2012 (12) TMI 1052 - AT - Income Tax

Refusal for registration u/s 12AA - whether conducting coaching classes for the students would fall within the meaning of education u/s 2(15) - Held that - education is processing of training and developing the knowledge, skill, mind and character of students by normal schooling - mere coaching classes may provide some kind of knowledge to the students but that kind of knowledge through coaching classes cannot fall within the meaning of education - and hence cannot be construed as charitable activity - the taxpayer is conducting coaching classes - and is not eligible for registration u/s 12AA - Decided against the assessee

Summary

Issues:
1. Whether conducting coaching classes qualifies as "education" under section 2(15) of the Act for the purpose of registration u/s 12AA(3) as a charitable institution.

Analysis:
The taxpayer's appeal was against the Administrative Commissioner's refusal to grant registration u/s 12AA(3) of the Act. The taxpayer contended that their society, located in an educationally and socially backward area, provided coaching and training classes with reduced fees for financially weaker students. The taxpayer argued that all income was used for charitable purposes. On the other hand, the Departmental Representative argued that coaching classes did not constitute "education" as defined in section 2(15) of the Act, and thus, the taxpayer was not eligible for charitable institution status.

Upon review, the Tribunal considered the definition of "education" as interpreted by the Apex Court in Sole Trustee, Loka Shikshana Trust v. CIT. The Apex Court clarified that education involved systematic instruction, schooling, or training to develop knowledge, skills, mind, and character through normal schooling. The Tribunal noted that mere coaching classes, while providing knowledge, did not meet the criteria of "education" under section 2(15) of the Act. Citing the Patna High Court's decision in Bihar Institute of Mining And Mine Surveying v. CIT, it was emphasized that coaching for open university/distance education did not qualify as a charitable activity. Similarly, the Gujarat High Court in Saurashtra Education Foundation v. CIT highlighted that education resulting in diplomas or degrees from recognized institutions was distinct from coaching classes.

Consequently, the Tribunal affirmed that the taxpayer's coaching classes did not align with the definition of "education" under section 2(15) of the Act, rendering them ineligible for charitable institution status under section 12AA. Therefore, the lower authority's decision to deny registration was upheld, and the taxpayer's appeal was dismissed.