ITO, CHENNAI V. FRP Institute, CHENNAI

ITA 1385/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7488 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 21-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JT
• Assessee Lawyers: T VASUDEVAN
• Keywords: Charitable institution; Reasonable cause
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1385/MDS/2015 /ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER (EXEMPTIONS), WARD -3, ANNEXE BUILDING, III FLOOR, 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI - 34. VS . FRP INSTITUTE, 23 & 24, DEVELOPED PLOT, EKKADUTHANGAL, CHENNAI - 600 097. [PAN: AAATF 1026B] ( /APPELLANT) ( /RESPONDENT) #$ % & /APPELLANT BY : SHRI A.V. SREEKANTH, JT. CIT '(#$ % & /RESPONDENT BY : SHRI T. VASUDEVAN, ADVOCATE % ) /DATE OF HEARING : 21.12.2016 *+ % ) /DATE OF PRONOUNCEMENT : 20.03.2017 /O R D E R PER BENCH THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-VIII, CHENNAI (CIT(A) FOR SHORT) DATED 30.06.2014, ALLOWING THE ASSESSEES APPEAL CO NTESTING ITS ASSESSMENT U/S. 143(3)OF THE INCOME TAX ACT, 1961 (THE ACT HEREIN AFTER) DATED 31.12.2013 FOR ASSESSMENT YEAR (AY) 2011-12. :- 2-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE 2. AT THE VERY OUTSET, IT WAS OBSERVED BY THE BENCH THAT THERE IS A DELAY OF 229 DAYS IN FILING THE APPEAL. THE CONDONATION PETITIO N, WHICH IS IN THE FORM OF AN AFFIDAVIT (DATED 04.06.2015) FILED BY THE REVENUE W AS PERUSED, TO FIND THE REASON THEREFOR AS THE DISLOCATION OF THE FILE WHIC H HAD GOT MIXED UP WITH OTHER FILES AND FINALLY TRACED AT TRICHY EXEMPTIONS OFFIC E ON 01.6.2015. THE APPEAL WAS FILED IMMEDIATELY THEREAFTER, ON 04.6.2015. THE FILE WOULD HAVE, IT IS STATED, BUNCHED ALONG WITH OTHER S.12AA FILES ON ACCOUNT OF CENTRALISED PROCESSING OF APPLICATIONS FOR REGISTRATION. THE FACTS HAVE NOT BEEN CONTESTED BY THE ASSESSEE, SO THAT HAVING REGARD THERETO, NO LACHES CAN BE INF ERRED. IN FACT, THE LD. AR OF THE ASSESSEE DID NOT RAISE ANY SERIOUS OBJECTIONS T O THE CONDONATION OF DELAY. AFTER HEARING THE PARTIES, WE ARE SATISFIED THAT TH ERE WAS A REASONABLE CAUSE FOR FILING THE APPEAL BELATEDLY. THE DELAY WAS ACCORDIN GLY CONDONED, AND THE APPEAL ADMITTED FOR HEARING. 3. THE ISSUE INVOLVED IN THE INSTANT APPEAL IS THE EXIGIBILITY TO EXEMPTION U/S. 11 ON THE ASSESSEES INCOME, DENIED BY THE REVENUE, SINCE ALLOWED BY THE FIRST APPELLATE AUTHORITY. THE BASIC CONTROVERSY ATTENDIN G THIS CASE IS IF THE ASSESSEE- SOCIETY, FORMED ON 01.12.1998, DULY REGISTERED AS A CHARITABLE INSTITUTION U/S. 12AA OF THE ACT ON 17.03.2003, IS PURSUING THE OBJE CT OF EDUCATION, AS CONTENDED BY IT, OR THE SAME IS THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AS CONTENDED BY THE REVENUE. THIS A SSUMES RELEVANCE AS ITS RECEIPT FOR THE RELEVANT YEAR, IN THE MAIN, IS STAL L CHARGES, RECEIVED IN THE SUM OF RS.302.71 LAKHS, AND WHICH, BEING IN EXCESS OF RS. 25 LACS, WOULD OPERATE TO OUST ITS CASE UNDER THE FIRST PROVISO TO SECTION 2(15), WHICH READS AS UNDER, I.E., WHERE, THE CHARITABLE PURPOSE INVOLVES ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, - (1) TO (14). :- 3-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE PO OR, EDUCATION , MEDICAL RELIEF, PRESERVATION OF ENVIRONMENTS (INCLUDING WAT ER-SHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY : PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGRE GATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREI N IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR; (EMPHASIS, BY ITALICS, OURS) WHILE THE ASSESSING OFFICER (AO) CONSIDERS THE CHA RITABLE PURPOSE TO BE FALLING UNDER THE LAST LIMB, THE LD. CIT(A) REGARDS THE ASSESSEE AS PURSUING THE OBJECT OF EDUCATION, SO THAT, AGGRIEVED, THE REVE NUE IS IN APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE CONTROVERSY 4.1 THE BASIS OF THE DENIAL OF THE CLAIM FOR EXEMPT ION U/S. 11 BY THE AO IS THAT THE WORD EDUCATION AS USED IN SECTION 2(15) OF TH E ACT DENOTES SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING, GIVEN TO THE YO UNG IN PREPARATION FOR THE WORK OF LIFE. THAT IS, IT CONNOTES THE WHOLE COURSE OF S CHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THE ASSESSEE DOES NOT CONDUCT ANY FORMAL EDUCATIONAL COURSES NOR IS AFFILIATED OR REGISTERED WITH ANY AU THORITY. REFERENCE IN THIS REGARD IS MADE BY HIM TO THE DIT(E) VS THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA [2012] 347 ITR 86 (DEL), WHEREIN THE HON'BLE COURT NOTED THAT THE RESPONDENT-INSTITUTE IMPARTS FORMAL EDUCATION IN AN ORGANIZED AND SYSTEMATIC MANNER, WITH A VIEW TO TEST THE PROFICIENCY OF THE STUDENTS FOR ENTERING THE PROFESSION OF ACCOUNTANCY. EVEN THE OPEN UNIVERSITI ES POSSESS ALL THE THREE INDICA OF AN EDUCATIONAL INSTITUTION, I.E., IMPARTI NG FORMAL TRAINING, ACCOUNTABILITY TO AN AUTHORITY AND CONTROL OVER THE STUDENTS, AND THAT THEREFORE :- 4-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE THE ASSESSEE CANNOT BE COMPARED THEREWITH AS WELL A ND, ACCORDINGLY, BE REGARDED AS AN EDUCATIONAL INSTITUTION. PER CONTRA, ITS ACTIVITIES CAN THEREFORE ONLY BE REGARDED AS QUA ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY , WHICH WOULD THOUGH STAND TO BE DISQUALIFIED AS A CH ARITABLE PURPOSE IN VIEW OF PROVISO TO SECTION 2(15) OF THE ACT. THE LD. CIT(A), HOWEV ER, WAS OF THE VIEW THAT THE SCOPE OF EDUCATION CANNOT BE CONFINED TO F ORMAL SCHOOL/COLLEGE EDUCATION ALONE, I.E., IN THE SENSE OF A CLASS ROOM TEACHING. WHEN THE OBJECT OF THE TRUST WAS DISSEMINATION OF USEFUL KNOWLEDGE, WH ICH WILL BE PROMOTED THROUGH CONFERENCES, PUBLICATION OF JOURNALS, BOOKS , BULLETINS, ETC., THE TRUST HAS TO BE REGARDED AS ESTABLISHED FOR EDUCATIONAL PURPO SE ONLY. IN FACT, THE EMERGING TREND IN EDUCATION POINT TO THE GROWING IMPORTANCE OF INSTITUTIONS OTHER THAN THOSE ENGAGED IN FORMAL TEACHING, AND THAT EDUCATIO N WOULD CERTAINLY INCLUDE THE ACTIVITIES CARRIED OUT BY THE ASSESSEE IN PROMOTING AND DIFFUSION OF KNOWLEDGE ON COMPOSITES AND CONNECTED THINGS. THE BASIC FACTS 4.2 THE OBJECTS OF THE ASSESSEE SOCIETY READ AS UN DER: THE OBJECTIVES OF THE INSTITUTE SHALL BE:- A. TO ADVANCE AND DEVELOP FOR THE BENEFIT OF ITS MEMBE RS AND THE PUBLIC THE ART, SCIENCE, TECHNOLOGY AND ENGINEERING OF FIBRE REINFO RCED PLASTICS AND OTHER COMPOSITES. B. TO FORM AND ORGANIZE A STRONG PROFESSIONAL BODY OF THOSE CONNECTED OR CONCERNED WITH FIBRE REINFORCED PLASTICS OR OTHER C OMPOSITES. C. TO INSTITUTE SUPERVISE, ADVISE UPON AND ADVANCE THE STANDARDS OF MATERIALS, MANUFACTURING PROCESSES, APPLICATIONS, USER ACCEPTA NCE STANDARDS AND RELATED TECHNICAL AND NON TECHNICAL SUBJECTS INCLUDING EDUC ATION. THE HOME PAGE OF ITS WEBSITE (COPY ON RECORD) DECL ARES ITS AVOWED OBJECTIVE AS FOLLOWS: THE INSTITUTE WAS FORMED WITH AN OBJECTIVE TO PROMOTE INDIAN COMPOSITES INDUSTRY THROUGH COLLABORATION AND EXCHANGE OF INFORMATION WITH OTHER LIKEMINDED PROFESSIONAL SOCIETIES, GOVERNMENT AND N ON GOVERNMENT ORGANISATIONS, R & D LABORATORIES AND EDUCATIONAL I NSTITUTIONS OPERATING BOTH IN INDIA AND ABROAD. :- 5-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE FURTHER, IT INTRODUCES ITSELF THEREIN AS: FRP INSTITUTE IS A REGISTERED NON PROFIT PROFESSIO NAL SOCIETY BASED IN CHENNAI, INDIA. THIS ORGANIZATION WAS FORMED IN 199 9 AND HAS MEMBERS RANGING FROM LARGE MULTINATIONAL CORPORATIONS TO SM ALL FABRICATORS SPREAD ALL OVER THE COUNTRY. THE MEMBER LIST INCLUDE RAW MATER IAL SUPPLIERS, FABRICATORS, MACHINERY MANUFACTURERS, SCIENTISTS, C OMPOSITE SPECIALISTS, CONSULTANTS, DESIGNERS, DEFENCE LABORATORIES, EDUCA TIONAL INSTITUTIONS, ETC. THE INSTITUTE WORKS IN CLOSE COLLABORATION WITH THE INDUSTRIES AND INSTITUTIONS FOR UPGRADING THE COMPOSITES TECHNOLOGY AND TO PROM OTE THE GROWTH OF THE INDIAN COMPOSITES INDUSTRY . OTHER EXCERPTS FROM ITS WEBPAGE READ AS UNDER: FRP INSTITUTE IS A PROFESSIONAL SOCIETY FOR BRINGI NG TOGETHER UNDER ONE PLATFORM ALL THOSE WHO ARE CONCERNED WITH FRP COMPOSITES, LIKE RAW MATERIAL MANUFACTURES PROCESSORS END USERS ACADEMIC INSTITUTIONS MACHINERY SUPPLIERS DESIGNERS AND CONSULTANTS IN ORDER TO PROMOTE THE GROWTH AND DEVELOPMENT OF F RP COMPOSITES AND THEIR INDUSTRIAL AND TECHNOLOGICAL BASE . THE INSTITUTE STARTED FUNCTIONING IN 1999 OBJECTIVES OF THE INSTITUTE ADVANCEMENT OF COMPOSITES TECHNOLOGY BY PROMOTING/P ROPAGATING THE USE OF COMPOSITES AND THEIR PRODUCTS. HUMAN SKILL DEVELOPMENT BY IMPARTING KNOWLEDGE AND SKILLS TO THE ENGINEERS, FABRICATORS, SUPERVISORS AND THE WORKERS ENGAGED IN COMPOSITES INDUSTRY/ORGANISATIONS. (EMPHASIS, OURS) THE ASSESSEES OPERATING STATEMENT FOR THE YEAR, W HICH ALSO BEARS FIGURES FOR THE IMMEDIATELY PRECEDING YEAR, IS SUMMARIZED A S UNDER: (AMOUNT IN RS. LACS) :- 6-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE THE LAW 4.3 THE HON'BLE APEX COURT IN SOLE TRUSTEE, LOK SIKSHANA TRUST VS CIT [1975] 101 ITR 2234 (SC), RELIED UPON BY THE REVENUE (REFE R GROUND 2.6), HAD THE OCCASION TO CONSIDER THE SCOPE OF WORD EDUCATION AS USED IN SECTION 2(15) OF THE ACT. IT CLARIFIED THAT THE WORD EDUCATION IN SECTION 2(15) OF THE ACT, CONNOTES THE PROCESS OF TRANING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING, AND HAS NOT BEEN USED IN THE WIDE AND EXTENSIVE SENSE ACCORDING TO WHICH EVERY ACQUIS ITION OF FURTHER KNOWLEDGE CONSTITUTES EDUCATION, DISCOUNTING THUS THE USE OF THE TERM IN A GENERIC SENSE, STATING THAT IF NOT SO CONSTRUED, EVERYTHING IS EDU CATION IN THE GREAT SCHOOL OF LIFE. IN ITS WORDS (PG. 241 OF THE REPORTS): THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN U SED 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 CO URSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THE WORD 'EDUCATION' H AS NOT BEEN USED IN THAT WIDE AND EXTENDED SENSE, ACCORDING TO WHICH EVERY A CQUISITION OF FURTHER KNOWLEDGE CONSTITUTES EDUCATION. ACCORDING TO THIS WIDE AND EXTENDED SENSE, TRAVELLING IS EDUCATION, BECAUSE AS A RESULT OF TRA VELLING YOU ACQUIRE FRESH KNOWLEDGE. LIKEWISE, IF YOU READ NEWSPAPERS AND MAG AZINES, SEE PICTURES, VISIT ART GALLERIES, MUSEUMS AND ZOOS, YOU THEREBY ADD TO YOUR KNOWLEDGE. INCOME CURRENT YEAR PREVIOUS YEAR MEMBERSHIP FEE 1.10 0.07 SPONSORSHIP 46.02 4.43 STALL CHARGES 302.71 - DELEGATE FEE 3.32 - TRAINING PROGRAMME - 3.46 INTEREST 11.80 7.06 MISC. SOUVENIER, ETC. 3.91 - TOTAL 368.86 15.02 EXPENDITURE CURRENT YEAR PREVIOUS YEAR HALL RENT CHARGES 57.46 3.55 SALARY & BONUS 8.75 5.24 ADVERTISEMENT 7.71 - TRAVELLING 5.64 2.48 MISC. 9.04 2.37 TOTAL 88.60 13.64 :- 7-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE AGAIN, WHEN YOU GROW UP AND HAVE DEALINGS WITH OTHE R 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 WAL LET IS LIABLE TO BE STOLEN OR YOU ARE LIABLE TO BE CHEATED BY SOME UNSCRUPULOUS P ERSON. 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 SOM E 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 CO NNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, S KILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING . THE APPELLANT-TRUST IN THAT CASE, PUBLISHING NEWS P APERS IN PURSUANCE TO CL. 2(C) OF ITS OBJECT CLAUSE, I.E., SUPPLYING THE KANNADA SPEAKING PEOPLE WITH AN ORGAN OR ORGANS OF EDUCATED PUBLIC OPINION AND COND UCTING JOURNALS IN KANNADA AND OTHER LANGUAGES FOR THE DISSEMINATION OF USEFUL NEWS AND INFORMATION AND FOR THE VENTILATION OF PUBLIC OPINION ON MATTERS OF THE GENERAL PUBLIC UTILITY, CONTENTED ON THAT BASIS THAT IT WAS ENGAGED IN THE FIELD OF EDUCATION. IT IS IN THIS CONTEXT THAT HONBLE COURT WENT ON TO OBSERVE THAT ANYTHING ONE DOES OR ENGAGES IN INVOLVES, IN SOME MEASURE, EDUCATION, AN D THAT THEREFORE CANNOT BE CONSTRUED IN SUCH A WIDE SENSE. IN FACT, IT ALSO DI SCOUNTENANCED THE USE OF THE WORD EDUCATION IN THE OBJECT CLAUSE OF THE APPELL ATE TRUST TO SAY THAT IT WAS A CASE OF CLEVER DRAFTING (PGS. 256-257 OF THE REPORT S). ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY, I.E., THE RESIDUARY CATEGORY, WAS OPINED, WITH REFERENCE TO T HE JUDICIAL PRONOUNCEMENTS, VIZ., ALL INDIA SPINNERS ASSOCIATION V. CIT [1944] 12 ITR 482 (PC); CIT V. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 (SC); LOK SABHA DEBATES, ETC., TO PRIMA FACIE , INCLUDE ALL OBJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. IT IS BECAUSE IT IS SO WIDELY WORDED THAT I T CAN BE TAKEN ADVANTAGE OF EVEN BY COMMERCIAL CONCERNS WHICH, WHILE SERVING A PUBLIC PURPOSE, GET FULLY PAID FOR THE BENEFITS PROVIDED BY THEM, THAT THE WO RDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WERE ADDED TO THE DEFINITION. THE SAME, :- 8-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE THUS, QUALIFIES ONLY THE LAST (FOURTH) LIMB OF THE DEFINING PURPOSES, I.E., AS CHARITABLE PURPOSES, AS THE PROVISION OF S. 2(15) T HEN STOOD, THE OTHER BEING RELIEF TO THE POOR; EDUCATION; AND MEDICAL RE LIEF, AS FINALLY CONFIRMED BY THE APEX COURT IN ADDL. CIT V. SURAT ART SILK CLOTH MFTRS. ASSOCIATIO N [1980] 121 ITR 1 (SC). ANALYSIS/FINDINGS 4.4 THE MATTER IS THUS NO LONGER RES INTEGRA , AND TO FALL UNDER THE LIMB OF EDUCATION AS A CHARITABLE PURPOSE AS CONTEMPLATED U/S. 2(15), THE SAME MUST NECESSARILY INVOLVE AN ORGANIZED ACTIVITY IN THE FI ELD OF EDUCATION. IT MAY ASSUME DIFFERENT FORMS, NOT NECESSARILY CONFINED TO CLASS ROOM STUDY, AS OPEN UNIVERSITIES THAT HAVE COME ABOUT IN RECENT TIMES, BUT HAS TO HAVE AN ELEMENTS OF SCHOLASTIC EDUCATION, DISCIPLINE, AND ACCREDITATION , I.E., CARRIED OUT IN AN ORGANIZED MANNER, WHICH STANDS RECOGNIZED IN THE FI ELD OF EDUCATION. THE RELIANCE BY THE ASSESSEE ON ITS ACTIVITIES TO CONTE ND THAT IT IS ENGAGED IN EDUCATION, I.E., FOR THE PURPOSE OF 2(15), IS THERE FORE COMPLETELY MISPLACED. THE ASSESSEE-INSTITUTION TO BE REGARDED AS AN EDUCATION AL INSTITUTION, WHICH IT MUST BE TO BE CONSIDERED AS IMBUED WITH THE CHARACTER OF ED UCATION, ITS OBJECT MUST BE PRE-DOMINANTLY EDUCATION, I.E., AS EXPLAINED BY THE HIGHER COURTS OF LAW, THE ELEMENTS OF WHICH WE FIND AS COMPLETELY MISSING. TH E INSTITUTION IS IN OPERATION SINCE THE YEAR 1999, AND THERE IS NOTHING ON RECORD TO SHOW THAT IT HAS CARRIED OUT OVER THE YEARS, MUCH LESS AS A SIGNIFICANT PART OF ITS ACTIVITIES, AS OUGHT TO BE THE CASE FOR IT TO BE REGARDED AS AN EDUCATIONAL IN STITUTION, EDUCATIONAL COURSES, WHERE EDUCATION IS IMPARTED IN A SYSTEMATIC AND FOR MAL MANNER, DULY ACCREDITED. THE ARRANGEMENT WITH THE INSTITUTE OF CHEMICAL TECH NOLOGY (ICT), MUMBAI IS ONLY OF MARCH, 2011 AND, ACCORDINGLY, HAS NOT RESUL TED IN CONDUCT OF ANY EDUCATIONAL COURSE, WHICH, WHERE SO, WOULD ONLY BE IN FUTURE . AGAIN, ANY SHORT TERM COURSE OR TRAINING PROGRAMME, EVEN IF CONDUCTE D IN THE PAST, WOULD NOT IMBUE IT WITH THE CHARACTER OF AN EDUCATIONAL INSTI TUTION, I.E., WHOSE SOLE OR EVEN :- 9-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE PREDOMINANT PURPOSE AND OBJECT IS EDUCATION . IN OTHER WORDS, THE TERMS OF THE MOU (WITH ICT, MUMBAI), DEFINING THE ROLE AND RESPO NSIBILITIES OF THE ASSESSEE, SHALL HAVE TO BE EXAMINED TO SEE IF IT COULD FALL W ITHIN THE PURVIEW OF EDUCATION, I.E., AS JUDICIALLY EXPLAINED AND SETT LED. FURTHER, THERE IS IN FACT NOTHING TO SHOW THAT THE ASSESSEE HAS THE NECESSARY RESOURCES AND WHEREWITHAL TO PURSUE THE SAID OBJECTIVE, WHICH SHALL REQUIRE, INFRASTRUCTURAL APPARATUS APART, SKILLED, TRAINED AND DEDICATED MANPOWER. AGAIN, WE MAY THOUGH ADD, IT IS ONLY THE PREDOMINANT CHARACTER OF THE INSTITUTION THAT I S TO BE CONSIDERED. A MERE BROWSE OF THE ASSESSEE-SOCIETYS OBJECTIVES , AND IT IS APPARENT THAT THE SAME CANNOT BE REGARDED AS EDUCATION, BUT ONL Y ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, WHICH STANDS SUCC INCTLY SUMMED UP IN ITS OBJECT CLAUSE A, I.E., TO ADVANCE AND DEVELOP THE ART, SCIENCE, TECHNOLOGY AND ENGINEERING OF FIBRE REINFORCED PLASTICS (FRP) AND OTHER COMPOSITES FOR THE BENEFIT OF ITS MEMBERS AND PUBLIC AT LARGE . ITS MEMBERS ARE DRAWN PRIMARILY FROM VARIOUS INDUSTRIES, RANGING FROM MULTINATIONAL CORPORATIONS TO SMALL FABRICATORS, I.E., WHICH ARE ASSOCIATED WITH FRP. IT IS AND WORKS AS A PROFESSIONAL BODY, ENGAGING WITH ANY SEGMENT RELATE D WITH FRP PRODUCTS OR TECHNOLOGY IN WHATEVER CAPACITY, VIZ. RAW-MATERIAL SUPPLIERS, PROCESSORS, MANUFACTURERS, DESIGNERS, CONSULTANTS, END-USERS, E VEN SCIENTISTS AND EDUCATIONAL INSTITUTIONS, AIMING TO INCLUDE POTENTIAL USERS THE REOF, BEING A MODERN DAY SUBSTITUTE FOR WOOD. ITS ENGAGEMENT WITH EDUCATION AL INSTITUTIONS IS, AGAIN, WITH A VIEW TO DEVELOP THE AWARENESS ABOUT FRP AS A FIEL D OF STUDY, PERHAPS PROVIDING SOME ASSISTANCE IN FORMULATING ITS SCOPE AND AMBIT, AS ALSO EXPLORE THE POSSIBILITIES FOR ENTREPRENEURSHIP, BEING A FAS T DEVELOPING TECHNOLOGY WITH VARIED AND GROWING APPLICATIONS. AFTER ALL, TRAININ G AND DEVELOPMENT OF MANPOWER IS A PREREQUISITE FOR THE PROPAGATION AND CONTINUOUS DEVELOPMENT OF THE RELEVANT INDUSTRY AND TECHNOLOGY. IT IS THESE E DUCATIONAL INSTITUTIONS, EXECUTING AND CONDUCTING THE EDUCATIONAL COURSES, W HICH IS AN INTEGRATED PROCESS INVOLVING TRANSMISSION OF KNOWLEDGE IN A SY STEMATIC MANNER, INCLUDING :- 10-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE PROVIDING AVENUES AND FACILITIES FOR ITS DEVELOPMEN T, THAT ARE ENGAGED IN EDUCATION.THAT IT MAY, AMONG ITS SEVERAL ACTIVITIES , ALSO CONDUCT SHORT TERM COURSES FOR STUDENTS, WOULD NOT ALTER, MUCH LESS MA TERIALLY, ITS CHARACTER AS AN INSTITUTION FOR THE ADVANCEMENT AND PROMOTION OF TH E FRP AND OTHER COMPOSITES. AS ANY OTHER PROFESSIONAL BODY, AS INDEED IT CLAIMS TO BE - EXCEPT FOR THE PURPOSE OF INCOME TAX, IT AIMS AT WORKING IN CLOSE ASSOCIATION WITH INDUSTRIES AND OTHER INSTITUTIONS TO UPGRADE COMPOSITES TECHNOLOGY AND GROWTH OF THE INDIAN COMPOSITES INDUSTRY . AS BORNE OUT BY THE OPERATING STATEMENT, THE ASSES SEE HAS DURING THE RELEVANT YEAR PURSUED ITS OBJECTS, CARRYING ON DIFFERENT ACTIVITI ES IN PURSUANCE THERETO . THERE IS IN FACT NO DISPUTE ABOUT THE SAME. THE R EGULAR RECEIPTS ARE BY WAY OF INTEREST, MEMBERSHIP FEE, SPONSORSHIP, ETC., WHICH THOUGH IS JUST ADEQUATE TO MEET ITS REGULAR EXPENDITURE. THE PRINC IPAL RECEIPT, AS WELL AS CORRESPONDING EXPENDITURE (VIZ. HALL RENT, ADVERTIS EMENT) IS BY WAY OF STALL CHARGES, SPONSORSHIP, DELEGATE FEE AND SOUVENIER CH ARGES, WHICH IS TOWARD AN INTERNATIONAL CONFERENCE AND EXHIBITION ON REINFORC ED PLASTICS (ICERP), STATED TO BE HELD BIANNUALLY, SUPPLYING THE SOCIETY THE FU NDS NECESSARY TO CARRY OUT ITS OTHER OBJECTS AS WELL AS FUND ITS ACTIVITIES AND OT HER REGULAR EXPENDITURE. THE FINANCIAL ASPECT APART, THE SAID ACTIVITY STANDS UN DERTAKEN ONLY IN PURSUANCE OF ITS OBJECTIVES, PROVIDING A PLATFORM FOR SHOWCASIN G THE LATEST DEVELOPMENTS IN THE FIELD OF COMPOSITES TO THE VARIOUS STAKEHOLDERS , VIZ. SUPPLIERS OF RAW MATERIALS; MANUFACTURERS OF MACHINERY; END USERS OF THE REINFORCED PLASTICS; IN FACT TO ALL INVOLVED IN SOME MANNER WITH THE COMPOS ITES. ANY ACTIVITY REQUIRES FUNDING, AND IF THIS GENERATES FUNDS FOR THE SOCIET Y; THE INCOME FAR EXCEEDING THE EXPENDITURE THEREON, IT IS ONLY GOOD FOR THE INSTIT UTION, ENGAGED IN A PUBLIC PURPOSE, AND DOES NOT DETRACT FROM THE FACT THAT IT STANDS PERFORMED ONLY IN PURSUANCE OF ITS OBJECTIVES. IN OTHER WORDS, NOTHIN G TURNS ON IT STATING THE BIANNUAL EXHIBITION AS A PRINCIPAL SOURCE OF INCOME FOR THE SOCIETY. THAT THE SAME, DUE TO THE RECEIPTS DIRECT AND INDIRECT, FL OWING FROM THIS EVENT, :- 11-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE EXCEEDING THE THRESHOLD LIMIT OF RS. 25 LACS, SO TH AT THE SAME DISQUALIFIES ITSELF AS A CHARITABLE PURPOSE, IN VIEW OF THE AMENDED LAW , IS ANOTHER MATTER ALTOGETHER, I.E., IS BESIDES THE POINT, WHICH MAKES THE APPLICATION OF THE SAID INCOME FOR CHARITABLE PURPOSE ALSO AS OF NO CONSEQU ENCE. FURTHER, THERE IS NO RECEIPT DURING THE YEAR FROM EDUCATION ACTIVITY, WH ICH COULD PERHAPS BE ON ACCOUNT OF NO COURSES CONDUCTED DURING THE YEAR, UN LIKE A SIX DAY TRAINING PROGRAM IN THE IMMEDIATELY PRECEDING YEAR, FETCHING SOME RECEIPT. THIS FACT BY ITSELF WOULD NOT BE MATERIAL IN-AS-MUCH, ASSUMING I T TO BE EDUCATION, CAN NEITHER BE SAID TO BE UNDERTAKEN ON A REGULAR BASIS SO AS T O IMBUE THE INSTITUTION WITH THE CHARACTER OF AN EDUCATIONAL INSTITUTION, AND IS AMO NG THE SEVERAL ACTIVITIES UNDERTAKEN BY THE ASSESSEE. IN SUM 5. THE ASSESSEES OBJECT CLAUSE CLEARLY SPECIFIES T HE OBJECTS FOR WHICH IT IS SET UP. THE VARIOUS PUBLIC PRONOUNCEMENTS AND PROJECTI ONS BY IT (THROUGH THE MEDIA), AS THEIR READING SHOWS, ARE ALSO IN CONSONA NCE THEREWITH. IT IS THE OBJECT CLAUSE IN THE CONSTITUTION WITH REFERENCE TO WHICH ITS CHARACTER, OR THE PREDOMINANT CHARACTER, I.E., IN CASE OF SOME AMBIVA LENCE AND DIVERGENCE THEREIN, ABSENT IN THE PRESENT CASE, SHALL HAVE TO BE DETERMINED. THIS IS MORE SO IN THE INSTANT CASE AS IT IS NOT DISPUTED THAT THE ACTIVITIES ARE BEING CARRIED OUT ONLY IN PURSUANCE TO ITS OBJECTS. REFERENCE IN THIS CONTEXT MAY BE MADE TO THE DECISION IN DELHI STOCK EXCHANGE ASSOCIATION LTD. V. CIT [1997] 225 ITR 235 (SC), WHEREIN IT STANDS CLARIFIED THAT WHAT IS RELE VANT IS THE LEGAL OBLIGATION CAST ON THE ASSESSEE. IN THE PRESENT CASE, IT IS THE OBJ ECTS AS SET OUT IN ITS CHARTER WHICH DEFINE THE PURPOSE FOR WHICH IT IS ESTABLISHE D. WE HAVE ALREADY NOTED THAT WE OBSERVE NO DISAGREEMENT BETWEEN THE SAME (OBJECT S) AND ITS ACTIVITIES CARRIED IN PURSUANCE THERETO. RATHER, WHERE SO, IT WOULD ONLY IMPLY THAT THE SAID ACTIVITIES ARE NOT IN PURSUANCE TO THE ASSESSEES O BJECTS, SO AS TO BE CONSIDERED AS VALIDLY PERFORMED, OR JUDGE ITS CHARACTER ON THAT BASIS. THE IRRESISTIBLE :- 12-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE CONCLUSION THAT STEMS FROM THE READING OF THE OBJEC T CLAUSES, WHICH ARE INTERNALLY IN HARMONY, IS THAT THE ASSESSEE IS FORMED TO PROMOTE THE INDIAN COMPOSITE INDUSTRY, INCLUDING THE UP-GRADATION OF F RP COMPOSITES TECHNOLOGY . ITS ENGAGEMENT WITH DIFFERENT STAKE-HOLDERS, INCLU DING EDUCATIONAL INSTITUTIONS, IS ONLY TO SUB-SERVE THAT LARGER PURPOSE. IT IS THE SE EDUCATIONAL INSTITUTIONS THAT ARE IN THE FIELD OF AND ENGAGED IN EDUCATION. IT, A PROFESSIONAL ASSOCIATION, PROVIDES A PLATFORM FOR EXCHANGE OF KNOWLEDGE BETWE EN ITS MEMBERS, DRAWN FROM THE RELEVANT INDUSTRY; THE INDUSTRIAL HOUSES; MERCHANDISERS; POTENTIAL USERS, ETC., AS WELL AS TO CONVEY THE DEVELOPMENTS AND TRE NDS IN THE RELEVANT FIELD. RESEARCH AND DEVELOPMENT, WHICH AGAIN CANNOT BE SA ID TO BE ASSESSEES DOMAIN; IT NOWHERE BEING ABLE TO SHOW TO HAVE THE E XPERTISE; INFRASTRUCTURAL FACILITIES; AND TECHNICALLY SKILLED MANPOWER, SO AS TO ENGAGE THEREIN THE SAME BEING THE CASE QUA EDUCATION AS WELL, IS AN ONGOING PROCESS IN ANY I NDUSTRY, OFFERING NEW PRODUCTS AND PROCESSES. TECHNOLOGY IN THAT SENSE IS AN INTEGRAL PART OF MODERN DAY LIFE, PROVIDING THE CUTTING EDGE IN EVERY INDUSTRY; IN FACT, IN EVERY SPHERE OF HUMAN ENDEAVOUR. WE HAVE ONLY TO LO OK AROUND FOR EVERYDAY PRODUCTS BEING USED NOW, WITH REFERENCE TO THAT BEI NG USED, SAY, A DECADE OR EVEN A FEW YEARS EARLIER, IN EVERY ASPECT OF HUMAN LIFE, VIZ. FOOD (PROCESSING); CLOTHING; HOUSING; CONVEYANCE; COMMUNICATIONS; ETC. TO FIND THEM HAVING WITNESSED A NEAR REVOLUTION THEREIN. IN FACT EVERY INDUSTRIAL HOUSE OF SOME REPUTE HAS A SEPARATE WING FOR RESEARCH AND DEVELOP MENT, CREATING NEW FRONTIERS IN SCIENCE AND TECHNOLOGY IN ITS RELEVANT FIELD, W HICH IT ENGAGES IN TO EXPLOIT COMMERCIALLY. THE SAME CANNOT EVEN REMOTELY BE REGA RDED AS IN PURSUIT OF EDUCATION EXCEPT WHERE CARRIED OUT BY AN EDUCATIONA L INSTITUTION ITSELF, ENGAGED IN THE ACTIVITY OF PROVIDING EDUCATION. THE ASSESSE E HAS ALSO NOT SHOWN TO HAVE THE CAPACITY FOR EDUCATIONAL ACTIVITY IN REGULAR MA NNER, I.E., AS A PRINCIPAL ACTIVITY, THE ESSENCE OF WHICH IS SCHOLASTIC INSTRU CTION, HOWSOEVER EXECUTED, IMPARTED IN A SYSTEMATIC MANNER. AS POINTED OUT BY THE REVENUE, THERE IS NO INCOME OR EXPENDITURE WITH REFERENCE TO THIS ACTIVI TY IN ITS STATEMENT. THIS IS :- 13-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE ONLY UNDERSTANDABLE AS THE ACADEMIC INSTITUTIONS AR E ONLY ONE AMONG THE VARIOUS STAKE-HOLDERS WITH WHICH THE ASSESSEE ENGAGES, SO T HAT EVEN A RECEIPT FROM THIS ACTIVITY DURING THE YEAR WOULD HAVE NO MATERIAL IMP ACT. IN FACT, AS WE OBSERVE, THE ENGAGEMENT WITH THE EDUCATIONAL INSTITUTIONS IS ON THE FRINGE, THOUGH, AS IT APPEARS, IS SLATED TO BE EXPANDED IN FUTURE. ITS O PERATIONS AS AFORESAID ARE PRIMARILY AS THAT CARRIED OUT BY THE INDUSTRIAL/PRO FESSIONAL ASSOCIATION/BODY. THE LD. CIT(A) HAS IN OUR VIEW MISGUIDED HIMSELF T O CONSTRUE THE WORD EDUCATION AS OCCURRING IN S. 2(15) IN ITS WIDEST SENSE. AS EXPLAINED BY THE APEX COURT, SO CONSIDERED, ANY ACTIVITY WOULD QUALI FY TO BE EDUCATION. ANY CONSTRUCTIVE ACTION WOULD, AND INDEED EVEN A DESTRU CTIVE OR NEGATIVE ONE, INASMUCH AS IT ENTAILS A LEARNING EXPERIENCE, AS EX PLAINED BY THE APEX COURT IN SOLE TRUSTEE, LOK SIKSHANA TRUST (SUPRA), WOULD BE EDUCATION IN ITSELF. IT IS ONLY THE ACTUAL CONDUCT OF EDUCATIONAL COURSES, WHERE AC CREDITED, CONDUCTED UNDER THE AUSPICES OF A FORMAL SET UP, SO AS TO BE RECOGN IZED IN THE FIELD OF EDUCATION, WHICH WOULD STAND TO BE REGARDED AS SO. THE ASSESSEE'S OBJECTS AND ACTIVITY THUS ONLY FALL WITHIN THE PURVIEW OF THE RESIDUARY CATEG ORY OF SEC. 2(15), I.E., ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY , SO THAT FIRST PROVISO THERETO SHALL APPLY, CLEARLY DEBARRING THE ASSESSEE ON ACCOUNT OF ITS RECEIPT FOR THE YEAR FOR BEING SUBJECT TO EXEMPTION U/S. 11 OF THE ACT. THE LAW IN THE MATTER IS WELL SETTLED, AND WE HAVE APPLIED THE SAME TO TH E FACTS OF THE CASE. REFERENCE TO THE CASE LAW RELIED UPON BY THE ASSESSEE, WHICH WE HAVE THOUGH PURSUED, WOULD ONLY AMOUNT TO BURDENING THIS ORDER FURTHER. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON MARCH 20, 2017 AT CHENNAI. SD/- SD/- ( . ) ( ) ( G. PAVAN KUMAR ) ( SANJAY ARORA ) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER :- 14-: ITA NO.1385/MDS/2015 (2011-12) ITO (EXEMPTIONS) V. FRP INSTITUTE /CHENNAI, 1 /DATED: MARCH 20, 2017 EDN, JPV 2 % '!)34 54+) /COPY TO: 1. #$ /APPELLANT 2. '(#$ /RESPONDENT 3. 6) ( )/CIT(A) 4. 6) /CIT 5. 478 '!)! /DR 6. 89: ; /GF