In a significant ruling granting relief to the NIIT Foundation, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the activities performed in ‘virtual classrooms’ also comes under the definition of ‘education’ eligible for an exemption to charitable activities under the Income Tax Act, 1961.

During the relevant assessment year, the Assessing Officer observed that the assessee society is engaged in Educational activity u/s 2 (15) of the act and eligible for benefits u/s 11 & 12 of the Income-tax Act. However, the CIT(Exemptions) held that the activity of the assessee is a business activity and therefore taxable.

Considering the fact that the details of courses in which the assessee participates on behalf of its clients are from in the nature of digital literacy, certificate course in basic IT, English Foundation, Social Media, Personality development, etc for a person qualified 8th class and without any age limit, the CIT(E) found that the activities do not come within the parameters of “education”.

The assessee contended that as the courses conducted by the assessee are affiliated with the competent authorities and therefore, it should be classified as educational activities.

Overruling the observations of the CIT(E) based on judicial precedents, the Tribunal held that it is apparent that assessee is not engaged in any other activity other than education.

“Before parting, we would like to put on record that, at the time of dictation, the whole world is experiencing ‘new normal’ in all spheres of activities. Education is no exception. Naturally, classrooms have no bricks and mortar, no benches, and blackboards. ‘Blackboard Collaborate’ and digital whiteboards have replaced blackboards. Teachers and students do not assemble at one place but they reach each other on the cloud through Meets, Teams, WebEx, and Zoom! Such cloud classes have a wide representation of students across the globe blurring the geographies of traditional classrooms. Students love Polls, Live Q & A sessions, and prerecorded videos. Books and Notebooks have been replaced by smartphones, tabs, etc. Most importantly, attendances are also virtual instead of physical. Chat boxes are medium of group discussion. Strikingly, Timings are 24*7. Still, it has all the essentials of a “classroom”. It definitely covers ‘process training, developing the knowledge, skill, mind, and character of students’ like normal schooling. Thus, in true sense the activities performed by the assessee are no different from ‘classrooms’,” the Tribunal added.

The ruling is relevant during these days as the schools and other educational institutions have started digital learning and virtual classrooms.