Calcutta High Court in a judgment has ruled that every acquisition of further knowledge constitutes education and has directed CIT to pass a fresh speaking order after upon giving opportunity of being heard. The Court delivered the judgment on writ petition of the trust “Swar Sangam” whose exemption application under section 10(23C) was denied by the CIT (prescribed authority) on the ground that Music, dance, art and craft can not be considered as education.

Case Details:
W.P. 246/2014
Swar Sangam & Ors. Vs. Chief Commissioner of Income Tax, Kolkata-III & Ors.
Judgment date: 12-09-2014
Coram: I. P. Mukerji, J

Case Law Considered:
Sole Trustee, Loka Shikshana Trust Vs. Commissioner of Income-Tax, Mysore 101 ITR 234
Music Society Vs. Director General of Income-Tax (2013) 357 ITR 265 (Delhi)
Sole Trustee, Loka Shikshana Trust Vs. Commissioner of Income-Tax, Mysore 101 ITR 234 (SC)
CIT Vs. Doon Foundation reported in (1985) 154 ITR 208 (Cal)

Facts of the Case:
“Swar Sangam”, the appellant was a trust which was having the following objects in its trust deed:
(i) Advancement of education in music both vocal and instrumental, dance, painting and science, commerce as well as any other fine arts and languages and for such purpose to hold classes.
(ii) To run regular courses in various subjects, conduct examinations at regular intervals and grant degrees and/or Diplomas.
(iii) To co-operate with other institutions in India having objects for advancement of education, if desired, to affiliate, amalgamate or merge them with the institution or vice versa.
(iv) To establish, maintain schools, colleges, libraries, reading rooms, lecture halls, museums and other establishments and institutions for the development of education and diffusion of knowledge.

According to the trustees, Swar Sangam was an educational institution not for profit purpose and having a gross annual receipt of more than Rs. 1crore. It was engaged in teaching fine arts, Indian music and dance to its students. The institution claimed that the entire course is graded and divided into years and classes. Each class had regular teaching hours. A course was for a specific length of time. Successful candidates were granted certificates and diplomas.

As per Section 10(23C)(iiiad) and (vi) of the Income Tax Act, 1961, an exemption is available to university or other educational institution existing solely for education purposes and not for purposes of profit

However, the application of the trust for exemption was disapproved by the Chief Commissioner of Income Tax (CIT) (iii) Kolkata being the prescribed authority under Section 10(23d)(vi). The reasons of rejection recorded for rejection was that Music, dance, art and craft have a limited scope in the education of a child. Instruction which the trust was imparting was not “normal education”. The instruction imparted by the trust was not in consonance with the definition of education. Surprisingly, the CIT concluded that, by being lured into this institution, students were being deprived of regular instruction which was against the “constitutional mandate.” The poor who were entitled to free education were being diverted to this institution.

Excerpts from the Judgment:

It is a cardinal rule of statutory interpretation that for the purpose of understanding the meaning of a particular word or phrase in a statute, the ordinary or grammatical meaning of that word has to be first applied, unless a special context in which the word is used is indicated in the statute expressly or impliedly. In the above provisions of the Act under consideration nothing has been indicated by the legislature to suggest that any special or extended or restricted meaning of the word education is implied. The word “education” is defined in the Concise Oxford English Dictionary, 11th Edition as follows:-
“education-n. 1. the process of educating or being educated. The theory and practice of teaching. Information about or training in a particular subject. 2. (an education) informal an enlightening experience”. The word “educate” is defined as follows:- “educate-v. give intellectual, moral and social instruction to train or give information on a particular subject”.

We find from the above definition that “education includes information about or training in a particular subject”. The word “educate” includes “intellectual instruction”. 10 (23C) (iiiad) and 10(23C) (vi) of Section 10 clearly specify that they cover 1. educational institution 2. An educational institution which exists for educational purpose only and not for the purpose of profit.

“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, traveling is education, because as a result of traveling 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 normal schooling.”

……. the word “education” in Section 10(23) (iii)(ad) and 10(23C)vi of the Act a very wide construction. In that case also the society was engaged in teaching, promoting and encouraging all forms of music and dancing, western, Indian and others. The Division Bench held as follows:-

“It is seen from the above, that the petitioner is being run like any school nor educational institution in a systemic manner with regular classes, vacations, attendance requirements, enforcement of discipline and so on. These provisions in the rules and regulations satisfy the condition laid down in the judgment of the Hon’ble Supreme Court , Sole Trustee, Loka Sikshana Trust, cited (Supra) that there should be a process of training and developing the knowledge, skill, mind and character of the students by “normal schooling”. It cannot be doubted that, having regard to the manner in which the petitioner runs the music school, that there is imparting of systematic instruction, schooling or training given to the students so that they attain proficiency in the field of their choice—vocal or instrumental in western classical music”.

Regrettably, the Chief Commissioner of Income Tax neither considered the facts nor the law properly. He was required to consider whether some form of information about or training regarding a subject was being imparted by the petitioner institution. Secondly, whether such instruction resulted in intellectual, moral or social benefit in keeping with the definition of the word “education” in the Concise Oxford Dictionary. He was also required to take into account the above judicial pronouncement of the Hon’ble Delhi High Court with the Hon’ble Supreme Court decision as the background. Now, to arrive at a finding regarding this the Chief Commissioner Income Tax was required to consider, on the basis of the above decisions whether the educational process was being carried on in a systematic way by its arrangement into courses, classes, a specific number and length of classes in a day, following set syllabi etc. The system of promotion, gradation, granting of diploma certificates etc. had also to be gone into.

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