2016 (6) TMI 1387 - AT - Income Tax

Tribunal rules for assessee on exemption issue under Section 11, directs AO to recalculate income

The Indian Institute of Banking & Finance (Formerly known as The Indian Institute of Bankers) Versus The Asst. Director of Income Tax Exemption Rg. II (1), Mumbai

The Tribunal partly allowed the appeal, ruling in favor of the assessee on the issue of exemption under Section 11. This decision influenced the findings ... Exemption u/s 11 denied - appellant’s primary activities were not for the benefit of the public at large and were also not of charitable nature - HELD THAT:- The order for the A.Y. of 2008-09 [2015 (2) TMI 449 - ITAT MUMBAI] has been passed under the similar circumstances hence the same is applicable in this assessment year also. No distinguishable material was produced before us to which it can be assumed that the activity of the institute has now being changed. The object and activity of the institute are quite similar with the assessment year of 2008-09 vide which the above mentioned order has been passed. We found no ground to deviate with the finding of the order of the Tribunal mentioned above. Therefore, in the said circumstances we are of the opinion that the assessee is charitable organization and eligible for deduction u/s.11&12 of the Act. - Decided in favour of assessee Issues Involved:1. Exemption under Section 11.2. Taxability of Capital Receipts / Corpus Donations.3. Deduction of Expenses.4. Other Statutory Deductions.5. Claim for Exemption under Section 10(23C)(vi).Detailed Analysis:Issue No.1:The first issue is formal in nature and does not require any adjudication.Issue No.2: Exemption under Section 11The assessee argued that the Hon’ble Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in ITA No.5725/Mum/2012 for A.Y.2008-09, had decided this issue in its favor, and there was no change in circumstances. The Tribunal examined the object and activity of the appellant company and concluded that the assessee was pursuing educational activities. The Tribunal's decision was based on the Memorandum of Association, which indicated that the institute was established for the development of banking personnel and imparted education through various courses, seminars, and examinations. The Tribunal also noted that the surplus generated was not distributed as dividends but was used for charitable purposes, and the institute's activities were educational and charitable in nature, thus eligible for exemption under Section 11.Issue No.3: Taxability of Capital Receipts / Corpus DonationsIn light of the decision on Issue No.2, the Tribunal held that the assessee was eligible for exemption under Sections 11 and 12 of the Act. Consequently, the capital receipts and corpus donations, being of a capital nature, could not be taxed. The matter was set aside to the Assessing Officer to recompute the total income after allowing the benefits of Sections 11 and 12.Issue No.4: Deduction of ExpensesSimilarly, the Tribunal's decision on Issue No.2 impacted the deductions of expenses. The Assessing Officer was directed to recompute the total income, considering the allowable deductions under Sections 11 and 12.Issue No.5: Other Statutory DeductionsThe Tribunal's ruling on Issue No.2 also affected the statutory deductions. The Assessing Officer was instructed to recompute the total income, allowing the statutory deductions set aside for future requirements as per Section 11(2).Issue No.6: Claim for Exemption under Section 10(23C)(vi)This issue was not pressed by the assessee during the hearing and was accordingly dismissed.Conclusion:The appeal was partly allowed, with the Tribunal ruling in favor of the assessee on the primary issue of exemption under Section 11, which influenced the decisions on related issues of capital receipts, deductions of expenses, and other statutory deductions. The additional ground for exemption under Section 10(23C)(vi) was dismissed as not pressed. The Assessing Officer was directed to recompute the total income in accordance with the Tribunal's findings. The order was pronounced in the open court on 23rd June 2016.