2018 (4) TMI 197 - HC - Income Tax

High Court Upholds Tribunal Decision on Educational Activities' Tax Benefits

Commissioner of Income Tax (Exemptions) Versus Indian Institute of Banking and Finance

The High Court upheld the Tribunal's decision, emphasizing the educational nature of the respondent-institute's activities and dismissing the Revenue's ... Eligibility for deduction u/s 11 - whether assessee is a charitable organization? - whether activity carried out by the assessee is in the nature of running Coaching Classes or Center and therefore the benefit of Section 11 cannot be extended to the respondent? - Held that:- We find that this objection/grievance of the Revenue has been taken up for the first time across the bar. There is no such objection taken before the authorities by the Revenue. Besides, nothing has been shown to us why it should be considered as a coaching class. The impugned order of the Tribunal has only applied the decision of this Court in Samudra Institute of Maritime Studies Trust (2014 (9) TMI 575 - BOMBAY HIGH COURT) to conclude that the activities which are run by the respondent-institute is an educational activity and not in the nature of running a Coaching Center or a Class. The Revenue is not able to point why it would not apply. We may also point out that the grant or refusal to grant exemption under Section 10(22) and/or (23C) of the Act cannot govern the application of Section 11 of the Act. In any case, we are informed that no appeals in respect of Section 10(22) and/or (23c)(vi) of the Act are pending disposal. No substantial question of law. Issues:Challenge to order of Income Tax Appellate Tribunal under Section 260-A of the Income Tax Act, 1961 for Assessment Year 2008-09. Question of law regarding eligibility for deduction under Section 11 of the Income Tax Act, 1961 for a charitable organization.Analysis:The respondent-assessee, a non-profit making Company registered under Section 26 of the Indian Companies Act, 1913, sought exemption under Section 11 of the Income Tax Act, 1961. The Assessing Officer denied the exemption, citing pending appeals and applications under different sections. The Assessing Officer disregarded the petitioner's contention of being entitled to exemption as an educational institution, stating that the activities were not charitable. The Commissioner of Income-Tax (Appeals) also rejected the petitioner's appeal. However, the Tribunal allowed the respondent-assessee's appeal after examining the object clause and activities of the institute. The Tribunal found that the institute existed for the advancement of learning in the field of banking, providing education to banking industry members efficiently. The Tribunal referred to a court decision to affirm the educational nature of the institute's activities and rejected the objection that the benefit was restricted to a specific group.The Revenue contended that the institute's activities resembled running coaching classes, thus not qualifying for Section 11 benefits. The High Court noted that this objection was raised for the first time and not presented before the authorities earlier. The Tribunal's order was based on the educational nature of the institute's activities, following a relevant court decision. The High Court clarified that the grant or refusal under other sections does not affect Section 11 application. As no pending appeals were reported for other sections, the High Court dismissed the appeal, stating that the question did not raise any substantial legal issue as the Tribunal applied a previous court decision to the case.Therefore, the High Court upheld the Tribunal's decision, emphasizing the educational nature of the respondent-institute's activities and dismissing the Revenue's objection regarding coaching classes. The judgment highlighted the importance of considering the specific activities and objectives of an organization to determine its eligibility for tax benefits under relevant sections of the Income Tax Act.