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TMI Blog2019 (2) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... jects of 'advancement of general public utility' is involved in carrying on any activity in the nature of trade, commerce, business or is charging fees for services in relation to any trade, commerce, business, it is excluded from being 'charitable.' The assessee’s plea that it is covered by mutuality has also been rightly set aside by the CIT(A). There is absence of complete identity between contributors and participants. The contributors and beneficiary are different. Furthermore, the assessee is rendering services to non members for getting profit. CIT(A) has rightly held that the assessee does not fulfill the condition of mutual organization. It is settled law that before one submits to the rule of precedence, the fact of the case has to be taken into account. The assessee has contended that none of its activities are carried out with an object or any motive to earn profit or surplus. That the earning of revenue is only incidental to the predominant object of providing education and skill development to the entrepreneurs. This submission is quite in contradiction to the fact that the assessee is charging huge amounts for sponsorship fee from corporate against which it provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Without prejudice to fact that the activity of the Appellant falls under the ambit of education under section 2(15) of Act, the AO and CIT(A) erred in not appreciating that such activities of the Appellant are also covered under 'advancement of any other object of general public utility as included in the definition of charitable purpose under section 2(15) of the Act but does not fall within the ambit of carrying on of any activity in the nature of trade commerce or business / services in aid thereto as contained in the first proviso to section 2(15) of the Act. 5. Since the facts are identical, the ld. CIT(A) has followed his order of A.Y. 2010- 11 and A.Y. 2011-12 but we are referring to facts and figures from A.Y. 2010-11. 6. Brief facts of the case are as under: During the course of assessment proceedings, the AO noted that the assessee trust has shown an income of ₹ 4.53 course from the activity of organizing seminars which does not fall within the meaning of education as contemplated in section 2(15) of the Income Tax Act 1961. Accordingly, a show cause notice u/s. 142(1) of the I. T. Act, dated 21.01.2013 was issued to the assessee. In response t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected. 9. Upon the assessee s appeal, the ld. CIT(A) considered the assessee s submission. But he was not convinced. He upheld the A.O. s action and held as under: i. The appellant submitted that its activities are education in nature and hence its case is not covered by proviso to section 2(15). In this regard, it is mentioned that the appellant is organizing annual functions wherein certain workshops are carried out. For all such workshop / seminar / meeting conducted by the appellant, there is a charge whether it is a member or non-member. During the year, out of total fees of ₹ 45.01 lakhs, appellant has received ₹ 24.45 lakhs from members and ₹ 20.38 lakhs from non-members. ithout any exception, a charge has been levied on nonmembers. Further, the appeilant is not authorized to issue any certificate / degree. The appellant is not having any regular faculty which is evident from the fact that no expenditure on account of salary etc. has been debited to its Income and Expenditure Account. There are no class rooms as such for imparting education on regular basis. Hence, no student and teacher relation exists between the speakers and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , corporate executives, and senior professionals only which is by invitation only. Thus, this membership is not open for general public. Similarly, 'Honorary membership' is restricted to the members who are prominent individuals of standing and repute for which approval of governing council is required. Again for 'Associate Members' and 'Corporate Members' approval of governing council is required. Thus the membership is restricted and hence the claim of the appellant that it is open to general public is factually not correct. iv. Appellant submitted that it does not render any services for fee in connection with business, trade or commerce. In this regard it is mentioned that during the year under consideration, the appellant has received meeting income of ₹ 45.01 lakhs and sponsorship income of ₹ 3.58 crores. The appellant has conducted seminars etc, for which a charge has been levied. The sponsors like Akruti City Ltd, Adani Enterprises, KPMG, ESSAR Oil Ltd. and ESSAR Steel Ltd. have paid ₹ 25 lakhs each, Tata sons ₹ 20 lakhs, ICICI Bank Ltd. ₹ 26.87 laks for sponsoring its annual function and in turn, the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not to be confined to carrying out trade, business and profession. It was held in the case of Subhram Trust vs. DIT (E) (2009) 317 ITR (AT)(Bang.) that 'the term in relation to should be broadly interpreted i.e. to say if any activity which directly or indirectly facilitates the rendering of any service in relation to any trade, commerce or business, is carried on by trust, then it will be covered under proviso to section 2(15)'. The proviso to section 2(15) is attracted even in a case where the assessee is not carrying out business, trade, commerce by itself. The charging of fees and consideration in relation to' services for any trade, business and commerce or 'involvement' in trade, commerce and business is sufficient to attract the proviso to section 2(15). vi. In view of the facts and legal position as discussed above, I agree with the Assessing Officer that the appellant is hit by the proviso to section 2(15) and hence not eligible for exemption u/s. 11 of the I. T. Act. ^Grounds of appeal no. 1 to 5 are, therefore, dismissed. vii. The appellant also argued that its case is covered by the principles of mutuality. In this regard it is mentioned th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and both of them function independently. Ground 1: General in nature Ground 2: It is submitted that the activities of the appellant is in the nature of education 1.10 The Appellant carries out its objects through various workshops. These educational workshops are conducted in a systematic and structured manner covering various topics of interest and importance. The details of the various workshops undertaken are given in the table below Sr. No. Name of Activity Brief Description of Activity 1 Cleantech SIG Focused interactions with leaders and experts imparting knowledge in clean energy and environment Topics covered: Trip to Suzlon Windfarms Energizing Entrepreneurship in the Cleantech Space Clean mentoring Workshop 2 The Media and Entertainment Network by TiE Mumbai (MENT) Initiative towards enabling and empowering entrepreneurs in the media entertainment industry across Mumbai Pune. Topics covered: Launch of Social Entrepreneurship 3 Mentoring Clinic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts these workshops through the year on a monthly/ bi-monthly basis to regularly impart entrepreneurial education and foster the growth and development of best practices and techniques for the entrepreneurs. 1.12 As per the Oxford dictionary, the meaning of the word 'Workshop' is a meeting at which a group of people engage in intensive discussion and activity on a particular subject or project. As per Black's Law dictionary, Seminar is a formal presentation by experts where the attendees are encouraged to ask Questions and discuss the matter to hand , whereas a workshop is a training class given to solve tasks related to work to gain hands-on experience , Thus the appellant is undertaking education and training of individuals/startups which falls within the meaning of the word education under section 2(15) of the Act. It is similar to the refresher courses conducted by professional bodies with the objective to update knowledge and skills by imparting education in a non-formal manner. 3 The word education has to be interpreted more widely to include non-formal education and cannot have restricted interpretation as placed under section 10(23C) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n instance in order to indicate as to what the word education appearing in section 2(15) of the Act which defines charitable purposes is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word education , persons other than young . The expression schooling also means that schools, instructs or educates (The Oxford English Dictionary, Vol. IX, page 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 the 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 or even such knowledge . The observations of the Supreme Court only indicate the proper confines of the word education in the context of the provisions of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not charge fees from members/non-members in case of certain workshops / seminars undertaken. In about 40% of the cases, the fees charged by the Appellant ranges from INR 300 to INR 1500 per workshop which is to recover the costs and cannot be said to be excessive. 1.18 Accordingly, it is submitted that its activities are educational in nature falling under the meaning of 'education' under section 2(15) of the Act. Reliance is placed on all the cases submitted during the course of hearing, which have upheld that conducting of workshops fall within the ambit of the term education. Ground 3: Without prejudice to the above, the activities undertaken by the Appellant are in the nature of 'advancement of other object of general public utility', not in the nature of business, trade or profession or services in relation to business, trade or profession 1.19 Without prejudice to the contention that the activities of the Appellant are purely educational, as per the objects in the Memorandum of Association of the Appellant, inculcating entrepreneurial skills and advancement of such skills for young students and aspirant entrepreneurs is for the advancement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employment, etc. The meaning of commerce as given by the Concise Oxford Dictionary is exchange of merchandise, specially on large scale . In ordinary parlance, trade, and commerce carry with them the idea of purchase and sale with a view to make profit. If a person buys goods with a view to sell them for profit, it is an ordinary case of trade. If the transactions are on a large scale it is called commerce. Nobody can define the volume, which would convert a trade into commerce. For the purpose of the first proviso to section 2(15), trade is sufficient, therefore, this aspect is not required to be examined in detail. The word business is the broadest term and it encompasses trade, commerce and other activities. Section 2(13) of the Income-tax Act defines the term business as under: 2. Definitions. - ... (13) 'business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The word business is a word of large and indefinite import. Section 2(13) defines business to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India International Centre[(2015) 57 taxmann.com 265 (Del-Trib)] h. Indian Chamber Of Commerce [(2014) 52 taxmann.com 52 (Kol)] 1.27 Also, further as per the financial working (bifurcated between regular and annual activities) submitted before your honor and also attached as Annexure-3, we would like to highlight that the appellant has generated mere surplus only due to the contribution received during the annual event, otherwise the appellant is running in losses while carrying out its regular activities. 1.28 Further, in the case of Hoshiapur Improvement Trust [(2015) 61 taxmann.com 162 (Amritsar)] it was held that when business activities are carried out by assessee trust in course of actual carrying out of such advancement of any other general public utility', benefit of section 11, read with section 2(15), cannot be declined. 1.29 The Appellant submits that none of its activities are carried out with an object or motive to earn a profit or surplus. The earning of revenue is only incidental to the predominant object of providing education and skill development to the entrepreneurs in India, which, without prejudice, will be considered to be advancement of any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by the ld. Counsel of the assessee has been very clearly and cogently addressed by the ld. CIT(A). Hence, the ld. Counsel of the assessee submitted that the order of the ld. CIT(A) needs to be sustained. 13. Before proceeding further we may gainfully refer to the provision of section 2(15) which reads as under: Definitions. 2. In this Act, unless the context otherwise requires,- (15) 68 charitable purpose 69 includes relief of the poor, 69education, 70[yoga,] medical relief, 71[preservation of environment69 (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other 69object of general public utility: Provided that the advancement of any other object of general public utility69 shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business73, or any activity of rendering any service in relation to any trade, commerce or business73, 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, unless- (i) such act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mining Mining Surveying (supra). 15. As regards the assessee s without prejudice/alternative submission that although the activities are in the nature of 'advancement of any other object of general public utility', yet they are not in the nature of business, trade or profession. The assessee s claim is that its activities are not limited for members but also to general public. In this regard, the ld. CIT(A) has referred to clause 5.5 of the Memorandum of Association, the 'Charter Membership' is restricted to persons who are successful veteran entrepreneurs, corporate executives, and senior professionals which is by invitation only. Hence, the membership is not open for general public. Furthermore, as noted by the ld. CIT(A) the 'Honorary membership' is restricted to the members who are prominent individuals of standing and repute for which approval of governing council is required. Again for 'Associate Members' and 'Corporate Members' approval of governing council is required. Hence, the assessee s claim that the membership is open to general public is not at all factually correct as the membership is restricted. 16. Furthermor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not fulfill the condition of mutual organization. 17. We further note that the ld. Counsel of the assessee has tried to distinguish the decision of the Hon ble Apex Court in the case of Sole Trustee, Loka Shikshona Trust (supra). But in our considered opinion, the distinction brought out by the ld. Counsel of the assessee is not sustainable. The nature of the activity of the said seminars and workshop were not at all accepted as educational activity. The decisions referred by the ld. Counsel of the assessee do not support the case of the assessee, as they were rendered in the facts of the individual cases. It is settled law that before one submits to the rule of precedence, the fact of the case has to be taken into account. The assessee has contended that none of its activities are carried out with an object or any motive to earn profit or surplus. That the earning of revenue is only incidental to the predominant object of providing education and skill development to the entrepreneurs. However, we find that this submission is quite in contradiction to the fact that the assessee is charging huge amounts for sponsorship fee from corporate against which it provides various ..... X X X X Extracts X X X X X X X X Extracts X X X X
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