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TMI Blog2013 (6) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities. The DIT(E) should cross these legal hurdles before he resorts to the denial. When the assessee-trust has have reported any receipts from the educational activities, i.e. objects of the trust, it is premature to conclude on the commercial nature of the educational activities of the trust. Also perusing the assessee's letter dated 27.9.2012, wherein there is a prayer from the assessee for "an opportunity of personal hearing" for sorting out the issues raised by the DIT (E). Assessee has not got invitation of the DIT(E) in this regard. To conclude in the context of the provisions of section 2(15), the expression 'education' should be understood as formal education by way of formal school or colleges or universities etc. The 'commercial centres' are not be treated on par with such formally established educational methods/systems. Also as to how the amended provisions of the second proviso to section 2(15) were not considered in NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY case [2009 (7) TMI 94 - UTTARAKHAND HIGH COURT] and how the amended provisions differ substantially. DIT(E) denied registration sole on the ground of extended and inclusive obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a Trust and filed an application for registration u/s 12AA of the Act on 21.3.2012. The Trust was constituted by indenture of Trust Deed dated 29.12.2011. The Trust was registered with the Charity Commissioner, Mumbai on 20.3.2012. From the papers filed, DIT (E) noticed that the Trust Deed vide Clause-7(b)(1) provides for objects for establishing and management of Tutorials / Coaching Classes and the same constitutes the commercial activity and the provisions of section 2(15) of the Act do not apply. In respect of the same, assessee filed an identical letter dated 27.9.2012 stating that the object of conducting Tutorials / Coaching classes is not the primary or main object of the trust and it is an extended one and the expression "Tutorials / Coaching classes" had to be read in that context of academics and the main object ie establish, set up, acquire, run, operate, maintain and manage schools (ie pre-primary, primary and secondary), colleges. Assessee also mentioned that establishing and management of tutorials / coaching classes is not a commercial activity and prayed for granting of registration u/s 12A of the Act. DIT (E) considered the same and rejected the registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment vs. CCIT [2009] 315 ITR 382 (All) (iii) The Institute of Chartered Accountants of India (ICAI) vs. DIT (E) ITA No. 1853/Del/2010 (iv) DIT (E), Delhi vs. ICAI (HC decision for above ITAT decision) ITA No.869/2011, dt 19.9.2011 (v) Tishir Shiksha Prasar Samiti vs. CIT Gwalior [2012] 52 SOT 146 (Agra) (URO) (vi) Heart Care Management vs. DIT (E), New Delhi [2012] 52 SOT 277 (Del) (vii) Sole Trustee, Loka shikshana Trust vs. CIT Mysore [1975] 101 ITR 234 4.1. He also mentioned that the Hon'ble Supreme Court judgment in the case of Lok Shikshana Trust vs. CIT (supra) relied upon by the DIT (E), is distinguishable on facts as it relates to the publishing of the news papers whether it falls in the boundaries of the expression "education". 5. On the other hand, Ld DR opposed vehemently and mentioned that the assessee's object also include establishing and managing of tutorial / coaching classes which is held to be a commercial activity. He also mentioned that tutorial / coaching classes may be a part of education for the fact that such activity implies 'commercial activity' which bars the assessee from being charitable in nature when such objects are undisputedly adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:- Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year; Section 2(15) has been amended from time to time. The provisions of the second proviso was not the statute originally. The same was brought into statute by the Finance Act 2010 with retrospective application and further, the limit of Rs 10 lakhs was increased to RS 25 lakhs by the Finance Act 2012. Otherwise, the list of 'charitable purposes' includes the "education purposes" and however, in view of the first proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses". From the plain reading of the above object, it is evident that the assessee's primary object is essentially 'to establish, set up, acquire, run, operate, maintain and manage schools (pre-primary, primary and secondary), colleges, academies'. In addition, 'tutorial or coaching classes' is also included as its activities. Considering the language used in the said object, we cannot hold that the primary object of the trust is to conduct tutorials or coaching classes only. In our interpretation, the main object is for establishing, running, managing etc of the schools, colleges and academics. We have already stated above that the assessee is yet to establish, set up, acquire, operate or maintain or manage schools, colleges, academics including tutorials or coaching classes. 9. We shall now examine the judgmental laws filed by the parties before us. First, we shall take up the Apex court's judgment in the case of Lok Shikshana Trust, supra relied upon by the DIT(E), Mumbai and of course it pertains to pre- amended period ie prior to 1.4.2009. In fact, this judgment was intensively discussed by the Tribunal of Cochin Bench while adjudicating the appeal of M. Star Charitable So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court found that all kinds of education would not fall within the meaning of section 2(15) of the Act. The training, instruction, etc. would result in grant of a diploma or degree by a university or a governmental agency. In the case before us, admittedly, the taxpayer is conducting coaching classes. Therefore, it cannot be treated as a charitable institution as provided in section 2(15) of the Act. This Tribunal is of the opinion that the taxpayer is not eligible for registration u/s 12AA of the Act. Accordingly, the order of the lower authority is confirmed." 9.2. Thus the Tribunal, Cochin Bench had the benefit of the amended provisions and it is held that the assessee-coaching centre is not a charitable institution. Thus, the assessee's argument that the activity of conducting 'coaching classes' per se constitutes charitable one is not correct. Therefore, there is need for considering and analyzing various facts before coming to that conclusion. Conducting 'tutorials or coaching classes' for certain some students of the formal school or formal colleges to meet out their difficulties in the classes , which are also commonly described as coaching classes, cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal is allowed. The impugned order dated August 12, 2005, passed by the Income-tax Appellate Tribunal, Delhi Bench " D" , New Delhi in I. T. A. No. 4278/Del/2004, is hereby set aside. The order dated September 14, 2004, passed by the Commissioner of Income-tax, Dehradun, is restored." 10. Other aspect which is directly relevant for examination relates to denial of registration u/s 12AA of the Act before the Trust starts realizing its objects. It is undisputed fact that the assessee-trust filed an application for registration u/s 12AA of the Act on 21.3.2012. The Trust was constituted by indenture of Trust Deed dated 29.12.2011 and it was registered with the Charity Commissioner, Mumbai on 20.3.2012. It is also an undisputed fact that the Trust has not applied or appropriated its funds of its objects till date. Thus, in our opinion, it is premature to decide or conclude on the question of application or appropriation of funds for the trust as the trust has not yet established any such academic or educational institutions or necessary infrastructure. Therefore, the question of exceeding of the aggregate receipts of 25 lakhs in violation of the provisions of the second proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration sole on the ground of extended and inclusive object of "tutorial or coaching classes". Therefore, in principle, the said denial of registration at this phase of the trust activities is not proper. Further, it is undisputed that the "education" should refers to a formal education by virtue of schools, colleges, universities and it is the core object of the assessee as seen from Clause 7 of the trust deed. Education has different shades and all kinds of education are not covered by the provisions of section 2(15) of the Act. The education for the purpose of earning profits, imparting knowledge, which is required for getting employment are not covered by the said provisions. Applying the said principles to the facts of the present case, we find that the assessee is yet to commence its activities. As on date, there is neither institution nor any coaching classes conducted by the assessee as stated by the Managing Trustee at Bar. These facts were not properly communicated by the assessee to the DIT (E), probably for this purpose, the assessee wanted an opportunity of being heard by the DIT (E) before the crucial decision was taken against the assessee ie by the rejection o ..... 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