Exemption u/s 2(15) was allowable to Investor Financial Education Academy for conducting activities for charitable purpose

Investor Financial Education Academy Vs. ITO (Madras High Court)

Conclusion: Exemption under section 2(15) was allowable to assessee-Investor Financial Education Academy as the surplus of assessee could not be distributed, which was clearly spelt out in the Memorandum of Association, income and profit of the company, whatsoever derived should be applied solely for the promotion of its objects as set forth in the memorandum; no portion of the income or property aforesaid should be paid or transferred.

Held:  Assessee – a Company incorporated under Section 25 of the Companies Act, 1956, had filed an application for grant of registration under Section 12AA. CIT by order rejected the application on the ground that assessee’s activity of imparting ‘financial education/awareness’ was a service for price, to the investor in the field of investments; assessee’s activity was designed in such a way that what it received in the form of fee from the client for imparting financial education/awareness was always higher than what was spent for imparting such education/awareness to the said clients thus, there was no element of charity in the process, rather it was purely on commercial basis amounting to a commercial activity. It was held that what was important to note was that the surplus could not be distributed, which was clearly spelt out in the Memorandum of Association, which stated that the income and profit of the company, whatsoever derived should be applied solely for the promotion of its objects as set forth in the memorandum; no portion of the income or property aforesaid should be paid or transferred. Thus, the rejection of the application filed by assessee for registration under Section 12AA was erroneous and said that assessee was entitled to exemption under s 2(15), holding that the activities carried on by it were charitable in nature.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

This appeal filed by the assessee under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) is directed against the order dated 11.06.2018, made in I.T.A.No.2565/Chny/2017 on the file of the Income Tax Appellate Tribunal ‘A’ Bench, Chennai (for brevity “the Tribunal”) for the assessment year 2016-17.

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