Citation- Commissioner of Income Tax v. NIIT Foundation
HC: Delhi
ITA No: 141 OF 2021
Assessment Year: 2014-15
Date of Order- July 26, 2024
Brief Facts:
The assessee-society was engaged in educational activities and registered under section 12A and section 80G (5).
The CIT(E) observed that the assessee was not affiliated to any regulatory body and therefore, could not impart formal education. Consequently, he held that the activities of the assessee fell under advancement of general public utility (GPU) and not education and the fees received by the assessee were akin to an activity in the nature of trade, commerce or business.
Further, he noted that the assessee had taken various receipts from corporate entities on which TDS had been deducted under 194J and the exact nature of these payments vis-à-vis the services rendered by the assessee had not been examined.
Thus, he denied exemption under section 11 and held that the assessee appeared to be acting primarily as a contractor/service provider for corporates with the elements of formal schooling being absent, and its activities, even if construed to be of a GPU, were liable to be viewed as contravening the Proviso to Section 2(15).
Observations of the High Court
The High Court noted the following observations made by the Tribunal in its order
The assessee had been operating primarily in rural areas and economically backward pockets of semi urban areas across India and all its centres had been approved by National Skill Development Corporation.
the assessee was also able to establish beyond a measure of doubt that the courses run by it had a fixed curriculum and attendance criteria, thus fulfilling all essential ingredients of formal education.
the assessee was also providing educational courses developed by globally recognised institutions which were known across IT and other industry. This ensured that the students were recruited by various companies in that industry.
the assessee had shown that it charged fees either at a subsidised rate or free of cost and had been awarded various recognitions and awards for its work.
the assessee had been treated as engaged in education in earlier years and granted exemption under section 11. There had been no change in facts of circumstances.
Merely because in certain projects there was a deficit, which had been reimbursed by corporate entities out of their CSR fund to the assessee did not make assessee a non-educational institute
Further, if TDS had been deducted by corporate entities due to their own tax obligations did not make income received by the assessee as business income.
Hence, the High Court upheld the order of the Tribunal that recognition by a regulatory authority are not essential attributes of education under section 2(15) and assessee was entitled to exemption under section 11.
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