Income Tax Appellate Tribunal - Delhi
Society For Development Studies, New ... vs Department Of Income Tax on 28 August, 2014
ITA NO. 2143/Del/2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. No. 2143/DEL/2013
A.Y. : 2009-10
Income Tax VS. Society for
Officer(E), Trust Development Studies,
Ward-II, Room No. Core-6A, 2nd floor,
2410, 24th floor, E-2 Lodhi Road,
Block, Dr. SP India Habitat Centre,
New Delhi - 110 003
Mukerjee Civic
(PAN: AABAS2815H)
Centre,
New Delhi - 110 002
(APPELLANT) (RESPONDENT)
Department by : Sh. Rakesh Kumar, Sr. DR
Assessee by : Sh. K. Sampath and Sh. V. Raj
Kumar, Advocates
Date of Hearing : 21.8.2014
Date of Order : 28.8.2014
28.8.2014
ORDER
PER H.S. SIDHU : JM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals-XXI), New Delhi dated 21.1.2013 pertaining to assessment year 2009-10.
2. The grounds raised read as under:-
1) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in ignoring that the activities carried 1 ITA NO. 2143/Del/2013 out by the assessee are providing services to various government agencies both Indian & Overseas to hold seminars, to educate people in the areas of Urban Housing Development for poor and for their upliftment and it does not provide any 'scholastic education', therefore, the activities do not falls under the limb ' education'
2). On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the judgment of Hon'ble Supreme Court in the case of Sole Trusty, Lok Shikshana Trust vs. Commissioner of Income Tax (1975) 10 ITR 234 (SC) wherein, the Hon'ble Apex Court has defined word 'education' and observed that 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. The word "education" has not been used in that wide and extended sense according to which every acquisition of further knowledge constitutes education.
3). The appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing."
3. The brief facts of the case are that the return of income for A.Y. 2009-10 was filed on 25.9.2009 declaring total income at NIL after claiming application of income as per provisions of Section 11 of the Act. The Return was processed u/s 143(1) of the Act. The case was selected for scrutiny with the prior approval of DGIT(E). Initial notice was sent u/s. 143(2) dated 27.9.2010 was issued and duly 2 ITA NO. 2143/Del/2013 served upon the assessee. The AO called for necessary details which were submitted from time to time. The books of accounts were produced and test checked by the AO. The AO observed that assessee trust is registered u/s. 12A(a) of the IT Act, 1961 vide order of the CIT, Delhi-VI dated 10.9.1985. The assessee is also enjoying exemption u/s. 80G of the I.T. Act, 1961. The AO noticed during the assessment proceedings, from the perusal of Income and Expenditure account, that assessee has declared income on account of funds from Govt. of India and Govt. Agencies, reimbursement of expenditure etc. From the perusal of the TDS certificate attached with the return, he noted assessee he declared contractual or commercial nature income from the following parties:-
S.No. Name of the party Gross amount on Section under which TDS which the tax is certificate is deducted / attached. nature of payment claimed to be made to the assessee 1 The Chief Accountant 39,79,312/- Contractual Mumbai Municipal Corp. payment 2 Ministry of Rural 5,84,400/- 194J Development 3 -do- 92,500/- 194J 4 -do- 3,70,000/- 194J 5 Municipal Corp., Mumbai 5,51,687/- Contractor payment 3 ITA NO. 2143/Del/2013 3.1 In the light of the above facts the assessee was asked to justify the activities for charitable purpose in view of the amended provisions of the I.T. Act, 1961 vide show cause dated 16.12.2011.
In response, to the same the assessee tried to justify its activities as charitable activities by stating that assessee is providing advisory services to Central and Local Government with no commercial interest. All applications on assessee's programmes are routed directly by the Indian Mission to Govt. of India and the Institute has no decision making power in the selection of participants as well as on the expenses to be reimbursed or fees to be paid. More than 95 per cent of the payments for these activities is on a reimbursement basis and the fees are of a token nature. The assessee further informed that there is no profit motive in undertaking the activities and there is no contract as such. After going through the reply filed by the assessee, the AO has held that assessee does not fall within the scope of charitable purpose defined in section 2(15) of the Income Tax Act, 1961, hence, benefit of section 11/12 was not allowed to the assessee for asstt. year 2009-10 and a proposal for withdrawal of registration u/s. 12AA was being sent separately to the DIT(E) vide his order dated 29.12.2011 passed u/s. 143(3) of the Income Tax Act, 1961.
4. Against the above order the Assessee appealed before the Ld. CIT(A) who after going through the finding of the AO in the 4 ITA NO. 2143/Del/2013 assessment order and submissions, held that assessee's activities fall under the 2nd limb of Section 2(15) of the Act. He also found that the activities of the assessee to be in the nature of education within the meaning of section 2(15) and benefit of section 11 and 12 was allowed. With regard to withdraw of registration, he stated that no action has been taken till date in this regard, hence, this ground is not entertained, hence, dismissed. Therefore, he partly allowed the appeal of the Assessee vide impugned order dated 21.1.2013.
5. Against the above order the Revenue is in appeal before us.
6. Ld. DR has relied upon the order of the AO and also stated that Ld. CIT(A) has erred in ignoring that the activities carried out by the assessee are providing services to various government agencies both Indian & Overseas to hold seminars, to educate people in the areas of Urban Housing Development for poor and for their upliftment and it does not provide any 'scholastic education', therefore, the activities do not fall under the limb ' education'. He also stated that Ld. CIT(A) has erred in ignoring the judgment of Hon'ble Supreme Court in the case of Sole Trusty, Lok Shikshana Trust vs. Commissioner of Income Tax (1975) 10 ITR 234 (SC) wherein, the Hon'ble Apex Court has defined word 'education' and observed that 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. The word "education" has not been used in that wide and extended sense according to which every acquisition of further knowledge constitutes education.
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ITA NO. 2143/Del/2013
7. On the other hand, Ld. Counsel for the assessee has relied upon the order of the Ld. CIT(A) and requested the same may be upheld. Ld. Counsel for the assessee in support of his arguments has also filed a Paper Book having pages 1 to 56 consisting of records and correspondence made before the lower authorities. He also filed the copy of following judgments of the Jurisdictional High Court as well as the Hon'ble High Court of Allahabad.
- Bureau of Indian Standards vs. Director General of Income Tax (Exemptions) [2012] 27 taxmann.com 127 (Delhi) in WP (C) No. 1755 of 2012 dated 27.9.2012.
- Institute of Chartered Accountants of India vs. Director General of Income Tax (Exemptions), Delhi [2013] 35 Taxmann.com 140 (Delhi) in WP Nos.
3147, 3148 and 7181 of 2012 dated 4.7.2013.
- CIT, Faizabad vs. Rajarshi Rananjai Singh Shiksha Sansthan, Amethi [2013] 40 taxmann.com 238 (Allahabad) of the Hon'ble High Court of Allahabad in ITA Appeal Nos. 17 & 18 of 2012 dated 12.9.2013.
8. We have heard both the counsel and perused the records. Ld. DR has stated that the activities carried out by the assessee are 6 ITA NO. 2143/Del/2013 providing services to various government agencies both Indian & Overseas to hold seminars, to educate people in the areas of Urban Housing Development for poor and for their upliftment and it does not provide any 'scholastic education', therefore, the activities do not fall under the limb ' education'. He also stated that Ld. CIT(A) has erred in ignoring the judgment of Hon'ble Supreme Court in the case of Sole Trusty, Lok Shikshana Trust vs. Commissioner of Income Tax (1975) 10 ITR 234 (SC) wherein, the Hon'ble Apex Court has defined word 'education' and observed that 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. The word "education" has not been used in that wide and extended sense according to which every acquisition of further knowledge constitutes education. We find that Ld. Counsel of the assessee on the contrary has submitted that its activities as charitable activities by way of submitting that assessee is providing advisory services to Central and Local Government with no commercial interest. All applications on assessee's programmes are routed directly by the Indian Mission to Govt. of India and the Institute has no decision making power in the selection of participants as well as on the expenses to be reimbursed or fees to be paid. More than 95 per cent of the payments for these activities is on a reimbursement basis and the 7 ITA NO. 2143/Del/2013 fees are of a token nature. The assessee further informed that there is no profit motive in undertaking the activities. We also find that Ld. CIT(A) rightly draw support from the CBDT Circular No. 11/2008 dated 19.12.2008, wherein vide para 3.2 it was submitted as under:-
"3.2 In the final analysis" however, whether the assessee has for its object 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or enders any service in relation to trade commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assesees, who claim that their object is 'charitable purpose' within the meaning of Section 2(15) would be well advised to enchew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business."
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ITA NO. 2143/Del/2013 8.1 We also find that Ld. CIT(A) has referred and discussed the judgment of Hon'ble Delhi High Court in the case of Bureau of Indian Standards vs. DG (E), reported at 2012-27 Taxmann.com 127 (Del), wherein, Hon'ble Delhi High Court has decided the issue vide para no. 13 in favour of the assessee which reds as under:-
"13. In view of the above discussion, it cannot be said that the BIS is involved in any carrying on trade, commerce or business. BIS is a statutory body established under the BIS Act and was brought in to existence "for the harmonious development of the activities of standardization, marking and quality certification of goods". This was, and has been, its primary and predominant object. Even though it does take license fee for granting marks/ certification, the same cannot be said to be done for the purpose of profit. If any profit/revenue is earned, it is purely incidental. The BIS performs sovereign and regulatory function, in its capacity of an instrumentality of the state. Therefore, this court has no doubt in holding that it is not involved in carrying any activity in the nature of trade, commerce or business. "
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ITA NO. 2143/Del/2013 8.2 We also find that Ld. CIT(A) has rightly observed that the activities of the assessee are identical and it was found that assessee was involved in helping various Government Agencies or foreign Government Agencies under SARC in providing training to the persons in the field of housing for poor sections of the society and advising the Government for their upliftment and no work is undertaken for any profit motive. We also find that Ld. CIT(A) has observed that vide letter dated 28.2.2012 various assignments undertaken have been mentioned which clearly reveal the fact that appellant's activities are in the nature of education as it is providing the training to various persons of the Indian Government and overseas Governments and these training programs are in the nature of education and education programs have been organized by the Institute are mainly for the Government of India which are not of a commercial nature. The issue of charging the fees and number of students to participate in the course are decided by Government of India.
8.3 We also find that before the Ld. CIT(A), the assessee has submitted some additional facts to substantiate its claim regarding the Trust is a charitable institution. The society with various Institutions and Governments and its Agencies, is making studies in the housing and other sectors to provide relief to poor and its contribution in the advancement of "Object of General Public Utility", 10 ITA NO. 2143/Del/2013 not relating to any commerce or trade. The society is also undertaking training programs for UNDP to provide Indian knowledge and skills to foreign government officials to strengthen their system of planning and governance. The society is rendering its services in different fields and educational programs being conducted are only one part of its activity. These programs are conducted on behalf of Indian Government and Overseas Government to train various persons and in the broader sense these programs are educational in nature. We also find that the case law cited by the Ld. DR of the Hon'ble Supreme Court in Sole Trustee Lok Sikshan Trust VS. CIT, 101 ITR 234 (HC), is not applicable to the present case, because the assessee society is not holding any classes and providing coaching facilities for candidates/articles and Audit Clerk who want to appear in the examinations. Hence, the activities of the Society are quite different. It is the contention of the Ld. Counsel of the assessee that the society is not engaged in any trade, commerce or business. However, the it simply providing the services to various Government Agencies both Indian & Overseas to hold seminars, to educate people in the areas of Urban Hosing Development for poor and for their upliftment. There is no element of profit involved in our activity and the entire amount received is spent either for meeting expenditure or the balance / surplus kept in the Bank as per the norms for future utilizations. 11
ITA NO. 2143/Del/2013 8.4 In the background of the aforesaid discussions, we find considerable cogency in the submissions of the ld. Counsel of the assessee and the case laws cited by him also supports the case of the case. However, the case law cited by the Ld. DR is quite distinguished from the facts of the present case. Therefore, in view of the above, we are of the opinion that no interference is required on our part, as the Ld. CIT(A) has rightly held that the assessee's activities fall under the 2nd limb of the Section 2(15). As the activities of the assessee has been found to be in the nature of education within the meaning of Section 2(15), benefit of section 11 and 12 given by the Ld. CIT(A) is upheld.
9. In the result, the Appeal filed by the Revenue stands dismissed.
Order pronounced in the Open Court on 28/8/2014.
Sd/- Sd/-
[S.V.
S.V. MEHROTRA]
MEHROTRA] [H.S. SIDHU]
SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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