2016 (11) TMI 1421 - AT - Income Tax

ITAT Upholds Exemption for Educational & Relief Activities Under Income Tax Act

The ITAT upheld the CIT(A)'s order, allowing exemption u/s 11 of the Income Tax Act for the assessee engaged in educational and relief activities. The ... Benefit of exemption u/s 11 - proof of charitable activities - activities of education - Held that:- As carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee was engaged in the activities of education and to achieve the objects, the assessee was engaged in publication and sales of books. The profits from the said activities were used in order to feed the charitable activities of imparting the education and relief to poor. The ld. CIT(A) in the impugned order categorically stated that the assessee had given in detail the Curriculum and Pedagogy of the society which revealed that the assessee was catering to children coming from under privileged families and providing education in such a manner as to merge them into main stream by awarding certificates, recognized and approved by the National Open School and that the list of schools furnished by the assessee included schools in slums of Delhi, traffic lights and remedial across centres across Delhi reflecting the beneficiaries. The aforesaid observations of the ld. CIT(A) were not rebutted. - Decided against revenue Issues:Department's appeal against CIT(A)'s order allowing exemption u/s 11 of the Income Tax Act, 1961 based on the definition of 'education' in Section 2(15).Analysis:The department's grievance was related to the deletion of disallowance made by the AO concerning the exemption claimed by the assessee u/s 11 of the Act. The AO initially denied the exemption, stating that the assessee's activities were not charitable due to a proviso inserted in Section 2 of the Act. The AO determined the total income of the assessee at a specific amount.The assessee, engaged in educational activities and relief to the poor, argued that its business of publication and sale of books was incidental to its main charitable objectives. The ld. CIT(A) noted that the assessee's receipts from the business activity were utilized for the main charitable purpose, primarily focused on educating underprivileged children. The CIT(A) emphasized that the proviso to Section 2(15) did not apply to trusts engaged in educational and relief activities, allowing the exemption u/s 11 to the assessee.In the appeal, the department supported the AO's order, while the assessee's counsel reiterated the arguments made before the CIT(A). The ITAT observed that the assessee's educational activities were well-documented, catering to underprivileged children and integrating them into mainstream education. The ITAT upheld the CIT(A)'s decision, dismissing the department's appeal based on the detailed Curriculum and Pedagogy of the society and the utilization of profits for charitable activities.In conclusion, the ITAT upheld the CIT(A)'s order, emphasizing the assessee's educational efforts for underprivileged children and the utilization of profits for charitable purposes. The ITAT found no valid grounds to interfere with the CIT(A)'s findings, ultimately dismissing the department's appeal.