Monday, July 8, 2013

ICAI can’t be deemed to be pursuing commercial activities by taking coaching classes or campus placements for a fee

Exemption under 10(23C)(iv) can’t be denied to ICAI on account of  fees received by it for providing coaching classes and campus placement for its students

The HC held as under:

1) The petitioner (i.e, ICAI) is the sole body empowered to conduct or approve of a course in the field of accountancy. No other person can conduct any course or award any degree or certificate which indicates a level of proficiency or competence in the field of accountancy similar to that as of a chartered accountant;

2) The activity of petitioner in conducting coaching classes was integral to its activity of conducting the courses in accountancy. The coaching classes being conducted by the petitioner couldn’t be equated with private coaching classes being conducted by organizations on commercial basis for preparing students to undertake entrance or other examinations in various professional courses;

3) The comparison of the petitioner with UPSC was also not apposite. The object of the study programme or post-qualification courses being conducted by the petitioner, was to impart knowledge and skill in the field of accountancy and related subjects to students and the same was not similar to the function as performed by UPSC;

4) It was not necessary that a person would give something for free or at a concessional rate to qualify as being established for a charitable purpose. If the object or purpose of an institution was charitable, the fact that the institution collected certain charges wouldn’t alter the character of the institution;

5) The fact that the petitioner charged a uniform fee from all students for coaching would not exclude it from the ambit of Section 2(15), unless it was found that the petitioner fell within the scope of the first proviso to Section 2(15), i.e., the petitioner carried on any trade, business or commerce or any activity of rendering any service in relation to any trade, commerce or business, for a cess or a fee;

6) The functions performed by the petitioner were in the genre of public welfare and not for any private gain or profit and, thus, it couldn’t be said that the petitioner was involved in carrying on any business, trade or commerce;

7) Accordingly, even though fees were charged by the petitioner for providing coaching classes and for holding interviews with respect to campus placements, the said activities couldn’t be stated to be rendering of service in relation to any trade, commerce or business, as such activities were being undertaken by the petitioner in furtherance of its main object which were not trade, commerce or business. Thus, Petitioner’s  writ petition was to be allowed and Department was to be directed to allow it exemption under section 10(23C)(iv) – ICAI v. Director General of Income-tax (Exemptions) [2013] 35 140 (Delhi)

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