AGRICULTURE SKILL COUNCIL OF INDIA,GURGAON vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

The assessee is a company incorporated under Section 8 of the Companies Act, 2013, and claims to be engaged in charitable activities relating to skill development in the agriculture sector. The assessee filed an application in Form No. 10AB seeking registration under section 80G. During the course of proceedings, the Ld. CIT (Exemptions) issued notices to the assessee seeking documents to verify the genuineness of activities and compliance with the objectives specified in its Memorandum of Association. Though partial replies were filed, upon examination of the submissions, the Ld. CIT (Exemptions) found that the income of the assessee was largely derived as consideration for 2

Relying on the judgment of the Hon’ble Supreme Court in the case of ACIT (Exemptions) v. Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278 (SC), the CIT (Exemptions) held that the activity of providing services for a fee does not qualify as “charitable purpose” under the limb of “advancement of any other object of general public utility” if it involves trade, commerce, or business, or services in relation thereto, for a consideration. It was, therefore, concluded that the activities of the assessee were not charitable in nature, and the application under section 80G was accordingly rejected.

Before us, the Ld. Counsel for the assessee submitted that the assessee is a not-for-profit entity and its activities are aimed at skill development in the agriculture sector, which is of general public benefit. It was argued that the fees received were nominal and incidental to charitable objectives and should not lead to disqualification under section 80G. The assessee also contended that the services were aligned with national schemes and were not undertaken with any profit motive.

The Ld. AR for the assessee drew our attention to page 83 of the paper book, wherein a copy of the registration granted to the assessee under section 12A of the Act for the period covering Assessment Years 2022–23 to 2026–27 has been placed on record. It was submitted that at the time of granting registration under section 12A, the competent authority had duly examined the aims and objects of the assessee and found no discrepancy therein. The Ld. AR further submitted that the assessee had been subjected to scrutiny assessments in prior assessment years, during which the nature of its activities was duly examined by the Assessing Officer. No adverse findings were recorded, nor was any disallowance made by treating the assessee’s income as non-charitable in nature.

Additionally, the Ld. AR placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of Centre for Excellence for Agricultural Skills in India, ITA No. 4860/Del/2024, wherein, on identical facts, the Tribunal had held in favour of the assessee and granted approval under section 80G. Based on the foregoing submissions, it was contended that the assessee is entitled to registration under section 80G of the Act and that the order passed by the Ld. CIT (Exemptions) is liable to be reversed.

On the other hand, the Ld. Departmental Representative supported the findings of the CIT (Exemptions) and submitted that the consideration received by the assessee clearly indicated quid pro quo for services rendered, thereby falling outside the purview of charitable purpose under the amended provisions and judicial interpretation.

We have heard the rival contentions and perused the material on record. While the assessee is registered as a Section 8 company, the financial documents clearly reflect that the primary income is derived from training activities for which consideration is received. The computation of income and TDS details establish that the receipts were in the nature of fees for services rendered. The assessee has also not demonstrated any free-of-cost services or voluntary charitable outreach devoid of quid pro quo. In fact note 14,17 to 19 to the statement of income and expenditure for the year ending 31st March 2024, shows as under:- 14 Revenue from Operation : S. No. Particulars For the Year Ended March 31, 2024 (₹ in '000) For the Year Ended March 31, 2023 (₹ in '000) a Income from Assessments 76,120 74,083 b Income from Training of Assessors 48 1,263 c Income from Training of Trainers 1,240 5,476 d Affiliation Charges - Regular 1,317 363 e Income under the head World Skills Programme - 2,286

A perusal of the financials clearly reveals that the assessee has not incurred any expenditure towards charitable purposes within the meaning of law. The assessee has merely executed work contracts awarded under various Central and State Government schemes, without any independent initiative or voluntary contribution. No services were rendered free of cost or at concessional rates. All services were provided strictly at rates contractually agreed with the Government. The activities, therefore, are purely commercial in nature and devoid of any charitable character.

The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has categorically laid down that institutions carrying out activities in the nature of trade, commerce, or business, or services in relation thereto for a fee or any consideration, cannot be said to be carrying on charitable activities under the fourth limb of section 2(15) unless such activity is within the limits of prescribed thresholds and truly incidental. In the present case, there is no material on record to establish that the training activities were free of charge, subsidized, or ancillary to other charitable objects.On a perusal of the financial statements reproduced hereinabove, it is abundantly clear that the assessee has not rendered any services free of cost or at subsidized rates. In 7

The reliance placed by the Ld. AR on the decision of the Coordinate Bench in the case of Centre for Excellence for Agricultural Skills in India( supra) is misplaced and does not assist the assessee. Upon a careful comparison, it is evident that the facts in the present case are distinguishable and materially different from those considered in the cited decision.

Accordingly, we are of the considered view that the Ld. CIT (Exemptions) has rightly rejected the application filed under section 80G after duly considering the objects and financials of the assessee and providing adequate opportunity of being heard. We, therefore, find no infirmity in the impugned order warranting interference.

In the result, appeal of the Assessee is dismissed. (Order pronounced in the open Court on 22/05/2025 ) मनोज कुमार अŤवाल