2017 (1) TMI 859 - AT - Income Tax

Exemption u/s 11 denied - assessee providing services of training and education - Held that - Hon ble jurisdictional High Court in the case of DIT vs Samudra Institute of Maritime Studies Trust 2014 (9) TMI 575 - BOMBAY HIGH COURT held that the Tribunal rightly held that the exemption u/s 11 of the Act can be availed of by the Assessee - the objects of the trust are to set up administer and maintain technical training institution at various places in India for pre-sea and post-sea training for the ships and maritime industry as a Public Charitable Institute for education - That is to provide on-board and offshore training and continuing technical education for Officers both on the deck and engine side - One of the object was to register with the Director General of Shipping and obtain other necessary approvals at the State and Central levels - Thus the Assessee is giving training in the area to seamen - All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable - The exemption u/s 11 can be claimed and bearing in mind the object of the Trust - Decided in favour of assessee

Summary

Issues:
Denial of exemption u/s 11 of the Income Tax Act to the assessee for providing charitable services of training and education.

Analysis:
The assessee appealed against the First Appellate Authority's order denying exemption u/s 11 of the Income Tax Act for providing charitable services of training and education. The Tribunal considered the assessee's claim in light of a previous decision (ITA No.7247/Mum/2012) and reproduced the relevant portion from that order. The AO had denied the exemption, stating that the assessee's activities were not charitable as per section 2(15) of the Act and that the training provided did not qualify as education. The AO concluded that the trust was engaged in commercial activities and not entitled to claim deduction under section 11. The CIT(A) upheld the AO's decision, emphasizing that the training provided by the assessee did not qualify as education and was profit-oriented, lacking a charitable object as required by section 2(15).

The assessee argued that their case was similar to a decision by the Jurisdictional High Court in favor of another trust, and requested the Tribunal to set aside the CIT(A)'s order. The Tribunal reviewed the submissions, orders of the lower authorities, and relevant case laws. It found that the issue had been addressed by the Jurisdictional High Court in a similar case, where the trust's activities were considered charitable and eligible for exemption under section 11. The Tribunal followed the High Court's decision and directed the AO to allow the benefit under section 11 by deleting the addition made to the assessee's income.

The Tribunal's decision was based on the fact that the assessee trust was established to provide technical training in the maritime industry, which was considered educational in nature. By following the High Court's judgment, the Tribunal allowed the appeal of the assessee, as the case was identical to the precedent set by the High Court. The appeal was allowed, and the order was pronounced in the open court in the presence of both parties' representatives.