THE INSTITUTE OF MARINE ENGINEERS (INDIA), MUMBAI V. ITO (E) I(1), MUMBAI

ITA 1271/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0688 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR RAI LD
• Assessee Lawyers: KARTHIK NATARAJANLD
• Keywords: Charitable institution
• Section: 143(3); 12A; 11

Judgement Text

ITA NO.1271/MUM/2016 THE INSTITUTE OF MARINE ENGINEERS (INDIA) ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1271/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) THE INSTITUTE OF MARINE ENGINEERS (INDIA) C/O NATVARLAL VEPARI & CO. ORICON HOUSE,4 TH FLOOR 12 K.DUBASH MARG,MUMBAI-400 023 / VS. INCOME TAX OFFICER (EXEMPTION) - 1 (1) PIRAMAL CHAMBERS 5 TH FLOOR, LALBAUG MUMBAI-400 012 '# ./ ./ PAN/GIR NO.AAATT-3254-B ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SAURABH KUMAR RAI, LD. DR ASSESSEE BY : KARTHIK NATARAJAN,LD.AR / DATE OF HEARING : 09/01/2018 / DATE OF PRONOUNCEMENT : 17 /01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-1 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-I/IT/E-I(59)/2014-15 DATED 10/12/2015. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER, (EXEMPTION)-1(1), MUMBAI [AO] U/S 143(3) OF THE INC OME TAX ACT, 1961 ON 2 ITA NO.1271/MUM/2016 THE INSTITUTE OF MARINE ENGINEERS(INDIA) ASSESSMENT YEAR 2011-12 25/03/2014. BEFORE US, THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-1, MUMB AI [CIT (A) ] ERRED IN CONFIRMING THE ORDER OF THE INCOME-TAX OFFICER I(1 ), (AO) DENYING EXEMPTION U/S.11 OF THE ACT TO THE APPELLANT 2. BOTH THE CIT(A) AND THE AO ERRED IN REFUSING TO CONSIDER THAT THE INCOME OF THE APPELLANT TRUST IS NOT TAXABLE IN ACCORDANCE WITH S ECTIONS 11 TO 13 OF THE ACT. 3. THE CIT(A) ERRED IN LAW AND FACTS IN CONFIRMING THE ORDER OF AO DENYING THE EXEMPTION OF INCOME OF THE APPELLANT U/S 11 ON THE GROUND THAT THE APPELLANT WAS CARRYING ON ACTIVITIES WHICH ARE IN THE NATURE OF T RADE, COMMERCE OR BUSINESS AND PROVIDING SERVICES WHICH ARE IN RELATION TO ANY TRA DE, COMMERCE OR BUSINESS. 4. THE CIT(A) ERRED IN CONFIRMING THE DENIAL OF E XEMPTION U/S.11 OF THE ACT BY THE AO BY HOLDING THAT THE APPELLANTS CLAIM OF IMPARTI NG EDUCATION COULD NOT BE ACCEPTED IN AS MUCH AS THERE WAS NO ACTIVITY OF SCH OOLING LEADING TO THE AWARD OF ANY DEGREE. THE APPELLANT SUBMITS THAT CIT(A) WHILE DENYING THE EXEMPTION HAS MISCONSTRUED THE FACTS OVERLOOKING THAT THE APPELLA NT DOES CONDUCT WIDE RANGE OF ENGINEERING AND WORKSHOP COURSES AND CERTIFICATE GI VEN BY THE APPELLANT IS REQUIRED FOR JOBS IN MARINE ENGINEERING FIELD. THE APPELLANT SUBMITS THAT THESE FACTS HAVE NOT BEEN DISCUSSED BY THE CIT(A) WHILE H OLDING THAT THE APPELLANT IS NOT IMPARTING EDUCATION. 5. THE CIT(A) UPHELD THE ORDER OF THE AO IN REJEC TING THE CLAIM OF THE APPELLANT WITHOUT CONSIDERING THE FACTS AND SUBMISSIONS MADE BY THE APPELLANT DURING THE APPELLANT PROCEEDINGS. 6. WITHOUT PREJUDICE, THE APPELLANT SUBMITS THAT AL L THE ACTIVITIES CARRIED OUT BY THE APPELLANT ARE ACTIVITIES CARRIED OUT BY THE APPELLA NT TO PROMOTE THE SCIENTIFIC DEVELOPMENT OF MARINE ENGINEERING IN ALL ITS BRANCH ES AND TO FURTHER SUCH KNOWLEDGE. ACCORDINGLY, INCOME FROM SPONSORSHIP, AD VERTISEMENTS, SUBSCRIPTION, ETC. THEREFROM IS NOT INCOME FROM BUSINESS, TRADE, COMMERCE AND IS THEREFORE NOT SUBJECT TO THE PROVISO TO SECTION 2(15) OF THE AC. THEREFORE, THE AO ERRED IN COMPLETELY DISALLOWING THE CLAIM OF EXEMPTION U/S 1 1 BY INVOKING THE PROVISIONS OF SUB-SECTION (8) OF SECTION 13. 7. THE AO ERRED IN NOT CONSIDERING INTEREST INCOM E OF RS.41,99,432/- AS EXEMPT U/S 11 OF THE ACT. THE APPELLANT SUBMITS WITHOUT PREJUD ICE THAT ONLY THE INCOME FROM BUSINESS CONDUCTED AS ADVANCEMENT OF OBJECT OF GENE RAL PUBLIC UTILITY IS NOT TO BE CONSIDERED AS CHARITABLE OBJECTS AND NOT THE ENT IRE INCOME. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE E BEING REGISTERED TRUST WAS ASSESSED U/S 143(3) AT RS.1,76,09,240/- AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST NIL RETURNED INCOME FILED BY THE ASSESSEE ON 13/09/2011. THE TRUST WAS REGISTERED AS CHARITABLE ORGANIZATION WITH 3 ITA NO.1271/MUM/2016 THE INSTITUTE OF MARINE ENGINEERS(INDIA) ASSESSMENT YEAR 2011-12 DIT(E), MUMBAI U/S 12A VIDE REGISTRATION NO. INS/14 501 AND WITH CHARITY COMMISSIONER, MUMBAI VIDE REGISTRATION NO. F-7589 ( MUMBAI). 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE TRUST WAS ENGAGED IN PROVIDING POST-SEA / PRE-SEA TRAINING AT MUMBAI AND ACCORDINGLY, CLAIMED EXEMPTION U/S 11 AGAINST ITS I NCOME. THE LD. AO NOTED THAT THE ASSESSEE WAS RUNNING MANY COURSES FE W OF WHICH WERE RECOGNIZED BY DIRECTORATE GENERAL OF SHIPPING WHEREAS FEW OF WHICH WERE NOT RECOGNIZED / NOT APPROVED. THE ASSESSEE CONTEND ED THAT IT WAS IMPARTING EDUCATION AND WELFARE IN THE FIELD OF MAR INE ENGINEERING AND HENCE ENTITLED FOR EXEMPTION U/S 11. HOWEVER, NOT C ONVINCED AND NOTING AMENDMENTS IN THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15), LD. AO CONCLUDED THAT THE ACTIVITIES OF THE TRUST CONSTITU TE OBJECT OF GENERAL PUBLIC UTILITY AND WERE IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS AND NOT OF IMPARTING THE EDUCATION. FINALLY, PLACING RELIANCE ON THE STAND OF REVENUE FOR AY 2009-10, THE SAID EXEMPTION WAS DENIED TO THE AS SESSEE AND INCOME WAS DETERMINED AT RS.176.09 LACS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 10/12/2 015 WHERE THE ASSESSEE PRIMARILY CONTENDED THAT ITS ACTIVITIES CO NSTITUTE IMPARTING OF EDUCATION AND THE SAID FACT HAS BEEN ACCEPTED BY TH E REVENUE OVER PAST MORE THAN 30 YEARS. HOWEVER, LD. CIT(A) RELYING UPO N THE STAND OF ITS PREDECESSOR IN ASSESSEES OWN CASE FOR 2009-10, CON FIRMED THE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEA L BEFORE US. 4 ITA NO.1271/MUM/2016 THE INSTITUTE OF MARINE ENGINEERS(INDIA) ASSESSMENT YEAR 2011-12 4. THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSET , DREW OUR ATTENTION TO THE FACT THAT THE MATTER FOR AY 2009-10 WAS CONT ESTED BY THE ASSESSEE BEFORE THIS TRIBUNAL VIDE ITA NO. 4762/MUM/2013 ORD ER DATED 29/04/2016 WHERE THE MATTER WAS REMITTED BACK TO THE FILE OF L D. AO WITH CERTAIN DIRECTIONS. PURSUANT TO SAID DIRECTIONS, THE MATTER WAS EXAMINED BY LD. AO VIDE ORDER DATED 29/09/2017 PASSED U/S 143(3) READ WITH SECTION 254 WHERE THE STAND OF THE ASSESSEE HAS AGAIN NOT BEEN ACCEPTED BY THE REVENUE AND THE MATTER, AT PRESENT, IS PENDING BEFO RE LD. FIRST APPELLATE AUTHORITY FOR RE-ADJUDICATION. THEREFORE, THE PRESE NT MATTER DERIVING ITS RATIO FROM AY 2009-10, MAY ALSO BE REMITTED BACK TO THE F ILE OF LD. CIT(A). THE LD. DEPARTMENTAL REPRESENTATIVE [DR] FAIRLY CONCEDE D THE FACTUAL MATRIX. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY LD. CIT(A) PRIMARILY BY PLACING RELIANCE ON THE STA ND OF ITS PREDECESSOR FOR AY 2009-10. THE MATTER FOR AY 2009-10 WAS REMITTED BACK BY THIS TRIBUNAL TO THE FILE OF LD. AO WITH CERTAIN DIRECTIONS AND P RESENTLY, THE SAME IS PENDING FOR RE-ADJUDICATION BEFORE LD. CIT(A). HENC E, AS A LOGICAL CONSEQUENCE, WE DEEM IT FIT TO RESTORE THIS MATTER BACK TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO DECIDE THE SAME AS PER L AW AFTER CONSIDERING THE DIRECTIONS OF THE TRIBUNAL AS GIVEN IN AY 2009-10. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. 5 ITA NO.1271/MUM/2016 THE INSTITUTE OF MARINE ENGINEERS(INDIA) ASSESSMENT YEAR 2011-12 ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 17.01.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. &. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI