2022 (5) TMI 1498 - AT - Income Tax

Exemption u/s 11 - Charitable activity u/s 2(15) - As per revenue Trust do not fall within the definition of education - Trust has written a script of the drama Janata Raja means an intelligent King who understood the feelings of his public and is performing its shows all over India - whether drama is not an entertainment activity simpliciter? - HELD THAT - Assessee had outsourced its so called shows for huge consideration. We thus see no reason to interfere with both the learned lower authorities findings treating the assessee as not eligible for the impugned exemption. CIT(A) s above extracted discussion has also cited a catena of case law that the assessee s activities do not fall under education lines under Section 2(15) of the Act. The same stands upheld.

Summary

Issues Involved:
1. Eligibility for Section 11 read with Section 2(15) exemption under the Income Tax Act, 1961.
2. Classification of the assessee's activities as "education" or "general public utility."

Issue-Wise Detailed Analysis:

1. Eligibility for Section 11 read with Section 2(15) Exemption:
The primary issue in this appeal was whether the assessee's activities qualify for exemption under Section 11 read with Section 2(15) of the Income Tax Act, 1961. The lower authorities had denied this exemption, treating the activities as not falling under the "education" category but rather under "general public utility."

2. Classification of Activities:
The assessee argued that its activities, specifically the performance of the drama "Janata Raja," should be classified as "education" under Section 2(15). The drama highlighted good governance qualities of Maharaja Shivaji and aimed to educate the public on moral and patriotic values through historical incidents. The assessee contended that modern educational methods, including audio-visual impacts, should be recognized as valid forms of education.

The CIT(A) examined the definition of "charitable purpose" under Section 2(15), which includes:
- Relief of the poor
- Education
- Medical relief
- Advancement of any other object of general public utility

The CIT(A) noted that entities engaged in commercial activities were claiming exemptions under the guise of "general public utility." The proviso to Section 2(15) was introduced to prevent such entities from claiming exemptions if they carried on trade, commerce, or business activities.

The CIT(A) emphasized that the term "education" in Section 2(15) should be interpreted in its fundamental sense, involving a systematic process of imbibing knowledge through formal schooling or recognized educational institutions. The CIT(A) referred to several judicial precedents, including the Supreme Court's decision in Sole Trustee, Lok Shikshan Trust v/s C.I.T., which defined education as systematic instruction and training given to young individuals in preparation for life.

The CIT(A) further analyzed the objectives of the assessee trust, which included research on Shivaji Maharaj's life, granting scholarships, maintaining museums, and spreading Shivaji's life story through various means. The CIT(A) concluded that the predominant activity of the trust was not "education" but "general public utility." The activities did not satisfy the conditions laid down by the Supreme Court for being classified as education.

The CIT(A) also noted that the assessee's activities, such as performing the drama, did not prepare individuals for jobs or income generation but aimed to make them better citizens morally and socially. The CIT(A) cited several case laws where similar activities were treated as "general public utility" rather than education or medical relief.

Tribunal's Findings:
The Tribunal noted that the assessee did not provide any evidence to counter the findings of the lower authorities that its drama shows were run on commercial lines. The Revenue pointed out that the assessee had outsourced these shows for significant consideration, indicating a commercial motive.

The Tribunal upheld the CIT(A)'s findings, agreeing that the assessee's activities did not qualify as "education" under Section 2(15) but fell under "general public utility." Consequently, the assessee was not eligible for the exemption under Section 11.

Conclusion:
The Tribunal dismissed the assessee's appeal, affirming the lower authorities' decision that the assessee's activities did not qualify for exemption under Section 11 read with Section 2(15) of the Income Tax Act, 1961. The activities were classified as "general public utility" rather than "education," and the commercial nature of the activities further disqualified them from the claimed exemption.