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TMI Blog2025 (5) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has erred both on facts and in law in allowing the appeal of the assessee as discussed below. 2. Whether, the Ld.CIT(A) was justified in deleting the whole addition amounting to Rs. 10,19,97,202/-ignoring the fact that the services rendered by the assessee to corporate houses were not in the nature of any education or training and was not incidental to the attainment of the objectives of the trust and clearly falls in the ambit of section 11(4A) of the Act and should be taxed as income from business and profession. 3. Whether, the Ld.CIT(A) was justified in allowing the appeal of the assessee stating that the assessment order passed by the AO is in violation of principle of consistency on the basis that for AY 2012-13 and 2013-14, the AO had not doubted the training provided to corporate houses and duly considered the same within the definition of education for the purposes of section 11(4A) and 2(15) of the Act, disregarding the very fact that every assessment is a fresh proceeding and principle of consistency does not summarily apply to an order/ addition which is based on substantiated facts and reasons. 4. Whether the Ld. CIT(A) was justified in assuming that the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in foreign countries. (c) To hold seminars, arrange lectures, conference, debates, exhibitions and the like for the dissemination of knowledge and advancement of education. (d) To adopt and implement measures to promote intellectual physical, moral and social welfare of students and teachers of educational institutions and to supervise and improve the conditions of their residence, health and discipline. (e) To carry out research in all aspects of education including applied sciences. (f) To take over and administer any institution or center, carrying on her intending to carry on any of the objects of the society. (g) To do all such acts, deeds and things as may be conducive to the furtherance of any of the above objects or incidental thereto. All the income, earnings, and moveable and/ or immoveable properties of the Society shall be solely utilized and applied towards the promotion of its aims and objects as set forth in this Memorandum of Association and no portion thereof shall be paid of transferred, directly or indirectly by way of dividends, bonus, profit or in any manner whatsoever to the present or past members of the Society or to any person or persons claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment fee' are business or professional activities distinct from 'educational activities' and consequently cannot be said to be covered under the definition of 'charitable purpose' contemplated under s. 2(15) of the Act. 5.3 The AO accordingly invoked the provision of s.11(4A) of the Act and held that training etc. provided to corporate houses and other entities by the assessee are in the nature of business activity which is separate from educational activity and cannot be regarded as 'incidental' to educational activity carried on by the society. The AO thus held that receipts shown under the head 'training and development fee receipts' attributable to skill development etc. bears the character of 'business and profession' in terms of s. 11(4A) of the Act. The AO thus denied the exemption under s. 11(1) in respect of receipts falling under s. 11(4A) of the Act. 5.4 Consequently, net profits in relation to such receipts by way of corporate training after deducting certain expenses, quantified by the AO at INR 10,19,97,202/- was treated as taxable income from business and profession and levied taxes thereon. 6. Aggrieved by the denial of exemption claimed under s. 11 of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; registered under the Societies Registration Act, 1860 vide order no S-16683 and having PAN AAATR7314Q. The assessee is also registered u/s. 12A of the Income-tax Act, 1961 vide order no. CIT- VI/TE/(62)/86/284 dated 08.08.1986. The assessee society is notified u/s. 80G(5)(vi) of the Income-tax Act, 1961 vide order no. DIT(E)/2008-09/R-62/216 dated 08.05.2009. The assessee also runs educational institutions and universities under the Amity University Uttar Pradesh Act, 2005 (UP Act no. 11 of 2005). The objects of the assessee 'society' include the following: -To establish educational institutions of all descriptions, including public schools, polytechnics, vocational and management training institutions, colleges, research institutes, centers for instruction and diffusion of useful knowledge, etc. Diploma certificates, etc. shall be issued after the approval of the competent authorities. -To hold seminars, arrange lectures, conferences, debates, exhibitions and the like for the dissemination of knowledge and advancement of education. -To carry out research in all aspects of education including applied sciences. -To adopt and implement measures to promote in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 NORMAL SCHOOLING (emphasis supplied). The AO has put a great emphasis on the words "normal schooling mentioned in the aforesaid judgment of Apex Court. As per the AO, the basic test to satisfy activity as an educational activity is that it must be provided by "normal schooling". In the mind of the AO, only the formal schooling is education as mentioned in section 2(15) of the Act. The assessee submitted that the Hon'ble Apex Court has itself inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inference can otherwise be made. Delhi High Court in the case of Delhi Music Society vs Director General of Income Tax [2012] 17 taxmann.com 49. The AO has also relied upon the judgment of Delhi High Court in the case of Delhi Music Society vs Director General of Income Tax 2012 17 taxmann.com 49, 357 ITR 265. The AO has asserted that the most important test laid down by the Delhi High Court as to whether an activity is formal schooling or not is regarding "maintenance of discipline and conducting examinations before granting degrees". The assessee stated that the aforesaid judgment pronounced by the Hon'ble High Court was in the context of provisions of section 10(23)(c)(vi) of the Act. In that case, Hon'ble Court had to deal with the question as to whether petitioner is eligible for exemption u/s. 10(23C)(c)(vi) of the Act. However, in the instant case, the question before you is whether assessee society is eligible for exemption u/s. 11 of the Income Tax Act, 1961. I have gone through the AO's findings and assessee's detailed reply. My findings are as under: Consistency: It was submitted by the assessee that assessment in the case of assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o stretch of imagination, I can presume that the training provided by IIM Bangalore was not education and the receipt from the same was taxable. In my opinion, the word normal schooling should be construed in the context of actual facts. If the training is provided by a recognised university or college or institute, and that the training was properly structure and attendance was ensured then the same should fall in the category of education. The facts of this case have all these ingredients. Therefore, the activity of training would fall in the category of education. Application of sec. 11(4A):- In the present case, the assessee runs schools, colleges and university. The assessee is registered under 12A and 80G of the IT act. The objects of the assessee clearly mentions the following: "To hold seminars, arrange lectures, conferences, debates, exhibitions and the like for the dissemination of knowledge and advancement of education" The above object in my opinion clearly covers conducting of seminars and training. The objects of the assessee were before the income tax authorities and after considering the objects registration under section 12A and 80G were granted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11(4A) of the Act holding that such activities of the assessee are in the nature of business activity. Such activities are independent activities and not incidental to the attainment of educational objectives of the Trust. 8.3 The CIT-DR next contended that such activities are not incidental to formal schooling and structured study imparted by the assessee. Such training and skill development activities imparted to employees of corporates etc. are business activity or adventure in the nature of commerce. Besides, no separate books of accounts have been maintained by the assessee society for such activity and thus squarely falls within the mischief of s. 11(4A) of the Act. 8.4 The CIT-DR assailed the order of the CIT(A) for granting relief on the grounds of doctrine of consistency also. The Ld. CIT-DR submitted that the doctrine of consistency is not applicable in the present facts. Such fee has been assessed as offered by the assessee in those years and the nuances of the nature of fee were not examined by the AO at all. The Ld. CIT-DR contended that the rule of consistency cannot be of inflexible application in income tax matters. Such rule evolved by judicial precedents is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , including public schools, polytechnics, vocational and management training institutions, colleges, research institutes, Centers for instruction and diffusion of useful knowledge. etc. Diploma certificates, etc. shall be issued after the approval of the competent authorities; (ii) To award stipends, scholarships and other financial facilities to students, teachers and research scholars for studies in Indian/foreign institutions; (iii) All the income, earnings, moveable/ immoveable properties of the society shall be solely utilized and applied towards the promotion of its aims and objects, and portion thereof shall not be paid/ transferred, directly or indirectly by way of dividends, bonus, profit or in any other manner whatsoever, to the present/past members of the society or to any other person. 9.2 In the backdrop of activities carried out, the Ld. Counsel contended that all the activities of the assessee are covered by s. 2(15) of the Act. To buttress such contentions, the ld. Counsel adverted to the training fee receipts and submitted the university provides the knowledge and skill based training as part of its educational activities. Such trainings are part of the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowers the Foundation to hold seminars, arrange lectures, conferences, debates, exhibition and the like for the dissemination of knowledge and advancement of nuanced education. The Ld. Counsel thus submitted that providing of training in the normal course in a systematic manner is integral part of the primary activity of formal schooling of the University/Foundation and cannot be artificially re-characterized as business activity of the foundation. 9.5 The Ld. Counsel thus contended that the provision of s. 11(4A) of the Act are thus wholly inapplicable in the facts of the case as rightly held by the CIT(A). 9.6 Adverting to the doctrine of consistency, the Ld. Counsel pointed out regular assessments were carried out in the earlier years AY 2012-13 & 2013-14 for which assessment orders passed under s. 143(3) of the Act are placed in the paper book. The respective assessment orders clearly holds the activities of the assessee to be charitable in nature within the meaning of s. 2(15) read with s. 11(4A) of the Act. Hence, there is a need for consistency, certainty and predictability in the administration of Act. 9.7 The Ld. Counsel next submitted that the AO has applied the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee under s. 11 of the Act do not cover such fee derived from training and development activity. The determination of such controversy is essentially a question of fact and depends on facts of each case i.e nature of establishment and its activities. 11. In the instant case, the assessee is engaged in advancement of 'education'. There is no dispute about the core nature of the captioned Institution / Trust/Foundation being charitable in nature. The object clause of the Foundation and receipts obtained also suggests the income has been derived from activities in accord with its objects. The controversy essentially revolves around the nature of training fee receipts. While Revenue seeks to recharaterise the revenue generated from such activity as business activity, the assessee claims it to be integral part of educational activity eligible from exemption under s. 11 of the Act. On facts, it is the case of the assessee that the training and other skill development fee of similar nature have been received using property held in trust i.e. the campus premises, goodwill attached to the Institution and knowledge bank available at the disposal of the trust. The training activities are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thly journal and on that basis, it claimed that it is educating Kannada speaking people through newspaper and journal. It is in this factual background, the Hon'ble Supreme Court made observations that 'education' connote the process of training and developing knowledge skill by normal schooling. The Hon'ble Gujarat High Court had an occasion to comprehend and expound the judgement delivered in Loka Shikshana. In Gujarat State Cooperative Union vs. CIT (1992) 195 ITR 279 (Guj.), the Hon'ble Gujarat High Court noted the true purport of the judgment in Loka Shikshana. The Hon'ble High Court observed that the 'education' cannot be given a pedantic sense. As further noted, the Hon'ble Supreme Court in Loka Shikshana has indicated that the word 'education' cannot be used in loose sense so as to include acquisition of each and every knowledge. The observations of Hon'ble Supreme Court do not confine the word 'education' only to scholastic instructions but other forms of educations are also included in the word 'education'. The word 'schooling' also means instructing or educating. Thus, it cannot be said that the Hon'ble Supreme Court has given any unduly restrictive meaning to word 'educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord "education" only to scholastic instructions but other forms 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 provision of section 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." What was thus meant by the Hon'ble Supreme Court in the case of Loka Shikshana Trust (supra) is that education derived from casual & unstructured activities like travelling, reading newspaper and magazines, visiting art galleries, museums and zoos and so on, cannot be regarded as 'education' for the purposes of s. 2(15) of the Act. 15. As pointed out, another distinctive feature is that the assessee society is not run by a sole trustee of any charitable trust as was the case in Loka Shikshana. Rather the assessee society is regulated by AMITY University Uttar Pradesh Act, 2005 which inter-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, providing of training in the normal course is integral part of the main activity of the University/foundation and cannot be viewed separately as business activity of the foundation which can be possibly covered under s. 11(4A) of the Act. 17. We now advert to the judgement rendered in the case of Delhi Musical Society (supra). It is noted that the aforesaid judgement was delivered in the context of s. 10(23)(c)(vi) of the Act whereas the assessee in the instant case is claiming eligibility for exemption under s. 11/2(15) of the Act. While s. 10(23)(C) of the Act employs the expression 'University or other Education Institution' existing solely for educational purposes, S. 2(15) of the Act, on the other hand, simply uses the word 'education' which qualifies for exemption under s. 11 of the Act. It may be pertinent to note that in order to claim exemption under s. 10(23C), it is mandatory that there should be a university or education institution which imparts formal education with certain degree of control over students and should carry standard accountability whereas in order to claim exemption under s. 11, it is sufficient to carry out educational activity without necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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