2022 (7) TMI 265 - AT - Income Tax

Exemption u/s 11 - Registration u/s 12AA - CIT(E) in the order stated that imparting skill development training doesn't partake the meaning of public charity - HELD THAT - Training means constitutes a basic concept in human resource development. It is concerned with developing a particular skill to a desired standard by instruction and practice. Training is a highly useful tool that can bring a person into a position where they can do their job correctly, effectively, and conscientiously. Training is the act of increasing the knowledge and skill of a person for doing a particular job. The assessee with the affiliation of Ministry of Skill Development Entrepreneurship (MSDE) under the scheme has provided training to youths of India and falls under the category of Education and/ or Advancement of any other objects of general public u/s 2(15) Since, imparting skill development is akin to providing education we hereby hold that the assessee is eligible for registration u/s 12AA.

Summary

Issues:
Appeal against rejection of registration under section 12AA of the Income Tax Act.

Detailed Analysis:
1. The Assessee challenged the rejection of registration under section 12AA by the ld CIT (Exemption), Chandigarh. The grounds of appeal included errors in facts and law, misinterpretation of facts, and the rejection despite having charitable objects and genuine activities.

2. The C.R. Dadhich Memorial Society applied for registration under section 12AA in 2017, which was initially rejected in 2018. Subsequently, a second application in 2018 was also rejected on the grounds that skill development did not qualify as charity under section 2(15) of the Act.

3. The Tribunal considered the nature of training provided by the society, emphasizing that training is essential for human resource development, increasing knowledge and skills. The society's affiliation with the Ministry of Skill Development & Entrepreneurship for skill training was deemed to fall under the category of education or advancement of public objects.

4. The Tribunal referred to previous decisions by ITAT Delhi and other authorities where imparting skill development training was recognized as a charitable activity falling under the definition of education. The decisions emphasized the broad interpretation of 'education' to include training and skill development.

5. The Tribunal noted discrepancies in the assessment by the CIT (Exemption) regarding the society's financials. A detailed reconciliation of bank credits and income was presented to address the CIT's concerns, showing that the bank entries were reconciled.

6. Considering that skill development is akin to providing education, the Tribunal held that the Assessee was eligible for registration under section 12AA of the Act. The decision was pronounced in open court on 27/06/2022.

7. The judgment highlighted the importance of training for skill development, the broad interpretation of 'education,' and the need for a comprehensive reconciliation of financial records to support registration under section 12AA.

8. The Tribunal's decision underscored the societal benefits of skill development programs and their alignment with charitable objectives, ultimately allowing the Assessee's appeal against the rejection of registration under section 12AA.