2022 (2) TMI 333 - AT - Income Tax

Exemption u/s 11 - denial of registration u/s. 12A - Proof of charitable activities - HELD THAT - As to the activities of the appellant in the past, there are assessment orders for AY 2016-17, AY 2017-18, AY 2018-19 in which the appellant has been found to be providing education. In the AY 2019-20 the benefit of exemption u/s. 11 of the Act has been refused due to the impugned order affecting the status of the appellant as not charitable. The assessee provides education and training in the field of remote sensing for preservation of environment through optimization of land use and natural resources. It provides specialized post-graduate degree courses in that subject in association with a recognized university. There is thus no doubt as to its mission for providing education. The Hon'ble Apex Court decision in Aditanar Educational Institution 1997 (2) TMI 3 - SUPREME COURT supports this plea. It will, therefore, be clear that the objectives of the appellant certainly constitute education for charitable purpose as understood u/s. 2(15) of the Act. We find that for the Assessment Years 2016-17, 2017-18 and 2018-19, the assessee was found to be providing education. There is also no dispute that the assessee is providing specialized Post-Graduate degree courses. Hence, as per the provisions of the Income Tax Act, we hold that the assessee is eligible for registration u/s.12AA of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Registration u/s. 12AA of the Income Tax Act, 1961 denied by CIT(E).
2. Interpretation of the term "education" for charitable entity status.
3. Applicability of section 10(23C)(iiiab) in registration process.
4. Assessment of the society's activities and eligibility for registration.

Issue 1: Registration u/s. 12AA Denied by CIT(E):
The appeal was filed against the order of the ld. CIT(E), Chandigarh dated 21.09.2020, rejecting the application for grant of registration made u/s. 12AA(1)(b)(ii) of the Income Tax Act, 1961. The society, established in 1986, was engaged in research and development in the field of remote sensing, providing training and educational facilities. The CIT(E) observed that the society was not established 'Solely for Educational Purposes' as mandated by Section 10(23C)(iiiab) of the Act, leading to the denial of registration due to taxable surplus generated in previous years.

Issue 2: Interpretation of the Term "Education" for Charitable Entity Status:
The CIT(E) held that the society did not qualify as a charitable entity under the head of education, citing the interpretation of the word 'education' as systematic instruction, schooling, or training given to the young, based on the Hon'ble Apex Court's decision in Sole Trustee Lok Sikshan Sansthan. However, the appellant argued that the CIT(E) erred in applying the yardsticks of section 10(23C)(iiiab) to the registration process u/s. 12AA, emphasizing the broader scope of education under section 2(15) of the Act.

Issue 3: Applicability of Section 10(23C)(iiiab) in Registration Process:
The CIT(E) referred to section 10(23C)(iiiab) to assess the society's eligibility for exemption, emphasizing that the society was not established solely for educational purposes, leading to the refusal of registration. The appellant contended that the CIT(E) wrongly limited scrutiny to education alone and injected the rigor of section 10(23C)(iiiab) into section 2(15) of the Act, which was deemed unwarranted and erroneous.

Issue 4: Assessment of Society's Activities and Eligibility for Registration:
The society provided M. Tech degrees in Geo-Informatics in collaboration with a university, demonstrating its educational activities. Previous assessment orders confirmed the provision of education by the society. The tribunal found that the society was providing education and specialized post-graduate degree courses in remote sensing, aligning with the definition of education for charitable purposes under section 2(15) of the Act. Consequently, the tribunal allowed the appeal, holding the society eligible for registration u/s. 12AA of the Act.

In conclusion, the tribunal allowed the appeal, emphasizing the society's educational mission and activities, which aligned with the provisions of the Income Tax Act, thereby granting registration u/s. 12AA.