Appeals Denied: Tribunal Rules Against Tax Exemption for Educational Institution Engaged in Profit Activities.

The Tribunal dismissed the appeals for the assessment years 2016-17 to 2019-20, upholding the denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. It concluded that the appellant did not exist solely for educational purposes, as its activities included profit-oriented endeavors such as collecting fees for examinations, earning royalties, and providing services to members. Despite historical exemptions and recognition by institutions, the Tribunal found these activities inconsistent with the requirement of solely educational objectives, as clarified by the SC in New Noble Educational Society vs Chief Commissioner of Income Tax.

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Issues Involved:
1. Non-grant of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961.

Summary:

Non-grant of exemption under Section 10(23C)(vi):

- Existence Solely for Educational Purpose: The learned Commissioner of Income Tax (Exemptions) [CIT(E)] held that the appellant does not exist solely for educational purposes and is involved in commercial activities. The Tribunal upheld this view, noting that the appellant's activities, such as collecting fees for examinations, earning royalties from publications, and providing services to members, indicate a profit motive rather than solely educational purposes. The Tribunal emphasized that the term "solely" is crucial and that the appellant's objectives include professional development and information dissemination, which do not qualify as educational activities.

- Previous Tribunal and High Court Orders: The appellant argued that previous orders by the Tribunal and the Bombay High Court recognized its activities as educational and covered by the definition of "charitable purpose" under Section 2(15) of the Act. However, the Tribunal noted that the Supreme Court's recent decision in New Noble Educational Society vs Chief Commissioner of Income Tax clarified that all objects of an institution must be aimed solely at imparting or facilitating education to claim exemption under Section 10(23C)(vi).

- Historical Exemptions and Continuity: The appellant contended that it has been carrying out the same educational activities for over 90 years and had been granted similar exemptions in the past. The Tribunal, however, found that the appellant's current functioning, including earning royalties and membership fees, does not align with solely educational purposes.

- Recognition by Institutions: The appellant highlighted that its courses are recognized by institutions like the Reserve Bank of India (RBI). The Tribunal acknowledged this but noted that the RBI's recommendation for a course does not equate to formal approval as an educational institution.

- Incidental Activities: The appellant argued that activities like counseling, consulting, and publication of books are incidental and support its educational purpose. The Tribunal disagreed, stating that these activities contribute to the profit motive and are not solely educational.

- Surplus Earnings: The Tribunal noted that earning a surplus is not prohibited, but the appellant's substantial surplus and profit-oriented activities indicate a profit motive, contrary to the requirement of Section 10(23C)(vi).

- Members' Entitlement to Surplus: The Tribunal found that the appellant's bye-laws prohibit distribution of dividends and repayment of surplus to members. However, the Tribunal emphasized that the overall activities and objectives must be solely educational, which was not the case here.

- Formal Education Requirement: The Tribunal upheld the CIT(E)'s view that formal education presupposes approval by educational bodies of the Central/State Government, which the appellant lacks.

Conclusion:
The Tribunal dismissed the appeals for the assessment years 2016-17, 2017-18, 2018-19, and 2019-20, upholding the denial of exemption under Section 10(23C)(vi) of the Act, as the appellant did not exist solely for educational purposes and was involved in profit-oriented activities.

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