TaxTMI 
TaxTMI 
2025 (5) TMI 1471
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....the facts and circumstances of the case, the Ld.CIT(A) has erred both on facts and in law in allowing the appeal of the assessee as discussed below. 2. Whether, the Ld.CIT(A) was justified in deleting the whole addition amounting to Rs. 10,19,97,202/-ignoring the fact that the services rendered by the assessee to corporate houses were not in the nature of any education or training and was not incidental to the attainment of the objectives of the trust and clearly falls in the ambit of section 11(4A) of the Act and should be taxed as income from business and profession. 3. Whether, the Ld.CIT(A) was justified in allowing the appeal of the assessee stating that the assessment order passed by the AO is in violation of principle of consistency on the basis that for AY 2012-13 and 2013-14, the AO had not doubted the training provided to corporate houses and duly considered the same within the definition of education for the purposes of section 11(4A) and 2(15) of the Act, disregarding the very fact that every assessment is a fresh proceeding and principle of consistency does not summarily apply to an order/ addition which is based on substantiated facts and reasons. ....
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....nd/or non-refundable to students, teachers and research scholars for studies in India Institutions and/or in foreign countries. (c) To hold seminars, arrange lectures, conference, debates, exhibitions and the like for the dissemination of knowledge and advancement of education. (d) To adopt and implement measures to promote intellectual physical, moral and social welfare of students and teachers of educational institutions and to supervise and improve the conditions of their residence, health and discipline. (e) To carry out research in all aspects of education including applied sciences. (f) To take over and administer any institution or center, carrying on her intending to carry on any of the objects of the society. (g) To do all such acts, deeds and things as may be conducive to the furtherance of any of the above objects or incidental thereto. All the income, earnings, and moveable and/ or immoveable properties of the Society shall be solely utilized and applied towards the promotion of its aims and objects as set forth in this Memorandum of Association and no portion thereof shall be paid of transferred, directly or indirec....
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....t from ordinary business/ professional activity. The AO referred to various judicial precedents and eventually concluded that such fee charged by way of 'training and development fee' are business or professional activities distinct from 'educational activities' and consequently cannot be said to be covered under the definition of 'charitable purpose' contemplated under s. 2(15) of the Act. 5.3 The AO accordingly invoked the provision of s.11(4A) of the Act and held that training etc. provided to corporate houses and other entities by the assessee are in the nature of business activity which is separate from educational activity and cannot be regarded as 'incidental' to educational activity carried on by the society. The AO thus held that receipts shown under the head 'training and development fee receipts' attributable to skill development etc. bears the character of 'business and profession' in terms of s. 11(4A) of the Act. The AO thus denied the exemption under s. 11(1) in respect of receipts falling under s. 11(4A) of the Act. 5.4 Consequently, net profits in relation to such receipts by way of corporate training after deducting certain expenses, quantified by the AO at ....
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.... This clearly shows that specific show cause was given to assessee, and it has replied to the same also. Considering the above this ground of appeal is dismissed. Ground No. 2 The assessee is a 'society' registered under the Societies Registration Act, 1860 vide order no S-16683 and having PAN AAATR7314Q. The assessee is also registered u/s. 12A of the Income-tax Act, 1961 vide order no. CIT- VI/TE/(62)/86/284 dated 08.08.1986. The assessee society is notified u/s. 80G(5)(vi) of the Income-tax Act, 1961 vide order no. DIT(E)/2008-09/R-62/216 dated 08.05.2009. The assessee also runs educational institutions and universities under the Amity University Uttar Pradesh Act, 2005 (UP Act no. 11 of 2005). The objects of the assessee 'society' include the following: -To establish educational institutions of all descriptions, including public schools, polytechnics, vocational and management training institutions, colleges, research institutes, centers for instruction and diffusion of useful knowledge, etc. Diploma certificates, etc. shall be issued after the approval of the competent authorities.....
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....g to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word "education" is used in clause (15) of section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by NORMAL SCHOOLING (emphasis supplied). The AO has put a great emphasis....
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.... trust; rather, as stated in detailed facts supra, the assessee is a society regulated by the Amity University Uttar Pradesh Act, 2005. Section 6 and 7 of such Act also empowers the assessee to provide trainings and grant certificates/ diplomas. Thus, the facts of the present case and those prevailing before the Supreme Court in the aforesaid judgment are radically different, and hence, no adverse inference can otherwise be made. Delhi High Court in the case of Delhi Music Society vs Director General of Income Tax [2012] 17 taxmann.com 49. The AO has also relied upon the judgment of Delhi High Court in the case of Delhi Music Society vs Director General of Income Tax 2012 17 taxmann.com 49, 357 ITR 265. The AO has asserted that the most important test laid down by the Delhi High Court as to whether an activity is formal schooling or not is regarding "maintenance of discipline and conducting examinations before granting degrees". The assessee stated that the aforesaid judgment pronounced by the Hon'ble High Court was in the context of provisions of section 10(23)(c)(vi) of the Act. In that case, Hon'ble Court had to deal with the question as to whe....
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....per the requirement of the organisations, attendance was ensured. Many of these organisations included government department and public sector undertakings; for example Ministry of defence, Department of science and technology, Food Corporation of India, Allahabad Bank et cetera. I can recall that as an IRS officer, I was also given Midterm career training at IIM Bangalore. This training was designed as per the needs of income tax department and a certificate was also issued. By no stretch of imagination, I can presume that the training provided by IIM Bangalore was not education and the receipt from the same was taxable. In my opinion, the word normal schooling should be construed in the context of actual facts. If the training is provided by a recognised university or college or institute, and that the training was properly structure and attendance was ensured then the same should fall in the category of education. The facts of this case have all these ingredients. Therefore, the activity of training would fall in the category of education. Application of sec. 11(4A):- In the present case, the assessee runs s....
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....ormal schooling contemplated in the Loka Shikshana but imparted to participants / employees of large corporates. Such income are clearly business income separate and distinct from education activity undertaken by the assessee society and there is nothing charitable about such activities. The Ld CIT DR next submitted that the corporate payers who were beneficiary of such training and development programmes by the society have deducted TDS on such payments to the Assessee society as they have always treated such payments to be professional services. The AO has thus rightly invoked the provision of s. 11(4A) of the Act holding that such activities of the assessee are in the nature of business activity. Such activities are independent activities and not incidental to the attainment of educational objectives of the Trust. 8.3 The CIT-DR next contended that such activities are not incidental to formal schooling and structured study imparted by the assessee. Such training and skill development activities imparted to employees of corporates etc. are business activity or adventure in the nature of commerce. Besides, no separate books of accounts have been maintained by the assessee....
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....has set up universities, schools, colleges across all fields like science, technology, medicines etc. These schools, colleges and other educational institutions are affiliated to Central Board of Education, various universities and also its own university set up under the State Legislature for which copy of Memorandum of Association ('MoA') and Rules and Regulations of the assessee society were placed before the lower authorities and also before the Tribunal. 9.1 The Ld. Counsel adverted to the objects to the assessee society which broadly includes (i) To establish educational institutions of all descriptions, including public schools, polytechnics, vocational and management training institutions, colleges, research institutes, Centers for instruction and diffusion of useful knowledge. etc. Diploma certificates, etc. shall be issued after the approval of the competent authorities; (ii) To award stipends, scholarships and other financial facilities to students, teachers and research scholars for studies in Indian/foreign institutions; (iii) All the income, earnings, moveable/ immoveable properties of the society shall be solely utilized and applied towa....
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....ature. Besides, the receipts from training is insignificant and measly in the context of whole set up and overall receipts. The AO has invoked the provision of s.11(4A) of the Act primarily because TDS on the receipts have been deducted by the payers of the training fee. The ld. Counsel asserted that mere deduction of TDS by the corporates cannot alter the inherent nature of activity carried out by the Education Foundation and can be no ground for holding such receipts to be business activity with commercial intent. 9.4 The Ld. Counsel yet again adverted to the specific clauses of the objects of the Assessee Foundation which collectively empowers the Foundation to hold seminars, arrange lectures, conferences, debates, exhibition and the like for the dissemination of knowledge and advancement of nuanced education. The Ld. Counsel thus submitted that providing of training in the normal course in a systematic manner is integral part of the primary activity of formal schooling of the University/Foundation and cannot be artificially re-characterized as business activity of the foundation. 9.5 The Ld. Counsel thus contended that the provision of s. 11(4A) of the Act are thus wholly....
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....ts, the CIT(A) has examined the issue in correct perspective and therefore, no interference thereon and has called for. 10. We have carefully considered the rival submissions and perused the material referred to and relied upon by respective sides. Essentially, the meaning of expression 'education' employed in s. 2(15) and applicability of S. 11(4A) are the bone of contentions between the assessee and revenue. The Revenue seeks to contend that training and development fee derived by the Assessee Society are in the nature of business activity in contravention of provisions of s. 2(15) r.w.s 11 & 12 of the Act and hence the exemption available to the Assessee under s. 11 of the Act do not cover such fee derived from training and development activity. The determination of such controversy is essentially a question of fact and depends on facts of each case i.e nature of establishment and its activities. 11. In the instant case, the assessee is engaged in advancement of 'education'. There is no dispute about the core nature of the captioned Institution / Trust/Foundation being charitable in nature. The object clause of the Foundation and receipts obtained also suggests the income ....
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....on the commercial activity which is not incidental to the objects of the trust and that the assessee has not complied with the provisions of s. 11(4A) by not maintaining separate books of accounts are found to be faulty. The revenue has committed wrong by holding that training and skill development activities carried out by the assessee has no relationship with the objectives of the trust. The Revenue has heavily relied upon the judgment in Loka Shikshana(supra). The judgement delivered in Loka Shikshana involves careful consideration of specific circumstances. In Loka Shikshana case, the assessee was engaged in printing and publishing newspaper and weekly & monthly journal and on that basis, it claimed that it is educating Kannada speaking people through newspaper and journal. It is in this factual background, the Hon'ble Supreme Court made observations that 'education' connote the process of training and developing knowledge skill by normal schooling. The Hon'ble Gujarat High Court had an occasion to comprehend and expound the judgement delivered in Loka Shikshana. In Gujarat State Cooperative Union vs. CIT (1992) 195 ITR 279 (Guj.), the Hon'ble Gujarat High Court noted the true ....
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....Court has indicated that the word "education" is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate the proper confines of the word "education" in the context of the provisions of section 2(15) of the Act. It will not be proper to construe these observations in a manner in which they are construed by the Tribunal when it infers from these observations, in para 17 of its judgment, that the word "education" is limited to schools colleges and similar institutions and does not extend to any other media for such acquisition of knowledge. The observations of the Supreme Court do not confine the word "education" only to scholastic instructions but other forms of education also are included in the word "education". As noticed above, the word "schooling" also means instructing or educating. It, therefore, cannot be said that the word "education" has been given an unduly restricted meaning by the Supreme Court in the said decision. Though, in the context of the provision of section 10(22), the concept of education need not be given any wide or extended meaning, it surely would encompass systematic dissemination o....
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.... the participants of the training programme in sync with it aims and objects of spreading education. The assessee has demonstrated the factual aspects with reference to the AMITY Act. Many companies have availed the training and skill development services offered by the assessee for several years. While conducting such programmes, record of attendance are prepared, examinations are conducted and certificates are awarded to the participants on successful completion of training programme. Such training programmes thus have all trappings of 'education'. Such trainings are method of continuing education and cannot be considered as business activity. As per the object clauses also, providing of training in the normal course is integral part of the main activity of the University/foundation and cannot be viewed separately as business activity of the foundation which can be possibly covered under s. 11(4A) of the Act. 17. We now advert to the judgement rendered in the case of Delhi Musical Society (supra). It is noted that the aforesaid judgement was delivered in the context of s. 10(23)(c)(vi) of the Act whereas the assessee in the instant case is claiming eligibility for exemption un....