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Facts
The assessee, a trust promoting arts and education, appealed against the CIT(Exemptions)'s order rejecting its application for approval under Section 80G. The CIT had rejected the application based on the interpretation of Section 2(15) of the Income Tax Act, considering the trust's activities not charitable.
Held
The Tribunal held that the CIT(Exemptions) erred in rejecting the application. The Tribunal, following judicial precedents and a co-ordinate bench's order, concluded that the trust's objects and activities, focused on imparting education in classical dance and allied arts, qualify as charitable under Section 2(15).
Key Issues
Whether the activities of promoting classical dance and allied arts by a trust constitute "charitable purpose" as defined under Section 2(15) of the Income Tax Act, 1961, thereby qualifying for approval under Section 80G.
Sections Cited
2(15), 80G, 12A
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI S. R. RAGHUNATHA
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (in short ‘the CIT(A)’), Delhi, dated 19.03.2025 for the Assessment Year (in short ‘AY’) 2017-18.
2. The registry has noted that the appeal has been filed after delay of ‘47’ days and the assessee has filed an affidavit explaining the delay. Having gone through the contents of the affidavit, we are satisfied that there is sufficient cause for the delay. Therefore, we condone the delay of ‘47’ (AY-) Nritya Samsrti days and proceed to adjudicate the grounds of both appeals raised by the assessee.
3. The grounds of appeal raised by the assessee are as under:
1. The Ld. CIT (Exemption) has erred in concluding that there are no charitable objects mentioned in the trust deed, and failed to appreciate the dominant object of the Appellant trust - to promote, advance and propagate Bharatnatyam, which is an ancient Indian dance form, by all legitimate means. In accordance with its Trust Deed, the Appellant engages in charitable activities like providing free Bharatnatyam classes to students and providing platform for students (Le.. competition, festivals, creating documentary film etc.) for showcasing the Bharatnatyam dance. These activities are not commercial or driven by profit in any manner.
The Ld. CIT (Exemption) has passed the impugned order on an erroneous interpretation of Section 2(15) of the Income Tax Act, 1961, holding that Appellant's activities are not in the nature of advancement of objects of general public utility merely because the Appellant charges a nominal fee in certain cases. It is submitted that Section 2(15) must be construed liberally in the context of its whole intent and purport. The purport of the first proviso to Section 2(15) is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a nominal consideration or a fee. The object of introducing the first proviso is only to exclude organizations which are carrying on regular business, driven by profitability, from the scope of "charitable purpose"
The Ld. CIT (Exemption) has failed to appreciate that the charitable nature of a trust is borne out from its primary and dominant object, and if the dominant object of a trust is to carry out charitable activities, then the charitable character of a trust would not be lost merely because the charitable purpose involves carrying on some activities for a nominal fee. It is further submitted that a nature of a charitable trust is not lost if it carries on business, as long as the business is incidental to its main activity. Therefore, merely because the (AY-) Nritya Samsrti Appellant occasionally collects some dance tuition fees or collects programme fees from a few of its well-to-do students, it does not change the dominant nature of the Appellant trust. However, The Ld. CIT (Exemption) has proceeded on the erroneous assumption that these activities are commercial in nature and has erroneously concluded that the very nature of the Appellant trust is therefore commercial. It is submitted that the said reasoning is not only erroneous but also unsustainable in the eyes of law.
4. It is submitted that The Ld. CIT (Exemption) erred in concluding that the principal activities of the Appellant are "recreation" in the field of Indian classical dance. It is submitted that activities that promote our ancient culture and art forms cannot be loosely termed as recreation. It is further submitted that the charitable nature of trusts engaged in the promotion of art and culture have consistently been upheld.
5. The Ld. CIT (Exemption) has erred in holding that teaching art forms cannot be considered as education under 5. 2(15). As per the decision of the Hon'ble Supreme Court in Sole Trustee, Loka Shikshana Trust vs. CIT, Mysore, 101 ITR 234, there must be a process of training and developing the knowledge, skill, mind, character of the students by normal schooling, for an activity to fall under the ambit of education. This position of law has been interpreted by various High Courts in the context of trusts teaching music and arts, and have held that the same would be considered education if it is taught in a systematic manner [Delhi Music Society D. DGIT (2013) 357 ITR 265; Swar Sangam v. CCIT, W.P. No. 246 of 2014 (Cal HC)). Therefore, The Ld. CIT (Exemption) ought to have only considered whether the Appellant is carrying out activities that are in the nature of training and developing knowledge and skill, and in a manner that is systematic. It is submitted that if the activities of the Appellant had been properly appreciated, it would have been seen that it is indeed in the nature of training and developing knowledge and skill in a systematic manner in the ancient dance form of Bharatanatyam. Instead, The Ld. CIT (Exemption) has decided the issue merely on the presumption that teaching dance cannot be considered education. This decision is not only unjust but is also premised on an erroneous interpretation of the position of law.
(AY-) Nritya Samsrti 6. The Ld. CIT(Exemptions) has erred in rejecting the application on the ground that the proportion of total trustee fees paid to the receipts of the Appellant trust is unreasonable.
4. The assessee is a trust. The assessee filed an application dated 26.06.2024 in Form 10AB under Rule 11AA of the I.T. Rules, 1962 seeking approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 [In short ‘Act’]. The assessee trust has obtained registration under section 12A in Form 10AC dated 25.05.2022 from AY 2022-23 to AY 2026-27 and provisional approval u/s 80G in Form 10AC dated 31.08.2021 from 31.08.2021 to 2024-25.
5. The trust is a public arts and educational trust formed on 26.02.2020 to promote advance and propagate Bharatanatyam and other Fine arts. The objects mentioned in the trust deed are as under:
To promote, advance and propagate Bhartanatyam and other Fine arts in all forms and by all legitimate means and to train students for attaining character and efficiency through such medium 2. To organise and/or conduct or arrange to conduct schools/colleges in fine arts, seminars/symposia, concerts, competitions, demonstrations, lectures, film shows, music, dance and drama festivals for the attainment of the objects and to provide facilities for advancement of such education, means.
3. To promote and encourage cultural activities in general and to foster and develop music, dance and other fine arts in particular.
(AY-) Nritya Samsrti 4. To advance the cause of Bharatnatyam and classical music in particular and all other fine arts and to extend the knowledge through literature and otherwise by all permissible and diverse means, of such fine arts and in particular Bharatanatyam dance and drama.
5. To award scholarships, stipends, honours and prizes and other forms of encouragement lassistance for learning/propagating dance, drama and other fine arts in pursuance of the above objects.
6. To conduct classes our courses for the development of dramatic arts, including acting, stage settings and decorations, face painting or makeup 7. To hold meetings, conferences, seminars, discussions on different and current social subjects or events other than political.
To hold inter state dialogues or meetings of artists, scholars, philosophers, technicians in different cultural scientific and philosophical subjects.
9. To produce documentary films on social and cultural subjects and to exhibit them through TV or in social functions at other places.
6. After consideration of the objectives of the trust, the CIT(Exemptions) passed an order dated 28.12.2024 rejecting the approval under Section 80G of the Act for the reasons as under:
As per the above provisions, any activity of rendering any service, for a fee, irrespective of the nature of use and the aggregate receipts from such activity or activities during the previous year, exceeds twenty per cent of the total receipts, then the activity should not be treated as charity.
(AY-) Nritya Samsrti Besides, from the the trust activities, it can be concluded that conducting dance class will not fall within the definition of 'education', with the advent of case law 'Loka Shikshana Trust', the term "Education", as used in section 2(15) of the Act 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.
According to this wide and extended sense, travelling is education as you can enrich your knowledge by seeing / gathering lot of information. For example, during the course of servicing the two wheeler / four wheeler, a mechanic gives tips / advice to the customer regarding the maintenance of vehicle, basic repairing technique, fuel saving measures etc. which would be useful to the said customer in his/her lifetime. Similarly, a tourist operator runs vehicle / cabs takes the visitors / passengers to the places of historical importance, museum, zoo, sports arena, pilgrimage etc. thereby the visitors / passengers are gaining knowledge which would give them social/ economical benefits in their lifetime. Though the above activities enrich the knowledge of the persons (AY-) Nritya Samsrti concerned, it is not covered under 2nd limb of charity le "Education". Hence, it does not fall in the ambit of "Charitable Purpose" u/s. 2(15) of the Income Tax Act, 1961.
From the above, it can be concluded the applicant trust is not actually engaged in any charitable activities and neither not covered under the limb 'Advancement of General public utility' nor under 'Education' as defined section 2(15) of the Income Tax Act 1961.
5. Conclusion: As per the second proviso to Section 80G(5) of the I.T.Act, 1961, if the application is made under first proviso to section 80G(5) and the Principal Commissioner or Commissioner is not satisfied, he can reject the application as well as cancel the approval of the trust/institution.
In view of the above facts and circumstances of the case, its application is not maintainable. Hence, the application filed by the applicant on 26.06.2024 in Form No. 10AB u/s 80G(5)(iv)(B) seeking approval u/s.80G(5) of the I.T. Act, 1961 for the reasons stated in Para 4.1 to 4.5 is rejected.
Aggrieved by the order of CIT (Exemptions), the assessee preferred an appeal before us. The learned AR for the assessee submitted that assessee is a trust established by a trust deed dated 15.07.1994 with a primary objective of educating, promoting and imparting knowledge, practice and training in the school of arts specifically, classical dance, (AY-) Nritya Samsrti bharatanatyam, kuchipudi and other related studies in stage management, vocal music, etc. The learned AR submitted that the objective of the trust is dedicated to a structured and systematic process imparting education in traditional dance forms and allied arts which align definition of “education” under Section 2(15) of the Act. In support of the argument, the learned AR relied on the following judicial precedents:
Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC); Delhi Music Society Vs DGIT (2013) 357 ITR 265; Swar Sangam Vs CCIT, W.P.No.246 of 2014 (Cal HC) 8. Further, the learned AR stated that the assessee’s activities are conducted without any profit motive and are aimed at benefiting the public at large. Further, the learned AR stated that the application of fund has been made towards educational activities such as conducting class work, dance and cultural programs and hence, trade for directing the learned CIT (Exemptions) to grant the approval under Section 80G of the Act. The ld. AR also placed on record the order of the co-ordinate bench of the Tribunal in “Kalasadhanalaya Vs CIT(E) dated 28.04.2025, wherein in identical circumstances allowed the appeal of the assessee.
Per contra, the learned DR vehemently supported the order of the CIT (Exemptions) and pleaded for confirming the same. (AY-) Nritya Samsrti 10. We have heard the rival submissions and perused the record of the appeal papers and case laws referred. We have perused the order of the co-ordinate bench of the Tribunal in “Kalasadhanalaya Vs CIT(E)” dated 28.04.2025 which held as under:
The assessee’s nature of activities are charitable and the object is education. Some of the objectives mentioned in the trust deed are as under: “1. To educate, promote, impart knowledge, practice and training in the school of arts inclusive of Bharatanatyam, Classical dance and any other related studies including philosophy, vocal music etc. 2. To publish materials in connection with this subject and make the literature available for students and art connossieurs. 3. To produce, written audio material and video material that would serve the purpose of propagation of dance, dance-drama and other subjects concerned. 4. To produce material that would facilitate the teaching, learning and propagation of classical dance and allied subjects.”
After consideration of the objectives of the trust, the CIT(Exemptions) passed an order dated 30.09.2024 rejecting the approval under Section 80G of the Act for the reason that the primary object is to promote awareness on traditional dance of India and to facilitate attainment of expertise in performing dance. Thus the activities of the trust cannot be construed for charitable purpose as defined in Section 2(15) of the Act.
Aggrieved by the order of CIT (Exemptions), the assessee preferred an appeal before us. The learned AR for the assessee submitted that assessee is a trust established by a trust deed dated 15.07.1994 with a primary objective of educating, promoting and imparting knowledge, practice and training in the school of arts specifically, classical dance, bharatanatyam, kuchipudi and other related studies in stage management, vocal music, etc. The learned AR submitted that the objective of the trust is dedicated to a structured and systematic process imparting education in traditional dance forms and allied arts which align definition of “education” under Section 2(15) of the Act. In support of the argument, the learned AR relied on the following judicial precedents: Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC): The Supreme Court held that “education” under Section 2(15) includes (AY-) Nritya Samsrti any systematic activity that imparts knowledge or skills to the public, beyond formal schooling. The Mylapore Fine Arts Clubm ITAT Chennai C Bench ITA 1706/MAD/2010: Hon’ble ITAT Chennai C Bench recognized preservation of cultural importance dance and musics eligible for charitable benefits. Abhinayavani Nritya Niketan –ITAT Hyderabad Bench A ITA 994 & 995 /HYD/2019 Held that education of Kuchipudi comes under definition of charitable activities under Section 2(15) of Income Tax Act, 1961. Sri Thiya Brahma Gana Sabha, Chennai ITAT bench D, ITA 1677/MAD/2015, held that imparting education in dance and music is charitable in nature.
7. Further, the learned AR stated that the assessee’s activities are conducted without any profit motive and are aimed at benefiting the public at large. Further, the learned AR stated that the application of fund has been made towards educational activities such as conducting class work, dance and cultural programs and hence, trade for directing the learned CIT (Exemptions) to grant the approval under Section 80G of the Act.
8. Per contra, the learned DR submitted the order of the CIT (Exemptions) and prayed for confirming the same.
9. We have heard the rival contentions perused the material available on record and gone through the order of lower authorities along with the case laws relied on. It is an admitted fact that the trust exists from 15.07.1994 and has exemption under Section 12A of the Act along with the approval under Section 80G of the Act from inception. On perusal of the objects of the trust in Trust deed we find that the assessee is engaged in the promotion of an art and culture by educating the ancient / traditional dance culture to the students, which forms part of the education as per Section 2(15) of the Act. The relevant extract of the objects stated in the trust deed is given below: “To educate, promote and impart knowledge, practice and training in the school of arts, namely (1) Classical dance (2) Bharatanatyam (3) Kuchipudi and (4) any other related studies in stage management, vocal music. Etc.”
Further, we find that the trust has spent the entire amount towards the expenditure related to the objects of the trust and hence there is no profit motive in the activities of the assessee. The receipts and expenditure of the trust have been captured in page nos.6 & 7 of the order of ld.CIT (E).
(AY-) Nritya Samsrti 11. Further, the reliance on the judicial precedents by the ld.AR in support of the assessee’s objects are in the nature of public charitable activities which is squarely falls u/s.2(15) of the Act is to be considered to appreciate the activities of the assessee.
12. We note that the Hon’ble Supreme court in Sole Trustee, Loka Shikshana Trust (Supra) has held that “education” u/s.2(15) includes any systematic activity that imparts knowledge or skills to the public, beyond formal schooling.
Further, this tribunal in the case of The Mylapore Fine Arts Club cited supra, observed that the preservation of cultural importance dance and music eligible for charitable benefits.
Similarly in the case Sri Thiya Brahma Gana Sabha, cited supra, held that imparting education in dance and music is charitable in nature.
Further, in the case of Abhinayavani Nritya Niketan –ITAT Hyderabad Bench (supra) held that education of Kuchipudi comes under definition of charitable activities under Section 2(15) of Income Tax Act, 1961.
In light of the above factual matrix and discussion, we are of the considered view that the ld.CIT(E) has erred in rejecting the application for approval u/s.80G of the Act. In the present facts of the case and respectfully following the judicial precedents cited supra, we remit the issue back to the files of the ld.CIT(E) to consider the issue afresh.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 28th April, 2025 at Chennai.
We are of the considered view that the objects of the assessee trust are akin and similar to the “Kalasadhanalaya Vs CIT(E)” referred supra. Hence, respectfully following the judicial precedents cited supra and order of the co-ordinate bench of the Tribunal in “Kalasadhanalaya Vs CIT(E)” dated 28.04.2025, we find that ld.CIT(E) has erred in rejecting the application for approval u/s.80G of the Act.
(AY-) Nritya Samsrti Therefore, we remit the issue back to the files of the ld.CIT(E) to consider the issue afresh.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 23rd day of July, 2025, in Chennai.