M/S SOUTHERN INDIA BANKS vs. THE INCOME-TAX OFFICER

Heard Shri. S. Parthasarathi, learned Advocate for assessee and Shri. K.V. Aravind, learned Advocate for the Revenue.

Brief facts of the case are, assessee, a Staff Training College submitted an application seeking exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 ('Act' for short) for the A.Y. 2014-15. The Chief

Shri. Parthasarathi, for the assessee, submitted that the Commissioner has rejected the application, holding that the applicant should be solely for educational purpose. According to the commissioner, in view of objects No.4 and 7 of the MoA2 and Rules of the Southern India Banks' Staff Training College, assessee's activities cannot be construed as activities for educational purposes because, object No.4 provides for assisting Banking Institutions in the matters such as appraisal programmes, conducting morale and productivity studies etc and object No.7 provides for giving consultancy services.

He further submitted that the assessee has written to the DDIT3 as back as August 16, 2008 stating that objects No.7 and 10 of the MoA were deleted and a copy of the amended Memorandum was furnished and approval was sought to amend the MoA. But the Income Tax Department has not granted the approval sought.

He urged that the assessee mainly runs the Staff Training College. It has not involved itself with any other activity. He relied upon Commissioner of Income Tax Vs. Vidya Vikas Vihar4, Aditanadar Educational Institution ETC. Vs. Additional Commissioner of Income Tax5 and Ecumenical Christian Centre Vs. Commissioner of Income Tax6 in support of his contention.

Shri. Aravind, learned Senior Standing Counsel submitted that the application has been filed in the year 2014. If objects No. 4 and 7 were deleted, they should not

We have carefully considered rival contentions and perused the records.

Objects No.4 and 7 read as follows: "4. to assist banking institutions in matters such as

to provide consultancy services under its auspices or through its faculty to banks or any other institutions or individuals on matters having a bearing on production in Banking services, optimum use of financial resources or any other matter conducive to economic

A copy of the letter dated August 16, 2008, written by the assessee to the DDIT seeking approval to amend the MoA and to delete Objects No. 7 and 10, is

The Commissioner has held that in order to qualify for exemption, applicant institution must be solely for educational purposes but objects No. 7 and 10 are not strictly for educational purposes. The ITAT has reiterated Commissioner's view in para 7 of its order. It has distinguished the Judgment in Vidya Vikas Vihar, on the ground that one of the objects in that case namely to construct houses for weaker Sections was not implemented whereas, in this case, the objects included rendering of Consultancy services to Bank. It has further held that assessee's case before Commissioner was not that such activities were not undertaken by the assessee.

In Vidya Vikas Vihar, Nagpur Bench of Bombay High Court, while upholding Tribunal's order granting exemption, has held that the incidental object of constructing houses for weaker sections, was never implemented.

In Adithanar, the Hon'ble Supreme Court of India has held that an Educational Institution, solely for educational purposes and not for any profit, could be regarded as 'Other Educational Institutions'.

In the case on hand, it is not in dispute that assessee has written to the DDIT to permit deletion of Objects No. 7 and 10. According to the Commissioner, Objects No. 4 and 7 disentitle the assessee from exemption. Shri. Parthasarathi is right in his submission that the Department not having granted permission to delete Objects 7 and 10, cannot record a finding against the assessee. So far as Object No.4 is concerned, we are of the view that assisting Banking Institutions in the matters such

In view of the above, this appeal merits consideration. Hence, the following: