9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 995 - AT - Income TaxDenial of exemption u/s. 11 - discharging of liability taken over from the Corporate College of Arts and Science - assessee is not a regular college, providing systematic education to the students - when the assessee is conducting coaching classes for various examinations conducted by the Board of Examination, University etc., whether such activities of the assessee could be treated as education within the meaning of sec. 2(15) - Held that - In the case of Sole Trustee, Loka Shikshana Trust vs. CIT 1975 (8) TMI 1 - SUPREME COURT the Supreme Court had an occasion to consider this issue and Apex Court found that all kinds of acquiring knowledge may not come within the term education . The assessee cannot be considered to be an educational trust within the meaning of section 2(15) of the Act. Therefore, it is not entitled for exemption u/s. 11 of the Act. Accordingly, the order of the CIT(A) is confirmed on the reasons as above. Since the approval u/s. 12A was granted, exemption u/s. 11 of the Act is to be granted automatically - Held that - As held by various Courts, the AO has the liberty to grant or refuse exemption u/s. 11 at the time of making assessment for each assessment year in accordance with law. In the assessment year under consideration, the Assessing Officer came to the conclusion that the activities carried on by the assessee are not charitable in nature, hence, he denied exemption u/s. 11 of the Act. Hence, we do not find any merit in the argument of the Ld. AR. This ground of appeal of the assessee is dismissed. Without prejudice to the earlier findings, we find that the assessee has paid interest to the Trustees on the amount of contribution made by 19 members at ₹ 10000/- each at 15% per month. Hence, the assessee is hit by the provisions of section 13(1)(c)(ii) of the I.T. Act. From this point of view also, the appeal of the assessee is dismissed. Non consideration of certain decisions relied upon by the assessee by the Assessing Officer and relying on some decisions against the assessee. Since we have held that the activities carried on by the assessee is not charitable in nature and the assessee is not entitled to exemption u/s. 11 of the Act, the assessee cannot have any grievance at this stage. This ground of appeal of the assessee is dismissed. When the assessee was treated as not entitled to exemption u/s. 11 of the Act, the income of assessee is to assessed at maximum marginal rate as applicable to AOP u/s. 164/165 of the Act. This ground of appeal of the assessee is rejected.
Issues Involved:
1. Denial of exemption under Section 11. 2. Ignoring the findings at the time of registration under Section 12A. 3. Conclusion on the discharging of liability taken over from another association. 4. Direction to change the system of accounting from mercantile to cash. 5. Reliance on specific legal decisions. 6. Provision of a copy of an unreported case relied upon. 7. Application of tax rates applicable to individuals and AOP. 8. Alternate claim for exemption under Section 10(23C)(iiiad). Detailed Analysis: 1. Denial of Exemption under Section 11: The Assessing Officer (AO) observed that the assessee, a trust formed to impart education, was running a parallel college/coaching center for profit, distributing profits to trustees via allowances and interest. Consequently, the AO denied the exemption under Section 11 and computed the total income at ?1,19,990. The CIT(A) confirmed this denial, noting that trustees received benefits from the trust's income, which violated Section 13(1)(c)(ii) of the IT Act. The Tribunal upheld this view, stating that the activities conducted by the assessee did not qualify as "education" under Section 2(15) of the Act, referencing the Supreme Court's judgment in Sole Trustee, Loka Shikshana Trust vs. CIT (101 ITR 234). 2. Ignoring Findings at the Time of Registration under Section 12A: The CIT(A) and Tribunal noted that the AO has the authority to grant or reject exemption under Section 11 annually, regardless of the initial registration under Section 12A. The Tribunal cited the Madras High Court decision in CIT Vs. Sarvodaya Ilakkiya Pannai (343 ITR 300) to support this stance. 3. Discharging of Liability Taken Over from Another Association: The AO found that the trust had taken over the Corporate College of Arts and Science, which was a coaching center without university affiliation, and no charitable activities were performed. The CIT(A) and Tribunal upheld this finding, stating that the trust's activities were profit-driven and not charitable. 4. Direction to Change System of Accounting from Mercantile to Cash: The Tribunal dismissed this issue, stating that the method of accounting is at the discretion of the assessee and does not require adjudication. 5. Reliance on Specific Legal Decisions: The CIT(A) and Tribunal noted that the decisions relied upon by the assessee were not relevant to the issue at hand. The Tribunal emphasized that the facts of the case clearly brought it within the provisions of Section 13(1)(c)(ii) of the IT Act. 6. Provision of a Copy of an Unreported Case Relied Upon: The CIT(A) relied on an unreported case (Prathima Educational Society vs. DCIT in ITA No.1767/Hyd/2011) but did not provide a copy to the assessee. The Tribunal did not find merit in this grievance, as the primary issue was the nature of the trust's activities. 7. Application of Tax Rates Applicable to Individuals and AOP: The Tribunal rejected the plea for applying tax rates applicable to individuals, stating that the income of the assessee should be assessed at the maximum marginal rate applicable to AOP under Sections 164/165 of the IT Act. 8. Alternate Claim for Exemption under Section 10(23C)(iiiad): The CIT(A) dismissed the alternate claim for exemption under Section 10(23C)(iiiad), and the Tribunal upheld this decision, noting that the trust's activities did not qualify for such exemption. Conclusion: The appeal filed by the assessee was dismissed, with the Tribunal confirming that the activities of the trust were not charitable in nature and did not qualify for exemption under Section 11 of the IT Act. The Tribunal also upheld the application of the maximum marginal rate of tax to the assessee's income.
|
