Educational Activities are neither business nor profession and are covered under section 2 (15) of Income Tax Act: Delhi High Court

 

Delhi HC has recently in the case of CIT(E) Versus NIIT Foundation (ITA 141/2021) has held that Educational Activities are neither business nor profession and are covered under section 2 (15) of Income Tax Act

Let us have a short overview of the case:

Facts of the case:

1.  The assessee was administering educational courses without any fixed curriculum, criteria, or discipline and thus lacking the ingredients of formal education as explained by the Hon Supreme Court.

2. The assessee contended that the donations and sponsorships that were received from private entities were utilized only for the purpose of furthering education as a charitable activity.

3. The department contended that in terms of the principles laid down by the Supreme Court in Lok Shikshana Trust, for the purposes of qualifying Section 2(15) of the Income Tax Act, the assessee was liable to establish that it was engaged in conducting systematic and formal instruction, schooling, or training.

In above background and argument, the Hon Delhi HC held as under:

1.  The mode and manner in which education is imparted would be a concept that would have to necessarily be evaluated bearing in mind the march of technology and the myriad modes of imparting instruction that now exist and have enabled institutions to overcome barriers of distance and time.

2. 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.

3. The Tribunal correctly found in favor 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).

4. It 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.

5. The department’s appeal is dismissed.

The copy of the order is as under:

NIIT_FOUNDATION_26_july_2024