THE INSTITUTE OF MARINE ENGINEERS (INDIA),MUMBAI vs. ITO (E) I(1), MUMBAI

Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2011-12 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-1 [CIT(A)], Mumbai, Appeal No.CIT(A)-I/IT/E-I(59)/2014-15 dated 10/12/2015. The assessment for impugned AY was framed by Ld. Income Tax Officer, (Exemption)-1(1), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on The Institute Of Marine Engineers(India) Assessment Year 2011-12 25/03/2014. Before us, the assessee has raised the following effective grounds of appeal:-

2. Both the CIT(A) and the AO erred in refusing to consider that the income of the appellant trust is not taxable in accordance with sections 11 to 13 of the Act.

3. The CIT(A) erred in law and facts in confirming the order of AO denying the exemption of income of the appellant u/s 11 on the ground that the appellant was carrying on activities which are in the nature of trade, commerce or business and providing services which are in relation to any trade, commerce or business.

4. The CIT(A) erred in confirming the denial of exemption u/s.11 of the Act by the AO by holding that the appellant’s claim of imparting education could not be accepted in as much as there was no activity of schooling leading to the award of any degree. The appellant submits that CIT(A) while denying the exemption has misconstrued the facts overlooking that the appellant does conduct wide range of engineering and workshop courses and certificate given by the appellant is required for jobs in marine engineering field. The appellant submits that these facts have not been discussed by the CIT(A) while holding that the appellant is not imparting education.

5. The CIT(A) upheld the order of the AO in rejecting the claim of the appellant without considering the facts and submissions made by the appellant during the appellant proceedings.

6. Without prejudice, the appellant submits that all the activities carried out by the appellant are activities carried out by the appellant to promote the scientific development of Marine Engineering in all its branches and to further such knowledge. Accordingly, income from sponsorship, advertisements, subscription, etc. Therefrom is not income from business, trade, commerce and is therefore not subject to the proviso to section 2(15) of the Ac. Therefore, the AO erred in completely disallowing the claim of exemption u/s 11 by invoking the provisions of sub-section (8) of section 13.

7. The AO erred in not considering interest income of Rs.41,99,432/- as exempt u/s 11 of the Act. The appellant submits without prejudice that only the income from business conducted as advancement of object of General Public Utility is not to be considered as charitable objects and not the entire income.

2.1 Facts leading to the same are that the assessee being Registered Trust was assessed u/s 143(3) at Rs.1,76,09,240/- after certain additions / disallowances as against ‘Nil’ returned income filed by the assessee on 13/09/2011. The trust was registered as Charitable Organization with The Institute Of Marine Engineers(India) Assessment Year 2011-12 DIT(E), Mumbai u/s 12A vide Registration no. INS/14501 and with Charity Commissioner, Mumbai vide Registration No. F-7589 (Mumbai). 2.2 During assessment proceedings, it was noted that the Trust was engaged in providing post-sea / pre-sea training at Mumbai and accordingly, claimed exemption u/s 11 against its income. The Ld. AO noted that the assessee was running many courses few of which were recognized by Directorate General of Shipping whereas few of which were not recognized / not approved. The assessee contended that it was imparting education and welfare in the field of marine engineering and hence entitled for exemption u/s 11. However, not convinced and noting amendments in the definition of Charitable purpose u/s 2(15), Ld. AO concluded that the activities of the Trust constitute object of general public utility and were in the nature of trade, commerce or business and not of imparting the education. Finally, placing reliance on the stand of revenue for AY 2009-10, the said exemption was denied to the assessee and income was determined at Rs.176.09 Lacs.

The Institute Of Marine Engineers(India) Assessment Year 2011-12 4. The Ld. Counsel for assessee [AR], at the outset, drew our attention to the fact that the matter for AY 2009-10 was contested by the assessee before this Tribunal vide order dated 29/04/2016 where the matter was remitted back to the file of Ld. AO with certain directions. Pursuant to said directions, the matter was examined by Ld. AO vide order dated 29/09/2017 passed u/s 143(3) read with Section 254 where the stand of the assessee has again not been accepted by the revenue and the matter, at present, is pending before Ld. first appellate authority for re-adjudication. Therefore, the present matter deriving its ratio from AY 2009-10, may also be remitted back to the file of Ld. CIT(A). The Ld. Departmental Representative [DR] fairly conceded the factual matrix.