Affiliation With and Recognition by Regulatory Authority Not Essential Attributes of Education u/s 2(15) | HC

Case Details: CIT(E) vs. NIIT Foundation - [2024] 164 taxmann.com 628

Judiciary and Counsel Details

• Yashwant Varma & Ravinder Dudeja, JJ.
• Abhishek Maratha, Sr. SC, Parth Semiwal, Apoorv Agarwal, Jr. SCs., Ms Nupur Sharma, Manav Goyal , Gaurav Singh, Ms Divya Verma & Bhanukaran Singh Jodha, Advs. for the Appellant.
• Ajay Vohra , Sr. Adv., Rohit Jain, Aniket D. Agrawal & Samarth Chaudhari, Advs. for the Respondent.

Facts of the Case

The assessee was a society registered under the Societies Registration Act, 1860, which held a registration under Section 12A. It was also accorded recognition under Section 80G(5). For the relevant assessment year, the assessee furnished its return of income, and the case was selected for scrutiny assessment. The Assessing Officer (AO) accepted the charitable nature of the educational activities undertaken by the assessee, and accordingly, the assessment was completed.

However, the CIT(E) noticed that the assessee was not affiliated with any regulatory body. Therefore, exercising the powers under section 263, CIT(E) set aside the assessment, contending that it was not engaged in imparting education and denied exemption under section 11.

On appeal, the Tribunal allowed the assessee’s appeal, and the matter then reached before the Delhi High Court.

High Court Held

The High Court held that the assessee 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. It was also stated that various digital literacy initiatives were undertaken across as many as ten states of the country. The instruction was imparted at either NIIT-run centres or NGO-partnered establishments. Its revenue stream was disclosed to flow from tuition fees and other educational services it provides. The fee structure was asserted to be heavily subsidised and discounted.

Further, the activities undertaken by the assessee were systematic. They proceeded along well-defined lines based on curated courses designed to skill and educate the students who had been enrolled. On facts, the assessee was also able to establish beyond a measure of doubt that its courses were informed by a fixed curriculum and attendance criteria, thus fulfilling all essential ingredients of formal education.

Relying upon the principles enunciated by the Supreme Court in both Lok Shikshana Trust (1976) 1 SCC 254 and New Noble Educational Society [2022] 143 taxmann.com 276 (SC), it was held that affiliation with and recognition by a regulatory authority are not essential attributes of education under Section 2(15).

In addition, the assessee’s centres had been duly approved by the NSDC, a nodal agency concerned with vocational and technical training. It explained that section 2(15) is concerned with training and developing knowledge, skill, mind, and character through formal schooling. The assessee clearly met these tests. Accordingly, the appeal was dismissed.