S.2(15) : Definitions – Charitable purpose – Institute conducting coaching classes and charging fees, denial of exemption is held to be not valid. [S. 10(23C)(vi)]
The Institute of Chartered Accountants of India was denied exemption u/s. 10(23C)(vi) for the A.Y. 2006-07 onwards on the grounds that
(i) the Institute was holding coaching classes and, therefore, was not an educational institution as per the interpretation placed on the word “education” used in sec. 2(15); (ii) the Institute was covered under the last limb of charitable purpose, i.e, advancement of any other object of general public utility. In view of the amendment made in sec. 2(15) of the Act with effect from April 1, 2009, for the asst. year 2009-10 onwards, the Institute was not entitled to exemption as it was an institution which conducted an activity in the nature of business and also charged fee or consideration.
Held, that the fundamental or dominant function of the Institute was to exercise overall control and regulate the activities of the members/enrolled chartered accountants. A very narrow view had been taken that the Institute was holding coaching classes and that this amounted to business. The Institute had framed the Chartered Accountants Regulations, 1988, and the Regulations provided for training of students, their examination, award of degrees and membership of the Institute. There was a clear distinction between coaching classes conducted by private coaching institutions and the courses and examinations which were held by the Institute. The question whether the Institute carried on business had not been examined with proper perspective. The Institute maintained that it never granted any loan and/or advance to the Institute of Chartered Accountants of India Accounting Research Foundation. The facts regarding this question had not been considered. The order denying the exemption was not valid. (A.Y. 2006-07, 2007-08, 2008-09, 2009-10)
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