INDIAN ACADEMY OF HIGHWAY ENGINEERS,NOIDA vs. CIT(E), LUCKNOW

The appeal has been preferred by the assessee against the order dated 31.03.2021 of Ld. CIT(Exemptions), Lucknow (hereinafter referred to as “Ld. Tax Authority) whereby application of Assessee u/s 10(23C) (vi) of the Income Tax Act 1961(hereinafter referred to as The Act) was rejected.

Indian Academy of Highway Engineers 2 2. The assessee has challenged the impugned order, raising grounds of appeal, that the Ld. CIT(Exemption), Lucknow erred in law and on facts, and failed to appreciate the facts placed on record, that the appellant society was already exempted u/s 10(23C)(vi) of the Act, vide approval granted by prescribed authority vide order dt 13.02.2008, for AY 2007-08 onwards, which always subsisted thereafter, and the appellant society was regularly assessed duly allowing the exemption u/s 10(23C)(vi) of the Act, and it was only due to change in name of the Appellant and resultant change in PAN, that to effectuate the corresponding changes incorporated in the aforesaid order dt 13.02.2008, the Appellant filed an Application u/s 10(23C)(vi) of the Act, to make the necessary changes in the already subsisting approval order dt 13.02.2008, and without appreciating the aforesaid facts, the CIT (Exemption), in an grossly arbitrary and illegal manner, rejected the application of the Appellant, without application of mind, which is bad in law. It is submitted that the Appellant society is a collaborative body of the Central and State Governments, formed under the administrative control of Ministry of Road Transport & Highway, Government of India with a Governing Body consisting of all ex officio senior nominees from the Government, and thus it is an extended arm of the Government, formed and running with an object to give the technical training and necessary professional grounding in the field of Highway engineering including bridges to ensure an efficient, safe, reliable and economic highway system as in integral part of nation's economy, and without considering these facts on record, the CIT (Exemption) has arbitrarily rejected the application by wrongly inferring that the Appellant Society is not doing any charity and is running on commercial lines only because it has surplus, and thus rejected the application which is grossly illegal, beyond jurisdiction and against the Indian Academy of Highway Engineers 3 law and thus. It is further submitted in grounds of appeal that the Ld. CIT (Exemption), Lucknow erred in law and on facts, by rejecting the Application u/s 10(23C)(vi), without appreciating that all the conditions prescribed in sec, 10(23C)(vi) r/w Sec 2(15) of the Act were satisfied by the Appellant. It is thus claimed by the appellant that the impugned order be set aside and the application of the appellant u/s 10(23C) (vi) of the Act be allowed.

3. Heard Sh. Akhilesh Kumar, Adv. & Sh. Vipin Garg, Adv. the counsels for the assessee and Ld. CIT (DR) and perused the records.

4. Ld. Counsel for appellant reasserted the aforesaid submissions of grounds of appeal and has taken the Bench across the paper book submitting that the appellant is an institution established by the Government of India, Ministry of Road Transport and Highway and was previously known by the name National Institute for Training of Highway Engineers (NITHE). It was holding PAN CARD with aforesaid name but the administrative ministry had decided to change its name to Indian Academy of Highway Engineers (IAHE) while broadening its objectives in the field of imparting training and education. Accordingly afresh application was moved u/s 10(23C)(vi) of the Act. It is submitted that the appellant was holding the registration for the purpose of Section 10(23C)(vi) of the Act for previous assessment years. However, the Ld. CIT(E), Lucknow failed to take into account the fact that there was merely a change in the name while the objectives and the functional nature of the appellant institution continued to be same. It was submitted that the Ld. CIT(E), Lucknow has not given any sustainable reasoning to disallow the benefit which was granted for previous assessment years and merely relied the reports called from the Assessing Officers. Indian Academy of Highway Engineers 4 4.1. Ld. Counsel for the appellant has relied the following judgments to primarily contend that activities like teaching Yoga conducting examinations teaching music distribution of tax books providing coaching/ guidance to get admissions to professional institutions have all been regarded yield following in the word (education) is limited schools, colleges and similar institutions and does not explain to any other media for such acquisition of knowledge it was also submitted that distinction has been drawn between making of surplus and institution being carried on “for profit”.

5. Counsel for the Indian School Certificate Examinations vs. Director General of Income Tax, 20 taxmann.com 505 (Delhi HC)

6. Oxford Academy for Carrer Development vs. Chief Commissioner of Income Tax

7. Investor Financial Education Academy vs. ITO (E) -4, Chennai , 121 taxmann.com 281 (Madras. HC)

8. ITO vs. SRM Foundation of India, 21 ITD 598 (Delhi)

9. ITO, Ward 1, New Delhi vs. Science Olympaid Foundation, 48 taxmann.com 382 (ITAT) Indian Academy of Highway Engineers 5 10. Sole Trustee, Lok Shikshana Trust vs. CIT, 101 ITR 234 (SC)

6.3 Then it can be appreciated that there is a letter dated 09.08.2019 issued by the Commissioner of Income Tax (E), Lucknow to the appellant calling for information in regard to the application. A perusal of this letter which is on record at page no. 87 of the paper book, shows that on a notice is on a Performa by which information or the documents are usually sought to verify the claim of any applicant. There is no specific query, in the light of contents of application of Appellant.

6.4 There after, by letter dated 16.09.2019 (at page no. 94 of the paper book) the appellant has given broadly the scope of its activities and had given specific replies to the 18 pointer questionnaire issued by the Tax Authorities in which it was specifically mentioned that IAHE was established as an autonomous body on the Ministry of Road Transport and Highways by initial corpus contribution. The land was allotted to the society in the name of President of India. Then again, on 10.09.2020 detail account/ Indian Academy of Highway Engineers 7 reply was submitted by the appellant to the Tax Authorities submitting specifically that as to how the activities of institution fall into the beneficial provision of Section 10(23C)(vii) of the Act. The copy of this letter dated 10.09.2020 is on record at page no. 89 of the paper book.

8.1 This bench is rather of considered view that this denial of benefit was actually withdrawal of the exemption which was provided to the assessee with its former name and for such withdrawal there should have been further reasons of misuse of the provision, then just re-examining the nature of activities and eligibility conditions.

8.2 The Ld. DR has submitted that the name was changed due to broadening of objectives so Ld. Tax authority could have denied the sanction. This bench of the considered opinion that broadening of objectives did not in any way change the nature of objectives of the institution or its functionality. It continued to be an institution to give technical training and necessary professional grounding in the field of highway engineers including bridges to ensure an efficient, safe, reliable and economic highway system as an integral part of nation’s economy.

8.3 The Ld. Tax Authority has questioned the charitable objectives of the appellant. An important aspect that is over looked by the Ld. Tax Authority is that appellant is an autonomous institution of a Ministry of Road Transport and Highway, Government of India. The initial funding was from this administrative ministry and even the land for building has been purchased in name of President of India. The Bench is of view that there cannot be a more sacrosanct purpose of an institution like the present appellant which is giving formal training to professionals like highway engineers, who otherwise would not have any training or continued learning, from ordinary academic institutions or Universities. Indian Academy of Highway Engineers 9 8.3.1 A self sustaining autonomous institution is rather expected to be generating receipts for its subsistence rather then being dependent on the Government for aid. So, merely collection of fee for training programs cannot make an autonomous institution to be commercial, as observed by the Ld. Tax Authority.