COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATA vs. GYAAN VIKAS FOUNDATION

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ITA/147/2019HC CalcuttaWBCHCO003296201701 July 2024Bench: HON'BLE JUSTICE SURYA PRAKASH KESARWANI,HON'BLE JUSTICE AJAY KUMAR GUPTA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the conclusion arrived at by the Tribunal was valid and justified, and therefore, no interference was called for. The Tribunal had correctly noted that the sole reason cited by the Commissioner of Income Tax (Exemption) for denying charitable status was the charging of fees for vocational training courses. The Tribunal's reliance on the Delhi High Court's decision in Commissioner of Income Tax vs. India Trade Promotion Organization, which established that collecting fees does not automatically disqualify an institution from being charitable if its dominant activity is not business, was deemed appropriate. Similarly, the Tribunal's reference to Commissioner of Income Tax Vs. Shri Ram Education Foundation, where income from a vocational training center was considered charitable, further supported its conclusion. The High Court found the Tribunal's reasoning sound and its conclusion justified. Consequently, the appeal filed by the revenue was dismissed, and the substantial question of law was answered against the appellant (revenue).

What were the facts?

The Revenue, Commissioner of Income Tax (Exemption), Kolkata, filed an appeal before the High Court at Calcutta against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had ruled that the assessee, Gyaan Vikas Foundation, was run for charitable purposes. The Revenue's primary objection was that the Foundation charged fees from students for vocational training courses in garment making and designing, which they argued disqualified it from being a charitable trust. The appeal was admitted on November 11, 2019. An application (GA/3/2024) was filed by the department to recall a previous order dismissing the appeal for non-prosecution and non-filing of the paper book. The explanation provided by the department was accepted, and the appeal was restored for hearing.

What were the issues?

1. Whether the impugned order of the Tribunal, holding that the trust in question was run for charitable purposes, was contrary to law and frivolous? (Question of law and fact, concerning the definition of charitable purpose under the Income Tax Act, 1961). Assessee's contentions: Not explicitly recorded in the judgment. Revenue's contentions: The Revenue argued that the trust was not genuine and did not exist for charitable purposes solely because it charged fees from students for vocational training courses in garment making and designing. This activity, they contended, disqualified the trust from being considered charitable. Authorities/Precedents relied on: The Tribunal, in its impugned order, relied on the Delhi High Court decision in Commissioner of Income Tax vs. India Trade Promotion Organization Vs. DGIT (Exemption), [2023] 152 taxmann.com 490, which held that if the dominant activity of a charitable institution is not business, trade, or commerce, collecting fees does not negate its charitable character. The Tribunal also referred to Commissioner of Income Tax Vs. Shri Ram Education Foundation, [2001] 116 Taxmann. 832 (Del), where income from a vocational training center for stitching and embroidery was considered an object of general public utility not involving profit-making.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

od 16 IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE

IA NO. GA/2/2024 In ITA/147/2019 COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATA Vs GYAAN VIKAS FOUNDATION

BEFORE : THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM -A N D- HON'BLE JUSTICE HIRANMAY BHATTACHARYYA DATE : 30th August, 2024.

Appearance : Mr. Soumen Bhattacharjee, Adv. Mr. Ankan Das, Adv. Ms. Doyel Dey, Adv. …for appellant Mr. S. Agarwal, Adv. Mr. R. Chatterjee, Adv. Ms. Suman Sahani, Adv. …for respondent

The Court :- By consent of the parties the application, GA/3/2024, is treated as on day’s list. This application, GA/3/2024 has been filed to recall the order passed by the Division Bench dismissing the appeal for non-prosecution and also for non filing of paper book. The explanation offered by the department is acceptable and the application is allowed and the appeal is restored for hearing.

This appeal filed by the Income Tax Department under section 260A of the Income Tax Act, 1961 [the Act] is directed against the order dated 12.5.2017 passed by the Income Tax Appellate Tribunal, “C” Bench, in ITA/1454/2015 and ITA/1455 of 2015 the appeal was admitted on 11.11.2019 on the following substantial question of law. a. Whether the impugned order of the Tribunal held that the trust in question was run for charitable purposes was contrary to law and frivolous ? We have heard learned counsel on either side.

2 The learned Tribunal has taken note of the factual position and found that the only reason given by the Commissioner of Income Tax [Exemption] to arrive at a conclusion that the assessee trust is not genuine and does not exist for charitable purposes for the sole reason that it charges fees from students conducting certain vocational training course in garment making and designing. In this regard, the learned Tribunal took note of the decision of the High Court of Delhi in Commissioner of Income Tax vas. India Trade Promotion Organization Vs. DGIT (Exemption), [2023] 152 taxmann.com 490 [Del] wherein it was held that if the dominant activity of a charitable institution was not business, the trade or commerce, merely because a fee or some other consideration was collected or received by the institution, it would not lose its character of having been established for a charitable purpose. Apart from that the learned Tribunal also took note of the decision in the case of Commissioner of Income Tax Vs. Shri Ram Education Foundation, [2001] 116 Taxmann. 832 (Del) wherein the income earned from running a vocational training centre training women in art of stitching and embroidery was considered as an object of general public utility not involving carrying on any activity of profit. Thus we find that the conclusion arrived at by the Tribunal is valid and justified calling for no interference. In the result, the appeal is dismissed and the substantial question of law is answered against the appellant revenue. (T.S. SIVAGNANAM) CHIEF JUSTICE

(HIRANMAY BHATTACHARYYA, J.)

pkd/GH.

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