Case Law Details

Case Name : The Institute of Chartered Accountants of India and Anr. Vs The Director General of Income Tax (Exemptions), Delhi and Ors. (High Court of Delh)
Appeal Number : W.P.(C) No. 3147/2012, 3148/2012 & 7181/2012
Date of Judgement/Order : 04/07/2013
Related Assessment Year :
Courts : All High Courts (3629) Delhi High Court (1146)

After going through the provisions of the ICAI Act and the Regulations framed therein as well as various activities carried on by the petitioner, we are of the view that the petitioner institute does not carry on any business, trade or commerce.

The activity of imparting education in the field of accountancy and conducting courses both at pre-qualification as well as post-qualification level are activities in furtherance of the objects for which the petitioner has been constituted. Activities of providing coaching classes or undertaking campus placement interviews for a fee are in relation to the main object of the petitioner which as stated earlier cannot be held to be trade, business or commerce. Accordingly, even though fees are charged by the petitioner institute for providing coaching classes and for holding interviews with respect to campus placement, the said activities cannot be stated to be rendering service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which as held earlier are not trade, commerce or business.

The second aspect for which the matter was remanded to DGIT(E) was to consider the issue whether the funds provided by the petitioner institute to ICAI Accounting Research Foundation would violate Section 13 of the Act. In this regard, the petitioner had submitted that it had not granted any loan or advance to ICAI Accounting Research Foundation and in any event the funds paid to the Jaipur Development Authority and Government of Rajasthan for establishing an  institution by ICAI Accounting Research Foundation must be considered as application of funds towards the object of the petitioner institute since ICAI Accounting Research Foundation has been incorporated under Section 25 of the Companies Act, 1956 as a company not for profit and for the purposes of carrying on research in the field of accountancy. The ICAI Accountancy Research Foundation is also entitled to exemption under Section 10 (23C)(iv) of the Act read with Section 11 of the Act. The petitioner has also placed reliance on the fact that the CIT (Appeals) in its order dated 31.12.2010 relevant to the assessment year 2006-07 has accepted this contention of the petitioner and the same has been affirmed by the Tribunal by its order dated 09.01.2010. The petitioner has further placed reliance on the assessment order dated 27.12.2010 relevant to the assessment year 2008-09 wherein the Assessing Officer has held as under:

“On verification, it is found out that its activities fall within the ambit of section 2(15) of the Act, i.e. “charitable purpose” and it has complied with the provision of section 11/12 of the Act. Violation of section 13 of the Act was not found.”

We note from the above that revenue has not found any violation of Section 13 of the Act. We also notice that DGIT(E) has not found any violation of Section 13 of the Act in the impugned orders. Further, it has also not been contended before us that the petitioner has violated section 13 of the Act. Thus, this dispute also stands concluded in favour of the petitioner.

In view of the above, we allow these writ petitions and set aside the two impugned orders dated 13.04.2012 and 28.09.12 passed by the respondent DGIT(E) and further direct DGIT(E) respondent to recognise the petitioner as eligible under Section 10(23C)(iv) of the Act as an institution established for charitable purposes having regard to its object and importance for the assessment years 2006-2007, 2007-2008, 2008-2009, 2009-2010, 2010-2011 and 2011-2012, subject to the petitioner complying with the other provisions of the Act.

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Category : Income Tax (24908)
Type : Judiciary (9823)
Tags : high court judgments (3935) ICAI (2148)

0 responses to “ICAI – Activity of providing coaching classes or undertaking campus placement interviews for a fee cannot be held to be trade, business or commerce”

  1. Vinay Joshi says:

    My earlier mail msg, 1941A or HAVE NO ANSWERS!?

    Yes diverting the subject.

    Instead of talking on ICAI why not TALK what ICAI is doing on 1941A?

    Today, filing I.TAX returns, not pertinent TO STATE THAT THE TAX PAYER is having 1% shortfall to meet the LTCG norms!?

    HOW HAVE YOU OVERLOOKED THIS ASPECT?! In which sections of IT the tax payer should file 1% deduction? WHAT IS THE PROVISION IN ITR? 26A credit is of no use!? The tax payer-seller has to get his money immediately!?

    Capital Gains S/B a/c BANK has nothing to do as long as its within six months of sale agreement date. They establish an a/c of the amt put!?

    What about tax free bonds? When can that 1% be introduced?

    When will the tax payer get refund & INTEREST ON MONEY WHICH IS NO MONEY DUE OF THE TAX PAYER TO ITax?!

    What is the cascading effect of this 1%+1%+1%…. infinity transactions? How many lose interest & unable to meet LTCG norms. WHAT CORRECTIVE MEASURES?

    NO CA FIRM HAS COME UP WITH ANSWER TO THIS! WHAT WILL YOU BE ADVISING YOUR CLIENTS?! Lacuna!

    Can you escalate it to ICAI? I’m as well to FinMin! FYI, even if you have been silent since my earlier post on this issue. OF WHAT USE IS YOUR FORUM?

    I expect your answer, if at all!? [none of my posts have been answered?]

    Regards,

    • CA Sandeep Kanoi says:

      Dear Sir,

      We here share knowledge with others without any obligation to answer anyone’s query. Forum is normally for discussion between viewers.

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