UNIQUE EDUCATIONAL SOCIETY,LADWA vs. CIT(E), CHANDIGARH

आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the appellant society against the order dated 30.06.2018 of the Commissioner of Income Tax (Exemptions), Chandigarh [hereinafter referred to as ‘CIT(E)’] agitating the action of the CIT(E) in rejecting the application of the appellant- society for registration u/s 12A of the Income Tax Act, 1961 (in short 'the Act'), as a ‘charitable institution’.

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 2 2. A perusal of the impugned order of the CIT(E) reveals that the

appellant society had applied for registration u/s 12A of the Act

pleading that it has been running a private Industrial Training Institute,

which is imparting vocational training to the students. That the

institution has been duly recognized by the Government of Haryana

and the same is affiliated and regulated by National Council for

Vocation Training (in short ‘NCVT’), Ministry of Skill Development

and Entrepreneurship, Govt. of India. However, the Ld. CIT(E)

rejected the application of the appellant society on three counts;

firstly, mainly that gaining of the knowledge of skill do not qualify for

label ‘Education’ in the sense in which the word ‘Education’ has been

used in section 2(15) of the Act and as interpreted by the Hon'ble

Supreme Court in the case of ‘Sole Trustee Lok Sikshan Sansthan’ 101

ITR 234, wherein, it has been held that the term ‘Education’ means a

systematic instruction, schooling or training given to the young in

preparation for the work of life and that it connotes the hole course of

scholastic instruction which a person has received. The Ld. CIT(A)

observed that the word ‘Education’ is not used in that wide and

extended sense, according to which every acquisition of further

knowledge constitutes ‘Education’. That the assessee was indulged in

activity of merely skill enhancement in which no systematic education

was involved. He, therefore, held that the activity of the assessee

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 3 would not fall in the definition of ‘education’ in the sense, the word

‘education’ has been used in section 2(15) of the Act.

Secondly, he observed that the appellant society was merely an

implementing agency of the Government and was being reimbursed for

its activities which cannot be held to be a charitable activity, rather,

the assessee was doing such activity for commercial purposes. That the

receipts of the assessee did not partake the character of voluntary

donations and neither the same was income from the property vested in

the trust for charitable purposes. The Ld. CIT(E) further observed that

even the contribution towards corpus funds by the members of the

society has not been corroborated with bank entries.

The Third objection raised by the Ld. CIT(E) is that the appellant

society had purchased two cars which were meant for personal use of

the members of the society and that such purchases did not enure to

the benefit of general public and the utilization of funds to that extent

was not for charitable purposes.

the record. So far as the first and foremost observation of the Ld.

CIT(E) that the activity of the assessee would not fall within the scope

of term ‘Education’ as used in section 2(15) of the Act is concerned,

the Ld. Counsel for the appellant in this respect has invited our

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 4 attention to page Nos. 52 & 53 of the paper book. Page No.52 is the

copy of the letter dated 27.7.2012 of the Govt. of India, Ministry of

Labour and Employment, Directorate General of Employment &

Training issued under the signatures of Director(T) addressed to the

State Directors / U.T. Administrators dealing with Craftsmen Training

Scheme, whereby, it has been conveyed that the case of the appellant

along with others was examined by the Members of the Sub-Committee

for NCVT and that the Committee after examination approved the

affiliation of the cases for conforming to the NCVT norms. The list of

such institution has been mentioned, wherein, the name of the

institution namely ‘Mahatma Gandhi Private ITI, Distt. Yamunanagar

run by appellant society is mentioned at Sr. No.1. Further, page No. 54

is the copy of the letter dated 10.8.2007 of the Industrial Training &

Vocational Education Department, Govt. of Haryana, whereby, the

Government has given approval to the appellant society for

establishment of private Industrial Training Centre in the name and

style of ‘Mahatma Gandhi Industrial Training Centre’ for running the

trades with affiliation to State Council for Vocational Training (SCVT).

The name of trade and the units approved are mentioned as under:-

S.No. Name of Trade Duration No. of Increase Total units. units in units / already units in approved new trade 1 Computer 1 year 1 1 2 (in two operator shifts) Programming

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 5 Assistant 2 Fitter 2 year 1 1 2 (in two shifts) 3 Painter General 2 year 1 1 2 (in two shifts) 4 Electrician 2 year 1 1 2 (in two shifts)

Development & Entrepreneurship, New Delhi, the appellant has been

empaneled as Assessing Body under Modular Employable Skills. The

Ld. Counsel for the assessee, therefore, has submitted that the

appellant has been running the vocational training course in a

systematic manner and is affiliated and regulated by NCVT as well as

SCVT, Haryana. That the examinations are conducted on national

level and Diploma equivalent to 10+2 degree is awarded by the NCVT.

That the courses run by the appellant being for promotion of skill

development and training, class rooms teaching and trainings are

designed for generation of employment opportunities for village youths

and the same have been duly recognized by the state government as

well as Central Government. We are convinced that the vocational

educational / training programme run by the appellant society are

systematic programme imparting class room as well training with focus

on employment generation. The education given by the appellant, in

our view, can safely be said to be in the mode of systematic

instructions / schooling or training given to the young in preparation

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 6 for the work of life and, in our view, duly fall within the purview and

scope of the term ‘Education’ as used in section 2(15) of the Act.

assessee is not from voluntary donation or that the same cannot be said

to be income from property held under the trust is concerned, we are

not convinced with the above observation of the Ld. CIT(E) for

rejecting the claim of the appellant trust. The appellant trust is

reimbursed the amount spent by the Government for carrying out its

‘education / training programme as per the skill development

programme of the Government. Thus, in our view, it can be safely said

to be income generated from the activity of the appellant trust and the

said activity as observed above, falls within the purview and scope of

charitable purpose. It is not be case of the CIT(E) that the major or

main activity of the appellant trust is towards commerce or business.

The receipt of income, in our view, is in the course of carrying out of

‘Educational activity’ of the assessee.

could not corroborate the receipts towards the corpus funds from the

members of the trust with bank entries. In our view, this cannot be

ground for rejection of the application u/s 12A of the Act. The

appellant has shown the receipts towards its corpus funds from the

members of the trust and the same has been duly recorded in the books

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 7 of account. It makes no difference if the receipts were received in cash

or through banking channel. Moreover, whether the receipts are towards

corpus funds or for application is to be seen at the time of assessment.

Counsel of the appellant has explained that the said cars are used by the

society for its activities as the society members have to travel between

Delhi and Chandigarh for meetings and review of its work done by the

Central / State Government and further that the said expenditure is

completely related to the activities and objects of the appellant society.

indulging in skill development programme under Pradhan Mantri

Kaushal Vikas Yogna (PMKVY) and that this programme is a short

duration programme and cannot be said to be a systematic education

programme. May it be so, apart from providing the long term course of

one year or two years as mentioned above, since the appellant society

has skilled instructors for providing vocational training to the students

and if the appellant institution has also been imparting training under

the Pradhan Mantri Kaushal Vikas Yogna, that itself, cannot be

sufficient to hold that the appellant society has done any activity in

violation of its objects.

ITA No. 1052-c-18 Unique Educational Society, Yamunanagar 8 10. In view of the observations made above, the impugned order

of the CIT(E) is set aside and the Ld. CIT(E) is further directed to grant

registration to the appellant society u/s 12A read with section 12AA of

the Act in accordance with the relevant provisions of the Act.

In the result, the appeal of appellant society stands allowed.

Order pronounced in the Open Court on 06.08.2019.

Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� /Vice President �या�यकसद�य/ Judicial Member Dated : 06.08.2019 “आर.के.” आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File

आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar