The case* is in reference to an appeal preferred by the Assessee Company before the Hon’ble High Court of Madras against the Order of the Income Tax Appellate Tribunal. The 2 main questions of law were as follows:
1. Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the appellant is entitled for registration under Section 12AA of the Income Tax Act, 1961(hereinafter referred to as “the Act”)?
2. Whether on the facts and circumstances of the case, the Tribunal was justified in holding that the appellant is not entitled to exemption under Section 2(15) of the Act, holding that the activities carried on by it are not charitable in nature?
The application for registration under Section 12AA of the Act which was originally submitted by the Company before the Director of Income Tax (Exemptions) had been rejected by the Commissioner of Income Tax (herein after referred to as “CIT”) following the clarification called for by him, on the ground that the activity of imparting ‘financial education/awareness’ were a service for price, to the investor in the field of investments. It was further reasoned that the activity of the Company was commercial in nature and that there was no element of charity by merely referring to the surplus of income in the income and expenditure of the Company.
The Hon’ble Tribunal had dismissed the appeal on two main grounds. The first one being that the Object of the activity of the Company was primarily not ‘Education’, in addition to the observation that that none of the object under the Object clause of the MOA of the Company fell within the definition of ‘Education’. Secondly, the Tribunal had come to a conclusion that the nature of activity of the Company cannot be regarded as ‘charitable purpose’. In conclusion the Tribunal had confirmed the Order of the CIT by highlighting that the dominant activity of the assessee did not reflect selflessness nor it involved in any charity.
*M/s. Investor Financial Education Academy Vs. Income Tax Officer, MHC/TCA/900.2018