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TMI Blog2015 (6) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... and noticed that the following activities cannot be considered as charitable activities: - (a) Providing technical training to Jet Airways India Ltd. and other private companies' employees; assessee received compensation of Rs. 87,84,000/- for training and also for providing space on rental basis. (b) Assessee trust gave advance of Rs. 97,60,000/- to various firms; for example amount was advanced to Don Bosco institute, which is run by the Bombay Salesian Society and is running an engineering college in the same campus of St. Josephs's Technical School, Kurla. 4. When called upon to explain as to why the above activities should not be treated as commercial activities, assessee trust, vide its reply dated 19.11.2011, submitted that Don Bosco Institute was running an engineering college in the campus of the society. Due to insufficiency of funds they temporarily borrowed funds from St. Joseph's Technical School. Since that society is also running an educational institution, the amount advanced cannot be treated as an activity falling outside the ambit of provisions of section 11/13 of the Act. Similarly, assessee received some amount from Tata Sky; the trainees from Tata Sky were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining & Mine Surveying 208 ITR 608 (Patna) wherein it was held that the institution which was not authorised, cannot be said to have any element of normal schooling. He thus concluded that the activities of consultancy and technical & professional services for which the institute receives payment are not certainly an educational activity but they are the jobs done for third parties against consideration. The AO distinguished the decisions of the Apex Court in the case of Sole Trustee, Lok Sikshana Trust vs. CIT 101 ITR 234 as well as the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Cooperative Union vs. CIT 195 ITR 279. On the facts of the aforesaid cases the activities of developing bankers and finance professionals are different from fees collected by the assessee from different parties. In his opinion there should be formal education who, in turn, should appear for a particular examination such as diploma/engineering course. He thus concluded that the income earned by the assessee-trust cannot be treated as income from educational activity and hence it has to be treated as business income. 7. With regard to the interest free loan given to Don Bosc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 234 to conclude that providing accommodation and granting computer labs to public in general would amount to carrying on an adventure in the nature of trade and it cannot be treated as an activity in the natural course of furtherance of the objects of the trust. He also relied upon the decision of the Uttarakhand High Court in the case of CIT vs. National Institute of Aeronautical Engineering and Educational Society 315 ITR 428 wherein the court observed that mere imparting of education with the primary purpose of earning profit cannot be said to be a charitable activity. He thus confirmed the order of the AO. 10. Further aggrieved, assessee is in appeal before us. The learned counsel for the assessee placed before us a chart chronologing the reasons given by the AO as well as the CIT(A) and the remarks against the reasons given by the tax authorities to submit that the trust had already been granted registration under section 12A and section 80G of the Income Tax Act and it has been granted exemption from year to year. Even in the subsequent year, i.e. A.Y. 2010-11 the learned CIT(A) has allowed the plea of the assessee that it is eligible for exemption under section 11 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and another which was not recognised, going by the broader definition of "Education" and the principle laid down by the Apex Court in the case of Sole Trustee, Lok Sikshana Trust vs. CIT 101 ITR 234 it is not necessary that, in order to claim exemption, the institution should be affiliated with a University or Board. In this regard he referred to the decision of the Hon'ble Bombay High Court in the case of DIT vs. National Safety Council 305 ITR 257 and contended that merely because some courses are not recognised by DG Shipping it cannot be a ground for denial of exemption under section 11 of the Act. The learned counsel also referred to circular No. 11 of 2008 dated 19th December, 2008 issued by CBDT wherein the Board observed that having regard to the number of entities engaged in commercial activities the expression 'advancement of any other object of general public utility' was amended by Finance Act, 2008 but the newly inserted first proviso to section 2(15) will not apply where the purpose of the trust or institution is education even if it incidentally involves commercial activity. In other words, the view of the CBDT was that so long as the case of the assessee falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute out of accumulated income set apart for application, in terms of section 11(2) of the Act, which is in violation of the provisions of section 11(5) of the Act, and (ii) assessee let out its premises partly to Jet Airways and others and the income earned therefrom is assessable to tax as business income. On the other hand, the case of the assessee is that the activity of leasing out property was for advancement of the object of general public utility; assessee was engaged in imparting vocational training and the institute was recognised by NCVT. The property was let out for no other purpose than for giving technical training. Jet Airways and others to whom the premises were let out was also engaged in imparting technical training and the assessee had also earned income by participating in the training programmes conducted by them in the form of offering the services to the lessee. In fact the agreement with Tata Sky clearly stipulates that the income should be applied solely towards promotion of the object of the society. Similarly, Jet Airways sought the expertise for conducting programmes for their employees and staff and assessee charged for imparting such training. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Institute and on identical issue the Hon'ble Delhi High Court, in the case of Acme Educational Society 326 ITR 146, observed that interest free loan given by the assessee society to another society with identical object cannot be treated as "investment" or "deposit" in which event there is no violation of section 13(1)(d) r.w.s. 11(5) of the Act. The case of the assessee herein is that both the assessees have similar objects and were registered under section 12A of the Act and interest free loan was returned subsequently. The claim of the assessee is not disputed by the learned D.R. Having regard to the circumstances of the case and in the light of the decision of the Hon'ble Delhi High Court, we are of the view that the amount advanced by the assessee to Don Bosco Institute is not covered by section 11(5) of the Act and even on that count the claim of exemption could not have been denied to the assessee. Under these circumstances we are of the view that the plea taken before us by the assessee merits acceptance and we direct the AO to grant exemption under section 11 of the Act on the income earned by the assessee, including lease rent, etc. 15. In the result, the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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