2017 (8) TMI 25 - AT - Income Tax

Tribunal upholds assessee's charitable status under Income Tax Act

The Tribunal dismissed the revenue's appeal and upheld the CIT(A)'s order, confirming that the activities of the assessee were charitable in nature and ... Exemption u/s 11 and 12 eligibility - whether the activities of the assessee are charitable in nature and covered under 'education' of Section 2(15) and not under advancement of 'any other object of general public utility' - Held that:- The annual accounts placed before shows that the assessee has excess of income of ₹ 8351077 for the year ended on 31st of March 2009 and 5188749/– for March 2008. On a query being raised by the bench that whether the assessee is still enjoying the registration under section 12A of the income tax act or not, it was replied by both the parties that still assessee is registered under section 12A. Merely because the assessee is holding conferences and seminars which are according to us in furtherance of the object of education only against payment of fees will not make the object of the trust falling into the 6th category i.e. ‘ Any other object of general public utility’. Further more it is not the case of the revenue that assessee is not carrying on the objective for which it has been formed and the fees and the income earned by the assessee is not used for charitable purposes. The Ld. departmental representative could not controvert the decisions relied upon by the Ld. AR. The revenue also could not place before us any evidence to show that the objects of the assessee are not ‘education’. NO infirmity in the order of the Ld. CIT (A) in holding that assessee is entitled for deduction or exemption under section 11 and 12 of the income tax act as assessee is carrying on the activity of education only and income generated there from is also used for the charitable objects of education only. - Decided in favour of assessee. Issues Involved:1. Whether the activities of the assessee are charitable in nature and covered under 'education' as per Section 2(15) of the Income Tax Act, 1961.2. Whether the assessee is eligible for exemption under Sections 11 and 12 of the Income Tax Act, 1961.Issue-Wise Detailed Analysis:1. Charitable Nature of Activities under 'Education':The primary issue was whether the activities of the assessee, a trust registered under Section 12A and 80G of the Income Tax Act, were charitable in nature and fell under the category of 'education' as defined in Section 2(15) of the Act. The assessee is a non-profit organization formed to provide a platform for the officers of the Oil industry, educationists, students, and technologists for educating them in areas of petroleum, such as exploration, drilling, production, etc. It organizes seminars and conferences on these topics.The Assessing Officer (AO) had contended that the assessee's activities fell under the category of 'advancement of any other object of general public utility' and were capable of generating profit, thereby denying the applicability of provisions of Sections 11 and 12.However, the CIT(A) held that the assessee’s activities were educational and, therefore, eligible for exemption under Sections 11 and 12. The CIT(A) relied on the fact that the assessee organized seminars and conferences on a no-profit-no-loss basis and was engaged in the academic field, providing education in the field of petroleum technology and related areas.The Tribunal upheld the CIT(A)’s decision, emphasizing that the assessee's activities were indeed educational. The Tribunal referred to various judicial precedents, including the Supreme Court's decision in Sole Trustee, Loke Shiksha Trust v. CIT, and the Delhi High Court's decision in Delhi Music Society vs. DGIT, which defined 'education' to include systematic instruction, schooling, or training that develops knowledge, skill, mind, and character of students.2. Eligibility for Exemption under Sections 11 and 12:The second issue was whether the assessee was eligible for exemption under Sections 11 and 12 of the Income Tax Act. The AO had denied the exemption on the grounds that the activities of the assessee were in the nature of business and capable of generating profit.The CIT(A) found that the activities of the assessee were not in the nature of trade, commerce, or business. The CIT(A) noted that the assessee was engaged in providing education and that the income generated was used solely for charitable purposes. The CIT(A) referred to Circular No. 11/2008, which clarified that the amendment in Section 2(15) does not apply to entities engaged in education, even if they incidentally carry on commercial activities.The Tribunal agreed with the CIT(A), stating that the assessee's activities were educational and not commercial. The Tribunal noted that the assessee was still registered under Section 12A and that the income generated from seminars and conferences was used for charitable purposes. The Tribunal concluded that the assessee was entitled to exemption under Sections 11 and 12 of the Income Tax Act.Conclusion:The Tribunal dismissed the revenue's appeal and upheld the CIT(A)’s order, confirming that the activities of the assessee were charitable in nature and fell under the category of 'education' as per Section 2(15) of the Income Tax Act. Consequently, the assessee was eligible for exemption under Sections 11 and 12. The Tribunal emphasized that the educational activities conducted by the assessee, including seminars and conferences, were in furtherance of its charitable objectives and did not constitute commercial activities.