2012 (1) TMI 380 - AT - Income Tax

Summary

Issues Involved:
1. Whether the activities carried on by the Institute of Chartered Accountants of India (ICAI) fall within the purview of "Education" u/s 2(15) of the Income Tax Act.
2. Whether the income from coaching classes conducted by ICAI should be treated as business income.

Summary:

Issue 1: Definition of "Education" u/s 2(15) of the Income Tax Act

The Department contended that ICAI's activities, including conducting courses, coaching classes, and seminars, do not constitute "Education" within the meaning of section 2(15) of the Income Tax Act. The Assessing Officer (AO) determined ICAI's income at Rs. 33,47,92,000/- against NIL income declared by ICAI, arguing that ICAI did not provide systematic instruction or training.

The learned CIT(A) reversed the AO's decision, stating that ICAI's activities, including various professional courses and training programs, fall within the definition of "Education" as per section 2(15). The CIT(A) referred to the Supreme Court judgment in Sole Trustee Lok Shikshana Trust 101 ITR 234, which defines "education" as the process of training and developing knowledge, skill, mind, and character of students. The CIT(A) also cited the Gujarat High Court's decision in Saurashtra Education Foundation 273 ITR 139, which supported the broader interpretation of "education" to include ICAI's activities.

Issue 2: Treatment of Income from Coaching Classes

The CIT(A) relied on the ITAT Delhi Bench's decision for the Assessment Year 2005-06, which held that income from coaching fees is towards ICAI's objectives and not a commercial activity. The Tribunal stated that ICAI's coaching classes are educational activities covered u/s 2(15) and thus, the income is exempt u/s 11 of the Act. The Tribunal also noted that ICAI is not required to maintain separate books of accounts for coaching fees as it is not carrying on a business.

The Tribunal upheld the CIT(A)'s order, confirming that ICAI's activities are educational and not commercial. The Tribunal referenced the Delhi High Court's decision in "Director of Income Tax (Exemptions) v. The Institute of Chartered Accountants of India," which supported the view that ICAI's activities do not constitute business.

Conclusion:

The Tribunal found no error in the CIT(A)'s order and dismissed the Department's appeal, confirming that ICAI's activities fall within the definition of "Education" u/s 2(15) and that the income from coaching classes is not business income but is exempt u/s 11 of the Income Tax Act.

Order pronounced in the open court on 09.01.2012.