IMC OF ITI , ALIGARH V. ITO EXMP., ALIGARH

ITA 749/AGR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8503 (ITAT-AGRA)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Maximum Marginal Rate
• Section: 271(1)(c); 10; 10(23C)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO. 749/AGR/2018 ASSESSMENT YEAR: 2015-16 M/S. IMC OF ITI KOIL KASIMPUR POWER HOUSE GOVT., GOVT. ITI, KOIL, ALIGARH. PAN: AAAAI5120N (APPELLANT) VS. INCOME - TAX OFFICER, WARD(EXEMPTION), GHAZIABAD. (RESPONDENT) APPELLANT BY SMT. MANISH VISHNOI, ADVOCATE RESPONDENT BY SHRI WASEEM ARSHAD, SR. DR ORDER PER LALIET KUMAR, J.M.: THIS APPEAL WAS FILED BY THE ASSESSEE, BEING AGGR IEVED BY THE ORDER PASSED BY THE CIT(A) ON 30.08.2018, SUSTAINING THE PENALTY AS THE ASSESSEE WAS NOT HAVING REGISTRATION U/S. 10(23) OF THE ACT, ON THE FOLLOWI NG GROUNDS : 1. TRUST AND ITS ACTIVITIES A) THE ASSESSES IS SOCIETY AND IS DULY REGISTERED WI TH THE REGISTRAR OF SOCIETY, UTTAR PRADESH UNDER SOCIETY REGISTRATION ACT VIDE R EGISTRATION NO. 1190 OF 2011-2012 DATED 29/08/2011. B) THE ASSESSEE SOCIETY IS A INSTITUTE MANAGEMENT CO MMITTEE AND IS FORMED WITH THE AIM (I) THE MAIN AIM OF THE SOCIETY IS TO ASSIST IN IMPROVEMENT OF STANDARD OF VOCATIONAL TRAINING AND SKILL DEVELOPME NT IN THE COUNTRY AS A WHOLE (II) THE SOCIETY HAS BEEN FORMED WITH A SPECIFIC AI M OF UP GRADATION OF THE INDUSTRIAL TRAINING INSTITUTE (ITI) KOIL INTO A CENT RE OF EXCELLENCE IN SUCH A WAY THAT THE TRAINING PROVIDED IN THE ITI IS IMPROVE AND BECOME DEMAND DRIVEN LEADING TO BETTER EMPLOYABILITY OF THE PASSING OUT GRADUATE. FOR THE PURPOSE, DATE OF HEARING 01.07.2019 DATE OF PRONOUNCEMENT 02 .07.2019 ITA NO. 749/AGR/2018 2 INTEREST FREE LOAN OF RS. 2.5 CRORE WAS GRANTED TO THE SOCIETY BY MINISTRY OF LABOR EMPLOYMENT, NEW DELHI. C) ON PERUSAL OF THE INCOME & EXPENDITURE A/C, IT I S NOTICED THAT TOTAL RECEIPTS OF RS. 34,53,762/-, BEING INTEREST FROM BANK SAVING, F LEXI DEPOSITS, AND FD, HAS BEEN DISCLOSED AND SURPLUS HAS ALSO BEEN DISCLOSED AT RS , 18,42,117/-, WHICH IS CLAIMED BY THE ASSESSEE AS EXEMPT U/S 10(23C) (IIIA D) OF THE INCOME TAX. THE ASSESSEE IS NOT A UNIVERSITY OR OTHER EDUCATIONAL I NSTITUTION EXISTING SOLELY FOR EDUCATION PURPOSE FOR IMPARTING EDUCATION, BUT THE ASSESSEE IS A INSTITUTE OF MANAGEMENT COMMITTEE (IMC) TO ASSIST FINANCIALLY IN IMPROVEMENT AND UP GRADATION OF THE INDUSTRIAL TRAINING INSTITUTE KOIL INTO A CENTRE OF EXCELLENCE IN SUCH A WAY THAT TRAINING PROVIDED IN THE ITI IS IMPR OVED AND BECOME DRIVEN LEADING TO BETTER EMPLOYABILITY OF THE PASSING OUT GRADUATES. HOWEVER THE ASSESSEE IS RUNNING A EDUCATIONAL INSTITUTIONS EXIS TING SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSE OF PROFIT, SHALL BE EXE MPT FROM UNDER SECTION 10(23C)(IV). SUCH APPROVAL IS NOT REQUIRED IN CASE OF UNIVERSITY OR EDUCATIONAL INSTITUTE WHOLLY OR SUBSTANTIALLY FINANCED BY THE G OVERNMENT OR IF THEIR AGGREGATE ANNUAL RECEIPTS DO NOT EXCEED RS ONE CROR E. D) UNDER SECTION 10(46) (SPECIFIES INCOME ARISING T O NOTIFIES BOARD OR TRUST OR COMMISSION):- THE INSTITUTION IS OWNED BY THE STATE GOVERNMENT AND IT HAS CONTROLLING INTEREST IN THE APPELLANT SOCIETY .THE A PPELLANT SOCIETY IS A NOTIFIED BODY U/S 10(46) AND HENCE CAN CLAIM THE BENEFIT OF THIS SECTION.( LIST OF ITIS ALONG WITH INDUSTRY PARTNERS FOR THE SCHEME OF UPGR ADATION OF GOVT. ARE ATTACHED.) E) ASSESSING OFFICER DISALLOWED OUT STATUS OF A C HARITABLE TRUST AND IMPOSED AN INCOME TAX AT MAXIMUM MARGINAL RATE RS. 617524/- F) THE ASSESSING OFFICERS ALSO WRONGLY DISALLOW THE PROVISION OF SECTION 10(23C). G) THE ASSESSING OFFICER ALSO WRONGLY DISALLOW EXEMP TION U/S 10(46). H) THE ASSESSING OFFICER ALSO IMPOSE PENALTY U/S 271(1)(C) WRONGLY. 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE TRI BUNAL VIDE ORDER DATED 19.06.2019 HAS ALLOWED THE SUBSTANTIVE APPEAL OF TH E ASSESSEE THEREBY HOLDING THAT THE ASSESSEE IS ENTITLED TO BENEFIT OF SEC. 10(23)( IIIAD) OF THE ACT TO THE FOLLOWING EFFECT : ITA NO. 749/AGR/2018 3 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND ALSO GONE THROUGH THE DECISIONS RELIED UPON BY LD.AR FOR THE ASSESSEE AS WELL AS BY THE LD . DR FOR THE REVENUE. 11. SECTION 10(23C) PROVIDES AS UNDER : 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAU SES SHALL NOT BE INCLUDED SECTION 10(23C) (IIIAD) PROVIDES AS UNDER: ( 23C ) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF I) THE PRIME MINISTERS NATIONAL RELIEF FUND; OR II) III) . [( IIIAB ) ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE S OF PROFIT, AND WHICH IS WHOLLY OR SUBSTANTIALLY FINANC ED BY THE GOVERNMENT; OR 12. FROM THE PERUSAL OF THE ABOVE NOTED PROVISION IT IS ABUNDANTLY CLEAR THAT THE INCOME ARISING OUT OF THE ACTIVITIES CARRYING O UT BY THE ASSESSEE IF FALLS UNDER, THE ABOVE NOTED CLAUSE, THAN IT SHALL NOT BE INCLUDED FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME OF THE PREVIO US YEAR. THIS SECTION FURTHER PROVIDES THAT INCOME MAY BE RECEIVED BY THE ASSESSEE ON BEHALF OF THE UNIVERSITY OR ANY OTHER EDUCATIONAL INSTITUTION . MEANING THEREBY IT IS NOT NECESSARY TO RUN UNIVERSITY OR RUN EDUCATIONAL INSTITUTION, BY THE ASSESSEE ITSELF, FOR CLAIMING THE BENEFIT OF SECTIO N 10 (23 C) (IIIAD). IN OUR VIEW, IN LAW, IT IS SUFFICIENT IF THE INCOME IS REC EIVED BY ASSESSEE ON BEHALF OF EDUCATIONAL INSTITUTION FOR CLAIMING THE BENEFIT UNDER SECTION 10(23), SUBJECT TO THE FULFILLMENT OF CONDITIONS OF DISBURS EMENTS OF GRANT AND SUBJECT TO UTILIZATION OF THE REVENUE FOR THE PURPO SES OF EDUCATION ALONE. 13. WE ARE OF THE OPINION THAT THERE IS NO REQUIREMENT IN LAW TO OWN THE EDUCATIONAL INSTITUTION FOR THE PURPOSES OF CLAIMIN G THE BENEFIT OF SECTION 10(23C)(IIAD), AS IT CAN BE RECEIVED BY THE ASSESSE E ON BEHALF OF THE SOCIETY OR INSTITUTION RUNNING THE EDUCATIONAL INSTITUTION . WHAT IS REQUIRED AND ITA NO. 749/AGR/2018 4 SINE QUA NON FOR CLAIMING BENEFIT OF 10(23C)(IIAD), IS TO RUN THE EDUCATION INSTITUTION AND RECEIVE THE INCOME FOR THAT PURPOSE S EITH ITSELF OR ON BEHALF OF INSTITUTION RUNNING THE EDUCATIONAL INSTITUTION. 14. IN THE PRESENT CASE ASSESSEE SOCIETY IS ENGAGED IN PROVIDING UPGRADATION/IMPROVEMENT TO THE GOVERNMENT RUN ITI A ND IS ALSO PROVIDING ON THE JOB-TRAINING TO THE STUDENTS OF THE GOVERNME NT RUN ITI, AFTER ENTERING INTO MEMORANDUM OF UNDERSTANDING WITH THE CENTRAL AND STATE GOVERNMENT , FURTHER THE ASSESSEE IS BOUND BY THE I NSTRUCTIONS ISSUED BY BOTH THE GOVERNMENTS. BOTH THE LOWER AUTHORITIES HA VE ADMITTED THAT THE ASSESSEE IS MANAGING THE ITI ( REF PARA 5.6 OF CIT (A) : THOUGH THE APPELLANT SOCIETYS MANAGING AN EDUCATIONAL INSTITU TION NAMELY ITI KASGANJ,. . ) AN EDUCATIONAL INSTITUTE. 15. IN OUR CONSIDERED OPINION THE UPGRADATION/IMPROVEM ENT OF THE GOVERNMENT RUN ITI AND PROVIDING JOB-TRAINING TO TH E STUDENTS FOR THE PURPOSE OF SKILL DEVELOPMENT IS AN INTEGRAL AND ESS ENTIAL PART OF EDUCATION ACTIVITIES AND IS EDUCATION. IN VIEW THEREOF WE ARE OF THE OPINION THAT THAT THE ASSESSEE SOCIETY IS INVOLVED IN RUNNING AND MAN AGING OF THE EDUCATION INSTITUTIONS. 16. THERE IS ONE MORE REASON FOR ALLOWING THE APPEAL FO R THE ASSESSEE AS THE ASSESSEE HAD ENTERED INTO THE MEMORANDUM OF UNDERST ANDING WITH THE GOVERNMENT OF INDIA FOR THE PURPOSES STATED ABOVE A ND ALSO MENTIONED IN MEMORANDUM OF UNDERSTANDING. THE OBJECTS OF THE UND ERSTANDING CLEARLY SUGGEST THAT THIS PARTNERSHIP WAS CONCEIVED WITH A VIEW TO IMPART EDUCATION/UPGRADE AND IMPROVE THE STANDARD OF THE G OVERNMENT ITI AND ALSO PROVIDE ON-THE-JOB TRAINING/SKILL DEVELOPMENT TO THE STUDENT STUDYING IN ITI. 17. IN VIEW THE ABOVE WE ARE OF THE OPINION THAT THE AS SESSING OFFICER AND THE COMMISSIONER BOTH ERRED IN REJECTING THE CLAIM OF T HE ASSESSEE AND ACCORDINGLY WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT THE BENEFIT OF10(23C)(IIAD) TO TH E ASSESSEE IN ACCORDANCE WITH LAW. 3. PER CONTRA, THE LD. DR RELIED ON THE ORDERS OF T HE LOWER AUTHORITIES. ITA NO. 749/AGR/2018 5 4. AS THE TRIBUNAL VIDE ORDER DATED 19.06.2019 HAD ALLOWED THE APPEAL OF THE ASSESSEE FOR REFUSING TO GRANT BENEFIT OF SECTION 1 0(23)(IIIAD) AND THE PRESENT ORDER UNDER CHALLENGE IS CONSEQUENCE OF DENIAL OF BENEFIT OF 10(23)(IIIAD), ON ACCOUNT OF WHICH THE PENALTY IS IMPOSED BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE CIT(A). SINCE THE BASIS OF IMPOSITION OF PENALTY CEASED TO EXIST, THEREFORE, THE INTEREST OF JUSTICE REQUIRE THAT THE PENALTY IMPOSED BY THE REV ENUE IS REQUIRED TO BE DELETED. ACCORDINGLY, WE DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DR. MITHA LAL MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02/07/2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA