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2022 (2) TMI 975 - AT - Income TaxExemption u/s 11 - Charitable activity u/s 2(15) - income earned by the assessee out of commercial exhibitions, auditorium etc., - contention of the revenue is that the object of the trust is only in the nature of advancement of any other object of the general public utility - As per assessee basic objects of the Centre or to inculcate and promote Indian arts, educate children in the field of science, arts, history and social response by Centre not only educates people at large but about astronomy through professional astronomers but also generate interest in physics the Centre also conduct exhibitions to exhibit the art of poor artists, coming from remote parts of India and thus provides relief to the artists in the form of sale of their art as well as promoting their skills - as per revenue object of the assessee will fall in the category of advancement of any other object of the general public utility thus operations carried on by the assessee are in the nature of commerce or business specially looking into the proportion of receipts from such activities therefore, the activities carried on by the assessee are not exempted in view of the section 13(8) HELD THAT - We observe from the record that assessee was granted 12A registration and continues to enjoy as the trust is established with the object to promote education. It is also fact on record that assessee was treated as an institution to promote the education and cause for promoting the education over the years until the present impugned Assessment year in which Assessing Officer after considering the object and activities of the assessee and came to the conclusion that assessee is hit by the proviso to section 2(15) of the Act and he categorized the assessee under the category of advancement of any other general public utility. We observe from the record that assessee is engaged in the formal form of Certification course of Astronomy and Astrophysics with collaboration with Mumbai University. The Annual Report submitted by the assessee gives detailed discussion of the Education activities carried on by the assessee, it is also found that the assessee is imparting the education in the form of organizing various workshop/lectures/Conferences apart from providing the certificate course. It is also fact on record that assessee is also carrying out activities such as Annual Exhibitions for poor artists and exhibitions held in the hall of Arts, the Nehru Center also organizes programs on Music and Culture etc., it is also submitted that Council of Scientific and Industrial Research has approved the assessee s trust for the purpose of section 35(1) of Clause (ii) of the Act. Assessing Officer has accepted that some of the activities assessee undertakes in the field of education and it spent some income on these activities. Therefore, Assessing Officer has not disputed the fact that assessee is engaged in the activities of Education and relief to poor. We are in agreement with the findings of the Ld.CIT(A) that the term education should be understood in common parlance and should not be mixed up with the mode of giving education. With the advancement in technology the education can be provided on electronic gadgets also. Therefore, we do not find any reason why assessee should not be treated as engaged for imparting education. Through several conventional and modern methods which are in the nature of imparting education. Therefore, we do not see any reason to interfere with the finding of the Ld.CIT(A). AO treated the hiring and planetarium receipts are in the category of business and not for charitable activities - Whether hiring charges and planetarium receipts are in the nature of business or not? - CIT(A) by relying in the case of Institute of Chartered Accountant of India v. DIT(E) 2013 (7) TMI 205 - DELHI HIGH COURT held that ICAI does not carry on any business, trade or commerce. The activity of imparting education in the field of accountancy and conducting courses are activities in furtherance of the objects for which the ICAI has been constituted. By relying on the above decision Ld.CIT(A) held that activity of running the planetarium for general public at normal rate and earning revenue from shows does not make the activity as non-charitable. Therefore, we do not find any reason to interfere with such finding of the Ld.CIT(A). CIT(A) observed that education is a very wide term which covers not only the skills and information imparted in schools and colleges but also covers the entire field of any institution which disseminates information and skills not only offline but online as well and that is also not confined to basic education like languages, sciences etc., but also encompasses the entire gamut of universe. We are in agreement with the decision of the Ld.CIT(A) that most of the institutions depends on voluntary donations and contributions and aid from government and income from property held by the trust by way of rent and assessee also depends wholly on the investments from which it derives interest and also income from the property held in trust by way of rent which are ultimately applied to meet the objects of the trust, that is, education and in certain ways to meet the objects of general public utility No reason to interfere in the conclusions reached by the Ld.CIT(A) that assessee was engaged in charitable activity and for the purpose of advancing its objects; it earned income which was incidental to its activities. He also came to the conclusion that it is an institution which imparts education and fulfills the basic condition laid down in section 2(15) of the Act. Therefore, the proviso to section 2(15) of the Act does not arise in the case of the assessee. With the above observations and facts on record we deem it fit and proper to dismiss the grounds raised by the revenue. Accordingly, grounds raised by the revenue are dismissed.
Issues Involved:
1. Whether the activities of the trust fall under the category of "advancement of any other object of general public utility" as per the proviso to section 2(15) of the Income Tax Act. 2. Whether the receipts from hiring out property are considered income from property held under trust or business income. 3. Whether the activities of the trust are in the nature of trade, commerce, or business, thus affecting its charitable status. 4. Whether the trust can claim exemption under section 11 of the Income Tax Act despite the proviso to section 2(15). Detailed Analysis: Issue 1: Advancement of General Public Utility The Assessing Officer (AO) argued that the trust's activities fall under "advancement of any other object of general public utility," thus invoking the proviso to section 2(15) of the Income Tax Act. The AO categorized the trust’s activities such as providing space for commercial exhibitions, renting out auditoriums, and other similar activities as commercial in nature, thereby disqualifying it from being considered charitable. The Commissioner of Income Tax (Appeals) [CIT(A)] and the Income Tax Appellate Tribunal (ITAT) disagreed, emphasizing that the trust's activities primarily involve education and dissemination of knowledge. They noted that the trust runs a planetarium, organizes educational workshops, and conducts exhibitions, which are educational activities. The ITAT upheld that these activities do not fall under the proviso to section 2(15) and are not commercial in nature. Issue 2: Receipts from Hiring Out Property The AO treated the receipts from hiring out property as business income, arguing that these activities are commercial and not incidental to the trust's charitable purposes. The AO also noted that the trust did not maintain separate books of accounts for these activities as required under section 11(4A). The CIT(A) and ITAT found that the income from hiring out property is incidental to the trust's charitable activities and is used to fund its educational programs. They cited the case of Institute of Chartered Accountants of India v. DIT(E), where similar activities were considered as furthering the institution’s main charitable objectives. Therefore, the receipts were deemed as income from property held under trust, not business income. Issue 3: Nature of Activities (Trade, Commerce, or Business) The AO argued that the trust’s activities are in the nature of trade, commerce, or business, especially given the proportion of receipts from such activities. The AO highlighted that the trust pays service tax, indicating commercial operations. The CIT(A) and ITAT countered that the trust's primary purpose is educational, and any income-generating activities are incidental to its main objectives. They noted that the trust's activities, such as running the planetarium and organizing educational workshops, are not commercial but educational. The ITAT emphasized that the trust’s activities do not have a profit motive and are aimed at furthering its educational objectives. Issue 4: Exemption under Section 11 The AO denied the trust's claim for exemption under section 11, arguing that the trust's activities fall under the proviso to section 2(15) and are thus disqualified from being considered charitable. The CIT(A) and ITAT held that the trust is engaged in educational activities and fulfills the conditions laid down in section 2(15). They noted that the trust has been consistently recognized as a charitable institution in previous years and that there was no change in its activities. The ITAT also referenced the CBDT Circular No. 11/2008, which clarifies that genuine charitable organizations will not be affected by the proviso to section 2(15). Conclusion: The ITAT dismissed the revenue's appeal, upholding the CIT(A)'s decision that the trust's activities are educational and charitable in nature. The trust's income from property and other incidental activities were deemed to be in furtherance of its charitable objectives, thus qualifying for exemption under section 11 of the Income Tax Act. The ITAT emphasized the importance of the trust's educational activities and the lack of a profit motive, distinguishing it from entities engaged in trade, commerce, or business.
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