TMI Blog2022 (7) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... m Lok Shikshan Trust [ 1975 (8) TMI 1 - SUPREME COURT] , Saurashtra Education Foundation decisions [ 2004 (2) TMI 11 - GUJARAT HIGH COURT] that such educational activities resulting in university degrees in various courses indeed make it eligible for Section 11 exemption. Section 11 exemption proceedings very much empower the Assessing Officer to verify the nature of the assessee s activity(ies) as to whether they are in line with its objects or not. Learned counsel lastly sought to pin-point the fact that all its foregoing classes are very much in tune with the university s approval only. He could hardly rebut the fact that a university is set up after its approval from the University Grants Commission UGC , a statutory body set up under the University Grants Commission Act, 1956 which makes provision for coordination of and determination of standards in universities. We fail to understand as to how any university, which has been set up under the UGC Act could grant affiliation for coaching classes which are nowhere part of commission s standards. Faced with this situation, we are of the opinion that the learned Assessing Officer needs to factually verify all the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling . Thus, the assessee's act of conducting coaching classes for preparation of UPSC and MPSC examinations etc. by charging huge amount of fees cannot be considered as Education for charitable purposes as per Section 2(15) of the I.T. Act. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in treating the activities of the assessee trust as education in terms of Section 2(15) of the Act by ignoring the fact that the assessee trust is mainly conducting coaching classes for preparation for UPSC and MPSC Examinations etc. by charging huge amount of fees and therefore, the same cannot be considered in the nature of Education to enable the assessee for exemption under Section 11 12 of the I.T. Act. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that conducting coaching classes for preparation for competitive examinations etc. by charging huge amount of fees cannot be considered as charitable activity within the meaning of Section 2(15) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the fourth limb of the definition of charitable purpose. Therefore, section 2(15) was amended vide finance Act 2008 by adding a which states that the advancement of any other object of general public utility shall not be charitable purpose, if it involves the carrying 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. Several implications have arose from this amendment. The newly inserted proviso will not apply in respect of the first three limbs of section 2(15) i.e. relief of poor, education or medical relief. Consequently, where the purpose of a trust or institution IS relief of the poor, education or medical relief, it will constitute charitable purpose, even if, it incidentally involves the carrying of commercial activities. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is advancement of any other object of general public utility i.e the fourth limb of the definition of charitable purpose c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public, so that a trust, the object and scope of which is limited to the education of the members of the family would not come within the definition of a charitable purpose contained in I.T. Act. H'ble Supreme Court in the case of MCD vs Children Book trust 63 taxman 385 (1992), while considering section 115(4) of the Delhi Municipal Corporation Act 1957 held that the imparting of education must involve public benefit so as to fall within the meaning of charitable object. As per explanation to section 115(4) (a) of the Delhi Municipal Corporation Act. 1957, charitable purpose includes relief of the poor, education and medical relief but does not include a purpose that relates exclusively to religious teaching. It more or less conforms to the definition of charitable purposes as defined u/s 2(15) of I.T. Act. Apart from the above, there are plethora of case laws, wherein, education has been held as charitable activity and further included in the main limb. However, there are several instances where H'ble Courts have held the activity being not an education particularly running the coaching classes, which is the prime issue under dispute in impugned appeal. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay trust Act 1950. The activities of the trust are under the control of and are being regularly monitored by charity commissioner. (c) The CIT has granted registration u/s 12A after considering the objects and activities being charitable in nature. (d) The payment of fee is not a pre condition for getting admission into appellant's institute for training for UPSC /MPSC examination, no students has been denied admission on account of inability to pay the fees (e) The training programmes of the appellant trust is approved or registered by Yashwantrao Chavhan Maharashtra Open University, Nashik since 2006, which is a university set up by the Act of Maharashtra Legislation assembly. The UPSC/ MPSC examination training programme is being run for the YCMOU in addition to appellant's own students. It also runs two other programmes B A (public service) and M A (public service). These are graduates and post graduate degree programme of YCMOU. These are combined programmes awarding graduation and post graduation degrees. (xiv) For the purpose of examining the issue further, whether predominant activity has been eucation or not, it is relevant to have a look a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide assistance in every form to any person fighting for social cause. To provide consultancy services in the field of engineering, finance, legal, electronics, technical, project management, managerial and or such other fields as may be deemed necessary to the corporate sectors including foreign firms, associations, individuals, etc. 5.9 To support establish, maintain and run the boarding houses and. residential, institutions for students and those connected with the institutions. 5.10 To construct, establish, equip, maintain, manage and/ or support financially or otherwise laboratories, schools, workshops, study circles, colleges and educational institutions. 5.11 To donate, support, assist any institute, fund, academy, trust; association, autonomous body, chamber, engaged or to be engaged in conducting any professional and management courses, certificate courses, examinations or other educational activities and also to donate to their building funds or other type of funds, set up for any specific purpose. 5.12 To establish, acquire, construct, donate and to maintain or support library for general education and advancement of leadership training to political/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd facilities and transfer or donate any funds or property of the Trust to any other trust or organization the objects or purposes whereof are similar to those of this Trust and which is recognised under the Income-tax Act, 1961. 5.18 To render all financial or other assistance independently or with others to carry out the programme of rural development and medium scale, small scale and tiny industries. 5.19 To organize relief, alleviate the distress, suffering and hardship of pubic caused by famine, flood; cyclone, tempest, earth-quake, fire, riots, or any other calamities and to establish, acquire, maintain, support and to help the institutions or funds for the above purposes. 5.20 To give aid by way of donation out of the income or the corpus of the trust property or otherwise to different charitable institutions, societies, organisations, autonomous bodies, or trusts which may have been established or which may hereafter be established for any of the' charitable objects 'mentioned in these presents to enable such institutions, societies, organisation or trusts to establish, maintain, or carry out charitable objects. 5.21 The charitable purpose withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, H'ble Courts have held that mere charging of fees and accumulating surplus does not disentitle the trust from the benefit of section 11 of LT. Act if the activities are charitable in nature and surplus funds are utilized towards the charitable work. The argument of the appellant also find support from the order of H'ble Custom, Excise and Service tax appellate Tribunal wherein, it has been exempted from the levy of service tax on the ground that services provided by the appellant are not under the category of commercial coaching and training centre. Although, the criteria for treating an activity as commercial in nature may be different under different taxing statutes however, considering the wide scope of definition of commerce or trade, the ratio laid down by custom, Excise and Service Tax appellate Tribunal cannot be put a side particularly in a situation where other factors are also inclined towards the appellant's claim. I also find force in the argument of the appellant that, even if for a moment, it is accepted that the appellant's activity fall within the scope of general public utility still the impugned activity qualify as charitable and in no way deser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s detailed paper book running into 368 pages that it has been running various study centres as per its agreement with Yashwantrao Chavhan Maharashtra Open University, Nashik as per the duly approved programmes. The said agreement suggests that the assessee is supposed to offer and carry out various study programmes for the university s registered students by way of correspondence classes, evaluation and as evolving course material as well other allied activities. That being the case, we are of the opinion that the CIT(A) has rightly held the assessee is eligible for the impugned exemption since it is carrying out education activities only. We draw support from Lok Shikshan Trust Saurashtra Education Foundation decisions (supra) that such educational activities resulting in university degrees in various courses indeed make it eligible for Section 11 exemption. 6. We next find that this is not the end of the matter. It transpires during the course of hearing from a perusal of page 5 in the CIT(A) s order and in light of assessee s arguments that it has also been conducting various coaching services for students preparing for civil services and other competitive exams. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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