New Elim Charitable and Educatonal Trust, Cochin V. CIT, Cochin

ITA 455/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68995 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2013
• Assessment Year: misc
• Appeal Filed On: 21-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: SUKUMAR NAINAN OOMMEN
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

1 ITA NO. 455/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 455/COCH/2013 NEW ELIM CHARITABLE & EDUCATIONAL TRUST VS C.I.T.-1 NO.39/1604, GROUND FLOOR COCHIN-1 ELAVANAL ENCLAVE KANNANTHODATHU LANE VALANJAMBALAM, KOCHI-682 016 PAN : AABTN1301Q (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI SUKUMAR NAINAN OOMMEN RESPONDENT BY : SMT. LATHA V KUMAR DATE OF HEARING : 08-10-2013 DATE OF PRONOUNCEMENT : 25-10-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE ADMINISTRATIVE COMMISSIONER DATED 26-04-2013 REJECT ING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. 2. SHRI SUKUMAR NAINAN OOMMEN, THE LD.COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE TRUST WAS ESTABLISHED B Y A REGISTERED DEED OF TRUST EXECUTED ON 02-07-2008 TO ESTABLISH EDUCATION AL INSTITUTION. IN 2 ITA NO. 455/COCH/2013 FURTHERANCE OF THE OBJECT OF THE TRUST, THE ASSESSE E HAS ESTABLISHED AN INSTITUTION TO PROVIDE STUDY CENTRE OF KARNATAKA OP EN UNIVERSITY. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE WA S AN AUTHORIZED CENTRE OF KARNATAKA OPEN UNIVERSITY TO ADMIT STUDENTS AND PROVIDE EDUCATION AS PER THE CURRICULUM OF KARNATAKA OPEN UNIVERSITY. A CCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX M ISUNDERSTANDING THE FACT SIMPLY SAYS THAT THE ASSESSEE WAS DISTRIBUTING STUDY MATERIAL AND PROVIDES LOCAL EXAMINATION CENTRE FACILITY FOR THE EXAMINATION CONDUCTED BY KARNATAKA OPEN UNIVERSITY. ACCORDING TO THE LD.REP RESENTATIVE, 70% OF THE FEE CHARGED BY THE ASSESSEE TRUST GOES TO THE ASSES SEE. THE FEES PRESCRIBED FOR ADMISSION OF THE STUDENT IS PAID BY DEMAND DRAFT IN FAVOUR OF THE TRUST. THEREFORE, ACCORDING TO THE LD.REPRESEN TATIVE, THE COMMISSIONER OF INCOME-TAX IS NOT CORRECT IN REJECTING THE APPLI CATION OF THE ASSESSEE. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON VARIOU S JUDGMENTS OF THE HIGH COURTS IN SUPPORT OF HIS CONTENTION. 3. ON THE CONTRARY, SMT. LATHA V KUMAR, THE LD.DR S UBMITTED THAT THE ASSESSEE IS ACTING AS AGENT / STUDY CENTRE FOR KARN ATAKA OPEN UNIVERSITY. THEREFORE, IT CANNOT BE CONSIDERED TO BE AN EDUCATI ONAL INSTITUTION. AN ORGANIZATION MERELY PROVIDING FACILITIES FOR OPEN U NIVERSITY STUDIES CANNOT BE CONSIDERED TO BE A REGULAR SCHOOL / COLLEGE. TH EREFORE, THE 3 ITA NO. 455/COCH/2013 COMMISSIONER OF INCOME-TAX HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ALL MODE S OF ACQUIRING KNOWLEDGE CANNOT BE CONSIDERED TO BE AN EDUCATIONAL ACTIVITY. THE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS COMMISSIONER OF INCOME-TAX (1975) 101 ITR 234 (SC) HAD AN OCCASION TO CONSIDER THIS ISSUE. THE APEX COURT FOUND THAT ALL KINDS OF ACQUISITION OF KNOWLEDGE CANNOT BE CONSIDERED TO BE EDUCATION. ONLY EDUCATION ACQUIRED IN THE COURSE OF NORMAL SCHOOLING HAS TO B E CONSIDERED AS EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. THIS TRIBUNAL HAD AN OCCASION TO EXAMINE AN IDENTICAL ISSUE IN TH E CASE OF M STAR CHARITABLE SOCIETY IN ITA NO.605/COCH/2011 IN ORDER DATED 14/12/2012. IN FACT, THIS TRIBUNAL, AFTER CONSIDERING THE JUDGMENT OF THE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST (SUPRA) HAS OBSERVED AS FOLLOWS: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON REC ORD. ADMITTEDLY, THE TAXPAYER IS RUNNING COACHING CLASSE S. THE TAXPAYER IS NOT DOING ANY OTHER ACTIVITY. THE QUES TION ARISES 4 ITA NO. 455/COCH/2013 FOR CONSIDERATION IS WHETHER CONDUCTING COACHING CL ASSES FOR THE STUDENTS WOULD FALL WITHIN THE MEANING OF EDUC ATION AS PROVIDED IN SECTION 2(15) OF THE ACT. THE APEX COU RT HAD AN OCCASION TO CONSIDER THE PROVISIONS OF SECTION 2(15 ) OF THE ACT IN SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS COMMISSION ER OF INCOME-TAX (1975) 101 ITR 234 (SC). AFTER CONSIDER ING THE PROVISIONS OF SECTIONS 2(15) OF THE ACT, THE APEX C OURT FOUND THAT ALL KINDS OF ACQUIRING KNOWLEDGE WILL NOT COME WITHIN THE MEANING OF EDUCATION. WHAT EDUCATION. CONNOTES IN SECTION 2(15) IS THE PROCESSING OF TRAINING AND DEV ELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING. IN FACT, THE APEX COURT HAS OBSERVED AS FOLLOWS AT PAGE 241 OF THE ITR: 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 PREPARA TION FOR THE WORK OF LIFE. IT ALSO CONNOTES THE WHOLE C OURSE 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 ACQUISITIO N 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, IF YOU READ NEWSPAPERS AND MAGAZINES, SEE PICTURES, VISIT ART GALLERIES, MUSEUMS AND ZOOS, YO U THEREBY ADD TO YOUR KNOWLEDGE. AGAIN, WHEN YOU GRO W UP AND HAVE DEALINGS WITH OTHER PEOPLE, SOME OF WHO M 5 ITA NO. 455/COCH/2013 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 MA KE 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 MYSTERI ES OF LIFE. ALL THIS IN A WAY IS EDUCATION IN THE GRE AT SCHOOL OF LIFE. BUT THAT IS NOT THE SENSE IN WHICH THE WO RD EDUCATION IS USED IN CLAUSE (15) OF SECTION 2. W HAT 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 WOU LD BE ABUNDANTLY CLEAR THAT THERE SHOULD BE A SYSTEMATIC INSTRUCTION TO THE STUDENTS BY WAY OF NORMAL SCHOOLING. MERE C OACHING CLASSES MAY PROVIDE SOME KIND OF KNOWLEDGE TO THE S TUDENTS. BUT THAT KIND OF ACQUISITION OF KNOWLEDGE THROUGH C OACHING CLASSES CANNOT FALL WITHIN THE MEANING OF EDUCATIO N 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 THAT KIND OF KNOWLEDGE CANNOT FALL WITHIN THE TERM EDUCATION AS PROVIDED IN SECTION 2(15) OF THE ACT. THERE SHO ULD BE A NORMAL SCHOOLING BY WAY OF REGULAR AND SYSTEMATIC I NSTRUCTION. 6 ITA NO. 455/COCH/2013 7. THE PATNA HIGH COURT IN THE CASE OF BIHAR INSTIT UTE OF MINING AND MINE SURVEYING VS C.I.T. (1994) 208 ITR 608 (PAT) HELD THAT MERE CONDUCTING OF CLASSES FOR OPEN UNIVE RSITY / DISTANCE EDUCATION CANNOT BE CONSTRUED AS CHARITABL E ACTIVITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. TH E PATNA HIGH COURT, AFTER CONSIDERING THE JUDGMENT OF THE A PEX 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 SH IKSHANA TRUST (1970) 77 ITR 61 (MYS) HAS OBSERVED AS FOLLOW S AT PAGE 615 OF THE ITR: IT IS TRUE THAT BY REASON OF THE FINANCE ACT, 198 3, THE QUESTION AS TO WHETHER ANY CHARITABLE INSTITUTION I S BEING RUN WITH A PROFIT MOTIVE OR NOT HAS LOST ITS RELEVA NT. 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 PETITIONERS I NSTITUTION HAS THE OBJECT OF COACHING AND PREPARING THE STUDEN TS 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 INST ITUTE IS NOT, IN OUR OPINION, AN IMPARTING OF EDUCATION WHIC H 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 7 ITA NO. 455/COCH/2013 DEFINITION OF CHARITABLE PURPOSE IS INCLUSIVE AND NOT EXHAUSTIVE. 8. IT IS FURTHER SEEN THAT THE GUJARAT HIGH COURT A LSO 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 EDUC ATION WOULD NOT FALL WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. THE TRAINING, INSTRUCTION, ETC. WOULD RESULT IN GRANT O F A DIPLOMA OR DEGREE BY A UNIVERSITY OR A GOVERNMENTAL AGENCY. I N THE CASE BEFORE US, ADMITTEDLY, THE TAXPAYER IS CONDUCTING C OACHING CLASSES. THEREFORE, IT CANNOT BE TREATED AS A CHAR ITABLE INSTITUTION AS PROVIDED IN SECTION 2(15) OF THE ACT . THIS TRIBUNAL IS OF THE OPINION THAT THE TAXPAYER IS NOT ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. ACCORDINGLY, THE ORDER OF THE LOWER AUTHORITY IS CONFIRMED. 5. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT CONDUCTING A STUDY CENTRE FOR KARNATAKA OPEN UNIVER SITY CANNOT BE CONSIDERED TO BE AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME-TAX ACT. THEREFORE, THE ASSESS EE IS NOT ENTITLED FOR REGISTRATION. IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST (SUPRA), THE JUDGMENT S OF THE VARIOUS HIGH COURTS RELIED UPON BY THE LD.REPRESENTATIVE FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE. ACCORDINGLY, THE ORDER OF THE 8 ITA NO. 455/COCH/2013 ADMINISTRATIVE COMMISSIONER IS CONFIRMED AND THE AP PEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH OCTOBER, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 25 TH OCTOBER, 2013 PK/- COPY TO: 1. NEW ELIM CHARITABLE & EDUCATIONAL TRUST, NO.39/1 604, GROUND FLOOR, NO.39/1604, GROUND FLOOR, ELAVANAL ENCLAVE, KANNANT HODATHU LANE, VALANJAMBALAM, KOCHI-682 016 2. THE COMMISSIONER OF INCOME-TAX-I, KOCHI 3. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH