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TMI Blog2017 (10) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... id, promote and coordinate research and training through its own or other agencies, including Universities and other institutions of standing. iii. To establish wings for'(i) Education, Training and Orientation, (ii) Research including Action Research, (iii) Consultancy; (iv) Publications and such others as may be necessary to achieve the objects. iv. To analyses specific problems encountered in the planning and implementation of projects; policies and programme of the Government and to suggest suitable remedial measures. v. To prepare, print and publish papers, periodicals and books in furtherance of the objects of the Society. vi. To establish and maintain libraries and information services. vii. To collaborate with other institutions, organizations, associations and societies, in India or abroad interest in similar objects; and viii. To offer fellowships, scholarships, prizes and stipends in furtherance of the objects of the Institutions. 4. The income of the assessee society was claimed as exempt under section 10(23C)(iiiab) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and not for making profits. The relevant findings of the Ld.CIT (Appeals) at para 6.3 and 6.3.1 of the order are as under: "6.3. The submission of the appellant, assessment order and relevant facts on the record have been carefully considered. Appellant has mainly placed reliance on the judgement of Hon'ble Supreme Court in the case of Visvesvaraya Technological University (supra). On perusal of the judgement it is seen that Hon'ble Court has laid down that entitlement for exemption u/s 10(23C)(iiiab) is subject to two conditions. Firstly the educational institutional or the university must be solely for the purpose of education and without any profit motive. Secondly it must be wholly or substantially financed by the government. From perusal of the total receipts and the grant received from government, it is seen that the appellant is substantially financed by the government as the grants to the assessee exceeds 50% of total receipts. So far as the condition that the educational institution is solely for the purpose of the education and without any profit motive, assessing officer has given detailed findings vis-a-vis objects and activities of the assessee society a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; and purpose of these advances and during appeal proceeding also it was not established that these advances have been made as per the objects of the institution. Therefore, assessing officer has given reasoned finding that assessee is not eligible for exemption u/s 10 (23C)(iiiab) of the Act and the same are upheld. Grounds of appeal No. 2, 3, 4, 5 and 6 are dismissed." 7. Aggrieved by the same, the assessee has come up in appeal before us raising the following grounds: 1. That the order of Learned Commissioner of Income Tax (A) is bad, against the facts & Law. 2. That the Learned Commissioner of Income Tax (A) has wrongly upheld the activities of the appellant as non educational. 3. That the Learned Commissioner of Income Tax (A) has wrongly denied the exemption u/s 10(23C)(iiiab) of the Income Tax Act, 1961. 4. That the Learned Commissioner of Income Tax (A) has wrongly disallowed whole of the expenses incurred during the year by the appellant. 5. That the Learned Commissioner of Income Tax (A) has wrongly treated the surplus as income of the appellant, which is to be transferred/adjusted by the government in the following years. 6.& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for non deduction of tax at source for the years 2001-02 and 2002-03, on the premise that it was covered under the provisions of section 10(23C)(iiiab) of the Act. The Ld. counsel for the assessee drew our attention to the said certificate issued to the Manager, ICICI Bank Ltd., Sector 9, Sector 35, Chandigarh and Manager, HDFC Bank, Sector 7 Panchkula, placed at Paper Book page No.24. c) The communication received from the office of the Chief Commissioner of Income Tax, N.W Region, Chandigarh stating that as per the provisions of section 10(23C)(iiiab) it was not required to seek any approval for claiming the said exemption. 11. The Ld. counsel for the assessee stated that it is evident from the above that the assessee had all along been allowed exemption under section 10(23C)(iiiab) of the Act by the Revenue and had been recognized as being eligible for the same also. The Ld. counsel for the assessee stated that since there was no change in the factual circumstances from the preceding years, there was no reason to hold that the assessee was not entitled to claim exemption under section 10(23C)(iiiab) of the Act. 12. The Ld. counsel for the assessee further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of funds of the society in modes other than those prescribed u/s 11(5) of the Act. The reasoning behind reaching to this conclusion by the Revenue is the fact that the assessee is indulging in activities which include providing training to various organizations and providing coaching for competitive exams which as per the Revenue do not come under the purview of education and further collecting revenue by letting out their premises to various organizations and collecting fees from the training and coaching classes resulting in surplus thus establishing the profit motive of the assessee society. Further the advances made to Punjab Small Industries & Export Corporation have been held to be in violation of the provisions of section 11(5) of the Act which prescribes the modes in which money is to be invested or deposited by charitable societies/institutions. 17. We find merit in the contentions of the Ld. counsel for assessee that it has not violated the basic condition of existing solely for education and not for the purpose of profit. Undisputedly, the assessee society has been in existence since 28.3.1974, established by the Government of Punjab, with the stated object of providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by conducting courses, training programmes, research and study of the subject, opening libraries and publishing periodicals and literature on the subject. The question before the Hon'ble High court was whether the assessee had been rightly denied exemption u/s 10(22) of the Income Tax Act,1961,holding its activities to be not educational in view of the meaning given by the Supreme court in Sole Trustee, Loka Shikshana Trust vs CIT 101 ITR 234. The Hon'ble High Court held that the objects of the assessee indicated that the society was established for diffusion of certain branch of knowledge and therefore was in the nature of imparting education. Further referring to the decision of the supreme court in Lok Shikshana (supra), the court held that the observation of the apex court that education means schooling would mean, that schools, instructs or educates and the observations of the apex court were not intended to give a narrow or pedantic sense to the word education. The relevant finding of the High Court are as under: "The controversy which we are called upon to decide is, therefore, whether the assessee is an educational institution existing solely for educational purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Development Banking-12 weeks, Certificate Course in Co-op. Credit & Banking-10 weeks, and Specialised short-term courses/Orientation Courses. The assessee also conducts Seminars. It also appears that the assessee has been running four co- operative training which conduct junior basic courses of 24 weeks duration for Diploma in Co-operation, Special Course for employees of Urban Co-op. Banks, Dist. Co-op. Banks and Market Class, and also Seminars. The assessee also conducts Co-operative Education Programme, Consumer Education Programmes (Project), Women Co-op. Education Programme, Special Training Classes in the District under Co-op. Education and Industrial Projects of the nature and duration as mentioned in detail in the said list of its activities. It is not suggested that the assessee-Co- operative Union is doing any activity other than those enumerated in the said list. 4. From the nature of the activities of the assessee, it is abundantly clear to us that the assessee is existing solely for educational purposes. It was sought to be contended by the learned counsel for the Revenue that having regard to the objects enumerated in cls. (iii), (iv), (vi) and (viii) of the Bye- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es actually carried on by it and, as noted above, the list of activities of the assessee clearly indicates that it is existing solely for educational purposes. It cannot be doubted that the assessee was a society for diffusion of a certain branch of knowledge of the co- operative movement in various fields governing human life and the activities for the purposes were carried out in an organised and systematic manner by conducting regular courses for imparting instruction and training on various subjects included in the curricula as is reflected from the list of its activities. There is no dispute about the fact that the assessee-Co-operative Union is given financial assistance by the Government. The resolutions of the Government dt. 15th Feb., 1968 and 10th Dec., 1982 [mentioned in para 8 of the order of the CIT(A)] clearly indicate that the grants sanctioned by the Government are for educational purposes. The Government had sanctioned Rs. 15 lakhs for the year 1982-83 which appears to have been raised to Rs. 20 lakhs from the year 1988-89. We are fully satisfied from the nature of the activities of the assessee-Co-operative Union and its objects that the assessee is existing exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mean. We are certain that these observations were not intended to keep out of the meaning of the word 'education', persons other then 'young'. The expression 'schooling' also means "that schools, instructs or educates" (The Oxford English Dictionary, Vol. IX 217). The Supreme Court has observed that the word 'education' also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word 'education'. By giving further illustrations of a traveller gaining knowledge, victims of swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge and hidden mysteries of life, the Supreme Court has indicated that the word 'education' is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate proper confines of the word 'education' in the context of the provisions of s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institutions. 21. Further we agree with the Ld.Counsel for the assessee that the revenue earned from letting out premises to various organizations is incidental to the main object of imparting education through training programmes and study courses conducted. The assessee has all along contended that the activity of letting out its premises is undertaken during the course of carrying out its activities of imparting training and conducting study courses. It is not the case of the Revenue, nor has it been pointed out to us that letting out of the premises of the assessee society has been done for any other purpose other than letting it out during the course of conducting training programs and study courses. Therefore, the revenue earned therefrom are incidental to carrying out of the main objectives of assessee society of imparting training to the public administration officers of the Government of Punjab. 22. Further we also find no merit in the contention of the Revenue that profit making is its main objective of the assessee society. The Balance Sheet and Income & Expenditure account of the assessee for the year ended on 31.03.2013, placed before us at paper book page Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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