By AJAY R. SINGH Advocate
[ Affirmed ACIT vs. Indian
Institute of Banking and Finance, dated 11/02/2015 ; Mum. ITAT ]
Section 11 : Educational
Institution – purpose of development of banking personnel for/in the banking
industry – by holding courses and also disbursing knowledge by lectures,
discussions, books, correspondence with public bodies and individuals or
otherwise etc – Trust entitle to exemption.[Section 2(15)]
The assessee is a Company
registered u/s. 26 of the Indian Companies Act, 1913 as a non-profit making
Company. The principal objects of the assessee as per the Memorandum of
Association is to inter-alia conduct educational activities in respect
of the banking and finance subjects by holding courses and also disbursing
knowledge by lectures, discussions, books, correspondence with public bodies
and individuals or otherwise etc. It is an undisputed position that, assessee
is registered u/s. 12A of the Act.
During the course of assessment
proceedings, the assessee sought benefit of exemption u/s. 11 of the Act. The
A.O denied the same on the ground that the claim for exemption u/s. 10(22) of
the Act for the A.Y 1996-97 to 1998-99 which had been granted by the Tribunal was
pending in Appeal filed by the Revenue in High Court, as well as, application
u/s. 10(23C)(vi) of the Act was pending before the CIT. It was on the aforesaid
basis that the A.O held that the benefit u/s. 11 cannot be granted to the
petitioners. This without dealing with the petitioner’s primary contention that
they are entitled to exemption as they satisfy the definition of charitable
purpose as they are an educational institution.
On further Appeal, the Tribunal
allowed the assessee’s appeal. The Tribunal after examining the object clause
as given in the Memorandum of Association gave a finding that the assessee has
been created for the purpose of development of banking personnel for/in the
banking industry. The assessee company imparts education to the candidates who
are connected with the banking industry. It has library facility, organises
lectures, seminars and undertake examinations for promoting bank officers. In
the aforesaid context, the Tribunal concluded on facts which were before the
Revenue Authorities that it exists for advancement of learning in the field of
banking. Besides, on facts it found the fee structure of the institute for
these courses was not on the higher side. Further, the assessee company
reliance upon the decision of this Court in Director of Income-tax
(Exemption), Mumbai vs. Samudra Institute of Maritime Studies Trust, reported
in [2014] 49 taxmann.com 510 (Bombay) to inter-alia hold that the
activity which is carried out by the assessee company is educational in nature.
This is for the reason that it imparts education to the members of the banking
industry and prepares them to discharge their duties as bankers more
efficiently.
Further, with regard to the
objection of the A.O that as the benefit of the assessee company is restricted
only to the persons working in the banking industry, it is not available to the
public at large was negatived by placing reliance upon the decision of the Apex
Court in Ahmedabad Rana Caste Association vs. Commissioner of Income-Tax,
reported in 82 ITR 704. In the above case, it has been held that the object
beneficial to a section of the public is an object of general public utility
and to serve a charitable purpose it is not necessary that the object should be
to benefit the whole of mankind or all persons in a country or State. In the
above view, it was, held that the petitioners were an institute for a
charitable purpose as defined in section 2(15) of the Act.
Being aggrieved, Revenue filed
appeal before the High Court. The Revenue contented that the activity carried out by the assessee
is in the nature of running Coaching Classes or Center and therefore the
benefit of section 11 of the Act cannot be extended to the assessee company.
The Court observed that there is no
such objection taken before the authorities by the Revenue. Besides, nothing
has been shown to us why it should be considered as a coaching class. Further,
the Court found that the impugned order of the Tribunal has only applied the
decision of this Court in Samudra Institute of Maritime Studies Trust (supra)
to conclude that the activities which are run by the institute is an
educational activity and not in the nature of running a Coaching Center or a
Class. The grant or refusal to grant exemption u/s. 10(22) and/or (23C) of the Act cannot govern
the application of section 11 of the Act. In the above view, the Appeal was
dismissed.
