Institute of Marine Education & Research, Patna V. C.I.T.(Exemption), Patna

ITA 162/PAT/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2098 (ITAT-PATNA)
• Duration Of Justice: 4 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 19-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 10; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA ‘DB’ BENCH AT KOLKATA [Virtual Court] (Before Sri Manish Borad, Accountant Member & Sri Sonjoy Sarma, Judicial Member) I.T.A. Nos.: 161 & 162/Pat/2017 Assessment Years: 2016-17 Institute of Marine Education & Research...............................Appellant [PAN: AAACI 8458 F] Vs. CIT (Exemption), Patna.........................................................Respondent Appearances by: None appeared on behalf of the Assessee. Sh. Sanjay Mukherjee, CIT, ITAT, appeared on behalf of the Revenue. Date of concluding the hearing : April 7 th , 2022 Date of pronouncing the order : May 17 th , 2022 ORDER Per Manish Borad, Accountant Member: The above captioned appeals filed by the assessee are directed against separate orders of ld. Commissioner of Income-tax (Exemption), Patna [in short ld. “CIT(E)”] dated 07.09.2017 which are arising out of the assessment orders framed u/s 10(23C)(vi) & 12AA(1)(b)(ii) of the Income Tax Act, 1961 (in short the “Act”). 2. The assessee is in appeal before the Tribunal raising the following grounds: i) I.T.A. No.: 161/Pat/2017: “1. For the ld. Commissioner of Income Tax (Exemptions), Patna has erred in refusing registration under section 10(23C)(vi) of the Act , merely on the ground that the appellant is charging substantial fee and has made huge profits and therefore, cannot be held to be charitable notwithstanding the fact that the appellant is working for the predominant object of the trust i.e. to impart education and is not pervaded by the profit motive but is carried on primarily for serving its main objects. Also the fee structure charged by the appellant is similar to other institutions running with similar object. I.T.A. Nos.: 161 & 162/Pat/2017 Assessment Years: 2016-17 Institute of Marine Education & Research. Page 2 of 5 2. For the Id. Commissioner of Income Tax (Exemptions), Patna has erred in refusing registration under section 10(23)(c) of the Act that activities conducted by the appellant are merely in nature of trade or commerce in the name of education notwithstanding the fact that the appellant is giving training in the area of Post Sea to sea men which falls under the ambit of the term ‘education’ i.e. within the scope of section 2(15) and these courses are duly approved and conducted under the guidance of DG Shipping falling under the Ministry of Shipping, Government of India. 3. For the Id. Commissioner of Income Tax (Exemptions), Patna has erred in refusing registration under section 10(23)(c) of the Act on huge surplus in for the year ending 31.03.2015, 31.03.2014, 31.03.2013, 31.03.2012 respectively by the appellant notwithstanding the fact that the accumulation in the present is to be used for purchase of land, and making of other infrastructural facility in furtherance of the Marine education. A copy of land purchased on 21.07.2017 has already been presented before the ld. Commissioner of Income Tax (Exemptions), Patna in response to detailed questionnaire which was received by the appellant. The appellant has not utilized such profit in any manner other than for educational purpose and the same shall be construed as income arising out of educational activity and be treated as exempt accordingly. In section 10 (23C) of the Act, there is no such language to restrict exemption based on the criteria of income. As long as the surplus is utilized for educational or charitable purposes the exemption has to be allowed. 4. For the ld. Commissioner of Income tax (Exemptions), Patna has erred in refusing registration under section 10(23(c) of the Act merely on the ground that the appellant paid salary to Mr. Prafulla Ranjan and Mr. Sanjay Kishore, both of whom are spouses of the directors notwithstanding the fact that such payments are made in lieu of services tendered by them and are reasonable taking into consideration their qualification and experience. 5. For that the impugned order, passed u/s 10(23C)(vi) of the Income Tax Act by the learned Commissioner of Income Tax (Exemptions), Patna is arbitrary, irrational, unjustified and bad in law. 6. The humble appellant prays for your leave to take, raise, press, plead and/or argue any other ground either hereinafter or during the course of appeal.” ii) I.T.A. No.: 162/Pat/2017: “1. For the grounds of appeal hereto are without prejudice to each other. 2. For the Id. Commissioner of Income Tax (Exemptions), Patna has erred in refusing registration under section 12AA of the Act, merely on the ground that the appellant is charging substantial fee and has made huge profits and therefore, cannot be held to be charitable notwithstanding the fact that the appellant is working for the predominant object of the trust i.e. to impart education and is not pervaded by the profit motive but is carried on primarily for serving its main objects. Also the fee structure charged by the appellant is similar to other institutions running with similar object. I.T.A. Nos.: 161 & 162/Pat/2017 Assessment Years: 2016-17 Institute of Marine Education & Research. Page 3 of 5 3. For the ld. Commissioner of Income tax (Exemptions), Patna has erred in refusing registration under section 12AA of the Act merely on the ground that the appellant paid salary to Mr. Prafulla Ranjan and Mr. Sanjay Kishore, both of whom are spouses of the directors notwithstanding the fact that such payments are made in lieu of services rendered by them and were not in excess of what may be reasonably paid for such services. 4. For the ld. Commissioner of Income tax (Exemptions), Patna has erred in refusing registration under section 12AA of the Act notwithstanding the fact that appellant imparts marine education and other related studies under section 2(15) of the Act and the same does not amount to trade or commerce. 5. For that in any view of the matter the order of the Id. Commissioner of Income tax (Exemptions), Patna to the extent as aforesaid are bad and are therefore, fit to be set aside. 6. The humble appellant prays for your leave to take, raise, press, plead and/or argue any other ground either hereinafter or during the course of appeal.” 3. From perusal of the grounds, we find that in ITA No. 161/Pat/2017 the assessee has challenged the order of the ld. CIT(E) refusing the registration u/s 10(23C)(vi) of the Act and in ITA No. 162/Pat/2017 the order of ld. CIT(E) refusing registration u/s 12AA of the Act. None appeared on behalf of the assessee. The case was heard with the assistance of ld. D/R and available records. 4. Brief facts of the case are that the assessee is a company registered u/s 25 of the Companies Act, 1956, existing not for profit. The main objects of the assessee in terms of its memorandum of association is to set up, establish, manage and run industries for Marine education, aeronautical studies and other allied fields of training and to setup, manage and run Educational Institutes including colleges, schools and coaching centres for promoting professional and/or technical education. The assessee is approved by Director General of Shipping, Government of India (hereinafter DG Shipping). The DG Shipping provides for guidelines to run educational institutions, particularly specification of classrooms, faculty infrastructure and even the fee structure. The Trainees are also to undergo a test conducted by the DG Shipping which awards degrees in recognition of their qualifications, which is integral to employment in the Marine industry. The assessee has come into existence on 29.02.2000. I.T.A. Nos.: 161 & 162/Pat/2017 Assessment Years: 2016-17 Institute of Marine Education & Research. Page 4 of 5 5. The assessee’s application dated 21.03.2017 for granting registration u/s 12AA of the Act and application for granting approval u/s 10(23C)(vi) of the Act were rejected vide order dated 07.09.2017. Against both these rejections, the assessee is in appeal before us. 6. We have heard ld. D/R, perused the records placed before us and also gone through the orders of this Tribunal in assessee’s own case in ITA No. 100/Pat/2017 order dated 13.10.2017 and ITA No. 05/Pat/2015 order dated 09.08.2018. 7. We find that in ITA No. 100/Pat/2016, this Tribunal in assessee’s own case for AY 2014-15 adjudicated the issue of granting of registration u/s 12AA of the Act. This Tribunal after considering the facts of the case as well as the ratio laid down by the Hon’ble Supreme Court in the case of Queen’s Educational Society vs. CIT in CA No. 5167 of 2008 dated 16.03.2015 held that once the surplus had been ploughed back into the coffers of the assessee institution, it has to be construed as an educational institution existing solely for educational purpose and not for purposes of profit. This Tribunal, further, held that the genuineness of the assessee institution cannot be doubted with in view of the fact that it is indeed conducting maritime training courses, which are approved by DG Shipping, falling under the Ministry of Shipping, Govt. of India. This Tribunal, accordingly directed the ld. CIT(E) to grant registration u/s 12AA of the Act. 8. Further, we find that through ITA No. 05/Pat/2015, order dated 09.08.2018, the assessee challenged the correctness of the order of ld. CIT(E) declining the application u/s 10(23C)(vi) of the Act. Since the assessee’s appeal in ITA No. 100/Pat/2016 dated 13.10.2017 was allowed and registration u/s 12AA of the Act was directed to be granted, the assessee withdrew the appeal filed against denial of registration u/s 10(23C)(vi) of the Act. 9. Under the given facts and circumstances of the case and respectfully following the decision of this Tribunal in assessee’s own case in ITA No. 100/Pat/2016 order dated 13.10.2017 wherein the assessee is held to be I.T.A. Nos.: 161 & 162/Pat/2017 Assessment Years: 2016-17 Institute of Marine Education & Research. Page 5 of 5 running for charitable and educational purposes and has been granted registration u/s 12AA of the Act, the instant two appeals become infructuous. 10. Thus, both the appeal filed by the assessee are dismissed as infructuous. Kolkata, the 17 th May, 2022. Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 17.05.2022 Bidhan (P.S.) Copy of the order forwarded to: 1. Institute of Marine Education & Research, 9 th Floor, Budha Marg, Patna-800 001. 2. CIT (Exemption), Patna, Patna. 3. PCIT (Central), Patna. 4. CIT(A) 5. CIT- 6. CIT(DR), Patna Bench, Patna. True copy By order Assistant Registrar ITAT, Kolkata Benches Kolkata