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2018 (4) TMI 622 - AT - Income TaxEligibility for exemption u/s 11 & 12 - as per revenue the assessee is not an educational institution so as to claim exemption - dominance of profit motive - Held that - In the present case, there is no allegation, much less any evidence, brought out by the Revenue to say that any amount has been applied by the assessee for purposes other than its stated objects, which ostensibly is in the field of education. Pertinently, upto Assessment Year 2008-09, assessee was accepted to be an entity engaged in education and in even in the captioned years there is no charge against the assessee that any of its activities have undergone any change. Therefore, merely because of insertion of the proviso, the nature of activities do not undergo a change unless it can be made out that profit motive is dominant all-pervading in the activities, an aspect which is absolutely absent in the present case. Therefore, even if we were to go along with the stand of the Assessing Officer that the activities of assessee fall within the expression advancement of any other object of general public utility contained in Sec. 2(15) of the Act, even then, from Assessment Year 2009-10 onwards, the insertion of proviso does not take away the benefits of Sections 11 & 12 of the Act from the assessee inasmuch as the proviso does not disentitle the assessee s activities from being considered as for charitable purpose because of the above discussion. - Decided in favour of assessee.
Issues Involved:
1. Exemption claimed by the assessee under Sections 11 & 12 of the Income Tax Act, 1961. 2. Exemption claimed by the assessee under Section 10(23C) of the Income Tax Act, 1961. 3. Determination of whether the assessee qualifies as a "charitable institution" under Section 2(15) of the Income Tax Act, 1961. 4. Applicability of the proviso to Section 2(15) of the Income Tax Act, 1961. Detailed Analysis: 1. Exemption under Sections 11 & 12 of the Income Tax Act, 1961: The primary issue revolves around the exemption claimed by the assessee under Sections 11 & 12 of the Act. The Assessing Officer (AO) denied this exemption, arguing that the assessee was not an "educational institution" and instead categorized its activities under "advancement of any other object of general public utility," which attracted the proviso to Section 2(15). The CIT(A) upheld the AO's decision for Assessment Years 2010-11, 2011-12, and 2012-13 but disagreed for Assessment Year 2009-10, allowing the exemption. The Tribunal concluded that the assessee is indeed engaged in education and thus qualifies for exemption under Sections 11 & 12 of the Act. 2. Exemption under Section 10(23C) of the Income Tax Act, 1961: The assessee also sought exemption under Section 10(23C) of the Act. However, this issue was rendered academic since the Tribunal upheld the exemption under Sections 11 & 12. Therefore, this claim was not adjudicated further. 3. Qualification as a "Charitable Institution" under Section 2(15) of the Income Tax Act, 1961: The Tribunal examined whether the assessee qualifies as a "charitable institution" under Section 2(15). The assessee, a society registered under the Societies Registration Act, 1860, is engaged in imparting education in banking and finance. The Tribunal found that the assessee's activities, including conducting training programs, seminars, and research, fall within the scope of "education" as defined in Section 2(15). The Tribunal referred to various judicial pronouncements, including the Supreme Court's judgments in T.M.A. Pai Foundation vs State of Karnataka and American Hotel & Lodging Association, which supported the view that educational institutions can generate funds without losing their charitable status. 4. Applicability of the Proviso to Section 2(15) of the Income Tax Act, 1961: The AO argued that the assessee's activities involved trade, commerce, or business due to fee collection, invoking the proviso to Section 2(15). The Tribunal disagreed, stating that the proviso applies only when there is a profit motive. It emphasized that the assessee's surplus is applied solely for educational purposes, with no evidence of profit distribution. The Tribunal also noted that the assessee was established by the Government of India through the Reserve Bank of India, further negating any commercial intent. The Tribunal concluded that the proviso to Section 2(15) does not apply to the assessee's activities, allowing the exemption under Sections 11 & 12. Conclusion: - The Tribunal dismissed the Revenue's appeal for Assessment Year 2009-10 and the assessee's cross-objection as infructuous. - For Assessment Years 2010-11 to 2012-13, the Tribunal allowed the assessee's appeals, applying the same reasoning as for Assessment Year 2009-10. - The Tribunal pronounced the order in the open court on 25th January 2018.
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