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TMI Blog2023 (9) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... n record that they are abnormally high with an intent to earn profit on commercial lines nor the same has been established that how they are not related to education in the instant case. In view of the arguments made by the ld A/R, supra, the surplus cannot lead by itself that the activities are from trade, commerce or business. There can be a revenue surplus in particular year/s which is allowed to be applied in the next year(s) as permitted under the Act. The un-applied amount becomes the income of the assessee after the end of the time-limit. Since, the proviso to section 2(15) is, otherwise, also not applicable as the activities are not in the nature of trade, commerce or business. Thus the object of the appellant Council qualified as charitable purpose and covered u/s 2(15) as applied by the appellant and given that there is no dispute on the genuineness of the activities carried on by the assessee Council in furtherance of its object, the order passed by ld. CIT (E) is hereby set aside and directed to grant the registration to the appellant Council under section 12AA as applied by them. Appeal filed by the assessee is allowed. - SHRI SANDEEP GOSAIN, JM SHRI RATHOD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara-medical subjects so as to maintain uniformity of standards. The applicant filed application online on 04.06.2020 in Form No. 10A for seeking registration under section 12AA of the Income Tax Act, 1961. The applicant was issued a letter/notice No. ITBA/EXM/F/41/2020- 21/1027702192(1) dated 12.08.2020 requesting therein to submit certain documents/explanations by 25.08.2020 and to produce original RC/MOA for verification. However, only part details were submitted the applicant. Accordingly, a show cause notice was issued to the applicant society vide No. ITBA/EXM/F/41/2020-21/1029329636(1) dated 29.12.2020 through which certain details were called for and date of hearing was fixed as 11.01.2021. In compliance, the applicant council furnished reply on 06.01.2021 along with the details called for, which has been examined in detail. The reply to the specific query on payment of taxes on surplus in different years has been found inappropriate as per the provisions of the I.T. Act, 1961. The ld. CIT (E) rejected the application for registration under section 12A of the IT Act, 1961 stating that it is not covered as Education because it is a regulatory body for Para-medical education a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iploma in Radiation Technology 10 + 2 (Science subject) 2 Years 3 Diploma in Dental Mechanics Technology 10 + 2 (Science subject) 2 Years 4 Diploma in Dental Hygiene Technology 10 + 2 (Science subject) 2 Years 5 Diploma in Operation Theater Technology 10 + 2 (Science subject) 2 Years 6 Diploma in Dialysis Technology 10 + 2 (Science subject) 2 Years 7 Diploma in Orthopedic Technology 10 + 2 (Science subject) 2 Years 8 Diploma in ECG Technology 10 + 2 (Science subject) 2 Years 9 Diploma in Blood Bank Technology 10 + 2 (Science subject) 2 Years 10 Diploma in Endoscopy Technology 10 + 2 (Science subject) 2 Years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees; (xii) to recognize the institutions conducting courses in Para-medical subjects; (xiii) to provide guidelines for admission of student to Para-medical institutions imparting Para-medical education; (xiv) to inspect or cause to be inspected any Para-medical institution; (xv) to constitute a board for conducting the examination in Para- medical subjects so as to maintain uniformity of standards; and (xvi) to perform such other functions as may be prescribed by rules. The Council is also the sole recognized body to regulate the para-medical profession in the State of Rajasthan through qualification courses. In view of the above it is clearly established that the Appellant Council is constituted by the State Government primarily for para- medical education and to promote, develop regulate the same for the welfare of the society, and the public health with no intent of any business and profit at all. 4. On the Major findings in the impugned order of the Learned CIT (E): 1. The Learned CIT at page 15 of the order has held that; Further, the direct income shown in the Income Exp. accounts comprises Mainly registration fees, counselling fees, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for education and training for which the regular inspections are made by which it provide the education in a systematic manner. Further it accepts that it is a GPU where by applying the proviso, the registration is denied. Further the case law referred is fundamentally applied on wrong interpretation without going to the facts of the case that it is established education Institution by an Act itself and provide and promote the education in a systematic manner. The said case law referred is dealt in the case laws as reported by us herein after. The learned CIT(E) has even after agreeing and spelling that the revenue is also from education and also a regulatory body and provide degree/Diploma and do the registration, conduct examination, has grossly erred in not granting registration under the limb of Education and rejecting the application. 5. The applicability of the proviso to section 2(15) as made by the Ld CIT is far away from the facts as all income are from the main object of Education only and all functions are as per the Act, there is no question of any business at all. The activities performed by the Council are as per the Act and the core activities undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rolled Educational Committees/Boards had been constituted to implement the educational policy of the States and consequently they should be treated as educational institutions. There is no system of distribution of surplus in the Council and the surplus have to be utilized only for the purposes of the Council. The acid test to determine whether any institution is constituted for the purpose of earning profit or charity could be the manner the distribution of surplus is made among the members. Where the surplus is not distributed among the members but used for general public, such institution is only meant for charity. Case Laws relied upon in support of our submissions. 1. The case of the appellant is squarely covered by the decision of Honorable Delhi High Court in Council for the Indian School Certificate Examinations vs. DGIT reported in (2012) 362 ITR 436 (Delhi) wherein it has been held as under:- 4. Reading of section 10(23C)(iv) shows that any University or other educational institution existing solely for educational purposes qualify under the clause. The University and the educational institution should not be for the purposes of profit. The second r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further fortified by the fact that when the first proviso was inserted to section 2(15), the activity of 'education' was not covered therein and only other object of general public utility alone was covered therein. The first proviso was brought in to curtail the scope of 'charitable purpose' with respect to the activities of general public utility, by excluding the same from this definition, if it involved carrying on of any activity in the nature of trade, commerce or business. Further, even after huge litigation with respect to blanket exemption to educational institutions, when the amendment was made by the Finance Act, 2009, the activity of the education was kept outside the purview of newly inserted proviso. Thus, impliedly, it can be said that, it is clear that the legislature has given great significance to the utility of 'education' in our country. 3. The Honorable Supreme Court in the Case of Assam State Text Book Production Publication Corpn. Ltd. has held that Following the judgment of the Rajasthan High Court, we are of the view that, in this case, the High Court, in its impugned judgment, has not considered the historical background in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals) as well as the Tribunal had noticed that even if some amount remained surplus, that was utilised only for the purposes of education. Thus, having regard to the concurrent finding of act recorded by the Commissioner (Appeals) and the tribunal has also taking note of the letter of the CBDT itself, it was not possible to say that the order of the tribunal was erroneous in any way. In this way, no question of law arose for consideration, much less a substantial question of law. 6. The Honorable Rajasthan High Court in the case of Rajasthan Hindi Granth Academy Versus Deputy Commissioner of Income Tax (D.B. Income Tax Appeal No. 302 / 2016), wherein it has been held as under:- 10. Before proceeding with the matter, it will not be out of place to mention that Rajasthan Hindi Granth Academy is established by the State Government to see that the books are available to the students of the educational institutions at the grass root level, (18 of 18) [ITA-302/2016] therefore, while considering the matter, we have considered that mainly the substantive amount out of receipts of Rs. 1,81,44,567/-, Rs. 1,24,10,000/- is received by the assessee from State Government by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption under section 10(22) of the Act would apply only to educational institutions as such. According to him, in this case, the assessee might be financing for running an educational institution, but it is not itself an educational institution. As noted earlier, the Tribunal held that the assessee was an institution existing for educational purposes and not for the purposes of earning any profit and the assessee itself could be termed as an educational institution coming within section 10(22) of the Act. The High Court has concurred with this view. The High Court has further held that the medium through which the assessee could effectuate its objects is the college and by employing this medium, the assessee imparts education and it cannot be stated that the assessee is only a financing body and does not, on the facts, come within the scope of other educational institution occurring in section 10(22) of the Act. 11. In the case of Shavak Shiksha Samiti vs CIT 104 TTJ 127 (ITAT Delhi) it was held that, The trust s main object of imparting education came within the purview of charitable purpose and it did not exist for profits, since the surplus, if any, were not to be dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are from the key services for education only. In this way the contents are contradictory neither it has been brought on record that they are abnormally high with an intent to earn profit on commercial lines nor the same has been established that how they are not related to education in the instant case. In view of the arguments made by the ld A/R, supra, the surplus cannot lead by itself that the activities are from trade, commerce or business. There can be a revenue surplus in particular year/s which is allowed to be applied in the next year(s) as permitted under the Act. The un-applied amount becomes the income of the assessee after the end of the time-limit. Since, the proviso to section 2(15) is, otherwise, also not applicable as the activities are not in the nature of trade, commerce or business. 6.1. In light of the above discussions and in the entirety of the facts and circumstances of the case and respectfully following the decisions referred supra, we are of the considered view that the object of the appellant Council qualified as charitable purpose and covered under Section 2(15) as applied by the appellant and given that there is no dispute on the genuineness of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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