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2023 (1) TMI 518 - AT - Income TaxExemption u/s.11 - Disallowance in respect of consultancy fee received by the assessee - Scope of guidelines of UGC and AICTE notification - HELD THAT - AR drew our attention to the objects of the University Grants Commission Scheme imposing guidelines of Incentives for Resource Mobilisation wherein under the caption objectives of the scheme , we find that UGC had specifically provided in encouraging University to provide consultancy on payment basis not only to the industries but to the Government and other bodies and society at large on vital issue of national importance. This categorically goes to prove that the assessee institution is mandated / advised to provide consultancy on payment basis. We find from the notification issued by All India Council for Technical Education (AICTE) dated 05/03/2010, it also provides for consultancy training for which AICTE shall work out suitable model for the purpose of revenue sharing between Institutions and consultant teachers providing in the Indian Institution of Technology, Indian Institute of Management and other Institutions may be taken into consideration. The copy of said notification is enclosed in pages 88-118 of the paper book. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove in assessee s own case 2020 (1) TMI 689 - ITAT MUMBAI we deem it fit to restore this appeal to the file of the ld. AO to decide the issue. In the light of the aforesaid guidelines of UGC and AICTE notification and in accordance with law. The assessee is also at liberty to furnish further evidences, if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
Issues Involved:
1. Disallowance of claim of exemption under section 11 of the Income Tax Act, 1961. 2. Alternative claim of exemption under section 10(23C) of the Income Tax Act, 1961. Detailed Analysis: 1. Disallowance of Claim of Exemption under Section 11 of the Income Tax Act, 1961: The primary issue in these appeals is the disallowance of the claim of exemption under section 11 of the Income Tax Act, 1961, in respect of consultancy fees received by the assessee. The assessee, a deemed university, filed its return declaring 'nil' income after claiming exemption under section 11. The Assessing Officer (AO) noticed that during the year, the assessee received consultancy fees and questioned why these should not be treated as business income under section 11(4A). The assessee argued that the consultancy projects were undertaken for research purposes, aiding students' practical experience, and the fees were used to cover infrastructure and administrative costs. However, the AO concluded that the consultancy activities were profit-oriented and not charitable, leading to the disallowance of the exemption claim. This decision was upheld by the Commissioner of Income Tax (Appeals). 2. Alternative Claim of Exemption under Section 10(23C) of the Income Tax Act, 1961: The assessee also raised an alternative ground claiming exemption under section 10(23C). The Tribunal noted that in prior years, similar issues were addressed, and the matter was restored to the AO for re-examination. The Tribunal observed that the assessee, recognized as a deemed university, falls within the category of institutions covered under section 10(23C)(iiib) or 10(23C)(vi). The Tribunal also highlighted that the proviso to section 2(15) applies only to activities of "advancement of any other object of general public utility" and not to educational activities. The Tribunal directed the AO to re-examine the issue considering the additional evidence and the decisions cited, providing the assessee with a reasonable opportunity of being heard. Conclusion: The Tribunal restored the appeals to the AO for re-examination in light of the guidelines from the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE), which mandate institutions to provide consultancy on a payment basis. The Tribunal directed the AO to consider all contentions regarding the applicability of the proviso to section 2(15) and the claim of exemption under section 10(23C), providing the assessee with a reasonable opportunity of being heard. The appeals for all assessment years were allowed for statistical purposes.
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