by the assessee in this regard, held the applicant/assessee ineligible for grant of registration u/s 12AA of the Act since as per the Ld.CIT(E), the activities of the assessee society could not be termed to fall under the category of charitable purpose and the absence of dissolution clause in the Memorandum of Association of the applicant-assessee impinged on the public charitable character of the society. 4. During the course of hearing before us the Ld. counsel for assessee drew our attention to the order of the Ld.CIT(E) and pointed out therefrom the specific reasons for denial of registration. Taking up each finding of the Ld.CIT(E) one by one, leading to the denial of grant of registration u/s 12A, the Ld. counsel for assessee first drew our attention to the findings of the Ld.CIT(E) that since the present application was triggered by rejection of the claim of the assessee to exemption u/s 10(23C(ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [***] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA ] : [Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the [***] Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registration. Affording training to government employees does not fit into the definition of "education" laid down by the Supreme Court in the case of "Sole Trustee Lok Shikshan Sansthan". The sense in which the word "education" has been used In section 2(15) as interpreted by the Apex Court in the case of Sole trustee, Loka Sikslian Sansthan (101 1TR 234) is 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 that wide and extended sense, according to which every acquisition of further knowledge constitutes education." 10. Vis-à-vis this finding of the Ld.CIT(E), the Ld. counsel for assessee pointed out that the I.T.A.T. in its order passed in the case of the assessee, while granting exemption u/s 10(23C)(iiiab) in ITA No.270/Chd/2017 dated 30.10.2017, had dealt with identical issue and had held the activity of affording the training to government employees as being in the nature of education. The Ld. counsel for assessee drew our attention to paras 18 and 19 of the order of the I.T.A.T. in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes and not for purposes of profit within the meaning of s. 10(22) of the Act. Under s. 10(22) of the Act, it is provided that in computing the total income of a previous year of any person, any income falling within the said clauses, i.e., any income of a University or other educational institution existing solely for educational purposes and not for purposes of profit, shall not be included. The objects of the assessee-Co-operative Union as also the activities actually carried on by it will throw considerable light on the question whether the assessee-Co-operative Union is existing solely for educational purposes or not. Bye-Laws 2 of the assessee-Co-operative Union, a copy of which is placed on record by the consent of both the learned counsel for our consideration, enumerates therein eight objects of the assessee- Co-operative Union and they read as under: (i) to impart education to members of co-operative societies and to workers in the Co-operative Movement; (ii) to act as a co-ordinating agency on all matters pertaining to Co-operative education and function as a body of experts in matters relating to education; (iii) to function as a focusing centre on non-of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) and (viii) of the Bye-law 2 of the Bye Laws of the assessee, it cannot be said that the assessee was existing solely for educational purposes. In cl. (iii) of the Bye-law 2, the object enumerated is that the assessee will function as a focusing centre on non-official opinion on various subjects affecting the movement and for representing it in proper quarters. Under cl. (iv), its object is to further the spread of the Co-operative Movement. Clause (vi) refers to objects of opening circulating libraries, publishing periodicals, books, pamphlets, and literature in general on co- operation, rural development and allied subjects, while cl. (viii) refers to running of a printing press. It is difficult to accept the contention of the Revenue that these clauses indicate any object other than educational for which the assessee seems to have been established. On totality of the objects enumerated in Bye-law 2, it is clear to us that the assessee-Co-operative Union is existing solely for educational purposes and even the objects which are enumerated in cls. (iii), (iv), (vi) and (viii) are referable to such purposes. It will not be open to read any of these clauses in isolation torn of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is existing exclusively for educational purposes and not for the purposes of profits. The assessee was publishing two Journals : (1) "Sahakar", a weekly Journal having circulation of 6,700 copies, and (2) "Gram Swaraj", a monthly magazine having circulation of 7,150 copies. Both these Journals were published in connection with the activities of the assessee and on the subject of co-operative movement. The assessee was also having an audio-visual unit for exhibiting films on co-operative movement to educate the masses. It also appears that the assessee maintained a rich library on the subject of co-operation. As noticed above, from the objects of the assessee, it is conducting training centres and colleges for various courses having bearing on the field of co-operative movement. It appears to us that the decision of the Tribunal which seeks to rest it on the observations made by the Supreme Court in "lok shikashana trust's case (supra), for holding that the assessee is not entitled to exemption under s. 10(22) of the Act is based on a complete misreading of the observations of the Supreme Court. In Lok Shikashana Trust's case (supra) the Supreme Court while dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal when it infers from these observations, in para 17 of its judgment, that the word 'education' is limited to schools, colleges and similar institutions and does not extend to any other media for such acquisition of knowledge. The observations of the Supreme Court do not confine the word 'education' only to scholastic instructions but other form of education also are included in the word 'education'. As noticed above, the word 'schooling' also means instructing or educating. It, therefore, cannot be said that the word 'education' has been given an unduly restricted meaning by the Supreme Court in the said decision. Though in the context of the provisions of s. 10(22) the concept of education need not be given any wide or extended meaning, it surely would encompass systematic dissemination of knowledge and training in specialised subjects as is done by the assessee. The changing time and the ever widening horizons of knowledge may bring in changes in the methodology of teaching and a shift for the better in the institutional setup. Advancement of knowledge bring within its fold suitable methods of its dissemination and though the primary method of sitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , independence of that entity is a sine qua non. The various clauses of the MOA of the society as well as the composition enable the Government to issue directions, inquire into the affairs and control the finances of the applicant. To that extent the society's functional independence is impinged and the same seemingly is not amenable to Independent decision making. The composition of the society is again drawn from the Government Departments and. to that extent is a continuation of the said department. There is no scope for public participation in the composition of such society. 10. In the instant case, given all of the above it is clearly held that the applicant's activities don't fit into the established definitions of charitable purposes. Lack of commercial intent does not in any way mean that the activities are charitable. The concept of charity that entails exemption from taxation can't be stretched and attached to anything that is altruistic. Further, the actions of the applicant don't flow from an altruistic intent but are part of statutory obligations. Redeeming one's statutory functions can't be passed off as charity. In light of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndum of Association had no dissolution clause as a consequence of which the provisions of section 13(1)(c) of the Act were clearly attracted making the assessee ineligible for grant of registration u/s 12AA of the Act. The relevant findings of the Ld.CIT(E) in this regard are as under: "11. It is also observed that the MOA submitted by the applicant lacks dissolution clause. The provisions of section 13(l)(c) of the IT Act states that "in case of a trust/ society for charitable or religious purposes or a charitable or religious institution, any income thereof - (i) If such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) If any part of income or any property of the trust or the institution (whenever created or established) is during the previous used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3):" 18. Vis-à-vis the aforesaid contention, the Ld. counsel for assessee stated that the said clause had been amended by the Executive Committee of the applicant-assessee in it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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