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TMI Blog2013 (11) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... business but was not maintaining separate books of accounts. We shall elaborate upon the findings recorded by the Director General of Income Tax (Exemptions) in later portion of this judgment. 2. At the outset, undisputed facts may be noted. The petitioner is a society registered under the Societies Registration Act, 1860 with the Registrar of Societies, Delhi since 1960. From the beginning the petitioner society was granted exemption or treated as a charitable institution under the provisions of the Act. Petitioner was granted exemption under Section 10(22) of the Act up to 1998-99. After substitution of Section 10(22) by Section 10(23C), the petitioner was granted exemption under clause (vi) with effect from 1st April, 1999 onwards. The petitioner has placed on record order dated 16th October, 2000 for the period 1999-2000, 2000-01 and 2001-02. The petitioner has also placed on record order dated 15th October, 2003 for the period 2002-03, 2003-04 and 2004-05. For the period 2005-06 to 2007-08, notification under Section 10(23C)(vi) was issued on 9th September, 2005. Similarly, for the period 2008-09 onwards tax notification was issued vide order dated 26th May, 2008. The first i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso are satisfied. 4. The two impugned orders in question refer to the fact that the petitioner has been conducting examinations like Management Aptitude Test (MAT), screening and admission tests. MAT is a national level test and the scores obtained in the said examination were/are recognised by business schools for admission to their MBA and allied programmes. The said exams were/are conducted four times in a year. The petitioner charges fee from the students who take the said examinations/tests. The petitioner had also conducted admission and selection tests for screening of candidates for admission to programmes, other than MBA and for induction of employees at various levels in different organisations. For this purpose, the petitioner was authorised and paid by the organizations including government bodies like Air India. This, according to the Director General as mentioned in the impugned orders, showed and established that the petitioner was not carrying on "solely educational activities" and, therefore, did not qualify and meet the prescribed parameters of Section 10(23C)(vi). 5. Section 10(23C) (vi) of the Act reads as under:- "(23C) any income received by any person on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to holding of teaching classes or lectures but educational purpose is equally served when educational text books are published. Accordingly, in the case of Council for the Indian School Certificate Examinations it was observed as under:- "7. ..................It is, therefore, clear that courts have laid emphasis on the activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient. 8. When we apply the aforesaid principle to the admitted nature of activity undertaken by the petitioner, we have no hesitation in quashing the impugned order dated 08.10.2008 and holding that the petitioner is an educational institution. Writ of certiorari is accordingly issued............." 8. There is one more reason why the submission of the petitioner deserves acceptance. The petitioner has drawn our attention to the objects and purpose for which the petitioner society was setup. The main objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above, the petitioner cannot be denied the character of "other education institution" because it conducts examinations or tests. 10. At this stage, learned counsel for the respondents has drawn our attention to the findings recorded in the order dated 28th February, 2012. The said findings read as under:- "13. The second activity of assessee is professional development programme from which assessee has earned income of Rs.6,52,82,034/- and Rs.6,10,23,991/- for the A.Y. 2008-09 and 2009-10 respectively. Under this head, the assessee is engaged in conducting short terms management development programme for two to three days. These programmes are organized in various hotels across the country for various corporate for which fees is being collected from the corporate regarding the candidates nominated by them. In these programmes, no degree or diploma is awarded. These are programmes only for two to three days and cannot be termed as imparting of education as understood in view of decision of Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshan Trust Vs. CIT, 101 ITR 234, as by these short term programmes assessee is not training and developing the knowledge, skill and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness" and "charity" have been elucidate and explained. 12. In view of the aforesaid position, we are inclined to pass an order of remit. The Director General will keep in mind the observations made in the two decisions and other cases, while deciding all aspects and questions. 13. Another incidental issue raised is whether the petitioner was maintaining separate books of accounts. The requirement to maintain separate books of account is stipulated in the 7th proviso to Section 10(23C) of the Act. The said proviso applies only if the authority comes to the conclusion that the charitable institution is incidentally carrying on business for the purpose of attainment of objects. It is only in these circumstances that separate books of account are required to be maintained. Another aspect which arises is what is meant by the term "separate books of account"? The primary requirement is that the authority should be in a position to ascertain and know the income earned through incidental activity of business and there should not be overlapping or confusion relating to business activity and charitable activity. This is necessary as there are stipulations of application of funds for cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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