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TMI Blog2018 (11) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... s Courts, the AO has the liberty to grant or refuse exemption u/s. 11 at the time of making assessment for each assessment year in accordance with law. In the assessment year under consideration, the Assessing Officer came to the conclusion that the activities carried on by the assessee are not charitable in nature, hence, he denied exemption u/s. 11 of the Act. Hence, we do not find any merit in the argument of the Ld. AR. This ground of appeal of the assessee is dismissed. Without prejudice to the earlier findings, we find that the assessee has paid interest to the Trustees on the amount of contribution made by 19 members at ₹ 10000/- each at 15% per month. Hence, the assessee is hit by the provisions of section 13(1)(c)(ii) of the I.T. Act. From this point of view also, the appeal of the assessee is dismissed. Non consideration of certain decisions relied upon by the assessee by the Assessing Officer and relying on some decisions against the assessee. Since we have held that the activities carried on by the assessee is not charitable in nature and the assessee is not entitled to exemption u/s. 11 of the Act, the assessee cannot have any grievance at this stage. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trustees by way of allowances and interest and therefore, deduction claimed u/s. 11 of the Act was not allowable. Accordingly, he denied exemption claimed under section 11 of the Act and computed the total income at 1,19,990/-. 3.1 The Assessing Officer noted that the assessee-Trust created by trust deed dated 31.08-2002, had 19 members. Its objects are: 1. To work for the educational cultural, social advancement of the people of Malabar. 2. To establish and run educational institutions of all kinds at all levels in all subjects including pre/upper/lower primary/secondary/higher secondary school, industrial training centres, teachers training institute and colleges such as Arts Science, Commerce and Management Studies, Medical, Engineering, Agriculture, Veterinary, Law etc. 3. To publish and propagate books, periodicals and journals as deemed useful by the Trust for achievement of the objectives of the Trust. 4. To take over the Institution, Corporate college of Arts and Science, YMCA Cross Road, Calicut with its all liabilities and assets. 3.2 The Assessing Officer further noted that in A.Y.2003-04, the assessee had not done any object of trust except taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointment letter or contract made between the teacher and the management to verify the correctness of providing allowance to teachers. They informed though the letter dated 17.01.2006 that there is no appointment letter or written contract entered with the teachers. In addition to the above, the licence fees paid to Shri Babu Premraj (Jt. Secretary) for conducting P.G. Centre is ₹ 16000/- for the F. Y. 2002-03 but agreement dated 02.06.2003 this has been enhanced to ₹ 40,000/- This also a direct benefit to the Trustee. Before the formation of Trust, 19 members has contributed ₹ 10,000/- each towards the capital, in the account it is termed as loan from members and teachers which will be refunded when the financial position improved. But in the subsequent years it is seen that interest @ 15% was granted to the balance payable to members. It is nothing but providing interest on capital employed for the business. Thus, the Assessing Officer denied exemption u/s. 11 of the Act to the assessee. 4. On appeal, the CIT(A) observed that it is well within the powers of the Assessing Officer to grant or reject exemption under Section 11 of I T Act from yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or any property of the trust or the institution (whenever created or established) is during the previous used or applied, Directly or indirectly for the benefit of any person referred to in subsection Further, sub section (3) of section 13 is as under: (3) The persons referred to clause (c) of sub-section (1) and subsection (2) are the following, namely:- (a) (b) (c) --------- (cc) any trustee of the trust or manager [by whatever name called) of the institution;] 4.3. Thus, the CIT(A) confirmed the view taken by the Assessing Officer that the trustees and Joint Secretary managing the P.G Centre had received benefits from the income / property of the trust during the year and such income is not eligible for deduction under section 11 of I.T. Act. 4.4 According to the CIT(A), the assessee s reliance on the case laws cited is misplaced as the facts of the instant case are entirely different. Further, the CIT(A) observed that its reliance on decision of High Court in its favour on the matter of service tax is also of no help as the benefit to trustees was never a matter before the Court. Moreover, the facts brought out by the Assessing Officer du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Sarvodaya Ilakkiya Pannai, cited supra is actually in favour of the assessee. Moreover, it was submitted that in this case Registration under section 12AA was not revoked. Section 12AA(3) is effective only from 01-10-2004, while the assessee was granted registration on 28/05/2003. Therefore, power to revoke has no retrospective operation. It was submitted that even assuming for the sake of argument that the Trust was not entitled to exemption, the rate of tax applicable was one applicable to AOP and there was no ground for applying maximum marginal rate of tax. It was submitted that the CIT(A) had not properly examined the claim of the assessee for exemption u/s. 10(23C)(iiiad). The Ld. AR relied on the decisions in Delhi Music Society vs. Director General of Income-tax (357 ITR 265) and CIT vs. Doon Foundation (154 ITR 208). 6. The Ld. DR relied on the order of the lower authorities. 7. We have heard the rival submissions and perused the record. The assessee is a Trust registered u/s. 12A of the I.T. Act. The main objects of the assessee-Trust are as under: 1. To work for the educational cultural, social advancement of the people of Malabar. 2. To establish and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, schooling or training given to the young in 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 eduction. 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, is education, because as a travelling you acquire fresh 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, an imparting of education 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. 8. It is further seen that the Gujarat High Court also had an occasion to consider identical issue in the case of Saurashtra Education Foundation vs C.I.T. (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. 7.2 In view of the above, we are of the opinion that the assessee cannot be considered to be an educational trust w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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