TaxTMI 
TaxTMI 
2025 (12) TMI 1290
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....2017 to examine the following substantial questions of law: i. Whether, in the facts and in the circumstances of the case, the Tribunal was right in law in holding that the activity of the appellant is not education but 'advancement of any other object of general public utility'? ii. Without prejudice to the above, whether in the facts and in the circumstances of the case, the Tribunal is right in holding that activity of the appellant is in the nature of trade, commerce or business and hit by the first proviso to section 2(15)? iii. Whether, the finding of the Tribunal that the appellant is collecting hefty fee, making huge profits and carrying business is perverse? BRIEF FACTS: 3. The appellant is a registered trust under Section 12AA of the Act engaged in the activity of running coaching classes and training programmes for skill development and vocational training to students by charging fees. The appellant filed the return of income for AYs 2011-12 and 2012-13 declaring nil income on 26.07.2011 and 26.09.2012, respectively. The case of the appellant for AY 2011-12 was selected for scrutiny and notices under Section 143(2) and Section 142....
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....further submit that the mere existence of profits or the mere generation of surplus from the activities carried out by the appellant would not mean that the activities carried on by the appellant is in the nature of business, trade or commerce. Learned senior counsel would also submit that the 1st proviso to Section 2(15) of the Act does not apply to the appellant, as the activities carried on by the appellant is in the nature of 'education' and not 'advancement of any other object of general public utility'. In the alternative, learned senior counsel for the appellant would also submit that, even if the activities of the appellant is classified as falling under 'advancement of any other object of general public utility', exemption is ought to be granted to the appellant, as the objects of the appellant neither involve any trade, commerce or business nor involve any profit motive. Thus, learned senior counsel would pray for allowing the appeal. 8. Per Contra, learned counsel for the Revenue, Sri. Thirumalesh would submit that the activities that the appellant is engaged in is rightly classified as falling under 'advancement of any other object of general public utility' by the L....
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....'education' as employed in Section 2(15) of the Act and held as under: "5. The sense in which the word "education" has been used in Section 2(15) is the systematic instruction, schooling or training given to the young in 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 and extended sense, according to which every acquisition of further knowledge constitutes education. According 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. ....
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....nstruction and training to faculty, students, and educators in all branches of knowledge and leaming including, but not limited to, arts, science and commerce, management, human resources, medical, engineering, information technology, leadership, entrepreneurship and innovation. II. To focus on, engage, promote, and incubate activities and programs related to, but not limited to, youth development, budding entrepreneurs, local leadership, vocational training, high-end technology, community collaboration, product design, social enterprise, and mentorship. III. To foster and inculcate the culture of innovation, entrepreneurship, w scale/growth, and leadership within the nation's educational system and programs, including activities related to education and its improvement. IV. To arrange and manage the training institutions in computers and technology, fine arts, music, painting, modeling, dancing, yoga, physical education and in other professional training subjects. V. To conduct research in education and other disciplines on different subjects relating to, but not limited to, education, impact measurement, curriculum development, training pro....
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...., institutions, autonomous bodies, centers, governments, funding agencies (including private, bi-and multi-lateral agencies), corporations, social enterprises and other leading educational institutions including e-learning programs or distance learning institutions. XVI. To publish books, magazines, case studies, literature, research articles, journals, videos, photographs, audiovisual materials, websites, blogs, and other content by utilizing the expertise available in house and from other resource persons. XVII. To aid, assist, donate or otherwise contribute funds to societies, institutions, trusts and other funds recognized under Section 80(G) of the Income Tax Act, 1961. XVIII. To do such other things/acts/activities, which are necessary and which may be incidental or conducive to the attainment of any of the object of the Trust. XIX. To devote resources for advancing finance to poor and needy students for their education and to identify such students in order to give them this benefit." 13. As seen from the objectives, the appellant trust was formed for the purpose of undertaking charitable activities through education for the empowerment....
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....tion to the appellant. The Hon'ble Apex Court in CIT v. Surat Art Silk Cloth Manufacturers' Assn., reported in (1980) 2 SCC 31 in paragraph 19 has held as under: "19. There is, however, one comment which is necessary to be made whilst we are on this point and that arises out of certain observations made by this Court in Sole Trustee, Loka Shikshana Trust case [(1976) 1 SCC 254 : 1976 SCC (Tax) 14 : (1975) 101 ITR 234] as well as Indian Chamber of Commerce case [(1976) 1 SCC 324 : 1976 SCC (Tax) 41 : (1975) 101 ITR 796] . It was said by Khanna, J. in Sole Trustee, Loka Shikshana Trust case [(1976) 1 SCC 254 : 1976 SCC (Tax) 14 : (1975) 101 ITR 234] : "[I]f the activity of a trust consists of carrying on a business and there are no restrictions on its making profit, the court would be well justified in assuming in the absence of some indication to the contrary that the object of the trust involves the carrying on of an activity for profit." And to the same effect, observed Krishna Iyer, J. in the Indian Chamber of Commerce case [(1976) 1 SCC 324: 1976 SCC (Tax) 41 : (1975) 101 ITR 796] when he said: "An undertaking by a business organisation is....
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....hich assumes significance, which is as under: "11. Thus, the law common to Sections 10(23-C)(iii-ad) and (vi) may be summed up as follows: (1) Where an educational institution carries on the activity of education primarily for educating persons, the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for educational purposes and becomes an institution for the purpose of making profit. (2) The predominant object test must be applied- the purpose of education should not be submerged by a profit-making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on "for profit". No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will not cease to be one existing solely for educational purposes. (5) The ultimate test is whether on an overall view of the matter in the assessment year concerned the object is to make profit as opposed to educating persons."....