2015 (2) TMI 449 - AT - Income Tax

Eligibility for deduction u/s 11 - claim denied on the ground that that the appellant s primary activities were not for the benefit of the public at large and were also not of charitable nature - Held that - 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. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. The section of the community sought to be benefitted must be sufficiently definite and identifiable by some common quality of a public or impersonal nature . The AR submitted that since the assessee was giving benefit to persons perusing banking industry, is not only education but by not making any profit, it was charitable in nature. Since the Institute does not undertake any other activities other than what is stated above. The activities as seen are educational in nature, which leaves no apprehensions. In our view the activities would squarely be covered by the definition of charitable purpose , as defined in Section 2(15) of the Act, as these activities are meant for general public utility, i.e. whoever wants to advance his/her qualifications in the banking industry. From the above details and description, we are of the opinion that the assessee is a charitable organization and eligible for deduction u/s 11 of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Exemption under Section 11.
2. Deduction of Expenses.
3. Other Statutory Deductions.
4. Claim for Exemption under Section 10(23C)(vi).

Issue-wise Detailed Analysis:

1. Exemption under Section 11:
The primary issue was whether the assessee's activities qualified for exemption under Section 11 of the Income Tax Act. The CIT(A) upheld the AO's decision, rejecting the exemption on the grounds that the assessee's activities were not for the public benefit and lacked a charitable nature. The Tribunal examined the assessee's Memorandum of Association, which outlined objectives such as promoting banking education, organizing lectures, and maintaining a library. The Tribunal noted that the assessee conducted examinations and awarded diplomas and certificates, which benefited banking professionals. The Tribunal referenced previous ITAT decisions and High Court rulings, concluding that the assessee's activities were educational and charitable, thus eligible for Section 11 exemption. The Tribunal also addressed the AO's concerns about the surplus generated, clarifying that the surplus was reinvested in charitable activities, complying with Section 11(2).

2. Deduction of Expenses:
The assessee contested the CIT(A)'s decision to uphold the AO's refusal to deduct expenses related to the amortization of premium on investments and the purchase of fixed assets. The Tribunal considered the assessee's argument that these expenses were legitimate and necessary for its educational activities. The Tribunal found that the expenses were incurred in the course of pursuing its charitable objectives and should be allowed as deductions. Consequently, the Tribunal allowed the assessee's claim for the deduction of these expenses.

3. Other Statutory Deductions:
The assessee challenged the denial of statutory deductions for amounts set aside for future requirements and sums accumulated for specified purposes under Section 11(2). The Tribunal examined the details provided by the assessee, demonstrating compliance with the statutory requirements for setting aside and accumulating funds. The Tribunal concluded that the assessee met the conditions for these deductions and allowed the claims accordingly.

4. Claim for Exemption under Section 10(23C)(vi):
The assessee also sought exemption under Section 10(23C)(vi) as an educational institution. The Tribunal noted that the CCIT, Mumbai, had rejected this claim. However, the Tribunal focused on the claim under Section 11, which was still viable. The Tribunal reiterated that the assessee's activities were educational and charitable, thus qualifying for exemption under Section 11. The Tribunal did not address the Section 10(23C)(vi) claim further, as it was not pressed by the assessee during the hearing.

Conclusion:
The Tribunal allowed the appeal partly, granting the assessee exemption under Section 11, allowing the deduction of expenses, and permitting other statutory deductions. The additional grounds of appeal related to Section 10(23C)(vi) were not pressed and thus rejected. The order was pronounced in open court on February 11, 2015.