Case Law Details
Acharya Jiyalal Vasant Sangeet Niketan Vs ITO (ITAT Mumbai)
Conclusion: Since teaching of Indian Classical Music was within the field of ‘education’ and the activities of the studio were carried on in order to achieve the main object of the Trust, the same could not be construed as a business and the proviso to section 2(15) did not apply on the same.
Held: Assessee was registered u/s 12A and 80G of the Act. It received studio charges from various artists (73 parties) in the year under consideration. AO observed that the activity of making available the studio to the artists was conducted with an intention to make profits in the shield of charitable activities. AO arrived at the above finding on the basis of his observation on the continuity, magnitude, quantum and frequency of the activities. Accordingly, AO brought to tax income of studio charges as business income, by applying provisions of section 11(4A) and further disallowed expenditure of Rs.5,00,151/- incurred by assessee towards the “Ajivasan Sounds” from the allowable expenditure on the object of the Trust. It was held that assessee was a charitable trust engaged in imparting education in the field of classical music and light music based on the Gurukul Philosophy, where the student learned by virtually staying with the Guru. The institution had a repute for providing scientific training in Hindustani Classical Music and Light Music. The trust had a studio namely “Ajivasan Sounds” which was used for the purpose of training students in professional singing and also the same was made available to various artists for the purpose of recording. It was found that the gross receipts were only Rs.16.72 lakhs which subsidized the fees for Rs.33.01 lakhs for 785 students which worked out to Rs.4206/- per student per year. In the instant case, the maintenance of studio was intrinsic and in pursuance of the objects of the assessee which was education. It was well understood that teaching of Indian Classical Music was within the field of “education”. The activities of the studio were carried on in order to achieve the main object of the Trust and could not be construed as business. Since the trust was engaged in education as clarified by CBDT Circular No. 11 dated 19.12.2008, the proviso to section 2(15) did not apply.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-3, Mumbai [in short ‘CIT(A)’] and arise out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’). As common issues are involved, we are proceeding to dispose off these appeals by a consolidated order for the sake of convenience. Facts being identical, we begin with the AY 2010-11.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
