NSDC Skill Impact Trust Vs CIT(Exemptions) (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeals filed by NSDC Skill Impact Trust against the order dated 25.03.2025 passed by the Commissioner of Income Tax (Exemptions)-Delhi rejecting the application for registration under Section 12AB of the Income Tax Act, 1961.
The issue before the Tribunal was whether the learned CIT(E) was justified in denying registration under Section 12AB of the Act on the ground that the activities carried out by the assessee trust were commercial in nature and not charitable activities.
The assessee trust was established on 31.05.2022 and had obtained registration under Section 12A(1)(ac)(vi) of the Act on 12.08.2022. The assessee filed an application in Form 10AB on 20.09.2024 seeking regular registration under Section 12A(1)(ac)(iii) of the Act.
The main objects of the trust included imparting education and advancement of any other object of general public utility. The assessee explained that it was a registered trust of National Skill Development Corporation (NSDC) and acted as an approved training partner under the National Skill Development Programme of the Ministry of Skill Development and Entrepreneurship, Government of India.
The assessee submitted that its objectives were to encourage, promote and facilitate skill development, employability, entrepreneurship skills and competency development, and create mechanisms for generating awareness regarding opportunities arising from acquiring specific skills.
The CIT(E) observed that as per the agreement with NSDC, the assessee was providing training services for consideration of payment of 10% of actual expenses as compensation. According to the CIT(E), the assessee was merely acting as a service provider collecting management fees and was engaged in business-oriented activities rather than charitable activities.
The CIT(E) also considered the agreement entered into by the assessee with M/s. Edujobs Academy Pvt. Ltd. as a co-implementation partner before execution of the formal agreement with NSDC.
The assessee explained that the management fee collected was only to recover operational costs and was not profit-driven. It was further explained that discussions with NSDC were already underway and the agreement with Edujobs Academy Pvt. Ltd. was executed in anticipation of formalisation of the NSDC agreement to ensure operational readiness.
The Tribunal examined the trust deed, activities carried out, training programmes conducted and supporting documents submitted by the assessee. It noted that the trust was established by NSDC, a Government body, and that the objects mentioned in the trust deed were charitable in nature.
The Tribunal observed that the details of training sessions, candidates enrolled, job roles offered, expenditure incurred and supporting documents were not disputed by the CIT(E). The Tribunal held that at the stage of granting registration, the primary consideration was whether the activities mentioned in the trust deed or proposed activities were charitable in nature.
Accordingly, the Tribunal directed the CIT(E) to grant registration under Section 12A of the Act and consequential exemption under Section 80G of the Act.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA Nos. 2153 & 2154/Del/2025 for AYs 2023-24 to 2025-26, arises out of the order of the Commissioner of Income Tax (Exemptions)-Delhi [hereinafter referred to as ‘Id. CIT(E) , in short] in Appeal No. ITBA/EXM/F/EXM45/2024-25/1074991739(1) dated 25.03.2025 for registration of u/s 12AB of the Income Tax Act, 1961.
2. Let us take up the appeal of the assessee in ITA No. 2153/Del/2025.
3. The only issue to be decided in this appeal is as to whether the Id CIT(E) was justified in denying the registration u/s 12AB of the Act to the assessee.
4. We have heard the rival submissions and perused the materials available on record. The assessee trust was started on 31.05.2022. The assessee obtained registration u/s 12A(1)(ac)(vi) of the Act on 12.08.2022. The assessee filed an application on 20.09.2024 in Form 10AB for regular registration u/s 12A(1)(ac)(iii) of the Act. The main objects of the assessee as per the Form 10AB of the Act as noted by the Id CIT(E) are for imparting education and advancement of any other object of general public utility. The assessee explained that it is a registered trust of the National Skill Development Corporation (NSDC) acting as an approved training partner under the National Skill Development Programme of Ministry of Skill Development and Entrepreneurship, Govt. of India, in order to encourage, promote and facilitate skill development, impactful employability, entrepreneurship skill and competency and create mechanism/ structure for information “outreach”, for generating awareness about the prospects which would open up on acquiring specific skills. The assessee submitted the copy of agreement dated 24.09.2024 with NSDC. The Id CIT(E) noted that as per the said agreement with the NSDC agreement, the assessee is a mere service provider for providing training services to NSDC for consideration of payment of 10% on actual expenses as compensation. The assessee submitted before the Id CIT(E) that 10% management fee collected is only to recover the operation cost incurred by the assessee trust. It is not profit driven fee charges but only reimbursement to sustain the trust’s activities, ensuring efficient execution of its objects. Further, the Id CIT(E) noted that the assessee had entered into an agreement with M/s. Edujobs Academy Pvt. Ltd on 11.09.2024 wherein M/s Edujobs Academy Pvt. Ltd was appointed as its co-implementation partner to oversee full implementation of the skilling programme in Odisha. The assessee was asked to explain how the agreement has been entered into with M/s. Edujobs Academy Pvt. Ltd even before the parent agreement with NSDC. The assessee submitted that though the formal agreement had been executed on 24.09.2024, the agreement with NSDC is applicable from 01.04.2024 to 31.03.2009. The work had already started and discussion had already been taking place with NSDC to start the services on ground. The agreement with M/s. Edujobs Academy Pvt. Ltd executed on 11.09.2024 was in anticipation of the formalization of the NSDC agreement as it was already in pipeline and discussions were going on. This was necessary to ensure operational readiness and alignment with the broader objectives of the scheme.
5. The Id CIT(E) however did not agree with the contentions of the assessee and concluded that the assessee has not engaged in the charitable activities but only engaged in rendering services of collection of management fees of 10%. Hence, he concluded that the activities carried out by the assessee are business/ target oriented and commercial in nature rather than charity-focused. Accordingly, he held that the assessee had failed to satisfy the genuineness of the charitable activities carried out by it and hence, the application seeking for registration u/s 12(1)(ac)(iii) of the Act was rejected. Consequentially, the claim of exemption u/s 80G of the Act was also rejected by the Id CIT(E).
6. The copy of the trust deed is enclosed in pages 5 to 22 of the Paper Book. The objects of the trust are reflected in pages 8 to 11 of the Paper Book in the trust deed which are not reiterated herein for the sake of brevity. On perusal of the trust deed, we find that the Settlor of the Trust is National Skill Development Corporation (NSDC), a Government body, through its initial trustees. A sum of Rs. 1 lakh stood deposited into the bank account of the trust as initial contribution. The list of students who are enrolled for the training programmes are provided from pages 77 to 94 of the Paper Book containing the full name, gender, date of birth, email id, marital status, father’s name, mother’s name, domicile state, mobile number and permanent address. No expenditures were incurred by the assessee for the year ended 31.03.2023 and 31.03.2024 by the trust. The provisional balance sheet of the assessee trust as on 31.12.2024 was placed on record which are enclosed in pages 101 to 103 of the Paper Book, wherein it can be seen that a sum of Rs. 56,73,335/- has been spent on activities carried out by it. The assessee submitted the complete details together with the bills, vouchers and photographs in respect of activities carried out by it. The details of training sessions conducted at the Skill India Training Centre at various locations together with the respective candidates undergoing training of the assessee trust were filed. The bills and vouchers raised by M/s. Edujobs Academy Pvt. Ltd in relation to the training activity carried out were enclosed on sample basis before the Id CIT(E). The assessee gave the details of its operating skill training at 5 centers in Odisha wherein, training is being provided to candidates in the below mentioned job roles:-
i. IT Help desk
ii. F&B steward
iii. Graphic designing
iv. Story Board Artist
v. Stitcher Goods and Garments
vi. Cutter Goods & Garments
vii. Part Making Helper
viii. Barista Executive
ix. Footwear and fashion accessory in retail
7. The assessee submitted that 608 candidates had been enrolled in the above mentioned job roles out of which 212 candidates were trained and the balance were undergoing training. We find all these aforesaid details were not doubted/ disputed by the Id CIT(E). The main grievance of the Id CIT(E) is that assessee is a service provider charging 10% management fee; and assessee had entered into agreement with M/s. Edujobs Academy Pvt. Ltd on 11.09.2024 as co- implementing partner, whereas the parent agreement with NSDC was entered only on 24.09.2024. In this regard, the assessee had explained in detail that the discussions with NSDC were in the pipeline and the formal agreement was executed on 24.09.2024. What is to be seen at the time of grant of registration by the Id CIT(E) is that whether the activity carried out which are mentioned in the trust deed or the activity proposed to be carried out are indeed charitable in nature. There is absolutely no doubt on perusal of the objects of the trust deed that the activities mentioned thereon are indeed charitable in nature. Hence, we direct the Id CIT(E) to grant registration u/s 12A of the Act to the assessee trust holding that it is engaged in charitable activity and consequentially grant claim of exemption u/s 80G of the Act.
8. In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 30/06/2025.
