AI Insights
The case involves the Agriculture Skill Council of India, which appealed against the decision of the CIT (Exemptions), Chandigarh, rejecting their application for registration under section 80G of the Income Tax Act. The CIT (Exemptions) had found that the council's activities, which included providing training services for a fee, were commercial in nature and thus not charitable. The tribunal examined the financial documents and activities of the council and concluded that the services provided were contractual and for consideration, aligning with commercial activities rather than charitable purposes.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 361252 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-05-2025
Appeal Filed By
Assessee
Order Result
Dismissed
Assessment Year
2022-2023
Judgement Text
"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 1066/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2022-23 Agriculture Skill Council of India, Unit No. 101, Greenwood Plaza, Block –B, Sector 45, Gurgaon, Haryana-122009 बनाम The CIT(Exemptions), Chandigarh ˕ायी लेखा सं./PAN NO: AALCA3414E अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Somil Aggarwal, Advocate (Virtual) राजˢ की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 15/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 22/05/2025 आदेश/Order PER LALIET KUMAR, J.M: 1. The present appeal has been filed by the assessee, Agriculture Skill Council of India, against the order dated 30.09.2024 passed by the Ld. CIT(Exemptions), Chandigarh, whereby the assessee’s application for approval under section 80G(5)(iii) of the Income Tax Act, 1961 (“the Act”) was rejected. 2. The assessee is a company incorporated under Section 8 of the Companies Act, 2013, and claims to be engaged in charitable activities relating to skill development in the agriculture sector. The assessee filed an application in Form No. 10AB seeking registration under section 80G. During the course of proceedings, the Ld. CIT (Exemptions) issued notices to the assessee seeking documents to verify the genuineness of activities and compliance with the objectives specified in its Memorandum of Association. Though partial replies were filed, upon examination of the submissions, the Ld. CIT (Exemptions) found that the income of the assessee was largely derived as consideration for 2 providing training services. The order further noted that the assessee had received payments with TDS deducted, which suggested that services were rendered for consideration in a commercial nature. 3. Relying on the judgment of the Hon’ble Supreme Court in the case of ACIT (Exemptions) v. Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278 (SC), the CIT (Exemptions) held that the activity of providing services for a fee does not qualify as “charitable purpose” under the limb of “advancement of any other object of general public utility” if it involves trade, commerce, or business, or services in relation thereto, for a consideration. It was, therefore, concluded that the activities of the assessee were not charitable in nature, and the application under section 80G was accordingly rejected. 4. Before us, the Ld. Counsel for the assessee submitted that the assessee is a not-for-profit entity and its activities are aimed at skill development in the agriculture sector, which is of general public benefit. It was argued that the fees received were nominal and incidental to charitable objectives and should not lead to disqualification under section 80G. The assessee also contended that the services were aligned with national schemes and were not undertaken with any profit motive. 5. The Ld. AR for the assessee drew our attention to page 83 of the paper book, wherein a copy of the registration granted to the assessee under section 12A of the Act for the period covering Assessment Years 2022–23 to 2026–27 has been placed on record. It was submitted that at the time of granting registration under section 12A, the competent authority had duly examined the aims and objects of the assessee and found no discrepancy therein. The Ld. AR further submitted that the assessee had been subjected to scrutiny assessments in prior assessment years, during which the nature of its activities was duly examined by the Assessing Officer. No adverse findings were recorded, nor was any disallowance made by treating the assessee’s income as non-charitable in nature. 3 6. Additionally, the Ld. AR placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of Centre for Excellence for Agricultural Skills in India, ITA No. 4860/Del/2024, wherein, on identical facts, the Tribunal had held in favour of the assessee and granted approval under section 80G. Based on the foregoing submissions, it was contended that the assessee is entitled to registration under section 80G of the Act and that the order passed by the Ld. CIT (Exemptions) is liable to be reversed. 7. On the other hand, the Ld. Departmental Representative supported the findings of the CIT (Exemptions) and submitted that the consideration received by the assessee clearly indicated quid pro quo for services rendered, thereby falling outside the purview of charitable purpose under the amended provisions and judicial interpretation. 8. We have heard the rival contentions and perused the material on record. While the assessee is registered as a Section 8 company, the financial documents clearly reflect that the primary income is derived from training activities for which consideration is received. The computation of income and TDS details establish that the receipts were in the nature of fees for services rendered. The assessee has also not demonstrated any free-of-cost services or voluntary charitable outreach devoid of quid pro quo. In fact note 14,17 to 19 to the statement of income and expenditure for the year ending 31st March 2024, shows as under:- 14 Revenue from Operation : S. No. Particulars For the Year Ended March 31, 2024 (₹ in '000) For the Year Ended March 31, 2023 (₹ in '000) a Income from Assessments 76,120 74,083 b Income from Training of Assessors 48 1,263 c Income from Training of Trainers 1,240 5,476 d Affiliation Charges - Regular 1,317 363 e Income under the head World Skills Programme - 2,286 4 S. No. Particulars For the Year Ended March 31, 2024 (₹ in '000) For the Year Ended March 31, 2023 (₹ in '000) f Income from Apprenticeship Program - 76 g Income from Sankalp Project - 5,708 h Industry Outreach Program - 900 i Agritourism Project - SHM Kerala - 878 j Transfer from Advances from Training Partner 25 - k CSR Programme 5,419 2,580 l Standard Development and Quality Assurance 3,162 - m PMKVY-4.0 11,958 - n PM Vishwakarma 1,751 - o Honorarium 4 - p PMKUVA Training Fee 9,084 - q NFDB Training & DBT 19,534 - r Implementation of Training Programs 67,670 - Total 1,97,331 93,613 Quite surprisingly the expenses shown by the assessee are as under :- \"Notes to the Financial Statements as at 31st March 2024\" of Agriculture Skill Council of India: 1. Employee Benefit Expenses Particulars For the Year Ended March 31, 2024 (₹ in '000) For the Year Ended March 31, 2023 (₹ in '000) (a) Salaries & Wages 24,281 23,479 (b) Provision for Gratuity 556 548 (c) Staff Welfare Expenses 382 363 (d) Provision for Leave Encashment 682 286 (e) Staff on Interns 611 648 (f) Insurance to Staff 626 345 (g) Gratuity (Tata) 134 138 (h) Remuneration to Contractual Manpower Resources 1,102 113 Total 27,355 25,968 2. Program Expenses – Assessments, Training, NOS, and Others Particulars March 31, 2024 (₹ '000) March 31, 2023 (₹ '000) 5 Particulars March 31, 2024 (₹ '000) March 31, 2023 (₹ '000) (a) Expenses on Assessment & Certification 47,036 42,391 (b) Training of Assessors 1,504 387 (c) Training of the Trainer 387 1,579 (d) Industry Outreach Program 69 - (e) World Skills India 146 - (f) PMKVY-2 Monitoring - 1,124 (g) Program Expenses – SHM Kerala funded Farmers Training and Tourism 469 367 (h) Program Expenses – Sankalp Project 510 - (i) CSR Project 2,347 4,275 (j) District Mineral Foundation - - (k) PM-Vishwakarma Expenses 733 - (l) SEDAP Funded Training Project 952 - (m) SELCO Funded Programme 170 - (n) Biofloc 4,226 - (o) HPKVN Project 10,670 - (p) PMKUVA Programme Expenses 8,334 - (q) RPL IV Programme Expenses 6,289 - (r) NFDB Project Expenses 10,214 - 3. Developmental Expenses Particulars March 31, 2024 (₹ '000) March 31, 2023 (₹ '000) (a) Content Development 2,152 4,638 (b) Standards & Quality Assurance 1,103 3,850 (c) Education & Research 152 677 (d) Rojgar Mela - 18 (e) Placement Portal - 16 (f) Skill Gap Studies - 100 (g) ASCI Funded RPL Projects - 244 (h) International Collaboration & Studies 178 - (i) Advertisement & Business Promotion Expenses 7 - | Total | 1,44,081 | 63,470 | 4. Administrative & Other Expenses Particulars March 31, 2024 (₹ '000) March 31, 2023 (₹ '000) Office Rent & Building Maintenance 943 4,429 Expenses on Professional Consultancy & Other Compliances 795 1,189 6 Particulars March 31, 2024 (₹ '000) March 31, 2023 (₹ '000) Miscellaneous & Office expenses 880 864 Repair & Maintenance 264 - Electricity Expenses 720 662 Telephone and Internet expenses 391 487 Meetings, Seminar and Conferences Expenses 160 307 Travelling, Conveyance and Vehicle expenses 986 818 Printing & Stationery 547 711 Administrative Charges on LIC Investment (Gratuity) 44 - Interest & Late fee on TDS & GST 13 - Auditors Remuneration 207 207 Tax Deducted at Source written off 1,256 701 Courier & Postage 47 - Prior Period Expenses 10 115 Total 7,218 10,470 9. A perusal of the financials clearly reveals that the assessee has not incurred any expenditure towards charitable purposes within the meaning of law. The assessee has merely executed work contracts awarded under various Central and State Government schemes, without any independent initiative or voluntary contribution. No services were rendered free of cost or at concessional rates. All services were provided strictly at rates contractually agreed with the Government. The activities, therefore, are purely commercial in nature and devoid of any charitable character. 10. The Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority (supra) has categorically laid down that institutions carrying out activities in the nature of trade, commerce, or business, or services in relation thereto for a fee or any consideration, cannot be said to be carrying on charitable activities under the fourth limb of section 2(15) unless such activity is within the limits of prescribed thresholds and truly incidental. In the present case, there is no material on record to establish that the training activities were free of charge, subsidized, or ancillary to other charitable objects.On a perusal of the financial statements reproduced hereinabove, it is abundantly clear that the assessee has not rendered any services free of cost or at subsidized rates. In 7 fact, the assessee has provided its services at rates comparable to the prevailing market rates, if not exactly at par with them. The receipts under various heads such as training, certification, and program implementation are indicative of consideration received against specific deliverables under different government schemes. This establishes a clear element of quid pro quo in the assessee’s operations, and the activities undertaken appear to be in the nature of contractual engagements executed for remuneration, rather than purely charitable undertakings. 11. The reliance placed by the Ld. AR on the decision of the Coordinate Bench in the case of Centre for Excellence for Agricultural Skills in India( supra) is misplaced and does not assist the assessee. Upon a careful comparison, it is evident that the facts in the present case are distinguishable and materially different from those considered in the cited decision. 12. Accordingly, we are of the considered view that the Ld. CIT (Exemptions) has rightly rejected the application filed under section 80G after duly considering the objects and financials of the assessee and providing adequate opportunity of being heard. We, therefore, find no infirmity in the impugned order warranting interference. 13. In the result, appeal of the Assessee is dismissed. (Order pronounced in the open Court on 22/05/2025 ) Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "
Mehul