Assessee denied tax exemption as not qualified under Section 10(23C)(iiiab). Appeal dismissed.

The Tribunal held that the assessee did not qualify as an educational institution under Section 10(23C)(iiiab) of the Income Tax Act and was not substantially financed by the Government. Consequently, the claimed exemption was denied, and the appeal was dismissed on 10/03/2021.

---

---

Issues Involved:
1. Whether the assessee was given a reasonable opportunity to present their case.
2. Whether the assessee qualifies for exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961.
3. Whether the assessee is an educational institution as defined by the Income Tax Act.
4. Whether the assessee is wholly or substantially financed by the Government.

Issue-wise Detailed Analysis:

1. Reasonable Opportunity to Present the Case:
The assessee contended that they were not given a reasonable opportunity to present their case before the Assessing Officer and the Commissioner of Income Tax (Appeals) [CIT(A)]. They argued that the authorities relied on the bare language of the Act without considering a broader view that might benefit the assessee. The appeal also requested the appellate authority to entertain the appeal without the payment of the disputed demand, citing the lack of a reasonable opportunity to be heard.

2. Qualification for Exemption under Section 10(23C)(iiiab):
The core issue revolved around whether the assessee qualifies for exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961. The assessee, a registered society, claimed exemption on the interest income earned from fixed deposits, arguing that they existed solely for educational purposes and were substantially financed by the Government. The CIT(A) held that the assessee did not fulfill the primary conditions for the claim under Section 10(23C)(iiiab), as they were engaged in improving vocational training standards but did not qualify as an educational institution per the Act.

3. Definition of Educational Institution:
The assessee argued that the term 'education' should be interpreted broadly to include any improvement in intellectual and analytical abilities. They claimed that their activities in upgrading Industrial Training Institutes (ITIs) under a Central Government scheme should qualify them for the exemption. However, the Tribunal examined the definition of 'education' as interpreted by the Hon'ble Supreme Court in the case of Sole Trustee, Loka Sikshana Trust v CIT [1975] 101 ITR 234, which defined education as systematic instruction or training resulting in a degree or diploma. The Tribunal found that the assessee was not affiliated with any board or university and did not provide such systematic instruction.

4. Financing by the Government:
The Tribunal also examined whether the assessee was wholly or substantially financed by the Government. The assessee had received an interest-free loan from the Ministry of Labour & Employment, repayable after ten years, but no grants, grants-in-aid, or financial assistance. The Tribunal concluded that receiving a repayable loan did not constitute substantial financing by the Government, as required under Section 10(23C)(iiiab).

Conclusion:
The Tribunal found that the assessee did not qualify as an educational institution under Section 10(23C)(iiiab) and was not substantially financed by the Government. Therefore, the assessee was not entitled to the claimed exemption. The appeal was dismissed, and the order was pronounced in the open court on 10/03/2021.

---