TaxTMI 
TaxTMI 
2014 (5) TMI 774
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed above at the time of hearing." 2. Brief facts are that the assessee foundation was incorporated with the objects of developing the expertise in scope and level of imparting of science education in the medium of Govt. approved schools. To achieve these laudable objects it developed 'course resource material (CRM)' for the students who keen in learning science education. By this education model, the willing students are registered with the institution. This registration is done through recognized schools and colleges spread across India. Such schools include mainly Kendriya Vidyalaya, Jawahar Navodaya Vidyalaya, Government Schools, DAV schools and other recognized schools across all over India. Such schools from where students are registered total upto more than 7500 schools who carry out the registration of the students for CRM on behalf of the assessee foundation. 2.1. The CRM prepared by the foundation is imparted to the students through the teaching staff of the respective schools. Thereafter an examination is conducted across India through these schools only and to the successful students, certificate of participation is awarded. The fees collected from the students is par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n u/s 11 by following observations: "7. In view of the para 6 I have considered the details filed by the assessee carefully and found that the assessee has failed to submit any supporting evidence in support of charitable activities. The details/ informations filed by the assessee show that assessee is a commercial undertaking which only conducts examination by charging fees from the students. No educational activity directly or indirectly is imparted by the assessee company as per books of accounts and annual accounts for the relevant years submitted by the assessee company. In fact, the family members of the director's of the company making huge income by selling the books/ periodicals which is a must for taking up the examination being conducted by the assessee company. The main object s as per specified in memorandum and actual activities being carried on by the assessee are contradictory in it self. No charity seems to be carried on by the assessee as per records/documents furnished by the assessee during the survey/ assessment proceedings. Further, as per information furnished no faculty/teaching facilities has been ever provided by the assessee company. Merely conducting of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r examination in this behalf. Its science education activities are in coordination with Central Govt. Schools and Hyderabad University. The foundation helped in standardization and uniformities of basic knowledge level in the field of science by CRM. The activities, course, examination and coordination with large spectrum of govt. approved schools and their teachers helped in removing the disadvantages at the school level due to variations caused by geographical, language and school curriculum across India. It helped students in learning subjects like maths and other science streams along with providing scholarship to needy students which is verifiable in the expenditure account. CIT (A) thus allowed assessee's claim u/s 11 by following observations: "In addition to the above, I also find that it is also not necessary that to be eligible to claim exemption as educational institution that the institution should provide whole education. The Assessing Officer in the assessment order has admitted this fact that the appellant institution is engaged in conducting examinations. Firstly, as stated hereinabove, this is not so but still in view of the above of the judgment of the various Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ational purpose was equally served when educational text books were published. It is, therefore, clear that courts have laid emphasis on the activity undertaken, while construing or deciding whether or not a particular institution can be regarded as an educational institution. The Courts have repeatedly held that the holding of classes is not mandatory for an institution to qualify and to be treated as an educational institution. If the activity undertaken and engaged is educational, it is sufficient. 8. When we apply the aforesaid principle to the admitted nature of activity under taken by the petitioner, we have no hesitation in quashing the impugned order dated 8.10.2008 and holding that the petitioner is an educational institution. 4.12 The main object of the institution as approved by the Govt. of India is to pursue educational activities. In terms of the approval granted by the Govt. of India it has been specifically provided in the Memorandum that the institution will be a nonprofit organization and if upon winding up or dissolution there remains any surplus the same shall not be distributed but will be given or transferred to such other institution having similar object. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 of the appellant are allowed." 2.5. Aggrieved revenue is before us in appeal. 3. Ld. DR relied on the order of ld AO and contends that i. assessee is not carrying out any charitable activity as it failed to produced any evidence in this behalf. ii. The activities of the assessee are only commercial in nature, substantial fee is charged for only conducting examination. iii. No direct or indirect educational activity is performed by the assessee institution. iv. Family members of assessee company are making substantial income by selling the books and periodicals which has been prescribed as a must in order to appear in the examinations conducted by it. v. The main objects as declared and as implemented are contradictory. vi. By carrying out commercial operations no charitable activity is carried out. vii. Assessee is not engaged in whole system of education and conducting only examination does not amount to education. viii. The assessee is not recognized by any Directorate of Education/ any university or any other Government body and hence it cannot be equated with any other body which conduct examination since all other bodies are recognized by the Government or through ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n excess of [fifteen] per cent of the income from such property;" 4.4. Charitable purpose has been defined in Section 2(15) which reads as under:- "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other object of general public utility." 4.5. A simple reading of the above provision reveals that charitable purpose includes 'education'. The word 'education' has not been restricted or qualified by any conditionality. This clearly implies that word education is to be construed as regarded in common parlance with an unrestricted and broad connotations. Thus so long as the activity relates to education, the same will be considered to be a charitable purpose within the meaning of Section 2(15) eligible for exemption under Section 11. 4.6. The applicant foundation has developed the expertise in imparting education in the science by 'course resource material'. All those students who are interested in learning and getting this education are required to get registered with the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the needy and the meritorious students the foundation is giving scholarships and prizes to such students. The bonafide educational activities are further proved that it has also tied up with the National University of Singapore which provides a platform to the science and mathematics students to interact with the best of faculty in the world. Workshops and seminars are organized in the various parts of the country to help students in learning various disciplines of science. 4.10. The fees charged is reasonable and much lesser than what can be charged by a commercial organization in imparting similar facilities. 4.11. The above details of the activities will demonstrate beyond doubt the educational activities in which this foundation is engaged in. Despite the above details the Assessing Officer has made certain observations which in view of the above explanations are factually incorrect. It has been erroneously stated by the Assessing Officer that the assessee has failed to submit any supporting evidence in support of charitable activities. 4.12. It is pleaded that despite denial of benefits of sec 11. assessee's registration u/s 12A still continues on the same objecs and activi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uct examinations and charge fees cannot be accepted. It has been further held that an institution established for educational purpose need not conduct teaching classes. Assessee has been held to be an educational institution. The facts of assessee's case are similar. 4.15. Hon'ble Supreme Court in the case of Assam State Text Book Production and Publication Corporation Ltd. vs. CIT 319 ITR 317 (SC). It was the allegation of the revenue in that case that the State Corporation was engaged in publication of its text books and as such it was not engaged in conducting teaching classes or directly imparting education through teaching and accordingly it does not fall within the meaning of educational institution. The Supreme Court further held that the said Corporation will fall within the meaning of Educational institution. Thus an institution only publishing educational books has been held to be educational institution. 4.16. Hon'ble Orissa High Court in the case of Secondary Board of Education vs. ITO 36 ITR 408 (Orissa). In this case the Secondary Board of Education which was conducting examination only and question was arisen whether it was an educational institution or not. It was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vident from the fact that surplus is utilized in achieving the objects of the foundation and in case of winding up no amount goes to relatives or share-holders. Besides, no allegation of violation of sec. 13(1)(d) or (c) is made out. Order of ld. CIT(DR) is relied on. 5. We have heard the rival contentions and perused the material available on record. It is undisputed that assesses books of accounts are audited and upheld by ld. AO. No discrepancy or question about genuineness of the books and affairs of the assessee have been called into question.In earlier assessments u/s 143(3) assesses activities have been held to be educational and charitable activities and benefits of sec 11 have been allowed to the assessee. Registration under sec 12A has not been withdrawn. It has been demonstrated by the assessee's counsel that nature of its educational activities, modalities of working, methodology of affiliation with CBSE and other Boards, fee structure, examination pattern remain same as in earlier year. 5.1. Ld AO has taken a divergent view on the assessee educational activities by holding that they are no more educational activities as regular classes are not held. AO's objectio....