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September 15, 2022

Section exemption is available for architectural education

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

Section exemption is available for architectural education

Facts and Issue of the Case

The assessee has raised following grounds

1. The Ld. CIT(A) fell in error of law in declining to the assessee the benefit of section 11, on the ground that the activities of the benefit its own member/professionals. The view of the Ld. CIT(A) runs contrary to the ratio laid down by the Hon’ble Bombay High Court in Bar Council of Maharashtra V/s. CIT 126 ITR 27 (Bom.).

2. The Ld. CIT(A) erred in rejecting the assessee’s claim for exemption u/s. 11 r/ws.2(15) on the ground that its activities do not qualify as ‘education’ within the meaning of sec.2(15) of the Act.

3. The Ld. CIT(A) failed to consider the assessee’s eligibility for exemption u/s. 11 r/w s.2(15) under the residual category viz advancement of any object of general public utility.

4. The Ld. CIT(A) was not justified in not considering the various decisions of the High Courts, including the Hon‟ble Bombay High Court, placed before him.

5. The Ld. CIT(A) failed to independently analyse the facts & evidences on record and erred in not returning an independent finding.

The only grievance of the assessee in the present appeal is against denial of claim of exemption under section 11 of the Act on the basis that assessee‟s activities do not qualify as „education‟ within the meaning of section 2(15) of the Act. The  facts of the case pertaining to this issue, as emanating from the record, are: The assessee is a trust registered with Charity Commissioner under the Bombay Public Trust Act, 1950. The assessee also holds registration section 12A(a) of the Act by the Commissioner of Income Tax (Exemptions). For the year under consideration the assessee filed its return of income on 30/10/2017 declaring total income at Rs. Nil. The return was further revised on 14/11/2018. During the course of assessment proceedings, upon perusal of the income and expenditure account, for the year under consideration, filed by the assessee along with return of income, it was observed that the assessee has shown income from membership fees, advertisement, sale of publication, sponsorship fees etc. Accordingly, assessee was asked to show cause as to why exemption claimed under section 11 should not be denied as the aforesaid receipts are in the nature of trade, commerce or business. In reply, assessee submitted that its membership is, inter-alia, recognised as requisite qualification under the provisions of the Architects Act, 1972 and the assessee institute plays a major role in promoting the profession of architecture by organising and uniting the Architects of India to promote aesthetic, scientific and practical efficiency of the profession in practice and in education. Accordingly, the assessee submitted that its primary objective is „education‟, and therefore it is covered within the meaning of section 2(15) of the Act. The Assessing Officer vide order dated 05/12/2019 passed under section 143(3) of the Act held that the assessee is an organisation of professionals who are in the architecture business to study and promote the latest development in the field of architecture, and therefore no charitable benefits results in favour of the society. The Assessing Officer further held that the word “education” used in section 2(15) of the Act is the systematic instruction, schooling or training given to the young in preparation for the work of life and the assessee institution is predominantly a mutual Association and non charitable objects, thus its activities are not educational in nature. Accordingly, the Assessing Officer denied claim of exemption under section 11 of the Act.

In appeal, learned CIT(A) vide impugned order dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us. During the course of hearing, Shri K. Shivaram, learned Senior Counsel submitted that assessee conducts examinations/seminar for the Architects and its membership has been recognised as a qualification for the purpose of the Architects Act, 1972. The learned Senior Counsel submitted that Associate Membership of the assessee institute has been recognised by the Ministry of Human Resource and Development at par with the Bachelor‟s Degree in Architecture and therefore, the sole objective of the assessee is education and thus, covered within the provisions of section 2(15) of the Act. On the other hand, learned Departmental Representative vehemently relied upon the orders passed by the lower authorities.

Observation by the Court

The court had considered the rival submissions and perused the material available on record. The Constitution of the assessee, forming part of the paper book, From the perusal of the aforesaid objectives of the assessee, it is evident that the assessee conducts architecture examinations, publishes journals, conducts seminar, conferences for promoting the profession of Architects as well as dissemination of latest updates in the field of architecture. Further, from the perusal of Bye-Laws of the assessee, forming part of the paper book, it is evident that the assessee also has library facility which is open to all members and students of the assessee institute, who shall have the right to pursue and inspect all the books, papers, maps, plans, drawings or models, belonging to the Institute and kept in the library. Further, it is also evident that on request by an educational institution, the assessee also imparts training in architecture, for recognition of its examination. At this stage, it is also pertinent to note that under section 14 read with the Schedule to the Architects Act, 1972, the membership of the assessee is, inter-alia, recognised as qualification for the purpose of the Architects Act, 1972. Further, vide Notification issued by the Ministry of Human Resource and Development, Government of India, qualification of Associate Membership of the assessee institute (by examination) is recognised for the purpose of employment to post and services under the Central Government. Further, we find that the Associate Membership of the assessee institute (by examination) is also considered at par with the Bachelor‟s Degree in architecture of a recognised Indian University. Thus, in view of the above, we are of the considered opinion that the dominant object of the assessee, in the present case, is imparting of „education‟ in the field of architecture, which is covered within the provisions of section 2(15) of the Act. Further, its activities are recognised statutorily as well as by the Government of India for the purpose of employment.

The Assessing Officer as well as learned CIT(A) denied the claim of exemption under section 11 of the Act also on the basis that no charitable benefits accrues in the favour of the society, as the assessee is an organisation of professionals who are in the architectural business to study and promote the latest development in the field of architecture. Further, it is also now trite that the mere fact that there is a surplus arising as a result of charitable activities cannot suggest that institution is not a charitable institution. Before concluding, it is relevant to note that while holding that activities in respect of banking and related subjects by conducting courses and also distributing knowledge by lectures, discussions, book correspondence with public bodies and individuals etc. In view of the above, plea of the assessee is upheld. Accordingly, the Assessing Officer is directed to allow exemption under section 11 in respect of income of the assessee.

Conclusion

 The appeal by the assessee is allowed by the court.

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