TaxTMI 
TaxTMI 
2025 (4) TMI 1037
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....he Act. The institution has also received exemption u/s 80G of the Act vide order dated December 22, 2009. The assessee has filed the return of income on September 29, 2013 for AY 2013-14 declaring a total income of Rs. NIL. The Appellant's case was selected for scrutiny and notices under section 143(2) and 142(1) of the Act were issued and duly served on the Appellant. In response to the said notices, the Appellant had filed all the necessary details and explanations asked by the Assessing Officer (AO). The assessment was completed u/s. 143(3) of the Act and the AO passed an order dated February 23, 2016 assessing the total income at Rs. NIL. However, exemption u/s. 11 of the Act has been denied to the Appellant on the alleged ground that no educational activities has been carried out by the Appellant and receipts of consultancy charges, seminar fees sponsorship are in the nature of services provided to trade and commerce. 3. As per Memorandum of Association the sole activity of the Appellant is to promote the development and dissemination of knowledge, understanding, Information and skills in all matters connected with the establishment, operation and transformation of hum....
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....ment which clearly established that the activities of the assessee were aimed at generating surplus and had clear components of activities that would qualify as trade, business or commerce, irrespective of how the surplus from these activities is utilized? 6. We have heard Ld. AR and Ld. DR and examined the record. It is argued on behalf of assessee that the income earned and sought to be exempted u/s 11 of the Act has been earned by the assessee from the activities which are incidental to the main object of the assessee. It is further argued that the assessee has been granted registration u/s 12AA of the Act which is valid and subsisting, therefore the Ld. AO has no locus standi to probe into the approved objects of the institution and all the activities carried out by the assessee are charitable in nature. The Ld. AR further stated that the Ld. CIT(E) has rightly granted the relief to the assessee because the case of assessee and the judgment of Ld. CIT(E) is supported by the judgment of Hon'ble Bombay High Court in the case of DIT(E) v. Gemological Institute of India (2019) 105 taxmann.com 170 (Bom). Ld. AR further submitted that the reliance by the revnue on the judgment of ....
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.... 10. In view of the foregoing, in Respondent Assessee's most humble view, decision of the Hon'ble Supreme Court in AUDA (supra) has no role to play while deciding the present appeal." 7. It is therefore argued that the impugned order is based on legally sound reasoning and correct appreciation of provision of the Act and therefore the appeal of the revenue lacks merits and is liable to be dismissed. 8. Ld. DR on the other hand submitted that order passed by Ld. AO was legally justified and Ld. CIT(E) has failed to appreciate facts correctly and has not considered the law laid down by the Hon'ble Apex Court in the case of AUDA (supra). The extracts of page 5 of the written submission of the Ld. DR are relevant and reproduced as under:- "The nature of activities undertaken by the Assessee as described during the course of Appellate proceedings are as follows: Income from Consultancy Services Rs. 1,10,20,985/-: Consultancy Charges have been received from various parties which are Government entities, NGOs, Town Planning and Development authorities and the United Nations etc. which are connected with urban planning environment and development, disast....
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....e of Ahmedabad Urban Development Authority (2022) 143 taxmann.com 278 (SC), wherein under almost identical fact pattern, the Hon'ble SC held that "fee, cess, or consideration" received for commercial activities indicates a profit motive and, therefore, falls outside the ambit of charitable purposes and is hit by the proviso to section 2(15) resulting in denial of exemption under section 11 of the Act. The Revenue also places its reliance on the decision of the Hon'ble Chennai Tribunal in the case of FRP Institute v. ITO (Exemptions) [(2017) 88 taxmann.com 835 (Chennai - Trib.)], wherein the Hon'ble Tribunal denied exemption to a professional organization conducting paid workshops, observing that such activities were inherently commercial." 9. It is therefore argued by Ld. DR that the impugned order be set aside and the order of the AO be restored. 10. We have considered these submissions and also examined the record. To proceed further, we deem it necessary to examine the relevant observation of the AO which are extracted below:- "4. The assessee has claimed exemption u/s.11 of the IT. Act, which has been examined. It is seen that though the asse....
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.... other activity of general public importance". Since the appellant was not engaged in charitable activity, the AO denied exemption u/s 11. However, since the expenses as per income and expenditure account exceeded the gross income, the AO assessed total income as NIL. 6.1 The appellant has argued that the since the appellant is approved u/s 12AA by the Commissioner of Income Tax and since the registration has not been cancelled, denying exemption u/s 11 is wrong and that the order is ab initio invalid. 6.2 The Hon. Supreme Court in Surat City Gymkhana [2008] 170 Taxman 612 (SC) held that that registration under section 12A was a fait accompli to hold the Assessing Officer back from further probe into the objects of the trust. In this case the Supreme Court endorsed the findings of Hiralal Bhagwati Vs. CIT [2000] 246 ITR 188 (Gujarat). The High Court held as under: Once the registration under section 12A(a) was granted, the grant of benefit could not be denied. The ITO was not justified in refusing the benefits which would otherwise accrue under the registration. If there was no registration, as contemplated under section 12A(a) read with rule 17A, the rev....
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....in "education" as contemplated in section 2(15). 12. We now proceed to examine if the impugned order challenged in this appeal suffers from any perversity or illegality based on wrong interpretation of facts and law by Ld. CIT(E) which may warrant interference by this Tribunal. To proceed further, we deem it necessary to know the main objects of the assessee's company as find mentioned in Article-1 of the Memorandum of Association:- "1. The name of the Company is INDIAN INSTITUTE FOR HUMAN SETTLEMENTS ("the Company") II. The registered office of the Company will be situated in the State of "Karnataka. III. The objects for which the Company is established are: [A] The Main Objects of the Company to be pursued by the Company on its incorporation are: (1) To Promote the development and dissemination of knowledge, understanding, information and skills in all matters connected with the establishment, operation and transformation of human settlements, including engaging in providing education and training and undertaking research, consultancy and advocacy, and taking any action in furtherance of these purposes. No object of the Com....
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....ements to those admitted to these programmes and toward certificates, diplomas, undergraduate, postgraduate and advanced research degrees as appropriate. (6) To provide continuing education and in-service training to institutions, professionals and others in any way connected with the establishment, operation and transformation of human settlements and to award certificates, diplomas and degrees as appropriate. (7) To provide information and education in matters related to the establishment, operation and transformation of human settlements or any aspect thereof through print, information technology, mass media and telephony enabled distance learning. (8) To conduct research and investigations in all matters related to the establishment, operation and transformation of human settlements and to disseminate the findings. (9) To provide design, consultancy and advisory services to any person or organization on matters related to the establishment, operation and transformation of human settlements. (10) To print, publish and distribute studies, reports and other publications and journals and establish libraries and information systems for th....
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.... actually the Assessing Officer who scrutinizes the case and comes out with the facts, as to whether the activities of the assessee are as per the objects mentioned in the trust deed or that the assessee have expended its income towards the objects of the trust ?" 3. So far as question (a) is concerned, it does not arise from the impugned order of the Tribunal. The issue whether or not the educational activities carried out by the Trust in terms of objects did not satisfy Section 2(15) of the Act was not examined by the Tribunal. This in view of the decision of the Apex Court in Asstt. CIT v. Surat City Gymkhana [2008] 170 Taxman 612/300 ITR 214 to the effect that once registration is granted a trust under Section 12A of the Act then it is not open to the Assessing Officer while examining compliance with Section 11 of the Act to revisit objects of the respondent-assessee and to hold contrary to the registration granted. Thus the nature of activity in terms of Section 2(15) of the Act was not verified nor considered by the Tribunal. 4. In the above view, question (a) as posed does not arise out of the order of the Tribunal and thus, it is not entertained. ....