TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 231
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.... the definition of charitable purpose under Section 2(15) 2) Without prejudice to the above, on the facts and in the circumstances of the case and in law. CIT(A)-1 erred in upholding / confirming the action of AC) that the Appellant is hit by the proviso to section 2(15) on the grounds that the activities of the Appellant arc commercial in nature Non-applicability of principle of mutuality 3) Without prejudice to (he above, on the facts and in the circumstances of the ease and in law. CIT(A)-1 erred in upholding / confirming the action of AO that the conditions for applicability of the principle of mutuality concept are not satisfied by the Appellant Each of the above grounds of appeal are independent and without prejudice to each other. 4. The assessee has also filed common additional ground which read as under: 4. Without prejudice to fact that the activity of the Appellant falls under the ambit of education under section 2(15) of Act, the AO and CIT(A) erred in not appreciating that such activities of the Appellant are also covered under 'advancement of any other object of general public utility' as included in the definition of charitable purpose under section 2(15....
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....na Trust v. Commissioner of Income Tax, Mysore. 101 ITR 234 wherein the Apex Court has held that word 'Education' has been used in section 2(15) in the sense of developing the knowledge, skill, mind and character of students by normal schooling. Further Hon'ble Patna High Court, in the case of Bihar Institute of Mining & Mining Surveying Vs CIT 208 ITR 608, 615(Pat) has held that coaching /training of students to appear at some specified examinations upon taking specified sum would not bring the Assessee under provisions of section 2(15). 8. In view of above the assessing officer held that the activities of the assessee being outside the scope of charitable activities, as defined under section 2(15) and being commercial and non-charitable in nature, the claim of exemption u/s 11 is rejected. 9. Upon the assessee's appeal, the ld. CIT(A) considered the assessee's submission. But he was not convinced. He upheld the A.O.'s action and held as under: i. The appellant submitted that its activities are "education" in nature and hence its case is not covered by proviso to section 2(15). In this regard, it is mentioned that the appellant is organizing annual functions where....
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.... the Hon'ble Court took cognizance of the fact that the Institute was not recognized. Thus, since the appellant is not imparting education during the year, proviso to section 2(15) is squarely applicable. iii. The appellant without prejudice submitted that although its activities are in the nature of 'advancement of any other object of general public utility', yet they are not in the nature of business, trade or profession or services in relation to business, trade or profession. The appellant claimed that its activities are not limited for members but also to general public. In this regard it is mentioned that as per clause 5.5 of the Memorandum of Association, the 'Charter Membership' is restricted to persons who are successful veteran entrepreneurs, corporate executives, and senior professionals only which is by invitation only. Thus, this membership is not open for general public. Similarly, 'Honorary membership' is restricted to the members who are prominent individuals of standing and repute for which approval of governing council is required. Again for 'Associate Members' and 'Corporate Members' approval of governing council is r....
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....ut objects of 'advancement of general public utility' is involved in carrying on any activity in the nature of trade, commerce, business or is charging fees for services in relation to any trade, commerce, business, is excluded from being 'charitable.' The profit motive behind such business, commerce or trade activity is not required to be separately examined and proved for applicability of proviso to section 2(15). The specific amendment by way of proviso to section 2(15) w.e.f. A.Y. 2009-10 does not provide for carrying out business trade or commerce per se for applicability of proviso, rather the stipulation in the proviso is 'in relation to' which is to be interpreted and applied in that context in a wider term and not to be confined to carrying out trade, business and profession. It was held in the case of Subhram Trust vs. DIT (E) (2009) 317 ITR (AT)(Bang.) that 'the term in relation to should be broadly interpreted i.e. to say if any activity which directly or indirectly facilitates the rendering of any service in relation to any trade, commerce or business, is carried on by trust, then it will be covered under proviso to section 2(15)'. The provi....
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....rvices to members d. To edit, print and publish journals, books, pamphlets and other relevant material relevant to boost the entrepreneurship (to receive voluntary contributions is not part of the objective of the appellant). 1.9 The Appellant is a member of the global TIE Network'. The Indus Entrepreneurs is based globally in the United States of America and is established as a registered not for profit organisation. The copy of tax residency certificate under US Laws is at Paperbook 2, page 36. The main object of the TiE network is to promote the education, encouragement and development of entrepreneurs around the globe. However, the appellant and TiE USA are does not have any kind of transactions amongst them and both of them function independently. Ground 1: General in nature Ground 2: It is submitted that the activities of the appellant is in the nature of education 1.10 The Appellant carries out its objects through various workshops. These educational workshops are conducted in a systematic and structured manner covering various topics of interest and importance. The details of the various workshops undertaken are given in the table below - Sr. No. Name of A....
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....n non-chargeable basis. 1.11 The Appellant undertakes the workshops by engaging external teachers, renowned experts in the field of entrepreneurship and other members of the Appellant. The Appellant conducts these workshops through the year on a monthly/ bi-monthly basis to regularly impart entrepreneurial education and foster the growth and development of best practices and techniques for the entrepreneurs. 1.12 As per the Oxford dictionary, the meaning of the word 'Workshop' is "a meeting at which a group of people engage in intensive discussion and activity on a particular subject or project." As per Black's Law dictionary, Seminar is "a formal presentation by experts where the attendees are encouraged to ask Questions and discuss the matter to hand", whereas a workshop is "a training class given to solve tasks related to work to gain hands-on experience", Thus the appellant is undertaking education and training of individuals/startups which falls within the meaning of the word "education" under section 2(15) of the Act. It is similar to the refresher courses conducted by professional bodies with the objective to update knowledge and skills by imparting educati....
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....The Supreme Court, in the above observations (Sole Trustee, Loka Shikshana Trust, supra), by referring to the systematic instruction, schooling or training given to the young has only cited an instance in order to indicate as to what the word "education" appearing in section 2(15) of the Act which defines "charitable purposes" is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word "education", persons other than "young". The expression "schooling" also means "that schools, instructs or educates" (The Oxford English Dictionary, Vol. IX, page 217). The Supreme Court has observed that the word "education" also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word "education". By giving further illustrations of a traveller gaining knowledge, victims of swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge the hidden mysteries of life, the Supreme Court has indicated that the word "education is not used in a loose sense so as to in....
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....e agreement with the view taken by the tribunal that the activities of the assessee is educational activities and/or is in the field of the education." 1.17 The Appellant does not charge fees from members/non-members in case of certain workshops / seminars undertaken. In about 40% of the cases, the fees charged by the Appellant ranges from INR 300 to INR 1500 per workshop which is to recover the costs and cannot be said to be excessive. 1.18 Accordingly, it is submitted that its activities are educational in nature falling under the meaning of 'education' under section 2(15) of the Act. Reliance is placed on all the cases submitted during the course of hearing, which have upheld that conducting of workshops fall within the ambit of the term education. Ground 3: Without prejudice to the above, the activities undertaken by the Appellant are in the nature of 'advancement of other object of general public utility', not in the nature of business, trade or profession or services in relation to business, trade or profession 1.19 Without prejudice to the contention that the activities of the Appellant are purely educational, as per the objects in the Memorandum of A....
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....or work. In Black's Law Dictionary, "trade" means a business which a person has learnt or he carries on for procuring subsistence or profit; occupation or employment, etc. The meaning of "commerce" as given by the Concise Oxford Dictionary is "exchange of merchandise, specially on large scale". In ordinary parlance, trade, and commerce carry with them the idea of purchase and sale with a view to make profit. If a person buys goods with a view to sell them for profit, it is an ordinary case of trade. If the transactions are on a large scale it is called commerce. Nobody can define the volume, which would convert a trade into commerce. For the purpose of the first proviso to section 2(15), trade is sufficient, therefore, this aspect is not required to be examined in detail. The word "business" is the broadest term and it encompasses trade, commerce and other activities. Section 2(13) of the Income-tax Act defines the term "business" as under: "2. Definitions. - ... (13) 'business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." The word "business" is a word of large and indefinite import. Se....
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.... of India [(ITA No, 964 & 966/2017; dated 13/11/2017 (Delhi HC)] f. Builders Association of India [(2017) 82 taxmann.com 239 (Mumbai)] g. India International Centre[(2015) 57 taxmann.com 265 (Del-Trib)] h. Indian Chamber Of Commerce [(2014) 52 taxmann.com 52 (Kol)] 1.27 Also, further as per the financial working (bifurcated between regular and annual activities) submitted before your honor and also attached as Annexure-3, we would like to highlight that the appellant has generated mere surplus only due to the contribution received during the annual event, otherwise the appellant is running in losses while carrying out its regular activities. 1.28 Further, in the case of Hoshiapur Improvement Trust [(2015) 61 taxmann.com 162 (Amritsar)] it was held that when business activities are carried out by assessee trust in course of actual carrying out of such advancement of any other general public utility', benefit of section 11, read with section 2(15), cannot be declined. 1.29 The Appellant submits that none of its activities are carried out with an object or motive to earn a profit or surplus. The earning of revenue is only incidental to the predominant object of providi....
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....ase of Bihar Institute of Mining & Mining Surveying (supra) are squarely applicable. The ld. DR submitted that all the points raised by the ld. Counsel of the assessee has been very clearly and cogently addressed by the ld. CIT(A). Hence, the ld. Counsel of the assessee submitted that the order of the ld. CIT(A) needs to be sustained. 13. Before proceeding further we may gainfully refer to the provision of section 2(15) which reads as under: Definitions. 2. In this Act, unless the context otherwise requires,- (15) 68"charitable purpose"69 includes relief of the poor, 69education, 70[yoga,] medical relief, 71[preservation of environment69 (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other 69object of general public utility: Provided that the advancement of any other object of general public utility69 shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business73, or any activity of rendering any service in relation to any trade, commerce or business73, for a cess or fee or any other consideration, ....
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....ities below have rightly quoted the decision of the Hon'ble Patna High Court in the case of Bihar Institute of Mining & Mining Surveying (supra). 15. As regards the assessee's without prejudice/alternative submission that although the activities are in the nature of 'advancement of any other object of general public utility', yet they are not in the nature of business, trade or profession. The assessee's claim is that its activities are not limited for members but also to general public. In this regard, the ld. CIT(A) has referred to clause 5.5 of the Memorandum of Association, the 'Charter Membership' is restricted to persons who are successful veteran entrepreneurs, corporate executives, and senior professionals which is by invitation only. Hence, the membership is not open for general public. Furthermore, as noted by the ld. CIT(A) the 'Honorary membership' is restricted to the members who are prominent individuals of standing and repute for which approval of governing council is required. Again for 'Associate Members' and 'Corporate Members' approval of governing council is required. Hence, the assessee's claim that the membership is op....