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TMI Blog2024 (7) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to the interest of the Revenue and framed without making proper enquiries/ verification and application of mind? B. Whether the ITAT was correct in coming to the conclusion that the assessee was undertaking educational activities in terms of Section 2 (15) of the Act?" 2. For the purposes of evaluating the rival submissions which were addressed, we deem it appropriate to notice the following essential facts. The respondent/assessee is a society registered under the Societies Registration Act, 1860 and also holds a registration under Section 12A of the Income Tax Act, 1961 [Act]. It was also accorded recognition under Section 80G (5) of the Act in terms of an order dated 07 March 2008. 3. In Assessment Year [AY] 2014-15, the assessee filed its Return of Income declaring its taxable income to be 'Nil'. The aforesaid Return is stated to have been selected for scrutiny assessment, as a consequence of which a notice came to be issued on 31 August 2015 under Section 143 (2). During the assessment proceedings, the assessee appears to have been called upon to furnish explanations with respect to the broad nature of activities undertaken by it as well as particulars pertaining to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed to be of a GPU, being liable to be viewed as contravening the Proviso to Section 2 (15). It additionally held that the various activities undertaken by the assessee were also concerned with the enhancement of brand value and thus were violative of Section 13 (1) (c) of the Act. 7. Pursuant to the aforesaid, a fresh assessment order came to be framed on 19 December 2019. In terms of this order the AO came to the following principal conclusions: "11. In view of the discussion made above, the following findings are arrived at:- a. The A.O during the assessment proceedings is duty bound to look into the manner of actual conduct of activities towards objects of the trust, as to whether these are actually done as charitable activity or as commercial activity. b. The assessee is actually undertaking commercial contracts of providing consultancy on the projects of its clients. c. The client of the assessee debits amount paid to the assessee as business expenses and claims 100% deduction. In case of donation/grant 100% deductions not allowed. d. The assessee itself books the income as receipt from educational services. e. The contracts with clients invariably come wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is concluded that:- a. The activities of the assessee do not fall under any limb of charitable purposes as defined under section 2 (15) of the Income Tax Act, 1961. b. The activities of the assessee are commercial services purely in the nature of trade and commerce. c. The case of the assessee is also hit by proviso to section 2 (15), even in case, the activities were taken to be in the nature general public utility. d. The assessee is providing benefit to specified persons, u/s 13(3) of the Act hence it is not eligible for exemption u/s11 and 12 of the Act. Since the assessee is not held eligible for exemption u/s 11 & 12 of the Act, in view of the discussion made above the Income of the assessee is held taxable, treating it as an AOP and also at Maximum Marginal Rate because of infringement of section 13(1) of the income tax Act. Total income as per computation of Income Rs. 4,53,41, 153/- Less: Application of Income Rs. 4, 14,01,899/- Total Taxable Income Rs. 39,39,254/- Assessed u/s 143 (3)/263 of the Act at an income of Rs. 39,39,254/-. Penalty proceedings u/s 271 (1)(c) of the Act, on account of concealment of income and furnishing inaccurate par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EFICOR 14000 1400 8 HOPE FOUNDATION 96098 1922 9 NIIT INITIATIVE FOR LEARNING 10697 1071 10 NIIT YUVA JYOTI LIMITED 5947278 190360 11 NIIT LIMITED 444876 44487 12 SAHYOG FOUNDATION 25667 2567 13 VIDYA INTEGRATED DEVELOPMENT FOR YOUTHAND ADULTS 60000 1200 14 ZILA PANCHAYAT 64000 1280 15 JBLIANT BHARTIA FOUNDATION 10000 1000 16 GRAM NIYOJAN KENDRA 73034 1460 17 AIRPORTS AUTHORITY OF INDIA 1058596 21772 18 AEGIS LIMITED 61500 6150 19 CIPLA FOUNDATIONS 991160 99440 20 TATA HOUSING DEVELOPMENT COMPANY LIMITED 263260 5266 21 THE TATA POWER COMPANY LIMITED 4248962.26 388941 22 TATA CONSULTANCY SERVICES LIMITED 719202 31000 xxxx xxxx xxxx 5. A perusal of the records of the case it is seen that the exact nature of these payments vis-a-vis services rendered by the assessee has not been examined in the assessment proceedings for A.Y.2014-15. Why commercial establishments are making such payments and deducting TDS on such payment, impliedly claiming the expenditure in computation of their taxable income have not been examined in the course of the proceedings. It cannot be disputed that the AO in the course of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling." 12. Learned counsel also invited our attention to a more recent decision of the Supreme Court in New Noble Educational Society vs. CIT (2023) 6 SCC 649, and where while reiterating the legal position which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on i.e. imparting formal scholastic learning, is what the IT Act provides for under the head of "charitable" purposes, under Section 2 (15)." 13. Refuting the aforenoted contentions, Mr. Vohra, learned senior counsel appearing for the respondent/assessee, submitted that the AO upon due examination of the activities undertaken by the assessee, had come to the definitive conclusion that the same fell within the scope of Section 2 (15). It was submitted that during Financial Year [FY] 2013-14, the assessee had conducted various training programs for underprivileged youth spread across various streams such as Information Technology [IT], English, Soft skills, BPO, Retail, Banking and Service sectors. It was submitted that the training imparted to the enrollees was conducted at NIIT-run centers and NGO-partner centers. It was pointed out that apart from the above, the assessee had undertaken various digital literacy initiatives such as the establishment of Hole-in-the-Wall Learning Stations across the country and which enabled children to improve their understanding of Science, IT, English, General Knowledge and Mathematics. 14. Mr. Vohra pointed out that the details in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country and to commission studies and research on the status of IT education and training in the country from time to time and to identify new initiatives required to be taken;" 17. Of equal significance are the particulars which have been set out and appear at Volume II, page no. 323 of our record and which carry details of the application of income that accrued to the assessee, and which was used solely for the purposes of imparting education. Mr. Vohra also underlined the fact that various courses which were conducted by the assessee were duly certified by the National Skill Development Council [NSDC], among other globally recognized institutions. 18. Our attention was specifically drawn to the reply dated 13 December 2019, making disclosures in response to the notice under Section 142. Similar disclosures were furnished in terms of a letter dated 19 December 2019 submitted in the course of assessment. Since the disclosures made in these two communications would be of some relevance, they are extracted hereinbelow: - "December 13, 2019 To, Income tax Officer, Ward Exemption 2(4), 24th Floor, Room No. 2409 E-2 Block, Civic Centre, New Delhi-110002 Dear Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes mentioning the grade scored by the students in the examination which is calculated on the basis of marks scored by the said students in the examination conducted by the assessee. The said certificates also contains the logo of the organization from where the course is approved. The Sample certificates are attached at 'Annexure C'. 4 Recognitions provided to the courses provided by the Assessee [Reply to Query No. 4(e)]: 4.1 The students who enroll with the centres operated by NF are given education as per educational courses duly developed and/or approved by various government authorities and/or globally recognized institutions. The educational courses offered by NF are mainly National Skill Development Corporation ("NSDC") approved courses. NSDC is an Indian not-for-profit company set up to address the need for providing skilled manpower across various industry sectors. It was founded in 2009 by the Ministry of Finance, and is currently under the Ministry of Skill Development and Entrepreneurship, Government of India. NllT Yuva Jyoti Limited (NYJ) is an approved training partner of NSDC (Please see the certificate issued by NSDC in this regard as 'Annexure D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous digital literacy initiatives like Hole-in-the-wall education project. The said project is to educate children of age group 6 to 12 years belonging to slum and backward areas of the country, who do not have access to the computers and its applications. In this project, Computer learning stations are installed at various locations like schools, slum, etc. where children can use these computer learning stations and improve their understating of subjects like Science, IT, English, GK and Mathematics. 4.7 Further, the work done by NF in the education field has also been recognised through various awards and recognitions. The list of some of the Awards received by NF recognizing its contribution in the field of education and charitable activities done by it over the years is as under: xxxx xxxx xxxx The detailed list of the awards is at 'Annexure H' 4.8 The list of some of the articles published in Newspaper and electronic media recognizing NF's contribution in the field of education and charitable activities done by it over the years are as follows: xxxx xxxx xxxx The aforesaid articles/news are attached at 'Annexure I'. 5 Details of trainees along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the order dated 26.03.2019 passed by the Commissioner of Income Tax (Exemptions) ("the CIT (E)") u/s. 263 of the Act. In response to the said notice, we have filed the part replies vide letters dated 23th November 2019 and 13th December 2019. In continuation to the earlier replies filed by us, we humbly submit as under: 1. As regards point 3 of the notices asking to show cause as to why the receipts of the Assessee should not be treated as business receipts and why the Assessee should not treated as carrying out activities relating to general purpose utility as against 'education'. 1.1 In this regard, the Assessee humbly submits as under: 1.2 NF's Objects: 1.3 We are society registered on December 1, 2004 under the Societies Registration Act, 1860 with the main object to promote, support and strengthen education, research and training of the Information Technology and its application in all fields of activity and to collaborate, cooperate and enter into partnerships with universities, colleges and schools for expanding IT education and training and to play an active role in the human development initiatives of the country by supporting and sponsoring, wherev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obally recognized institutions for the poor and physically and mentally challenged students at either free of cost or at heavily subsidized rate. NF also assists its student in getting job placement after completing certified educational courses (i.e. Career oriented program) offered by NF. Please see the profile of NF explaining the activities carried on by it in detail at pages 27 to 38 of the PB and brief note on past and current activities of NF at pages 39 of PB. 1.9 We first identify under privileged / economically backward areas and communities to whom we can provide benefit with our activities and set up centers in those areas. A center generally comprises of classrooms, computer labs and other infrastructure required to conduct educational classes along with trained faculties to educate/train the students. Once the center is set up, we spread awareness about the various educational programs being carried out at our centers in those communities and try to persuade the students to come and visit our centers. At the center, we do a proper counselling for the student and based on his/her strength and weakness suggest the student, which would be the best educational course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent authorities (NSDC) and/or other institution: 1.12 The students who enroll with the centers operated by NF are given education as per educational courses duly developed and/or approved by various government authorities and/or globally recognized institutions. The educational courses offered by NF are mainly NSDC approved courses. As stated above, NSDC is an Indian not-for-profit company set up to address the need for providing skilled manpower across various industry sectors. It was founded in 2009 by the Ministry of Finance, and is currently under the Ministry of Skill Development and Entrepreneurship, Government of India. NllT Yuva Jyoti Limited (NYJ) is an approved training partner of NSDC which provides the said NSDC approved courses to be used for providing education to the students of the assessee. The certificate issued by NSDC in this regard was already submitted vide submissions dated 13th December 2019 at Annexure D. Apart from educational courses approved by NSDC, NF is also providing educational courses developed by globally recognized institutions (CompTIA, CISCO, Tally, NllT etc.) that are recognized across IT industry and other industry. For instance, CompTIA is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd classes. The attendance of the students is taken on a regular basis and a proper track record of the same is maintained by NF. The students who do not have proper attendance are not allowed to take examination. 1.19 Conducts examination and issues Certificates: After the completion of the specified course, a proper assessment of the students is taken and certificate of the same is provided to the students. 1.20 Educational Courses are offered either free of cost or at heavily subsidized rate at the aforesaid Centers: 1.21 NF are providing aforesaid educational courses at either free of cost or at heavily subsidized rate at its Centers. The reason behind charging a token amount fees from the students is that this helps building a commitment from students side towards the educational course and they don't dropout the enrolled course. Anything that comes for free is not valued and so a token amount of fees is charged from them. NF is providing the educational courses at heavily subsidized rate at its Centers as compared to the market rates as already submitted vide submissions dated 13th December 2019 as Annexure K. 1.22 Conducting various Approved Educational / vocatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid charitable activities are funded by donations received from various persons. 1.29 Further, NF has various corporate sponsors who have sponsored various centers operated by NF. These corporate sponsors reimburse the cost incurred by NF for operating these centers on actual basis of the centers sponsored by them. NF has charged service tax on this amount from the sponsors and the sponsors, in certain cases, have deducted TDS on the same. REPLY TO THE QUERY THAT WHY THE TUTITION FEE SHOULD NOT BE TREATED AS BUSINESS RECEIPT [QUERY NO. 3(l)] 2. OUR COURSES ARE AFFILIATED WITH COMPETENT AUTHORITIES AND ACCORDINGLY, OUR ACTIVITY WOULD CLASSIFY AS 'EDUCATION': 2.1 In this regard, it is submitted that as stated above at Paras 1.10 to 1.13, NF is mainly providing courses duly approved by NSDC (a government body) from its centers, which are also approved by NSDC, to conduct said approved educational courses. The same is clearly visible from the certificates that are provided by us to the students at the time of successful completion of the course. These certificates contain the logo of the organization whose course has been provided to the students. Also, the students who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sole Trustee, Lok Shikshan Trust vs. CIT (101 ITR 234). It that case, the Hon'ble Supreme Court has given a guidance as to what can constitute 'education' and what not. In that context, the Hon'ble Supreme Court has explained that the word 'education' cannot be construed in a loose manner to mean any acquisition of knowledge. However, any mode of systematic instruction, schooling or training given to the young in preparation for the work of life would be regarded as education. The relevant extract of the said decision is as under: "The word 'education' has been used in section 2 (15) is the systematic instruction, schooling or training given to the young is 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 normal schooling." (Emphasis Supplied) 3.3 It is submitted that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are germane to the question as to whether the petitioner is an educational institution within the meaning of Section 10 (23C) (vi). 9. The Supreme Court in the case of Sole Trustee, Loka Sikshana Trust (Supra) interpreted the word "education" in Section 2 (15) of the Act and held that the word has been used to denote systematic instruction, schooling or training given to the young in preparation for the work of life and it also connotes the whole course of scholastic instruction which a person has received. It has further been observed that the word also connotes the process of training and development of knowledge, skill, mind and character of students by normal schooling. xxxx xxxx xxxx 3.4 Kind reference is also drawn to the decision of the Gujarat High Court in case of Gujarat State Cooperative Union v. Commissioner of Income Tax {195 ITR 279), wherein the Hon'ble Court has explained the meaning of 'education' after considering in detail the foregoing decision of the Supreme Court. In that case, the Tribunal had disallowed the claim of exemption of the assesse on the ground that the objects of the assessee could not be considered to be educational in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness or manufacture, we are still eligible for exemption u/s. 11 of the Act. 4.2 In this regard, it is submitted that the term 'business' is defined under section 2(13) of the Act to include 'any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture'. The term 'business' connotes "some real, substantive and systematic or organized course of activity or conduct with a set purpose". 4.3 It is submitted that in our case, we are not carrying out any trade, commerce or manufacture. We are engaged in imparting training and education to the under privileged strata of the society. The primary purpose behind our activity is to develop the underprivileged youth of the country and to make them fit for the work of life. The activity carried out by us is not with an objective to earn any profit. Considering that the object of imparting the aforesaid education/training is to achieve the charitable object of uplifting the calibre/skill of the under privileged I economically backward strata of our society, a nominal fee is charged from the candidates with an intent to instill sense of responsibility amongst the cand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the said law, service tax is chargeable on services rendered by the service provider to the service receiver, notwithstanding such services are provided in the course of business or not. Under Service tax Act (Finance Act, 1994), the term 'services' have been widely defined to include various activities that may or may not be in the nature of business. For eg. Service tax is leviable on sitting fees received by a Non-executive Director. Clearly, a Nonexecutive Director is not doing any business activity, still service tax is leviable on the same. Thus, it is submitted that levy of service tax cannot be a basis to decide that the activity on which service tax is charged is a business or not. 4.11 We further submit that under the Service tax Act, the term 'services' may or may not be regarded as services, as understood in common parlance. For eg. renting of immovable/movable property, royalty, etc. are regarded as 'service' under said law, which under common parlance is not regarded as service at all. Accordingly, it is submitted that levy of service tax cannot be a basis to decide that the activity on which service tax is charged is a business or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thev deducted TDS, will not convert a donation into a commercial receipt on the basis of presumptive inferences. As Jong as the assessee has credited the amount as donations and issued donation receipts, in our view, the same cannot be held to be commercial receipt." (Emphasis supplied) 4.16 In view of the foregoing, we humbly submit that the basis on which Your Goodself has treated the receipts as business receipts is totally unfounded. 5. WITHOUT PREJUDICE TO THE ABOVE, IF IT IS HELD THAT THE ACTIVITY OF THE ASSESSEE IS BUSINESS ACTIVITY AND THEREFORE TAXABLE, THEN THE LOSSES INCURRED BY THE ASSESSEE FROM SAID ACTIVITY IN THE EARLIER YEARS OUGHT TO BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AGAINST THE ACTIVITY OF THE CAPTIONED YEAR. 5.1 Without prejudice to the above, it is submitted that if we are considered to be doing business activity and not charitable activity, then said finding would apply to all the years in which said activity has been conducted by us. 5.2 Accordingly, in that case, the taxability of the income for all the years ought to be based on the same premise. As stated earlier, in the past, we have incurred losses aggregating to Rs. 3.6 crores from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 195,003 19,500 Tata Housing Development Co. Ltd. 263,260 5,226 NIIT Limited 444,876 44,487 Tata Consultancy Services Ltd. 719,202 31,000 Aegis Limited 61,500 6,150 Hindustan Coca-Cola Beverages Pvt. Ltd. 8,286,755 170,774 World Vision of India 815,130 16,302 ATC Tower company of India Pvt Ltd 1,039,075 20,782 ApneAap Women World Wide Trust 46,765 4,677 The Evangelical Fellowship of India Commission on Relief. 14,000 1,400 Hope Foundation 96,098 1,922 Sahyog Foundation 25,667 2,567 Vidya Integrated Development for youth and adults 60,000 1,200 Gram Niyojan Kendra 73,034 1,460 Cipla Foundation 991,160 99,440 The Tata power Company Limited 4 4,248,962 388,941 Jubilant Bhartia Foundation 10,000 1,000 Total 24,396,361 1,029,000 Interest Income NIIT Initiative for Learning 10,697 1,071 Total 10,697 1,071 20. Mr. Vohra then vehemently countered the contention of Mr. Maratha, who had urged that the amounts so received were utilized by the assessee for activities concerned with conducting sponsored courses and which were in the nature of trade, commerce or business. Learned senior counsel submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee society is a charitable in nature within the meaning of section 2 (15) of The Income Tax Act, 1961. Thereafter he computed the income of the assessee and assessed at Rupees Nil. During the course of assessment proceedings, assessee submitted a letter dated 24 November 2016 wherein the assessee explained its charitable activities conducted during the financial year. Assessee submitted that during the financial year 2013-14, 15656 underprivileged youths were trained by in NIIT foundation across various streams such as information technology, English, soft skills, BPO, retail sector banking sector and service sectors. The training was conducted at NIIT foundation run centers and NGO partner centers. Out of the youths that were eligible for job, 2903 students were placed with an average income of Rs.6800 per month. Each employed student contributed to increase family income making the family more sustainable. It was further stated that various digital literacy initiatives were also started during the period. Assessee is holding Hole in the wall learning stations were also set up across Telangana, Sikkim, West Bengal, and Bihar to provide free access to technology to child ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re within the meaning of section 2 (15) of The Income Tax Act, 1961. Then learned assessing officer specifically mentioned that the provisions of section 13 of The Income Tax Act, 1961 are not violated at all. Thus for the earlier years also on the similar set of activities the learned assessing officer in that year has taken a view that assessee is carrying on educational activities. Thus in past the activities of the assessee were accepted as educational." 24. As is manifest from the recordal of facts appearing in that paragraph, the assessee in the concerned AY was found to have essentially undertaken educational activities spread across various subjects and streams, providing opportunities to underprivileged youth and others and essentially skilling them for the purpose of future employment. It is also stated to have undertaken various digital literacy initiatives spread across as many as ten States of the country. The instruction was imparted at either NIIT-run centers or NGO-partnered establishments. Its revenue stream was disclosed to flow from tuition fees and other educational services provided by it. The fee structure was asserted to be heavily subsidized and discounted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was further held that the courses run on behalf of its clients for a duration of 20 hours to 200 hours without any fixed curriculum, criteria, discipline and other essential ingredients of formal education, but merely to teach how cooperate a Smartphone or use an email, and speak English cannot be considered as an education thus it was held that the order passed by the learned assessing officer is erroneous as he has not made any such enquiries." 26. On an overall consideration of the material that existed on the record, the Tribunal ultimately came to the following conclusion: - "22. The details of the activities conducted by the assessee have been explained above at various places therefore to avoid repetition, they are not reiterated. The assessee has categorically stated that it is primarily operating various education and development centers in rural areas and slum and economically backward pockets of semi urban areas across India so as to impart education to the students belonging to the under privileged economically backward strata of the society with an objective to develop their skills so that their employability can increase. Assessee has also shown that it has charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the opinion of the assessing officer for this year that assessee is carrying on an educational activity is also supported by the assessment history of the assessee where in earlier year also on identical facts and circumstances, the assessee was held to be carrying on educational activities, entitled to deduction/exemption under section 11 and 12 of The Income Tax Act, 1961. Honourable Supreme Court xxxx xxxx xxxx 27. If the activities carried out by the assessee are visualized in the context of judicial precedent as relied upon above, it is apparent that assessee is not engaged in any other activity other than education. Therefore, for this reason, we are of the view and hold so that the learned CIT - E is not correct in holding that assessee is not engaged in educational activities covered under section 2 (15) of the Act. 28. No evidences have been put forth by the revenue except merely an allegation of violation of the provisions of section 13 (1) (C) of the act. It has not been shown that how the assessee has conferred any benefit directly or indirectly on any person. It is also not shown that who are those persons who are fulfilling the criteria of section 13 (3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o note that the veracity of the facts noticed above was not contested by the respondents before us. 28. We at this juncture deem it apposite to take note of the following observations of the Supreme Court in New Noble Educational Society: - "82. The conclusions of this Court are summarised as follows: 82.1. It is held that the requirement of the charitable institution, society or trust, etc. to "solely" engage itself in education or educational activities, and not engage in any activity of profit, means that such institutions cannot have objects which are unrelated to education. In other words, all objects of the society, trust, etc. must relate to imparting education or be in relation to educational activities. 82.2. Where the objective of the institution appears to be profit-oriented, such institutions would not be entitled to approval under Section 10 (23-C) of the IT Act. At the same time, where surplus accrues in a given year or set of years per se, it is not a bar, provided such surplus is generated in the course of providing education or educational activities." 29. The Tribunal, in our considered opinion, correctly found in favour of the assessee when it held that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... boxes are medium of group discussion. Strikingly, Timings are 24*7. Still it has all the essential of a "classroom". It definitely covers 'process of training, developing the knowledge, skill, mind and character of students' like normal schooling. Thus, in true sense the activities performed by the assessee are no different from 'classrooms.' 31. In view of above facts, we hold that assessee is carrying on educational activities which are covered by the provisions of section 2 (15) of the income tax act and it is neither business nor profession of the assessee. It definitely constitute a charitable activity as it does not charge the fees at the level of market rate and even otherwise the surplus generated is also used for charitable activities of education. This is the finding of the learned assessing officer for assessment year 14 - 15 and for earlier assessment years. In view of this, the order passed by the assessing officer is not at all erroneous. Therefore, we set aside and quash the order passed by the learned CIT - exemption under section 263 of the Income Tax Act For assessment year 20 14-15 on 26th of March 2018. Thus, we allow ground number 3-6 of the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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