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Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: Ms. Sushma ChowlaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the orders of the ld. CIT(A), Meerut dated 16.02.2015.
Following grounds have been raised by the assessee: “1. The ld. CIT (A) was not justified by dismissing the appeal.
2. The ld. CIT (A) has erred in summarily rejecting the plea of the appellant trust for exemption under section 10(23C)(vi).
3. The several observations as made and inferences drawn are untenable, incorrect, unwarranted.”
The additional grounds taken up by the assessee while letter dated 04.10.2017 are not pressed.
Umalock Charitable Trust 4. Facts relevant to the adjudication are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 was conducted in M/s Umalok Charitable Trust and Dr. Atul Krishan group of cases. Incriminating documents relating to the assessee were found and seized. Accordingly, assessment proceedings u/s 153C read with section 153A were initiated by the AO. The assessee trust is running two educational institutions namely, Umalok Paramedical College and Umalok Nursing School. The trust has not been granted registration u/s 12AA. The assessee claimed exemption u/s 10(23C) on the grounds that it is engaged in running educational institutions and its total receipts are below Rs. 1 crore. During the course of assessment proceedings, the AO show caused as to why exemption claimed u/s 10(23C) shall not be disallowed since the trust has not been established solely for educational purposes. The assessee stated before the AO that the main object of the trust is to run solely for educational purposes and not for the purposes of profit and the annual aggregate receipts of the trust does not exceed Rs. 1 crore in each and every year. However, the AO did not accept the explanation given by the assessee and came to a conclusion that the assessee is not fulfilling the conditions required u/s 10(23C).
The ld. CIT(A) confirmed the addition holding that in the income and expenditure account, the assessee has claimed expenditure under the heads medicine distribution, cloth distribution, food distribution, disability camp blood donation camp etc. It was held that these activities may be charitable in nature but they do not have any direct or incidental connection with education. The ld. CIT (A) has also held that during the Umalock Charitable Trust year, the trust has given various interest free advances to its trustees.
During the arguments before us, the ld. AR argued that the assessee is running three educational trust namely, M/s Umalock Nursing School, M/s Umalock Paramedical College and M/s Umalock Health Workers Training Centre. He has filed the details of cloth distribution, food distribution, medicine distribution and expenses of blood donation camp. It was argued that that assessee is into imparting education of nursing and training of paramedical staff. In order to impart the practical training and field exposure, various camps are conducted at rural areas in and around Meerut. During the camps, the medicines are distributed to the patients and provision of food and clothing is being made to the patients, volunteers and the participants. It was argued that it cannot be considered as an expenditure unrelated to the type of educational activities as it is part of expenditure related to organizing the camp which is part of imparting the education and field training.
The ld. DR relied on the orders of the authorities below.
Heard the arguments of both the parties and perused the material available on record.
We find that the assessee has duly registered with Indian Nursing Council (INC) and also with the State Nursing Council and granted permission to train and impart education of 40 students in the course of Auxiliary Nurse & Midwife (ANM). Similarly, the assessee is also permitted to train 60 students for Umalock Charitable Trust the course of General Nurse & Midwife (GNM). These activities involve theoretical classes, practical training and field exposure. Conducting of camps for a field exposure to the students is a part of training activities which will help the students to cope up with the field realities. During the camps, the patients have to be necessarily treated, counseled, given medicines. During the blood donation camps food has to be distributed to the blood donors. Hence, the expenditure involved in conduct of the camps and distribution of medicines, food and cloth forms and an integral part of conducting of field camps by the assessee trust in imparting the education. They are directly and also integrally connected with the type of education imparted by the assessee trust. Hence, we are unable to accept with the finding of the ld. CIT (A). We have also gone through the observation of the ld. CIT (A) that the assessee trust has given various interest free advances to the trustees and find that the assessee has given only an indemnity bond but not any loans to the trustees as per the record before us. Hence, it can be held that the assessee is found to be solely in the activity of education and no other activities have been undertaken by the assessee during the year.
The provisions of Section 10(23C) read as under: “Section 10(23C) (23C) any income received by any person on behalf of—
[(iiiab) any university or other educational institution68 existing68 solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government69; or Umalock Charitable Trust (iiiac) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government.
[Explanation.—For the purposes of sub-clauses (iiiab) and (iiiac), any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds such percentage of the total receipts including any voluntary contributions, as may be prescribed, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year]; or (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed; or
The prescribed limit for Section 10(23)(iiiad) is less than Rs.1 crore.
Hence, keeping in view that the annual receipt of the education institute is less than Rs.1 crore, the education institute is solely involved in the educational activity and since the objects clause of the trust during the year under consideration is to carry the educational activities and keeping in view that no other material contra has been brought by the revenue. We hereby hold that the assessee is eligible for deduction u/s 10(23C) of the Act.
Umalock Charitable Trust 14. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 14/05/2020.