9911796707
TMI Blog1997 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... also claimed exemption of its income under the provisions of section 10(22) of the Income-tax Act. This ground is not taken for the assessment years 1991-92 and 1993-94. Before considering the stand taken by the Revenue authorities it will be useful to consider the objects of the appellant institute. 3. The appellant is a Society registered under the Societies Registration Act, 1860 and it was registered on 1st March, 1984. Clauses I to III of the Memorandum gives the objects of the Society and these clauses read as follows : I. The name of the Society shall be 'Institute of Banking Personnel Selection (IBPS)'. II. The Registered Office of the Society shall be situated in the State of Maharashtra at present at Paper Box Estate, Mahakali Caves Road, Andheri (East), Bombay-400 093. III. The objects for which the Society is established are : (1) to establish and to carry on the administration and management of the Institute of Banking Personnel Selection. (2) to plan, promote and produce for competent, well-qualified and efficient cadres of personnel at various levels to the banks and financial institutions in the country on a scientific basis. (3) to render assis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examinations for recruitment or promotion at various levels. (4) Undertake to conduct on behalf of banks or financial institutions or other organisations a total partial selection project for recruitment or promotion involving all stages like designing and release of advertisement, receipt and screening of applications, conduct of examination, processing of results, etc. (5) Train persons for (i) developing suitable selection tests/tools through workshops, seminars, etc., and (ii) for conducting examinations comprising objective tests or simulation exercises. (6) Provide consultancy services under its auspices or through its faculty to banks and financial institutions as well as other organisations on matters having a bearing on selection, placement, performance appraisal, promotion, motivation, etc., in order to improve productivity of the services rendered by the banks and financial institutions. (7) Maintain liaison with banking and financial directly or through the personnel department, Recruitment Boards, training institutions and educational bodies for purposes of promoting selection, placement, appraisal and promotion system. (8) Maintain close contact with other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was incurred both on establishment of the assessee society and also in carrying out the objects of the Institute. The following results are culled out from the income and expenditure accounts of the assessee for the respective years : - YEAR ENDED 31-3-1990 31-3-1991 31-3-1992 31-3-1993 31-3-1994 (1)Material fees 1,85,83,480 2,15,85,479 2,10,27,0002, 2,40,04,219 3,21,67,715 (2)Testing fees 81,62,098 75,08,213 73,20,655 75,22,496 88,58,384 YEAR ENDED 31-3-1990 31-3-1991 31-3-1992 31-3-1993 31-3-1994 (3)Fees from consultancy project 9,46,721 2,74,805 8,30,162 15,86,314 20,03,580 (4)Surplus (+) (+)33,81,128 (+)16,32,021 (+) 76,86,111 Deficit (-) -15,13,384 -33,71,968 Transfer to 5,44,007 25,62,037 General Reserve It was explained before the Revenue authorities that the appellant institute was conducting examination for recruitment to various public sector Banks and other public sector institutions and even for some Universities. It prepares test materials which are sold to the candidates for fees and it also charges fees for conducting the tests. The fees collected from public sector undertakings other than public sector banks who are member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harity Trust v. CIT (1976) 103 ITR 777. He also observed that under the provisions of section 28(iii) of the Income-tax Act income derived from rendering specific services to members has to be construed as income and as the fees received by the appellant institute are substantially from rendering services to its own members which are public sector banks, he held that the income of the appellant is assessable under the head "Business". Accordingly he gave deduction only for expenses incurred on establishment and ignored the expenditure incurred in the carrying out of the objects of the appellant and determined the income at Rs. 2,07,90,235 for the assessment year 1991-92. However, for the subsequent two assessment years, i.e., 1993-94 and 1994-95 the Assessing Officer gave deduction for the expenditure incurred in carrying out the objects also and determined the income for the assessment year 1993-94 at Rs. 51,59,726 and for the assessment year 1994-95 at Rs. 1,28,04,281. 4. The CIT(Appeals) for the assessment year 1991-92 gave an elaborate order and held that the objects of the appellant are not charitable within the meaning of section 2(15) of the Income-tax Act and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te within the meaning of section 10(22), the assessee has relied upon the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Co-operative Union v. CIT (1992) 195 ITR 279. He has also pleaded that the appellant society conducted tests for candidates whose number runs into lakhs and so the surplus derived in any particular year does not prove that the assessee had indulged in profit making activities. He has explained that the assessee charges fees at pre-determined rates and in this context he has invited our attention to the minutes of the 17th meeting of the Governing Board of the Institute held on 12-5-1992 a copy of which is annexed to this order as Annexure 1. From this Minutes it is claimed that the appellant charges fees at very reasonable and at pre-determined rates and when the candidates are about 20 to 30 lakhs in an year, any small variation in the cost of materials would result in either surplus or deficit and because of the number of candidates involved, the result appears to be substantial. It is pleaded that considering the nature of the activity, such surplus or deficit is unavoidable and the nature of the appellant society cannot be determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt Silk Cloth Mfrs. Association's case (supra) Incorporated Council of Law Reporting v. Attorney General 47 TC 321 (CA) Hyderabad Stock Exchange Ltd. v. CIT (1967) 66 ITR 195 (AP) Addl. CIT v. Automobile Association of Southern India (1981) 127 ITR 730/ 5 Taxman 77 (Mad.) Addl. CIT v. Delhi Brick Kiln Owners Association (1981) 130 ITR 55/(1980) 4 Taxman 420 (Delhi) Girijan Co-operative Corpn. Ltd. v. CIT (1989) 178 ITR 359/ 44 Taxman 60 (AP) CIT v. Andhra Pradesh State Road Transport Corpn. (1986) 159 ITR 1 / 25 Taxman 63 A (SC) CIT v. Bar Council of Maharashtra (1981) 130 ITR 28/6 Taxman 1 (SC). 6. The learned Departmental Representative, on the other hand, contend- ed that the activities of the appellant society serve to improve only efficiency of the member banks and no benefit accrues from such activities to the general public. Where the benefit does not extend to the general public or to a cross section of the public but only to the members of the appellant society it is pleaded that the organisation cannot be regarded as charitable within the meaning of section 2(15) of the Income-tax Act and in this context he relied upon the decision of the Hon'ble Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the memorandum prohibiting the appellant society to distribute profits but the dissolution has to be done in accordance with sections 13 and 14 of the Societies Registration Act and under these sections on the dissolution of the society, any surplus remaining shall be given to some other society and no member is to receive profit on dissolution. Further so far the appellant society has not distributed any profits in its decade long existence and the constitution of the governing board headed by the Governor, Reserve Bank of India, to our mind, indicates that this is not a commercial organisation but a semi-Government organisation that has come into existence only to improve the performance and efficiency of the financial sector in the country. The case law cited by the learned counsel for the assessee amply proves that such objects as that of the appellant society have been regarded as charitable inasmuch as they advanced objects of general public utility. We may, however, clarify that the assessee cannot be given the benefit of section 10(22) of the I.T. Act. This section exempts the income of an University or other educational institution, existing solely for educational p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c utility or not. As already mentioned, we are of the view that the objects and also the constitution of the society go to indicate that they advance an object of general public utility being the promotion of efficiency in the financial sector of the country. The provisions of section 11(4A) have also been substituted by the Finance (No. 2) Act, 1991 with effect from 1-4-1992 and it is only the substituted provision which are relevant for the present assessment year and this section as it stands does not prohibit the carrying on of any business so long as it is incidental to the attaining of the objects of the trust or institution. In the present case, we find that the activities undertaken by the appellant trust are only incidental to the four main objects mentioned in clause (iii) of the memorandum which we have extracted hereinabove. So we find that the appellant trust is not hit by the provision of section 11(4A). Similarly we are of the view that the reliance placed upon section 28(iii) by the Revenue is misplaced. This section only includes income derived by a trade professional or similar association from specific services performed for its members in the scope of profits an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
