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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 338/JP/2016
PER SHRI KUL BHARAT, JM.
This appeal by the assessee is directed against the order of ld. CIT (E),Jaipur
dated 27.10.2015. The assessee has raised the following grounds of appeal:
“The assessment order passed u/s 12AA(1)(b) is bad in law as well as on the facts of the present case and hence, the same may please be deleted. 2.1 The ld. CIT(E) erred in law as well as on the facts of the present case in holding the objects and activities of the Trust as not charitable in nature. 2.2 The Ld. CIT(E) erred in law as well as on the facts of the present case in refusing the assessee to grant exemption u/s 12AA of the IT Act, 1961. 3. The appellant prays your Honour’s indulgence to add, amend, modify or delete all or any ground of appeal.”
Briefly, stated the facts are that the assessee filed an application in the form
no. 10A, seeking registration u/s 12AA of the Income Tax Act, 1961(hereinafter
referred to as the Act). The said application was rejected by the ld. CIT on the
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ground that the activity of the trust are not charitable nature, as it is running
technical course. The ld. Counsel for the assessee reiterated the submissions as
made in the written submissions. The contention of the assessee is that, the ld. CIT
has not appreciated the fact in right perspective. The ld. Counsel for the assessee
has placed reliance upon the judgment of Hon’ble Delhi High Court rendered in the
case of Delhi Music Society Vs. DGIT 357 ITR 265(Del) also decision of the Co-
ordinate Bench rendered in the case of Additional Director of Income Tax(E) vs.
Samudra Institute of Maritime Studies Trust ITA 2668/Mum/2012.
On the contrary, the ld. Departmental Representative has opposed the
submission and submitted that the activities of the assessee is not of charitable
nature as has been imparting the technical courses. There is no systematic school
education.
We have heard the rival contentions, perused the material available on record
and gone through the orders of the authorities below. The application of the
assessee was rejected by the Ld. CIT (E) by observing as under:
“6. On examination of details filed by the applicant, it is noticed that trust is running two professional courses of providing training in the field of welding and fabrication and Hotel assistance. The training is provided after charging prescribed fee for a particular course. The provisional Income & Expenditure account for the year ending on 31/03/2015 reproduced as under:- Provisional Income and Expenditure Account (F.Y. 2014-15)
Expenditure Amount Income Amount Activity Expenses 17425.00 Course Fees 169500.00 Audit Fee 5618.00 Bank Charges 112.00 Convenyance Exp. 4274.00 Legal Fee 5100.00 Printing & Stationary 8463.00 Rent Exp. 30000.00
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Salary 110486.00 Surplus transferred (-) 11978.00 to corpus fund Total 169500.00 Total 169500.00
From the Income & Expenditure account, it is clear that the trust is earning income in the form of fee charged from running of vocational courses. This sort of activity cannot be regarded as “education” within the meaning of section 2(15) of the Act.
The word “education” used in section 2(15) for charitable purpose stipulates the systematic education or scholastic.
The Apex Court had an occasion the provisions of section 2(15) of the Act in Sole Trustees, Loka Shikshana Trust vs. CIT [1975] 101 ITR 234 (SC). After considering the provisions of section 2(15) of the Act, the apex court found that all kinds of acquiring knowledge will not come within the meaning of “education”. What “education”, Connotes in character of students by normal schooling. In facts, the Apex court has observed as follows at page 241 of ITR: “The sense in which the word “education” has been used in section 2(15) is the systematic instruction, schooling or training given to the young is 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, because as a travelling you acquire fresh knowledge, likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealing with other people, some of whom are not straights, you learn by experience and thus add to your knowledge o the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesion an in the process make you wiser though poorer. If you visit a night club, you get acquired with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the work “education” used in clause (15) of section 2. Wheat education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling.”
From the above judgment of the Apex court it would be abundantly clear that there should be a systematic instruction to the students by way of normal schooling. Mere training activities may provide some
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kind of knowledge to the students. But that kind of acquisition of knowledge through training courses cannot fall within the meaning of “education” as provided in section 2(15) of the Act. As the Apex Court observed, one may acquire knowledge in the course of travelling; during the course of reading newspaper; etc. but that kind of knowledge cannot fall within the term “education” as provided in section 2(15) of the Act. There should be a normal schooling by way of regular and systematic instruction.
From the discussion made above, it is clear that the activities of the trust are not charitable in nature as it is running technical courses, therefore, it cannot be held as charitable within the meaning of section 2(15) of Income-tax Act, 1961.”
Ld. Counsel has placed reliance on the judgment of Hon’ble Delhi High Court
rendered in the case of Delhi Music society vs. Director General of Income Tax. The
Hon’ble High Court held that Hon’ble Supreme Court in the case of Loka Shikshana
Trust has held that there should be a process of training and developing the
knowledge skill, mind and character of the students by process of normal schooling.
We find that the Hon’ble Court has observed that normally coaching centre is
running for shorter period and there have no strict rules and regulations as in
educational institutions. There is no such thing as an academic year, strict discipline
and requirement of attendance are not are not enforced. Further they are run on
commercial lines and with a profit motive as per the object of the society. The ld.
Counsel for the assessee has brought to our notice the decision of the coordinate
bench rendered in the case of Additional Director of Income Tax(E) vs. Samudra
Institute of Maritime Studies Trust ITA 2668/Mum/2012, wherein the coordinate
bench decided the issue as under:
“5. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the claim for the
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assessee for exemption u/s 11 was disallowed by the AO in AY-2007- 08 on the similar ground and the order of the Ld. CIT(A) reversing the order of the AO and allowing the claim of the assessee for exemption claim u/s 11 was upheld by the Tribunal vide its order dated 30/11/2011 passed in ITA No. 5760/Mum/2010 for the reasons given in para 9.6 which reads as under:
We find the Delhi Bench of the Tribunal in the case of S.R.M Foundation of India(supra) while deciding the issue u/s.10(22) of the IT Act has held that there is no requirement prescribed u/s 10(22) that the institution should be recognized by an University or State or Central Government. The Tribunal in the said decision held 33 lessons of what is termed a Science of Creative Intelligence (SCI) which are in the nature of Yoga Classes as education. The Tribunal while deciding the issue has considered the decision of the Hon’ble Supreme Court in the case of Sole Trustee, Lok Shikshan Trust (supra). We find the various other decisions relied on by the ld. Counsel for the assessee also support its cae. The decision in the case of Bihar Institute of Mining and Mine Surveying (supra) in our opinion is not applicable to the facts of the present case. In that case it was coaching of students for particular examination, for which it was held that coaching institution is not a charitable institution within the meaning of section 2(15). However, in the instant case the assessee is giving training in the area of Pre Sea and Post Sea to sea men. The various other decisions relied on by the AO are also distinguishable and not applicable to the facts of the present case. In our opinion, merely because the courses are not approved by the DG Shipping or merely because there is huge surplus in the non-approved courses than the approved courses cannot be a ground for denial of exemption u/s 11 as long as the Trust is imparting education as per the objects of the Trust. In this view of the matter and in view of the detailed observation given by the ld. CIT(A) on this issue we do not find any infirmity in the same and accordingly the same is upheld. The grounds raised by the Revenue are accordingly dismissed.”
As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of assessment year 2007-08, we respectfully following the decision of co-ordinate Bench of this Tribunal rendered for assessment year 2007-08 and uphold the order of the ld. CIT(A) allowing the claim of the assessee for exemption u/s 11 of the Act.”
One of the object of the assessee’s trust is that to establishment of training and
schooling development centre and institutions for professional education and
training. As per the assessee it has been providing vocational courses which cannot
be equated with any coaching institute. The assessee is also imparting professional
courses. We notice that, the assessee has also other objectives as per the trust
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deed. Therefore, after considering the totality of the facts and in the light of the
decision of the Co-ordinate Bench rendered in the case of Additional Director of
Income Tax(E) vs. Samudra Institute of Maritime Studies Trust ITA 2668/Mum/2012,
where of the view that CIT should reconsidered application of the assessee for
registration after considering the case laws as relied by the assessee. In view of the
above discussion the application of the asseessee is restored to the file of the ld. CIT
for decision afresh.
In the result, appeal of the Assessee in ITA No. 338/JP/2016 is allowed for
statistical purposes.
Order is pronounced in the open court on 21 .03.2017.
Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 21/03/2017. Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Rudraksh Professional Education Trust, Jaipur. 2. The Respondent –The Commissioner of Income Tax, Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 338/JP/2016)
vkns'kkuqlkj@ By order,
7 ITA No. 338/JP/2016 Rudrakash Professional Education Trust.
सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत