TMI Blog2019 (6) TMI 1448X X X X Extracts X X X X X X X X Extracts X X X X ..... bted. We are satisfied that the activities carried out by the assessee are in the nature of education, medical relief and help to poor which are specifically covered by section 2(15) and not by its residuary segment. The proviso to Section 2(15) thus indeed has no application in the matter. As for the denial of deduction in respect of expenses like assistance to voluntary agencies, management assistance and training, public education programme, research and publications and expenses for community service, that is only consequential in nature inasmuch as the deductions were declined in computation of business income from garba event but then once the proviso to Section 2(15) is held to be inapplicable on the facts of this case, these expenses are to be treated as application of income. Learned representatives do not dispute this position. - ITA Nos.: 772 and 2656/Ahd/17, 3565/Ahd/16, 426, 2657 and 2658/Ahd/17 - - - Dated:- 25-6-2019 - Justice P P Bhatt, President and Pramod Kumar, Vice President James Kurian for the appellant S N Soparakar and Urvashi Shodan for the respondent ORDER Per Bench: 1. These six appeals pertain to the same assessee, involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA of the Act. The assessee filed a return of income on 26.9.2011 showing NIL income. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has shown gross receipts of ₹ 3,81,01,051, and a surplus of ₹ 39,94,650. In the computation of income, the assessee had claimed application of funds for charitable purposes to the extent of ₹ 3,81,16,559 and claimed exemption under section 11 of the Act. When the Assessing Officer probed the matter further, he found that out of total receipts of ₹ 3,81,01,051, a sum of ₹ 2,73,26,591 (i.e. 71.72% of revenues) is in respect of garba event only. The Assessing Officer also noted that the assessee organizes one of the most popular and prestigious garba event in Baroda in a highly professional manner, that the assessee charges entry fees from the participants as also the stall owners, and that it is in the nature of a business activity. It was in this backdrop that the assessee required the assessee to justify the eligibility for exemption of income under section 11, in the light of the provisions of Section 13(8) read with proviso to Section 2(15). In response to this requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that main object of the trust is to mobilize the resources from local communities and the people having affiliation and concern for India in general, and Gujarat in particular, residing in India or abroad, and to apply them for strengthening the services in education, health and human care and the other social sectors of the underprivileged. It was thus contended that the proviso to Section 2(15) will have no application in this case. The assessee also made elaborate submissions on the connotations of expressions business activities and made out a case as to how the activities of the assessee, even with respect to holding the garba event, do not constitute business activities. 6. None of these submissions, however, impressed the Assessing Officer. 7. The Assessing Officer was of the view that how the income is applied is one thing, but what is much more important is, what he termed as, gravity of generation of income . He referred to the provisions of Section 2(15), as amended with effect from 1st April 2009, and observed that after the insertion of the above proviso, the advancement of any other object of public utility shall not be a charitable purpose, if it involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reversed the stand of the Assessing Officer and held the assessee to be eligible for section 11 and 12 benefits as, in his considered opinion, the proviso to Section 2(15) had no application in the matter. While holding so, learned CIT(A), inter alia, reasoned as follows: 5.3 I have carefully considered the facts and circumstances of the case, the observations of the Assessing Officer, the submissions of the assessee, material available on record and the judicial pronouncements on the subject. The assessee is registered as a trust under Bombay Public Trust Act with the Charity Commissioner and also has registration u/s 12AA and 80G of the Income-tax Act. The Assessing Officer noted that the assessee was organizing annual Garba event during Navratri Festival and 71.72% of its annual receipt was generated from that single event. Based on this observation, the Assessing Officer inferred that the prime objective of the assessee was to organize its annual Garba event, which was a commercial activity, hit by the first proviso to section 2(15) of the Act. He also denied exemption u/s 11 of the Act to the assessee, on this ground. However, the Assessing Officer has nowhere referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in congruence with its aims and objectives. 5.5 The provisions of section 2(15) of the Act read as under- (15) charitable purpose includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic 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 ten lakh rupees or less in the previous year; 5.6 The Assessing Officer has alleged that assessee's activity of organizing Garba is in the nature of business, trade and commerce. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 2(15) could not be applied to assessee society and assessee was entitled to exemption under section 11. 5.8 From the perusal of the material available on the record, it is clear that the first and foremost object of assessee's. existence is education, health and human care and a large part of the activities carried out by the assessee, are in the nature of education, medical relief and relief to the poor, which are covered by the first three limbs of the 'Charitable purpose1 definition u/s 2(15) of the Act. I agree with the assessee that the newly inserted proviso to section 2(15) of the Act only comes in to play when the trust is engaged in the advancement of any other object of general public utility covered by the fourth limb of section 2(15). Since the assessee was covered not by the fourth limb of section 2(15) of the Act, it was not hit by the newly inserted proviso to section 2(15) of the Act. Hon'ble ITAT, Bangalore has, in the case of Vivekanand General Hospital vs CIT [2014] 49 taxmann.com 392 (Bangalore-Trib.), held that 15. We have considered the rival submissions. We are in agreement with the arguments put forth on behalf of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other consideration, irrespective of the nature of use or application, or retention of the income from such activity. The revenue has denied the exemption claimed by the assessee under Section 11 of the Act mainly relying upon the amended Section 2(15) of the Act by submitting that the case of the assessee would fall under the fourth limb of the definition of 'charitable purpose i.e. 'advancement of any other object of general public utility' and, therefore, the assessee shall not be entitled to exemption from tax under Section 11 of the Act. Therefore, the first question, which is posed for consideration of this Court is, whether proviso to Section 2(15) of the Act would be applicable in case where it is found that the activity of the assessee is an educational activity and whether the activities of the assessee can be said to be educational activities or not? 5.4 Now while considering whether the activities of the assessee can be said to be educational activities or not the decision of this Court as well as Hon'ble the Supreme Court is required to be referred to and considered. In the case of Gujarat State Co-operative Union (Supra) it is held by the Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The expression schooling also means that schools, instructs or educates (The Oxford English Dictionary Vol. IX, page 217). The Supreme Court has observed that the word education also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word education . By giving further illustrations of a traveler gaining knowledge, victims of swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge the hidden mysteries of life, the Supreme Court has indicated that the word education is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate the proper confines of the word education in the context of the provisions of Section 2(15) of the Act. It will not be proper to construe these observations in a manner in which they are construed by the tribunal when it infests from these observations, in paragraph 17 of its judgment, that the word education is limited to schools, colleges and similar institutions and does not extend to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities of the assessee such as Continuing Education Diploma and Certificate Programme; Management Development Programme; Public Talks and Seminars and Workshops and Conferences etc., we are in complete agreement with the view taken by the tribunal that the activities of the assessee is educational activities and/or is in the field of education. 5.7 Now in view of the aforesaid finding that the activities of the assessee is in the field of education, whether the assessee is entitled to exemption under Section 11 of the Act or not and whether in the facts and circumstances of the case the assessee can be denied exemption under Section 11 of the Act relying upon and/or considering the proviso to Section 2(15) of the Act is concerned so far as the amendment in Section 2(15) of the Act amended vide Finance Act, 2008 and insertion of proviso to Section 2(15) of the act is concerned, as such the same has been explained vide Circular No.11/2008 dated 19/12/2008. It is clarified that where industries or trade association claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation and, therefore, is entitled to exemption under Section 11 of the Act At this stage, it is required to be noted that right from the Assessment Year 1995-96 till 200809 the activities of the assessee has been considered by the revenue as educational activities. Considering various activities of the assessee as narrated by the Assessing Officer in paragraph nos. 4 and 5 of the Assessment Order and considering the decision of the Division Bench of this Court in the case of Gujarat State Co-operative Union (Supra) we confirm the view taken by the tribunal that the activities of the assessee-Ahmedabad Management Association is related to education and, therefore, is entitled to exemption under Section 11 of the Act as claimed. 5.10 The core activity of the assesses is undisputedly charitable. The Assessing Officer has never raised any doubt about the activities carried out by the assessee. One of the major aims of the assessee is to raise resources to meet its objects relating to education, medical relief and relief to the poor. There is a close and proximate connection between the organization of Garba event and the utilization of the surplus generated, to meet the aims and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f environment, including watersheds, forests and wildlife, and preservation of monuments or places or objects of artistic 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 ten lakh rupees or less in the previous year; 12. As a plain look at the above statutory provision would show the disability on account of first proviso to Section 2(15) comes into play only in a case in which the objects of an institution are objects of general public utility. In contrast, however, in the present case, the objects of the institution are in the area of relief to poor, education and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee society is mobilizing resources from the local communities and the people having affiliation and concern for India in general, and Gujarat in particular, residing in India or abroad and to apply them for strengthening the services in education, health and human care and other social sectors existing in Baroda and State of Gujarat , and there is also no dispute that considerable work in this area has been carried out in this area as evident from the material produced before the Assessing Officer, copies of which have been filed before us as well. The genuineness of this object, and furtherance of this object, cannot even be doubted. We are satisfied that the activities carried out by the assessee are in the nature of education, medical relief and help to poor which are specifically covered by section 2(15) and not by its residuary segment. The proviso to Section 2(15) thus indeed has no application in the matter. As for the denial of deduction in respect of expenses like assistance to voluntary agencies, management assistance and training, public education programme, research and publications and expenses for community service, that is only consequential in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X
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