NIIT Foundation, New Delhi V. CIT(E), New Delhi

ITA 4868/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1295 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 28-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMITA M BISWAS
• Keywords: Business income; Business expenditure; Charitable institution; Opportunity of being heard; Principle of natural justice; Assessment record; Capital expenditure; TDS; Set aside
• Section: 143(3); 80G; 12A; 12AA; 195; 201; 208; 194J; 13; 119; 22; 263; 12; 11

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA NO. 4868/DEL/2019 (ASSESSMENT YEAR: 2014-15) NIIT FOUNDATION, PLOT NO. 8, BALAJI ESTATE, SUDARSHAN MUNJAL MARG, KALKAJI, NEW DELHI PAN: AACAN3951E VS. CIT(E), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI YOGESH THAR , CA SHRI ANKIT AGARWAL, CA REVENUE BY: MS. PARMITA M. BISWAS, CIT DR DATE OF HEARING 19/03/2020 DATE OF PRONOUNCEMENT 27/05/2020 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (EXEMPTION), NEW DELHI DATED 26.03.2018 FOR THE ASS ESSMENT YEAR 2014-15 U/S 263 OF THE ACT HOLDING THAT THE ASSESSMENT ORDE R PASSED U/S 143(3) OF THE ACT FOR ASSESSMENT YEAR 2014-15 ON 28.12.2016 B Y ITO EXEMPTION WARD-2(3), NEW DELHI ACCEPTING RETURNED INCOME OF T HE ASSESSEE AT RS. NIL IS ERRONEOUS, SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- GROUND I: WANT OF NATURAL JUSTICE 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED COMMISSIONER INCOME TAX (EXEMPTIONS), NEW D ELHI ['THE CIT'] ERRED IN PASSING THE ORDER U/S. 263 OF INCOME TAX A CT, 1961 ('THE ACT') WITHOUT GIVING A FAIR AND REASONABLE OPPORTUNITY HE ARING TO THE APPELLANT AND THEREBY VIOLATING THE PRINCIPLES OF N ATURAL JUSTICE. 1.2 THE APPELLANT PRAYS THAT THE ORDER OF THE CIT BE STRUCK DOWN AS BAD IN LAW. WITHOUT PREJUDICE TO GROUND NO. I GROUND II: CIT TRAVELLED BEYOND THE SHOW CAUSE NOTI CE ISSUED PAGE | 2 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT ERRED IN EXERCISING JURISDICTION UNDER SECTION 263 ON THE BASIS OF ISSUES/REASONS WHICH WERE NOT REFERRED IN THE SHOW CAUSE NOTICE ISSUED BY THE CIT TO THE APPELLANT AND WITHOUT GIVI NG THE APPELLANT THE OPPORTUNITY TO CONTROVERT THE SAME. 2.2 THE APPELLANT PRAYS THE ORDER PASSED BY THE CIT U/S. 263 BE HELD AS BAD IN LAW. WITHOUT PREJUDICE TO GROUND NO. I & II GROUND III: CIT INVOKED PROVISIONS OF SECTION 263 B ASED ON ALLEGED FACTS/ALLEGATONS WITHOUT ANY OPPORTUNITY OF REBUTTA L: 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT ERRED IN INVOKING PROVISIONS OF SECTION 263 OF THE ACT BASED ON ALLEGED FACTS AND ALLEGATIONS WITHOUT GIVING ANY OPPORTUNITY TO REBUT THE SAME AND THEREBY, VIOLATING THE PRINCIPLES OF NATURAL JUSTIC E. 3.2 THE APPELLANT PRAYS THE ORDER PASSED BY THE CI T OUGHT TO BE STRUCK DOWN AND SHOULD BE CONSIDERED AS BAD IN LAW. WITHOUT PREJUDICE TO GROUND NO. I, II & III GROUND IV: REVISION UNDER SECTION 263 OF THE ACT IS BAD IN LAW 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT ERRED IN INVOKING PROVISIONS OF SECTION 263 OF THE ACT AND DIRECTING REVISION OF THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT BY ITO(E), WARD 2(4), NEW DELHI ('THE AO') ON THE ALLE GED GROUND THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. 4.2 THE APPELLANT PRAYS THAT ORDER PASSED U/S. 263 OF THE ACT BE STRUCK DOWN AS NULL AND VOID AB INITIO WITHOUT PREJUDICE TO GROUND NO. I, II, III & IV GRO UND V: ACTIVITY OF THE APPELLANT IS IN THE NATURE OF EDUCA TION 5.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT ERRED IN HOLDING THAT THE ACTIVITY CARRIED OUT BY THE APPELL ANT IS NOT IN THE NATURE OF 'EDUCATION' WITHIN THE MEANING OF SECTION 2(15) OF THE ACT AND THEREBY INVOKING PROVISO TO SECTION 2(15) OF THE ACT; 5.2 THE APPELLANT PRAYS THAT IT BE HELD THAT THE A CTIVITY CARRIED OUT BY THE APPELLANT IS IN THE NATURE OF 'EDUCATION' WITHIN TH E MEANING OF SECTION 2(15) OF THE ACT AND THEREBY, THE PROVISO TO SECTIO N 2(15) OF THE ACT IS NOT APPLICABLE IN CASE OF THE APPELLANT. 5.3 THE APPELLANT PRAYS THAT IT BE HELD THAT THE A PPELLANT IS ENGAGED IN CHARITABLE ACTIVITY AS DEFINED U/S. 2(15) OF THE AC T AND IS ELIGIBLE FOR CLAIMING EXEMPTION U/S. 11 OF THE ACT. WITHOUT PREJUDICE TO GROUND NO. I, II, III, IV & V GROUND VI: ACTIVITY OF THE APPELLANT IS NOT IN THE NATURE OF B USINESS 6.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT ERRED IN HOLDING THAT THE ACTIVITY CARRIED OUT BY THE APPELL ANT IS IN THE NATURE OF PAGE | 3 TRADE, COMMERCE OR BUSINESS AND ACCORDINGLY, IT IS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT; 6.2 THE APPELLANT PRAYS THAT NATURE OF THE ACTIVIT Y OF THE APPELLANT BE HELD AS NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND ACCORDINGLY, BE HELD THE PROVISO TO SECTION 2(15) OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE APPELLANT. 3. BRIEF FACTS OF THE CASE SHOWS THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 AS PER CERTIFI CATE DATED 01.12.2004. IT IS ALSO REGISTERED U/S 12A AND RECOGNIZED U/S 80G (5) (VI) OF THE ACT AS PER ORDER DATED 07.03.2008. IT FILED ITS RETURN OF INCO ME ON 23.09.2014 DECLARING NIL INCOME. 4. THE ASSESSEE WAS FORMED WITH THE FOLLOWING OBJECTS: - 1. TO PROMOTE, SUPPORT AND STRENGTHEN EDUCATION, RE SEARCH AND TRAINING OF INFORMATION TECHNOLOGY AND ITS APPLICAT ION IN ALL FIELDS OF ACTIVITIES AND TO COLLABORATE, CO-OPERATE AND EN TER INTO PARTNERSHIPS WITH UNIVERSITIES, COLLEGES AND SCHOOL S FOR EXPANDING IT EDUCATION AND TRAINING TO PLAY AN ACTI VE ROLE IN THE HUMAN DEVELOPMENT INITIATIVES OF THE COUNTRY BY SUP PORTING AND SPONSORING, WHEREVER FEASIBLE, THE ESTABLISHMENT OF NEW UNIVERSITIES, COLLEGES AND SCHOOLS FOR ORGANIZING I NNOVATIVE IT EDUCATION AND TRAINING PROGRAM. 2. TO SUPPORT, SPONSOR AND COLLABORATE WITH TEACHE RS AND RESEARCHERS IN UNIVERSITIES AND RESEARCH INSTITUTIO NS TO DEVELOP IT ENABLED TEACHING AND LEARNING PARADIGM AND NEW EDUC ATION TECHNOLOGIES AND TO SPONSOR AND SUPPORT CONFERENCES , SEMINARS AND WORKSHOPS OF ACADEMICS AND PROFESSIONALS ENGAGE D IN IT AND RELATED FIELDS TO SHARE EXPERIENCES AND TO STRE NGTHEN INSTITUTION INDUSTRY LINKAGES. 3. TO CO-OPERATE WITH AND SEEK COOPERATION FROM UN IVERSITIES, RESEARCH INSTITUTIONS AND INDUSTRY IN DELHI FOR STR ENGTHENING AND MODERNIZING THE CURRICULA, TEACHING METHODS AND STU DENT ASSESSMENT PROCEDURES IN IT EDUCATION AND TRAINING. TO PLAY A CATALYTIC ROLE IN PROMOTING POPULARIZING AND EXPAND ING IT EDUCATION AND TRAINING ETC. THE ACTIVITIES OF THE A SSESSEE SOCIETY ARE CHARITABLE IN NATURE AND WITHIN THE MEANING OF SECTION 2(15) OF THE INCOME TAX ACT, 1961. 5. DURING ASSESSMENT PROCEEDINGS LD. AO ENQUIRED ABO UT THE OBJECT, ACTIVITY, RECEIPT OF FEES, TDS ITS RECONCILIATION WITH FORM N O 26AS, SERVICE TAX PAYMENTS AND ITS NATURE, DETAILS OF DONORS/ CONTRIB UTORS ETC. THERE WAS HUGE COMMUNICATION BY THE ASSESSEE, WHICH WE WILL COME TO LATER ON. THEREFORE, LD. AO HELD THAT ASSESSEE SOCIETY IS ENG AGED IN EDUCATIONAL ACTIVITY U/S 2 (15) OF THE ACT AND ELIGIBLE FOR BEN EFITS U/S 11 & 12 OF THE INCOME TAX ACT. THE LD AO COMPUTED THE TOTAL INCOME AS PER INCOME AND PAGE | 4 EXPENDITURE ACCOUNT OF RS. 45341153/- REDUCED IT EX EMPT THE EXPENDITURE APPLIED FOR THE OBJECT OF THE TRUST TO RS. 41325810 /- AND BALANCE AMOUNT WAS FOUND TO BE LESS THAN 15% OF THE INCOME OF THE SOCIETY AND THEREFORE, INCOME WAS COMPUTED AT RS. NIL. THE LD. AO PASSED A N ORDER U/S 143(3) OF THE ACT ON 30.11.2016 DETERMINED THE TOTAL INCOME O F THE ASSESSEE AT RS. NIL 6. ON EXAMINATION OF THE RECORDS, THE LD. CIT(E) ISS UED SHOW CAUSE NOTICE U/S 263 OF THE ACT AS UNDER:- ASSESSMENT ORDER U/S 143(3) OF THE ACT FOR A.Y 201 4-15, WAS PASSED IN THE CASE OF ABOVE ASSESSEE ON 28.12.2016 BY ITO (E) WARD-2(3), NEW DELHI ACCEPTING THE RETURNED INCOME AT NIL. 2. ON EXAMINATION OF THE ASSESSMENT RECORDS IT WAS PRIMA FACIE CONSIDERED THAT THE ASSESSMENT ORDER IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE PURP OSE OF THE PROVISIONS OF SECTION 263 OF THE ACT ON VARIOUS GROUNDS. ACCORDIN GLY, A SHOW CAUSE U/S 263 WAS ISSUED ON 15/16.11.2018 REQUIRING THE A SSESSEE TO EXPLAIN WHY THE AFORESAID ASSESSMENT ORDER SHOULD N OT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND HENCE AMENABLE TO REVISION UNDER SECTION 263 OF THE ACT. THE NOTICE SETTING OUT THE FACT OF THE CASE AND ISSUES INVOLVED IS REPRODU CED BELOW FOR REFERENCE:- SHOW CAUSE NOTICE:- IT IS NOTED THAT THE ASSESSMENT IN THIS CASE WAS CO MPLETED U/S 143(3) ON 30.11.2016 AT NIL INCOME. WHILE REVIEWING THE ASSESSMENT THE FOLLOWING OBSERVATIONS ARE MADE WITH REGARD TO THE QUALITY OF ASSESSMENT FRAMED:- 2. AS PER THE INCOME AND EXPENDITURE ACCOUNT, THE A SSESSEE HAS RECEIVED AN AMOUNT OF RS. 1,06,66,236/- AS TUIT ION FEES. THE ASSESSEE HAS ITSELF STATING THAT IT IS PROVIDING TR AINING TO YOUTH ACROSS INDIA. THE A.O. HAS FAILED TO EXAMINE WHETHE R THE ACTIVITIES CARRIED OUT BY THE ASSESSEE IN THE ABSEN CE OF AFFILIATION WITH ANY REGULATORY BODY AND ADHERENCE TO THE CRITE RIA FOR FORMAL EDUCATION LAID DOWN BY HON'BLE SUPREME COURT IN LOK SHIKSHAN SANSTHAN CASE, BY HON'BLE DELHI HIGH COURT IN DELHI MUSIC SOCIETY CASE ETC., STILL QUALIFY AS EDUCATION. IN C ASE IF THE ACTIVITIES OF THE ASSESSEE DO NOT QUALIFY AS EDUCATION, THESE WILL QUALIFY AS GENERAL PUBLIC UTILITY AND THE PROVISO TO SECTION 2 (15) WILL BE APPLICABLE IN SUCH CASE. THE ASSESSE HAS RECEIVED F EES FOR TRAINING STUDENT WHICH IS IN THE NATURE OF TRADE, C OMMERCE OR BUSINESS AND ACCORDINGLY THE SURPLUS FROM THESE ACT IVITIES SHOULD BE BROUGHT TO TAX. THIS IS FURTHER REQUIRED DUE TO THE FACT THAT THE RECEIPTS FROM DIFFERENT CORPORATE HOUSES HAVE BEEN SUBJECTED TO TDS U/S 194(J) AND THEREFORE, THE NATURE OF THESE R ECEIPTS IN COMMERCIAL IN NATURE. PAGE | 5 2.1 IN CASE IF THE ACTIVITIES OF THE ASSESSEE DO NO T QUALIFY AS EDUCATION, THESE WILL QUALIFY' AS GENERAL PUBLIC UT ILITY AND THE PROVISO TO SECTION 2(15) WILL BE APPLICABLE IN SUCH CASE. THE ASSESSEE HAS RECEIVED FEES FOR TRAINING STUDENT WHI CH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND ACCORDING LY THE SURPLUS FROM THESE ACTIVITIES SHOULD BE BROUGHT TO TAX. THIS IS FURTHER REQUIRED DUE TO THE FACT THAT THE RECEIPTS FROM DIFFERENT CORPORATE HOUSES HAVE BEEN SUBJECTED TO TDS U/S 194 (J) AND THEREFORE, THE NATURE OF THESE RECEIPTS IN COMMERCI AL AND NATURE. 2.2 THE REASONS FOR THE SELECTION OF THE CASE UNDER CASS IS THE TURNOVER FROM SERVICES REPORTED TO THE SERVICE TAX AUTHORITIES AMOUNTING TO RS.3,86,65,028/-. THE ASSESSEE HAS ALS O PAID SERVICE TAX ON THE FEES ETC RECEIVED FROM THE STUDE NTS MAKING IT A FURTHER STRONG CASE FOR INVOKING THE PROVISO TO SEC TION 2(15). 3. IN VIEW OF THE FACTS REFERRED TO IN PARA 2 ABOV E, YOU ARE HEREBY GIVEN AN OPPORTUNITY OF BEING HEARD TO EXPLA IN AS TO WHY THE ORDER PASSED BY THE AO SHOULD NOT BE CONSIDERED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE & WHY AN ORDER ENHANCING OR MODIFYING THE A SSESSMENT OR CANCELLING THE ASSESSMENT OR DIRECTING FRESH ASS ESSMENT SHOULD NOT BE PASSED IN TERMS OF PROVISION OF SECTI ON 263 OF IX ACT, 1961. 4. DATE OF HEARING IN YOUR CASE HAS BEEN FIXED FOR 03.12.2018 AT 11:45AM AT MY OFFICE. YOU MAY PRODUCE ALL NECESSARY EVIDENCE IN SUPPORT OF YOUR EXPLANATION., ' 7. ASSESSEE RESPONDED TO THAT BY FILING DETAILED REPRE SENTATION EXPLAINING THE REASON FOR SHOW CAUSE STATING THAT ORDER IS NEITH ER ERRONEOUS AND NOR PREJUDICIAL TO THE INTEREST OF ASSESSEE . HOWEVER , THE LD. CIT PROCEEDED TO PASS THE ORDER U/S 263 OF THE ACT AS UNDER :- FACTS OF THE CASE:- 4. THE ASSESSEE SOCIETY IS REGISTERED UNDER SOCIETI ES REGISTRATION ACT, 1860 VIDE ORDER NO,S-50787 DATED 01.12.2004. T HE ASSESSEE SOCIETY IS ALSO REGISTERED U/S 12A OF THE INCOME TA X ACT, 1961 VIDE ORDER NO. DIT(E)/L2A/2005-06/N-845/1616 DATED 30.03 .2006. THE ASSESSEE SOCIETY IS NOTIFIED U/S 80G (5)(VI) OF THE INCOME TAX ACT, 1961 VIDE ORDER NO. DLT(E)/2007-08/N- 845/136 DATED 07.0 3.2008. AS PER THE ASSESSEE, IT IS A SOCIETY REGISTERED ON 01ST DECEMBER 2004 UNDER THE SOCIETIES REGISTRATION ACT, 1860 WITH THE MAIN OBJECT PROMOTE, SUPPORT AND STRENGTHEN EDUCATION, RESEARCH, AND TRA INING OF INFORMATION TECHNOLOGY AND ITS APPLICATION IN ALL FIELDS OF ACT IVITY AND TO COLLABORATE, COOPERATE AND ENTER INTO PARTNERSHIPS WITH UNIVERSI TIES, COLLEGES AND SCHOOLS FOR EXPANDING IT EDUCATION AND TRAINING AND TO PLAY AND ACTIVE ROLE IN THE HUMAN DEVELOPMENT INITIATIVES OF THE CO UNTRY BY SUPPORTING AND SPONSORING, WHEREVER FEASIBLE, THE ESTABLISHMEN T OF NEW UNIVERSITIES, COLLEGES AND SCHOOLS FOR ORGANIZING I NNOVATIVE IT PAGE | 6 EDUCATION AND TRAINING PROGAMMES. IT IS SEEN FROM T HE RECORDS THAT THE ASSESSEE HAS RECEIPT VARIOUS PAYMENTS FROM MANY COR PORATE ENTITIES. ON THESE PAYMENTS TDS HAS BEEN DEDUCTED AT SOURCE U /SL94C/194J CHARACTERIZING THE PAYMENT AS IN THE NATURE OF CONT RACTUAL/PROFESSIONAL SERVICES RENDERED BY THE ASSESSEE. 4.1 THE DETAILS OF PAYMENTS RECEIVED FROM VARIOUS C ORPORATE AS PER TDS STATEMENT DURING THE YEAR ARE UNDER:- S.NO. NAME RECEIPTS TDS DEDUCTED U/S 194C/J 1. HINDUSTAN COCA COLA BEVERAGES PVT. LTD. 8223755 164474 2. M.P. BUILDING & OTHER CONSTRUCTION WORKER WELFARE BOARD 348170 38686 3. TATA CONSULTANCY SERVICES LIMITED 195003 19500 4. WORLD VISION INDIA 815130 16302 5. ATC TOWER COMPANY OF INDIA PVT. LTD. 1039075 20782 6. APNE AAP WOMEN WORLD WIDE (TRUST) 46765 4677 7. EFICOR 14000 1400 8. HOPE FOUNDATION 96098 1922 9. NUT INITIATIVE FOR LEARNING 10697 1071 10. NIIT YUVAJYOTI LIMITED 5947278 190360 11. NIIT LIMITED 444876 44487 12. SAHYOG FOUNDATION 25667 2567 13. VIDYA INTEGRATED DEVELOPMENT FOR YOUTH AND ADULTS 60000 1200 14. ZILA PANCHAYAT 64000 1280 15. JUBILANT BHARTIA FOUNDATION 10000 1000 16. GRAM NIYOJAN KENDRA 73034 1460 17. AIRPORTS AUTHORITY OF INDIA 1058596 21772 18. AEGIS LIMITED 61500 6150 19. CIPLA FOUNDATIONS 991160 99440 20. TATA HOUSING DEVELOPMENT COMPANY LIMITED 263260 5266 21. THE TATA POWER COMPANY LIMITED 4248962.26 388941 22. TATA COSULTANCY SERVICES LIMITED 719202 31000 5. A PERUSAL OF THE RECORDS OF THE CASE IT IS SEEN THAT THE EXACT NATURE OF THESE PAYMENTS VIS A VIS SERVICES RENDERE D BY THE ASSESSEE HAS NOT BEEN EXAMINED IN THE ASSESSMENT PROCEEDINGS FOR A.Y.2014-15. WHY COMMERCIAL ESTABLISHMENTS ARE MAKING SUCH PAYME NTS AND DEDUCTING TDS ON SUCH PAYMENT, IMPLIEDLY CLAIMING T HE EXPENDITURE IN COMPUTATION OF THEIR TAXABLE INCOME HAVE NOT BEEN E XAMINED IN THE COURSE OF THE PROCEEDINGS. IT CANNOT BE DISPUTED TH AT THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IS SUPPOSED TO EXAMINE THE NATURE AND GENUINENESS OF ACTIVITIES UNDERTAKEN BY THE ASSESSEE SO AS TO ASCERTAIN WHETHER SUCH ACTIVITIES FALL WITHIN TH E SCOPE OF CHARITABLE ACTIVITIES OR WHETHER THEY ARE HIT BY PROVISO TO SE CTION 2(15) OF THE ACT. FROM THE RECORDS, IT IS CLEAR THAT NO SUCH EXERCISE HAS BEEN UNDERTAKEN BY THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE ASSESSEE HAS BEEN PAGE | 7 ACCEPTED WITHOUT MAKING NECESSARY ENQUIRIES AND INV ESTIGATIONS. THE FOLLOWING POINTS HAVE NOT BEEN SPECIFICALLY EXAMINE D BY THE A.O. IN THE ASSESSMENT PROCEEDINGS. A. THE ASSESSEE HAS BEEN SHOWING THE RECEIPTS AS DO NATIONS BUT THE PAYERS ARE CONSISTENTLY DEDUCTING TDS AND CLAIMING THE SAME AS BUSINESS EXPENDITURE TOWARDS PROFESSIONAL OR CONTRACTUAL SERVICES. WHETHER THE T ERMS OF THE AGREEMENT AND THE NATURE OF SERVICES RENDERED B Y THE ASSESSEE SHOW THAT THE ASSESSEE IS MERELY RENDING SERVICES FOR FEE OR PROFIT AND IS NOT ENGAGED IN CH ARITABLE ACTIVITY AS DEFINED UNDER SECTION 2(15) OF THE INCO ME TAX ACT. WHETHER ASSESSEE IS MERELY A TOOL FOR THESE EN TITIES THAT MAY OR MAY NOT BE ENGAGED IN CHARITABLE ACTIVI TIES ON THEIR OWN. B. TERMS OF THE CONTRACTS WITH VARIOUS CLIENTS AND DOCUMENTS SHOW THAT THAT THE PAYMENT TO THE ASSESSEE ARE BOOK ED IN THEIR RESPECTIVE ACCOUNTS AS 'RECRUITMENT OR TRAINI NG EXPENSES' (WITH TCS), FOR INSTALLATION AND SUPPLY O F COMPUTER EQUIPMENT ( WITH CHEMICAL TERMINAL TROMBAY LIMITED), FOR MANAGING, OPERATING AND UPGRADING RECRUITMENT CENTERS ( WITH JSL LIMITED), TO ACT AS A TECHNICAL CONSULTANT FOR COURSE RUN BY AGA KHAN FOUNDATION, ETC. THE FACT THAT ESSENTIALLY COMES OU T FROM THE SAID AGREEMENT IS THAT THE ASSESSEE IS PROVIDIN G SUPPLIES AND SERVICES TO ITS CLIENTS WHO ARE ACTUAL LY UNDERTAKING SERME ACTIVITIES IN THE FIELD OF TRAINI NG ETC. ALL THE CLIENTS OF THE ASSESSEE HAVE INVARIABLY DEDUCTE D TDS AND TERMED THE SERVICES RECEIVED FROM THE ASSESSEE AS EITHER PROFESSIONAL OR CONTRACTUAL RECEIPTS. THE AS SESSEE HAS ALSO RAISED INVOICES TERMING THE SAME AS CONSUL TANCY OR PROFESSIONAL SERVICES AND SERVICE TAX WAS RAISED IN THE INVOICES THE A.O. HAS FAILED TO APPRECIATE THE ACTU AL NATURE OF ACTIVITIES UNDERTAKEN BY IT. C. IT HAS ALSO CAME TO NOTICE THAT IN ALL THE DEVEL OPMENT CENTERS, THE NAME OF THE CLIENT AND THE NAME OF NII T IS INCORPORATED PROMINENTLY IN THE NAMING OF THE CENTE RS. THE CERTIFICATES ALSO SHOW THE NAMES OF THE CLIENT AND NIIT. THUS NOT ONLY THE ACTIVITIES RESULT IN ADVERTISEMEN T OF CLIENT BUT ALSO IN CREATION OF BRAND VALUE OF NIIT LIMITED . THE ASSESEE DOES NOT HAVE WHEREWITHAL TO DEVELOP THE CO URSE CONTENT. IT IS CLEAR THAT THE COURSE PROGRAM IS DEV ELOPED BY NIIT LIMITED AT MANY PLACES THE CENTERS ARE RUN WIT HIN THE PREMISES OF NIIT LIMITED AND PAYMENTS TOWARDS RENT ARE ALSO MADE. THUS IN THE EYES OF THE GENERAL PUBLIC T HE ACTIVITIES OF THE ASSESSEE RESULT IN ENHANCEMENT OF BRAND NIIT, WHICH IS A BENEFIT BEING ACCRUED TO A RELATED PARTY, NO PERMISSIBLE UNDER SECTION 13(1)(C) OF THE ACT. THIS ASPECT OF THE MATTER HAS NO BEEN EXAMINED AT ALL. PAGE | 8 D. IT HAS ALSO COME TO NOTICE THAT THERE IS HARDLY ANY DIFFERENCE BETWEEN THE TRAINING CENTERS RUN BY NIIT LIMITED AND THE CDC RUN AT THE PREMISES OF NIIT BY THE ASSE SSEE. BOTH OF THEM WORK AS A TRAINING ENTITY ON COMMERCIA L LINES FOR SKILL DEVELOPMENT FOR RAISING THE EMPLOYABILITY OF PERSONNEL BEING TRAINED IN IT, ITES, RETAIL SECTOR. HOWEVER, THE ONLY DIFFERENCE IS THAT IN THE CASE OF THE ASSE SSEE, THE TRAINING IS SPONSORED BY SOME CORPORATE, TRUSTS WHE RE THE ASSESSEE ACTS AS A CONSULTANT TO PROVIDE TRAINING O N THEIR BEHALF. AS THE AGREEMENTS MENTIONED ABOVE STATE THA T THE ROLE OF THE ASSESSEE IS LIMITED TO RENDERING OF SER VICES TO ITS CLIENTS. IT IS LIKE ANY OTHER CONTRACTOR/CONSULTANT . THE ASSESSEE IS ACTUALLY UNDERTAKING COMMERCIAL CONTRAC TS OF PROVIDING CONSULTANCY ON THE PROJECTS OF ITS CLIENT S. THE CLIENT OF THE ASSESSEE DEBITS AMOUNT PAID TO THE AS SESSEE AS BUSINESS EXPENSES AND CLAIMS 100% DEDUCTION. IN CASE OF DONATION/GRANT 100% DEDUCTIONS NOT ALLOWED. THE ASSESSEE ITSELF BOOKS THE INCOME AS RECEIPT FROM EDUCATIONAL SERVICES. E. THE CONTRACTS WITH CLIENTS INVARIABLY COME WITH ADVERTISEMENT/LOGO OBLIGATION ON THE PART OF THE AS SESSEE, WHICH ALSO SHOWS THE COMMERCIAL ANGLE OF THE ARRANGEMENT. F. THE AMOUNTS RECEIVED BY THE ASSESSEE ARE NOT IN THE NATURE OF SPECIFIED GRANT/LEGAL OBLIGATION. RATHER IT IS BASED ON COMMERCIAL ARRANGEMENTS. THE PAYMENTS ARE RECEIVED ON THE BASIS OF INVOICES RAISED ON DELIVER ABLES. THE DONOR DOES NOT PROMISE TO PAY THE DEFICIT OR TH E ASSESSEE HAS ANY OBLIGATION TO PAY BACK THE UNUTILI ZED AMOUNTS. THE DEDUCTION OF TAX AT SOURCE ON EVERY PAYMENTS MADE TO THE ASSESSEE AND ISSUE OF INVOICE INCLUDING SERVICE TAX SHOW THE ACTUAL INTENT OF COM MERCIAL TRANSACTION ON THE SIDE OF BOTH THE PARTIES. G. THERE IS NO ELEMENT OF CHARITY FROM THE SIDE OF THE ASSESSEE, AS IT IS EARNING SURPLUS FROM PROVIDING T RAINING, BY NOT ONLY CHARGING THE TRAINING BUT ALSO GETTING ITS COST AND PROFIT RECOUPED, WHO MAKE PAYMENTS EITHER OUT O F BUSINESS CONSIDERATIONS OR OUT OF CSR OBLIGATIONS. THE ASSESSEE IS ACTING ONLY UNDER A COMMERCIAL CONTRACT AS A CONSULTANT/CONTRACTOR. THE ACTIVITY OF THE ASSESSEE CANNOT BE CATEGORISED AS AN ACTIVITY WITHIN THE MEANING OF 'EDUCATION AS DEFINE D IN SECTION 2(15) OF THE INCOME TAX ACT'. EVEN IF THE A CTIVITY OF THE ASSESSEE IS CONSIDERED AS CHARITABLE UNDER THE LIMB OF GENERAL PUBLIC UTILITY, IT IS HIT BY PROVISO TO SEC TION 2(15) OF THE ACT. 6. NOW THE ARGUMENTS SUBMITTED BY THE ASSESSEE DURI NG THE COURSE OF PRESENT PROCEEDINGS, IT IS SEEN THAT THE ASSESSEE PAGE | 9 HAS FILED A VERY DETAILED REPLY, WHICH CAN BE SUMMA RIZED IN FOLLOWING POINTS.- SUMMARY OF REPLY:- A. ITS COURSES ARE AFFILIATED WITH COMPETENT AUTHO RITIES AND ACCORDINGLY ITS ACTIVITY WOULD CLASSIFY AS EDUCATIO N. IT HAS STATED THAT ITS COURSES ARE MAINLY APPROVED BY NSDC (A GOVERNMENT BODY) AND IT IS INCORRECT TO STATE THAT THE COURSE ARE NOT APPROVED BY REGULATORY AUTHORITIES. B. IT FURTHER STATES THAT EVEN OTHERWISE THREE IS NO REQUIREMENT THAT THE COURSES CONDUCTED BY THE ASSES SEE SHOULD BE APPOINTED TO ANY REGULATORY AUTHORITATIVE . IT HAS RELIED UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING T HE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DELHI MUSIC SOCIETY(357ITR265), HON'BLE GUJRAT HIGH COURT IN GURJAT STATE COOPERATIVE UNION VS COMMISSIONER OF I NCOME TAX(195ITR279), HON'BLE BOMBAY HIGH COURT IN DIT(E) VSSAMUDRA INSTITUTE OF MARITIME STUDIES TRUST ETC. C. WITHOUT PREJUDICE EVEN IF THE ACTIVITY IS NOT R EGARDED AS EDUCATION, THE SAME IS CLEARLY FOR THE PURPOSE OF ADVANCEMENT OF GENERAL PUBLIC UTILITY AND SINCE IT IS NOT ENGAGED IN ANY TRADE, BUSINESS OR MANUFACTURE, IT I S STILL ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. D. WITHOUT PREJUDICE TO THE ABOVE, IF IT IS HELD T HAT THE ACTIVITY OF THE ASSESSEE IS BUSINESS ACTIVITY AND THEREFORE TAXABLE, THEN THE LOSSES INCURRED BY THE ASSESSEE FROM SAID ACTIVITY IN EARLIER YEARS OUGHT TO BE ALLOWED TO BE CARRIED FORWARD AND SET OFF AGAINST THE ACTIVITY OF THE CAPTIONED Y EAR. E. IN ADDITION TO THE ABOVE, IT HAS ALSO MADE A DE TAILED SUBMISSION ON INVOKING OF SECTION 263 OF THE INCOME TAX ACT, BY CLAIMING THAT THE ORDER IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 7. THE ASSESSEE HAS MADE ELABORATE SUBMISSIONS IN R ESPECT OF EACH OF THE POINTS HIGHLIGHTED ABOVE AND ALSO FI LED SUPPORTING DOCUMENTS. THE REPLY OF THE ASSESSEE ON THE ABOVE HAS BEEN CAREFULLY CONSIDERED WITH REFERENCE TO THE RECORDS OF THE CASE. 7.1. THE ASSESSEE CLAIMS THAT THE COURSE CONDUCTED BY IT AT MANY OF ITS CENTERS LOCATED ACROSS INDIA IS DULLY APPROV ED BY NATIONAL SKILL DEVELOPMENT CORPORATION (NSDC). NSDC IS A NOT FOR PROFIT GOVERNMENT SET UP UNDER THE MINISTRY OF SKILL DEVEL OPMENT AND ENTREPRENEURSHIP, GOVT, OF INDIA. THIS ARGUMENT IS MADE TO MEET THE POINT THAT ITS COURSES ARE NOT APPROVED BY ANY GOVERNMENT AUTHORITY. IT HAS ALSO FILED SCREET SHOTS OF THE WE BSITE OF NSDC IN THE PAPERBOOK FILED SHOWING THAT ITS CENTERS ARE AP PROVED. PAGE | 10 A CAREFUL PERUSAL OF THE SCREEN SHOTS FILED BY THE ASSESSEE SHOW THAT IT IS BLATANTLY MISREPRESENTING THE FACT. IN A LL THE SCREEN SHOTS, THE NSDC PARTNER, WHO IS AUTHORIZED TO RUN T HE COURSE IS 'NIIT YUVA JYOTI LIMITED', NAME OF THE ASSESSEE APP EARS AT BUILDING NAME AND NUMBER. NIIT YUVAJYOTI LIMITED IS ONE OF THE RELATED PARTIES OF THE ASSESSEE, WHICH IS A COMMERC IAL COMPANY. IT IS THUS CLEAR THAT IT IS USING LOGISTICAL AND IN FRASTRUCTURAL SUPPORT OF THE ASSESSEE FOR RUNNING NSDC COURSES. T HE ASSESSEE IS MERELY HIRED FOR PROVIDING SOME SUPPORT AND SERV ICES. THE APPROVAL FOR RUNNING THE COURSES ARE WITH NIIT YUVA JYOTI LIMITED AND NOT WITH THE ASSESSEE. APART FROM THE ASSESSEE, THE SAID COMPANY WOULD HAVE EMPLOYED OTHER PROFESSIONAL COMM ERCIAL AGENCIES ALSO. WHETHER ALL SUCH AGENCIES CAN BE SAI D TO BE RUNNING AN AUTHORSIED COURSE BY NDMC. THE REPLY IS CLEARLY IN NEGATIVE, AS SUCH, AT THE OUTSET ITSELF, IT IS SEEN THAT THE ASSESSEE HAS MISREPRESENTED THE FACT THAT IT IS RUNNING APPR OVED COURSE FROM ITS CENTERS, IT IS ALSO SEEN FROM THE DETAILS OF PAYMENTS RECEIVED BY THE ASSESSEE THAT NIIT YUVAJYOTI LIMITE D HAS MADE PAYMENT OF RS.5947278/- ON WHICH TDS OF RS.190360 H AS BEEN MADE BY IT.THUS IT IS CLEAR THAT THE PAYMENT IS MAD E FOR THE USE OF INFRASTRUCTURE AND SUPPORT SERVICES RENDERED BY THE ASSESSEE. THE ASSESSEE CANNOT CLAIM THAT IT IS AUTHORIZED AGE NCY FOR RUNNING OF NSDC COURSE AND THUS THE ARGUMENT THAT I TS COURSES ARE APPROVED BY GOVERNMENT AUTHORITIES ARE FACTUALL Y INCORRECT. 7.2 THE ASSESSEE HAS ALTERNATIVELY CLAIMED THAT FOR UNDERTAKING CHARITABLE ACTIVITIES IN THE FIELD OF ' EDUCATION' IT IS NOT REQUIRED TO BE APPROVED BY ANY GOVERNMENT AUTHORITI ES. IT HAS RELIED UPON VARIOUS DECISIONS OF THE HIGH COURTS. I T IS HOWEVER SEEN FROM THE FACTS OF THE CASE, THE ASSESSEE IS NO T RENDERING ANY EDUCATION ACTIVITIES ON ITS OWN. IT IS ONLY EMPLOYE D BY ITS CLIENTS TO RUN VARIOUS CENTERS AND PROVIDE EQUIPMENT ETC AT PER THEIR REQUIREMENTS. FURTHER THE CONTENTS OF VARIOUS COURS ES RUN THROUGH IT DO NOT INSPIRE A CONFIDENCE THAT IT CAN BE CALLE D EDUCATION IN THE NATURE ENVISAGED BY THE LAW FOR THE LIMITED PURPOSE OF SECTION 2(15) OF THE ACT, FOR WHICH EXEMPTION FROM PAYMENT OF TAX COULD BE GRANTED BY THE GOVERNMENT. THE DETAILS OF COURSE S IN WHICH THE ASSESSEE PARTICIPATES ON BEHALF OF ITS CLIENTS ARE FROM IN THE NATURE OF DIGITAL LITERACY, CERTIFICATE COURSE IN B ASIC IT, ENGLISH FOUNDATION, SOCIAL MEDIA, PERSONALITY DEVELOPMENT E TC FOR A PERSON QUALIFIED 8TH CLASS AND WITHOUT ANY AGE LIMI T. THE DURATION OF THE COURSES RUNS FROM 20 HOURS TO MAXIM UM 200 HOURS. ONE OF THE EXAMPLE OF COURSES BROUGHT TO MY NOTICE IS PAGE | 11 7.2.1 AFTER CONSIDERING THE PROVISIONS OF SECTIONS 2(15) OF THE ACT, THE APEX COURT IN THE CASE OF SOLE TRUSTEE, LOKASIKSHAN A TRUST FOUND THAT ALL KINDS OF ACQUIRING KNOWLEDGE WILL NOT COME WITH IN THE MEANING OF 'EDUCATION'. WHAT 'EDUCATION', CONNOTES IN SECTION 2(15) IS THE PROCESSING OF TRAINING AND DEVELOPING 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 101ITR 234(1 975]: 'THE SENSE IN WHICH THE WORD 'EDUCATION' HAS BEEN U SED IN SECTION 2(15) IS THE SYSTEMATIC INSTRUCTION, SCHOOL ING OR TRAINING GIVEN TO THE YOUNG IS PREPARATION FOR THE WORK OF L IFE. IT ALSO CONNOTES THE WHOLE COURSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THE WORD 'EDUCATION' HAS NOT B EEN USED IN THAT WIDE AND EXTENDED SENSE, ACCORDING TO WHICH EV ERY ACQUISITION OF FURTHER KNOWLEDGE CONSTITUTES EDUCAT ION. ACCORDING TO THIS WIDE AND EXTENDED SENSE, TRAVELLING IS EDUC ATION, BECAUSE AS A TRAVELLING YOU ACQUIRE FRESH KNOWLEDGE. LIKEWI SE, IF YOU READ NEWSPAPERS AND MAGAZINES, SEE PICTURES, VISIT ART GALLERIES, MUSEUMS AND ZOOS, YOU THEREBY ADD TO YOUR KNOWLEDGE . AGAIN, WHEN YOU GROW UP AND HAVE DEALINGS WITH OTHER PEOPL E, 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 WALLET IS LIABLE TO BE STOLEN OR YOU ARE LIABL E TO BE CHEATED BY SOME UNSCRUPULOUS PERSON. THE THIEF WHO REMOVES YOU R 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 A BOUT SOME 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 CLAU SE (15) OF PAGE | 12 SECTION 2. WHAT EDUCATION CONNOTES IN THAT CLAUSE I S THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MI ND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING.' FROM THE ABOVE JUDGMENT OF THE APEX COURT IT WOULD BE ABUNDANTLY CLEAR THAT THERE SHOULD BE A SYSTEMATIC INSTRUCTION TO THE STUDENTS BY WAY OF NORMAL SCHOOLING. MERE TRAIN ING CLASSES MAY PROVIDE SOME KIND OF KNOWLEDGE TO THE STUDENTS. BUT THAT KIND OF ACQUISITION OF KNOWLEDGE THROUGH COACHING C LASSES CANNOT FALL WITHIN THE MEANING OF 'EDUCATION' AS PROVIDED IN SECTION 2(15) OF THE ACT. AS THE APEX COURT OBSERVED, ONE MAY ACQ UIRE KNOWLEDGE IN THE COURSE OF TRAVELLING; DURING THE C OURSE 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 SHOULD HE A NORMAL SCHOOLING BY WAY OF R EGULAR AND SYSTEMATIC INSTRUCTION. 7.2.3. THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE DELHI MUSIC SOCIETY V. DGIT [2012] 17 TAXMANN.COM 49/204 TAXMAN 231/(2013] 357 ITR 265/(2 012] 246 CTR 327 STATING THAT THE COURT TOOK A VERY BROAD VI EW OF 'EDUCATION' FOR THE PURPOSES OF SECTION 2(15) AND GAVE A NEW PERSPE CTIVE TO THE SUPREME COURT DECISION IN THE CASE OF SOLE TRUSTEE, LOKOSIKSHANA TRUST V. CIT [1975] 101 ITR 2.34. IT HELD THAT TEACHING M USIC SHOULD ALSO BE TREATED AS EDUCATION EVEN IF THE SOCIETY WAS NOT AF FILIATED TO BOARDS AND UNIVERSITIES PROVIDING SCHOOLING WHICH RESULTED IN A DEGREE OR DIPLOMA, BECAUSE EVEN WITHOUT ANY SUCH AFFILIATION THE SOCIE TY WAS CREATING MUSICIANS WHICH WERE ACCLAIMED WORLDWIDE. IT MAY BE NOTED THAT EVEN IN THIS CASE THE COURT RECOGNIZED THE WORLD ACCLAIM ED EDUCATIONAL ACTIVITIES WHICH ARE NOT COVERED BY TRADITIONAL UNI VERSITIES. THIS RULING HAS IN NO WAY SUGGESTED THAT ANY KIND OF EDUCATIONA L ACTIVITY WHETHER IT RESULTS IN A RECOGNIZED DEGREE OR NOT CAN BE TRE ATED AS EDUCATION. THE HONBLE COURT HAD GONE INTO THE FACTS OF THE CASE A ND ANALYSED IT BEFORE HOLDING DELHI MUSIC SOCIETY TO BE AN EDUCATIONAL IN STITUTION. THE RELEVANT EXTRACTS FROM THE CASE ARE REPRODUCED BELO W; 11. EVEN IF THESE TESTS ARE APPLIED TO THE CASE OF THE PETITIONER THE PETITIONER FULFILS THEM. AS HAS ALREADY BEEN NO TICED, THE PETITIONER IS TEACHING AND PROMOTING ALL FORMS OF M USIC AND DANCE, WESTERN, INDIAN OR ANY OTHER. IN ACCORDANCE WITH THE OBJECT, IT IS RUNNING A MUSIC SCHOOL IN DELHI, COLL ECTING TUITION FEE AND ADMISSION FEE FROM THE STUDENTS. TEACHERS HAVE BEEN EMPLOYED AND THEY HAVE BEEN PAID SALARIES. EXPENDIT URE IS ALSO INCURRED ON THE MAINTENANCE OF MUSICAL INSTRUMENTS. ALL THESE ARE REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEARS ENDED 31ST MATCH, 2006 TO 31ST MARCH, 2010. THE PET ITIONER HAS ALSO FILED AUDITED ACCOUNT FOR THESE YEARS. IN ANNE XURE P-5 TO THE WRIT PETITION, THE PETITIONER HAS ANNEXED A WRITE U P OF ITS ACTIVITIES. FROM THIS, IT IS SEEN THAT THERE ARE S4 9 STUDENTS ENROLLED WITH THE PETITIONER WHO ARE TAUGHT WESTERN INSTRUMENTS ACCORDING TO THEIR CHOICE SUCH AS PIANO, GUITAR, EL ECTRONIC KEY BOARD, WIND INSTRUMENTS, DRUMS AND VOCAL. THE SCHOO L FACULTY PAGE | 13 COMPRISES OF 30 TEACHERS WITH 25 OF THEM BEING GRAD E 8 AND ABOVE IN WESTERN MUSIC. THERE IS REFERENCE TO SCHOL ARSHIPSTHAT ARE OPEN TO THE STUDENTS INCLUDING WAIVER OF FEES F ROM 25% TO 90%.IT HAS BEEN STATED THAT SEVERAL STUDENTS OF THE SCHOOL HAVE GONE ON FOR HIGHER MUSICAL STUDIES TO PLACES LIKE M OSCOW, LONDON, NEW YORK, PRAGUE AND ROME. THE SCHEDULE OF FEES EFFECTIVE FROM APRIL, 2011 IS ALSO MADE PART OF THE ANNEXURE. THERE ARE RULES AND REGULATIONS GOVERNING THE RUNNI NG OF THE SCHOOL WHICH ARE ALSO MADE PART OF THE ANNEXURE. TH E MAIN RULES AND REGULATIONS ARE THAT THE SCHOOL WORKS FOR ALL S EVEN DAYS A WEEK AND REMAINS CLOSED ONLY ON NATIONAL AND PUBLIC HOLIDAYS; THAT THE SCHOOL YEAR IS DIVIDED INTO FOUR TERMS OF THREE MONTHS EACH; THAT STUDENTS WHO ARE ATTENDING INSTRUMENTAL MUSIC CLASSES WOULD BE TAUGHT INDIVIDUALLY BY THE TEACHER S; THAT DANCE STUDENTS WOULD BE TAUGHT IN GROUPS; THAT THERE WOUL D BE WORKSHOPS/LECTURE DEMONSTRATIONS ARRANGED FOR THE B ENEFIT OF THE STUDENTS FROM TIME TO TIME AND THAT ATTENDANCE IN S UCH WORKSHOPS WOULD BE COMPULSORY; THAT STUDENTS WHO RE PORT LATE BY MORE THAN 20 MINUTES MAY BE MARKED ABSENT AND SO ON. THERE IS ALSO A RULE THAT THE STUDENTS WHO ARE IRRE GULAR IN ATTENDING THE CLASSES OR ABSENT THEMSELVES FREQUENT LY FOR LONG PERIODS WITHOUT PRIOR INTIMATION, WOULD BE REMOVED FROM THE ROLLS AND IF ANY OF THE STUDENTS ARE FOUND LACKING IN APP LICATION OR DISCIPLINE, THEY ARE LIABLE TO BE TERMINATED BY THE PRINCIPAL. 12. IT IS SEEN FROM THE ABOVE THAT THE PETITIONER I S BEING RUN LIKE ANY SCHOOL OR EDUCATIONAL INSTITUTION IN A SYSTEMIC MANNER WITH REGULAR CLASSES, VACATIONS, ATTENDANCE REQUIREMENTS , ENFORCEMENT OF DISCIPLINE AND SO ON. THOSE PROVISIONS IN THE RU LES AND REGULATIONS SATISFY THE CONDITION LAID DOWN IN THE JUDGMENT OF THE HON'BLE SUPREME COURT, SOLE TRUSTEE, LOKASIKSHANA T RUST, CITED (SUPRA) THAT THERE SHOULD BE A PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF THE STU DENTS BY 'NORMAL SCHOOLING'. IT CANNOT BE DOUBTED THAT, HAVI NG REGARD TO THE MANNER IN WHICH THE PETITIONER RUNS THE MUSIC S CHOOL, THAT THERE IS IMPARTING OF SYSTEMATIC INSTRUCTION, SCHOO LING OR TRAINING GIVEN TO THE STUDENTS SO THAT THEY ATTAIN PROFICIEN CY IN THE FIELD OF THEIR CHOICE - VOCAL OR INSTRUMENTAL IN WESTERN CLA SSICAL MUSIC. THUS HONBLE DELHI HIGH COURT IN THE CASE OF DELHI MUSIC SOCIETY HAS FOLLOWED THE CONDITIONS LAID DOWN IN THE JUDGMENT O F THE HON'BLE SUPREME COURT, SOLE TRUSTEE, LOKASIKSHANA TRUST, CI TED (SUPRA) THAT THERE SHOULD BE A PROCESS OF TRAINING AND DEVELOPIN G THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF THE STUDENTS BY 'NORMA L SCHOOLING'. 7.2.4 THE GUJARAT HIGH COURT ALSO HAD AN OCCASION T O CONSIDER IDENTICAL ISSUE IN THE CASE OF SOURASHTRA EDUCATION FOUNDATION V. CIT [2005] 273 ITR 139/[2004] 141 TAXMAN 26. THE GU JARAT HIGH COURT FOUND THAT ALL KINDS OF EDUCATION WOULD NOT FALL WITHIN THE MEANING OF SECTION 2(15) OF THE ACT, UNLESS THE TRAINING, INSTRUCTION, ETC. RESULTS IN GRANT OF A DIPLOMA OF DEGREE BY A UNIVERSITY OR A GOVERNMENTAL AGENCY. PAGE | 14 7.2.5 THE PATNA HIGH COURT IN THE CASE OF BIHAR IN STITUTE OF MINING & MINE SURVEYING V. CIT [1994] 208 ITR 608/7 6 TAXMAN 455 HELD THAT MERE CONDUCTING OF CLASSES FOR OPEN U NIVERSITY / DISTANCE EDUCATION CAN NOT BE CONSTRUED AS CHARITAB LE ACTIVITY WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. THE PATNA HIGH COURT, AFTER CONSIDERING THE JUDGMENT OF THE APEX C OURT IN CIT V. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 AND IN THE CASE OF CIT V. SOLE TRUSTEE, LOKASHIKSHANA TRUST [1970] 77 ITR 61 (MYS.) HAS OBSERVED AS FOLLOWS AT PAGE 615 OF THE I TR; ' IT IS TRUE THAT BY REASON OF THE FINANCE ACT, 198 3, THE QUESTION AS TO WHETHER ANY CHARITABLE INSTITUTION IS BEING R UN WITH A PROFIT MOTIVE OR NOT HAS LOST ITS RELEVANT. HOWEVER, THE W ORD 'CHARITABLE' PREFIXING THE WORD 'INSTITUTION' HAS TO BE GIVEN IT S FULL EFFECT. IT APPEARS THAT ONE OF THE PRINCIPAL PROJECTS OF THE P ETITIONER'S INSTITUTION HAS THE OBJECT OF COACHING AND PREPARIN G THE STUDENTS FOR APPEARING IN VARIOUS EXAMINATIONS CONDUCTED BY THE BOARD OF MINING EXAMINATION AND / OR ML(L) SECTION IMPARTING OF EDUCATION WHICH CAN BE SAID TO BE A PROCESS OF TRAINING AND D EVELOPING KNOWLEDGE AND CHARACTER OF STUDENTS BY NORMAL SCHOO LING. A COACHING INSTITUTE CANNOT BE SAID TO BE AN INSTITUT ION WHERE NORMAL SCHOOLING IS DONE. THE DEFINITION OF 'CHARIT ABLE PURPOSE' IS INCLUSIVE AND NOT EXHAUSTIVE.' THE ABOVE RULING IS A LANDMARK RULING WHEREIN THE H ON'BLE BIHAR HIGH COURT FURTHER RULED THAT AN INCIDENTAL EDUCATI ONAL ACTIVITY OR A TRAINING PROGRAM CAN BE CONSIDERED AS EDUCATION O NLY IF SUCH ACTIVITIES ARE CONDUCTED BY A RECOGNIZED EDUCATIONA L INSTITUTION. BUT IF SUCH TRAINING PROGRAM ARE CONDUCTED STAND AL ONE BY AN INSTITUTION THEN THEY CANNOT BE TREATED AS EDUCATIO NAL ACTIVITY IN THE ABSENCE OF THE PRIMARY EDUCATIONAL ACTIVITY. TH E RELEVANT EXTRACTS ARE REPRODUCED AS UNDER: 'FROM THE AFORESAID OBSERVATION, IT BECOMES CLEAR T HAT, IN ORDER TO EARN TOTAL EXEMPTION UNDER SECTION 10(22) OF THE AC T, AN ASSESSEE SHOULD BE AN EDUCATIONAL INSTITUTION OR AN ESTABLIS HMENT WHICH PRIMARILY ENGAGES ITSELF IN EDUCATIONAL ACTIVITIES. ' 'HOWEVER, SUCH INCIDENTAL ACTIVITIES ALONE, IN THE ABSENCE OF ACTUAL ACTIVITY OF IMPARTING EDUCATIONAL BY NORMAL SCHOOLING OR NORMAL CONDUCTING OF CLASSES, WOULD NOT BE SUFFICIE NT FOR THE PURPOSE OF QUALIFYING THE INSTITUTION TO EARN THE B ENEFIT OF SECTION 10(22) OF THE SAID ACT.' 'IN THIS CASE, THE SCHOOL IN QUESTION DOES NOT APPE AR TO BE RECOGNISED BY ANY AUTHORITY.' 'AN INDICATED HEREINBEFORE, THE INSTITUTION IS BEIN G RUN FOR A SPECIFIC PURPOSE, NAMELY, TO PREPARE THE STUDENTS F OR APPEARING IN VARIOUS EXAMINATIONS, BUT IT ITSELF APPEARS TO BE N OT AUTHORISED, THEREFORE, NOR CAN IT BE SAID TO HAVE ANY ELEMENT O F NORMAL SCHOOLING.' PAGE | 15 7.2.7 IN THE CASE NEW ELIM CHARITABLE & EDUCATIONA L TRUST VS. COMMISSIONER OF LNCOME-TAX-1, COCHIN-1 [2014] 62 SO T 126 (COCHIN - TRIB.)(URO) WHERE ASSESSEE-TRUST WAS CONDUCTING A STUDY CENTRE FOR KARNATAKA OPEN UNIVERSITY, IT COULD NOT BE CONSIDER ED TO BE AN EDUCATIONAL INSTITUTION WITHIN MEANING OF SECTION 2 (15). 7.2.8 IN THE CASE IMPRESSARIO EDUCATIONAL TRUST VS . COMMISSIONER OF INCOME-TAX-1, KOCHI [2014] 65 SOT 7 0 (COCHIN - TRIB.) IN ORDER TO FALL WITHIN MEANING OF 'EDUCATION1 AS P ROVIDED IN SECTION 2(15), THERE SHOULD BE A NORMAL SCHOOLING B Y WAY OF REGULAR AND SYSTEMATIC INSTRUCTION. WHERE ASSESSEE-TRUST RAN AN INSTITUTION CONDUCTING CLASSES IN EVENT MANAGEMENT WHICH WERE NOT RECOGNIZED BY GOVER NMENTAL BODIES AND AS A CONSEQUENCE IT DID NOT RESULT IN CO NFERMENT OF ANY DEGREE OR DIPLOMA, SAID ACTIVITY DID NOT FALL W ITHIN MEANING OF 'EDUCATION' AND, THUS, ASSESSEE'S CLAIM FOR REGI STRATION UNDER SECTION 12AA WAS TO BE REJECTED. 7.2.9 IN THE CASE INFORMATION SYSTEMS AUDIT & CONTR OL ASSOCIATION VS. DEPUTY DIRECTOR OF INCOME-TAX (EXEM PTIONS) -1, CHENNAI [2016] 46 ITR(T) 665 (CHENNAI - TRIB.) WHERE ASSESSEE-TRUST CONDUCTED COURSES AND SEMINARS TO HELP ITS MEMBERS IN PREPARATION OF A FOREIGN CERTIFICATION C OURSE, ASSESSEE'S ACTIVITY WAS NOT OF EDUCATION BUT OF ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND INVO LVED TRADE, COMMERCE OR BUSINESS, HENCE, NOT ENTITLED FOR EXEMP TION UNDER SECTION 11 8. THE PURPOSE OF CITING THE ABOVE DECISIONS IS MER ELY TO SHOW THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE CANNOT BE CATEGORIZED AS 'EDUCATION' PER SE, EVEN IF THE SAME WERE BEING CON DUCTED ON ITS OWN ACCOUNTS AS THE ELEMENT OF FORMAL SCHOOLING AS ENVI SAGED THEREIN IS COMPETLY MISSING.. THE ABOVE DECISIONS EMPHASIZE TH E FACT THAT THE DEFINITION OF 'EDUCATION' IN SECTION 2(15) OF THE A CT IS MUCH NARROW AND EVERY KIND OF TRAINING CANNOT BE CONSIDERED FOR EXE MPTION FROM TAXATION BY THE LEGISLATURE. THE COURSES RUN ON BEHALF OF IT S CLIENTS SPANNING FOR A DURATION .OF 20 HOURS TO 200 HOURS WITHOUT ANY FI XED CURRICULUM, CRITERIA, DISCIPLE AND OTHER ESSENTIAL INGREDIENTS OF FORMAL EDUCATION, BUT MERELY TO TEACH HOW TO OPERATE A SMART PHONE, OR US E E-MAIL, AND SPEAK ENGLISH CANNOT BE CONSIDERED EDUCATION THUS FROM TH E FACTS OF THE CASE AND NATURE OF COURSES RUN BY IT, IT IS VERY CLEAR T HAT THE ASSESSEE CANNOT PLACE RELIANCE ON THE DECISIONS REFERRED BY IT BECA USE:- A. IT IS RENDERING THE SERVICES ONLY AS A CONTRACT OR/SERVICE PROVIDER. B. THE CONTENT AND NATURE OF THE SERVICE CANNOT BE CANNOT BE CHARACTERIZED AS 'EDUCATION' IN ANY MANNER WHATSOEV ER. PAGE | 16 C. THE NATURE, DURATION AND QUALITY OF COURSES RUN BY THE ASSESSEES IN REFERRED 9. THIRD GROUND OF THE ASSESSEE IS THAT EVEN IF IT IS NOT CONSIDERED A CHARITABLE ORGANIZATION IMPARTING EDUCATION, THEN A LSO MUST BE CONSIDERED PROVIDING GENERAL PUBLIC UTILITY SERVICE S. AS IS NOT INVOLVED IN ANY BUSINESS, IT WOULD NOT HIT BY PROVISION TO SECT ION 2(15). THE FACTS OF THE CASE HOWEVER CLEARLY CONTRADICT THE ARGUMENT OF THE ASSESSEE. IT HAS BEEN ELABORATED IN DETAILS ABOVE THAT THE ASSES SEE IS MERELY ACTING AS A PROFESSIONAL/CONSULTANT APPOINTED BY ITS CLIEN T FOR RENDERING CERTAIN SERVICES IN THE FIELD OF TRAINING. THE PAYM ENT RECEIVED BY IT IS NOT IN THE NATURE OF GRANT OR DONATION, BUT IT RAISES I NVOICE UPON ITS CLIENTS AND EARN PROFIT FROM THE SERVICES RENDERED BY IT. H ENCE, EVEN IF IT IS CONSIDERED CHARITABLE IN NATURE UNDER THE CATEGORY OF GPU, IT IS CLEARLY HIT BY PROVISO TO SECTION 2(15) OF THE ACT AS ALL T HE CONDITIONS REQUIRED THEREIN ARE CLEARLY SATISFIED. 10. THE, NEXT GROUND OF THE ASSESSEE IS THAT EVEN I F IT IS FOUND TO BE NOT ELIGIBLE FOR EXEMPTION U/S 11 AND 12 OF THE ACT , IT IS ENTITLED TO CARRY FORWARD AND SET OFF OF LOSS OF EARLIER YEARS. THERE IS NOT DENYING THE FACT THAT THE ASSESSEE IS ENTITLED TO ALL THE RIGHTFUL L EGAL CLAIMS UNDER THE LAW. THUS, IF IT IS NOT ENTITLED TO EXEMPTION U/S 1 1 AND 12 OF THE ACT, THE A.O. IS DUTY BOUND TO EXAMINE THE CLAIM OF CARRY FO RWARD AND SET OFF OF LOSS IN ACCORDANCE WITH THE PROVISIONS OF LAW. IT I S ALSO REQUIRED TO BE EXAMINED WHETHER THE LOSS IN THE EARLIER YEAR WAS D UE TO CLAIM OF CAPITAL EXPENDITURE WHICH IS ALLOWABLE TO AN EXEMPT INSTITUTION ONLY. 11. IN THE LAST POINT THE ASSESSEE HAS ARGUED THAT THE ORDER IS NOT ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE, THE AO HAD TAKEN ONE OF THE POSSIBLE STANDS. WHEN T WO VIEWS ARE POSSIBLE, AND THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, WITH WHICH THE CIT DOES NOT AGREE, IT WILL NOT MAKE THE ORDER AMENABLE TO PROVISIONS OF SECTION 263 OF THE ACT. A NUMBER OF C ASE LAWS HAVE BEEN RELIED UPON BY THE ASSESSEE IN THIS REGARD. THE ARG UMENT OF THE ASSESSEE NO LONGER HOLDS GOOD IN VIEW OF AMENDED PR OVISIONS OF LAW. IT IS FIRSTLY SEEN THAT THE AO HAS NOT TAKEN A CONSIDE RED VIEW OF THE MATTER AND MERELY ACCEPTED THE RETURN OF THE ASSESSEE WITH OUT MAKING THE NECESSARY ENQUIRIES. THE LAW AS ITS STANDS TODAY CO NTAINS A DEEMING PROVISION WHEN THE ORDER OF THE ASSESSING OFFICER C AN BE DEEMED TO BE 'ERRONEOUS AND PREJUDICIAL' TO THE INTEREST OF REVE NUE. EXPLANATION 2 OF SECTION 263 OF THE ACT CLEARLY STATES THAT WHERE TH E ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOU LD HAVE BEEN MADE OR THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM THEN SUCH ORDER SHALL BE DEEMED TO BE ERRONEO US IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE CASE LA WS RELIED UPON BY THE ASSESSEE IS THEREFORE NOT DISCUSSED AS IT NO LONGER HOLDS GOOD IN VIEW OF THE EXTANT PROVISIONS OF LAW RELATING TO REVISION O F ASSESSMENT. 8. THEREAFTER, THE LEARNED CIT EXEMPTION HELD THAT THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER ACCEPTING T HE CONTENTION OF THE ASSESSEE AND ALLOWING EXEMPTION UNDER SECTION 11 AN D 12 IGNORING THE CLEAR PAGE | 17 PROVISIONS OF SECTION 2 (15) OF THE ACT AND ALSO IT S FIRST PROVISO. THUS, THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS CL EARLY ERRONEOUS WITHIN THE MEANINGS OF PROVISIONS OF SECTION 263 OF THE ACT AN D PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE FURTHER REFERRED TO THE EXPLANATION 2 ADDED BY THE FINANCE ACT 2005 WITH EFFECT FROM WAS 1 JUNE 20 15 TO SUPPORT HIS ORDER. CONSEQUENTLY HE CANCELLED THE ASSESSMENT ORD ER PASSED UNDER SECTION 143 (3) OF THE ACT DATED 28/12/2016 FOR ASS ESSMENT YEAR 2014 15 AND DIRECTED THE LEARNED ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER. 9. THUS, THE ASSESSEE AGGRIEVED HAS PREFERRED THIS APP EAL. 10. SHRI CA YOGESH THAR, AUTHORIZED REPRESENTATIVE SUB MITTED A DETAILED PAPER BOOK IN TWO VOLUMES CONTAINING 698 PAGES COMPRISING OF THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER ON 24 NOVEMBER 20 16, 7 NOVEMBER 2016 AND 3 SEPTEMBER 2016 ( TWO SUBMISSIONS OF THE EVEN DATE) AND OF 16 JUNE 2016. VOLUME 2 OF THE PAPER BOOK IS COMPRISING OF GROUND -WISE DOCUMENTS RELIED UPON ALONG WITH THE AUDITED FINANC IAL STATEMENTS, COMPUTATION ETC. IT ALSO CONTAINS THE ASSESSMENT OR DER PASSED UNDER SECTION 143 (3) OF THE ACT FOR PAST YEAR. 11. THE LEARNED AUTHORIZED REPRESENTATIVE FIRST TOOK US TO THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 263 OF THE INCOME TAX A CT BY THE LEARNED COMMISSIONER OF INCOME TAX EXEMPTION AND ALSO REFER RED TO VARIOUS REASONS WHY THE LEARNED CIT EXEMPTION HAS HELD THAT ASSESSEE IS NOT CARRYING ON THE EDUCATIONAL ACTIVITIES. THEREAFTER, HE REFERRED TO THE WRITTEN SUBMISSION MADE BY THE ASSESSEE BEFORE CIT EXEMPTIO N DURING THE COURSE OF PROCEEDINGS PLACED AT PAGE NUMBER 627 676 OF H IS PAPER BOOK. HE REFERRED TO PARA NUMBERS 1.7 WITH RESPECT TO CONDUC TING VARIOUS APPROVED EDUCATIONAL, VOCATIONAL COURSES AT VARIOUS DEVELOPM ENT CENTERS RUN BY ASSESSEE. HE SUBMITTED THAT ASSESSEE IS PRIMARILY O PERATING VARIOUS EDUCATIONAL AND DEVELOPMENT CENTERS IN RURAL AREAS AND SLUMS FOR ALL ECONOMICALLY BACKWARD POCKETS OF SEMI URBAN AND URB AN AREAS ACROSS INDIA SO AS TO IMPART EDUCATION TO THE STUDENTS BELONGING TO THE UNDER PRIVILEGED, ECONOMICALLY BACKWARD STRATA OF THE SOCIETY WITH AN OBJECT TO DEVELOP THEIR SKILL SO THAT THEIR EMPLOYABILITY CAN INCREASE. HE FURTHER SUBMITTED THAT ASSESSEE HAS CONDUCTED VARIOUS EDUCATIONAL COURSES IN THE FIELD OF INFORMATION TECHNOLOGY AND OTHER COMMUNICATION AND VOCATIONAL COURSES PAGE | 18 SUCH AS INFORMATION TECHNOLOGY, ENGLISH, SOFT SKILL S, BUSINESS PROCESS OUTSOURCING, BANKING SECTOR, ACCOUNTING SKILLS, PER SONALITY DEVELOPMENT ETC. DULY DEVELOPED OR APPROVED BY THE GOVERNMENT AUTHOR ITIES AND/OR GLOBALLY RECOGNIZED INSTITUTIONS FOR THE POOR AND PHYSICALLY AND MENTALLY CHALLENGED STUDENTS AT EITHER FREE OF COST OR AT HEAVILY SUBSI DIZED RATES. ASSESSEE ALSO ASSISTS ITS STUDENT IN GETTING JOB PLACEMENT AFTER COMPLETING CERTIFIED EDUCATIONAL COURSES OFFERED BY ASSESSEE. HE FURTHER REFERRED TO PARA NUMBER 1.9 OF HIS SUBMISSION TO SAY THAT THE ASSESSEE OPER ATES CENTERS, WHICH ARE DULY APPROVED BY NATIONAL SKILL DEVELOPMENT CORPORA TION TO CONDUCT VARIOUS EDUCATIONAL COURSES. HE SUBMITTED THAT ASSE SSEE HAS AROUND 24 CENTERS LOCATED ACROSS INDIA AND PRESENTLY THEY HAV E ALMOST 133 CENTERS ACROSS INDIA. HE ALSO REFERRED TO THE VARIOUS LOCAT IONS OF THE CENTERS. HE SUBMITTED THAT FROM THOSE CENTERS ASSESSEE HAS EDUC ATED AND TRAINED ALMOST 4.25 LAKHS STUDENTS TILL DATE AND OTHER COMP LETING CERTIFIED EDUCATIONAL COURSES, WHICH HAS MADE THOSE STUDENTS TO GET BETTER EMPLOYMENT OPPORTUNITY. THEREFORE, HE SUBMITTED THA T THE BASIC ACTIVITY OF THE ASSESSEE IS HELPING TO THE POOR, ECONOMICALLY B ACKWARD STRATA OF THE SOCIETY TO GET THEM EMPLOYMENT BY IMPARTING THEM KN OWLEDGE/TRAINING IN CENTERS APPROVED BY NATIONAL SKILL DEVELOPMENT CORP ORATION. HE FURTHER STATED THAT NATIONAL SKILL DEVELOPMENT CORPORATION WAS FOUNDED IN 2009 BY THE MINISTRY OF FINANCE AND IS OPERATED UNDER THE M INISTRY OF SKILL DEVELOPMENT AND ENTREPRENEURSHIP, GOVERNMENT OF IND IA. THEREAFTER HE SUBMITTED THAT THOSE CLASSES OF THOSE PROGRAMS ARE CONDUCTED AS PER FIXED CURRICULUM, CONDUCTED AND COMPLETED WITHIN A FIXED DURATION, THE STUDENTS HAD TO COMPULSORILY ATTEND CLASSES AND THE STUDENTS WHO DO NOT HAVE PROPER ATTENDANCE ARE NOT ALLOWED TO TAKE EXAMINATION. THE REAFTER THE EXAMINATIONS ARE CONDUCTED AND NECESSARY CERTIFICAT ES ARE ISSUED. HE FURTHER STATED THAT THESE EDUCATIONAL COURSES ARE O FFERED FREE EITHER OF COST OR AT HEAVILY SUBSIDIZED RATE AT THE AFORESAID CENT ERS. HE ALSO SUBMITTED A COMPARATIVE CHART TO SHOW THAT THE COURSES CONDUCTE D BY THE ASSESSEE ARE AT HEAVILY SUBSIDIZED RATE AT ITS CENTRE FROM THE C OMPARISON OF FEES CHARGED FROM THE STUDENTS BY ASSESSEE AND MARKET RATE OF SU CH COURSES. HE FURTHER STATED THAT ASSESSEE IS ALSO CONDUCTING VARIOUS APP ROVED EDUCATIONAL/VOCATIONAL COURSES IN GOVERNMENT SCHOOL S, COMMUNITY SCHOOLS PAGE | 19 AND SCHOOLS OR CENTERS OPERATED BY VARIOUS OTHER NG OS. HE FURTHER REFERRED THAT THE ASSESSEE HAS BEEN GIVEN VARIOUS RECOGNITIO N AND AWARDS BY SEVERAL INSTITUTES OR ORGANIZATION, WHICH ARE LISTED IN PAR A NUMBER 1.25 OF HIS SUBMISSION. HE FURTHER REFERRED TO THE SOME OF THE ARTICLES PUBLISHED IN NEWSPAPERS AND ELECTRONIC MEDIA RECOGNIZING THE CON TRIBUTION OF THE ASSESSEE IN THE FIELD OF EDUCATION AND CHARITABLE A CTIVITIES. HE FURTHER SUBMITTED THAT AS THE ACTIVITY CARRIED ON BY THE AS SESSEE PROVIDING EDUCATIONAL COURSES AT FREE COFFEE OF COST OR AT HE AVILY SUBSIDIZED RATES AT ITS CENTERS, THE AMOUNT OF TUITION FEES RECEIVED IS NOT ADEQUATE TO FUND THE AFORESAID CHARITABLE ACTIVITY OF THE ASSESSEE AND T HEREFORE PART OF THE EXPENSES ARE FUNDED BY DONATIONS RECEIVED FROM VARI OUS PERSONS. HE FURTHER REFERRED THAT SEVERAL CORPORATE SHAVE ALSO SPONSORE D VARIOUS CENTERS OPERATED BY THE ASSESSEE AND THESE CORPORATE SPONSO RS REIMBURSE THE COST INCURRED BY THE ASSESSEE FOR OPERATING THESE CENTER S ON ACTUAL BASIS. HE ALSO REFERRED THE DETAILS OF SUCH CONTRIBUTION AND CORPO RATE SPONSOR DURING THE RELEVANT PREVIOUS YEAR. THEREFORE, HE SUBMITTED THA T AS THE COURSES CONDUCTED BY THE ASSESSEE ARE AFFILIATED WITH THE C OMPETENT AUTHORITIES AND ACCORDINGLY ACTIVITIES OF THE ASSESSEE WOULD CLASSI FY AS AN EDUCATIONAL ACTIVITIES. 12. HE FURTHER SUBMITTED THAT THE LEARNED CIT HAS TREAT ED THE ACTIVITY CARRIED OUT BY THE ASSESSEE AS BUSINESS SINCE THE PERSONS W HO HAVE CONTRIBUTED HAVE DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE TO THE ASSESSEE AND ASSESSEE HAS CHARGED SERVICE TAX ON THE FEES COLLEC TED FROM THE STUDENTS AND ON THOSE SUMS. IN RESPONSE TO THIS HE SUBMITTED THE NATURE OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE EDUCATIONAL IN NAT URE, MERELY FOR THESE REASONS AND CANNOT BE REGARDED AS A BUSINESS OF THE ASSESSEE. HE REFERRED TO THE DECISION OF THE HONOURABLE DELHI HIGH COURT IN INDIA TRADE PROMOTION ORGANIZATION VERSUS DIRECTOR OF INCOME TA X (EXEMPTION) 371 ITR 333. HE SUBMITTED THAT AS THE INHERENT NATURE OF TH E ACTIVITY ITSELF IS NOT THE BUSINESS OF THE ASSESSEE BUT THE EDUCATIONAL ACTIV ITIES FOR CHARITABLE PURPOSES, MERELY BECAUSE SERVICE TAX HAS BEEN CHARG ED BY THE ASSESSEE OR TAX HAS BEEN DEDUCTED AT SOURCE BY THE PAYER IN COM PLIANCE WITH SOME SPECIFIC LAW, THE NATURE OF THE RECEIPT IN THE HA NDS OF THE ASSESSEE TRUST WOULD NOT BECOME BUSINESS RECEIPTS. HE FURTHER SUBM ITTED THAT THESE PAGE | 20 FACTORS ARE NOT RELEVANT AT ALL IN DETERMINING THE NATURE OF RECEIPT OF THE ASSESSEE. FOR THIS PROPOSITION, HE RELIED UPON THE DECISION OF THE COORDINATE BENCH IN CASE OF A CIT VERSUS KALYAN MITRA TRUST 15 SOT 11 (DELHI). OBJECTING TO THE ACTION UNDER SECTION 263 OF THE IN COME TAX ACT, HE MADE DETAILED SUBMISSION THAT IN THE PRESENT CASE, THE L EARNED ASSESSING OFFICER HAS MADE DETAILED ENQUIRIES ABOUT THE ACTIVITIES PE RFORMED BY THE ASSESSEE AND HAS REVIEWED THE DETAILS IN RESPECT OF THE RECE IPT ON WHICH SERVICE TAX WAS CHARGED BY THE ASSESSEE AND TAX DEDUCTED AT S OURCE BY THE PAYERS. HE FURTHER REFERRED THAT RELEVANT DETAILS WERE SUBMITT ED BEFORE THE LEARNED ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HE REFERRED TO VARIOUS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER ON 24 NOVEMBER 2006, 7 NOVEMBER 2006 AND 3 SEPTEMBER 2006. HE SPECIFICALLY REFERRED TO SUBMISSION DATED 7 NOVEMBER 2016 BEFORE THE ASSESSI NG OFFICER WHERE THE NOTE ON TUITION FEES CHARGED FROM THE STUDENTS BELO NGING TO ECONOMICAL WEAKER SECTION OF STUDENTS AND OTHER PHYSICALLY AND MENTALLY CHALLENGED STUDENTS WAS SUBMITTED. HE SUBMITTED THAT THESE FEE S ARE HIGHLY SUBSIDIZED, DISCOUNTED OR FREE OF COST. HE ALSO REFERRED TO THE REVENUE RECEIVED FROM VARIOUS SPONSORS INCLUDING NGOS, CORPORATE AND OTHE R INSTITUTIONS FOR RENDERING EDUCATION TO POOR ON WHICH SERVICE TAX HA S BEEN CHARGED. HE FURTHER REFERRED TO THE SUBMISSION DATED 3 SEPTEMBE R 2016, WHICH COMPRISE OF THE CONSOLATION OF SERVICE AS PER SERVICE TAX RE TURN AND REVENUE AS PER INCOME AND EXPENDITURE ACCOUNT AS WELL AS THE COPY OF THE SERVICE TAX RETURN FILED BY THE ASSESSEE. HE FURTHER SUBMITTED TO THE SUBMISSION OF THE SAME DATE (SECOND SUBMISSION) WHERE THE ASSESSEE HA S SUBMITTED THE DETAILS OF THE RECONCILIATION OF RECEIPT AS PER FOR M NUMBER 26AS AND INCOME AND EXPENDITURE ACCOUNT ALONG WITH THE INCOME TAX R ETURN. HE ALSO SUBMITTED THE SUBMISSION DATED 6 JUNE 2016 WHERE TH E COPY OF THE MEMORANDUM OF ASSOCIATION OF THE SOCIETY CONTAINING ITS OBJECTS AND NOTE ON THE HISTORY OF THE ACTIVITIES CONDUCTED BY THE A SSESSEE WERE ALSO EXPLAINED TO THE ASSESSING OFFICER. HE THEREFORE SU BMITTED THAT THE LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS HAD MADE SPECIFIC ENQUIRIES ABOUT THE NATURE OF SERVICES AND ACTIVITIES CONDUCTED BY THE ASSESSEE AND ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE ACTIVITIES ALONG WITH THE RELEVANT SUPPORTING DOCUMENTS. HE SU BMITTED THAT AFTER PAGE | 21 SATISFACTION WITH RESPECT TO THE NATURE OF ACTIVITI ES OF THE ASSESSEE, THE INCOME STREAM OF DONATION AND FEES, THE LEARNED ASS ESSING OFFICER ACCEPTED THE ACTIVITIES OF THE ASSESSEE AS CHARITABLE AND ED UCATION IN NATURE. HE THEREFORE SUBMITTED THAT THE ORDER PASSED BY THE LE ARNED ASSESSING OFFICER COULDNT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE LEARNED ASSESSING OFFICER HAS MADE A LL THE DUE ENQUIRIES WHICH HE SHOULD HAVE MADE TO GRANT EXEMPTION TO THE ASSESSEE UNDER SECTION 11, 12 AND 13 OF THE INCOME TAX ACT HOLDING THAT ASSESSEE IS ENGAGED IN EDUCATIONAL ACTIVITIES. HE THEREFORE SUBMITTED THAT THE DUE ENQUIRIES HAVE BEEN MADE, THE LEARNED CIT EXEMPTION HAS NOT H ELD THAT WHAT KIND OF ENQUIRIES FURTHER THE ASSESSEE OFFICER SHOULD HAVE MADE IN THAT PARTICULAR CASE. HE THEREAFTER RELIED UPON THE PLETHORA OF JUD ICIAL PRECEDENT TO SUBMIT THAT WHERE THE LEARNED ASSESSING OFFICER BASED ON I NCOME TAX RETURN OF THE ASSESSEE HAS MADE THE DETAILED ENQUIRIES, THE ORDER PASSED BY HIM CANNOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. HE FURTHER REFERRED TO SPECIFICALLY THE DECISION OF THE COORDI NATE BENCH IN CASE OF NARAYAN TATU RANE VERSUS INCOME TAX OFFICER (70 TAX MAN.COM 227) WITH RESPECT TO THE EXPLANATION 2 INSERTED IN THE SECT ION 263 OF THE ACT. HE FURTHER SUBMITTED THAT THE ORDER IS NEITHER ERRONEO US, NOR NOT AT ALL PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, ACCORDING TO HIM THE ORDER PASSED BY THE LEARNED CIT E IS NOT AT ALL SUSTAIN ABLE IN THE LAW. 13. HIS FURTHER GRIEVANCE WAS THAT THAT CERTAIN ISSUE S DECIDED BY CIT E WERE NOT AT ALL PART OF THE PROCEEDINGS BEFORE THE LEARN ED CIT E. THEY WERE USED WITHOUT CONFRONTING THE ASSESSEE ON THOSE ISSUES. HE REFERRED TO SHOW CAUSE NOTICE AND PROCEEDINGS TO SHOW THAT. HE FURT HER STATED THAT AGREEMENTS, WHICH HAVE BEEN REFERRED BY THE LEARNED CIT EXEMPTIONS UNDER THE ORDER PASSED UNDER SECTION 263 OF THE INCOME TA X ACT, WERE NOT AT ALL CONFRONTED TO THE ASSESSEE. HE FURTHER SUBMITTED TH AT EVEN OTHERWISE THE LEARNED CIT EXEMPTION DID NOT CONFRONT THE ASSESSEE ABOUT HIS VIEW ON THE CONTRACTS. HE FURTHER STATED THAT IN PARA NUMBER 5 (B) THE LEARNED CIT EXEMPTIONS HAVE DEALT WITH THIS ISSUE WITHOUT CONFR ONTING THE ASSESSEE. HE FURTHER STATED THAT IN PARA NUMBER FIVE (E) THE LEA RNED CIT E HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE HAS RESULTED IN ENHA NCEMENT OF BRAND IN NIIT WHICH IS A BENEFIT BEING ACCRUE TO A RELATED PARTY NOT PERMISSIBLE UNDER PAGE | 22 SECTION 13 (1) (C) OF THE ACT. THE CIT HAS HELD THA T THIS ASPECT OF THE MATTER HAS NOT BEEN EXAMINED AT ALL. THE LEARNED AUTHORISE D REPRESENTATIVE SUBMITTED THAT THESE ISSUES WERE NOT CONFRONTED TO THE ASSESSEE DURING THE COURSE OF 263 PROCEEDINGS. OTHERWISE, THEY COULD HA VE BEEN EXPLAINED. HE THEREFORE SUBMITTED THAT NIIT AND NIIT FOUNDATION H AVE DIFFERENT STRUCTURES AND THEY ARE NOT AT ALL RELATED AS DEFINED UNDER SE CTION 13 (1) (C) OF THE ACT. HE FURTHER REFERRED TO THE VARIOUS AGREEMENTS ENTER ED INTO BY THE ASSESSEE TITLED AS MEMORANDUM OF UNDERSTANDING. THE FIRST RE FERRED SUCH AGREEMENT PLACED AT PAGE NUMBER 677 OF HIS PAPER BOOK BEING M EMORANDUM OF UNDERSTANDING ENTERED INTO BETWEEN THE ASSESSEE AND TATA CONSULTANCY SERVICES LTD. HE SUBMITTED THAT THE TATA CONSULTANC Y SERVICES IN ORDER TO ALLEVIATE THE CONDITION OF MERITORIOUS STUDENTS HAI LING FROM ECONOMICALLY BACKWARD AREAS PARTICULARLY FROM THE CHINDWARA DIST RICT OF M P. TCS OFFERED SCHOLARSHIP FOR NIIT FOUNDATION STUDENTS IN THAT REGION. FOR THAT PURPOSE, THE MEMORANDUM OF UNDERSTANDING WAS ENTERE D INTO. HE FURTHER REFERRED TO CLAUSE 2 OF THAT AGREEMENT WHICH HAS SC HOLARSHIP OBJECTIVE AND STATED THAT 20,000 PER ANNUM PER STUDENT WAS PROVIDED BY THAT INSTITUTE IN 12 EQUAL MONTHLY INSTALLMENTS TO ASSESSEE FOUNDA TION FOR THE SCHOLARSHIP. HE FURTHER REFERRED TO CLAUSE 5, WHICH DEALS WITH THE SCHOLARSHIP ELIGIBILITY OF THE STUDENTS. IN VIEW OF THIS, HE SUBMITTED THAT THE ABOVE AGREEMENT IS PURELY FOR IMPARTING EDUCATION T O THE MERITORIOUS STUDENTS AND THE TCS HAS MERELY PROVIDED A GRANT/DO NATION/ SCHOLARSHIP TO THE STUDENTS WHO ARE PARTICIPATING IN THE COURSES C ONDUCTED BY THE ASSESSEE. HE FURTHER REFERRED TO PAGE NUMBER 82 OF THE PAPER BOOK WHICH CONSIST OF MEMORANDUM OF UNDERSTANDING IN THE MONTH OF JUNE 2014 BETWEEN NIIT FOUNDATION, APPELLANT, AS WELL AS, CTT L A TATA GROUP COMPANY. HE SUBMITTED THAT WHEN THE MEMORANDUM OF UNDERSTAND ING HAS BEEN ENTERED IN THE MONTH OF JUNE 2014 COULD NOT BE PART OF THE RECORD. EVEN OTHERWISE, HE SUBMITTED THAT TATA COMPANY WANTED TO ENGAGE THE ASSESSEE FOR SETTING UP AND MAINTAINING HOLE- IN THE- WALL LEARNING STATIONS FOR SCHOOLCHILDREN. HE FURTHER SUBMITTED THAT THE TOTAL PROJECT COST OF THAT EDUCATIONAL ACTIVITY WAS RS 1011608/ WHICH WAS TO BE PAID BY THAT COMPANY TO THE ASSESSEE FOR CONDUCTING THESE ACTIVI TIES. SIMILARLY, HE REFERRED TO AGREEMENT WITH THE AGA KHAN FOUNDATION DATED 27 FEBRUARY PAGE | 23 2013 FOR TRAINING AGENCY CONDUCTING COURSES AT CDC CENTRE AT MCP SCHOOL UNDER URBAN RENEWAL PROGRAM. HE FURTHER REFERRED TO PAGE NUMBER 695 OF THAT AGREEMENT WHICH IS IN ANNEXURE A STATING THAT THESE ARE THE COURSES, WHICH ARE BEING CONDUCTED BY THE ASSESSEE IN THE NA TURE OF COURSES IN DATA ENTRY, CERTIFICATE COURSE IN CUSTOMER SERVICE ASSOC IATE TRAINING. HE ALSO REFERRED TO THE FEES CHARGED BY THE ASSESSEE IS ONL Y RS 987 PER STUDENT. HE SUBMITTED THAT ABOVE FEES CHARGED IS AT CONCESSIONA L RATE AND THE TEACHING IS IN THE CLASSROOM MANNER. HE ALSO REFERRED TO PAG E NUMBER 119 OF THE PAPER BOOK, WHICH IS STRUCTURE OF STUDENT FEES CHAR GED BY THE ASSESSEE AND ITS COMPASS COMPARISON WITH THE MARKET PRICE OF SUC H COURSES. HE SUBMITTED THAT THERE IS A VAST DIFFERENCE BETWEEN W HAT IS CHARGED IN THE MARKET ABOUT SUCH COURSES AND WHAT THE ASSESSEE HAS CHARGED FROM THE STUDENTS WHO ARE NEEDY AND ECONOMICALLY BACKWARD. I N VIEW OF THIS, HE SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS GR ANTED THE EXEMPTION TO THE ASSESSEE HOLDING IT TO BE AN EDUCATIONAL INSTIT UTE CARRYING ON THE CHARITABLE ACTIVITIES AND IS ENTITLED TO THE EXEMPT ION UNDER SECTION 11, 12 AND 13 OF THE INCOME TAX ACT AFTER DUE VERIFICATION . EVEN OTHERWISE, HE STATED THAT THE ORDER PASSED BY THE LEARNED ASSESSI NG OFFICER IS NEITHER ERRONEOUS NOR NOT AT ALL PREJUDICIAL TO THE INTERES T OF REVENUE. 14. HE FURTHER SUBMITTED COPIES OF THE SEVERAL CERTIFIC ATE OF APPRECIATION ISSUED TO THE VARIOUS STUDENTS AS APPRECIATION OF DIGITAL LITERACY CERTIFICATES, WHICH ARE FOR EXAMINATION CONDUCTED BY THE NATIONAL INSTI TUTE OF OPEN SCHOOLING UNDER THE SCHEME OF NATIONAL DIGITAL LITERACY MISSI ON OF DEPARTMENT OF ELECTRONIC AND INFORMATION TECHNOLOGY UNDER THE MIN ISTRY OF COMMUNICATION AND INFORMATION TECHNOLOGY, GOVERNMEN T OF INDIA. HE THEREFORE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE EDUCATIONAL ACTIVITIES IN THE MANNER IN WHICH IT SHOULD HAVE BE EN CONDUCTED. THUS ASSESSEE IS ELIGIBLE FOR EXEMPTION WHICH HAS BEEN R IGHTLY GRANTED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 11 AND 12 O F THE INCOME TAX ACT HOLDING IT TO BE AN SOCIETY ENGAGED IN THE EDUCATIO NAL ACTIVITIES FALLING WITHIN THE MEANING OF SECTION 2 (15) OF THE INCOME TAX ACT. 15. HE FURTHER SUBMITTED A DETAILED PAPER BOOK CONTAINI NG 39 JUDICIAL PRECEDENTS SUPPORTING HIS ARGUMENTS WITH RESPECT TO HIS VARIOUS CONTENTIONS. WITH RESPECT TO THE FACT THAT THE ASSE SSEE SHOULD HAVE BEEN PUT PAGE | 24 TO THE NOTICE BEFORE ANY ISSUE IN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT HAS BEEN PASSED BY THE LEARNED CIT E, HE RELIED ON THE DECISION OF THE HONOURABLE SUPREME COURT OF INDIA IN C IT VERSU S AMITABH BACHCHAN [384 ITR 200] WHEREIN IT HAS BEEN SPECIFICALLY HELD THAT THOUGH THERE CAN BE NO DISPUTE THAT WHILE CIT IS FREE TO EXERCISE HIS J URISDICTION IN CONSIDERATION OF ALL RELEVANT FACTS, A FULL OPPORTUNITY TO CONTRI BUTE THE SAME AND TO EXPLAIN THE CIRCUMSTANCES SURROUNDING SUCH FACTS, AS MAY BE CONSIDERED RELEVANT BY THE ASSESSEE, MUST BE AFFORDED TO ASSESSEE BY TH E CIT PRIOR TO THE FINALIZATION OF THE DECISION. HE SUBMITTED THAT THE VARIOUS CONTRACTS/MEMORANDUM OF UNDERSTANDING AS WELL AS TH E PROVISIONS OF SECTION 13 (1) (C) OF THE ACT WERE NOT AT ALL CONFR ONTED TO THE ASSESSEE EITHER IN THE ORIGINAL SHOW CAUSE NOTICE OR DURING THE COU RSE OF REVISION PROCEEDINGS. ON THE ISSUE OF THE WANT OF NATURAL JU STICE, HE SUBMITTED THAT THE LAW ALWAYS PROVIDES ASSESSING OFFICER AS WELL A S THE ASSESSEE TO RESPOND TO THE ASSESSING OFFICER IN THE PROCESS ENSURING TH AT BOTH THE PARTIES HAVE MANY OPPORTUNITIES OF BEING HEARD AND THERE IS NO I NJUSTICE MERELY FOR WANT OF TIME. HE FURTHER STATED THAT THE LEARNED CIT COU LD NOT PASS AN ORDER UNDER SECTION 263 BASED ON THE ISSUE/REASONS WHICH WERE NOT REFERRED TO IN THE SHOW CAUSE NOTICE ISSUED BY THE CIT TO THE APPE LLANT AND WITHOUT GIVING AN APPELLANT FAIR AND REASONABLE OPPORTUNITY OF BEI NG HEARD. HE SUBMITTED THAT NO DOUBT THOSE ISSUES WERE NOT IN THE SHOW CAU SE NOTICE, HOWEVER EVEN OTHERWISE BEFORE THE CONCLUSION OF THE PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT THE LEARNED CIT EXEMPTION SHOULD HAV E GIVEN THE ASSESSEE TO CONFRONT VARIOUS OBSERVATION AND FINDINGS REACHED B Y HIM. THE ASSESSEE SHOULD GET A REASONABLE OPPORTUNITY OF HEARING AND TO EXPLAIN THOSE ISSUES. HE EVEN OTHERWISE SUBMITTED THAT THE FOR THE PURP OSE OF THE INVOCATION OF JURISDICTION UNDER SECTION 263 OF THE INCOME TAX , BOTH THE CONDITIONS OF SECTION 263 NEED TO BE SATISFIED I.E. THAT AS THE O RDER MUST BE ERRONEOUS AND IT SHOULD ALSO BE PREJUDICIAL TO THE INTEREST OF RE VENUE. HE SUBMITTED THAT EVEN ONE OF THE CONDITIONS FAILS, AND THEN THE ORDE R UNDER SECTION 263 CANNOT BE SUSTAINED. HE SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS THOUGH MADE DETAILED ENQUIRY ON THE ISSUE OF APPLIC ABILITY OF PROVISIONS OF SECTION 2 (15) OF THE INCOME TAX ACT AS WELL AS APP LICABILITY OF SECTION 11 AND 12 WITH RESPECT TO THE INCOME OF THE ASSESSEE, HOWE VER, IF THE LEARNED CIT PAGE | 25 E ANY BASIS TO DISLODGE THAT FINDING, IT SHOULD BE PUT TO THE NOTICE OF THE ASSESSEE, BY STATING THAT IN ORDER OF REVISION THAT WHAT KIND OF INQUIRIES THE LEARNED ASSESSING OFFICER HAS FAILED TO MAKE. H E SUBMITTED THAT MERELY ENQUIRY, WHICH THE CIT EXEMPTION THOUGHT FIT, BUT W HICH ARE NOT WARRANTED IN THE CASE OF THE ASSESSEE, OR HAS ALREADY BEEN EX AMINED BY THE ASSESSING OFFICER, CANNOT BE A BASIS ON WHICH REVISION UNDER SECTION 263 CAN BE MADE. HE FURTHER SUBMITTED THAT IF TWO VIEWS ARE POSSIBLE AND AO HAS ACCEPTED ONE OF THE PLAUSIBLE VIEWS, THAN SECTION 263 CANNOT BE INVOKED. HE REFERRED TO THE CELEBRATED DECISION OF THE HONOURABLE SUPREME C OURT IN CASE OF MALABAR INDUSTRIAL CO LTD VERSUS CIT [243 ITR 83] TO SUPPOR T HIS CONTENTION. ON THE ISSUE OF THE ASSESSMENT ORDER BEING CRYPTIC, SMALL, NOT DISCUSSING THE ISSUES IN DETAILS, HE SUBMITTED THAT THE DECISION OF THE A SSESSING OFFICER COULD NOT BE PREJUDICIAL OR ERRONEOUS FOR THE ONLY REASON THA T ASSESSING OFFICER HAS NOT MADE ANY ELABORATE DISCUSSION IN HIS ORDER. HE SUBM ITTED THAT SUCH DISCUSSION CAN ONLY BE MADE, OR GENERALLY ARE MADE BY THE LEARNED ASSESSING OFFICER, WHEN THE ASSESSEE IS DENIED CERT AIN BENEFITS OR THEY ARE NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASS ESSEE. WHEN THE LEARNED ASSESSING OFFICER IS SATISFIED WITH THE DETAILED EX PLANATION GIVEN BY THE ASSESSEE, THERE IS NO NEED OF MENTIONING THE SAME I N ELABORATE MANNER IN THE ASSESSMENT ORDER ITSELF. EVEN OTHERWISE, THAT D OES NOT MAKE THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER ERRONEOUS. 16. HE ALSO SUBMITTED THAT THE ORDER IS NOT AT ALL PREJ UDICIAL TO THE INTEREST OF REVENUE. HE SUBMITTED THAT EVEN IF THE ACTIVITY OF THE ASSESSEE IS REGARDED AS BUSINESS ACTIVITY, THEN THE LOSSES INCURRED BY THE ASSESSEE IN EARLIER YEARS WOULD BE ELIGIBLE FOR SET OFF AGAINST THAT INCOME A ND THAT MAY BE DETERMINED FOR THE CURRENT YEAR AND ACCORDINGLY THERE WOULD NO T BE ANY LOSS OF REVENUE IN THE CURRENT YEAR. HE SUBMITTED THAT APPELLANT HA S BEEN INCURRING LOSSES FROM THE ACTIVITIES TO LAST YEAR AGGREGATING TO 3.6 CRORES WHICH IS NEVER BEEN CLAIMED BY THE ASSESSEE. HE REFERRED TO PAGE N UMBER 622 OF THE PAPER BOOK VOLUME 2. HE THEREFORE SUBMITTED THAT IF IN TH IS YEAR INCOME FROM SAID ACTIVITY WERE CONSIDERED AS BUSINESS INCOME THEN TH E LOSSES FROM PAST YEAR WOULD BE ELIGIBLE TO BE SET OFF AGAINST THE SAME. H E STATED THAT THE LEARNED CIT EXEMPTION HAS PRINCIPALLY ACCEPTED IN HIS REVIS IONARY ORDER. THEREFORE, THERE WOULD NOT BE ANY LOSS OF REVENUE IN THIS YEAR , THEREFORE THE ORDER OF PAGE | 26 THE LEARNED ASSESSING OFFICER CANNOT BE CONSIDERED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND ACCORDINGLY SECTION 26 3 OF THE INCOME TAX ACT CANNOT BE INVOKED AS ONE OF THE LIMB/CONDITIONS PRE SCRIBED UNDER SECTION 263 FAILS. 17. THUS, HE CONCLUDED HIS ARGUMENT BY SAYING THAT THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE THE ORDER PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX EXEMPTION DESERVES TO BE SET-ASIDE. 18. THE LEARNED COMMISSIONER OF INCOME TAX, DEPARTMENT REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER PASSED BY THE LEARNE D CIT EXEMPTION. HE SUBMITTED THAT THE LACK OF NATURAL JUSTICE CANNOT BE CLAIMED BY THE ASSESSEE NOW AS THE ASSESSMENT ORDER HAS BEEN PASSE D UNDER SECTION 143 (3) OF THE INCOME TAX ACT AND IN THAT PROCESS THE ASSESSING OFFICER HAS GRANTED ENOUGH OPPORTUNITIES TO THE ASSESSEE TO SUB STANTIATE THE CLAIM MADE BY THE ASSESSEE. HE FURTHER STATED THAT THE LE ARNED ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY DURING THE COURSE OF ASSES SMENT, WHICH HE SHOULD HAVE MADE. HE REFERRED TO THE ASSESSMENT ORD ER PASSED ON 30/11/2016 STATING THAT IT HAS BEEN PASSED IN THE T WO PARAGRAPHS, WHEREIN THE FIRST PARAGRAPH THE LEARNED ASSESSING OFFICER H AS MENTIONED ABOUT THE STATUS OF THE ASSESSEE AND THE OBJECTS FOR WHICH IT HAS BEEN FRAMED. THEREAFTER THE LEARNED ASSESSING OFFICER HAS COMPUT ED THE INCOME OF THE ASSESSEE GRANTING THE ASSESSEE EXEMPTION UNDER SECT ION 2 (15) AND 11/12 OF THE INCOME TAX ACT ON HOLDING THAT ACTIVITIES OF TH E ASSESSEE ARE CHARITABLE IN NATURE AND WITHIN THE MEANING OF SECTION 2 (15) OF THE INCOME TAX ACT 1961. HE FURTHER REFERRED TO PARA NUMBER 2.1 OF THE SHOW CAUSE NOTICE ISSUED BY THE LEARNED CIT EXEMPTION WHICH STATE THA T IN CASE OF THE ACTIVITIES OF THE ASSESSEE DO NOT QUALIFY AS EDUCA TION AND THERE WOULD BE QUALIFYING AS GENERAL PUBLIC UTILITY AND THE PROVIS O TO SECTION 2 (15) WILL BE APPLICABLE IN SUCH CASES. THE REASONS FOR THE SAME IS THAT ASSESSEE HAS RECEIVED FEES FOR TRAINING STUDENT WHICH IS IN THE NATURE OF, TRADE, COMMERCE OR BUSINESS AND ACCORDINGLY THE SURPLUS FROM THESE ACTIVITIES SHOULD BE BROUGHT TO TAX. THIS IS FURTHER BECAUSE OF THE REAS ON THAT THE RECEIPT FROM DIFFERENT CORPORATE HOUSES HAVE BEEN SUBJECTED TO T AX DEDUCTION AT SOURCE UNDER SECTION 194J OF THE INCOME TAX ACT AND THEREF ORE THE NATURE OF THESE PAGE | 27 RECEIPTS ARE IN COMMERCIAL IN NATURE. HE FURTHER RE FERRED TO THE ORDER OF THE LEARNED CIT EXEMPTION WHEREIN THE RELIANCE WAS PLAC ED ON THE DECISION OF THE HONOURABLE SUPREME COURT IN SOLE TRUSTEE LOK SH ISKHSAN SANSTHAN TRUST WHEREIN IT HAS BEEN HELD THAT THERE SHOULD BE A PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARA CTER OF THE STUDENT BY NORMAL SCHOOLING. HE SUBMITTED THAT ASSESSEE IS NOT CONDUCTING EDUCATIONAL ACTIVITIES AS IT SHOULD HAVE BEEN AND IN CONFORMITY WITH THE DECISION OF THE HONOURABLE SUPREME COURT. THEREFORE, ON THIS GROUND NO FAULT CAN BE FOUND WITH THE ORDER OF THE LEARNED CIT EXEMPTION. HE FUR THER REFERRED TO THE ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATIVE A ND SUBMITTED THAT ON THE TWO VIEWS POSSIBLE CONCEPT THE LEARNED CIT EXEM PTION HAS GIVEN DETAILED ANSWER IN PARA NUMBER 11 OF THE ORDER. HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT TAKEN A CONSIDERED VIEW O F THE MATTER AND MERELY ACCEPTED THE RETURN OF THE ASSESSEE WITHOUT MAKING THE NECESSARY ENQUIRIES. HE THEREFORE SUBMITTED THAT EXPLANATION 2 OF SECT ION 263 OF THE ACT CLEARLY APPLIES TO THE FACTS OF THE CASE AND THEREFORE THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS LEARNED A SSESSING OFFICER HAS FAILED TO MAKE ADEQUATE ENQUIRY IN THIS REGARD. HE THEREFO RE SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT EXEMPTION SETTING ASIDE THE ORDER PASSED BY THE LEARNED ASSESSING OFF ICER HOLDING THAT IT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 19. IN REJOINDER, THE LEARNED AUTHORIZED REPRESENTATIVE REFERRED TO HIS WRITTEN SUBMISSION PLACED AT PAGE NUMBER 627 665 OF THE P APER BOOK, WHICH WAS PLACED BEFORE THE LEARNED CIT EXEMPTION. HE SUBMITT ED THAT THESE ISSUES ARE REPLIED THERE AND NOTHING MORE IS REQUIRED TO B E SAID. 20. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION A ND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THE CASE OF THE ASSESSEE, ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 WAS PASSED BY T HE LEARNED ASSESSING OFFICER ON 30/11/2016 WHERE THE LEARNED ASSESSING O FFICER HAS RECORDED THE FACT THAT ASSESSEE IS A SOCIETY WHICH IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, UNDER SECTION 12 A OF THE INCOME TAX ACT, 1961 AND IS ALSO HOLDING THE RECOGNITION UNDER SECTION 80 G (5) (VI) OF THE INCOME TAX ACT, 1961. THE LEARNED ASSESSING OFFICER HAS NOTED THE O BJECTS OF THE SOCIETY AND THEREAFTER HELD THAT INCOME OF THE ASSESSEE SOCIETY IS A CHARITABLE IN NATURE PAGE | 28 WITHIN THE MEANING OF SECTION 2 (15) OF THE INCOME TAX ACT, 1961. THEREAFTER HE COMPUTED THE INCOME OF THE ASSESSEE AND ASSESSED AT RUPEES NIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBM ITTED A LETTER DATED 24 NOVEMBER 2016 WHEREIN THE ASSESSEE EXPLAINED ITS CH ARITABLE ACTIVITIES CONDUCTED DURING THE FINANCIAL YEAR. ASSESSEE SUBMI TTED THAT DURING THE FINANCIAL YEAR 2013 14, 15656 UNDERPRIVILEGED YO UTHS WERE TRAINED BY IN NIIT FOUNDATION ACROSS VARIOUS STREAMS SUCH AS INFO RMATION TECHNOLOGY, ENGLISH, SOFT SKILLS, BPO, RETAIL SECTOR BANKING SE CTOR AND SERVICE SECTORS. THE TRAINING WAS CONDUCTED AT NIIT FOUNDATION RUN C ENTERS AND NGO PARTNER CENTERS. OUT OF THE YOUTHS THAT WERE ELIGIB LE FOR JOB, 2903 STUDENTS WERE PLACED WITH AN AVERAGE INCOME OF 6800 PER MONTH. EACH EMPLOYED STUDENT CONTRIBUTED TO INCREASE FAMILY INCOME MAKIN G THE FAMILY MORE SUSTAINABLE. IT WAS FURTHER STATED THAT VARIOUS DIG ITAL LITERACY INITIATIVES WERE ALSO STARTED DURING THE PERIOD. ASSESSEE IS HOLDING HOLE IN THE WALL LEARNING STATIONS WERE ALSO SET UP ACROSS TELANGANA, SIKKIM, WEST BENGAL, AND BIHAR TO PROVIDE FREE ACCESS TO TECHNOLOGY TO CHILDREN IN THE AGE GROUP OF 6 12 YEARS. THE CHILDREN LEARNED TO USE THIS LEARNING ST ATIONS TO IMPROVE THEIR UNDERSTANDING OF SCIENCE, IT, ENGLISH, GK AND MATHE MATICS APART FROM THIS DIGITAL LITERACY PROGRAM WAS ALSO LAUNCHED AT SEVER AL LOCATIONS TO PROVIDE TEACHER TRAINING AND FREE BASIC INFORMATION TECHNOL OGY CONTAINED. FURTHER, DELHI, HARYANA, RAJASTHAN, MAHARASHTRA, MP, TAMIL N ADU, TELENGANA, SIKKIM, WEST BENGAL, AND BIHAR WERE THE MAIN GEOGRA PHIES WHERE THE IMPACT WAS CREATED DURING THIS FINANCIAL YEAR. THE ASSESSEE FURTHER SUBMITTED THE DETAILS OF ITS ACTIVITY BY LETTER DAT ED 7 NOVEMBER 2016 WHERE THE ASSESSEE EXPLAINED ITS REVENUE FROM TUITION FEE S AND EDUCATIONAL SERVICES. THE ASSESSEE SUBMITTED THAT IN RESPECT OF FEES CHARGED, THE ASSESSEE IS IMPARTING EDUCATIONAL SERVICES TO THE E CONOMICALLY WEAKER SECTION OF STUDENTS AND OTHER PHYSICALLY AND MENTAL LY CHALLENGED, FOR STUDENTS WHEREIN THE EDUCATIONAL SERVICES ARE RENDE RED EITHER FREE OR HEAVILY SUBSIDIZED, DISCOUNTED. ASSESSEE OFFERS HIGHLY SUBS IDIZED TRAINING TO UNDERPRIVILEGED YOUTH. A VERY SMALL PART OF THE TRA INING COURSES CHARGES FEES TO THE STUDENTS. THIS BUILDS COMMITMENT TO THE STUD ENTS TO COMPLETE THE TRAINING COURSE AND THEY DO NOT DROPOUT. ANYTHING F REE IS NOT VALUED SO STUDENTS ARE ENCOURAGED TO PAY SMALL FEES. FOR THOS E STUDENTS WHO CANNOT PAGE | 29 AFFORD EVEN THAT SMALL FEE, ADDITIONAL DISCOUNTS AR E PROVIDED. TO DEMONSTRATE THIS FACT THE ASSESSEE DISCLOSED A FEE STRUCTURE DURING THE YEAR REFLECTING NUMBER OF STUDENTS AND THE FEES CHARGED COMPARED IT WITH THE MARKET RATE AND NUMBER OF STUDENTS AND TYPE OF COUR SE UNDERTAKEN. THUS, ASSESSEE DEMONSTRATED BEFORE THE ASSESSING OFFICER THAT EDUCATIONAL SERVICES RENDERED ARE HEAVILY SUBSIDIZED TO CATER TO THE NEE DS OF POOR SECTIONS OF THE SOCIETY. ASSESSEE ALSO EXPLAINED THAT IT RECEIVES A S PARTICIPATION BY THE NGOS, CORPORATION, AND OTHER INSTITUTIONS, WHICH SP ONSOR EDUCATIONAL SERVICES OF THE ASSESSEE OR VOCATIONAL TRAINING ETC FOR THE POORER SECTION OF THE SOCIETY. IT WAS ALSO DEMONSTRATED THAT THE AMOU NT RECEIVED IS SPENT BY THE ASSESSEE ON THE INTENDED PURPOSE AS MANDATED BY THE SPONSORS. ASSESSEE ALSO SUBMITTED A DETAILED LIST OF EDUCATIO NAL SERVICES RECEIPTS FOR SPONSORS DURING THE YEAR. ASSESSEE ALSO EXPLAINED V ARIOUS EXPENDITURE INCURRED BY IT IN THE FORM OF OFFICE AND BUILDING RENT, REPAIRS AND MAINTENANCE ACTIVITIES AS WELL AS ADMINISTRATIVE EX PENSES. ON 3 SEPTEMBER 2016, ASSESSEE ALSO EXPLAINED BEFORE THE ASSESSING OFFICER THE RECONCILIATION OF REVENUE AS PER THE SERVICE TAX RETURNS FILED BY THE ASSESSEE AND THE REVENUE DISCLOSED IN THE INCOME TAX RETURNS. FURTHE R, THE RECONCILIATION OF RECEIPTS AS PERFORM NUMBER 26AS AND RECEIPTS SHOWN IN THE INCOME TAX RETURN ARE ALSO RECONCILED WITH THE TAX DEDUCTION A T SOURCE MADE BY THE CORPORATE. AS PER PAGE NUMBER 283, WHICH IS PART OF THE SUBMISSION MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, AS PE R COMMUNICATION DATED 6 JUNE 2016, ASSESSEE SUBMITTED BRIEF NOTE INDICATING THE HISTORY OF THE APPELLANT. ASSESSEE EXPLAINED THAT ASSESSEE IS NOT FOR PROFIT EDUCATION SOCIETY SET UP BY THE PROMOTERS OF NIIT IN 2004 IN THE NAME OF NIIT EDUCATION SOCIETY TO REACH THE UNREACHED, UNCARING AND UNATTENDED FOR ENSURING INCLUSIVE DEVELOPMENT IN INDIA. IT WAS FU RTHER EXPLAINED THAT ASSESSEE HAS BEGUN A NUMBER OF PROGRAMS THAT WILL P OSITIVELY INFLUENCE THE UNDERSERVED SOCIETY OF THE COUNTRY THROUGH VARIOUS EDUCATIONAL INTERVENTIONS. IT WAS STATED THAT INTENT OF THE ASS ESSEE IS TO BETTER UNDERSTAND THE EDUCATION AND EMPLOYABILITY ISSUES A T THE GRASSROOTS LEVEL AND BUILD SUSTAINABLE TRAINING INTERVENTION MODELS OF THE ASSESSEE, EXPLORED THE BACK TO TRAINING IN INFORMATION TECHNOLOGY AND IT ENABLED AREAS FOR VARIOUS NOT-FOR-PROFIT ORGANIZATIONS ACROSS THE COU NTRY. IT HAS MANY PAGE | 30 PROTOTYPES WITH THE INTENT TO BUILD SCALABLE AND SU STAINABLE MODELS. AT THE SAME TIME ASSESSEE IS ALSO CONTINUING TO EXPAND THE AREAS OF IMPACT AS THEY COLLABORATE WITH THE CORPORATE SOCIAL RESPONSIBILIT Y IN THE CORPORATE SECTOR, NGOS AND FUNDING ORGANIZATIONS. THE MAIN OBJECTS OF THE ASSESSEE WERE ALSO EXPLAINED BY SUBMITTING THE COPY OF THE MEMORANDUM OF ASSOCIATION AND A SUBSEQUENT AMENDMENT. ASSESSEE ALSO SUPPORTED ITS A CTIVITY NARRATED BY THE ASSESSEE BY PRODUCING BEFORE HIM THE VARIOUS BA NK ACCOUNTS AS WELL AS THE DETAILS OF DONATION. AFTER EXAMINATION OF ALL T HESE INFORMATION, LEARNED ASSESSING OFFICER PASSED AN ORDER GRANTING ASSESSEE EXEMPTION PROVIDED UNDER 2 (1% AS EDUCATIONAL INSTITUTE U/S 11, 12 O F THE INCOME TAX ACT, 1961 HOLDING THAT ASSESSEE IS CARRYING ON CHARITABL E ACTIVITIES WITHIN THE MEANING OF SECTION 2 (15) OF THE INCOME TAX ACT, 19 61. IT IS ALSO IMPORTANT TO NOTE THAT FOR ASSESSMENT YEAR 2008 09, WHERE THE ASSESSEE WAS LAST ASSESSED, ON SIMILAR LINES , WHERE THE ASSESSEE WA S HELD TO BE CARRYING ON THE ACTIVITIES OF CHARITABLE NATURE WITHIN THE MEAN ING OF SECTION 2 (15) OF THE INCOME TAX ACT, 1961. THEN LEARNED ASSESSING OFFICE R SPECIFICALLY MENTIONED THAT THE PROVISIONS OF SECTION 13 OF THE INCOME TAX ACT, 1961 ARE NOT VIOLATED AT ALL. THUS FOR THE EARLIER YEARS ALSO ON THE SIMILAR SET OF ACTIVITIES THE LEARNED ASSESSING OFFICER IN THAT YEAR HAS TAKE N A VIEW THAT ASSESSEE IS CARRYING ON EDUCATIONAL ACTIVITIES. THUS IN PAST TH E ACTIVITIES OF THE ASSESSEE WERE ACCEPTED AS EDUCATIONAL. 21. DESPITE THIS EXAMINATION CARRIED OUT BY THE LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED C IT EXEMPTION ISSUED A NOTICE FOR SETTING ASIDE THE ASSESSMENT UNDER SECTI ON 263 OF THE INCOME TAX ACT, 1961 ON 1611 2018. THE MAIN REASON FOR STATING SO, IS THAT THE INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE HAS SHOWN T HAT ASSESSEE HAS RECEIVED THE TUITION FEE INCOME OF 10666236 AND THE AO HAS FAILED TO EXAMINE WHETHER THE ACTIVITIES CARRIED OUT BY THE A SSESSEE IN THE ABSENCE OF AFFILIATION WITH ANY REGULATORY BODY AND ADHERENCE TO THE CRITERIA FOR FORMAL EDUCATION LAID DOWN BY THE HONOURABLE SUPREME COURT IN CASE OF SOLE TRUSTEE, LOK SHISKHASN SANSTHAN CASE DOES NOT Q UALIFY AS EDUCATION. IT WAS FURTHER ALLEGED THAT THE ASSESSEE HAS RECEIVED FEES FOR TRAINING STUDENTS, WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, AND ACCORDINGLY THE SURPLUS FROM THESE ACTIVITIES SHOULD BE BROUGHT TO TAX. THE LEARNED CIT PAGE | 31 EXEMPTION WAS ALSO GUIDED BY THE FACT THAT THE RECE IPT FROM DIFFERENT CORPORATE HOUSES HAS BEEN SUBJECTED TO TAX DEDUCTIO N AT SOURCE UNDER SECTION 194J AND THEREFORE THE NATURE OF THESE RECE IPTS ARE COMMERCIAL IN NATURE. FURTHER IT WAS ALSO POINT OF CONCERN FOR CI T EXEMPTION THAT THE TURNOVER FROM SERVICES REPORTED TO THE SERVICE TAX AUTHORITIES AMOUNTED TO 38665028 AND ASSESSEE HAS ALSO PAID SERVICE TAX ON THE FEES ETC RECEIVED FROM THE STUDENTS MAKING IT A FURTHER STRONG CASE F OR INVOKING THE PROVISO TO SECTION 2 (15) OF THE ACT. THEREAFTER CONSIDERING T HE REPLY FILED BY THE ASSESSEE THE LEARNED CIT EXEMPTION SET ASIDE THE OR DER PASSED BY THE LEARNED ASSESSING OFFICER HOLDING THAT ASSESSEE IS ONLY RENDERING SERVICES AS A CONTRACTOR, SERVICE PROVIDER, THE CONTENT AND NAT URE OF THE SERVICES CANNOT BE CHARACTERIZED AS EDUCATION IN ANY MANNER WHATSOE VER, AND THE NATURE, DURATION AND THE QUALITY OF COURSES RUN BY THE ASSE SSEE ARE NOT COMPARABLE TO THE ACTIVITIES OF THE ASSESSEE IN ANY MANNER. IT WAS FURTHER HELD THAT THE COURSES RUN ON BEHALF OF ITS CLIENTS FOR A DURATION OF 20 HOURS TO 200 HOURS WITHOUT ANY FIXED CURRICULUM, CRITERIA, DISCIPLINE AND OTHER ESSENTIAL INGREDIENTS OF FORMAL EDUCATION, BUT MERELY TO TEAC H HOW COOPERATE A SMARTPHONE OR USE AN EMAIL, AND SPEAK ENGLISH CANNO T BE CONSIDERED AS AN EDUCATION THUS IT WAS HELD THAT THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS ERRONEOUS AS HE HAS NOT MADE ANY SUCH EN QUIRIES. 22. THE DETAILS OF THE ACTIVITIES CONDUCTED BY THE ASSE SSEE HAVE BEEN EXPLAINED ABOVE AT VARIOUS PLACES THEREFORE TO AVOID REPETI TION, THEY ARE NOT REITERATED. THE ASSESSEE HAS CATEGORICALLY STATED T HAT IT IS PRIMARILY OPERATING VARIOUS EDUCATION AND DEVELOPMENT CENTERS IN RURAL AREAS AND SLUM AND ECONOMICALLY BACKWARD POCKETS OF SEMI URBA N AREAS ACROSS INDIA SO AS TO IMPART EDUCATION TO THE STUDENTS BELONGING TO THE UNDER PRIVILEGED OR ECONOMICALLY BACKWARD STRATA OF THE SOCIETY WITH AN OBJECTIVE TO DEVELOP THEIR SKILL SO THAT THEIR EMPLOYABILITY CAN INCREAS E. ASSESSEE HAS ALSO SHOWN THAT IT HAS CHARGED FEES FROM THE STUDENTS EITHER A T SUBSIDIZED RATE OR AT FREE OF COST. THE NATURE OF THE TRAINING THAT HAS BEEN I MPARTED AT ITS VARIOUS CENTERS, GENERALLY, COMPRISES OF CLASSROOMS, COMPUT ER LABS AND OTHER INFRASTRUCTURE REQUIRED CONDUCTING EDUCATIONAL CLAS SES ALONG WITH TRAINED FACULTIES TO EDUCATE AND TRAIN THE STUDENTS. THE AS SESSEE IS ALSO GETTING THOSE CENTERS APPROVED BY NATIONAL SKILL DEVELOPMEN T PAGE | 32 CORPORATION TO CONDUCT VARIOUS EDUCATIONAL COURSES APPROVED BY THEM. THUS IT IS APPARENT THAT EDUCATIONAL COURSES CONDUC TED BY ASSESSEE ARE IN THE SAME MANNER AS THAT OF ANY COURSE OR CLASSES CO NDUCTED BY OTHER EDUCATIONAL INSTITUTE IN A SCHOOLING FORMAT. THE AS SESSEE HAS ALSO DEVELOPED THE FIXED CURRICULUM, WHICH IS DULY RECOGNIZED BY T HESE GOVERNMENT AUTHORITIES OR MAY BE RECOGNIZED BY OTHER GLOBALLY RECOGNIZED INSTITUTIONS. THE COMPLETE SESSION PLAN FOR EVERY COURSE IS COVER ED. THEREFORE IT IS IN A PLANNED MANNER. THE ATTENDANCE OF THE STUDENTS IS A LSO COMPULSORY TO ALLOW THEM TO TAKE FURTHER EXAMINATION. THE NECESSARY CER TIFICATES TO THE SUCCESSFUL CANDIDATES ARE ALSO ISSUED. THE FEES CHA RGED BY THE ASSESSEE TO THE VARIOUS STUDENTS ARE COMPARED TO THE MARKET RAT E ARE VERY LOW, THE DESERVING STUDENT ARE GRANTED CONCESSION OR SUBSIDY . THE ASSESSEE HAS ALSO CONDUCTED VARIOUS APPROVED EDUCATIONAL AND VOCATION AL COURSES IN GOVERNMENT SCHOOLS, COMMUNITY SCHOOLS AND CENTERS O PERATED BY OTHER NGOS. THE DIGITAL LITERACY MISSION TRAININGS ARE AL SO PROVIDED TO THE CHILDREN. THE WORK OF THE ASSESSEE HAS BEEN ACCREDI TED BY VARIOUS ORGANIZATIONS BY AWARDING RECOGNITION AND AWARDS. A SSESSEE HAS ALSO SHOWN VARIOUS NEWSPAPER REPORTS, WHICH CLEARLY SHOWS THAT ASSESSEE, IS PROVIDING EDUCATION. MERELY BECAUSE OF IN CERTAIN PROJECTS TH ERE IS A DEFICIT, WHICH DEFICIT IS REIMBURSED BY THE SEVERAL CORPORATE ENTI TIES BY SPENDING OUT OF THEIR CORPORATE SOCIAL RESPONSIBILITY FUNDING TO TH E ASSESSEE DOES NOT MAKE ASSESSEE AN NON-EDUCATIONAL INSTITUTE. IF, FOR ANY REASONS, THOSE ENTITIES HAVE DEDUCTED TAX AT SOURCE DUE TO THEIR OWN TAX OB LIGATIONS, IT DOES NOT MAKE THE INCOME SO RECEIVED BY THE ASSESSEE AS BUSI NESS INCOME, NATURALLY, THE CHARACTER OF OUTFLOW FROM THE PAYER CANNOT ALWA YS USED IN CHARACTERIZING THE INFLOW OF THE RECIPIENT. THE OBL IGATION OF THE ASSESSEE OF COMPLYING WITH THE SERVICE TAX LAW ALSO DOES NOT MA KE ASSESSEE AN INSTITUTE, WHICH IS CARRYING ON BUSINESS. MORE SO, THE OPINION OF THE ASSESSING OFFICER FOR THIS YEAR THAT ASSESSEE IS CARRYING ON AN EDUCA TIONAL ACTIVITY IS ALSO SUPPORTED BY THE ASSESSMENT HISTORY OF THE ASSESSEE WHERE IN EARLIER YEAR ALSO ON IDENTICAL FACTS AND CIRCUMSTANCES, THE ASSE SSEE WAS HELD TO BE CARRYING ON EDUCATIONAL ACTIVITIES, ENTITLED TO DED UCTION/EXEMPTION UNDER SECTION 11 AND 12 OF THE INCOME TAX ACT, 1961. HONO URABLE SUPREME COURT PAGE | 33 23. FURTHER , THE DECISION OF THE HONOURABLE SUPREME CO URT IN CASE OF THE SOLE TRUSTEE, LOK SHIKSHANA TRUST VS. THE COMMISSIONER O F INCOME TAX, MYSORE (28.08.1975 - SC) : MANU/SC/0273/1975 IT IS HELD TH AT 5. THE SENSE IN WHICH THE WORD 'EDUCATION' HAS BE EN USED IN SECTION 2(15) IS THE SYSTEMATIC INSTRUCTION, SCHOOLING OR T RAINING GIVEN TO THE YOUNG IN PREPARATION FOR THE WORK OF LIFE. IT ALSO CONNOTES THE WHOLE COURSE OF SCHOLASTIC INSTRUCTION, WHICH A PERSON HA S RECEIVED. THE WORD 'EDUCATION' HAS NOT BEEN USED IN THAT WIDE AND EXTENDED SENSE ACCORDING TO WHICH EVERY ACQUISITION OF FURTHER KNO WLEDGE CONSTITUTES EDUCATION. ACCORDING TO THIS WIDE AND EXTENDED SENS E, TRAVELLING IS EDUCATION, BECAUSE AS A RESULT OF TRAVELLING YOU AC QUIRE FRESH KNOWLEDGE. LIKEWISE, IF YOU READ NEWSPAPERS AND MAG AZINES, SEE PICTURES, VISIT ART GALLERIES, MUSEUMS AND ZOOS, YO U THEREBY ADD TO YOUR KNOWLEDGE. AGAIN, WHEN YOU GROW UP AND HAVE DE ALINGS WITH OTHER PEOPLE, SOME OF WHOM ARE NOT STRAIGHT, YOU LE ARN BY EXPERIENCE AND THUS ADD TO YOUR KNOWLEDGE OF THE WAYS OF THE W ORLD. 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 MAKE 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 REALTIES AND MYSTERIES OF LIFE. ALL T HIS 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 SECT ION 2. WHAT EDUCATION CONNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY FORMAL SCHOOLING. 24. THESE OBSERVATION OF HONOURABLE SUPREME COURT WERE IN CASE OF THE ASSESSEE WHO WAS SAYING THAT THE COMMUNICATION SENT BY THE SOLE TRUSTEE TO THE INCOME-TAX OFFICER SHOWS THAT THE TRUST AT PRESENT IS CARRYING OUT ONLY THE LAST MENTIONED OBJECT OF THE TRUST, NAMELY, SUPPLYI NG THE KANNADA SPEAKING PEOPLE WITH AN ORGAN OR ORGANS OF EDUCATED PUBLIC OPINION. PAGE | 34 25. IN FACT THE ACTIVITIES CARRIED ON BY THE ASSESSEE S QUARELY FITS INTO THE ABOVE CRITERIA. 26. FURTHER HONOURABLE GUJARAT HIGH COURT IN 195 ITR 27 9 HAS ANALYZED AND INTERPRETED THE DECISION OF THE HONOURABLE SUPREME COURT OF SOLE TRUSTEE LOK SHISKSHAN SANSTHAN ( SUPRA) AS UNDER :- IT APPEARS TO US THAT THE DECISION OF THE TRIBUNAL WHICH SEEKS TO REST IT ON THE OBSERVATIONS MADE BY THE SUPREME COURT IN LOKASHIKSHANA TRUST'S CASE [1975] 101 ITR 234 , FOR HOLDING THAT, THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UND ER SECTION 10(22) OF THE ACT IS BASED ON A COMPLETE MISREADING OF THE OBSERVATIONS OF THE SUPREME COURT. IN LOKASHIKSHANA TRUST'S CASE [1975] 101 ITR 234 , THE SUPREME COURT, WHILE DEALING WITH THE PROVISIONS OF SECTION 11 READ WITH SECTION 2(15) OF THE ACT WHICH DEFINES 'CHARITABLE PURPOSE' OBSER VED AS UNDER (AT PAGE 241) : 'THE SENSE IN WHICH THE WORD 'EDUCATION' HAS BEEN USED IN SECTION 2(15) IN THE SYSTEMATIC INSTRUCTION , SCHOOLING OR TRAINING GIVEN TO THE YOUNG IS PREPARA TION 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 ACQUISITIO N OF FURTHER KNOWLEDGE CONSTITUTES EDUCATION. ACCORDING TO THIS WIDE AND EXTENDED SENSE, TRAVELLING IS EDUCATI ON, BECAUSE AS A RESULT OF TRAVELLING YOU ACQUIRE FRESH KNOWLEDGE.......BUT THAT IS NOT THE SENSE IN WHICH THE WORD 'EDUCATION' IS USED IN CLAUSE (15) OF SECTION 2. WHAT 'EDUCATION' CONNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING.' THE SUPREME COURT, IN THE ABOVE OBSERVATIONS, BY RE FERRING TO THE SYSTEMATIC INSTRUCTION, SCHOOLING OR TRAINING G IVEN TO THE YOUNG HAS ONLY CITED AN INSTANCE IN ORDER TO INDICA TE AS TO WHAT THE WORD 'EDUCATION' APPEARING IN SECTION 2(15) OF THE ACT WHICH PAGE | 35 DEFINES 'CHARITABLE PURPOSES' IS INTENDED TO MEAN. WE ARE CERTAIN THAT THESE OBSERVATIONS WERE NOT INTENDED T O KEEP OUT OF THE MEANING OF THE WORD 'EDUCATION', PERSONS OTHER THAN 'YOUNG'. THE EXPRESSION 'SCHOOLING' ALSO MEANS 'THAT SCHOOLS, INSTRUCTS OR EDUCATES' (THE OXFORD ENGLISH DICTIONARY, VOL. IX, PAGE 217). THE SUPREME COURT HAS OBSERVED THAT THE WORD 'EDUCATION' ALSO CONNOTES TH E WHOLE COURSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THIS CLEARLY INDICATES THAT THE OBSERVATI ONS OF THE SUPREME COURT WERE NOT INTENDED TO GIVE A NARROW OR PEDANTIC SENSE TO THE WORD 'EDUCATION'. BY GIVING F URTHER ILLUSTRATIONS OF A TRAVELLER GAINING KNOWLEDGE, VIC TIMS OF SWINDLERS AND THIEVES BECOMING WISER, THE VISITORS TO NIGHT CLUBS ADDING TO THEIR KNOWLEDGE THE HIDDEN MYSTERIE S OF LIFE, THE SUPREME COURT HAS INDICATED THAT THE WORD 'EDUCATION' IS NOT USED IN A LOOSE SENSE SO AS TO I NCLUDE ACQUISITION OF EVEN SUCH KNOWLEDGE. THE OBSERVATION S OF THE SUPREME COURT ONLY INDICATE THE PROPER CONFINES OF THE WORD 'EDUCATION' IN THE CONTEXT OF THE PROVISIONS O F SECTION 2(15) OF THE ACT. IT WILL NOT BE PROPER TO CONSTRUE THESE OBSERVATIONS IN A MANNER IN WHICH THEY ARE CONSTRUE D BY THE TRIBUNAL WHEN IT INFERS FROM THESE OBSERVATIONS , IN PARA 17 OF ITS JUDGMENT, THAT THE WORD 'EDUCATION' IS LI MITED TO SCHOOLS, COLLEGES AND SIMILAR INSTITUTIONS AND DOES NOT EXTEND TO ANY OTHER MEDIA FOR SUCH ACQUISITION OF KNOWLEDGE. THE OBSERVATIONS OF THE SUPREME COURT DO NOT CONFINE THE WORD 'EDUCATION' ONLY TO SCHOLASTIC INS TRUCTIONS BUT OTHER FORMS OF EDUCATION ALSO ARE INCLUDED IN THE WORD 'EDUCATION'. AS NOTICED ABOVE, THE WORD 'SCHOOLING' ALSO MEANS INSTRUCTING OR EDUCATING. IT, THEREFORE, CANN OT BE SAID THAT THE WORD 'EDUCATION' HAS BEEN GIVEN AN UN DULY RESTRICTED MEANING BY THE SUPREME COURT IN THE SAID DECISION. THOUGH, IN THE CONTEXT OF THE PROVISION OF SECTION 10(22), THE CONCEPT OF EDUCATION NEED NOT BE GIVEN ANY WIDE OR PAGE | 36 EXTENDED MEANING, IT SURELY WOULD ENCOMPASS SYSTEMA TIC DISSEMINATION OF KNOWLEDGE AND TRAINING IN SPECIALI SED SUBJECTS AS IS DONE BY THE ASSESSEE. THE CHANGING TIMES AND THE EVER WIDENING HORIZONS OF KNOWLEDGE MAY BRING IN CHANGES IN THE METHODOLOGY OF TEACHING AND A SHIFT FOR THE BET TER IN THE INSTITUTIONAL SETUP. ADVANCEMENT OF KNOWLEDGE B RINGS WITHIN ITS FOLD SUITABLE METHODS OF ITS DISSEMINATI ON AND THOUGH THE PRIMARY METHOD OF SITTING IN A CLASSROOM MAY REMAIN IDEAL FOR MOST OF THE INITIAL EDUCATION, IT MAY BECOME NECESSARY TO HAVE A DIFFERENT OUTLOOK FOR FU RTHER EDUCATION. IT IS NOT NECESSARY TO NAIL DOWN THE CON CEPT OF EDUCATION TO A PARTICULAR FORMULA OR TO FLOW IT ONL Y THROUGH A DEFINED CHANNEL. ITS PROGRESS LIES IN THE ACCEPTA NCE OF NEW IDEAS AND DEVELOPMENT OF APPROPRIATE MEANS TO R EACH THEM TO THE RECIPIENTS. EVEN IF IT WERE TO BE HELD THAT THE OBSERVATIONS OF THE SUPREME COURT WOULD APPLY ONLY TO THE SCHOOLS, COLLEGES AND SIMILAR INSTITUTIONS AS HELD BY THE TRIBUNAL, WE ARE SATISF IED FROM THE NATURE OF THE ACTIVITIES OF THE ASSESSEE-CO-OPERATI VE UNION OF RUNNING COLLEGES AND TRAINING CENTRES FOR VARIOUS C OURSES FOR THE PURPOSES OF IMPARTING TRAINING AND/OR AWARDING DIPL OMAS AND CERTIFICATES, THAT THE ASSESSEE IS AN EDUCATIONAL I NSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FO R THE PURPOSES OF PROFIT. THE QUESTION BEFORE THE SUPREME COURT, IN THE ABOVE CASE WAS AS TO WHETHER EXEMPTION UNDER SECTION 11 READ WITH SECTION 2(15) OF THE ACT COULD BE GIVEN TO A TRUST WHICH WA S AT THE RELEVANT TIME PUBLISHING NEWSPAPERS AND JOURNALS. S ECTION 11( A ) APPLIES TO INCOME DERIVED FROM PROPERTY HELD UNDE R TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE WHILE SE CTION 10(22) COVERS ANY INCOME OF A UNIVERSITY OR OTHER EDUCATIO NAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE S AND NOT FOR PURPOSES OF PROFIT. THE EXEMPTION INCORPORATED IN S ECTION 11( A ) IS ONLY IN RESPECT OF THE EXTENT TO WHICH THE INCOM E DERIVED FROM PAGE | 37 THE PROPERTY IS APPLIED FOR CHARITABLE PURPOSE WHIC H INCLUDES EDUCATIONAL CHARITY. IF THE INCOME IS ONLY ACCUMULA TED OR SET APART FOR SUCH PURPOSE, THE EXEMPTION IS LIMITED TO THE EXTENT OF 25 PER CENT, OF THE INCOME OF THE PROPERTY HELD UND ER SUCH TRUST. THE EXEMPTION UNDER SECTION 10(22), ON THE O THER HAND, IS WITHOUT ANY SUCH LIMITATION. THE LANGUAGE OF SEC TION 10(22) EMPHASIZES THAT THE SOLE PURPOSE OF THE EXISTENCE O F THE INSTITUTION SHOULD BE EDUCATIONAL. THE VERY PROVISI ON OF EXEMPTION UNDER SECTION 10(22) INDICATES THAT THE I NCOME OF SUCH INSTITUTIONS IS CONTEMPLATED. THEREFORE, MERE EXISTENCE OF PROFIT WILL NOT DISQUALIFY THE INSTITUTION IF THE S OLE PURPOSE OF ITS EXISTENCE IS NOT PROFIT-MAKING BUT IS EDUCATIONAL A CTIVITY. INCIDENTAL ACTIVITIES CONNECTED WITH THE EDUCATIONA L PURPOSES FOR WHICH THE INSTITUTION EXISTS WHICH RESULT IN IN COME WILL NOT DISQUALIFY THE INSTITUTION, FOR SECTION 10(22), BY ITS VERY NATURE, CONTEMPLATES INCOME OF SUCH INSTITUTIONS WHICH IS T O BE EXEMPTED UNDER THAT PROVISION. IT IS, THEREFORE, DI FFICULT TO ACCEPT THE CONTENTION CANVASSED ON BEHALF OF THE RE VENUE BY THE LEARNED ADVOCATE, MR. SHELAT, THAT BECAUSE THE ASSESSEE WAS HAVING INCOME FROM ITS PROPERTIES, IT WAS NOT QUALI FIED TO GET EXEMPTION UNDER SECTION 10(22) OF THE ACT. [UNDERLINE SUPPLIED BY US] 27. IF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE V ISUALIZED IN THE CONTEXT OF JUDICIAL PRECEDENT AS RELIED UPON ABOVE, IT IS APPA RENT THAT ASSESSEE IS NOT ENGAGED IN ANY OTHER ACTIVITY OTHER THAN EDUCATION. THEREFORE, FOR THIS REASON, WE ARE OF THE VIEW AND HOLD SO THAT THE LEA RNED CIT E IS NOT CORRECT IN HOLDING THAT ASSESSEE IS NOT ENGAGED IN EDUCATIO NAL ACTIVITIES COVERED UNDER SECTION 2 (15) OF THE ACT. 28. NO EVIDENCES HAVE BEEN PUT FORTH BY THE REVENUE EXC EPT MERELY AN ALLEGATION OF VIOLATION OF THE PROVISIONS OF SECTION 13 (1) (C ) OF THE ACT. IT HAS NOT BEEN SHOWN THAT HOW THE ASSESSEE HAS CONFERRED ANY BENEF IT DIRECTLY OR INDIRECTLY ON ANY PERSON. IT IS ALSO NOT SHOWN THAT WHO ARE TH OSE PERSONS WHO ARE FULFILLING THE CRITERIA OF SECTION 13 (3) OF THE AC T. THUS, THE ORDER OF THE PAGE | 38 LEARNED CIT EXEMPTIONS SO FAR AS THIS ISSUE IS INVO LVED IS NOT SUPPORTED BY ANY EVIDENCE. 29. FURTHER, IT IS APPARENT FROM THE ASSESSMENT ORDER A ND THE COMMUNICATION MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS BEFORE THE ASSESSING OFFICER IT IS APPARENT THAT ALL AND E VERY ASPECT OF THE ASSESSMENT OF THE INCOME OF THE ASSESSEE HAVE BEEN EXAMINED BY HIM. THE LEARNED ASSESSING OFFICER HAS IN DETAILED LOOK INTO THE ACTIVITIES, OBJECT, THE FUNCTIONS, NATURE OF RECEIPTS, NATURE OF EXPENDITUR E, APPLICABILITY OF SERVICE TAX, APPLICABILITY OF TAX DEDUCTION AT SOURCE CREDI T AND ABOVE ALL THE APPLICABILITY OF THE PROVISIONS OF SECTION 2 (15) O F THE ACT. THEREAFTER, THE LEARNED ASSESSING OFFICER HAS GRANTED ASSESSEE THE BENEFIT OF BEING AN EDUCATIONAL INSTITUTE. IT IS NOT REQUIRED FOR THE A SSESSING OFFICER TO EXAMINE HOW THE PAYER OF AN INCOME HAS DEALT WITH RECEIPT O F AN INCOME IN THE HANDS OF THE ASSESSEE. THIS CANNOT BE A GENERAL LAW BUT I N THE SPECIFIC FACTS OF THE CASE WHERE THE PAYMENT MADE BY THE PARTIES ARE SUBJ ECTED TO TAX DEDUCTION AT SOURCE UNDER SECTION 194J OF THE INCOME TAX ACT CANNOT GO AGAINST THE ASSESSEE. THE LEARNED CIT EXEMPTION HAS NOT IN SU BSTANCE HELD THAT ANY DUE ENQUIRY WHICH SHOULD HAVE BEEN MADE BY THE ASSE SSING OFFICER HAS NOT BEEN MADE BY HIM. PERHAPS AT THE LEVEL OF ENQUIRY A ND THE MANNER OF ENQUIRY MAY BE DIFFERENT BECAUSE OF CHANGE IN PERCE PTION. HOWEVER, THAT DOES NOT MAKE THE ORDER ERRONEOUS. 30. BEFORE PARTING, WE WOULD LIKE TO PUT ON RECORD THAT , AT THE TIME OF DICTATION, WHOLE WORLD IS EXPERIENCING NEW NORMAL IN ALL SPH ERES OF ACTIVITIES. EDUCATION IS NO EXCEPTION. NATURALLY, CLASSROOMS HAVE NO BRICKS AND MORTAR, NO BENCHES AND BLACKBOARDS. BLACKBOARD COL LABORATE AND DIGITAL WHITE BOARDS HAVE REPLACED BLACKBOARDS. TEACHERS AN D STUDENTS DO NOT ASSEMBLE AT ONE PLACE BUT THEY REACH EACH OTHER ON CLOUD THROUGH MEETS, TEAMS, WEBEX AND ZOOM! SUCH CLOUD CLASSES HAVE WI DE REPRESENTATION OF STUDENTS ACROSS THE GLOBE BLURRING THE GEOGRAPHIES OF TRADITIONAL CLASSROOMS. STUDENTS LOVE POLLS, LIVE Q & A SESSIONS AND PRER ECORDED VIDEOS. BOOKS AND NOTEBOOKS HAVE BEEN REPLACED BY SMART PHONES, T ABS ETC. MOST IMPORTANTLY, ATTENDANCES ARE ALSO VIRTUAL INSTEAD OF PHYSICAL. CHAT BOXES ARE MEDIUM OF GROUP DISCUSSION. STRIKINGLY, T IMINGS ARE 24*7. STILL IT HAS ALL THE ESSENTIAL OF A CLASSROOM. IT DEFINITE LY COVERS PROCESS OF PAGE | 39 TRAINING, DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS LIKE NORMAL SCHOOLING. THUS, IN TRUE SENSE THE ACTI VITIES PERFORMED BY THE ASSESSEE ARE NO DIFFERENT FROM CLASSROOMS. 31. IN VIEW OF ABOVE FACTS, WE HOLD THAT ASSESSEE IS CA RRYING ON EDUCATIONAL ACTIVITIES WHICH ARE COVERED BY THE PROVISIONS OF S ECTION 2 (15) OF THE INCOME TAX ACT AND IT IS NEITHER BUSINESS NOR PROFESSION O F THE ASSESSEE. IT DEFINITELY CONSTITUTE A CHARITABLE ACTIVITY AS IT DOES NOT CHA RGE THE FEES AT THE LEVEL OF MARKET RATE AND EVEN OTHERWISE THE SURPLUS GENERATE D IS ALSO USED FOR CHARITABLE ACTIVITIES OF EDUCATION. THIS IS THE FIN DING OF THE LEARNED ASSESSING OFFICER FOR ASSESSMENT YEAR 14 15 AND FOR EARLIER ASSESSMENT YEARS. IN VIEW OF THIS, THE ORDER PASSED BY THE ASSESSING OFFICER IS NOT AT ALL ERRONEOUS. THEREFORE, WE SET ASIDE AND QUASH THE ORDER PASSED BY THE LEARNED CIT EXEMPTION UNDER SECTION 263 OF THE INCOME TAX ACT F OR ASSESSMENT YEAR 20 14-15 ON 26 TH OF MARCH 2018. THUS, WE ALLOW GROUND NUMBER 3- 6 O F THE APPEAL OF THE ASSESSEE. 32. AS WE HAVE IN SUBSTANCE ALLOWED THE APPEAL OF THE A SSESSEE, THE GROUND NUMBER ONE RAISED AGAINST VIOLATION OF PRINCIPLES O F NATURAL JUSTICE AND CIT TRAVELLING BEYOND THE SHOW CAUSE ARE NOW INFRUCTOUS , THEREFORE, THEY ARE NOT REQUIRED TO BE ADJUDICATED HENCE DISMISSED. 33. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/2020. -SD/- -SD/- (K.N.CHARY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27/05/2020 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI PAGE | 40 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/ PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER