M/s.Southern India Banks' Staff Training College, Bangalore V. Commissioner of Income-Tax, Bangalore

ITA 2057/BANG/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0404 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 25-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 205; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO. 205 7/ BANG / 2016 ASSESSMENT YEAR: 2015 - 16 M/S. SOUTHERN INDIA BANKS STAFF TRAINING COLLEGE, NO.9, SHANKARMATH ROAD, SHANKARAPURAM, BANGALORE 560 009. PAN: AAATS 5632E VS. THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. PRA THIBHA R., ADVOCATE RESPONDENT BY : MS. NEERA MA LHOTRA, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 1 1 .0 3 .202 1 DATE OF PRONOUNCEMENT : 11 .0 3 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(EXEMPTIONS), BENGALURU DATED 29.9.2016 PASSED U /S. 10(23C(VI) OF THE INCOME-TAX ACT, 1961 [THE ACT] ON THE FOLLOWING GRO UNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED THE COMMISSIONER OF INCOME-TAX (E) ERRED IN DECLINING TO GRANT EXEMPTION U/S.10(23C)(VI) OF THE ACT TO THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (E) ERRED IN HOLDING THAT THE APPELLANT INSTITUTION WAS NOT SOLE LY FOR EDUCATIONAL PURPOSES WITHOUT APPRECIATING THAT THE VARIOUS ITA NO.2057/BANG/2016 PAGE 2 OF 7 ACTIVITIES CARRIED ON BY THE APPELLANT WERE TOWARDS EDUCATIONAL PURPOSES OF THE BANKING STAFF AND CONSE QUENTLY THE APPELLANT HAD FULFILLED ALL THE CONDITIONS REQU IRED U/S.10(23C)(VI) OF THE ACT TO AVAIL THE EXEMPTION A S PROVIDED THEREIN. 3. THE LEARNED COMMISSIONER(E) OUGHT TO HAVE APPREC IATED THAT THOUGH VARIOUS OBJECTS PROVIDED IN THE TRUST D EED, THE APPELLANT HAD WHOLLY PROMOTED THE OBJECTS IN EDUCAT ING THE BANKING STAFF AND CONSEQUENTLY HE OUGHT TO HAVE HEL D THAT THE APPELLANT WAS ELIGIBLE TO GET THE EXEMPTION U/S.10(23C)(VI) OF THE ACT. 4. THE LEARNED COMMISSIONER(E) OUGHT TO HAVE APPREC IATED THAT THE OTHER OBJECTS PROVIDED IN THE TRUST DEED W OULD ALSO RELATE TO THE PROMOTION OF THE EDUCATION AMONGST TH E STAFF AND WERE NOT TO BE CONSIDERED ISOLATED TO DENY THE BENEFIT U/S.10(23C)(VI) OF THE ACT. ON THE CONTRARY, IT WAS DEMONSTRATED BEFORE THE LEARNED CIT(E) WITH MATERIA L EVIDENCE IN THE FORM OF INCOME AND EXPENDITURE ACCO UNT OF THE SOCIETY FOR THE YEAR ENDED 31.3.2015 THAT THE O THER OBJECTS VIZ., (A) PROVIDING APPRAISAL PROGRAMMES, ( B) CONSULTANCY SERVICES AND (C) FACULTY DEVELOPMENT PROGRAMMES WERE NOT AT ALL PURSUED BY THE SOCIETY D URING THE RELEVANT PREVIOUS YEAR AND THAT THE SOCIETY EXI STED SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PROFIT; THE PR EDOMINANT OBJECTIVE AND SOLITARY GOAL OF THE SOCIETY BEING IM PARTING OF EDUCATION. 5. THE LEARNED COMMISSIONER (E) FAILED TO CONSIDER THE DECISION OF THE INCOME-TAX APPELLATE TRIBUNAL, BANG ALORE BENCH, BANGALORE IN THE CASE OF NATIONAL INSTITUTE FOR RURAL BANKING (ITA NO.923/BANG/ 2011 DT.17.7.2012) STATIN G THAT ALTHOUGH THE CASE IS SQUARELY APPLICABLE IN THE APP ELLANT'S CURRENT CASE, THE ALLOWABILITY FOR GRANT OF EXEMPTI ON BY ITAT, BANGALORE IS NOT THE FINAL AUTHORITY AND FINA LITY HAD NOT YET BEEN REACHED. 6. THE LEARNED COMMISSIONER (E) GROSSLY ERRED IN FA ILING TO UNDERSTAND THE VAST MEANING OF THE WORD 'EDUCATION' WHICH IS NOT SPECIFICALLY DEFINED UNDER THE INCOME-TAX AC T AND WENT AHEAD TO DISTINGUISH THE VARIOUS JUDGMENTS PLA CED ITA NO.2057/BANG/2016 PAGE 3 OF 7 BEFORE HIM BY THE APPELLANT BY MERELY STATING THAT THE APPELLANT SOCIETY WAS NOT ENGAGED IN EDUCATIONAL AC TIVITIES IN THE TRUE SENSE, 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. THE LD. AR SUBMITTED THAT THE ISSUE BEFORE THE TRIBUNAL WAS WITH REGARD TO, WHETHER THE ASSESSEE IS ENTITLED FOR EXE MPTION U/S. 10(23C(VI) OF THE ACT. IT WAS SUBMITTED THAT IN THE EARLIER AY 2 014-15, THE ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL AND VIDE ORDE R DATED 26.8.2016 IN ITA NO.1408/BANG/2015, THE TRIBUNAL CONFIRMED THE ORDER OF THE CCIT IN DENYING EXEMPTION U/S. 10(23C(VI) OF THE ACT. THE APPEAL AGAINST THE TRIBUNALS ORDER IS PENDING BEFORE THE HONBLE HIGH COURT OF KARNATAKA, WHEREIN THE FOLLOWING QUESTIONS OF LAW ARE FRAMED:- 1. WHETHER IN LAW, THE TRIBUNAL WAS RIGHT IN REJE CTING THE APPLICATION FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WITHOUT CONSIDERING THE VAST DEFINITION THAT TH E WORD 'EDUCATION' EMBRACES ALTHOUGH THERE BEING NO SPECIF IC DEFINITION FOR 'EDUCATION' UNDER THE INCOME-TAX ACT OF 1961? 2. WHETHER IN LAW, THE TRIBUNAL WAS RIGHT IN CONSTR UING THAT THE ACTIVITIES CARRIED ON BY THE APPELLANT-SOCIETY WERE NOT FOR EDUCATIONAL PURPOSES? 3. THE HON'BLE COURT WAS PLEASED TO ADMIT THE APPEA L AND FRAMED THE SUBSTANTIAL QUESTIONS OF LAW, WHICH READS AS UNDER: - WHETHER IN LAW, THE TRIBUNAL WAS RIGHT IN REJECTIN G THE APPLICATION FOR EXEMPTION UNDER SECTION 10(23C)(VI) OF THE ACT WITHOUT CONSIDERING THE VAST DEFINITION THAT THE WO RD 'EDUCATION' EMBRACES ALTHOUGH THERE BEING NO SPECIFIC DEFINITIO N FOR 'EDUCATION' UNDER THE INCOME-TAX ACT OF 1961? ITA NO.2057/BANG/2016 PAGE 4 OF 7 4. FURTHER IT WAS SUBMITTED THAT THE TRIBUNAL IN TH E EARLIER ULTIMATELY HAS HELD THAT THE JUDGMENTS CITED WERE NOT HELPFUL TO T HE APPELLANT'S CASE AND HAD FURTHER OBSERVED THAT THE OBJECTS OF THE APPELL ANT-SOCIETY ARE NOT IN RESPECT OF EDUCATIONAL PURPOSES AND THEY AMOUNTED T O CONSULTANCY SERVICES. IT WAS ON THESE REASONS THE APPEAL HAD BE EN DISMISSED. HOWEVER, IN THE RELEVANT YEAR BEFORE THE HON'BLE CO URT THE APPELLANT HAD MADE A DETAILED SUBMISSION BEFORE THE CCIT CITING V ARIOUS CASE LAWS TO SUPPORT ITS CASE, THOUGH CCIT REFERRED THESE CASES TRIED TO DISTINGUISH THE SAME TO JUSTIFY THE DENIAL OF EXEMPTION. THE CCIT, HOWEVER, FAILED TO CONSIDER THE FACT THAT THE APPELLANT INSTITUTION IS CARRYING ON EDUCATIONAL ACTIVITY. HE HAD NOT CONTROVERTED THE FACT THAT THE APPELLANT HAD NOT CARRIED ON ANY ACTIVITY OF MERE CONSULTANCY. THE APPELLANT SPECIFICALLY BROUGHT TO THE NOTICE OF THE CCIT THAT THE APPELLANT WAS IMPAR TING TRAINING TO THE PERSONNEL OF MEMBER BANKS AND OTHER OBJECTIVES ENUM ERATED IN THE MEMORANDUM PROVIDING APPRAISAL PROGRAMS, CONSULTANC Y SERVICES AND OTHER MATTER CONDUCTIVE TO ECONOMIC BETTERMENT ARE NOT ALL PURSUED BY THE SOCIETY. IN FACTS THE AUDITED ACCOUNT FOR THE YEAR 31.3.2012 TO 31.3.2015 WERE FURNISHED TO PROVE THAT THERE WAS NO RECEIPT R ECEIVED FOR SUCH ACTIVITY. EVEN THE SURPLUS MADE WAS NOT CONCLUSIVE TO HOLD TH AT THE APPELLANT SOCIETY WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 10(23C)(VI) OF THE ACT AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ADITANAR EDUCATIONAL INSTITUTION VS. ADDL.CIT (1997) 224 ITR 310 (SC) AND ALSO THE DECISION OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PINE GROVE INTERNATIONAL CHARITABLE TRUST VS. UOI AND OTHERS (2010) 327 ITR 73 (P&H) . THE SUBMISSION OF THE APPELLANT BEFORE THE CCIT HAD BEE N BROUGHT OUT IN THE ORDER OF THE CCIT. THE VARIOUS JUDGMENTS REFERRED T O THEREIN WOULD SUPPORT THE CASE OF THE APPELLANT. FURTHER, THE ORDER IN TH E CASE OF ITAT, BANGALORE BENCH, BANGALORE IN THE CASE OF ADIT(E) VS. M/S.NATIONAL INSTITUTE FOR RURAL BANKING, ITA NO.923/B.2011 DT.24TH JULY 2012 AND ALSO THE BOMBAY TRIBUNAL IN THE CASE OF NATIONAL INSTITUTE OF BANK MANAGEMENT VS. ADIT - ITA NO.2057/BANG/2016 PAGE 5 OF 7 ITA NOS.2913 86 2914/MUM/2016 DT.25.1.2018 WERE FURNISHED TO SUPPORT THE CASE OF THE APPELLANT. IN THE BOMBAY TRIBUNAL'S JUDGMENT THE TRIBUNAL HAD ALSO HELD UNDER IDENTICAL CIRCUMSTANCES THE INS TITUTION IS FOR EDUCATIONAL PURPOSES AND ALSO ELIGIBLE FOR EXEMPTION UNDER SECT ION 11 OF THE ACT. HAVING HELD THAT THE APPELLANT IN THAT CASE WAS ELI GIBLE FOR EXEMPTION U/S.11 OF THE ACT, IT DID NOT CONSIDER THE FACT AS TO WHET HER THE INSTITUTION WAS ELIGIBLE FOR EXEMPTION U/S.10(23C)(VI) OF THE ACT, EVEN THOUGH A PRAYER IN THIS REGARD WAS MADE BY THE APPELLANT. FURTHER THE APPELLANT RELIED ON THE FOLLOWING JUDGMENTS:- (A) DIGEMBER JAIN SOCIETY FOR CHILD WELFARE VS DGIT(E) 329 TR 459(DEL) (B) C.P.VIDYA NIKETAN INTER COLLEGE SHIKSHAN SOC. VS. U OI 359 ITR 322 (ALL) 5. ON THE SIMILAR CIRCUMSTANCES, THE ITAT, BOMBAY B ENCH HAS HELD THAT THE APPELLANT WAS FOR EDUCATIONAL INSTITUTION. IN THE APPELLANT'S OWN CASE THE ITAT, BANGALORE BENCH HAD NOT GONE INTO TH E REAL ISSUE THAT THE APPELLANT-SOCIETY WAS FOR EDUCATIONAL PURPOSES AND HELD THAT THEIR SERVICES WERE ONLY FOR CONSULTANCY WHICH WAS CONTRARY TO THE FACTS OF THE CASE WHICH WAS NOT GONE INTO DETAIL BY THE TRIBUNAL. 6. IN THE CIRCUMSTANCES, IT IS SUBMITTED THAT THE J UDGMENT OF THE APPELLATE TRIBUNAL IS DISTINGUISHABLE AND ON THE FA CTS OF THE CASE OF THE APPELLANT BEFORE THE APPELLATE TRIBUNAL THE OTHER J UDGMENT WOULD APPLY AND THE APPELLANT WAS ENTITLED TO THE EXEMPTION U/S.10( 23C)(VI) OF THE ACT AS CLAIMED. 7. IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE APPE AL MAY KINDLY BE BLOCKED UNTIL THE DISPOSAL OF THE APPEAL BY THE HON 'BLE HIGH COURT OF KARNATAKA IN THE APPELLANT'S OWN CASE FOR THE ASSES SMENT YEAR 2014-15. IN THE ALTERNATIVE, IT IS ALSO PRAYED THAT THE ORDER O F THIS CIT MAY KINDLY BE SET ASIDE AND THE MATTER MAY BE RESTORED TO THE FILE OF THE CIT FOR FRESH ITA NO.2057/BANG/2016 PAGE 6 OF 7 ADJUDICATION AWAITING THE JUDGMENT OF THE HON'BLE C OURT IN THE CASE OF THE APPELLANT FOR THE ASSESSMENT YEAR 2014-15. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE TRIBUNAL FOR EARLIER YEAR AND SUBMITTED THAT THE ISSUE NEED NOT BE REMITTED TO THE FILE OF THE CIT(EXEMPTIONS) AS THE ISSUE HAS ALREADY BEEN D ECIDED AGAINST THE ASSESSEE FOR THE AY 2014-15. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, THE TRIBUNAL IN THE EARLIER YEAR FOR AY 2014-15 ONLY RELIED ON CLAUSE (D) & (G) OF THE MEMORANDUM OF ASSOCIATION O F THE ASSESSEE COLLEGE AND OVERLOOKED CLAUSE (A) & (B) OF THE MEMORANDUM O F ASSOCIATION. HOWEVER, AT THIS STAGE, WE ARE NOT IN A POSITION TO TAKE A DECISION IN FAVOUR OF THE ASSESSEE, SINCE THE DECISION OF THE TRIBUNAL IS NOT DISTURBED BY ANY HIGHER FORUM. HOWEVER, IN THE INTERESTS OF JUSTICE , IT IS APPROPRIATE TO REMIT THE ISSUE IN DISPUTE TO THE FILE OF THE CIT(EXEMPTI ONS) FOR APPROPRIATE DECISION, AFTER THE FINAL JUDGMENT OF THE HONBLE H IGH COURT OF KARNATAKA IN THE CASE OF ASSESSEE FOR THE AY 2014-15. WITH THES E OBSERVATIONS, WE REMIT THE ISSUE TO THE FILE OF THE CIT(EXEMPTIONS). 10. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF MARCH, 2021. SD/- SD/- ( BEENA P ILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH MARCH, 2021. / DESAI S MURTHY / ITA NO.2057/BANG/2016 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.