2015 (2) TMI 1030 - AT - Income Tax

Tax Tribunal Upholds Exemption for Coaching Society, Emphasizes Education Criteria

The tribunal upheld the Commissioner of Income Tax (Appeals)' decision, granting the society conducting coaching classes for civil services examinations ... Eligibility for exemption u/s.10(23C)(iiiad) - assessee is conducting only coaching classes for students for appearing in civil services examination - CIT(A) allowed the claim - Held that:- there is no justification on the part of the A.O. to observe that the assessee cannot be treated as a charitable institution. Therefore, keeping in view the fact that assessee is registered as a charitable institution under section 12A of the Act, it can alternatively also claim exemption under section 11 of the Act. The A.O. while completing the assessment has totally ignored this aspect and has failed to examine whether the assessee is eligible for exemption under section 11 of the Act. For the aforestated reasons, we cannot therefore, accept the conclusion drawn by the A.O. while disallowing the claim of exemption. In the aforesaid view of the matter, we hold that Ld. CIT(A) was correct in allowing assessee's claim of of exemption under section 10(23C)(iiiad). - Decided in favour of assessee. Disallowance of depreciation - CIT(A) deleted the addition - Held that:- As can be seen Ld. CIT(A) has deleted the addition having found that assessee has neither written off the cost of acquisition nor has treated it as application of income. As the learned D.R. has not brought any material to controvert the aforesaid finding of the Ld. CIT(A), we do not find any infirmity in the order of the Ld. CIT(A). - Decided against revenue. Issues Involved:1. Eligibility for exemption under section 10(23C)(iiiad) of the Income Tax Act, 1961.2. Definition of 'education' under section 2(15) of the Income Tax Act, 1961.3. Consistency in granting exemption in successive assessment years.4. Allowability of depreciation on capital assets.5. Alternative claim of exemption under section 11 of the Income Tax Act, 1961.Issue-Wise Detailed Analysis:1. Eligibility for Exemption under Section 10(23C)(iiiad):The primary issue revolves around whether the assessee, a society conducting coaching classes for civil services examinations, qualifies for exemption under section 10(23C)(iiiad). The Assessing Officer (A.O.) denied the exemption, arguing that coaching does not constitute 'education' as defined under section 2(15) and thus, the society is not a charitable institution. The assessee contended that 'education' should not be narrowly defined and includes vocational training. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the assessee's claim, noting that the activities fall within the broader concept of education, which includes training and skill development. The tribunal agreed with CIT(A), emphasizing that the assessee's systematic and structured training qualifies as 'education', thus making it eligible for exemption under section 10(23C)(iiiad).2. Definition of 'Education' under Section 2(15):The A.O. argued that 'education' should be restricted to conventional schooling. However, the CIT(A) and the tribunal referred to various judicial precedents, including the Supreme Court's decision in Sole Trustee, Loka Shikshana Trust vs. CIT, which suggested that 'education' encompasses a broader scope, including vocational training and skill development. The tribunal concluded that the assessee's activities of preparing students for competitive exams fit within this broader definition of 'education'.3. Consistency in Granting Exemption:The tribunal noted that the assessee had been consistently granted exemption in previous and subsequent assessment years. Citing the principle of consistency from the Supreme Court's decision in Radhasoami Satsang, the tribunal held that the department should not deviate from its earlier stance without any new material or change in circumstances. The tribunal emphasized that the A.O. had accepted the exemption in earlier years, and there was no justification for a different view in the current assessment year.4. Allowability of Depreciation on Capital Assets:The A.O. disallowed depreciation on the grounds that the cost of acquisition of the capital asset was either written off or treated as an application of income. The CIT(A) found that the assessee had neither written off the cost nor treated it as an application of income but had merely debited depreciation to the Income and Expenditure account. The tribunal upheld the CIT(A)'s decision, as the department failed to provide any evidence to the contrary.5. Alternative Claim of Exemption under Section 11:The assessee argued that it should alternatively be granted exemption under section 11, given its registration under section 12A. However, since the tribunal upheld the CIT(A)'s decision to grant exemption under section 10(23C)(iiiad), the alternative claim under section 11 was deemed unnecessary to adjudicate.Conclusion:The tribunal dismissed the department's appeal, upholding the CIT(A)'s decision to grant the assessee exemption under section 10(23C)(iiiad). The tribunal also dismissed the assessee's cross-objection regarding the alternative claim under section 11 as infructuous, given the primary issue's resolution. The order was pronounced in the open court on 30.01.2015.