Commissioner Of Income Tax (Exemptions) Delhi v. Niit Foundation

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 08 July 2024 Judgment pronounced on: 26 July, 2024 + ITA 141/2021 COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI .....Appellant Through: Mr. Abhishek Maratha, Sr. SC alongwith Mr. Parth Semiwal, Mr. Apoorv Agarwal, Jr. SCs. with Ms. Nupur Sharma, Mr. Manav Goyal, Mr. Gaurav Singh, Ms. Divya Verma and Mr. Bhanukaran Singh Jodha, Advs. versus NIIT FOUNDATION .....Respondent Through: Mr. Ajay Vohra, Sr. Adv. with Mr. Rohit Jain, Mr. Aniket D. Agrawal and Mr. Samarth Chaudhari, Advs. CORAM:HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA J U D G M E N T YASHWANT VARMA, J. 1.This appeal by the Commissioner of Income Tax (Exemptions)[1] assails the order of the Income Tax Appellate Tribunal[2] dated 27 May 2020. By our order of 09 May 2024, we had 1 CIT(E) 2 Tribunal Signature Not Verified Page 1 of 43 formally admitted the appeal on the following two questions of law: “A. Whether the Income Tax Appellate Tribunal [“ITAT”] is correct in the eyes of law in setting aside the order under Section 263 of the Income Tax Act, 1961 [“Act”] even though the order of Assessing Officer [“AO”] was erroneous and prejudicial to the interest of the Revenue and framed without making proper enquiries/ verification and application of mind? B. Whether the ITAT was correct in coming to the conclusion that the assessee was undertaking educational activities in terms of Section 2(15) of the Act?” 2.For the purposes of evaluating the rival submissions which were addressed, we deem it appropriate to notice the following essential facts. The respondent/assessee is a society registered under the Societies Registration Act, 1860 and also holds a registration under Section 12A of the Income Tax Act, 1961[3]. It was also accorded recognition under Section 80G(5) of the Act in terms of an order dated 07 March 2008. 3.In Assessment Year[4] 2014-15, the assessee filed its Return of Income declaring its taxable income to be „Nil‟. The aforesaid Return is stated to have been selected for scrutiny assessment, as a consequence of which a notice came to be issued on 31 August 2015 under Section 143(2). During the assessment proceedings, the assessee appears to have been called upon to furnish explanations with respect to the broad nature of activities undertaken by it as well as particulars pertaining to the fee structure, service tax payments, details of contributors and other functions concerning its avowed charitable activity of imparting education. 4.Responding to the aforesaid, the assessee made various 3 Act 4 AY Page 2 of 43 submissions including those dated 06 June 2016 (a brief note indicating the history of the assessee), 03 September 2016 (an explanation of the reconciliation of revenue as per the service tax returns and TDS 26AS forms filed by the assessee and the revenue disclosed in the income tax returns), 07 November 2016 (a note on the particulars of the tuition fees charged, the demography of the students and the details of sponsorship received by the assessee) and 24 November 2016 (a write-up on the charitable activities conducted by the assessee in the relevant previous year). The Assessing Officer[5] accepted the Return under Section 143(3), in terms of an order dated 30 November 2016 and which acknowledged and accepted the charitable nature of the educational activities undertaken by the assessee. Page 2 of 43 submissions including those dated 06 June 2016 (a brief note indicating the history of the assessee), 03 September 2016 (an explanation of the reconciliation of revenue as per the service tax returns and TDS 26AS forms filed by the assessee and the revenue disclosed in the income tax returns), 07 November 2016 (a note on the particulars of the tuition fees charged, the demography of the students and the details of sponsorship received by the assessee) and 24 November 2016 (a write-up on the charitable activities conducted by the assessee in the relevant previous year). The Assessing Officer[5] accepted the Return under Section 143(3), in terms of an order dated 30 November 2016 and which acknowledged and accepted the charitable nature of the educational activities undertaken by the assessee. 5.The CIT(E), however, doubting the correctness of the view taken by the AO, issued a Show Cause Notice[6] dated 15/16 November 2018 in purported exercise of powers conferred by Section 263 and embodying its intent to revise and set aside the assessment on the ground that the same was not only erroneous but also prejudicial to the interest of the Revenue. As would be apparent from a reading of the said SCN, the CIT(E) appears to have doubted that the respondent was engaged in the activity of imparting education as explained by the Supreme Court in its judgment in Lok Shikshana Trust vs. CIT[7] and consequently that its activities were liable to be placed in the residual category of General Public Utility[8] as contemplated under Section 2(15). The CIT(E) appears to have been swayed by the assessee not 5 AO 6 SCN 7 (1976) 1 SCC 254 8 GPU 8 GPU Page 3 of 43 being affiliated with any regulatory body and thus not being engaged in the activity of imparting formal education. 6.By an order dated 19/26 March 2018, the CIT(E) set aside the assessment as erroneous and held that the respondent was rendering services for profit and was not engaged in any educational or charitable activity as contemplated under Section 2(15). It further held that the assessee appeared to be acting primarily as a contractor/service provider with the elements of formal schooling being absent, and its activities, even if construed to be of a GPU, being liable to be viewed as contravening the Proviso to Section 2(15). It additionally held that the various activities undertaken by the assessee were also concerned with the enhancement of brand value and thus were violative of Section 13(1)(c) of the Act. 7.Pursuant to the aforesaid, a fresh assessment order came to be framed on 19 December 2019. In terms of this order the AO came to the following principal conclusions: “11. In view of the discussion made above, the following findings are arrived at:- a.The A.O during the assessment proceedings is duty bound to look into the manner of actual conduct of activities towards objects of the trust, as to whether these are actually done as charitable activity or as commercial activity. b.The assessee is actually undertaking commercial contracts of providing consultancy on the projects of its clients. c.The client of the assessee debits amount paid to the assessee as business expenses and claims 100% deduction. In case of donation/grant 100% deductions not allowed. d.The assessee itself books the income as receipt from educational services. e.The contracts with clients invariably come with advertisement/logo obligation on the part of the assessee, which also shows the commercial angle of the arrangement. f.The amounts received by the assessee are not in the nature of specified grant/legal obligation. Rather it is based on commercial arrangements. The payments are received on the basis of invoices raised on deliverables. The donor does not promise to pay the deficit or the assessee has any obligation to pay back the unutilized amounts. c.The client of the assessee debits amount paid to the assessee as business expenses and claims 100% deduction. In case of donation/grant 100% deductions not allowed. d.The assessee itself books the income as receipt from educational services. e.The contracts with clients invariably come with advertisement/logo obligation on the part of the assessee, which also shows the commercial angle of the arrangement. f.The amounts received by the assessee are not in the nature of specified grant/legal obligation. Rather it is based on commercial arrangements. The payments are received on the basis of invoices raised on deliverables. The donor does not promise to pay the deficit or the assessee has any obligation to pay back the unutilized amounts. g.The deduction of tax at source on every payments made to the assessee and issue of invoice including service tax show the actual intent of commercial transaction on the side of both the parties. h.The assessee is also acting as a turn-key contractor for supply, installation, operation and maintenance of "Hole in Wall" computer system, a proprietary product of its related party/specified persons M/s Mind Champion learning System Ltd. On the said project it is also earning profits. i.The assessee has not been able to show that the prices charged towards various programmes to the trainee, are less than the market price of the same courses, in the same area for the same duration, of the same quality and under the same circumstances. j.There is no element of charity from the side of the assessee, as it is earning surplus from providing training, by not only charging the training but also getting its cost and profit recouped, who make payments either out of business considerations or out of CSR obligations. The assessee is acting only under a commercial contract as a consultant/contractor. k.The assessee has tried to mislead by stating that NllT Ltd. Is not a specified person, whereas it has itself shown NIIT Ltd as specified persons in the audit report in form 10 B and also in submission filed. Further the assessee has not been able to deny, rather admitted that intangible and tangible benefits were derived by NllT Ltd, from the income of the property of the trust. l.The activity of the assessee cannot be categorised as an activity within the meaning of „education‟ as defined in section 2(15) of the income tax Act. m.The advertisement of one of the courses shows that it cannot be categorized as education in any manner. n.Even if the activity of the assessee is considered as charitable under the limb of General Public Utility, it is hit by proviso to section 2(15) of the Act. Hence it is concluded that:- a.The activities of the assessee do not fall under any limb of charitable purposes as defined under section 2(15) of the Income Tax Act, 1961. b.The activities of the assessee are commercial services purely in the nature of trade and commerce. c.The case of the assessee is also hit by proviso to section 2(15), even in case, the activities were taken to be in the nature general public utility. d.The assessee is providing benefit to specified persons, u/s 13(3) of the Act hence it is not eligible for exemption u/s11 and 12 of the Act. Since the assessee is not held eligible for exemption u/s 11 & 12 of the Act, in view of the discussion made above the Income of the assessee is held taxable, treating it as an AOP and also at Maximum Marginal Rate because of infringement of section 13(1) of the income tax Act. Total income as per computation of Income Rs. 4,53,41, 153/- Less: Application of Income Rs. 4, 14,01,899/- Total Taxable Income Rs. 39,39,254/- Assessed u/s 143(3)/263 of the Act at an income of Rs. 39,39,254/-. Penalty proceedings u/s 271 (1)(c) of the Act, on account of concealment of income and furnishing inaccurate particulars of such income, have been separately initiated. Interest charged as per law. Issue necessary forms.” Since the assessee is not held eligible for exemption u/s 11 & 12 of the Act, in view of the discussion made above the Income of the assessee is held taxable, treating it as an AOP and also at Maximum Marginal Rate because of infringement of section 13(1) of the income tax Act. Total income as per computation of Income Rs. 4,53,41, 153/- Less: Application of Income Rs. 4, 14,01,899/- Total Taxable Income Rs. 39,39,254/- Assessed u/s 143(3)/263 of the Act at an income of Rs. 39,39,254/-. Penalty proceedings u/s 271 (1)(c) of the Act, on account of concealment of income and furnishing inaccurate particulars of such income, have been separately initiated. Interest charged as per law. Issue necessary forms.” 8.Aggrieved by the aforesaid order, the assessee approached the Tribunal. In terms of the order dated 27 May 2020, the Tribunal allowed the appeal of the assessee holding that not only was Section 263 unjustifiably invoked, but the findings rendered in the context of Section 2(15) were also unsustainable. It ultimately came to the conclusion that the assessee was engaged in the charitable activity of imparting education. 9.Before us, Mr. Maratha, learned counsel for the appellant, argued that in terms of the principles laid down by the Supreme Court in Lok Shikshana Trust, for the purposes of qualifying Section 2(15), the assessee was liable to establish that it was engaged in conducting systematic and formal instruction, schooling or training. It was his submission that the assessee was merely administering courses without any fixed curriculum, criteria or discipline and thus lacking the ingredients of formal education as explained by the Supreme Court. Learned counsel also referred to the order of the CIT(E) which had doubted the activities of the assessee as being concerned with imparting education and had held that the same could at best be classified as GPU. 10.The CIT(E), it becomes pertinent to note, had also drawn an adverse inference from the fact that the assessee received fees from students, and which it held akin to undertaking an activity in the nature of trade, commerce or business. It had also taken note of various receipts of the assessee from different corporate houses and on which TDS had been deducted under Section 194J. This, according to the CIT(E), was clear evidence of the respondent being engaged in commercial activities. Mr. Maratha drew our attention to the following conclusions as appearing in the order of the CIT(E): “4.1 The details of payments received from various corporate as per TDS statement during the year are under: xxxx xxxx xxxx 5. A perusal of the records of the case it is seen that the exact nature of these payments vis-a-vis services rendered by the assessee has not been examined in the assessment proceedings for A.Y.2014-15. Why commercial establishments are making such payments and deducting TDS on such payment, impliedly claiming the expenditure in computation of their taxable income have not been examined in the course of the proceedings. It cannot be disputed that the AO in the course of the assessment proceedings is supposed to examine the nature and genuineness of activities undertaken by the assessee so as to ascertain whether such activities fall within the scope of charitable activities or whether they are hit by proviso to section 2(15) of the Act. From the records, it is clear that no such exercise has been undertaken by the assessing officer and the submissions of the assessee has been accepted without making necessary enquiries and investigations. The following points have not been specifically examined by the A.O. in the assessment proceedings. xxxx xxxx xxxx xxxx xxxx xxxx b. Terms of the contracts with various clients and documents show that that the payment to the assessee are booked in their respective accounts as „recruitment or training expenses' (with TCS), for installation and supply of computer equipment (with Chemical Terminal Trombay Limited), for managing, operating and upgrading recruitment centres (with JSL Limited), to act as a technical consultant for course run by Aga Khan Foundation, etc. The fact that essentially comes out from the said agreement is that the assessee is providing supplies and services to its clients who are actually undertaking some activities in the field of training etc. All the Clients of the assessee have invariabaly deducted TDS and termed the services received from the assessee as either professional or contractual receipts. The assessee has also raised invoices terming the same as consultancy or professional services and also service tax was raised in the invoices The A.O. has failed to appreciate the actual nature of activities undertaken by it.” 11.Insofar as the subject of education and the ambit of Section 2(15) is concerned, Mr. Maratha relied upon the following principles which were enunciated in Lok Shikshana Trust: “5.The sense in which the word “education” has been used in Section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word “education” has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word “education” is used in clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.” 12.Learned counsel also invited our attention to a more recent decision of the Supreme Court in New Noble Educational Societyvs. CIT[9], and where while reiterating the legal position which was enunciated in Lok Shikshana Trust, the Supreme Court had held as follows: “34.The subject of education is vast, even sublime. Yet, it is not the broad meaning of the expression which is involved in this case. As was held in T.M.A. Pai Foundation [T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481 : 2 SCEC 1] , education in the narrower meaning of the term as scholastic structured learning is what is meant in Article 21-A, Articles 29-30 and Articles 45-46 of the Constitution. As to what is “education” in the context of the IT Act, was explained in Lok Shikshana Trust v. CIT [Lok Shikshana Trust v. CIT, (1976) 1 SCC 254 : 1976 SCC (Tax) 14] in the following terms : (Lok Shikshana Trust case [Lok Shikshana Trust v. CIT, (1976) 1 SCC 254 : 1976 SCC (Tax) 14] , SCC p. 262, para 5) “34.The subject of education is vast, even sublime. Yet, it is not the broad meaning of the expression which is involved in this case. As was held in T.M.A. Pai Foundation [T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481 : 2 SCEC 1] , education in the narrower meaning of the term as scholastic structured learning is what is meant in Article 21-A, Articles 29-30 and Articles 45-46 of the Constitution. As to what is “education” in the context of the IT Act, was explained in Lok Shikshana Trust v. CIT [Lok Shikshana Trust v. CIT, (1976) 1 SCC 254 : 1976 SCC (Tax) 14] in the following terms : (Lok Shikshana Trust case [Lok Shikshana Trust v. CIT, (1976) 1 SCC 254 : 1976 SCC (Tax) 14] , SCC p. 262, para 5) “5.The sense in which the word “education” has been used in Section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word “education” has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get 9 (2023) 6 SCC 649 acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word “education” is used in clause (15) of Section 2. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.” Thus, education i.e. imparting formal scholastic learning, is what the IT Act provides for under the head of “charitable” purposes, under Section 2(15).” 13.Refuting the aforenoted contentions, Mr. Vohra, learned senior counsel appearing for the respondent/assessee, submitted that the AO upon due examination of the activities undertaken by the assessee, had come to the definitive conclusion that the same fell within the scope of Section 2(15). It was submitted that during Financial Year[10] 2013-14, the assessee had conducted various training programs for underprivileged youth spread across various streams such as Information Technology[11], English, Soft skills, BPO, Retail, Banking and Service sectors. It was submitted that the training imparted to the enrollees was conducted at NIIT-run centers and NGO-partner centers. It was pointed out that apart from the above, the assessee had undertaken various digital literacy initiatives such as the establishment of Hole-in-the-Wall Learning Stations across the country and which enabled children to improve their understanding of Science, IT, English, General Knowledge and Mathematics. 14.Mr. Vohra pointed out that the details in respect of these activities were duly placed before the AO in terms of a letter dated 24 November 2016. Mr. Vohra further drew our attention to the 10 FY 11 IT 11 IT assessment order for AY 2007-08 and which appears at Volume II, page no. 246 of our record and where also the factum of the assessee being engaged in the promotion and imparting of technical education was duly accepted. 14.Mr. Vohra pointed out that the details in respect of these activities were duly placed before the AO in terms of a letter dated 24 November 2016. Mr. Vohra further drew our attention to the 10 FY 11 IT 11 IT assessment order for AY 2007-08 and which appears at Volume II, page no. 246 of our record and where also the factum of the assessee being engaged in the promotion and imparting of technical education was duly accepted. 15.Learned senior counsel then took us through the details of the various activities undertaken by the respondent in FYs 2011-12, 2012-13 and 2013-14 and which extended to the establishment of career development and skill development centers. The details of those activities which appear at Volume II, page no. 232 of our record also encapsulate particulars pertaining to the skill development training programs as well as the mobile learning project which was curated for employability training. 16.Mr. Vohra also highlighted that the Memorandum of Association for the respondent/assessee identifies its primary aims and objectives as under: - “3. Aims and objectives The aims and objects for which this society is established are as follows: 1. To promote, support and strengthen education, research and training of Information Technology and its application in all fields of activities and to collaborate, cooperate and enter into partnerships with Universities, Colleges and Schools for expanding IT education and training and to play and active role in the human development initiatives of the country by supporting and sponsoring, wherever feasible, the establishment of new Universities, Colleges and Schools for organizing innovative IT education and training programmes; 2. To support, sponsor and collaborate with teachers and researchers in Universities and research institutions to develop IT enabled teaching and learning paradigms and new education technologies and to sponsor and support conferences, seminars and workshops of academics and professionals engaged in IT and related fields to share experiences and to strengthen institution-industry linkages; 3. To cooperate with, and seek cooperation from Universities, Research Institutions and industry in Delhi for strengthening and modernizing the curricula, teaching methods and student assessment procedures in IT education and training. To play a catalytic role in promoting, popularizing and expanding IT education and training at all levels of education in the country and to commission studies and research on the status of IT education and training in the country from time to time and to identify new initiatives required to be taken;” 17.Of equal significance are the particulars which have been set out and appear at Volume II, page no. 323 of our record and which carry details of the application of income that accrued to the assessee, and which was used solely for the purposes of imparting education. Mr. Vohra also underlined the fact that various courses which were conducted by the assessee were duly certified by the National Skill Development Council[12], among other globally recognized institutions. 18.Our attention was specifically drawn to the reply dated 13 December 2019, making disclosures in response to the notice under Section 142. Similar disclosures were furnished in terms of a letter dated 19 December 2019 submitted in the course of assessment. Since the disclosures made in these two communications would be of some relevance, they are extracted hereinbelow: - “December 13, 2019 To, Income tax Officer, Ward Exemption 2(4), 24th Floor, Room No. 2409 E-2 Block, Civic Centre, New Delhi-110002 12 NSDC ITA 141/2021 Dear Sir, Re.:M/s. NllT Foundation ("We or Assessee or NF") (formerly known as NllT Education Society) Assessment Year: 2014-15 Reply to notice u/s. 142(1) of the Income Tax Act, 1961 ("the Act") issued pursuant to order passed u/s. 263 of the Act. 18.Our attention was specifically drawn to the reply dated 13 December 2019, making disclosures in response to the notice under Section 142. Similar disclosures were furnished in terms of a letter dated 19 December 2019 submitted in the course of assessment. Since the disclosures made in these two communications would be of some relevance, they are extracted hereinbelow: - “December 13, 2019 To, Income tax Officer, Ward Exemption 2(4), 24th Floor, Room No. 2409 E-2 Block, Civic Centre, New Delhi-110002 12 NSDC ITA 141/2021 Dear Sir, Re.:M/s. NllT Foundation ("We or Assessee or NF") (formerly known as NllT Education Society) Assessment Year: 2014-15 Reply to notice u/s. 142(1) of the Income Tax Act, 1961 ("the Act") issued pursuant to order passed u/s. 263 of the Act. We are in receipt of notices issued under section 142(1) of the Income Tax Act, 1961 ("the Act") dated October 14, 2019 and November 21, 2019 for assessment year 2014-15 in respect of the proceedings pursuant to the order dated 26.03.2019 passed by the Commissioner of Income Tax (Exemptions) ("the CIT(E)") u/s. 263 of the Act. In this regard, the details asked for by you are being submitted as under: 1 Details of training provided, their duration, timings, etc. [Reply to Query no. 4 (a) and 4(b)] 1.1 The details of the courses offered by the Assessee along with their duration, type of certificate granted and attendance requirement, passing percentage, etc. is attached as 'Annexure A'. As would be observed, the Assessee was offering around 33 courses during the captioned year. Further, during said year, the Assessee had around 24 centres located across India. Presently, it has almost 188 centres across India. The list of centres that were there in the relevant previous year is attached as 'Annexure B'. The said courses were provided by the Assessee through all these centres. 2Attendance criteria of the courses, its assurance anddisciplinary actions taken in case inadequate attendance [Reply to Query No. 4 (c)]: 2.1 As would be observed from 'Annexure A' attached above, each course has a minimum attendance requirement ranging from 50% to 70% of the total attendance. The students have to compulsory attend classes and achieve at least the minimum attendance. The attendance of the students is taken on a regular basis and a proper track record of the same is maintained by NF. In case, the students do not have the required attendance, they are not provided completion certificates for the course and in order to avail certificate of completion of training, students have to attend the course afresh. 3Examination in respect of the courses provided [Reply to Query No. 4(d)]: 3.1 After the completion of a specified course, a proper assessment of the students is taken. Examination is conducted and the performance of each student is evaluated. The successful students are issued certificates mentioning the grade scored by the students in the examination which is calculated on the basis of marks scored by the said students in the examination conducted by the assessee. The said certificates also contains the logo of the organization from where the course is approved. The Sample certificates are attached at 'Annexure C'. 4 Recognitions provided to the courses provided by the Assessee [Reply to Query No. 4(e)]: 3Examination in respect of the courses provided [Reply to Query No. 4(d)]: 3.1 After the completion of a specified course, a proper assessment of the students is taken. Examination is conducted and the performance of each student is evaluated. The successful students are issued certificates mentioning the grade scored by the students in the examination which is calculated on the basis of marks scored by the said students in the examination conducted by the assessee. The said certificates also contains the logo of the organization from where the course is approved. The Sample certificates are attached at 'Annexure C'. 4 Recognitions provided to the courses provided by the Assessee [Reply to Query No. 4(e)]: 4.1 The students who enroll with the centres operated by NF are given education as per educational courses duly developed and/or approved by various government authorities and/or globally recognized institutions. The educational courses offered by NF are mainly National Skill Development Corporation ("NSDC") approved courses. NSDC is an Indian not-for-profit company set up to address the need for providing skilled manpower across various industry sectors. It was founded in 2009 by the Ministry of Finance, and is currently under the Ministry of Skill Development and Entrepreneurship, Government of India. NllT Yuva Jyoti Limited (NYJ) is an approved training partner of NSDC (Please see the certificate issued by NSDC in this regard as 'Annexure D') which provides the said NSDC approved courses to be used for providing education to the students of the assessee. 4.2 Apart from educational courses approved by NSDC, NF is also providing educational courses developed by globally recognized institutions (CompTIA, CISCO, Tally, NllT etc.) that are recognized across IT industry and other industry. For instance, CompTIA is a world-renowned non-profit trade association, issuing professional certifications for the information Technology (IT) industry. It is considered one of the IT industry‟s top trade assoc1at1ons and its courses are recognized across the IT industry. Intel is a well renowned corporate body in the field of IT. Since these courses are recognized across the industry, the students who undergo these certificate educational courses get easily recruited by various companies. 4.3 NF uses the curriculum recognized by these government authorities and globally recognized institutions to educate/train its student at its centres. The list of approved courses offered by NF is given at 'Annexure E'. The classes conducted by NF are based on the courseware supplied by these government authorities and globally recognized institutions. 4.4 Further, the centres through which we provide trainings and courses are duly approved by NSDC to conduct various approved educational courses approved by NSDC. The fact that the said centres were approved from NSDC is evident from the screen shots of the NSDC website which are attached at 'Annexure F'. Further, as could be observed therefrom, the details of the said centres like address of centres, the date of approval of said centres is duly mentioned therein. 4.5 Further, NF also operates aforesaid approved Educational I vocational Courses in Government Schools, Community Schools and Schools/Centres operated by various other NGOs. Please see the sample approval letters received from various government schools in this regard at 'Annexure G'. All the activities stated above which are carried by NF in its own center is also being carried at these Government schools, Community Schools and Schools/Centres operated by various other NGOs. NF even trains the teachers and faculties of such schools to enable these institutions to conduct these educational courses on their own. 4.5 Further, NF also operates aforesaid approved Educational I vocational Courses in Government Schools, Community Schools and Schools/Centres operated by various other NGOs. Please see the sample approval letters received from various government schools in this regard at 'Annexure G'. All the activities stated above which are carried by NF in its own center is also being carried at these Government schools, Community Schools and Schools/Centres operated by various other NGOs. NF even trains the teachers and faculties of such schools to enable these institutions to conduct these educational courses on their own. 4.6 Other ways of NF to provide the students education is through various digital literacy initiatives like Hole-in-the-wall education project. The said project is to educate children of age group 6 to 12 years belonging to slum and backward areas of the country, who do not have access to the computers and its applications. In this project, Computer learning stations are installed at various locations like schools, slum, etc. where children can use these computer learning stations and improve their understating of subjects like Science, IT, English, GK and Mathematics. 4.7 Further, the work done by NF in the education field has also been recognised through various awards and recognitions. The list of some of the Awards received by NF recognizing its contribution in the field of education and charitable activities done by it over the years is as under: xxxx xxxx xxxx The detailed list of the awards is at „Annexure H‟ 4.8 The list of some of the articles published in Newspaper and electronic media recognizing NF's contribution in the field of education and charitable activities done by it over the years are as follows: xxxx xxxx xxxx The aforesaid articles/news are attached at 'Annexure I'. 5 Details of trainees along with the courses opted by them in the-NF during financial year 201314 [Reply to Query No. 4(f to j) 5.1 Details of the number of students registered in the NF alongwith the courses opted by them during the relevant previous year is attached as 'Annexure J'. 5.2 As stated earlier, the Assessee, in its development centres, is conducting various educational courses in the field of IT and other communication and vocational courses such as IT, English, Soft skills, BPO, Banking Sector, Accounting Skills, Personality development etc. duly developed and/or approved by government authorities and/or globally recognized institutions like NSDC, CompTia, Intel, CISCO etc. for the poor and physically and mentally challenged students at either free of cost or at heavily subsidized rate. The same is evident from comparison of fees charged from the students by NF and market rate of said courses attached at 'Annexure K'. NF also assists its student in getting job placement after completing certified educational courses (i.e. Career oriented program) offered by NF. These courses are certification courses and not degree oriented courses, and hence the information of the courses run by the NF is not required to be submitted before AICTE and no such authorisation of the said courses is also required from the AICTE. We are in the process of compiling the balance details sought by Your Goodself in the captioned notice, and accordingly, we humbly request Your Goodself to kindly allow us time to finalize the details. In case if Your Goodself decides otherwise, kindly grant us an opportunity of personal hearing to take a well-considered decision. Thanking You Yours faithfully, For NIIT Foundation (formerly known as NIIT Education Society) xxxx xxxx xxxx To, Income Tax Officer, Ward Exemptions 2(4), 24[th] Floor, Room No. 2409, E-2 Block, Civic Centre, New Delhi- 110002. December 19[th], 2019 Dear Sir, Re.: M/s. NIIT Foundation (“We or Assessee or NF”)(formerly known as NIIT Education Society) Assessment Year: 2014-15 Reply to notice u/s. 142(1) of the Income Tax Act, 1961 ("the Act") issued pursuant to order passed u/s. 263 of the Act. In case if Your Goodself decides otherwise, kindly grant us an opportunity of personal hearing to take a well-considered decision. Thanking You Yours faithfully, For NIIT Foundation (formerly known as NIIT Education Society) xxxx xxxx xxxx To, Income Tax Officer, Ward Exemptions 2(4), 24[th] Floor, Room No. 2409, E-2 Block, Civic Centre, New Delhi- 110002. December 19[th], 2019 Dear Sir, Re.: M/s. NIIT Foundation (“We or Assessee or NF”)(formerly known as NIIT Education Society) Assessment Year: 2014-15 Reply to notice u/s. 142(1) of the Income Tax Act, 1961 ("the Act") issued pursuant to order passed u/s. 263 of the Act. We are in receipt of notices issued under section 142(1) of the Income Tax Act, 1961 ("the Act") dated October14, 2019 and November 21, 2019 for assessment year 2014-15 in respect of the proceedings pursuant to the order dated 26.03.2019 passed by the Commissioner of Income Tax (Exemptions) ("the CIT(E)") u/s. 263 of the Act. In response to the said notice, we have filed the part replies vide letters dated 23th November 2019 and 13th December 2019. In continuation to the earlier replies filed by us, we humbly submit as under: 1.As regards point 3 of the notices asking to show cause as to why the receipts of the Assessee should not be treated as business receipts and why the Assessee should not treated as carrying out activities relating to general purpose utility as ''against education. 1.1In this regard, the Assessee humbly submits as under: 1.2NF’s Objects: 1.3We are society registered on December 1, 2004 under the Societies Registration Act, 1860 with the main object to promote, support and strengthen education, research and training of the Information Technology and its application in all fields of activity and to collaborate, cooperate and enter into partnerships with universities, colleges and schools for expanding IT education and training and to play an active role in the human development initiatives of the country by supporting and sponsoring, wherever feasible, the establishment of new universities, colleges and schools for organizing innovative IT education and training programmes. Please see the copy of our Memorandum of Association at Page 1to10 of Paper Book (PB). 1.4Rule 5 of the Rules and Regulations contained in the charter of the society provides that the income and property derived by the society shall be applied solely to the promotion of the objects of the society and no portion thereof shall be paid or transferred directly or indirectly to any member of the society. Relevant portion of the aforesaid rule reads as under: "Income and Property of the Society The Income and properties of the Society derived shall be applied solely towards the promotion of the objects of the Society as set forth in "Memorandum of Association" of the Society and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or other manners or by way of profit to any of the member of the society provided that nothing herein contained shall prevent the payment in good faith of the remuneration to any employee of the Society for work done or service rendered for payment of interest that may be due on moneys borrowed by the Society." Please see the copy of the Rules and Regulations at Page 11 to 25 of PB. 1.5 Further, we were accorded approval under section 12A of the Act by DIT (Exemption) vide order dated 30th March 2006, w.e.f December 1, 2004. Please see the copy of said registration at Page 26 of PB. 1.6NF's Activities: 1.7 Conducting various approved Educational /vocational Courses in NF's education /development centers: 1.8In pursuance of the aforesaid objects, we have been primarily operating various educationIdevelopment centers in rural areas and slum /economically backward pockets of semi urbanand urban areas across India, so as to impart education Please see the copy of the Rules and Regulations at Page 11 to 25 of PB. 1.5 Further, we were accorded approval under section 12A of the Act by DIT (Exemption) vide order dated 30th March 2006, w.e.f December 1, 2004. Please see the copy of said registration at Page 26 of PB. 1.6NF's Activities: 1.7 Conducting various approved Educational /vocational Courses in NF's education /development centers: 1.8In pursuance of the aforesaid objects, we have been primarily operating various educationIdevelopment centers in rural areas and slum /economically backward pockets of semi urbanand urban areas across India, so as to impart education to the students belonging to the underprivileged / economically backward strata of the society with an objective to develop their skillso that their employability can increase. In the said education /development centers, we conduct various educational courses in the field of IT and other communication and vocational courses such as IT, English, Soft skills, BPO, Banking Sector, Accounting Skills, Personality development etc. duly developed and/or approved by government authorities and/or globally recognized institutions for the poor and physically and mentally challenged students at either free of cost or at heavily subsidized rate. NF also assists its student in getting job placement after completing certified educational courses (i.e. Career oriented program) offered by NF. Please see the profile of NF explaining the activities carried on by it in detail at pages 27 to 38 of the PB and brief note on past and current activities of NF at pages 39 of PB. 1.9We first identify under privileged /economically backward areas and communities to whom we can provide benefit with our activities and set up centers in those areas. A center generally comprises of classrooms, computer labs and other infrastructure required to conduct educational classes along with trained faculties to educate/train the students. Once the center is set up, we spread awareness about the various educational programs being carried out at our centers in those communities and try to persuade the students to come and visit our centers. At the center, we do a proper counseling for the student and based on his/her strength and weakness suggest the student, which would be the best educational course that would suit him. The students who desire to enroll for the educational courses are asked to fill requisite forms and a proper record of the students enrolled in a particular course is collected like the name of the student, his parent's name, address of his residence, his age, economic condition of his family, etc. The enrolled students are given education at these centers based on the courses duly developed and/or approved by various government authorities and/or globally recognized institution. Please see photographs of some of our centers at Page 40 to 59 of PB. As could be observed from the said photographs in the centers, there are proper classroom, computer labs and other infrastructure required to conduct educational classes using which the faculty is imparting education/career skills to students. 1.10Centers operated by NF are duly approved by National Skill Development Corporations ['NSDC'] to conduct various educational courses approved by NSDC: During the relevant previous year, we had around 24 centers located across India and presently, we have almost 188 centers across India. The list of centers that were there in the relevant previous year is already submitted vide submissions dated 13th December 2019 at Annexure B. We from th2 said centers have educated/trained almost 4.25 lakhs students till date and after completing certified educational courses from NF these students have been able