Case Law Details
World Institution Development Programme Vs ITO (ITAT Delhi)
Developing Study Material Qualifies as educational Activity which qualifies as a charitable purpose within the meaning of section 2(15) of the Act and eligible for exemption under section 11 and 12 of the Act.
Admittedly, the assessee is a charitable trust. It is registered u/s 12AA of the Act as well as u/s 80G(5) of the Act. Further, in the earlier years the similar activities of the assessee have been accepted by the revenue holding that activities of the assessee are covered under head “educational” in nature and benefit u/s 11 and 12 of the Act has been granted to the assessee. For this year claim of the assessee has been rejected by the ld AO. Looking to the object of the trust the assessee has earned course material fees of Rs. 4.11 crores out of which it has spent staff salary of Rs. 12.14 lakhs, course material charges of Rs. 72.37 lakhs, course material photocopy charges of Rs. 7.19 lakhs, honorarium charges of Rs. 59.21 lakhs. Over and above it has also incurred courier fees of Rs. 11.44 lakhs, printing and stationary charges of Rs. 4.79 lakhs. The assessee is carrying on object of establishing and helping universities, colleges, schools and other institutions for strengthening the cause of education by providing didactical facilities provide consultancy support in the area of educational planning and administration for opening, diversifying and developing the existing or new institutions. It also provides mutual and technical cooperation for implementing and supplementing for establishment of universities. It has entered into an MOU with the Global Open University, Nagaland for helping the university in the areas of instructional material and resource development, research design, publications and collaborative programme development. Thus, it was assigned duty of preparation and publication of study material including its distribution to the students from time to time. It was also helping in coordinating the development activities of the universities. The trust has appointed 200 teachers who guide the students in studying course material and their queries of study material. It also helps the students in preparation for examination. Such facts are stated before the ld AO per letter dated 08.06.2016. The assessee also submitted the details of course material expenses of Rs. 72.37 lakhs, which was for the course material, it can be said to be an educational activity or not. Admittedly, in the earlier years the claim of the assessee is accepted. The issue is discussed by the Hon’ble Delhi High Court in case of DIT Vs. The Delhi Public School Society ITA No. 609/2008 dated 03.04.2018, wherein, the issue is examined that when the assessee is carrying out opening and running around 120 schools through franchise agreement and franchise charges received with the assessee for using the name of Delhi Public School by the satellite schools in and outside India and assessee earned franchisee fees is an educational activity or business activity. The Hon’ble High Court observed that the memorandum of association of DPS society as well as the joint venture agreement entered by DPS society with the satellite schools is having motive of an educational purpose. Further, in para No. 33 of that decision, Hon’ble High Court has stated it is an educational activity which qualifies as a charitable purpose within the meaning of section 2(15) of the Act. It further held that the objected activity were an activity incidental to the dominant educational purposes.
9. Further, in ITA No. 4329/Del/2012 for Assessment Year 2009-10, the coordinate bench also held that when a trust entered into an agreement with the assessee society in providing research services is also engaged in charitable purpose even if it incidentally involves the carrying on of commercial activity. Further in case of CIT Vs. Spicmacay ITA No. 406/2017 dated 16.05.2017 the Hon’ble Delhi High Court held that mere receipt of sum did not mean that it was involved in trade, business. Applying the above principles to the facts of the above case, it is apparent that the assessee is a developing, preparing and providing study material to the students of Global Open university of Nagaland as per MOU placed before us at page 21. For this, it recovers 67% of the fees for publication, preparation of study material. Admittedly, study material has used as curriculum of the above university. Admittedly, the assessee is also receiving examination fees, conducting such examination, providing help to the university, and incurring expenses on them. Admittedly, it is not shown by the ld AO that the revenue surplus generated by the assessee is not utilized for the purposes of educational activities. Thus, prima facie assessee is carrying on the educational activities and not the business as facilitator. Further, the decision stated by the ld AO of 101 ITR 234 of the Hon’ble Supreme Court, does not apply to the facts of the present case as in that case as trust was running, printing and publishing newspapers, where as in the impugned case the assessee is preparing study material which is part of the curriculum of the university for the distribution to the students and material purposes in examination of the students. The Hon’ble Delhi High Court in 81 Taxmann.com 142 in Delhi Bureau of Textbooks Vs. Director Income Tax held that when a charitable society engaged in the printing, publishing of its books of govt schools which was provided to the students, such activities classifies as an educational activity. The Hon’ble Delhi High Court also considered the decision of the Hon’ble Supreme Court in 101 ITR 234 and distinguishes the same in para No. 21. Further, in para No. 22 it held that preparation and distribution of textbooks certainly contributes to the process of training and development of the mind and character of students. Further in para No. 29 the Hon’ble High Court also referred to principle of consistency. These findings are equally applicable to the present case. It also dealt with in that decision the observation of the revenue about huge earning by that assessee whether that can be said to be a charitable activity. The court held that it does not hamper the claim of the assessee u/s 11 and 12 of the Act. As the facts of the present case are identical to the facts of the case decided by the Hon’ble Delhi High Court in 81 Taxmann.com 412 thus following the decision of the Hon’ble Delhi High Court we also hold that the activity of the assessee is an educational activity and assessee is eligible for exemption u/s 11 and 12 of the Act. Accordingly, orders of the lower authorities are reversed and appeal of the assessee is allowed.
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