Income Tax Appellate Tribunal - Cochin
Impressario Educational Trust, Cochin vs Assessee on 27 June, 2014
1
ITA No.187/Coch/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN
Before Shri N.R.S. Ganesan (JM) and Shri Chandra Poojari (AM)
I.T.A No. 187/Coch/2014
Impressario Educational Trust vs CIT-1, Kochi
IInd Floor, Gandhi Nagar Complex
Kadavanthara, Kochi 682 020
PAN : AABTI0531P
(Appellant) (Respondent)
Appellant by : Shri Joshi John
Respondent by : Shri M Anil Kumar, CIT, DR
Smt. Latha V Kumar, Jr DR
Date of hearing : 19-06-2014
Date of pronouncement : 27-06-2014
ORDER
Per N.R.S. Ganesan (JM) This appeal of the assessee is directed against the order of the Commissioner of Income-tax-1, Kochi dated 26-02-2014 rejecting the application of the assessee for registration u/s 12AA of the Act.
2. Shri Joshi John, the ld.representative for the assessee submitted that the assessee charitable institution was established by a trust deed dated 22-07-2013. The object of the institution is to establish and administer school, colleges, etc. In furtherance of its objects, the assessee 2 ITA No.187/Coch/2014 established an institution for teaching event management course. The Administrative Commissioner rejected the application of the assessee on the ground that the assessee trust is conducting course without approval of any statutory authorities. The Administrative Commissioner has also observed that the assessee was charging exorbitant fee for conducting event management course and as a result of course conducted by the assessee, no certificate was issued by any statutory authority. Referring to the judgment of the Apex Court in Sole Trustee, Loka Shikshana Trust vs Commissioner of Income-tax (1975) 101 ITR 234 (SC), the ld.representative submitted that "education" means process of training and developing the knowledge of skill, mind and character of a student. In this case, according to the ld.representative, the assessee is imparting training and knowledge in event management to the students. Therefore, the course conducted by the assessee falls within the four corners of the definition of "education". According to the ld.representative, approval of any statutory authority or university is not a pre-condition for grant of registration u/s 12AA of the Act. What is required to be seen is whether the assessee is conducting the course for the benefit of the students by imparting knowledge to the students. Since the approval by the university / 3 ITA No.187/Coch/2014 statutory authority is not a pre-condition, the Administrative Commissioner is not justified in rejecting the application of the assessee. The ld.representative placed his reliance on the decision of the Mumbai Bench of this Tribunal in Samudra Institute of Maritime Studies Trust (2014) 6 TMI 350 - ITAT, MUMBAI.
3. On the contrary, Smt. Latha V Kumar, the ld.DR submitted that the assessee trust is not conducting any normal schooling. It is conducting classes for event management course which is not approved by any university or regulatory body. Mere coaching class cannot be considered to be "education" within the meaning of section 2(15) of the Act. Referring to the decision of the Chennai Bench of this Tribunal in Rajah Sir Annamalai Chettiar Foundation (2011) 48 SOT 502, the ld.DR submitted that when the assessee is charging exorbitant fees, the element of charity no longer remains; hence the assessee is not eligible for registration u/s 12AA of the Act.
4. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee is conducting classes for even management course. The 4 ITA No.187/Coch/2014 event management course conducted by the assessee is not approved by any governmental agency or affiliated to any university. The course conducted by the assessee does not result in confirment of a degree or diploma by a governmental agency or affiliated to any university. The question arises for consideration is whether a mere class conducted by the assessee would fall within the definition of "education". No doubt, the class conducted by the assessee may facilitate the students to acquire some kind of knowledge. The acquisition of all kinds of knowledge is not education as held by the Apex Court in Sole Trustee, Loka Shikshana Trust (supra). The acquisition of knowledge shall be through a normal schooling. In fact the Apex Court observed as follows:
" 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 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 and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, 5 ITA No.187/Coch/2014 because as a 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."
5. From the above judgment of the Apex Court it would be abundantly clear that there should be a systematic instruction to the students by way of normal schooling. Mere conducting of event management classes may provide some kind of knowledge to the 6 ITA No.187/Coch/2014 students; but that kind of acquisition of knowledge cannot fall within the meaning of "education" as provided in section 2(15) of the Act. As the Apex Court observed, "one may acquire knowledge in the course of travelling; during the course of reading newspaper; etc". But, that kind of knowledge cannot fall within the term "education" as provided in section 2(15) of the Act. There should be a normal schooling by way of regular and systematic instruction.
6. The Patna High Court in the case of Bihar Institute of Mining And Mine Surveying vs C.I.T. (1994) 208 ITR 608 (Pat) held that mere conducting of classes for open university / distance education cannot be construed as charitable activity within the meaning of section 2(15) of the Act. The Patna High Court, after considering the judgment of the Apex Court in Commissioner of Income-tax vs Andhra Chamber of Commerce (1965) 55 ITR 722 (SC) and in the case of Commissioner of Income-tax vs Sole Trustee, Loka Shikshana Trust (1970) 77 ITR 61 (Mys) has observed as follows at page 615 of the ITR:
" It is true that by reason of the Finance Act, 1983, the question as to whether any charitable institution is 7 ITA No.187/Coch/2014 being run with a profit motive or not has lost its relevant. However, the word "charitable" prefixing the word "institution" has to be given its full effect. It appears that one of the principal projects of the petitioner's institution has the object of coaching and preparing the students for appearing in various examinations conducted by the Board of Mining Examination and / or MI(1) section (a)(b) and the said coaching of students in an institute is not, in our opinion, an imparting of education which can be said to be a process of training and developing knowledge and character of students by normal schooling. A coaching institute cannot be said to be an institution where normal schooling is done. The definition of "charitable purpose"
is inclusive and not exhaustive."
7. It is further seen that the Gujarat High Court also had an occasion to consider identical issue in the case of Saurashtra Education Foundation vs C.I.T. (2005) 273 ITR 139 (Guj). The Gujarat High Court found that all kinds of education would not fall within the meaning of section 2(15) of the Act. The training, instruction, etc. would result in grant of a diploma or degree by a university or a governmental agency.
8ITA No.187/Coch/2014
8. In the case before us, admittedly, the assessee is conducting classes in event management. But the institution run by the assessee is not recognized by the government or any governmental bodies. As a consequence, the teaching courses conducted by the assessee do not result in conferment of any degree or diploma and remains unrecognised. As we have opined earlier, as also held by the Apex Court in Sole Trustee, Loka Shikshana Trust (supra) all kinds of knowledge would not fall within the definition of "education", and therefore, cannot be treated as a charitable institution as provided in section 2(15) of the Act. This Tribunal is of the opinion that the assessee is not eligible for registration u/s 12AA of the Act. Accordingly, the order of the lower authority is confirmed.
9. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on this 27th June, 2014.
Sd/- sd/- (Chandra Poojari) (N.R.S. Ganesan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dt : 27th June, 2014 pk/- 9 ITA No.187/Coch/2014 copy to:
1. Impressario Educational Trust, IInd Floor, Gandhi Nagar Complex, Kadavanthara, Kochi 682 020
2. The Commissioner of Income-tax-I, Kochi
3. The DR (True copy) By order Asstt. Registrar, Income-tax Appellate Tribunal, Cochin Bench