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Income Tax Appellate Tribunal, BANGALORE BENCH ‘A’, BANGALORE
Before: SHRI A. K. GARODIA & SMT ASHA VIJAYARAGHAVAN
PER SHRI A.K.GARODIA, AM
Both these are appeals are filed by the assessee and these are
directed against two separate orders of learned CIT (A), Hubli dated
08.02.2016 for A. Y. 2011 – 12 and dated 31.303.2016 for A.Y. 2012 –
Both were heard together and are being disposed of by this common
order for the sake of convenience.
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The assessee has raised several grounds in both years but the
main grievance in both years is about non granting of exemption u/s 11.
Second grievance in both years is about charging of interest and the
third grievance which is A. Y. 2012 – 13 only is about non allowing of
credit of TDS in part.
The appeal for A. Y. 2011 – 12 is filed late by the assessee and the
delay is of 16 days. The assessee has made an application for
condonation of delay and it is stated in this that the assessee is based at
HUBLI and considerable time elapsed in identifying the chartered
accountant in Bangalore for preparation and filing of the appeal. In view
of these facts, we condone the delay and admit this appeal.
It was submitted by the learned AR of the assessee that the
objection of the A.O. and of learned CIT (A) is this that the activities of
the assessee are not education and relief to poor. In this regard, he
submitted that the activity report of the assessee is available on pages
36 to 38 of the paper book, as per which, the assessee is conducting
various education programs. He also submitted that the copy of
submissions made before the A.O. is available on pages 229 to 232 of
the paper book and the same should also be considered. Thereafter, He
placed reliance on the following judicial pronouncements in support of
this contention that the activities of the assessee are education:-
a) DIT (E) vs. Group Vocational Training Centre Trust in ITA
No. 199/2015 Dated 23.02.2016 (kar.) PB Pages 262 to 271.
b) Ecumenical Christian Centre vs. CIT, 8 Taxman 175 (Kar.)
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c) CCIT vs. St. Peter’s Education Society, 70 Taxman.com171
(SC) at pages 278 to 289 of PB.
d) CIT vs. Red Rose School, 163 taxman 19 (All.)
4.1 He placed reliance on the following judicial pronouncements also
in support of this contention that even if it is held that the activities of
the assessee is not education but object of general public utility then
also proviso to section 2 (15) is not applicable:-
e) Society for Participatory Research in Asia vs. ITO, 71
Taxman.com321 (ITAT, Delhi) at pages 478 to 492 of PB.
f) DIT vs. Women’s India Trust, 60 Taxman.com55 (Bombay) at
pages 495 to 498 of PB.
g) India Trade Promotion Organization vs. DGIT (E), 53
Taxman.com404 (Delhi) at pages 499 to 528 of PB.
He also submitted that relevant extract from Budget Speech,
Memorandum Explaining Provisions of Finance Bill 2008 and FM’s reply
to the debate on Finance Bill, 2008 are available on pages 493 to 494 of
the paper book and these should also be considered. Learned DR of the
revenue supported the orders of the authorities below.
We have considered the rival submissions. We find that a
categorical finding is given by the A.O. on page 7 of the assessment order
that the assessee’s main activity for the year under consideration is to
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run coaching classes by collecting hefty fees for every kind of services.
Even before CIT (A), the assessee has filed nothing to controvert these
findings of the A.O. The submissions of the assessee before CIT (A) are
available on pages 233 to 261 of the paper book as per which, the
assessee has filed copy of Registration certificate u/s 12AA, Copy of
Trust Deed and Financial Statements for F Y 2010 – 11. Before us also,
no evidence is filed to controvert this finding of the A.O. The Activity
report on pages 36 to 38 of the paper book is a report about which, even
this is not known as to who prepared this report and on what date or in
which year. Such a vague report has no evidentiary value. Hence, we
proceed on this basis that the assessee has nothing to say about this
finding of the A.O. that “the assessee’s main activity for the year under
consideration is to run coaching classes by collecting hefty fees for every
kind of services”. We examine the applicability of the various judicial
pronouncements in view of this factual position.
The first judgment cited is the judgment of Hon’ble Karnataka
High Court rendered in the case of DIT (E) vs. Group Vocational Training
Centre Trust (Supra). In this case, the issue in dispute was about
granting of registration u/s 12AA. Mere granting of registration does not
entitle for exemption u/s 11 and the A.O. is entitled to examine as to
whether the activities are charitable or not. In the present case,
registration u/s 12AA is already granted and the issue in dispute is
about eligibility of exemption u/s 11 and the finding of the A.O. that the
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assessee is not imparting education or relief to poor could not be
controverted by the assessee. Hence this judgment renders no help to
the assessee in the present case.
The second judgment cited is also a judgment of Hon’ble
Karnataka High Court rendered in the case of Ecumenical Christian
Centre vs. CIT (Supra). In this case, the issue in dispute was granting
approval u/s 80G, which was granted up to 31.12.1973 but was refused
by the CIT for subsequent period and CIT refused to consider the earlier
order and allied evidence produced by the assessee before him and
under these facts, it was held that the CIT was not justified in refusing
approval u/s 80G for subsequent period. This is also noted by Hon’ble
Karnataka High Court in penultimate Para that no fees was being
charges and scholarships were being given to cover up expenses
regarding food, accommodation etc. whereas the assessing is earning
income. Since the facts are different, this judgment also renders no help
to the assessee in the present case.
The next judgment cited is a judgment of Hon’ble Apex Court
rendered in the case of CCIT vs. St. Peter’s Education Society (Supra). In
this case, the issue in dispute was not this that the assessee is not
imparting education. The objection of the revenue was this that it exists
for profit and this is the judgment that if an institution makes profit, it
does not necessarily mean that it exists for profit. In the present case,
the objection is this that it is not imparting education. Hence, this
judgment also renders no help to the assessee in the present case.
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The next judgment cited is a judgment of Hon’ble Allahabad High
Court rendered in the case of CIT vs. Red Rose School (Supra). In this
case, the issue in dispute was about granting of registration u/s 12AA
and hence, for the same reasons as given in Para 7 above in respect of
the judgment of Hon’ble Karnataka High Court rendered in the case of
DIT (E) vs. Group Vocational Training Centre Trust (Supra) it is held that
this judgment also renders no help to the assessee in the present case.
The next judgment cited is a tribunal order rendered in the case of
Society for Participatory Research in Asia vs. ITO (Supra). In this case,
the tribunal noted in Para 4.3 that in A. Y. 2004 – 05 to 2008 – 0-9, the
assessments were completed u/s 143 (3) and exemption u/s 11 was
allowed. This was also noted that as per the submission of the assessee,
the activities of the assessee were in the nature of education which has
been accepted in preceding and subsequent years. And in Para 5.6 of the
order, the tribunal has given a finding that the assessee was engaged in
education which has been accepted in preceding and subsequent years.
The objection in that case this that out of total receipts of Rs. 21.46
Crores, only Rs. 20.65 Lacs was from educational activities. The tribunal
noted in Para 6.1 that other receipts were mainly on account of Research
& Training Grants Rs. 1591.42 lacs, Contribution Rs. 418.69 Lacs and
other income Rs. 136.27 Lacs. Thereafter in Para 6.5, the tribunal noted
that the activities of the assessee are in the nature of participatory
research and in the assessment order for A. Y. 1983 – 84, the A.O. noted
that the participatory research is a new development of the last decade
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and it can be utilized depending upon the needs of the poor and
deprived. Under these facts, it was held that invocation of proviso to
section 2 (15) to deny claim of exemption u/s 11 is not justified. Since,
the facts in the present case are materially different, we hold that this
judgment also renders no help to the assessee in the present case.
The next judgment cited is a judgment of Hon’ble Bombay High
Court rendered in the case of DIT vs. Women’s India Trust (Supra). In
this case, the issue in dispute was similar as to whether the proviso to
section 2 (15) is required to be invoked but the facts were different. In
that case, it is noted by Hon’ble Bombay High Court in Para 6 that the
assessee received donation of Rs. 36.88 lacs and Rs. 4.46 lacs as fees of
nursing school. This was also noted that nursing training provided at
panvel centre is free of costs and charge is levied for the mess but the
accommodation and other facilities are free of cost. This was also noted
that community development programme by training the ladies to earn
while learning in the field of catering, stitching, toy making etc. Some
finished products such as pickles, jam etc. are produced in the process
which are sold by the assessee through shops, exhibitions and personal
contacts. This is also noted that the motive is not generation of profit but
to provide training to the needy women in order to equip them in these
fields and make them self reliant. This is also noted that there is deficit
because fees collected is only for proving food items. In the present case,
Fellowship Fees collected is Rs. 11.32 lacs and expenses are only Rs.
6.68 Lacs with a surplus of Rs. 6.19 lacs. Mere surplus is not a deciding
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factor but in view of overall facts that only coaching is provided without
any formal education, the activity is in line with so many coaching
institutions being run on commercial line and in absence of any evidence
that such coaching is provided at free of cost or at subsidized price to
needy or poor, as in that case, it has to be accepted that this activity of
providing coaching is a commercial activity and this judgment also
renders no help to the assessee because in the facts of that case,
nursing training was being provided free of cost and for this reason, it
was held that it is not an activity in nature of trade, commerce or
business etc. and facts in the present case are different.
The next judgment cited is a judgment of Hon’ble Delhi High Court
rendered in the case of India Trade Promotion Organization vs. DGIT (E)
(Supra). The facts of this case are that Pragati Maidan Complex was
allotted by the Govt. of India to the assessee at a nominal Ground Rent
of Re 1 per anumn for initial 5 years and thereafter Rs. 6 lacs per anumn
for an area of 123.50 Acres and because of this, in spite of this that the
assessee provided space for exhibition space to trade and industry at
much lower rate than the prevailing market rates and still generated
surplus, which was for major infrastructural additions and
improvements in Pragati Maidan. Under these facts, it was held that
this institution is not driven primarily by a desire or motive to earn profit
and therefore, proviso to section 2 (15) is not applicable. In the present
case, this is not established by the assessee that the rates charged by it
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are much lower than market rate of similar services and therefore, this
judgment also renders no help to the assessee in the present case.
As per above discussion, we find that none of the judgments cited
by the learned AR of the assessee is rendering any help to the assessee
in the present case and in the facts of the present case, the proviso to
section 2 (15) gets attracted. We, therefore, find no reason to interfere in
the order of CIT (A) in any year.
In the result, both the appeals of the assessee are dismissed.
Order pronounced in the open court on the date mentioned on the
caption page.
Sd/- Sd/-
(SMT ASHA VIJAYARAGHAVAN (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER
Place: Bangalore: D a t e d : 13.10.2016
AKG/DS /
Copy to : 1 Appellant 2 Respondent 3 CIT(A)-II Bangalore 4 CIT 5 DR, ITAT, Bangalore. 6 Guard file By order
AR, ITAT, Bangalore