RUDRAKASH PROFESSIONAL TRUST, Jaipur V. CIT, Jaipur

ITA 338/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9688 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA MEHTA CIT DHK
• Assessee Lawyers: NIKHLESH KATARIACA
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 338/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : N.A. RUDRAKASH PROFESSIONAL EDUCATION TRUST, PLOT NO.-29, JAISHINGHPURA ROAD, OPPOSITE CEMENT GODAM, AJMER ROAD, JAIPUR (RAJ.)-302026 CUKE VS. THE COMMISSIONER OF INCOME TAX JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACTR4843G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI NIKHLESH KATARIA(CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VIRENDRA MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02.03.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21/03/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (E),JAIPUR DATED 27.10.2015. THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THE ASSESSMENT ORDER PASSED U/S 12AA(1)(B) IS BAD IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE AND HENCE, THE SAME MAY P LEASE BE DELETED. 2.1 THE LD. CIT(E) ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN HOLDING THE OBJECTS AND ACTIVITIES OF THE TRUST AS NOT CHARITABLE IN NATURE. 2.2 THE LD. CIT(E) ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN REFUSING THE ASSESSEE TO GRANT EXEMPTION U/S 12AA O F THE IT ACT, 1961. 3. THE APPELLANT PRAYS YOUR HONOURS INDULGENCE TO ADD, AMEND, MODIFY OR DELETE ALL OR ANY GROUND OF APPEAL. 2. BRIEFLY, STATED THE FACTS ARE THAT THE ASSESSEE FILED AN APPLICATION IN THE FORM NO. 10A, SEEKING REGISTRATION U/S 12AA OF THE INCOM E TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT). THE SAID APPLICATION WAS REJECTED BY THE LD. CIT ON THE 2 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. GROUND THAT THE ACTIVITY OF THE TRUST ARE NOT CHARI TABLE NATURE, AS IT IS RUNNING TECHNICAL COURSE. THE LD. COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE CONTENTION OF THE ASSESSEE IS THAT, THE LD. CIT HAS NOT APPRECIATED THE FACT IN RIGHT PERSPECTIVE. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE JUDGMENT OF HONBLE DE LHI HIGH COURT RENDERED IN THE CASE OF DELHI MUSIC SOCIETY VS. DGIT 357 ITR 265(DE L) ALSO DECISION OF THE CO- ORDINATE BENCH RENDERED IN THE CASE OF ADDITIONAL D IRECTOR OF INCOME TAX(E) VS. SAMUDRA INSTITUTE OF MARITIME STUDIES TRUST ITA 266 8/MUM/2012. 3. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE HAS OPPOSED THE SUBMISSION AND SUBMITTED THAT THE ACTIVITIES OF THE ASSESSEE IS NOT OF CHARITABLE NATURE AS HAS BEEN IMPARTING THE TECHNICAL COURSES. THERE IS NO SYSTEMATIC SCHOOL EDUCATION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE APPLICATION OF THE ASSESSEE WAS REJECTED BY THE LD. CIT (E) BY OBSERVI NG AS UNDER: 6. ON EXAMINATION OF DETAILS FILED BY THE APPLICAN T, IT IS NOTICED THAT TRUST IS RUNNING TWO PROFESSIONAL COURSES OF PROVIDING TR AINING IN THE FIELD OF WELDING AND FABRICATION AND HOTEL ASSISTANCE. THE TRAINING IS PROVIDED AFTER CHARGING PRESCRIBED FEE FOR A PARTICULAR COURSE. TH E PROVISIONAL INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDING ON 31/03/20 15 REPRODUCED AS UNDER:- PROVISIONAL INCOME AND EXPENDITURE ACCOUNT (F.Y. 20 14-15) EXPENDITURE AMOUNT INCOME AMOUNT ACTIVITY EXPENSES 17425.00 COURSE FEES 169500.00 AUDIT FEE 5618.00 BANK CHARGES 112.00 CONVENYANCE EXP. 4274.00 LEGAL FEE 5100.00 PRINTING & STATIONARY 8463.00 RENT EXP. 30000.00 3 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. SALARY 110486.00 SURPLUS TRANSFERRED TO CORPUS FUND ( - ) 11978.00 TOTAL 169500.00 TOTA L 169500.00 FROM THE INCOME & EXPENDITURE ACCOUNT, IT IS CLEAR THAT THE TRUST IS EARNING INCOME IN THE FORM OF FEE CHARGED FROM RUNNING OF V OCATIONAL COURSES. THIS SORT OF ACTIVITY CANNOT BE REGARDED AS EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. 7. THE WORD EDUCATION USED IN SECTION 2(15) FOR C HARITABLE PURPOSE STIPULATES THE SYSTEMATIC EDUCATION OR SCHOLASTIC. THE APEX COURT HAD AN OCCASION THE PROVISIONS OF SE CTION 2(15) OF THE ACT IN SOLE TRUSTEES, LOKA SHIKSHANA TRUST VS. CIT [1975] 101 ITR 234 (SC). AFTER CONSIDERING THE PROVISIONS OF SECTION 2 (15) OF THE ACT, THE APEX COURT FOUND THAT ALL KINDS OF ACQUIRING KNOWLE DGE WILL NOT COME WITHIN THE MEANING OF EDUCATION. WHAT EDUCATION , CONNOTES IN CHARACTER OF STUDENTS BY NORMAL SCHOOLING. IN FACT S, THE APEX COURT HAS OBSERVED AS FOLLOWS AT PAGE 241 OF ITR: THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN USED IN SECTION 2(15) IS THE SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING G IVEN 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 EDUCATI ON, BECAUSE AS A TRAVELLING YOU ACQUIRE FRESH KNOWLEDGE, LIKEWISE, I F YOU READ NEWSPAPERS AND MAGAZINES, SEE PICTURES, VISIT ART GALLERIES, M USEUMS AND ZOOS, YOU THEREBY ADD TO YOUR KNOWLEDGE. AGAIN, WHEN YOU GRO W UP AND HAVE DEALING WITH OTHER PEOPLE, SOME OF WHOM ARE NOT STR AIGHTS, YOU LEARN BY EXPERIENCE AND THUS ADD TO YOUR KNOWLEDGE O THE WAY S 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 LESION AN IN THE PROCESS MAKE YOU WISER THOUGH POORER. IF YOU VISIT A NIGHT CLUB , YOU GET ACQUIRED WITH AND ADD TO YOUR KNOWLEDGE ABOUT SOME OF THE NOT MUC H REVEALED REALITIES AND MYSTERIES OF LIFE. ALL THIS IN A WAY IS EDUCAT ION IN THE GREAT SCHOOL OF LIFE. BUT THAT IS NOT THE SENSE IN WHICH THE WORK EDUCATION USED IN CLAUSE (15) OF SECTION 2. WHEAT EDUCATION CONNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING. 8. FROM THE ABOVE JUDGMENT OF THE APEX COURT IT WOU LD BE ABUNDANTLY CLEAR THAT THERE SHOULD BE A SYSTEMATIC INSTRUCTION TO THE STUDENTS BY WAY OF NORMAL SCHOOLING. MERE TRAINING ACTIVITIES MAY PROVIDE SOME 4 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. KIND OF KNOWLEDGE TO THE STUDENTS. BUT THAT KIND O F ACQUISITION OF KNOWLEDGE THROUGH TRAINING COURSES CANNOT FALL WITH IN 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 O F TRAVELLING; DURING THE COURSE OF READING NEWSPAPER; ETC. BUT TH AT KIND OF KNOWLEDGE CANNOT FALL WITHIN THE TERM EDUCATION A S PROVIDED IN SECTION 2(15) OF THE ACT. THERE SHOULD BE A NORMAL SCHOOLING BY WAY OF REGULAR AND SYSTEMATIC INSTRUCTION. 8. FROM THE DISCUSSION MADE ABOVE, IT IS CLEAR THAT THE ACTIVITIES OF THE TRUST ARE NOT CHARITABLE IN NATURE AS IT IS RUNNING TECHNICAL COURSES, THEREFORE, IT CANNOT BE HELD AS CHARITABLE WITHIN T HE MEANING OF SECTION 2(15) OF INCOME-TAX ACT, 1961. 5. LD. COUNSEL HAS PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF DELHI MUSIC SOCIETY VS. DIR ECTOR GENERAL OF INCOME TAX. THE HONBLE HIGH COURT HELD THAT HONBLE SUPREME COURT IN THE CASE OF LOKA SHIKSHANA TRUST HAS HELD THAT THERE SHOULD BE A PROCESS OF TR AINING AND DEVELOPING THE KNOWLEDGE SKILL, MIND AND CHARACTER OF THE STUDENTS BY PROCESS OF NORMAL SCHOOLING. WE FIND THAT THE HONBLE COURT HAS OBSERVED THAT NO RMALLY COACHING CENTRE IS RUNNING FOR SHORTER PERIOD AND THERE HAVE NO STRICT RULES AND REGULATIONS AS IN EDUCATIONAL INSTITUTIONS. THERE IS NO SUCH THING A S AN ACADEMIC YEAR, STRICT DISCIPLINE AND REQUIREMENT OF ATTENDANCE ARE NOT ARE NOT ENFOR CED. FURTHER THEY ARE RUN ON COMMERCIAL LINES AND WITH A PROFIT MOTIVE AS PER TH E OBJECT OF THE SOCIETY. THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGHT TO OUR NOTICE THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF ADDITIONAL DIRECTOR O F INCOME TAX(E) VS. SAMUDRA INSTITUTE OF MARITIME STUDIES TRUST ITA 2668/MUM/20 12, WHEREIN THE COORDINATE BENCH DECIDED THE ISSUE AS UNDER: 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE CLAIM FOR THE 5 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. ASSESSEE FOR EXEMPTION U/S 11 WAS DISALLOWED BY THE AO IN AY-2007- 08 ON THE SIMILAR GROUND AND THE ORDER OF THE LD. C IT(A) REVERSING THE ORDER OF THE AO AND ALLOWING THE CLAIM OF THE ASSES SEE FOR EXEMPTION CLAIM U/S 11 WAS UPHELD BY THE TRIBUNAL VIDE ITS OR DER DATED 30/11/2011 PASSED IN ITA NO. 5760/MUM/2010 FOR THE REASONS GIVEN IN PARA 9.6 WHICH READS AS UNDER: WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF S.R.M FOUNDATION OF INDIA(SUPRA) WHILE DECIDING THE ISSUE U/S.10(22) OF THE IT ACT HAS HEL D THAT THERE IS NO REQUIREMENT PRESCRIBED U/S 10(22) THAT THE INSTITUTION SHOULD BE RECOGNIZE D BY AN UNIVERSITY OR STATE OR CENTRAL GOVERNMENT. THE TRIBUNAL IN THE SAID DECISION HELD 33 LESSONS OF WHAT IS TERMED A SCIENCE OF CREATIVE INTELLIGENCE (SCI) WHICH ARE IN THE NATUR E OF YOGA CLASSES AS EDUCATION. THE TRIBUNAL WHILE DECIDING THE ISSUE HAS CONSIDERED THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHAN TRUST (SUPRA). WE FI ND THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT ITS C AE. THE DECISION IN THE CASE OF BIHAR INSTITUTE OF MINING AND MINE SURVEYING (SUPRA) IN O UR OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE IT WAS COACHING OF STUDENTS FOR PARTICULAR EXAMINATION, FOR WHICH IT WAS HELD THAT COACHING INSTITUTION IS NOT A CHARITABLE INSTITUTION WITHIN THE MEANING OF SECTION 2(15). HOWEVER, IN THE INSTANT CASE THE ASSESSEE IS GIVING TRAINING IN THE AREA OF PRE SEA AND POST SEA TO SEA MEN. THE VARIOUS OTHER DECISIONS RELIED ON BY THE AO ARE ALSO DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN OUR OPINION, MERELY BECAUSE THE COURSES ARE NOT APPROVED BY THE DG SHIP PING OR MERELY BECAUSE THERE IS HUGE SURPLUS IN THE NON-APPROVED COURSES THAN THE APPROV ED COURSES CANNOT BE A GROUND FOR DENIAL OF EXEMPTION U/S 11 AS LONG AS THE TRUST IS IMPARTING EDUCATION AS PER THE OBJECTS OF THE TRUST. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED OBSERVATION GIVEN BY THE LD. CIT(A) ON THIS ISSUE WE DO NOT FIND ANY INFIRMITY I N THE SAME AND ACCORDINGLY THE SAME IS UPHELD. THE GROUNDS RAISED BY THE REVENUE ARE ACCO RDINGLY DISMISSED. 6. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDER ATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF ASSESSMENT YEAR 2007-08, WE RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL RENDERED FOR ASSESSMENT YEAR 2007-08 AND UPHOLD THE ORDER OF THE LD. CIT(A) ALLOWING THE CLAIM OF THE A SSESSEE FOR EXEMPTION U/S 11 OF THE ACT. ONE OF THE OBJECT OF THE ASSESSEES TRUST IS THAT T O ESTABLISHMENT OF TRAINING AND SCHOOLING DEVELOPMENT CENTRE AND INSTITUTIONS FOR P ROFESSIONAL EDUCATION AND TRAINING. AS PER THE ASSESSEE IT HAS BEEN PROVIDING VOCATIONAL COURSES WHICH CANNOT BE EQUATED WITH ANY COACHING INSTITUTE. THE ASSESS EE IS ALSO IMPARTING PROFESSIONAL COURSES. WE NOTICE THAT, THE ASSESSEE HAS ALSO OTH ER OBJECTIVES AS PER THE TRUST 6 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. DEED. THEREFORE, AFTER CONSIDERING THE TOTALITY OF THE FACTS AND IN THE LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH RENDERED IN THE C ASE OF ADDITIONAL DIRECTOR OF INCOME TAX(E) VS. SAMUDRA INSTITUTE OF MARITIME STU DIES TRUST ITA 2668/MUM/2012, WHERE OF THE VIEW THAT CIT SHOULD RECONSIDERED APPL ICATION OF THE ASSESSEE FOR REGISTRATION AFTER CONSIDERING THE CASE LAWS AS REL IED BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION THE APPLICATION OF THE ASSEESSEE I S RESTORED TO THE FILE OF THE LD. CIT FOR DECISION AFRESH. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 338/JP/2016 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .03. 2017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 21/03/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- RUDRAKSH PROFESSIONAL EDUCATION TRUST, JAIPUR. 2. THE RESPONDENT THE COMMISSIONER OF INCOME TAX, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 338/JP/2016) VKNS'KKUQLKJ@ BY ORDER, 7 ITA NO. 338/JP/2016 RUDRAKASH PROFESSIONAL EDUCATION TRUST. LGK;D IATHDKJ@ ASSISTANT. REGISTRAR