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TMI Blog2011 (12) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... to hold funds and distribute the same for achieving the above purposes. (h) To collaborate with other organizations, Societies. 2. The society was allotted a land measuring 0.422 acres by the Ministry of Works, Housing and Supply, Land & Development Office, Government of India in Diplomatic Enclave, Nyaya Marg. Till the financial year 2007-08 the petitioner/society is stated to have been allowed exemption from income tax under Section 10(22) of the Income Tax Act, 1961 ( "the Act", for short). However, in the financial year 2008-09, the gross receipts of the petitioner exceeded Rs. 1 crore and, therefore, as stipulated in Section 10(23C)(vi) of the Act, the petitioner was obliged to apply to the "prescribed authority" for approval so that it can continue to enjoy the tax exemption. The prescribed authority referred to in the provision is the Director General of Income Tax (Exemptions), Delhi. Accordingly, the petitioner moved an application before him in form No.56D, which is the prescribed form, on 7th September, 2009 for grant of exemption. It would appear that the application covered both clauses (vi) and (via) of Section 10(23C). We are, however, concerned only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 234 and it was observed that the word "education" has not been used in Section 2(15) of the Act in a wide sense, that it refers to systematic instruction, schooling or training given to the young in preparation for the work of life and that it connotes the process of training and developing the knowledge, skill, mind and character of students by normal schooling . According to the prescribed authority, the petitioner did not satisfy those requirements. He also referred to the judgment of the Patna High Court in Bihar Institute of Mining & Mine Surveying v. CIT (1994) 208 ITR 608 wherein it was held that coaching of the students in an institution could not be held as imparting of education as it was not a process of training and development of the students in normal schooling. It was further observed that the institution should be recognized by an authority and should have an element of normal schooling and mere preparation of the students for appearing in various competitive examinations did not amount to imparting of education. 5. The petitioner is aggrieved by the order of the prescribed authority and has approached this Court for issue of a writ of certiorari or any other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or its officer or servant or any other person. It is true that the petitioner is not affiliated to any university in India and is not recognized by any statutory body having anything to do with education. It is also a fact that the petitioner does not have a syllabus of its own and it awards grade certificates to the students depending upon their proficiency as declared by the Trinity College, London and the Associated Board of Royal School of Music, London on the basis of the examinations conducted by them. The question before us is whether the reasons given by the prescribed authority are germane to the question as to whether the petitioner is an educational institution within the meaning of Section 10(23C)(vi). 9. The Supreme Court in the case of Sole Trustee, Loka Sikshana Trust (Supra) interpreted the word "education" in Section 2(15) of the Act and held that the word has been used to denote systematic instruction, schooling or training given to the young in preparation for the work of life and it also connotes the whole course of scholastic instruction which a person has received. It has further been observed that the word also connotes the process of training and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this, it is seen that there are 549 students enrolled with the petitioner who are taught western instruments according to their choice such as Piano, Guitar, Electronic Key Board, Wind Instruments, Drums and Vocal. The school faculty comprises of 30 teachers with 25 of them being Grade 8 and above in western music. There is reference to scholarships that are open to the students including waiver of fees from 25% to 90%. It has been stated that several students of the school have gone on for higher musical studies to places like Moscow, London, New York, Prague and Rome. The schedule of fees effective from April, 2011 is also made part of the annexure. There are rules and regulations governing the running of the school which are also made part of the annexure. The main rules and regulations are that the school works for all seven days a week and remains closed only on national and public holidays; that the school year is divided into four terms of three months each; that students who are attending instrumental music classes would be taught individually by the teachers; that dance students would be taught in groups; that there would be workshops/lecture demonstrations arranged for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n examination or awards degrees of its own is not decisive of the question whether it is an educational institution or not. It also lends support to the petitioner's stand before the prescribed authority that it is not a mere coaching centre preparing students for competitive examinations. The coaching centres, as we understand them, are where candidates are specially prepared to appear in competitive examinations such as civil services, entrance examination for IIMs, IITs and other professional colleges. Profit motive pervades and is the essence of the business activity undertaken by the coaching institutes. The primary object of the coaching institutes is personal or self gain and activity undertaken is with the said objective. Knowledge of education may be imparted but "charity" or philanthropy is missing. No such finding or observation is recorded and stated in the impugned order. The difference between coaching centres and an "educational institution" from section 2(15) or 10(vi) is apparent. 14. It now remains for us to deal with the judgment of the Patna High Court in Bihar Institute of Mining & Mine Surveying vs. CIT(supra) relied on by the prescribed authority. In that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures of fee receipts, surplus and what is described by him as percentage of profit in respect of three financial years, namely, 2006-07, 2007-08 and 2008-09. After setting out these figures in the form of a table, it has been stated that the petitioner exists solely for the purpose of profit making and that the activity of training or coaching the students to undergo the examinations conducted by the foreign institutions is a commercial activity. This objection/reason has not been stated in the impugned order. In Mohinder Singh Gill & Anr vs The Chiief Election AIR 1978 (SC) 851, the Supreme Court has observed as under:- "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out." As the impugned order is silent on the aspect of profit motive, we, therefore, refrain from examining the objection further. 18. We ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 241): "The sense in which the word `education' has been used in section 2(15) in the systematic instruction, schooling or training given to the young is preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word `education' has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge........But that is not the sense in which the word `education' is used in clause (15) of section 2. What `education' connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by normal schooling." x x x x x x x x x x x x x x x The observations of the Supreme Court only indicate the proper confines of the word "education" in the context of the provisions of section 2(15) of the Act. It will not be proper to construe these observations in a manner in which they are construed by the Tribunal when it infers from these observations, in para 17 of its judgment, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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