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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 ..... ppellant Trust be granted registration u/s 12A / 12AA. 2. On the facts and in the circumstances of the case, the DIT (A), Mumbai has further erred in stating that there is no binding legal obligation under the terms of the Trust deed on the trustees to apply the income / Trust funds solely for charitable purposes which is factually and legally incorrect in view of clause - 7 of Trust Dee, which is liable to be and should be set aside." 3. Briefly stated relevant facts of the case are that the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or coaching classes". In this regard, he mentioned that assessee has not established any such establishments for the purpose of providing tutorial or coaching classes, which is considered to be a commercial activity. Further, he mentioned that education is a very broad term which includes providing tutorials and coaching classes also. In this regard, he relied on various decisions which are as under:- (i) NSHM Academy vs. CIT [2912] 18 ITR (Trib) 244 (Kolkata) (ii) Oxford Academy for Career Development 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and issues pertaining to present case. To start with, we shall take up the legal position on the topic. 7. For this said purpose, we have perused the meaning of the expression 'charitable purpose' as provided in the provisions of section 2(15) of the Act and the same as it stands today reads as under: "Section 2(15): "charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended provisions of section 2(15) of the Act. Present trust is constituted vide Trust Deed dated 29.12.2011 and therefore, the newly inserted second proviso applies to it. 8. Now we shall take the nature of the controversial object of trust vide Clause- 7(b)(1)of the Trust. The said clause reads read as follows,- "to establish, set up, acquire, run, operate, maintain and manage schools ( ie pre- primary, primary and secondary), colleges, academies including tutorial or coaching classes". 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining and developing the knowledge, skill, mind and character of students by normal schooling. In fact, the Apex Court has observed as follows at page 241 of the ITR:- "The sense in which the word "education" has been used in section 2(15) is 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 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 che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducation which can be said to be a process of training and developing knowledge and character of students by normal schooling. A coaching institute cannot be said to be an institution where normal schooling is done. The definition of "charitable purpose" is inclusive and not exhaustive." 7. It is further seen that the Gujarat High Court also had an occasion to consider identical issue in the case of Saurashtra Education Foundation v. CIT [2005] 273 ITR 139 (Guj). The Gujarat 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 charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning profits cannot be said to be a charitable activity. We are of the firm view that, in the expression " charitable purpose" , " charity" is the soul of the expression. Mere trade or commerce in the name of education cannot be said to be a charitable purpose. And the Commissioner Income-tax has to satisfy himself as provided under section 12AA of the Act before allowing the registration. The question of law stands answered. 12. For the reasons as discussed above, the appeal 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into reality. The trust, which is instituted vide the Trust Deed dated 29.12.2011 and recognized by the Charity Commissioner in March 2012, seeks registration u/s 12AA of the IT Act vide its application 21.3.2012, is yet to raise funds from the donors and therefore, yet to establish the requisite infrastructure ie construction of the school/college buildings, recruiting of the teaching personnel etc to be in tune with the educational objects of the trust. DIT(E) denied 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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