TaxTMI 
TaxTMI 
2019 (2) TMI 231
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....does not fall \\iihin the meaning of education as included in 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 gen....
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....meaning of 'education' as contemplated in section 2(15) of the IT. Act. Reliance was placed on Sole Trustee, Loka Shikshona 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 henc....
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....the institution which are not authorized, cannot be said to have any element of normal schooling. Special reference is made to the third last Para of the said order where 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 ....
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.... of the appellant is not correct. Even in subsequent year surplus of Rs. 42.29 lakhs is shown in the Income & Expenditure Account, Here it would be relevant to mention that if a charitable organization carrying out 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 ....
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.... c. To organize educational workshops, business seminars, conferences and exhibitions to bring together members, Venture Capitalists, Angel Investors and others fostering a better appreciation of each other's' needs and delivering the highest quality services 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 ....
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.... * The Why, How & When of Networking * 6 must haves for running successful ventures * Tata TiE Stree Shakti Workshop and Awards The details of these workshops are also been given at Paperbook 1, pages 94-95 for AY 2010-11 and pages 99-104 for AY 2011-12 as well as handout during the course of hearing. During the subject assessment years, more than 60% of the workshops were on 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", wher....
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....ndo- American Society vs. ADIT(E) [2005] 96 ITD 61, wherein it was held that there is no indispensibte requisite that education should only be imparted to poor class and not to the elite, and therefore holding of educational programmes and courses by charging fees to cover the costs amounted to education, which was a charitable purpose. b. The Gujarat High Court in the case of Gujarat State Co-operative Union vs CIT[1992] 195 ITR 279 held that '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 p....
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....t in the case of DIT vs. Ahmedabad Management Association [2014] 47 taxmann.com 162, wherein the Court held that "applying the ratio of the decision of the Division Bench of this Court in the case of Gujarat State Co-operative Union (Supra) reproduced hereinabove and the activities of the assesses such as Continuing Education Diploma and Certificate Programme; Management Development Programme; Public Talks and Seminars and Workshops and Conferences etc., we are in complete 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 condu....
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....e Appellant is to provide tangible benefit to the society at large and make them self-reliant by educating them. The appellant does not carry on any business activity. 1.24 In the case of Institute of Chartered Accountants of India v. Director General of Income tax (Exemptions) [2012] 347 ITR 99, the Hon'ble Delhi High Court discussed the definitions trade, commerce and business reproduced below - 'Trade, as per the Webster's New Twentieth Century Dictionary (2nd edition), means, amongst others, "a means of earning one's living, occupation 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....
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....h a view to make or earn profit. Profit motive is determinative and a critical factor to discern whether an activity is business, trade or commerce. 26 There are various judicial precedents which held that if the dominant object being charity then any incidental activity would not fall within the definition of business - a. Bharat Diamond Bourse [(2003) 126 Taxman 365 (SC) b. Shree Nashik Panchvati Panjarpole [(2017) 81 taxmann.com 375 (Bombay)] c. Women's India Trust[(2015) 60 taxmann.com 55 (Bombay)] d. Sabarmati Ashram Gaushala Trust [(2014) 362 ITR 539 (Guj)] e. The Fertilizers Association 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 du....
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....al Representative (ld. DR for short) relied upon the orders of the authorities below. He referred to the program details and the activities of the fees charged from members and non members detailed in the assessment order. The ld. DR submitted that the detail of the program makes it abundantly clear that the assessee is not providing any educational services. It is not indulging in any systematic educational activity. Rather, it is essentially a networking organization of entrepreneurs. The fees being charged from non members are fairly high. The ld. DR further submitted that reliance on the Hon'ble Apex Court decision in the case of Sole Trustee, Loka Shikshona Trust (supra) and the Hon'ble Patna High Court in the case 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.....
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....is. Good amount of fees is also being charged to non members. Huge sponsorship money is collected from corporate bodies in lieu of advertisement and other services provided to them. As rightly noted by the ld. CIT(A), the assessee is not imparting any systematic educational activity. It is not authorized to issue any certificate/degree. It is not having any regular faculty. No student and teacher relationship exists between the speakers and the persons attending the seminars. The ratio of decision of Hon'ble Apex Court in the case of Sole Trustee Lok Shikshan Trust (supra) referred by the ld. CIT(A) and the A.O. are fully applicable. The said huddle workshop, course, etc. offered by the assessee have no recognition of any competent authority. In this regard, the authorities 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....
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....rative cost without any motive to earn profit is clearly in contradiction to the surplus of Rs. 1.22 crores generated by the assessee in this year. Here it would be relevant to note that if a charitable organization carrying out 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, it is excluded from being 'charitable.' The assessee's plea that it is covered by mutuality has also been rightly set aside by the ld. CIT(A). There is absence of complete identity between contributors and participants. The contributors and beneficiary are different. Furthermore, the assessee is rendering services to non members for getting profit. Hence, the ld. CIT(A) has rightly held that the assessee does not fulfill the condition of mutual organization. 17. We further note that the ld. Counsel of the assessee has tried to distinguish the decision of the Hon'ble Apex Court in the case of Sole Trustee, Loka Shikshona Trust (supra). But in our considered opinion, the distinction brought out by the ld. Counsel of the assessee is....