In the recent case the Punjab and Haryana High Court upheld the Income Tax Appellate Tribunal (ITAT)’s decision granting Section 12A registration to the Unique Educational Society, which operates a vocational training institute.
The appeal is filed by the Revenue against the ITAT decision dated 06.08.2019, which overturned the Commissioner of Income Tax(Exemption) [CIT(E)]’s refusal to register the Unique Educational Society under section 12A of the Income Tax Act, 1961.
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Unique Educational Society, the respondent-assessee, had applied for registration, stating that it operated a private Industrial Training Institute that provided vocational training to students and was affiliated with the National Council for Vocational Training (NCVT).
The CIT(E) had rejected the application, arguing that the institute’s activities did not qualify as ‘education’ under the Income Tax Act and relied on the Supreme Court decision in Sole Trustee Loka Shikshana Trust and concluded that vocational training focused on skill enhancement did not constitute systematic instruction.
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Furthermore, the CIT(E) raised objections that the Society’s income was not from voluntary donations, and its funds, including contributions towards its corpus fund, were not properly corroborated and also pointed to the Society’s purchase of two cars for personal use by its members, which it argued was not for charitable purposes.
The tribunal, however, rejected these contentions. It found that the society had been imparting systematic vocational education through recognized courses like computer programming and electrician training, and had affiliations with NCVT and the State Council for Vocational Training (SCVT), Haryana. It held that these courses contributed to skill development and employment generation, meeting the definition of ‘education’ under Section 2(15).
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The bench also rejected concerns about donations, holding that they were duly recorded in the books of account, and dismissed objections regarding the cars, which it did not consider relevant for rejecting the application.
The Court upheld the ITAT’s findings, ruling that vocational education was vital for individual development and earning a livelihood and rejected the Revenue’s reliance on a Kerala High Court judgment, noting that vocational education is now widely recognized as part of the broader field of education.
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A coram of bench Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth dismissed the revenue’s appeal, confirming the registration of the Society under section 12A.
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