9911796707
TMI Blog2024 (7) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... s as many as ten States of the country. The instruction was imparted at either NIIT-run centers or NGO-partnered establishments. Its revenue stream was disclosed to flow from tuition fees and other educational services provided by it. The fee structure was asserted to be heavily subsidized and discounted. It is the aforesaid facts which appear to have weighed upon the AO to characterize the activities undertaken by the assessee as being charitable and falling within the meaning of the word education and which falls within the six principal activities spoken of in Section 2 (15). Tribunal came to the firm conclusion that the activities undertaken by the respondent/assessee were systematic and proceeded along well-defined lines based on curated courses all of which were designed to skill and educate the students who had been enrolled. On facts, the assessee was also able to establish beyond a measure of doubt that the courses run by it were informed by a fixed curriculum and attendance criteria and thus fulfilling all essential ingredients of formal education. The Tribunal also found that the corporate receipts were mainly flowing from the CSR obligations of the concerned business ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Appellant Through: Mr. Abhishek Maratha, Sr. SC alongwith Mr. Parth Semiwal, Mr. Apoorv Agarwal, Jr. SCs. with Ms. Nupur Sharma, Mr. Manav Goyal, Mr. Gaurav Singh, Ms. Divya Verma and Mr. Bhanukaran Singh Jodha, Advs. For the Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Samarth Chaudhari, Advs. JUDGMENT YASHWANT VARMA, J. 1. This appeal by the Commissioner of Income Tax (Exemptions) [CIT (E)] assails the order of the Income Tax Appellate Tribunal [ITAT] dated 27 May 2020. By our order of 09 May 2024, we had formally admitted the appeal on the following two questions of law: A. Whether the Income Tax Appellate Tribunal [ ITAT ] is correct in the eyes of law in setting aside the order under Section 263 of the Income Tax Act, 1961 [ Act ] even though the order of Assessing Officer [ AO ] was erroneous and prejudicial to the interest of the Revenue and framed without making proper enquiries/ verification and application of mind? B. Whether the ITAT was correct in coming to the conclusion that the assessee was undertaking educational activities in terms of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted that the respondent was engaged in the activity of imparting education as explained by the Supreme Court in its judgment in Lok Shikshana Trust vs. CIT (1976) 1 SCC 254 and consequently that its activities were liable to be placed in the residual category of General Public Utility [GPU] as contemplated under Section 2 (15). The CIT (E) appears to have been swayed by the assessee not being affiliated with any regulatory body and thus not being engaged in the activity of imparting formal education. 6. By an order dated 19/26 March 2018, the CIT (E) set aside the assessment as erroneous and held that the respondent was rendering services for profit and was not engaged in any educational or charitable activity as contemplated under Section 2 (15). It further held that the assessee appeared to be acting primarily as a contractor/service provider with the elements of formal schooling being absent, and its activities, even if construed to be of a GPU, being liable to be viewed as contravening the Proviso to Section 2 (15). It additionally held that the various activities undertaken by the assessee were also concerned with the enhancement of brand value and thus were violative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. The assessee is acting only under a commercial contract as a consultant/contractor. k. The assessee has tried to mislead by stating that NllT Ltd. Is not a specified person, whereas it has itself shown NIIT Ltd as specified persons in the audit report in form 10 B and also in submission filed. Further the assessee has not been able to deny, rather admitted that intangible and tangible benefits were derived by NllT Ltd, from the income of the property of the trust. l. The activity of the assessee cannot be categorised as an activity within the meaning of education as defined in section 2 (15) of the income tax Act. m. The advertisement of one of the courses shows that it cannot be categorized as education in any manner. n. Even if the activity of the assessee is considered as charitable under the limb of General Public Utility, it is hit by proviso to section 2 (15) of the Act. Hence it is concluded that:- a. The activities of the assessee do not fall under any limb of charitable purposes as defined under section 2 (15) of the Income Tax Act, 1961. b. The activities of the assessee are commercial services purely in the nature of trade and commerce. c. The case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. It had also taken note of various receipts of the assessee from different corporate houses and on which TDS had been deducted under Section 194J. This, according to the CIT (E), was clear evidence of the respondent being engaged in commercial activities. Mr. Maratha drew our attention to the following conclusions as appearing in the order of the CIT (E): 4.1 The details of payments received from various corporate as per TDS statement during the year are under: S.No. Name Receipts TDS deduction u/s 194/J 1 HINDUSTAN COCA COLA BEVERAGES PVT. LTD. 8223755 164474 2 M.P. BUILDING OTHER CONSTRUCTION WORKER WELFARE BOARD 348170 38686 3 TATA CONSULTANCY SERVICES LIMITED 195003 19500 4 WORLD VISION INDIA 815130 16302 5 ATC TOWER COMPANY OF INDIA PVT. LTD. 1039075 20782 6 APNE AAP WOMEN WORLD WIDE (TRUST) 46765 4677 7 EFICOR 14000 1400 8 HOPE FOUNDATION 96098 1922 9 NIIT INITIATIVE FOR LEARNING 10697 1071 10 NIIT YUVA JYOTI LIMITED 5947278 190360 11 NIIT LIMITED 444876 44487 12 SAHYOG FOUNDATION 25667 2567 13 VIDYA INTEGRATED DEVELOPMENT FOR YOUTHAND ADULTS 60000 1200 14 ZILA PANCHAYAT 64000 1280 15 JBLIANT BHARTIA FOUNDATION 10000 1000 16 GRAM NIYOJAN KENDRA 73034 1460 17 AIRPORTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of education and the ambit of Section 2 (15) is concerned, Mr. Maratha relied upon the following principles which were enunciated in Lok Shikshana Trust: 5. The sense in which the word education has been used in Section 2 (15) is the systematic instruction, 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 education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your 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 cheat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 way is education in the great school of life. But that is not the sense in which the word education is used in clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling. Thus, education i.e. imparting formal scholastic learning, is what the IT Act provides for under the head of charitable purposes, under Section 2 (15). 13. Refuting the aforenoted contentions, Mr. Vohra, learned senior counsel appearing for the respondent/assessee, submitted that the AO upon due examination of the activities undertaken by the assessee, had come to the definitive conclusion that the same fell within the scope of Section 2 (15). It was submitted that during Financial Year [FY] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and researchers in Universities and research institutions to develop IT enabled teaching and learning paradigms and new education technologies and to sponsor and support conferences, seminars and workshops of academics and professionals engaged in IT and related fields to share experiences and to strengthen institution- industry linkages; 3. To cooperate with, and seek cooperation from Universities, Research Institutions and industry in Delhi for strengthening and modernizing the curricula, teaching methods and student assessment procedures in IT education and training. To play a catalytic role in promoting, popularizing and expanding IT education and training at all levels of education in the country and to commission studies and research on the status of IT education and training in the country from time to time and to identify new initiatives required to be taken; 17. Of equal significance are the particulars which have been set out and appear at Volume II, page no. 323 of our record and which carry details of the application of income that accrued to the assessee, and which was used solely for the purposes of imparting education. Mr. Vohra also underlined the fact that various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the minimum attendance. The attendance of the students is taken on a regular basis and a proper track record of the same is maintained by NF. In case, the students do not have the required attendance, they are not provided completion certificates for the course and in order to avail certificate of completion of training, students have to attend the course afresh. 3 Examination in respect of the courses provided [Reply to Query No. 4(d)]: 3.1 After the completion of a specified course, a proper assessment of the students is taken. Examination is conducted and the performance of each student is evaluated. The successful students are issued certificates mentioning the grade scored by the students in the examination which is calculated on the basis of marks scored by the said students in the examination conducted by the assessee. The said certificates also contains the logo of the organization from where the course is approved. The Sample certificates are attached at 'Annexure C'. 4 Recognitions provided to the courses provided by the Assessee [Reply to Query No. 4(e)]: 4.1 The students who enroll with the centres operated by NF are given education as per educational courses d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al I vocational Courses in Government Schools, Community Schools and Schools/Centres operated by various other NGOs. Please see the sample approval letters received from various government schools in this regard at 'Annexure G'. All the activities stated above which are carried by NF in its own center is also being carried at these Government schools, Community Schools and Schools/Centres operated by various other NGOs. NF even trains the teachers and faculties of such schools to enable these institutions to conduct these educational courses on their own. 4.6 Other ways of NF to provide the students education is through various digital literacy initiatives like Hole-in-the-wall education project. The said project is to educate children of age group 6 to 12 years belonging to slum and backward areas of the country, who do not have access to the computers and its applications. In this project, Computer learning stations are installed at various locations like schools, slum, etc. where children can use these computer learning stations and improve their understating of subjects like Science, IT, English, GK and Mathematics. 4.7 Further, the work done by NF in the education fiel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 19th, 2019 Income Tax Officer, Ward Exemptions 2(4), 24th Floor, Room No. 2409, E-2 Block, Civic Centre, New Delhi-110002. Dear Sir, Re.: M/s. NIIT Foundation ( We or Assessee or NF ) (formerly known as NIIT Education Society) Assessment Year: 2014-15 Reply to notice u/s. 142(1) of the Income Tax Act, 1961 ( the Act ) issued pursuant to order passed u/s. 263 of the Act. We are in receipt of notices issued under section 142(1) of the Income Tax Act, 1961 ( the Act ) dated October14, 2019 and November 21, 2019 for assessment year 2014-15 in respect of the proceedings pursuant to the order dated 26.03.2019 passed by the Commissioner of Income Tax (Exemptions) ( the CIT (E) ) u/s. 263 of the Act. In response to the said notice, we have filed the part replies vide letters dated 23th November 2019 and 13th December 2019. In continuation to the earlier replies filed by us, we humbly submit as under: 1. As regards point 3 of the notices asking to show cause as to why the receipts of the Assessee should not be treated as business receipts and why the Assessee should not treated as carrying out activities relating to general purpose utility as against 'education'. 1.1 In this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urban areas across India, so as to impart education to the students belonging to the under privileged / economically backward strata of the society with an objective to develop their skill so that their employability can increase. In the said education / development centers, we conduct various educational courses in the field of IT and other communication and vocational courses such as IT, English, Soft skills, BPO, Banking Sector, Accounting Skills, Personality development etc. duly developed and/or approved by government authorities and/or globally recognized institutions for the poor and physically and mentally challenged students at either free of cost or at heavily subsidized rate. NF also assists its student in getting job placement after completing certified educational courses (i.e. Career oriented program) offered by NF. Please see the profile of NF explaining the activities carried on by it in detail at pages 27 to 38 of the PB and brief note on past and current activities of NF at pages 39 of PB. 1.9 We first identify under privileged / economically backward areas and communities to whom we can provide benefit with our activities and set up centers in those areas. A cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Ministry of Skill Development and Entrepreneurship, Government of India. The fact that the said centers were approved from NSDC is evident from the screen shots of the NSDC website. The same has already been submitted vide submissions dated 13th December 2019 at Annexure F. Further, as could be observed therefrom, the details of the said centers like address of centers, the date of approval of said centers is duly mentioned therein. 1.11 Educational Courses offered at the aforesaid Centres are developed and/or by the government authorities (NSDC) and/or other institution: 1.12 The students who enroll with the centers operated by NF are given education as per educational courses duly developed and/or approved by various government authorities and/or globally recognized institutions. The educational courses offered by NF are mainly NSDC approved courses. As stated above, NSDC is an Indian not-for-profit company set up to address the need for providing skilled manpower across various industry sectors. It was founded in 2009 by the Ministry of Finance, and is currently under the Ministry of Skill Development and Entrepreneurship, Government of India. NllT Yuva Jyoti Limited (NYJ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been defined what all needs to be covered in each session; 1.17 Courses are conducted and completed within a fixed duration: NF conducts and completes these courses in its centers within a fixed duration which is decided on the basis of content of each educational courses and on recommendations of institutions that has developed these courses; 1.18 Students have to compulsory attend classes and the students who do not have proper attendance are not allowed to take examination: The students have to compulsory attend classes. The attendance of the students is taken on a regular basis and a proper track record of the same is maintained by NF. The students who do not have proper attendance are not allowed to take examination. 1.19 Conducts examination and issues Certificates: After the completion of the specified course, a proper assessment of the students is taken and certificate of the same is provided to the students. 1.20 Educational Courses are offered either free of cost or at heavily subsidized rate at the aforesaid Centers: 1.21 NF are providing aforesaid educational courses at either free of cost or at heavily subsidized rate at its Centers. The reason behind charging a to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution in the field of education and charitable activities done by it over the years are already submitted before Your Goodself vide submissions dated 13th December 2019 at Annexure I. 1.27 Donations and amount received from various Sponsors: 1.28 As stated above, NF is providing aforesaid educational courses at either free of cost or at heavily subsidized rate at its Centers. Therefore, the amount of tuition fees received is not adequate to fund the aforesaid charitable activity of NF. The aforesaid charitable activities are funded by donations received from various persons. 1.29 Further, NF has various corporate sponsors who have sponsored various centers operated by NF. These corporate sponsors reimburse the cost incurred by NF for operating these centers on actual basis of the centers sponsored by them. NF has charged service tax on this amount from the sponsors and the sponsors, in certain cases, have deducted TDS on the same. REPLY TO THE QUERY THAT WHY THE TUTITION FEE SHOULD NOT BE TREATED AS BUSINESS RECEIPT [QUERY NO. 3(l)] 2. OUR COURSES ARE AFFILIATED WITH COMPETENT AUTHORITIES AND ACCORDINGLY, OUR ACTIVITY WOULD CLASSIFY AS 'EDUCATION': 2.1 In this regard, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee ought to be regarded as being in the nature of 'education'. 3. WITHOUT PREJUDICE, THERE IS NO REQUIREMENT THAT THE COURSES CONDUCTED BY NF SHOULD BE AFFILIATED TO ANY REGULATORY BODY: 3.1 Besides, it is submitted that for the purpose of being 'education', it is not mandatory that the courses provided should be affiliated with any regulatory body. 3.2 In this regard, attention is drawn to the decision of the Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshan Trust vs. CIT (101 ITR 234). It that case, the Hon'ble Supreme Court has given a guidance as to what can constitute 'education' and what not. In that context, the Hon'ble Supreme Court has explained that the word 'education' cannot be construed in a loose manner to mean any acquisition of knowledge . However, any mode of systematic instruction, schooling or training given to the young in preparation for the work of life would be regarded as education. The relevant extract of the said decision is as under: The word 'education' has been used in section 2 (15) is the systematic instruction, schooling or training given to the young is preparation for the work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not recognized by any statutory body having anything to do with education. It is also a fact that the petitioner does not have a syllabus of its own and it awards grade certificates to the students depending upon their proficiency as declared by the Trinity College. London and the Associated Board of Royal School of Music, London on the basis of the examinations conducted by them. The question before us is whether the reasons given by the prescribed authority are germane to the question as to whether the petitioner is an educational institution within the meaning of Section 10 (23C) (vi). 9. The Supreme Court in the case of Sole Trustee, Loka Sikshana Trust (Supra) interpreted the word education in Section 2 (15) of the Act and held that the word has been used to denote systematic instruction, schooling or training given to the young in preparation for the work of life and it also connotes the whole course of scholastic instruction which a person has received. It has further been observed that the word also connotes the process of training and development of knowledge, skill, mind and character of students by normal schooling. xxxx xxxx xxxx 3.4 Kind reference is also drawn to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PURPOSE UTILITY INSTEAD OF EDUCATION AND PROVISO TO SECTION 2 (15) OF THE ACT SHOULD NOT APPLY (QUERY NO. 3(ii)] 4.1 In this regard, as submitted above, it is reiterated that the activity carried out by the Assessee is in the nature of education. Without prejudice to the same, even if the activity is not regarded as education but as advancement of general purpose utility, even in that case, since we are not engaged in any trade, business or manufacture, we are still eligible for exemption u/s. 11 of the Act. 4.2 In this regard, it is submitted that the term 'business' is defined under section 2(13) of the Act to include 'any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture'. The term 'business' connotes some real, substantive and systematic or organized course of activity or conduct with a set purpose . 4.3 It is submitted that in our case, we are not carrying out any trade, commerce or manufacture. We are engaged in imparting training and education to the under privileged strata of the society. The primary purpose behind our activity is to develop the underprivileged youth of the country and to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance with the specific laws, the nature of the receipts would not become business receipts. It is submitted that these cannot be the factors in determining the nature of any receipt. 4.10 As regards levy of service tax, it is submitted that that the Service Tax Law is a completely different and independent law and thus, no inference can be drawn from the same with regards to the nature of receipt. Under the said law, service tax is chargeable on services rendered by the service provider to the service receiver, notwithstanding such services are provided in the course of business or not. Under Service tax Act (Finance Act, 1994), the term 'services' have been widely defined to include various activities that may or may not be in the nature of business. For eg. Service tax is leviable on sitting fees received by a Non-executive Director. Clearly, a Nonexecutive Director is not doing any business activity, still service tax is leviable on the same. Thus, it is submitted that levy of service tax cannot be a basis to decide that the activity on which service tax is charged is a business or not. 4.11 We further submit that under the Service tax Act, the term 'servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner which it thinks legal, generally the donee would not refuse the donation. This is so because TDS can be claimed by trust towards the tax paid. It has not been disputed that for these amounts only donation receipts were issued. There was no loss to trust as on application of income i.e. utilization of donation, the TDS becomes refundable to it. On/v because donors are pharmaceutical companies and thev deducted TDS, will not convert a donation into a commercial receipt on the basis of presumptive inferences. As Jong as the assessee has credited the amount as donations and issued donation receipts, in our view, the same cannot be held to be commercial receipt. (Emphasis supplied) 4.16 In view of the foregoing, we humbly submit that the basis on which Your Goodself has treated the receipts as business receipts is totally unfounded. 5. WITHOUT PREJUDICE TO THE ABOVE, IF IT IS HELD THAT THE ACTIVITY OF THE ASSESSEE IS BUSINESS ACTIVITY AND THEREFORE TAXABLE, THEN THE LOSSES INCURRED BY THE ASSESSEE FROM SAID ACTIVITY IN THE EARLIER YEARS OUGHT TO BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AGAINST THE ACTIVITY OF THE CAPTIONED YEAR. 5.1 Without prejudice to the above, it is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,071 Total 24,819,228 1,070,037 Details of Tuition Fees (as per Form 26AS) MP Building and Construction 348,170 38,686 Zila Panchayat 64,000 1,280 Total 412,170 39,966 Educational Services NIIT Yuva Jyoti Limited 5,947,278 190,360 Airport Authority of India 1,058,596 21,772 Tata Consultancy Services Ltd. 195,003 19,500 Tata Housing Development Co. Ltd. 263,260 5,226 NIIT Limited 444,876 44,487 Tata Consultancy Services Ltd. 719,202 31,000 Aegis Limited 61,500 6,150 Hindustan Coca-Cola Beverages Pvt. Ltd. 8,286,755 170,774 World Vision of India 815,130 16,302 ATC Tower company of India Pvt Ltd 1,039,075 20,782 ApneAap Women World Wide Trust 46,765 4,677 The Evangelical Fellowship of India Commission on Relief. 14,000 1,400 Hope Foundation 96,098 1,922 Sahyog Foundation 25,667 2,567 Vidya Integrated Development for youth and adults 60,000 1,200 Gram Niyojan Kendra 73,034 1,460 Cipla Foundation 991,160 99,440 The Tata power Company Limited 4 4,248,962 388,941 Jubilant Bhartia Foundation 10,000 1,000 Total 24,396,361 1,029,000 Interest Income NIIT Initiative for Learning 10,697 1,071 Total 10,697 1,071 20. Mr. Vohra then vehemently countered the contention of Mr. Maratha, who had urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Income Tax Act, 1961 and is also holding the recognition under section 80 G (5) (vi) of The Income Tax Act, the learned assessing officer has noted the objects of the society and thereafter held that income of the assessee society is a charitable in nature within the meaning of section 2 (15) of The Income Tax Act, 1961. Thereafter he computed the income of the assessee and assessed at Rupees Nil. During the course of assessment proceedings, assessee submitted a letter dated 24 November 2016 wherein the assessee explained its charitable activities conducted during the financial year. Assessee submitted that during the financial year 2013-14, 15656 underprivileged youths were trained by in NIIT foundation across various streams such as information technology, English, soft skills, BPO, retail sector banking sector and service sectors. The training was conducted at NIIT foundation run centers and NGO partner centers. Out of the youths that were eligible for job, 2903 students were placed with an average income of ₹6800 per month. Each employed student contributed to increase family income making the family more sustainable. It was further stated that various digital literac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax Act, 1961. It is also important to note that for assessment year 2008-09, where the assessee was last assessed, on similar lines, where the assessee was held to be carrying on the activities of charitable nature within the meaning of section 2 (15) of The Income Tax Act, 1961. Then learned assessing officer specifically mentioned that the provisions of section 13 of The Income Tax Act, 1961 are not violated at all. Thus for the earlier years also on the similar set of activities the learned assessing officer in that year has taken a view that assessee is carrying on educational activities. Thus in past the activities of the assessee were accepted as educational. 24. As is manifest from the recordal of facts appearing in that paragraph, the assessee in the concerned AY was found to have essentially undertaken educational activities spread across various subjects and streams, providing opportunities to underprivileged youth and others and essentially skilling them for the purpose of future employment. It is also stated to have undertaken various digital literacy initiatives spread across as many as ten States of the country. The instruction was imparted at either NIIT-run cente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services cannot be characterized as education in any manner whatsoever, and the nature, duration and the quality of courses run by the assessee are not comparable to the activities of the assessee in any manner. It was further held that the courses run on behalf of its clients for a duration of 20 hours to 200 hours without any fixed curriculum, criteria, discipline and other essential ingredients of formal education, but merely to teach how cooperate a Smartphone or use an email, and speak English cannot be considered as an education thus it was held that the order passed by the learned assessing officer is erroneous as he has not made any such enquiries. 26. On an overall consideration of the material that existed on the record, the Tribunal ultimately came to the following conclusion: - 22. The details of the activities conducted by the assessee have been explained above at various places therefore to avoid repetition, they are not reiterated. The assessee has categorically stated that it is primarily operating various education and development centers in rural areas and slum and economically backward pockets of semi urban areas across India so as to impart education to the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t always used in characterizing the inflow of the recipient. The obligation of the assessee of complying with the service tax law also does not make assessee an Institute, which is carrying on business. More so, the opinion of the assessing officer for this year that assessee is carrying on an educational activity is also supported by the assessment history of the assessee where in earlier year also on identical facts and circumstances, the assessee was held to be carrying on educational activities, entitled to deduction/exemption under section 11 and 12 of The Income Tax Act, 1961. Honourable Supreme Court xxxx xxxx xxxx 27. If the activities carried out by the assessee are visualized in the context of judicial precedent as relied upon above, it is apparent that assessee is not engaged in any other activity other than education. Therefore, for this reason, we are of the view and hold so that the learned CIT E is not correct in holding that assessee is not engaged in educational activities covered under section 2 (15) of the Act. 28. No evidences have been put forth by the revenue except merely an allegation of violation of the provisions of section 13 (1) (C) of the act. It has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at profiteering. Those corporate donations were asserted to have been utilized solely for the purposes of the educational activities which were undertaken by the assessee. It becomes pertinent to note that the veracity of the facts noticed above was not contested by the respondents before us. 28. We at this juncture deem it apposite to take note of the following observations of the Supreme Court in New Noble Educational Society: - 82. The conclusions of this Court are summarised as follows: 82.1. It is held that the requirement of the charitable institution, society or trust, etc. to solely engage itself in education or educational activities, and not engage in any activity of profit, means that such institutions cannot have objects which are unrelated to education. In other words, all objects of the society, trust, etc. must relate to imparting education or be in relation to educational activities. 82.2. Where the objective of the institution appears to be profit-oriented, such institutions would not be entitled to approval under Section 10 (23-C) of the IT Act. At the same time, where surplus accrues in a given year or set of years per se, it is not a bar, provided such surplus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A sessions and prerecorded videos. Books and Notebooks have been replaced by smart phones, tabs etc. Most importantly, attendances are also virtual instead of physical. Chat boxes are medium of group discussion. Strikingly, Timings are 24*7. Still it has all the essential of a classroom . It definitely covers process of training, developing the knowledge, skill, mind and character of students like normal schooling. Thus, in true sense the activities performed by the assessee are no different from classrooms. 31. In view of above facts, we hold that assessee is carrying on educational activities which are covered by the provisions of section 2 (15) of the income tax act and it is neither business nor profession of the assessee. It definitely constitute a charitable activity as it does not charge the fees at the level of market rate and even otherwise the surplus generated is also used for charitable activities of education. This is the finding of the learned assessing officer for assessment year 14 15 and for earlier assessment years. In view of this, the order passed by the assessing officer is not at all erroneous. Therefore, we set aside and quash the order passed by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
