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2022 (7) TMI 177

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....ting the Assessing Officer to treat the activity as "education" in terms of Section 2(15) of the I.T. Act. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the ratio laid down by the Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshan Trust Vs. CIT (1975) 1010 ITR 234 (SC) , wherein it is held that, "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 that wide and extended sense according to which every acquisition of further knowledge constitutes education. .................. What "education" connotes 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 ....

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....iscussion treating the assessee as eligible for Section 11 exemption as under: - "(x) I have considered the submission of the appellant carefully and gone through the reasoning's enumerated by A.O. Section 2(15) of l.T. Act defines charitable purpose to include the following (i) Relief of the poor (ii) Education (iii) Medical relief (iv) and advancement of any other object of general public utility An entity with a charitable object of the above nature is eligible for exemption from tax under section 11 or alternatively under section 10(23C) of l.T. Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility 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....

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....ng education, the fundamental aspect of imbibing knowledge through the process of education has to be considered. The term education occurring in section 2(15) has been used in the wider sense and in it's widest amplitude. In the case of house of lords in IRC vs Mcmullen 54 TC 413 (HL) it was held that it cannot be whittled down by narrow sense. This is for the simple reason that the education takes verity of form and it can not be restricted to a particular form and manner. This expression is not amenable to any fixed or rigid formulae. In the case of D.V. Arur vs CIT 465 H'ble Bombay High Court held it, In my opinion, looking at the definition in the various acts, a charitable purpose which is not of' a religious character must contain the element of benefiting 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....

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....students for various courses appearing for open university. Distance education can not be construed as a charitable activity within the meaning of section 2(15) of I.T. Act. (xiii) Therefore, there are instances, wherein, it is held that running a coaching institute, is not a charitable activity for the purpose of section 2(15) of IT. Act, however, those decisions are based on particular set of facts. In this regard, I find force in the arguments of the A.R of the appellant that the facts involved in relied upon case viz Bihar Institute of Minning and Mine Surveying (Supra) are not identical to the facts of the appellant on the following grounds: (a) The appellant is not running a private coaching class (b) It is registered by the charity commissioner under the 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 deni....

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....other useful pursuits and to remunerate them. 5.6 To award scholarships, loan scholarships, freeships and prizes at any school or college or other institutions and also to give any award scholarship, loan scholarship, freeships, and prizes, directly to the students studying in any school, college or any other educational institutions. 5.7 To grant or award any, sum by way of donation, scholarship; prize, or otherwise either for the purpose of establishing scholarship, prize, research; grant or otherwise whether without name or carrying particular name including conferring of honour by way of photograph, chair or otherwise. 5.8 To, institute, defend, support and provide assistance to any public interest litigation on or to provide 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 con....

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....gerial and or such other fields as may be deemed necessary to the corporate sectors and to foreign firms, associations, institutions, individuals, etc, and also to establish and support human resource placement services. 5.16 To establish, maintain, run and support human placement services, and to provide the Job opportunities to various persons. 5.17 To undertake and support any programme of development for promoting literacy, education, medical, cultural facilities and services the social and economic welfare of the public including the programme of construction. of roods, providing of wells and drinking water facilities, public parks, bus shelters, urinals and such other public conveniences and 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 ....

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....preme Court in the case of Sole Trustee Cited (Supra) where emphasis was given on formal education, which the appellant fulfils in the form of not only conducting coaching classes on regular basis but also carrying out other educational programmes under the guidance of YCMOU, Nashik a Govt. approved University. On careful observation of the fact, it is gathered that collection of fees is not with the intention to earn surplus, and whatever surplus the trust has accumulated over the years has been ploughed back for the educational purpose. It has constructed a new building equipped with modern class rooms and hostel at the cost of Rs.6.94 crores. There are plethora of case laws, wherein, 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 und....

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....he other hand derives strong support from the CIT(A)'s detailed discussion as well as the fact that it already enjoys both Section 12AA as well as Section 80G registration. Learned counsel also invited our attention to case law Gemological Institute of India (2019) 105 taxmann.com 180 (SC), Rajaneesh Foundation (Neo-Sannyas Foundation) (2002) 81 ITD 31 (Pune) (TM) as well as Surat City Gymkhana (2008) 300 ITR 214 (SC) that the assessee has been rightly held as entitled for Section 12AA registration. 5. We have given our thoughtful consideration to the foregoing rival arguments and find no force in either party's submission in its entirety. We note first of all from a perusal of 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 ....