WORLD INSTITUTION DEVELOPMENT PROGRAMME,NEW DELHI vs. ITO(EXE3MPTION), WARD-2(3), NEW DELHI

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee against the order of the ld CIT (A)-40, Delhi dated 26.11.2018 for the Assessment Year 2014-15, wherein, appeal filed against the order of the ITO (Exemption), Ward-2(3), New Delhi passed u/s 143(3) dated 06.12.2016 is confirmed. 2. The assessee has raised the following grounds of appeal:-

1. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as not treating the appellant to be engaged in activity of education within the meaning of section 2(15) of the Act (definition of charitable purpose under the Act) as interpreted in various court rulings which have been not judiciously appreciated by any of the lower authority thus leading to erroneous conclusion that activities of appellant do not come under the purview of word education which is seriously flawed due to the singular fact that when sharing of proceeds with Global Open University Nagaland is an admitted and accepted fact which in turn is sourced from tuition fees etc so collected by said university from admitted students so character of said proceeds in hands of appellant would also be education receipts only as ultimate and exclusive beneficiaries of activity of assessee is student only who are getting education from collective, combined and consolidated efforts of appellant and said university. Accordingly Ld AO and Ld CIT-A orders may please be reversed and returned income may please be restored. Page | 1

2. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as not treating the appellant to be engaged in charitable activity as covered u/s 2(15) of the Act which also includes general public utility and even if for sake of moment it is assumed without admitting that education clause does not apply to appellant then it does not ipso facto result in ouster of appellant from section 2(15) of the Act as done by both the lower authorities in flying manner without heed to scheme of law applicable to charitable trust/societies where stated activity of assessee in helping students at large to gain better qualitative education by assisting university where only students are admitted , in ensuring timely and smooth arrangement of requisite study syllabus material etc is very well part of general public utility (public welfare is writ large there) and here commercial activity label cant be put on appellant as predominant purpose of appellant activity is to cater to education related activities only. Accordingly Ld AO and Ld CIT-A orders may please be reversed and returned income may please be restored.

3. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as not treating the appellant to be engaged in charitable activity as covered u/s 2(15) of the Act (education limb) on basis of time tested plea of consistency which binds revenue as in assessments of AY 2012- 2013 and AY 2013-2014 identical activities of appellant are accepted in detailed scrutiny assessment to be educative in nature u/s 2(15) of the Act and thus viewing once a confirmed and positive stand is taken on appellant educative activities in very beginning years where stated educative activity was initiated revenue is barred from making a somersault like done in extant case which is proscribed in law. Accordingly Ld AO and Ld CIT-A orders may please be reversed and returned income may please be restored. 4. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as an indirect attempt is made to revoke valid registration granted to appellant u/s 12A/12AA by reviewing the stated objects/activities of appellant on which hitherto appellant is already treated to be genuinely engaged in charitable activity u/s 2(15) of the Act by competent authority which review and sitting over judgment of registration granting authority u/s 12A/12AA is not permissible in law. 5. That in the given facts order of Ld AO and Ld CIT-A are incorrect in so far as not accepting plea of appellant for reduction of interest accrued but not reed of Rs 61,75,292 already included in gross receipt but was to be reduced from it making arbitrary addition against the law.” 3. The facts shows that the assessee is a trust registered u/s 12 AA of the act and u/s 80G (5) (vi) as per order dated 10.02.2011, which is carrying on the activities of establishment of educational institute for strengthening the cause of education by providing the didactical (designed or intended to teach) facilities etc. It filed its return of income on 30.09.2014 declaring nil income. The ld AO during the course of assessment proceedings found that activities of the trust are in the nature of business activities and therefore, it is not eligible for deduction/ exemption u/s 11 and 12 of the Act. The main reason for holding so is that assessee has entered into Memorandum Of Understanding with Global Open University, Nagaland wherein, 67% of the fees collected by that university is shared by the assessee. The assessee submitted that the issue is covered in favour of the assessee by the decision of the Hon'ble Supreme Court in Oxford University Press Vs. CIT 115 Taxmann.com 69 and of the Hon'ble Delhi High Court in 20 Taxmann.com 505. The ld AO rejected the contention of the assessee stating that those decisions relied are on different facts. He held that the assessee is engaged in procuring study materials and engaged part time teachers who are paid remuneration to the assessee, has also signed an MOU with Indian Institute of Ecology and Environment (IIEE), New Delhi for procuring master copy in books on different subjects. Further, the gross receipt of assessee is Rs. 4.86 crores out of which Rs. 4.11 crores is for course material fees and remaining sum is Rs. 17,32,532/- is examination fees and Rs. 58,00,000/- approximately is interest. The major expenses include material charges and remuneration to part time teachers. The assessee does not have any infrastructure to run an educational institutions but it is mere facilitator between students and the various universities. The ld AO also relied upon the decisions of Hon'ble Supreme Court in case of sole trustee Lok Shikshana Trust Vs. CIT (1975) 101 ITR 234. Thus, for the above reason he held that assessee is not engaged in providing education but engaged in completing contractual obligation to provide study materials, and arranging part time teachers to guide the Open University Students. Ld AO further relied upon the decision of the coordinate bench reported in Professional & Research Foundation Vs. Director of Income Tax (Exemption) 20 Taxmann.com 471. Thus, he determined the net taxable income of the assessee at Rs. 3,59,79,514/- per assessment order passed u/s 143(3) of the Act on 06.12.2016.

4. The assessee aggrieved with the order of the ld AO preferred appeal before ld CIT(A) who confirmed the finding of the ld AO as per para No. 4 at page No. 10 to 14 of his order as under:- “4. Determination Page | 3

4.1 Grounds of appeal Nos. 1 to 10 challenge the denial of exemption under sections 11 and 12 by holding that the activities of the assessee were in the nature of business activities and initiation of penalty proceedings under section 271 (l)(c). Since these grounds of appeal are interlinked, these are being adjudicated together. 4.1.1 The Assessing Officer noted that the assessee was engaged in procuring stud; material and engaging part time teachers who were paid honorarium. It was also noted the assessee had signed a MoU with Indian Institute of Ecology and Environment (IIEE New Delhi for procuring Master copy and books on different subjects to be provided t those who had enrolled with WIBP. It was further noted that the appellant was only facilitator who had no educational infrastructure, no permanent establishment, no teachers on its rolls, no recognition to enroll students in its premises and hence it could not be called an educational institution in view of the decision of the Hon'ble Supreme Court in the ca: of Sole Trustee, Lok Shikshan Trust (supra). It was held that the activities of the trust we non-charitable and the benefit of exemption under section 11 was denied to the appellant. 4.1.2 The appellant has submitted that from the objects of the assessee it is clear that it is engaged in carrying on the activities in the field of education and from the MoU entered into with the Global Open University, Nagaland it is apparent that all the services to be rendered by the assessee are exclusively in the field of education. It has also been submitted that the assessee ensures preparation in publication of the syllabus, study material and conduct classes and examinations of the student on behalf of the Global Open University, Nagaland. It has also been submitted that the assessee monitors and evaluates the development activities of students of the Global Open University, Nagaland and hence the activity in question cannot be regarded as being in the nature of trade, commerce or business. It has also been submitted that the assessee has been assessed as a charitable institution since its inception and for assessment years 2012-13 and 2013-14 under section 143(3) and the status should not be disturbed as there is no change in the facts nor any variation in the objectives of the society. It has also been submitted that training and development of students in preparation and distribution of course study material and conducting exams on behalf of the Nagaland University contributes to the process of training and development of mind and character of students. Reliance has been placed on the decision of the Hon'ble Supreme Court in the case of Assam State Text Book Production & Publication Corporation Ltd and also the decision of the Hon'ble Delhi High Court in the case of Delhi Bureau of Text Books vs. DIT(E). Reliance has also been placed on the decision of the Hon'ble Delhi High Court in the case of Indian School Certificate Examinations vs. DCIT (E).

4.1.3 I have considered the assessment order and the submissions of the appellant. The relevant portion of the MoU entered into by the appellant with the Global Open University, Nagaland is reproduced below:

regular classes or coaching classes, the member of hours spent on leaching etc. 4.1.5 It is the contention of the appellant that it is also conducting examinations and hence reliance has been placed on the decision of the Hon'ble Delhi High Court in the case of Council for Indian School Certificate Examination vs. DGIT (supra). The facts of case of the appellant are different from the said case in as much as in the case relied upon, the Council for Indian School Certificate Examination was itself awarding certificates after conducting the exams which is not the case with the appellant. The appellant is merely conducting the exams but is not awarding the certificates/degrees after the examination. Further, in the said case the Hon'ble Court decided the issue whether Council for Indian School Certificate Examination was an educational institution for the purpose of section 10(23C)(vi) and not whether the appellant was imparting 'education' within the meaning of Section 2(15). 4.1.6 The appellant has also relied on the decision of the Hon'ble Delhi High Court in the case of Delhi Bureau of Text Books (supra). The facts of the said case are also different from those of the appellant in as much as that the Delhi Bureau of Text Books was engaged in printing and publication of textbooks for students of government schools, NDMC schools and Delhi Cantonment schools and the books were provided at subsidised rates. The bureau was also distributing free books, reading material and schoolbags to needy students. Exemption had been denied in that case because the assessee had generated profits out of the activity of publishing and selling school textbooks. In the case under consideration, the appellant is Ecology and Environment, New Delhi and providing it to be the students enrolled with WIBP. It is not the case that the appellant itself is printing and publishing the course material and is distributing the same at subsidized rates to the students. 4.1.7 In the case of Assam State Text Book Production and Publication Corporation Ltd vs. CIT [(2009) 319 ITR 317 (SC)] also, the facts of the case were different from that in the case of the appellant. In the case of Assam State Text Book Production and Publication Corporation Ltd, the Horible Supreme Court noted as under: "Following the judgement of the Rajasthan High Court, we are of the view that, in this case, the High Court, in its impugned judgement, has not considered the historical background in which the Corporation came to be constituted; secondly, the High Court ought to have considered the source of funding, the share- holding pattern and aspects, such as return on Investment; thirdly, it has not considered the letters issued by C.B.D.T. which are referred to in the judgement of the Rajasthan High Court granting benefit of exemption to various Board/Societies in the country under Section 10(22) of the Act; fourthly, it has failed to consider the judgements mentioned hereinabove; and lastly, it has failed to consider the letter of the Central Government dated 9th July, 1973, to the effect that all State- controlled Educational Committee(s)/Board(s) have been constituted to implement the Page | 6 educational policy of the State(s); consequently, they should be treated as educational institution." None of the factors as noted by the Hon’ble Supreme Court are present in the case- of the appellant. The entire share capital of Corporation in that case was owned by the Government of Assam. 4.1.8 From the Income & Expenditure account it is seen that fees from educational courses amounting to Rs. 4,28,58,405/- consists of course material fee amounting to Rs. 4,11,25,873/- and examination fees of Rs. 17,32,532/-. It is also noted that the major expenses are on account of course material charges (Rs. 72,37,232/-) and honorarium (Rs. 59,12,086/-). The assessee does not own any building nor is paying any rental expenses. It is not understood as to how the appellant is carrying on its educational activities or what are the activities. 4.1.9 In view of the facts as discussed above there appears to be no infirmity in the order of the Assessing Officer in concluding that the activities of the assessee do not fall under the category of education'. 4.1.10 As regards the contention that exemption has been allowed to the assessee on similar facts and On principles of consistency alone the income should be treated as exempt -is not acceptable. It is now settled law that the principle of res judicata is not applicable to income tax proceedings since each assessment year is separate unit. It has been held that a wrong view taken in the past cannot be allowed to perpetuate based on the principle of consistency. In the case of Ace Investments (P) Ltd. Vs CIT [244 ITR 166(Mad)] it has been held that finding for earlier year is not conclusive if facts can be reconsidered in a later year and different findings are recorded. In the case under consideration from the assessment orders for assessment years 2012- 13 and 2013-14 it is seen that on the basis of the facts, different findings have been recorded in the year under consideration. Hence, the principle of consistency cannot be taken as a ground for holding that the income is exempt. 4.1.11 As regards initiation of penalty proceedings, it is to be noted that an appeal lies against an order levying penalty and not against initiation of penalty. 4.1.12 In view of the discussion above, grounds of appeal

Nos. 1 to 10 are dismissed. 4.2 Ground of appeal No. 11 states that the appellant craves to urge additional ground/grounds, substitute, alter or amend any of the grounds of appeal either before or at the time of the hearing. Since no such option has been exercised during the appellate proceedings, this ground of appeal is considered to be dismissed for statistical purposes.

5. In the end result, the appeal is DISMISSED.”

5. Thus, assessee aggrieved with the same has preferred this appeal.

6. The ld AR submitted that the assessee’s activities are accepted in Assessment Year 2012-13 and 2013-14 u/s 143(3) of the Act and for this Page | 7 year, the assessee’s activities are termed as business activity. He submitted that there is no change in the facts and circumstances of the case and therefore, when the particular stand has been taken by the revenue in earlier years, it cannot be changed in subsequent years when there being no change in the activities of the assessee. He further submitted that the assessee has entered into an MOU, which is placed at page 21 of the paper book, which developed the study material of universities, and therefore, the main object of the assessee is educational activities only. He further referred to balance sheet of the assessee at page NO. 9 - 10 of the paper book to show that the course material fees earned by him are Rs. 4.11 crores. It incurred expenditure of material charges are Rs. 72.37 lakhs and the total honorarium paid is Rs. 5912086/-. He further stated that course material charges are Rs. 72.37 lakhs and other charges for course material are Rs. 719534. He therefore, submitted that assessee is providing help to the universities in the area of instructional material, resource development, research design, publications and collaborative programme development. He therefore, submitted that the assessee is engaged in educational activities only. He therefore, submitted that the assessee must be eligible to claim of exemption u/s 11 and 12 of the Act. He further relied upon the decision of the Bharatiya Shiksha Samiti Vs. Addl. CIT for Assessment Year 2010-11. He further relied upon the various judicial precedents with respect to above contention. He further relied upon the decision of the coordinate bench in case of Hyderabad State Circle in ITA No. 1645/Hyd/2013 for Assessment Year 2007-08 to support his argument. 7. The ld DR vehemently supported the orders of the lower authorities. It was submitted that the reliance placed by the assessee on various decisions has already dealt with by the AO and ld CIT(A) and they have rejected the contention of the assessee. 8. We have carefully considered the rival contentions and perused the orders of the lower authorities. Admittedly, the assessee is a charitable trust. It is registered u/s 12AA of the Act as well as u/s 80G(5) of the Act. Further, in the earlier years the similar activities of the assessee have been accepted by the revenue holding that activities of the assessee are covered under head "educational” in nature and benefit u/s 11 and 12 of the Act has been granted to the assessee. For this year claim of the assessee has been rejected by the ld AO. Looking to the object of the trust the assessee has earned course material fees of Rs. 4.11 crores out of which it has spent staff salary of Rs. 12.14 lakhs, course material charges of Rs. 72.37 lakhs, course material photocopy charges of Rs. 7.19 lakhs, honorarium charges of Rs. 59.21 lakhs. Over and above it has also incurred courier fees of Rs. 11.44 lakhs, printing and stationary charges of Rs. 4.79 lakhs. The assessee is carrying on object of establishing and helping universities, colleges, schools and other institutions for strengthening the cause of education by providing didactical facilities provide consultancy support in the area of educational planning and administration for opening, diversifying and developing the existing or new institutions. It also provides mutual and technical cooperation for implementing and supplementing for establishment of universities. It has entered into an MOU with the Global Open University, Nagaland for helping the university in the areas of instructional material and resource development, research design, publications and collaborative programme development. Thus, it was assigned duty of preparation and publication of study material including its distribution to the students from time to time. It was also helping in coordinating the development activities of the universities. The trust has appointed 200 teachers who guide the students in studying course material and their queries of study material. It also helps the students in preparation for examination. Such facts are stated before the ld AO per letter dated 08.06.2016. The assessee also submitted the details of course material expenses of Rs. 72.37 lakhs, which was for the course material, it can be said to be an educational activity or not. Admittedly, in the earlier years the claim of the assessee is accepted. The issue is discussed by the Hon'ble Delhi High Court in case of DIT Vs. The Delhi Public School Society dated 03.04.2018, wherein, the issue is examined that when the assessee is carrying out opening and running around 120 schools through franchise agreement and franchise charges received with the assessee for using the name of Delhi Public School by the satellite schools in and outside India and assessee earned franchisee fees is an educational activity or business activity. The Hon’ble High Court observed that the memorandum of association of DPS society as well as the joint venture agreement entered by DPS society with the satellite schools is having motive of an educational purpose. Further, in para No. 33 of that decision, Hon’ble High Court has stated it is an educational activity which qualifies as a charitable purpose within the meaning of section 2(15) of the Act. It further held that the objected activity were an activity incidental to the dominant educational purposes.

9. Further, in for Assessment Year 2009-10, the coordinate bench also held that when a trust entered into an agreement with the assessee society in providing research services is also engaged in charitable purpose even if it incidentally involves the carrying on of commercial activity. Further in case of CIT Vs. Spicmacay ITA No. 406/2017 dated 16.05.2017 the Hon'ble Delhi High Court held that mere receipt of sum did not mean that it was involved in trade, business. Applying the above principles to the facts of the above case, it is apparent that the assessee is a developing, preparing and providing study material to the students of Global Open university of Nagaland as per MOU placed before us at page 21. For this, it recovers 67% of the fees for publication, preparation of study material. Admittedly, study material has used as curriculum of the above university. Admittedly, the assessee is also receiving examination fees, conducting such examination, providing help to the university, and incurring expenses on them. Admittedly, it is not shown by the ld AO that the revenue surplus generated by the assessee is not utilized for the purposes of educational activities. Thus, prima facie assessee is carrying on the educational activities and not the business as facilitator. Further, the decision stated by the ld AO of 101 ITR 234 of the Hon'ble Supreme Court, does not apply to the facts of the present case as in that case as trust was running, printing and publishing newspapers, where as in the impugned case the assessee is preparing study material which is part of the curriculum of the university for the distribution to the students and material purposes in examination of the students. The Hon'ble Delhi High Court in 81 Taxmann.com 142 in Delhi Bureau of Textbooks Vs. Director Income Tax held that when a charitable society engaged in the printing, publishing of its books of govt schools which was provided to the students,