AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 175
X X X X Extracts X X X X
X X X X Extracts X X X X
....red stones or other specialities and gems and jewellery business management through schools/institutes or otherwise. The assessee filed the return of income for AY 2010-11 on 13.10.2010 declaring a loss of Rs. 2,65,30,349/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the course of hearing the AO called on the assessee to furnish details of courses conducted during the FY 2009-10 and the fees received against it. The AO further required the assessee to furnish details regarding the duration of the courses and other information in relation to the courses conducted by the assessee. After perusing the various details furnished by the assessee the AO held that the activities of the assessee are for advancement of general public utility in nature and is hit by the First Proviso to Section 2(15) of the Act, as the assessee has undertaken activities in the nature of business and the services in relation to business industry of gems and jewellery. The AO issue a show cause notice requiring the assessee to explain as to why its case is not hit by Section 11(4) and First Proviso to Section 2(15) of the Act. The assessee submitted befo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... activities of the appellant are of advancement of general public utility nature and it had conducted various courses throughout the year in exchange of consideration for imparting the training to them, it is hit by first proviso to section 2(15) of I.T. Act, 1961, as it has undertaken activities in the nature of business and services in relation to business industry of gems and jewellery and persons engaged into the same. Hence its purpose does not constitute charitable purpose and thereby income earned by it cannot be said to be derived for charitable purpose and therefore, expenditure incurred by it is not for charitable purpose. Consequently, I side with the findings of the AO with respect to this issue as the appellant's activity cannot be called charitable. Thus, Ground of appeal raised by the appellant related to this issue is dismissed and the addition made by the AO stands sustained. The grounds raised regarding levy of interest cannot be entertained as levy of interest is mandatory and shall follow the course of order. 3. There is a delay of 121 days in filing the appeal before the Tribunal. The assessee submitted an affidavit explaining the reasons for the delay a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fee, timing, qualification etc., to drive home the argument that the assessee is providing an organised and systematic training in the field of the gemmology. The ld. AR submitted that the assessee is registered u/s. 12A from 25.02.2004 and has been engaged in the activity of imparting knowledge and education in the field of gemmology and is one of the renowned in the said field. The ld. AR argued that the other reasons as stated by the AO/CIT(A) are that the assessee is not affiliated to any university and the courses being for shorter period cannot be the reason to hold that the assessee is not engaged in imparting education. The ld. AR drew our attention to the following observations of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust vs. CIT [1975] 101 ITR 234 (SC) where the term "education" is explained by the Apex Court "The sense in which the word "education" has been used in section 2(15) in the systematic instruction, schooling or training given to the young is preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word "education" has not been used in that wide....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the present case. 8. The ld. DR on the other hand, submitted that imparting of education in a systematic manner cannot be self-defined but, has to be defined by an authority in India. The ld. DR further submitted that the entire curriculum, duration conducting exams etc. are all designed and implemented by the assessee and it does not have any approval or affiliation with any authority. The ld. DR also submitted that the degree/diploma provided by the assessee is not recognized and the value carried for such certificate is only based on the reputation of the assessee. The ld. DR argued that the definition of imparting education for the purpose of Section 2(15) should be read in a restricted manner and the assessee's activities which are designed and conducted by its own standard cannot be held as imparting education. Accordingly, the ld. DR supported the orders of the lower authorities. 9. We heard the parties and perused the material on record. The assessee is a section 25 company and is also registered under section 12A of the Act. The assessee conducts various courses in the field of gemology through formal class rooms through instructors. The assessee issues certifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....professionals in the field (refer page 36 of catalogue), in a formal classroom set up (refer photographs), awards diplomas (refer page 82 of paper book) after conducting formal evaluation/tests (refer sample test evaluation sheet). During the course of hearing the ld AR also took us through various details submitted before the lower authorities in this regard. These factual findings when considered along with the ratio laid down by the Hon'ble Supreme Court,convinces us that the primary contention of the revenue with regard to points (i), (iv) & (v) are addressed and accordingly denying the benefits under section 11 on these grounds cannot be sustained. 11. Now we will examine the other two contentions of the revenue i.e. assessee not being affiliated and that courses are conducted for short duration as a reason for denying the claim of the assessee. In the context of whether an educational institution not recognised by any university or Board or not awarding its own degrees or certificates can be grounds for denying exemption under section 10(23C)(vi) and the Hon'ble Delhi High Court in the case of Delhi Music Society held that - 7. It is not the case of the pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the word has been used to denote systematic instruction, schooling or training given to the young in preparation for the work of life and it also connotes the whole course of scholastic instruction which a person has received. It has further been observed that the word also connotes the process of training and development of knowledge, skill, mind and character of students by normal schooling. 10. We may refer to the judgment of the Calcutta High Court in CIT v. Doon Foundation [1985] 154 ITR 208/22 Taxman 9. Interpreting the provisions of Section 10(22) of the Act, the High Court observed as under:- "We are also unable to accept the contention of Mr. Maitra that an educational institution to be eligible for exemption under Section 10(22) should be affiliated to any university or any board. Section 10(22) does not impose such a condition. So long as the income is derived from an educational institution existing solely for educational purposes and not for purposes of profit, such income is entitled to exemption under Section 10(22), whether or not such educational institution is affiliated to any university or college or board. If the contention of the Revenue is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the course of hearing drew our attention to the observations of the Hon'ble Gujarat High Court in the case of Gujarat State Co-Operative Union (supra) where the union running courses for periods in the range of 10 to 12 weeks were held to be solely for educational purposes. Further it is noticed that in the above decision the Hon'ble High Court has thrown more light on the word "education" by placing reliance on decision of the Hon'ble Supreme Court in the case of Loka Shikshana Trust (supra). The relevant observations in this regard are extracted as under - The Supreme Court, in the above observations, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hem to the recipients. 13. It is brought to our attention a similar view is held by the Hon'ble High Court in the case of Ahmedabad Management Association (supra). The Hon'ble High Court has elaborated the concept 'education' to hold that the same should not be given a restrictive meaning and would encompass systematic dissemination of knowledge and training in specialised subjects. In the present case the assessee is providing systematic training in a formal setup in the specialized field of gemology and it is a known fact that the assessee is one of the premium valued institution in the said field. We further notice that the Hon'ble Bombay High Court in the case of Samudra Institute of Maritime Studies Trust has considered the issue of denying exemption u/s.11 on the ground of the institute not being affiliated and held that - 2. Mr Malhotra has taken us through the finding rendered by the Tribunal and the Commissioner of Income Tax (Appeals). Mr Malhotra submits that Chapter III in which section 10 falls and of which clause 23(c) is a part deals with incomes which are not included in total income. In the present case, that clause cannot be invoked....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11 of the Act. This is not a case where the purpose can be said to run a coaching class or a centre. This is an institution which imparts education in the area of pre-sea and post-sea training to seamen so as to prepare them for all duties. In such circumstances, we do not find that the concurrent findings of fact are vitiated by error of law apparent on the face of the record or perversity enabling us to entertain this Appeal. There is no substantial question of law. The Appeal is therefore dismissed with no order as to costs. (emphasis supplied) 14. We also notice that in the case National Institute of Bank Management (supra) coordinate bench has considered an identical issue as in assessee's case and has held that - 8. We have carefully considered the rival submissions. Sec. 2(15) of the Act defines the expression 'charitable purpose'. So far as it is relevant for our purpose, the expression 'charitable purpose' seeks to include 'education'. The case of the assessee is that its activities fall within the scope of the expression 'education' and, therefore, it is covered within the meaning of 'charitable purpose' co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the written submissions which have been filed by the assessee before the lower authorities also give an insight to the activities being actually pursued by the assessee. It emerges that the assessee is recognised by the University of Pune as an approved centre for post-graduate research and also by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. It is pointed out that assessee is conducting post-graduate Diploma courses and many Ph.D students are also registered with it for their Doctorial dissertation under the supervision of assessee's faculty members. It has also been pointed out that assessee has thirty full-time faculty of academicians from a wide range of disciplines, viz., Economics, Finance, Commerce, Business Management, Computer Science, Agricultural Science, etc. At the time of hearing, the learned representative has also emphasised that assessee has class rooms to conduct regular classes and the library in the educational campus has more than 60,000 books. It was also pointed out that assessee offers programmes in collaboration with Kellogg School of Management, Northwestern University USA, The London Sc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Taxman 58, wherein the activity in the field of publication of text books was also held to be an activity falling within the scope of 'education'. Similarly, the judgment of the Hon'ble Gujarat High Court in the case of Gujarat State Co-operative Union v. CIT [1992] 195 ITR 279 has also been relied upon. In the case of Gujarat State Co-operative Union (supra), assessee was engaged in conducting courses for Higher Diploma in Co-operation, Diploma in Land Development Banking, Certificate Course in Co-operative Credit and Banking and Specialised Short-term Courses/Orientation Courses. The assessee therein was also conducting seminars and running training centres for employees of Urban Co-operative Banks, District Co-operative Banks, etc. The Hon'ble Gujarat High Court understood such activities to be falling within the expression 'education'. In coming to such a conclusion, the Hon'ble Court referred to the judgment of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 to contend that the word 'education' should not be confined only to scholastic instructions, but other forms of education are a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12 of the Act. In fact, the Hon'ble Delhi High Court in the case of Council for the Indian School Certificate Examinations v. DGIT (E) [2014] 362 ITR 436/206 Taxman 466/20 taxmann.com 505 was considering the activities of an assessee who was neither conducting any classes and nor was directly engaged in teaching students, but was only affiliating schools, prescribing syllabus and conducting examinations. The institution carrying out such activities was also understood by the Hon'ble Court to be an educational institution. 14. When we apply the aforesaid principles to the admitted nature of activities in the present case, we have no hesitation in holding that assessee is an educational institution and, therefore, it falls within the scope of the expression 'charitable purpose' contained in Sec. 2(15) of the Act. 15. The objects of the assessee as extracted in the earlier part of this order when considered in the light of the above judicial precedence leads us to conclude that the assessee who is providing systematic instructions using a structured curriculum in a formal setting (timing, holiday, fees structure etc.) through professional faculty and provid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....term advancement of any other object of general public utility' as is to be understood for the purposes of section 2(15) of the Act ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 5 Without prejudice to the foregoing. Re: Not allowing set-off of the deficit of earlier years in the current year ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 6 Without prejudice to the foregoing. Re: Non-quantification of the deficit of the earlier year to be carried forward for set-off in subsequent years ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 7 Re. Claim for depreciation X X X X ✓ X X X 8 Without prejudice to the foregoing. Re .. Not allowing depreciation in terms of Section 32 of the Act ✓ ✓ ✓ ✓ X ✓ ✓ ✓ 9 Re: Not allowing deduction of finance cost of Rs. 80,0921- X X ✓ X X X X X 10 Re: Erroneous levy of interest u/s. 234A of the Act ✓ X ✓ ✓ ....