ADIT (E) I(2), MUMBAI V. SAMUDRA INSTITUTE OF MARITIME STUDIES TRUST, MUMBAI

ITA 2668/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78893 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: S A MUKADAM
• Keywords: Charitable institution; Benefit of exemption
• Section: 11; 143(3); 12A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND VIVEK VARMA, (JM) . . , , ./I.T.A.NO.2668/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) ADDITIONAL DIRECTOR OF INCOME TAX (E) I(2), ROOM NO.504, 5TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400012. / VS. SAMUDRA INSTITUTE OF MARITIME STUDIES TRUST, 507, 5 TH FLOOR, SAI COMMERCIAL COMPLEX, BKS DEVSHI MARG, GOVANDI, MUMBAI-400088 ./ ./PAN/GIR NO. : AACTS9557L ( # / APPELLANT) .. ( $%# / RESPONDENT) # / APPELLANT BY : SHRI GIRIJA DAYAL $%# ' /RESPONDENT BY SHRI S .A.MUKADAM ' ) / DATE OF HEARING : 6.5.2014 ' ) /DATE OF PRONOUNCEMENT : 16 .5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF LD. CIT(A)- 1, MUMBAI, DATED 7.3.2012 AND IN THE SOLITARY GROUN D RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A ) IN HOLDING THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE ASSESSEE IN THE PRESENT CASE IS A CHARITABL E TRUST WITH ITS MAIN OBJECT BEING TO IMPART POST-SEA AND PRE-SEAL TRAINING TO ALL SEAMEN. IT HAS GOT POST SEA TRAINING CENTRE AT GOVANDI, MUMBAI AND PRE- SEA TRAINING CENTRE AT LONAVALA. IT IS DULY REGISTERED U/S 12A OF THE AC T. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSES SEE TRUST ON 29.9.2008 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING EXEMP TION U/S 11 OF THE ACT. FROM THE RELEVANT DETAILS FURNISHED BY THE ASSESSEE IN RESPECT OF COURSES CONDUCTED, IT I.T.A.NO. . 2668/MUM/2012 2 WAS NOTED BY THE AO THAT THERE ARE TWO TO CATEGORI ES OF COURSES, ONE APPROVED AND RECOGNIZED BY THE DIRECTORATE GENERAL OF SHIPP ING AND OTHER CATEGORY OF COURSES WHICH WERE NOT APPROVED AND RECOGNIZED BY T HE DIRECTORATE GENERAL OF SHIPPING. ACCORDING TO THE AO, THE COURSES WHI CH WERE NOT APPROVED AND RECOGNIZED BY THE DIRECTORATE GENERAL OF SHIPPING WERE CONDUCTED BY THE ASSESSEE AS PRIVATE COACHING CLASSES AND THE SAME C OULD NOT BE TREATED AS HAVING CHARACTER OF CHARITABLE PURPOSES AS PROVIDE D UNDER SECTION 2(15). HE HELD THAT THESE COURSES WERE CONDUCTED BY THE ASSES SEE PURELY AS A COMMERCIAL ACTIVITY WITH ONLY MOTIVE OF EARNING PROFIT. HE T HEREFORE DISALLOWED THE BENEFIT OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT AND COMPLETED AN ASSESSMENT U/S 143(3) VIDE ORDER DATED 21.12.2010 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.38,13,726/-. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) O F THE ACT, THE APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AN D AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND FOL LOWING THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE ON SIMILA R ISSUE FOR ASSESSMENT YEAR 2007-08 VIDE ITS ORDER DATED 30.11.2011 PASSED IN ITA NO.5760/MUM/2010 , THE LD. CIT(A) VIDE PARA 4 OF HIS ORDER ALLOWED THE C LAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 OF THE ACT BY OBSERVING AS UNDER : 4. THE AO ANALYZED THE COURSES ACTUALLY CONDUCTED DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2007-08. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE HE NOTED THAT THE ASSESSE E HAS MADE PROFIT OF RS.99,22,167/- ON ACCOUNT OF DG SHIPPING APPROVED C OURSES CONDUCTED AT LONAVALA AND MADE A PROFIT OF RS.2,08,19,001/- ON A CCOUNT OF NON APPROVED COURSES CONDUCTED AT GOVANDI, MUMBAI. THE AO WAS OF THE OPINION THAT THIS IS AN INDICATOR OF THE ASSESSEES INDULGENCE IN THE COMMERCIAL AND PROFIT MAKING ACTIVITIES UNDER THE G ARB OF CHARITABLE INSTITUTION. HE, THEREFORE, ASKED THE ASSESSEE TO E XPLAIN AS TO WHY THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S.11 OF THE I .T. ACT SHOULD NOT BE REJECTED. REJECTING THE VARIOUS EXPLANATION OFFERED BY THE ASSESSEE HE NOTED THAT THE ASSESSEE IS PROJECTING THE COURSES W HICH ARE MORE PROFITABLE AND PROVIDE MORE EARNING TO THE ASSESSEE , RATHER THAN OFFERING I.T.A.NO. . 2668/MUM/2012 3 EDUCATION THROUGH RECOGNIZED COURSES. THE ENTIRE IN STITUTION IS BEING RUN WITH A SOLE MOTIVE OF EARNING PROFIT. HOWEVER, A F EEBLE ATTEMPT HAS BEEN MADE BY THE ASSESSEE OF GIVING THE COLOUR OF CHARIT ABLE INSTITUTION TO THE TRUST WHOSE ACTIVITIES ARE NOT COVERED WITHIN THE M EANING OF EDUCATION AS CONTEMPLATED U/S.2(15) OF THE I.T. ACT. RELYING ON THE DECISION OF HON'BLE PATNA HIGH COURT IN THE CASE OF BIHAR INSTITUTE OF MINING AND MINE SURVEYING VS. CIT REPORTED IN 208 ITR 608 AND THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE LOKA SHI KSHANA TRUST VS. CIT REPORTED IN 101 ITR 234, THE DECISION IN THE CASE O F MAZGAON DOCKS LTD. VS. CIT REPORTED IN 34 ITR 368 AT 376 AND VARIOUS O THER DECISIONS HE HELD THAT THE ACTIVITIES OF THE ASSESSEE IN CONNECTION W ITH THE CONDUCTING OF COMMERCIAL COURSES ARE CLEARLY BUSINESS ACTIVITIES WITHIN THE MEANING OF SEC.2(13) OF THE I.T. ACT., SINCE ALL THE ELEMENTS OF BUSINESS ARE PRESENT IN THESE COURSES. HE ACCORDINGLY REJECTED THE CLAIM OF EXEMPTION U/S.11 OF THE I.T. ACT. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE CLAIM FOR THE ASSESSEE FOR EXEMPTION U/S 11 WAS DISALLOWED BY THE AO IN AY -2007-08 ON THE SIMILAR GROUND AND THE ORDER OF THE LD CIT(A) REVERSING TH E ORDER OF THE AO AND ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION CLAIM U/S 11 WAS UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 30.11.2011 PASSE D IN ITA NO.5760/MUM/2010 FOR THE REASONS GIVEN IN PARA 9.6 WHICH READS AS U NDER : 9.6 WE FIND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF S.R.M FOUNDATION OF INDIA (SUPRA) WHILE DECIDING THE ISSU E U/S.10(22) OF THE I.T. ACT HAS HELD THAT THERE IS NO REQUIREMENT PRESCRIBE D U/S.10(22) THAT THE INSTITUTION SHOULD BE RECOGNIZED BY AN UNIVERSITY O R STATE OR CENTRAL GOVERNMENT. THE TRIBUNAL IN THE SAID DECISION HELD 33 LESSONS OF WHAT IS TERMED AS SCIENCE OF CREATIVE INTELLIGENCE (SCI) WH ICH ARE IN THE NATURE OF YOGA CLASSES AS EDUCATION. THE TRIBUNAL WHILE DECID ING THE ISSUE HAS CONSIDERED THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHAN TRUST (SUPRA). WE FIND THE VA RIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT ITS CASE. THE DECISION IN THE CASE OF BIHAR INSTITUTE OF MINING A ND MINE SURVEYING (SUPRA) IN OUR OPINION IS NOT APPLICABLE TO THE FAC TS OF THE PRESENT CASE. IN THAT CASE IT WAS COACHING OF STUDENTS FOR PARTICULA R EXAMINATION, FOR WHICH IT WAS HELD THAT COACHING INSTITUTION IS NOT A CHA RITABLE INSTITUTION WITHIN THE MEANING OF SECTION 2(15). HOWEVER, IN THE INSTA NT CASE THE ASSESSEE IS GIVING TRAINING IN THE AREA OF PRE SEA AND POST SEA TO SEA MEN. THE VARIOUS OTHER DECISIONS RELIED ON BY THE AO ARE ALS O DISTINGUISHABLE AND I.T.A.NO. . 2668/MUM/2012 4 NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN OUR OPINION, MERELY BECAUSE THE COURSES ARE NOT APPROVED BY THE DG SHIP PING OR MERELY BECAUSE THERE IS HUGE SURPLUS IN THE NON-APPROVED C OURSES THAN THE APPROVED COURSES CANNOT BE A GROUND FOR DENIAL OF E XEMPTION U/S.11 AS LONG AS THE TRUST IS IMPARTING EDUCATION AS PER THE OBJECTS OF THE TRUST. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED OBSERVATIONS GIVEN BY THE LD. CIT(A) ON THIS ISSUE WE DO NOT FIND ANY INF IRMITY IN THE SAME AND ACCORDINGLY THE SAME IS UPHELD. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 6. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDE RATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO TH AT OF ASSESSMENT YEAR 2007-08, WE RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDIN ATE BENCH OF THIS TRIBUNAL RENDERED FOR ASSESSMENT YEAR 2007-08 AND UPHOLD THE ORDER OF THE LD. CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/ S 11 OF THE ACT. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MA Y, 2014 ' - . 16 TH MAY, 2014 ' SD SD ( / VIVEK VARMA ) ( . . / P.M.JAGTAP) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 16 TH DAY OF MAY, 20 14 . . ./ SRL , SR. PS ' #$&' (' / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT /APPLICANT 2. $%# / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. $5 , ) 5 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) ) 5 , /ITAT, MUMBAI