Sec. 12AA Training in rock climbing, mountaineering, bag-packing, kayaking, sailing and rafting is educational activity

By CA Sandeep Kanoi Income Tax Judiciary December 8, 2017

TaxGuru Citation: 2017 taxguru.in 1146
Case Name: Nandadevi Outdoor Leadership School Vs. DIT (Exemptions) (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All ITAT, ITAT Delhi

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Nandadevi Outdoor Leadership School Vs. DIT (Exemptions) (ITAT Delhi)

The assessee is engaged in the activities of rock climbing and mountaineering, bag-packing, kayaking, sailing and rafting. It says that it is one of the world^‟s biggest outdoor skill trainer and its parent is headquartered in the USA. It offered courses in the Himalayan by instructing. It is submitted that it not only teaches the outdoor skills but also keeps the course dynamic with evolving situations used as case studies for exploring leadership. Its course feature both leadership and technical outdoor skills. It has trained more than 280,000 students giving academic credit for all courses either through the university which has it specified or schools. The above company is Indian arm of National Outdoor Leadership School, a nonprofit outdoor educational school based in the United States dedicated to teach environmental ethics, technical outdoor skills, wilderness medicine, risk management and judgment and leadership on extended wilderness expeditions and in traditional classrooms.

The limited issue here is whether the activity of the assessee falls under the category of “education” and not “general public utility”. The ld CIT(E) has heavy relied on the decision of the Hon’ble Supreme Court in Lok Shikshana Trust 101 ITR 234. He was of the view that there is no class room teaching as formal schooling and not the activity as ^„education” as envisages by the assessee. The Hon’ble Delhi High Court had an occasion to consider in 357 ITR 265 that whether a society teaching and promoting form of music and dance, western, Indian or any other which runs like school or educational institute in a systematic manner in regular classes, vacations, attendance and enforcement of discipline is in “education” or not. Though it did not conduct its own examination or awarded degrees the Hon’ble High Court held that it meets the requirement of educational institute.

Similarly, in DIT(E) Vs. Samudra Institute Of Maritime Studies Trust 369 ITR 645 the Hon’ble Bombay High Court had an occasion to consider whether the above assessee set up to administer and maintain technical trading institute for pre sea and post sea training for the ships and maritime industry is an ^„education „ activity or not. Hon’ble High Court held that though courses are not approved it is an educational institute.

Further the Hon’ble Kolkata High Court in Swar Sangam and other Vs. CIT [ 368 ITR 395] held that teaching in fine arts, Indian music and dance is also educational activities. The activities of the assessee before us are no different than the activities decided by the various High Courts as above.

In all the above decisions the decision of the Hon’ble Supreme Court relied up on by the ld CIT (E) was considered and held that such a restricted meaning of ^„education^‟ cannot be given. In the present case the assessee^‟s activities are prima facie ^„educational activities^‟ . further it is for the authority granting registration to give prima facie opinion with reasoning that the activities carried on by the assessee is eligible for registration u/s 12A of the Income Tax Act or not. Furthermore, while granting registration u/s 12A of the Act the registration authority is further required to look into the fact that whether the activities of the trust are genuine or not. Merely because assessee received some donation and grants from other entities its activities does not become in-genuine. As these aspects are required to be dealt with about the objects whether it is education or not and activities whether they are genuine or not,. the ld CIT(E) has merely relied upon the decision of the Hon’ble Supreme Court without considering the several decisions wherein, the above decision of the Hon’ble Supreme Court has been considered. Therefore, we direct the ld CIT(E) to consider the application of the assessee by considering the above decisions and in the light of them needs to examine the object of the trust whether they are falling within the meaning of “education” or not as per section 2(15) of the Act. Further the ld CIT(E) may also examine the grant and other income received by the trust to verify the genuineness of the activities of the trust. Needless to say that proper opportunity of hearing may be granted to the assessee and thereafter the issue may be decided afresh and on merits.

Full Text of the ITAT Order is as follows:-