The Delhi High Court ruled that imparting education through virtual mode or by adoption of new technologies qualifies Income Tax Exemption.
The court noted that the assessee in the concerned AY was found to have essentially undertaken educational activities spread across various subjects and streams, providing opportunities to underprivileged youth and others and essentially skilling them for the purpose of future employment.
The bench further noted that the instruction was imparted at either NIIT-run centers or NGO-partnered establishments. Its revenue stream was disclosed to flow from tuition fees and other educational services provided by it. The fee structure was asserted to be heavily subsidized and discounted. It is the aforesaid facts which appear to have weighed upon the AO to characterize the activities undertaken by the assessee as being charitable and falling within the meaning of the word “education” and which falls within the six principal activities spoken of in Section 2(15).
The court opined that the Tribunal correctly found in favour of the assessee when it held that affiliation with and recognition by a regulatory authority are not essential attributes of education under Section 2(15).
“This clearly flows from the principles enunciated by the Supreme Court in both Lok Shikshana Trust and New Noble Educational Society. This, of course, was in addition to it having been duly established that the centers of the respondent/assessee had been duly approved by the NSDC, which undoubtedly is a nodal agency concerned with vocational and technical training”, the court said.
The bench also found merit in the Tribunal‟s conclusion that the mode and manner in which education is imparted would be a concept which would have to necessarily be evaluated bearing in mind the march of technology and the myriad modes of imparting instruction which now exist and have enabled institutions to overcome barriers of distance and time. Imparting education through a virtual mode or by the adoption of new technologies would not detract from the said activity, otherwise fulfilling the requirements of structured education.
The court found no merit in the challenge which stands raised to the order of the Tribunal.
Issue raised
A. Whether the Income Tax Appellate Tribunal [“ITAT”] is correct in the eyes of law in setting aside the order under Section 263 of the Income Tax Act, 1961 [“Act”] even though the order of Assessing Officer [“AO”] was erroneous and prejudicial to the interest of the Revenue and framed without making proper enquiries/ verification and application of mind?
B. Whether the ITAT was correct in coming to the conclusion that the assessee was undertaking educational activities in terms of Section 2(15) of the Act?”
Facts
The respondent/assessee is a society registered under the Societies Registration Act, 1860 and also holds a registration under Section 12A of the Income Tax Act, 1961.
In Assessment Year4 2014-15, the assessee filed its Return of Income declaring its taxable income to be „Nil‟. The aforesaid Return is stated to have been selected for scrutiny assessment, as a consequence of which a notice came to be issued on 31 August 2015 under Section 143(2).
Case Information
Case Name : COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI v/s NIIT FOUNDATION
Judicial Level & Location : Delhi High Court
Appeal Number : ITA 141/2021
Date of Ruling : 2024-07-26
Ruling in favor of: Respondent
Judges: Justice Yashwant Varma And Justice Ravinder Dudeja
Petitioner Advocate: Mr. Abhishek Maratha, Sr. SC alongwith Mr. Parth Semiwal, Mr. Apoorv Agarwal, Jr. SCs. with Ms. Nupur Sharma, Mr. Manav Goyal, Mr. Gaurav Singh, Ms. Divya Verma and Mr. Bhanukaran Singh Jodha, Advs.
Respondent Advocate: Mr. Ajay Vohra, Sr. Adv. with Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Samarth Chaudhari, Advs