2013 (1) TMI 839 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee Trust is engaged in educational or charitable activities u/s 2(15) of the Income Tax Act, 1961.
2. Whether the assessee Trust qualifies as an educational institution eligible for exemption u/s 10(23C)(iiiab) of the Income Tax Act, 1961.

Summary:

Issue 1: Educational or Charitable Activities u/s 2(15)
The assessee Trust filed an appeal against the order of the CIT(A) confirming the AO's decision that the Trust is neither engaged in educational activities nor charitable activities as defined u/s 2(15) of the Income Tax Act, 1961. The AO had denied the exemption u/s 10(23C)(iiiab) and proposed a review of the exemption granted u/s 12AA. The CIT(A) upheld the AO's decision, stating that the Trust's activities, primarily training public servants, do not fall under "education" within the restricted meaning given in section 2(15). However, the ITAT noted that the DIT (Exemption) had accepted the Trust's activities as educational, and the revenue did not challenge this decision. Consequently, the ITAT dismissed this ground as infructuous.

Issue 2: Exemption u/s 10(23C)(iiiab)
The AO and CIT(A) held that the Trust did not qualify for exemption u/s 10(23C)(iiiab) as it was not solely existing for educational purposes. The AO cited the Supreme Court's definition of "education" in the case of Sole Trustee Loka Shikshana Trust Vs CIT, which emphasized systematic instruction and schooling. The CIT(A) also relied on similar judicial decisions. However, the ITAT examined the Trust's objectives and governance, noting that it was formed by a Government resolution, registered under the Societies Registration Act, 1860, and funded by the State and Central Governments. The Trust's activities included training government officers and conducting educational programs, which the ITAT deemed as imparting education. The ITAT concluded that the Trust is an extended limb of the State Government created for educational purposes and thus qualifies for exemption u/s 10(23C)(iiiab). Therefore, the ITAT held this issue in favor of the assessee.

Conclusion:
The ITAT allowed the appeal of the assessee, holding both grounds in its favor. The order was pronounced in the open Court on 04-01-2013.