new norms

Meaning of Online Coaching: -

Online coaching means having amazing access to support, and an amazing coach, wherever you are. With coaching sessions scheduled for convenience around life in all its busyness.

Online Coaching is Education u/s 2(15) & eligible for tax Exemption

Meaning of Education u/s 2(15): -

The word ‘Education’ means training and developing the knowledge, skill, mind, and character of students by normal schooling. Travelling also enhances knowledge, but that would not amount to ‘education’ in the context of Section 2(15).
The running of a private coaching institute for the purpose of training the students to appear at certain specified examinations upon taking specified sum from the trainees is not a charitable purpose.

NIIT Foundation Vs CIT (ITAT Delhi): -
In this case, the assessee is a society registered under the Societies Registration Act, 1860 & also registered u/s 12A and recognized u/s 80G. The assessee here filed his income tax return with NIL income, however the CIT held that the activity of the assessee is taxable.
Taxability of any income of an assessee depends on the nature of activities carried out by the assessee nor based on the tax deductions made by entities against the assessee because of their tax obligations. The opinion of the assessing officer for this year that assessee is carrying on an educational activity is also supported by the assessment history of the assessee where in earlier year also on identical facts and circumstances, the assessee was held to be carrying on educational activities, entitled to deduction/exemption under section 11 and 12 of The Income Tax Act, 1961.
Hence, ITAT hold that assessee is carrying on educational activities which are covered by the provisions of section 2 (15) of the income tax act and it is neither business nor profession of the assessee.

Grounds of appeal by the assessee: -
1. Want of natural Justice-
The order was passed u/s 263 of the income tax act without giving a fair & reasonable opportunity hearing to the Appellant and thereby violating the principles of natural justice.

2. Issue of order beyond the causes asked for in show cause notice-
The order was issued based on reasons which were not asked for in the show cause notice.

3. Violation of principles of natural-
The assessee was not given an opportunity to rebut i.e. revert to produce the facts, there by the order was a violation of principle of natural and against the provisions of section 263

4. Nature activity- Education u/s 2(15)-
The holding by CIT was wrong that the activity carried out by the appellant is not in the nature of ‘education’ within the meaning of section u/s 2(15).
Whereas the appellant prays that the activities carried out is in complete nature of education as prescribed in the section 2(15) of the act.

5. Activities- not in the nature of business-
Appellant prays that nature of the activity of the Appellant be held as not in the nature of trade, commerce or business and accordingly, be held the proviso to section 2(15) of the Act is not applicable.

Brief facts of the case show that the assessee is a society registered under the Societies Registration Act, 1860 as per certificate dated 01.12.2004. It is also registered u/s 12A and recognized u/s 80G (5) (vi) of the Act as per order dated 07.03.2008.

Also, the assessee was formed with the below objectives: -
1. To promote, support and strengthen education, research and training of Information Technology and its application in all fields of activities and to collaborate, co-operate and enter partnerships with Universities, Colleges and Schools for engaging in the human development activities.
2. To support, sponsor and collaborate with teachers and researchers in Universities and research institutions to develop IT enabled teaching.
3. To cooperate with educational institutes which will aim at strengthening and modernising the curriculum of education.

Conclusion: -

The assessing officer after enquiring about the object, activity, receipt of fees, TDS, service tax payments and it’s nature, details of donors held that assessee society is engaged in Educational activity u/s 2 (15) of the act and eligible for benefits u/s 11 & 12 of the Income tax Act.

Hereby it is concluded that only if the assessee is engaged in the charitable activities and does not aim at earning profits, only works or helps in social welfare it will be eligible for the benefits u/s 11 & 12 of the income tax act and will be exempted from the tax liability.

Entities involved in giving training for specified examinations by collecting a sum of fees from the students will be categorised as business entities & the incomes derived from such activities will attract tax liabilities.

Ministry of MSME has reiterated that it has put in place a very strong handholding mechanism for MSMEs and new entrepreneurs in the name of Champions which was recently launched by Prime Minister Narendra Modi.

The Champions Control Rooms functioning in various institutions and offices of the Ministry of Micro, Small and Medium Enterprises including the Development Institutes (MSME-DI) shall act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises in all possible manner.

Interested enterprises can take benefit of this mechanism and in case of any discrepancy or complaint we can put there and the same will be attended to with utmost promptness.

Disclaimer:“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”

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Prepared By

A Satish Kumar Sarab

CA Final

Date: 08/09/2020