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Income Tax Appellate Tribunal, “B” Bench, Mumbai
Per B.R.Baskaran (AM) :-
The revenue has filed this appeal challenging the order dated 24.9.2018 passed by Ld CIT(A)-3, Mumbai and it relates to the assessment year 2014-15. The revenue is aggrieved by the decision of Ld CIT(A) in holding that the activities carried on by the assessee is charitable in nature and hence eligible for exemption u/s 11 of the Act.
The facts relating to the issue are stated in brief. The main object of the assessee is to acquire all infrastructures required for conducting various courses which are approved by Government of India/D.G Shipping/any institution approved by Government of India such as Pre-sea/post sea course relating to marine fraternity and to spread education in the field of Marine fraternity. The assessee is registered as a Charitable Trust u/s 12A of the Act. It filed its return of income for the year under consideration declaring NIL income after claiming exemption u/s 11 of the Act. Since the assessee has generated profits year after year, the AO took the view that the assessee is not
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existing solely for philanthropic purposes. The AO further held that the assessee is engaged in the activities of trade, business and commerce and rendering services in relation to trade, commerce or business which is hit by the revised proviso to sec. 2(15) of the Act. Accordingly, he held that the assessee is not entitled to claim exemption u/s 11 of the Act and accordingly rejected the claim.
The Ld CIT(A) followed the decision rendered by Hon’ble Bombay High Court in the case of Samundra Institute of Maritime Studies Trust (2014)(369 ITR 645), wherein it was held that the assessee before the Hon’ble High Court is imparting education in pre-sea and post-sea training to seamen. Accordingly, the Learned CIT(A) held that the activity of the assessee is charitable in nature. The revenue is aggrieved by the decision so rendered by Learned CIT(A).
At the time of hearing, the Learned D.R. submitted that the Learned CIT(A) had decided certain issues against the assessee in this year and hence the assessee has also filed appeal before the Tribunal. He submitted that the appeal of the assessee numbered as ITA No.174/Mum/2019 has since been disposed of by the Tribunal, vide its order dated 06-09-2019. He submitted that the Tribunal, inter alia, has confirmed the view taken by the Learned CIT(A) on the charitable nature of the assessee herein and further held that the activities of the assessee satisfy the requirement of the term “education” given in sec. 2(15) of the Act. He also fairly submitted that the proviso to sec. 2(15) shall not apply to the assessee herein, since it is carrying on educational activity.
We heard Ld A.R and perused the record. We notice that the co-ordinate bench, while disposing of the appeal filed by the assessee in ITA No.174/Mum/2019 (supra) has also dealt with the issue relating to the character of the assessee as under:-
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“6.2. We have heard the rival submissions and find that the Ld. CIT (A) has allowed this ground of appeal in para no 4.4.3 of the impugned Appellate Order passed by him. We also find that the Assessing Officer observed that the activities of the Assessee is business income u/s 2(15). On the other hand, the Ld. CIT (A) has allowed this ground by relying upon the decision in the case of Samudra Institute of Maritime Studies Trust [369 ITR 645(Bom)(2014)] which is exactly identical to the facts of the instant case before us. The Ld. CIT (A) has discussed the said judgment at length at para 4.4.1. of the impugned Appellate Order. We also find that the Ld. CIT (A) has also taken note of the case of Lokshikshan Trust [101 ITR 234(SC)] in which it was held Page that "the sense in which the word 'education' has been used in section 2(15) is the systematic instruction, schooling or training giving to the young in preparation for the walks of life. It also converts the old course of scholastic instruction which a person has received." Moreover, the Assessee also relied upon the judgment in the case of Andhra Chamber of Commerce [130 ITR 184(SC)] in which the Appeal of the Revenue was dismissed by holding that the objects of the Chamber of Commerce was to promote and protect trade commerce and industries and therefore, falling under the definition of "Charitable" under other objects of public benefit. Similarly, the CIT (A) also relied upon judgment in the case of Queens Education Society [372 ITR 699(SC)] in which it was held that the correct tests which have been culled out in the Apex Court decisions as stated above, namely, Surat Art Silk Cloth Aditanar and American Hotel and Lodging, would all apply to determine whether an educational institution exists solely for educational purposes and not for purposes of profit." Similarly, we also find that the Ld. CIT(A) examined the objects of the Assessee as filed at page no. 204 of the Paper book and at page no 13 to 14 of the impugned Appellate Order and also examined courses conducted with the approval of DG Shipping. Apart from this, the ld. CIT(A) also considered the decision of Saint Lawrence Education Society [53 DTR 130(Del)] and Surat Art Silk Cloth Manufacturers Association [121 ITR 1 (SC)] which supports the case of the Assessee before us. We also find that the Assessee obtained various registrations for carrying out educational activities from the Regional Director, Western Region, MCA as filed at page No 140 of paper book, certificate u/s 12AA issued by the DIT(E), Mumbai filed at page No 141 of Paper book, renewal certificate issued by DIT(E), Mumbai filed page No 142 of Paper book and certificate issued by DG, Shipping filed at page 143 to 145 of Paper book. The Assessee also relied upon C.B.D.T. circular no 11/2008 allowing exemption u/s 11 in case of Assessee claiming to be charitable and mutual organization which included educational institute u/s 2(15)(ii) filed at page no. 146 of Paper book. The ld. CIT (A) also observed that five courses conducted by the Assessee as well as list of courses on the website of DG Shipping which included courses offered by the Assessee. The ld. CIT(A) also observed from the copy of email returned by DG Shipping for course Page certification, certificate of continuous discharge. The Assessee also relied upon a copy of Seafarer's Identity Documents Convention, 1958 filed at page no. 212 to 215 of the Paper book and decision of the DIT(E) national safety council at page no. 216 to 219 of Paper book). The ld AR also drew our attention to decision in the case of Shree Kamdar Education Trust foiled at page no 220 to 229 of the Paper book, Institute of Banking Personnel Selection [264 ITR 110(Bom)] and ViswesvarayaTechnologial
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University [384 ITR 37 (SC)] in support of this ground. After considering the facts of the case in the light of various decisions , we are of the opinion that the activities of the Assessee are covered by last limb of Section 2(15) and are akin to the activities to Samudra Institute of Maritime Studies Trust [369 ITR 645(Bom)(2014)]. Not only that the notice for Cancellation u/s 12AA was dropped by the DIT(E) himself . Apart from this, we also find that similar exemption was granted by other Assessing Officer in A.Y. 2015-16 as filed at Pg. No 75 to 78 of the Paper book, 2016-17 filed at Pg. No 79 to 81 of the Paper book and 2010-11as filed at Pg. No 82 to 87 of the Paper book. We are therefore, of the opinion that the Ld. CIT(A) has correctly appreciated the facts and allowed this ground of appeal. We therefore, accordingly, uphold that activities undertaken by the Assessee satisfy the requirements of the term "education". Moreover, the ground no 4 before us is dealt with separately in the subsequent paragraphs. Accordingly, ground no 1 is hereby allowed in the favour of the Assessee and the AO is directed accordingly.”
We notice that the co-ordinate bench has upheld the view taken by Ld CIT(A) that the activities carried on by the assessee fall under the category of “education” mentioned in sec. 2(15) of the Act, in which case, the proviso to sec. 2(15) shall not have application. In view of the above, the grounds urged by the revenue in the present appeal are liable to be rejected. We order accordingly.
In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 13.07.2022.
Sd/- Sd/- (KAVITHA RAJAGOPAL) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated : 13/07/2022 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai