The Institue Of Chartered Accountants Of India Andanr v. The Director General Of Income Tax (Exemptions), Delhiand Ors.…

THE HIGH COURT OF DELHI AT NEW DELHI %Judgment delivered on: 04.07.2013 +W.P.(C) No.3147/2012 THE INSTITUE OF CHARTERED ACCOUNTANTS OF INDIA ANDANR......Petitioners versus THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS), DELHIAND ORS.…..Respondents …..Respondents AND +W.P.(C) No.3148/2012 THE INSTITUE OF CHARTERED ACCOUNTANTS OF INDIA ANDANR......Petitioners .....Petitioners versus THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS), DELHI AND ORS. …..Respondents AND +W.P.(C) No.7181/2012 THE INSTITUE OF CHARTERED ACCOUNTANTS OF INDIA ANDANR......Petitioners .....Petitioners versus THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS), DELHIAND ORS.…..Respondents …..Respondents CORAM:-HON'BLE MR JUSTICE BADAR DURREZ AHMED, THE ACTINGCHIEF JUSTICEHON'BLE MR JUSTICE VIBHU BAKHRU JUDGMENT VIBHU BAKHRU, J 1.These writ petitions have been filed by the Institute of CharteredAccountants of India. The petitioner has challenged the orders passed by theDirectorGeneralIncomeTax(Exemptions),(hereinafterreferredtoas“DGIT(E)”), refusing to grant exemption under Section 10(23C)(iv) of theIncome Tax Act, 1961 (hereinafter referred to as “the Act”) to the petitioner.Whereas writ petition No.3147/2012 impugns the order dated 13.04.2012declining the exemption with respect to the assessment years 2006-2007, 2007-2008 and 2008-2009, the writ petition No.3148/2012 has been preferred againstthe order dated 13.04.2012 passed by the DGIT(E) refusing to grant theexemption to the assessee under Section 10(23C)(iv) of the Act for theassessment years 2009-2010 and 2010-2011. The assessee has preferred the writpetition No.7181/2012 against the order dated 28.09.12 passed by the DGIT(E)declining exemption for the assessment year 2011-2012. All the three ordersimpugned in the three petitions are similarly worded. As the three petitions raisecommon issues the same have been considered together. 2.The petitioner has been incorporated by virtue of Section 3 of the Instituteof Chartered Accountants Act, 1949 (hereinafter referred to as the “ICAI Act”) asa body corporate which is constituted by all members whose names are entered inthe register of members maintained under the ICAI Act. 3.The Income Tax Authorities have, since incorporation of the petitioner,considered the petitioner as having been formed for charitable purposes asdefined under Section 2(15) of the Act. Declarations that the petitioner is entitledto the exemption under Section 10(23)(iv) of the Act subject to fulfilment ofcertain conditions have been notified by the Income Tax Authorities from time totime until the assessment year 2005-2006. The last notification in this regard wasdated 18.10.2004 and is quoted below:- “GOVERNMENT OF INDIAMINISTRY OF FINANCEDEPARTMENT OF REVENUECENTRAL BOARD OF DIRECT TAXESNEW DELHI, THE 18.10.2004NOTIFICATION(INCOME TAX) S.O. No.In exercise of the powers conferred by subclause (iv) of clause (23C) of section 10 of the Income Tax Act,1961 (43 of 1961), the Central Government hereby notifies “TheInstitute of Chartered Accountants of India, New Delhi for thepurpose of the said sub clause for the assessment years 2003-2004 to 2005-2006 subject to the following conditions, namely:- (i)the assessee will apply its income, or accumulate forapplication, wholly and exclusively to the objects for which it isestablished; (ii)the assessee will not invest or deposit its funds (other thanvoluntary contributions received and maintained in the form ofjewellery, furniture etc. for any period during the previous year’srelevant to the assessment years mentioned above otherwise thanin any one or more of the forms or modes specified in subsection (5) of section 11; (iii) this notification will not apply in relation to any incomebeing profits and gains of business, unless the business isincidental to the attainment of the objectives of the assessee and separate books of accounts are maintained in respect of suchbusiness. (i)the assessee will apply its income, or accumulate forapplication, wholly and exclusively to the objects for which it isestablished; (ii)the assessee will not invest or deposit its funds (other thanvoluntary contributions received and maintained in the form ofjewellery, furniture etc. for any period during the previous year’srelevant to the assessment years mentioned above otherwise thanin any one or more of the forms or modes specified in subsection (5) of section 11; (iii) this notification will not apply in relation to any incomebeing profits and gains of business, unless the business isincidental to the attainment of the objectives of the assessee and separate books of accounts are maintained in respect of suchbusiness. (iv)the assessee will regularly file its return of income beforethe Income Tax Authority in accordance with the provisions ofthe Income Tax Act, 1961. (v)that the event of dissolution, its surplus and the assets willbe given to a charitable organization with similar objectives. Sd/- Deepak GargUnder Secretary to the Government of India(F.No.197/115/2004-ITA-I)” 4.The petitioner applied for the renewal of the exemption under Section10(23C)(iv) of the Act in the prescribed form (Form No.56 prescribed under rule2C of the Income Tax Rules, 1962) for the assessment years 2006-2007, 2007-2008 and 2008-2009. However, the petitioner received no response to the saidapplication. 5.The petitioner, filed its return of income for the assessment year 2006-2007 on 31.10.2006 and the return of income for the assessment year 2007-2008on 31.10.2007. In both the returns, the assessee showed its taxable income as niland claimed exemption as available under Section 11 of the Act. 6.On 07.05.2008, the petitioner once again made an application in theprescribed form for renewal of the exemption under Section 10(23C)(iv) of theAct for the assessment year 2009-2010. No response to this application was alsoreceived by the petitioner at the material time. However, the Assessing Officertook up the return filed by the petitioner for the assessment year 2006-2007 forscrutinyanddeterminedthetotaltaxableincomeofthepetitionerat `33,47,92,000/- and computed the tax payable thereon at `14,96,59,474/- andraised a demand accordingly. 7.The petitioner was denied exemption under the Act on the ground that thepetitionerwasholdingcoachingclassesforpreparingstudentsfortheexaminations being conducted by the petitioner and was charging fees for thesame. The Assessing Officer concluded that the activity undertaken by thepetitioner of providing coaching to students amounted to carrying on businessand income from the same was liable to be treated as business income. As thepetitioner was not maintaining separate books of accounts with respect to theactivity of coaching students, the Assessing Officer denied the petitioner’s claimunder Section 11 of the Act. The Assessing Officer further held that the petitionerhad violated the provisions of Section 13(1)(d) of the Act as a balance of`5,65,48,000/- was outstanding against ICAI Accountant Research Foundation inthe books of the petitioner. The Assessing Officer held that this represented anamount invested or deposited which is not in accordance with the form or modesspecified under Section 11(5) of the Act and thus, the benefit of the exemptionunder Section 11 of the Act was not available to the petitioner. 8.It was contended on behalf of the petitioner before the Assessing Officerthat the petitioner was not carrying on any business and providing coaching to thestudents was a part of its function of conducting a course in accountancy whichwas not business and thus, would not disqualify the petitioner from theexemption as available under Section 11 of the Act. The petitioner alsocontended that the amount outstanding against the ICAI Accountant ResearchFoundation was not an investment but the amount expended by the petitioner inestablishing another institute in furtherance of its object. The petitioner explainedthat ICAI Accountant Research Foundation was a company registered underSection 25 of the Companies Act, 1956 and intended to establish a university in Rajasthan for education in the field of Accountancy. Research and impartingeducation in the field of Accountancy was one of the objects for which thepetitioner had been constituted, accordingly, it was contended that the amountexpended by the petitioner and standing to the debit of ICAI AccountantResearch Foundation amounted to applying funds of the petitioner towards itsobject and could not be considered as a deposit or investment made by thepetitioner. Both the contentions raised by the petitioner were rejected by theAssessing Officer by the order dated 31.12.2008. The assessment order dated31.12.2008 was carried in appeal by the petitioner before the CIT (Appeals). 9.With respect to the assessment pertaining to the assessment year 2007-2008, the Assessing Officer adopted a similar view as was adopted by theAssessing Officer for the Assessment year 2006-2007 and denied the petitionerbenefit of exemption available under Section 11 of the Act and passed anassessment order dated 30.12.2009 assessing the petitioner’s taxable income at`35,34,12,000/-. This assessment order was also carried in appeal by thepetitioner before the CIT (Appeals). 10.In the meantime, the Commissioner of Income Tax passed an order dated29.03.2010 under Section 263 of the Act holding that the Assessment order dated21.08.2007 passed by the Assessing Officer with respect to the assessment year2005-06 was prejudicial to the interest of the revenue and the petitioner could notbe allowed exemption under Section 10(23C)(iv) of the Act as the petitioner wasconducting coaching classes which according to the Commissioner of IncomeTax was not a charitable activity and would disentitle the petitioner fromclaiming exemption under Section 11 of the Act. 11.The petitioner approached the Income Tax Appellate Tribunal for settingaside the said order and the Tribunal passed an order dated 18.10.2010 allowing the appeal of the petitioner. The Tribunal held that the activity of the petitionerrevolved around the education and training for Chartered Accountancy and thatthe view that coaching activity was not permissible under the Act was contrary tothe Act. The relevant extract of the decision of the Tribunal is quoted below:- “15. The Institute as such merely it is receiving coaching fee fromstudents for imparting education, cannot be said to have beencarrying on business and accordingly it is not required to maintainseparate books of accounts as alleged by DIT(E). The income of thecoaching classes earned by the assessee institute is within its objectsand its Regulations and further these activities are educationalactivity within the definition of section 2(15) of the Income Tax Act,1961, and consequently therefore cannot be activity of business forwhich separate books of accounts are required to be maintained. Theorder of the learned DIT(E) is therefore not sustainable as the incomeof the Institute is exempt not only u/s 10(23C)(iv) but also undersection 11. The institute is an educational institute and hence itsincome will also be exempt under section 11 as education fallswithin the meaning of charitable purpose under section 2(15) of theAct.” 12.An appeal was preferred on behalf of the revenue against the order dated18.10.2010 passed by the Tribunal. This court rejected the appeal vide itsdecision dated 19.09.2011 which is reported asDirector General of Income Tax(Exemptions) v. Institute of Chartered Accountants of India: [2012] 347 ITR86 (Del). We are informed that a special leave petition has been preferred againstthe order dated 19.09.2011 which is pending. 13.The CIT (Appeals) also allowed the appeals preferred by the petitioneragainst the assessment orders passed in respect of the assessment years 2006-07& 2007-08. The revenue filed appeals before the Income Tax Appellate Tribunalagainst the orders dated 31.12.2010 and 24.01.2011 passed by CIT (Appeals) inrespect of assessment years 2006-07 & 2007-08. The said appeals were also dismissed by the Tribunal vide orders dated 09.01.2012 & 16.06.2011respectively. 14.The revenue filed an appeal under Section 260A of the Act against theorder dated 16.06.2011 passed by the Tribunal in respect of the assessment year2007-08. The said appeal was disposed of by this court by an ex-parte orderdated 11.05.2012. This court held that the dominant purpose and objective of theinstitute was to regulate the profession of Chartered Accountants in India. Thecoaching facilities provided by the petitioner for its members and other studentsare with the pre-dominant object of maintaining and upholding standards of theprofession of chartered accountancy and is in furtherance of the object for whichthe petitioner has been established. This court further held that there was nofinding by the Assessing Officer that the pre-dominant object of the petitioner inholding coaching classes was to generate profits. Special leave petitions havebeen preferred both by the petitioner as well as by the revenue in the SupremeCourt which, we are informed, are pending. 15.The DGIT(E) passed an order dated 19.05.2009 rejecting the applicationdated 07.05.2008 filed by the petitioner seeking the notification under Section10(23C)(iv) of the Act. The petitioner preferred the writ petition against the orderdated 19.05.2009 passed by DGIT(E) which was allowed by this court by thejudgment dated 19.09.2011 which is reported as The Institute of CharteredAccountants of India and Anr v. Director General of Income Tax (Exemptions)and Ors: [2012] 347 ITR 99 (Del). This court set aside the order dated19.05.2009 passed by DGIT(E) and remanded the matter for consideration ofcertain facts and aspects as well as further developments which had taken placesubsequent to the passing of the order dated 19.05.2009. The DGIT(E) passed aremand order dated 13.04.2012 once again rejecting the petitioner’s applicationfor exemption under Section 10(23C)(iv) of the Act and the said order is the subject matter of challenge in Writ Petition No. 3148/2012. In the meantime, theAssessing Officer has also passed an order dated 26.12.2011 denying theexemption under Section 11 of the Act to the petitioner. The petitioner haspreferred an appeal against the assessment order dated 26.12.2011 which hasbeen allowed by CIT (Appeals) vide its order dated 31.01.2013. 16.In respect to the assessment year 2008-2009, the Assessing Officer passedan assessment order dated 27.12.2010 under Section 143(3) of the Act andallowed the petitioner the exemption under Section 11 of the Act. The AssessingOfficer categorically found that the activities of the petitioner fell within theambit of Section 2(15) of the Act and further that the petitioner had compliedwith the provisions of Section 11 of the Act. The Assessing Officer further heldthat no violation of Section 13 of the Act was found. Although the proceedingsunder Section 263 of the Act were initiated by the Commissioner of Income Taxin respect of the assessment order dated 27.12.2010, however, it has been statedby the learned counsel for the petitioner that the said proceedings have beendropped and no order under Section 263 of the Act has been passed by theCommissioner of Income Tax. 17.In the myriad of all the proceedings as noted above, the central issueremains the same, which is, whether the petitioner is an institution established forcharitable purposes having regard to the objectives of the institution. Charitablepurpose has been defined under Section 2(15) of the Act and the controversyrevolves around the question whether activities carried out by the petitioner fallwithin the ambit of the definition of “charitable purpose”. Another issue that alsoneeds to be considered is whether funds paid by the petitioner to ICAIAccounting Research Foundation is in violation of Section 13 of the Act whichwould disentitle the petitioner from claiming exemption under the Act. 18.The course of Chartered Accountancy is a distance education programmewhere study material is provided by the petitioner institute to all the studentsundergoing the pre-qualification course. In order to facilitate further learning, thepetitionerinstitutealsoorganizesclassroominstructionsbywayofcoaching/revisionary classes for students enrolled with it. The coaching andrevisionary classes are with respect to the curriculum approved by the petitionerinstitute for various examinations. These coaching classes are with the object toprepare the students for the examinations being conducted by the petitionerinstitute. 19.The petitioner institute charges fees ranging between ` 1,500/- to ` 2,500/-for one group and ` 4,000/- to ` 6,000/- for both groups depending on the placesor cities where such classes are held. The Board of studies of the petitioner –institute has an expert faculty who conducts oral classes. 20.The petitioner has contended that the coaching and revisionary classes areconducted without any commercial motive and are a part of its object ofimparting education to the students registered with it. It is further contended thatstudents enrolled with the petitioner institute are provided with comprehensivestudy material including model test papers and question banks for which noseparate fee is charged. These activities of the petitioner institute are stated to beundertaken without any profit motive and in discharge of its statutory dutiesunder the ICAI Act. 21.The petitioner institute has also asserted that it incurs administrativeexpenses which include salaries paid to the staff employed at various branches ofthe petitioner institute as well as depreciation on the assets situated at variousbranches. The branches of the institute are the main centres for holding coachingand revisionary classes. It is contended that the common administrative expenses (including salaries and depreciation) incurred by the petitioner institute exceedthe surplus generated from the coaching facilities provided to the students. 22.It has been contended on behalf of the petitioner that a large number ofstudents are enrolled with the petitioner and during the financial year ending31.03.2012, 10,70,839 students appeared for examination conducted by thepetitioner institute. It has been further contended on behalf of the petitioner thatproviding education to the students enrolled with the institute at the pre-qualification stage as well as to member chartered accountants is the primary andthe main object of the petitioner institute and the activity of controlling andregulating the conduct of the profession of chartered accountants is whollyancillary and incidental to its main object of providing formal education. It is,thus, contended that the first proviso to Section 2(15) of the Act is whollyinapplicable to the activity for providing education, thus, the exemption underSection 10(23C)(iv) of the Act cannot be denied to the petitioner on account ofthe petitioner institute holding coaching classes or carrying on certain incidentalactivities for a fee. 23.In the alternative, it is submitted that the objects and activities carried onby the petitioner fall in two categories specified in the definition of theexpression “charitable purposes”. The first category being “education” insofar asthe petitioner institute provides formal education and training to the studentsundergoing the chartered accountancy course as well as post-qualificationcourses such as corporate management, tax management, information system,audit etc. The other category being “advancement of any other object of generalpublic utility” insofar as the petitioner controls and regulates the profession ofchartered accountants. It is contended that the activity of holding coachingclasses is an integral part of providing formal education and, thus, is relatable to the first object of providing education to which the first proviso to section 2(15)of the Act is wholly inapplicable. 24.It is submitted by the petitioner that the amount expended by the petitioneron account of ICAI Accounting Research Foundation does not violate Section 13of the Act as ICAI Accounting Research Foundation is itself a charitableinstitution as being the company incorporated under Section 25 of the CompaniesAct, 1956 which cannot distribute profits to its members. It is further pointed outthat Section 15(2)(k) of the ICAI Act authorises the petitioner for giving financialassistance to persons other than members of the council for carrying out researchin accountancy. The balance outstanding against ICAI Accounting ResearchFoundation, thus, represents application of funds towards the objectives of thepetitioner institute and cannot be stated to be violative of Section 13 of the Act.The petitioner has further placed reliance on assessment order dated 27.12.2010wherein the Assessing Officer has accepted that the petitioner has not violatedsection 13 of the Act. 25.We have heard the counsel for the parties. 26.Section 2(15) and Section 10(23C)(iv) of the Act are relevant and areextracted hereunder:- “2. - Definitions.-In this Act, unless the context otherwise requires,— (15) ‘charitable purpose’ includes relief of the poor, education,medical relief, preservation of environment (including watersheds,forests and wildlife) and preservation of monuments or places orobjects of artistic or historic interest, and the advancement of anyother object of general public utility: Provided that the advancement of any other object of generalpublic utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce orbusiness, or any activity of rendering any service in relation to anytrade, commerce or business, for a cess or fee or any otherconsideration, irrespective of the nature of use or application, orretention, of the income from such activity: Provided further that the first proviso shall not apply if theaggregate value of the receipts from the activities referred to thereinis ten lakh rupees or less in the previous year.” xxxxxxxxxxxxxxxxxxxx “10. Incomes not included in total income.-In computing the totalincome of a previous year of any person, any income falling withinany of the following clauses shall not be included- xxxxxxxxxxxxxxxxxxxx(23C) any income received by any person on behalf of –xxxxxxxxxxxxxxxxxxxx (iv) any other fund or institution established for charitable purposeswhich may be notified by the Central Government in the OfficialGazette, having regard to the objects of the fund or institution andits importance throughout India or throughout any State of States”. 27.A plain reading of Section 2(15) of the Act indicates that expression“charitable purpose” has been divided into six categories, namely, (i) relief topoor, (ii) education, (iii) medical relief, (iv) preservation of environmentincluding water sheds (forest and wildlife), (v) preservation of monuments andplaces or objects of artistic or historical importance, and (vi) advancement of anyother object of general public utility. xxxxxxxxxxxxxxxxxxxx(23C) any income received by any person on behalf of –xxxxxxxxxxxxxxxxxxxx (iv) any other fund or institution established for charitable purposeswhich may be notified by the Central Government in the OfficialGazette, having regard to the objects of the fund or institution andits importance throughout India or throughout any State of States”. 27.A plain reading of Section 2(15) of the Act indicates that expression“charitable purpose” has been divided into six categories, namely, (i) relief topoor, (ii) education, (iii) medical relief, (iv) preservation of environmentincluding water sheds (forest and wildlife), (v) preservation of monuments andplaces or objects of artistic or historical importance, and (vi) advancement of anyother object of general public utility. 28.Section 2(15) was substituted w.e.f. 01.04.2009. Prior to its substitution bythe Finance Act, 2008, section 2(15) as amended by the Finance Act, 1983 readas under:- “15:- ‘Charitable purpose’ includes relief to the poor, education,medical relief and the advancement of any other object of generalpublic utility.” 29.Section 2(15) was substituted by the Finance Act, 2008 by introducing theproviso, the effect of which was to exclude from the ambit of the expression“charitable purpose” any activity which is in the nature of a trade, commerce orbusiness or any activity of rendering service in relation to any trade, commerce orbusiness for a fee or any other consideration. 30.The issue whether the income of the petitioner is exempt under Section10(23C)(iv) of the Act has to be considered by examining the provisions of theICAI Act, the functions performed and the activities carried on by the petitionerand determining whether the same fall within the definition of the expression‘charitable purpose’. 31.The petitioner - Institute of Chartered Accountant of India is a statutorybody established by the ICAI Act. Prior to enactment of the ICAI Act, in 1932the Government of India had framed the Auditors Certificates Rules in 1932 inexercise of the powers conferred by section 144 of the Indian Companies Act,1913 and the profession of accountancy in India was regulated by those rules.The Indian Accountancy Board used to advise Government in all matters relatingto the profession and assisted the Government in maintaining the standards of theprofessional qualifications and the conduct required of the members of theprofession. The ICAI Act was enacted to constitute an autonomous association ofaccountants to maintain standards of professional competence and regulate theprofession of chartered accountants. The Statement of objects and reasons forenactment of the ICAI Act clearly indicates the object and purpose for which thePetitioner Institute has been established and is quoted hereunder: “STATEMENT OF OBJECTS AND REASONS The accountancy profession in India is at present regulated bythe Auditors Certificates Rules framed in 1932 in exercise of thepowers conferred on the Government of India by section 144 of theIndian Companies Act, 1913, and the Indian Accountancy Boardadvises Government in all matters relating to the profession andassistsitinmaintainingthestandardsoftheprofessionalqualificationsandconductrequiredofthemembersoftheprofession. The majority of the Board’s members are elected byRegistered Accountants members of the profession from all parts ofIndia. These arrangements have, however, all long been intended tobe only transitional, to lead up to a system in which such accountantswill, in autonomous association of themselves, largely assume theresponsibilities involved in the discharge of their public duties bysecuring maintenance of the requisite standard of professionalqualifications, discipline and conduct, the control of the CentralGovernment being confined to a very few specified matters. The Bill seeks to authorize the incorporation by statute ofsuch an autonomous professional body and embodies a schemewhich is largely the result of a detailed examination of the wholeposition by an ad hoc expert body constituted for the purpose, aftertaking into account the views expressed by the various ProvincialGovernments and public bodies concerned.” 32.The preamble of the ICAI Act also indicates that the purpose of the ICAIAct was to make provision for the regulation of the profession of CharteredAccountants. The relevant extract from the preamble of the ICAI Act is asunder:- “WHEREAS it is expedient to make provision for the regulation ofthe profession of chartered accountants and for that purpose toestablish an Institute of Chartered Accountants;” 33.The petitioner has been incorporated by virtue of Section 3 of the ICAIAct as a body corporate constituted by all members whose names are entered in the ‘register’. The register is defined under Section 2(i)(g) of the ICAI Act tomean ‘register of members’ maintained under the Act. Section 19 of the ICAI Actprovides for maintaining of register of members of the institute wherein, theparticulars of the members of the petitioner as specified are to be included.Section 20 of the ICAI Act provides for power to remove the names of themembers from the register. By virtue of Section 7 of the ICAI Act, theconstituent members of the petitioner who are in practice are required to use thedesignation of ‘Chartered Accountant’ and no member of the petitioner is entitledto practice the profession of Accountancy unless he has obtained a certificate forpractice from the petitioner. 34.The petitioner institute functions through a Council constituted in terms ofSection 9 of the ICAI Act. The Council includes elected members of thepetitioner and also persons who are nominated by the Central Government. Thepetitioner functions under the overall control, guidance and supervision of theCouncil which is vested with the obligation to carry out the provisions of theICAI Act including the functions as specified under section 15(2) of the ICAIAct. Section 15 of the ICAI Act is quoted below:- “15.- Functions of Council. - (1) The Institute shall function underthe overall control, guidance and supervision of the Council and theduty of carrying out the provisions of this Act shall be vested in theCouncil. (2)In particular, and without prejudice to the generality of theforegoing powers, the duties of the Council shall include: (a) to approve academic courses and their contents ; (b) the examination of candidates for enrolment and the prescribingof fees therefor.of fees therefor. (c) the regulation of the engagement and training of the articled andaudit assistants;audit assistants; (d) the prescribing of qualifications for entry in the Register; (e) the recognition of foreign qualifications and training for thepurposes of enrolment ;purposes of enrolment ; (f) the granting or refusal of certificates of practice under this Act. (g) the maintenance and publication of a Register of personsqualified to practice as chartered accountant ;qualified to practice as chartered accountant ; (h) the levy and collection of fees from members, examinees andother persons ;other persons ; (i) subject to the orders of the appropriate authorities under the Act,the removal of names from the Register and the restoration tothe Register of names which have been removed;the removal of names from the Register and the restoration tothe Register of names which have been removed; (j) the regulation and maintenance of the status and standard ofprofessional qualifications of members of the Institute ;professional qualifications of members of the Institute ; (k) the carrying out by granting financial assistance to persons otherthan members of the Council or in any other manner, of researchin accountancy;than members of the Council or in any other manner, of researchin accountancy; (h) the levy and collection of fees from members, examinees andother persons ;other persons ; (i) subject to the orders of the appropriate authorities under the Act,the removal of names from the Register and the restoration tothe Register of names which have been removed;the removal of names from the Register and the restoration tothe Register of names which have been removed; (j) the regulation and maintenance of the status and standard ofprofessional qualifications of members of the Institute ;professional qualifications of members of the Institute ; (k) the carrying out by granting financial assistance to persons otherthan members of the Council or in any other manner, of researchin accountancy;than members of the Council or in any other manner, of researchin accountancy; (l) the maintenance of a library and publication of books andperiodicals relating to accountancy ;periodicals relating to accountancy ; (m) to enable functioning of the Director (Discipline), the Board ofDiscipline, the Disciplinary Committee and the AppellateAuthority constituted under the provisions of this Act;Discipline, the Disciplinary Committee and the AppellateAuthority constituted under the provisions of this Act; (n) to enable functioning of the Quality Review Board; (o) consideration of the recommendations of the Quality ReviewBoard made under Clause (a) of Section 28B and the details ofaction taken thereon in its annual report ;andBoard made under Clause (a) of Section 28B and the details ofaction taken thereon in its annual report ;and (p) to ensure the functioning of the Institute in accordance with theprovisions of this Act and in performance of other statutoryduties as may be entrusted to the Institute from time to time.”provisions of this Act and in performance of other statutoryduties as may be entrusted to the Institute from time to time.” 35.The petitioner conducts academic courses which leads successful studentscompleting the courses to be eligible for being inducted as members of the petitioner. The petitioner has specified the code of conduct and ethics which arerequired to be followed by its members in practice of the profession ofaccountancy. In addition, the petitioner as an expert body also prescribes theaccounting principles, practices and standards which are required to be followedby various entities in reporting their affairs. 36.The functions of the Council as are listed in Section 15(2) of the ICAI Actare not exhaustive as indicated by the opening words of Section 15(2) of the ICAIAct and the Council, thus, has the power to take all necessary actions and conductall activities that are necessary for developing and regulating the profession ofpublic accountants in India. 37.The petitioner is the only body that can confer the qualification of aChartered Accountant to any person successfully undergoing courses which aredesigned and conducted by the institute. No other person is entitled to confer anydegree, diploma or bestow any designation which would indicate attainment ofany qualification or competence as similar to that of a member of the petitioner.Section 24A(1)(ii) of the ICAI Act is relevant and is quoted below:- “24A. Penalty for using name of the Council, awarding degreesof chartered accountancy, etc.- (1) Save as otherwise provided inthis Act, no person shall- (i)xxxxxxxxxxxxxxxxxxxx (ii)award any degree, diploma or certificate or bestow anydesignation which indicates or purports to indicate theposition or attainment of any qualification or competencesimilar to that of a member of the Institute: ordesignation which indicates or purports to indicate theposition or attainment of any qualification or competencesimilar to that of a member of the Institute: or (iii)xxxxxxxxxxxxxxxxxxxx” 38.Section 30 of the ICAI Act empowers the council to make regulations forcarrying out the objects of the ICAI Act, inter alia with respect to the matters asspecified in Section 30(2). Section 30 of the Act is relevant and is quoted below: (i)xxxxxxxxxxxxxxxxxxxx (ii)award any degree, diploma or certificate or bestow anydesignation which indicates or purports to indicate theposition or attainment of any qualification or competencesimilar to that of a member of the Institute: ordesignation which indicates or purports to indicate theposition or attainment of any qualification or competencesimilar to that of a member of the Institute: or (iii)xxxxxxxxxxxxxxxxxxxx” 38.Section 30 of the ICAI Act empowers the council to make regulations forcarrying out the objects of the ICAI Act, inter alia with respect to the matters asspecified in Section 30(2). Section 30 of the Act is relevant and is quoted below: “30. - Power to make regulations. – (1) The Council may, bynotification in the “Gazette of India”, make regulations for thepurpose of carrying out the objects of this Act. (2) In particular, and without prejudice to the generality of theforegoing power, such regulations may provide for all or any of thefollowing matters :− (a)the standard and conduct of examinations under this Act; (b)the qualifications for the entry of the name of any person inthe Register as a member of the Institute;the Register as a member of the Institute; (c)the conditions under which any examination or training maybe treated as equivalent to the examination and trainingprescribed for members of the Institute;be treated as equivalent to the examination and trainingprescribed for members of the Institute; (d)the conditions under which any foreign qualification may berecognised;recognised; (e)the manner in which and the conditions subject to whichapplications for entry in the Register may be made;applications for entry in the Register may be made; (f)the fees payable for membership of the Institute and theannual fees payable by associates and fellows of the Institutein respect of their certificates;annual fees payable by associates and fellows of the Institutein respect of their certificates; (g)the manner in which elections to the Regional Councils maybe held;be held; (h)the particulars to be entered in the Register; (i)the functions of Regional Councils; (j)the training of articled and audit assistants, the fixation of limitswithin which premia may be charged from articled assistantswithin which premia may be charged from articled assistants and the cancellation of articles and termination of auditservice for misconduct or for any other sufficient cause; (k)the regulation and maintenance of the status and standard ofprofessional qualifications of members of the Institute;professional qualifications of members of the Institute; (l)the carrying out of research in accountancy; (m) the maintenance of a library and publication of books andperiodicals on accountancy;periodicals on accountancy; (n)the management of the property of the Council and themaintenance and audit of its accounts;maintenance and audit of its accounts; (o)the summoning and holding of meetings of the Council, thetimes and places of such meetings, the conduct of businessthere at and the number of members necessary to form aquorum;times and places of such meetings, the conduct of businessthere at and the number of members necessary to form aquorum; (p)the powers, duties and functions of the President and theVice-President of the Council;Vice-President of the Council; (q)the functions of the Standing and other Committees and theconditionssubjecttowhichsuchfunctionsshallbedischarged;conditionssubjecttowhichsuchfunctionsshallbedischarged; (r)the terms of office, and the powers,duties and functions of theSecretary and other officers and servants of the Council; andSecretary and other officers and servants of the Council; and (s)xxxxxxxxxxxxxxxxxxxx (t)any other matter which is required to be or may be prescribedunder this Act.under this Act. (p)the powers, duties and functions of the President and theVice-President of the Council;Vice-President of the Council; (q)the functions of the Standing and other Committees and theconditionssubjecttowhichsuchfunctionsshallbedischarged;conditionssubjecttowhichsuchfunctionsshallbedischarged; (r)the terms of office, and the powers,duties and functions of theSecretary and other officers and servants of the Council; andSecretary and other officers and servants of the Council; and (s)xxxxxxxxxxxxxxxxxxxx (t)any other matter which is required to be or may be prescribedunder this Act.under this Act. 39.All regulations made by the council under the ICAI Act requirepublication and prior approval of the Central Government. In exercise of thepowers, the council has published the Chartered Accountants Regulations, 1988which provide for regulations for training of the students, their examination,award of the certificates, and enrolment of the members of the petitioner institute. 40.The present scheme for a student to be enrolled as a chartered accountantis as under:- (i)A student has to enroll with the institute for CommonProficiencyTest(CPT)afterpassingclass10[th]examinationconducted by an examining body constituted by law in India or anexamination recognised by the Central Government as equivalentthereto. (ii)On enrolment a student is provided with the study materialfor the Common Proficiency Test. (iii)A student may take the CPT Examination after he hasappeared in Sr. Secondary Examination (10+2) Examination andafter completing the period of 60 days from the date of registrationfor CPT with the board of studies. (iv)After clearing the CPT, a student joins the IntegratedProficiency Competence Court (IPCC) /Accounting TechnicianCourt (ETC) and registers for 100 hours of Information TechnologyTraining (ITT). (v)A student has to undergo 100 hours of ITT and appear inIPCC examination which is divided into two groups. The student canappear for IPCC after completion of a specified period of studycourse. After clearing group I of IPCC a student is eligible to enrollas an article clerk for practical training, the duration of which isthree years. (vi)After the student has cleared both the groups of IPCC, he hasto enroll for the final course with the board of studies and he isprovided study material for the final examination. Student also has toundergo the course of General Management Skills while studying forhis final course and can appear for the final examination whichserving the last six months of his article training or thereafter. (vii)On passing the final examination and completing the articletraining or thereafter, a student is eligible to be enrolled as a memberof the petitioner institute. 41.The petitioner institute has not only approved and designed the course andthe training required to a student to obtain the proficiency in accountancy but alsoimparts education in the subjects comprising the curriculum for the examinationsconducted by the petitioner institute. In addition, the petitioner institute alsoconducts post qualification courses in Corporate Management, Tax Managementand Information System Audit and awards certificates/degrees to the students onsuccessfully completing the said courses. There are several other workshops andpost qualification courses that are conducted by the petitioner institute for thebenefit of its members for maintaining and improving the professional standardsof chartered accountants. 42.Indisputably, substantial activity of the petitioner institute revolves aroundproviding education to students for the purposes of feeding the profession ofChartered Accountancy in India. It is only those students who successfullyundergo the courses conducted by the petitioner who are eligible to practice theprofession of a Chartered Accountant in India. The special programmes alsoinclude providing coaching classes to students to enable them to attain therequisite level of proficiency in various subjects forming the course as approved 42.Indisputably, substantial activity of the petitioner institute revolves aroundproviding education to students for the purposes of feeding the profession ofChartered Accountancy in India. It is only those students who successfullyundergo the courses conducted by the petitioner who are eligible to practice theprofession of a Chartered Accountant in India. The special programmes alsoinclude providing coaching classes to students to enable them to attain therequisite level of proficiency in various subjects forming the course as approved by the petitioner. This Court in the case ofInstitute of Chartered Accountants ofIndia v. Director General of Income Tax (Exemptions)(supra) while disposingof writ petition no. 1927/2010 and remanding the matter to the respondentDGIT(E) also held that the petitioner was providing education and the conduct ofthe courses by the petitioner could not be equated or categorized as coachingclasses conducted by private institutions for students to appear in entranceexaminationorforpre-admissioninexaminationsbeingconductedbyuniversities and other Institutions. This Court further held that a private coachinginstitute does not have any statutory or regulatory duty to perform and in thisaspect, the case of the petitioner was different and the activities undertaken by thepetitioner satisfied the term ‘education’. The relevant extract of the said judgmentis as under:- “36. It may be noted that the petitioner-Institute provideseducationandtrainingintheirpost-qualificationcourses,corporate management, tax management and information systemaudit. It awards certificates to members of the Institute whosuccessfully complete the said courses. Post-qualification diplomacourses are also conducted in several fields. The examinationconducted by the petitioner institute consists ofCommonProficiencyTest,ProfessionalEducationExamination,Professional Competence Examination, Accounting TechnicianCourse, Integrated Professional Competence Course, final andpost-qualification courses. The conduct of these courses cannot beequated and categorized as mere coaching classes which areconducted by private institutes to prepare students to appear forentrance examination or for pre-admission or examinations beingconducted by the universities, school-boards or other professionalexaminations. The courses of the institute, per se, it does appearscannot be equated to a private coaching institute. There is a cleardistinctionbetweencoachingclassesconductedby privatecoaching institutions and the courses and examinations which areheld by the petitioner-Institute. The decision, in the case of BiharInstitute of Mining and Mine Surveying [1994] 208 ITR 608(Patna) is not applicable. A private coaching institute has nostatutory or regulatory duty to perform. It cannot award degrees or enroll members as Chartered Accountants. These activitiesundertaken by the petitioner-institute satisfies the requirement ofthe term “education” as defined by the Supreme Court in SoleTrustee, Loka Shikshana Trust [1975] 101 ITR 234 (SC).” 43.Although, this Court has held that the activities of the petitioner fell wi