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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member: The above cross appeals one each by the assessee and the Revenue have been preferred against the order dated 29.10.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2013-14.
2 ITA No.7430/M/2018 ITA No.57/M/2019 M/s. Indian Institute of Materials Management
ITA No.7430/M/2018 (Assessee’s appeal) 2. The assessee has raised three grounds of appeal. The issue in ground No.1 & 2 is against the upholding the order of AO denying the exemption of Rs.5,04,24,702/- by Ld. CIT(A) as made by the AO under section 10(23A) of the Act on the ground of Notification dated 01.08.1978 allowing exemption under section 10(23A) was issued in the name of Indian Association of Material Management whereas the name of the assessee was subsequently changed to Indian Institute of Material Management.
At the outset, the Ld. Counsel of the assessee stated that the issue is squarely covered in favour of the assessee by the decision of the co-ordinate bench of the Tribunal in assessee’s own case in ITA No.3414/M/2016 A.Y. 2011-12 & ors.. Ld. A.R. therefore requested that since the identical issue has been adjudicated by the co-ordinate bench of the Tribunal in favour of the assessee, the appeal of the assessee may kindly be allowed following the said decision.
The Ld. D.R., on the other hand, fairly agreed to the contentions of the Ld. A.R. that the issue has been decided by the co-ordinate bench of the Tribunal in assessee’s own case in earlier year, he however relied on the order of authorities below.
After hearing both the parties and perusing the material on record, we find that identical issue has been decided in assessee’s own case in assessment year 2011-12 wherein the exemption under section 10(23A) has been held to be allowable
3 ITA No.7430/M/2018 ITA No.57/M/2019 M/s. Indian Institute of Materials Management to the assessee. For the sake of convenience and ready reference we would like to reproduce the operative part of the decision in ITA No.3414/M/2016 A.Y. 2011-12 as under: “13. We have noticed from the above correspondence amongst the various departments of Finance Ministry including CBDT and Chief Commissioner of Income Tax, New Delhi. It seems that none of the authorities is interested in taking decision on the above subject of amendment in name or change in name of the assessee association. Assessee has only made name change from "Indian Association of Material Management" to "Indian Institute of Material Management" vide letter dated 20.01.2015. Even otherwise, the assessee is consistently claiming exemption under section 10(23A) of the Act and Revenue is allowing the exemptions. Even though, the change has taken place vide CR No. 6852/82 dated 24.04.1983. The relevant certificate is enclosed in assessee's paper book at page 1. From these facts it is clear that there is neither any change in the objects nor in the activities of the Institute but only name changed for which the AO has disallowed the exemption. We noted the facts that the assessee has claimed exemption under section 10(23A) of the Act with respect to course, Exam and other fees amounting to ₹ 4,83,18,591/- after claiming expenditure of ₹ 1,46,08,916/-. The AO has rejected the claim of the assessee under section 10(23A) of the Act that the notification was issued to "Indian Association of Materials Management" and subsequently the name was changed to "Indian Institute of Materials Management" in 1983. Also, the Memorandum of Association had undergone a change in 1998. Quoting the provisions of section 10(23A) of the Act and referring to the objectives contained in the memorandum of Association it was stated that income and property of the institute which is derived shall be applied solely towards the promotion of the objectives of the Institute and no portion thereof shall be paid or transferred directly or indirectly by way of profit to the persons who at any time are or have been members of the Institute or to any person claiming through any of them. It is provided that nothing herein contain shall prevent the payment in good faith of remuneration to any officers or servants of the Institute or to any other member thereof or any other person in return for any service actually rendered to the institute or the payment of interest on money borrowed from any members of the Institute. Thus, based on the above, activities in the notified profession of 'Materials Management' were carried out during the year. As there is no change in the activities, we are of the view that the assessee is entitled for the claim of exemption. Merely, change in name can be carried out by the Chief Commissioner of Income Tax (Exemption) or any other Revenue authority designated for that purpose because this is not a material thing, on the basis of which the exemption under section 10(23A) of the Act is to be disallowed. Accordingly, we direct the AO to allow this exemption. Necessary changes in the certificate i.e. change in name can be carried out by the concern authority.” 6. Since the issue has been settled by the co-ordinate bench of the Tribunal in earlier year, we, therefore, respectfully following the said decision, set aside the findings of Ld. CIT(A) on
4 ITA No.7430/M/2018 ITA No.57/M/2019 M/s. Indian Institute of Materials Management this issue and direct the AO to allow exemption u/s 10(23A) of the Act. The ground No.1 & 2 are allowed.
The issue raised in ground No.3 is without prejudice and therefore not being adjudicated.
ITA No.57/M.2019 (Revenue’s appeal) 8. The ground raised by the Revenue are as under: “1. The Ld.CIT(A), Mumbai erred in holding that the assessee's activity of running private commercial courses is not related to trade & commerce industry and that this activity constitute 'education' which is clearly against the decision of Hon'ble Supreme Court in the case of Lok Shikshan Trust vs. C1T (1975] 101ITR 234. 2. Whether, on the facts and in the circumstances of the case and in law the Id CIT(A) erred in relying upon the order of his predecessor in assessee's own case for A.Y.2011-12 & 2012-13 only without appreciating the facts and circumstances of the case and also the fact that Department has not accepted the decision of Ld. CIT(A) on merit and filed appeal before Hon'ble ITAT which is pending. 3. The appellant prays that the order of the Commissioner of Income Tax [Appeals]-I, Mumbai be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.” 9. The only issue challenged by the Revenue in the aforesaid grounds is against the order of Ld. CIT(A) holding that assessee’s activity of running private commercial courses is not related to trade and commerce industry and constitutes educational activity. According to the revenue, the Ld. CIT(A) has primarily relied on the order of his predecessor in A.Y. 2011-12 & 2012-13 without appreciating the fact that the department has not accepted the order of Ld. CIT(A) and filed the appeal before ITAT which is pending for adjudication.
At the outset, the Ld. Counsel of the assessee pointed out that this issue is also squarely covered in favour of the assessee
5 ITA No.7430/M/2018 ITA No.57/M/2019 M/s. Indian Institute of Materials Management by the decision of co-ordinate bench of the Tribunal in assessee’s own case in ITA No.5123/M/2011 A.Y. 2009-10 wherein it has been held that charitable purpose includes education also. In other words the educational activities were held to be charitable. The operative part of the decision is reproduced below: “5. On appraisal of the above mentioned order it came into the notice that the assessee is doing following eight courses 1. GDPP Graduate Diploma in Public Procurement 2. GDMM Graduate Diploma in Materials Management 3. PGDMM Post Graduate Diploma in Materials Management 4. PGDLM Post Graduate Diploma in Logistics Management 5. DSM Diploma in Stores Management 6. DIT Diploma in International Trade 7. IPSCM International Diploma in Purchasing & Supply Chain Management 8. CPM Certified Purchasing Manager 6. The assessee was deriving income from the said course which was applied for the promotion of the objects of the institution. The courses run by the assessee are recognized by the Government of India vide Annexure II-D No.F.1-6/7/T7T dated 29th July 1999 issued by the Ministry of HRD. IT is not in dispute that the department has accepted the claim of the assessee for the A.Y. 2008-09. The amendment in section 2(15) of the Act was restricted to the advancement of object of general public utility. Thereafter, it is the clarification in view of the circular no.11/2008 dated 19.12.2008 wherein it is specifically mentioned that the newly inserted proviso to section 2(15) of the Act would not apply in respect of the first three limbs of section 2(15) of the Act i.e. relief of the poor, education or medical relief. Accordingly, the charitable trust was found to be carrying out charitable activities other than advancement of general public utility. The proviso will not apply as in the case of appellant because the claim of the assessee was to carry out charitable activity in the field of education. The assessee is notified by the Central Government vide notification F.No.196/1/77-IT(AI) u/s. 10(23A) of the Act in reference to course of material management recognized by the Central Govt. vide S.O. No.3081 dated 04.08.1978. It is not in doubt that the assessee is during the relevant year imparting education in a systematic and organized manner, running courses which have been duly recognised by the HRD Ministry. The assessee’s income from educational activities would therefore fall to be regarded as from charitable purposes/objects. The decision in the case of Gujarat State Co-operative Union Vs. CIT (1992) 195 ITR (Guj) would thus apply in the facts and circumstances of the case. Further, the decision in Loka Skikshana Trust Vs Commissioner of Income Tax (1975) 101 ITR 234 (SC) is distinguishable on facts. We, however, observe the assessee to be undertaking other activities as well, income from which has been recorded and worked out separately (refer para 5/ pages 2-4 of the
6 ITA No.7430/M/2018 ITA No.57/M/2019 M/s. Indian Institute of Materials Management assessment order). The order of the CIT(A) is silent on these activities, i.e. whether they qualify as charitable activities or a charitable purpose, or not. However, as the net income from these activities is in the negative (refer para 10 of the assessment order), the accuracy of which has not been doubted by the Assessing Officer, no useful purpose in our view shall be served by remanding the matter on t his aspect of the matter (appeal) to the file of the learned CIT(A); the assessee having claim exemption u/s.11 only on the net income from all the activities, including educational (charitable activity. The order of the CIT(A) is accordingly upheld. 7. In the result, the appeal of the revenue is hereby dismissed.” 11. We, therefore, respectfully, following the decision of the co- ordinate bench of the Tribunal, dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed and the appeal of the assessee is partly allowed.
Order pronounced in the open court on 14.12.2020.
Sd/- Sd/- (Vikas Awasthy) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 14.12.2020. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [ By Order
Dy/Asstt. Registrar, ITAT, Mumbai.