ADIT (E)-II(1), MUMBAI v. INDIAN INSTITUTE OF MATERIAL MANAGEMENT, NAVI MUMBAI

ITA 5123/MUM/2014 | 2009-2010
Pronouncement Date: 24-10-2016 | Result: Dismissed

Appeal Details

RSA Number 512319914 RSA 2014
Assessee PAN AAATI1446A
Bench Mumbai
Appeal Number ITA 5123/MUM/2014
Duration Of Justice 2 year(s) 2 month(s) 16 day(s)
Appellant ADIT (E)-II(1), MUMBAI
Respondent INDIAN INSTITUTE OF MATERIAL MANAGEMENT, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 24-10-2016
Date Of Final Hearing 03-08-2016
Next Hearing Date 03-08-2016
Assessment Year 2009-2010
Appeal Filed On 07-08-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI BEFORE S/SHRI SANJAY ARORA ACCOUNTANT MEMBER AND AMARJIT SINGH JUDICIAL MEMBER / I .T.A. NO.5123/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) ASSTT. DIRECTOR OF INCOME TAX (EXEMPTION)-II(1) 506 5 TH FLOOR PIRAMAL CHAMBERS LALBAUG MUMBAI - 400012 / VS. INDIAN INSTITUTE OF MATERIAL MANAGEMENT PLOT NO.102 & 104 SECTOR-15 INSTITUTIONAL AREA CBD BELAPU R NAVI MUMBAI - 400614 ./ ./ PAN/GIR NO. : AAATI1446A ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI NITESH JOSHI DEPARTMENT BY: DR. SUMAN RATNAM DARSI / DATE OF HEARING: 04.08.2016 /DATE OF PRONOUNCEMENT: 24.10.2016 ! / O R D E R PER AMARJIT SINGH JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 29.05.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RE LEVANT TO THE A.Y.2009-10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) MUMBAI ERRED IN HOLDING THAT THE AS SESSEES ACTIVITY OF RUNNING PRIVATE COMMERCIAL COURSES IS N OT RELATED ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 2 TO TRADE AND COMMERCE INDUSTRY AND THAT THIS ACTIVI TY CONSTITUTE EDUCATION WHICH IS CLEARLY AGAINST THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOK SHIKSHAN T RUST VS. CIT (1975) 101 ITR 234. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS)-I MUMBAI BE SET ASIDE AND THA T OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.09.200 9 ALONG WITH AUDITED INCOME & EXPENDITURE ACCOUNT AND BALANCE SH EET DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL/-. THE RETURN W AS ACCOMPANIED BY COMPUTATION OF TOTAL INCOME AND AUDIT REPORT U/S.12 A(B) OF THE INCOME TAX ACT 1961( IN SHORT THE ACT) IN FORM NO.10B. THE ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUANCE OF NOTICE U/ S.143(2) AND 142(1) OF THE ACT. THE ASSESSEE IS A TRUST AND REGISTERED U/S. 12A OF THE ACT WITH THE DIRECTOR OF INCOME TAX (EXEMPTION) (DIT(E) ). THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE U/S.11 O F THE ACT ON THE GROUND OF THAT THE ASSESSEE IS A MUTUAL ASSOCIATION AND NO N CHARITABLE INSTITUTION FOR PRIMARY PURPOSE FOR BENEFITING THEMSELVES WHIL E IN A CHARITABLE INSTITUTION PEOPLE SUBSCRIBE FOR CHARITABLE OBJECT WITHOUT ANY EXPECTATION IN RETURN. THE ASSESSEE CONTRIBUTED ON LY FOR THE PURPOSE OF ITS OWN BENEFIT AND FOR ACQUIRING CERTAIN AMENITIES . THEREFORE THE ASSESSEE WAS BEING TREATED AS MUTUAL ASSOCIATION AN D NOT AS CHARITABLE INSTITUTION. INFACT THE ASSESSING OFFICER WAS OF TH E VIEW THAT THE EDUCATION COURSES RUNNING BY THE ASSESSEE ARE NOT F OR THE CHARITABLE PURPOSE THEREFORE DENIED THE EXEMPTION U/S.11 OF T HE ACT. BEING NOT SATISFIED FILED THE APPEAL WAS FILED BEFORE THE CI T(A) WHO ALLOWED THE ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 3 APPEAL OF THE ASSESSEE BUT ON BEING UNSATISFIED WIT H THE FINDING OF THE CIT(A) THE REVENUE HAS FILED THE PRESENT APPEAL BEF ORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D. THE CONTENTION OF THE REVENUE IS THAT THE ASSESSEES ACTIVITIES FOR RUNNING PRIVATE COMMERCIAL COURSES RELATED TO TRADE AND COMMERCE IN DUSTRY ARE NOT REQUIRED TO BE TREATED AS EDUCATION IN VIEW OF THE LAW SETTLED IN LOKA SKIKSHANA TRUST VS COMMISSIONER OF INCOME TAX (1975 ) 101 ITR 234 (SC). HOWEVER ON THE OTHER HAND THE LEARNED REPRESENTATI VE OF THE ASSESSEE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION AND ARGUED THAT THE COURSES RUNNING BY THE ASSESSEE CANNOT BE SAID FOR THE BENEFIT OF THE MEMBERS OF THE TRUST. INFACT THE PURPOSE OF THE TRUST IS FOR THE EDUCATION THEREFORE IN THE S AID CIRCUMSTANCES THE CIT(A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESS EE. HENCE THE APPEAL FILED BY THE REVENUE IS LIABLE TO BE REJECTED. BEF ORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RE CORD. 4.7 THE APPELLANT HAD FURTHER SUBMITTED THAT THE CONTENTION OF THE LEARNED ASSESSING OFFICER IS BASED UPON THE INCORRECT INTERPRETATION OF THE LAW IN THE REGARD : CIRCULAR NO.11/2008 DATED 19.12.2009 STATES THAT THERE ARE INDUSTRY AND TRADE ASSOCIATIONS WHO CLAIM EXEMP TION FROM TAX UNDER SECTION 11 ON THE GROUND THAT THEIR OBJECTS ARE FOR CHARITABLE PURPOSE AS THESE ARE COVERED UND ER ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. UNDER THE PRINCIPLE OF MUTUALITY IF TRADING TAKES PLACE BETWEEN PERSON S WHO ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 4 ARE ASSOCIATED TOGETHER AND CONTRIBUTE TO A COMMON FUND FOR THE FINANCING OF SOME VENTURE OR OBJECT AND IN THIS RESPECT HAVE NO DEALINGS OR RELATIONS WITH ANY OUTS IDE BODY THEN ANY SURPLUS RETURNED TO THE PERSONS FORMING SU CH ASSOCIATION IS NOT CHARGEABLE TO TAX. IN SUCH CASE S THERE MUST BE COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND THE PARTICIPANTS. THEREFORE WHERE INDUSTRY OR TRADE A SSOCIATION CLAIM BOTH TO BE CHARITABLE INSTITUTIONS AS WELL AS MUTUAL ORGANIZATIONS AND THEIR ACTIVITIES ARE RESTRICTED T O CONTRIBUTIONS FROM PARTICIPATION OF ONLY THEIR MEMB ERS THESE WOULD NOT FALL UNDER THE PURVIEW OF THE PROVI SO TO SECTION 2(15) OWING TO THE PRINCIPLE OF MUTUALITY. HOWEVER IF SUCH ORGANIZATIONS HAVE DEALINGS WITH N ON- MEMBERS THEIR CLAIM TO BE CHARITABLE ORGANIZATIONS WOULD NOW BE GOVERNED BY THE ADDITIONAL CONDITIONS STIPUL ATED IN THE PROVISO TO SECTION 2(15). THE APPELLANT PROVIDES EDUCATIONAL FACILITIES EVEN TO NON MEMBERS. HENCE TAKING RECOURSE TO THE ABOVE CIRCU LAR THE APPELLANT CONTENDS THAT IT IS NOT A MUTUAL ASSOCIAT ION. THUS ON A COMBINED READING OF THE COUNTER ARGUMENT S THE APPELLANT CONTENDS THAT IT SATISFIES THE DEFINITION OF A CHARITABLE ORGANIZATION AND THUS ELIGIBLE TO CLAIM RELIEF UNDER SECTION 11. 4.8 THE APPELLANT HAD CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE SUBMISSIONS OF THE APPELLANT AND FINDI NGS OF THE ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 5 A.O. IN THE ASSESSMENT ORDER. THE A.O. HAS VERY SPECIFICALLY DISCUSSED THE ACTIVITIES AND RESULTING INCOME OF THE APPELLANT DURING THE YEAR FROM SUCH ACTIVITIES. ON THE ISSUE OF COURSES OFFERED AND ACTIVITIES CAR RIED ON BY THE APPELLANT IT WAS RESPONDED BY STATING THAT THE INCOME DERIVED FROM ABOVE ACTIVITIES WAS APPLIED SOLELY FO R THE PROMOTION OF THE OBJECT OF THE INSTITUTE AND THAT T HE APPELLANT HAS ALSO FURNISHED DETAIL OF COURSES OFFE RED WHICH ARE 1. GDPP GRADUATE DIPLOMA IN PUBLIC PROCUREMENT 2. GDMM GRADUATE DIPLOMA IN MATERIALS MANAGEMENT 3. PGDMM POST GRADUATE DIPLOMA IN MATERIALS MANAGEMENT 4. PGDLM POST GRADUATE DIPLOMA IN LOGISTICS MANAGEMENT 5. DSM DIPLOMA IN STORES MANAGEMENT 6. DIT DIPLOMA IN INTERNATIONAL TRADE 7. IPSCM INTERNATIONAL DIPLOMA IN PURCHASING & SUPPLY CHAIN MANAGEMENT 8. CPM CERTIFIED PURCHASING MANAGER ON FURTHER QUERY IT WAS REVEALED THAT SUCH COURSES ARE RECOGNIZED BY THE GOVT. OF INDIA AS A RECOGNISED QUALIFICATION FOR THE PURPOSE OF EMPLOYMENT UNDER T HE CENTRAL GOVT. TO THE POST AND SERVICES FOR WHICH A BACHELERS DEGREE IN THE APPROPRIATE FIELD IS PRESC RIBED VIDE ANNEXURE-II-(D) NO.F.1-6/7/T7/T DATED 29 TH JULY 1999 OF THE MINISTRY OF HRD. 4.8 IT IS ALSO ON RECORD THAT TILL A.Y.2008-09 THE CLAIM OF EXEMPTION U/S.11 OF THE IT ACT HAS BEEN ACCEPTED BY THE ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 6 DEPARTMENT AS REFERRED ABOVE. THE APPLICABILITY OF AMENDMENT BY WAY OF PROVISO TO SECTION 2(15) IS RES TRICTED TO THE FOURTH LIMB I.E. ADVANCEMENT OF OBJECT OF GE NERAL PUBLIC UTILITY. IT HAS BEEN CLARIFIED VIDE CIRCULA R NO.11/2008 DATED 19.12.2008 THAT THE NEWLY INSERTED PROVISO TO SECTION 2(15) I.E. RELIEF OF THE POOR E DUCATION OR MEDICAL RELIEF. THEREFORE IF THE CHARITABLE TRUST IS FOUND TO BE CARRYING OUT CHARITABLE ACTIVITIES OTHER THAN AD VANCEMENT OF GENERAL PUBLIC UTILITY THE PROVISO WILL NOT APP LY AS IN THE CASE OF APPELLANT WHICH HAS CLAIM OF CARRYING OUT C HARITABLE ACTIVITY IN THE FIELD OF EDUCATION. 4.9 THE DOUBTS RAISED BY THE A.O. ON THE EDUCATION ACTIVITIES OF THE APPELLANT ARE MISPLACED IN VIEW OF THE FACT THA T THE APPELLANT IS IMPARTING EDUCATION IN SYSTEMATIC AND ORGANIZED MANNER FOR THE COURSES WHICH ARE DULY RECOGNIZED BY THE HRD MINISTRY AS REFERRED ABOVE. IT IS FURTHER SEEN THAT THE APPELLANT IS NOTIFIED BY THE CENTRAL GOVT. VIDE S.O. NO.3081 DATED 4.8.1978. THEREFORE IN VIEW OF THE DECISION IN THE CASE OF GUJARAT STATE C O- OPERATIVE UNION VS. CIT (1992) 195 ITR (GUJ.) THE ASSESSEE WAS CONDUCTING COURSES FOR HIGHER DIPLOMA IN CO- OPERATION (18 WEEKS) CERTIFICATE COURSE IN CO-OPE RATIVE CREDIT AND BANKING 10 WEEKS AND SPECIALISED SHORT T ERM COURSES / ORIENTATION COURSES. THE ASSESSEE ALSO H AD BEEN RUNNING FOUR CO-OPERATIVE TRAINING CENTRES WHICH CO NDUCTED ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 7 JUNIOR BASIC COURSES OF 24 WEEKS DURATION FOR DIPLO MA IN CO-OPERATION SPECIAL COURSES FOR EMPLOYEES FOR URB AN CO- OPERATIVE BANKS DISTRICT CO-OPERATIVE BANKS AND AL SO SEMINARS. AT THESE PROGRAMMES RUN BY ASSESSEE WERE DEEMED AS EDUCATIONAL ACTIVITY. 4.10 COURSES RUN BY APPELLANT ARE RECOGNISED BY MIN ISTRY OF HRD AND INSTITUTE IS ALSO RECOGNISED U/S.10(23C). THEREFORE IT IS ENGAGED IN EDUCATION FIELD OF CHARI TY AS IN U/S.2(15) WHERE COURSE AND BUSINESS UNDER PROVISO I S NOT APPLICABLE AS PER CIRCULAR NO.11 OF 2008. HENCE A PPEAL IS ALLOWED. 5. ON APPRAISAL OF THE ABOVE MENTIONED ORDER IT CAM E INTO THE NOTICE THAT THE ASSESSEE IS DOING FOLLOWING EIGHT COURSES 1. GDPP GRADUATE DIPLOMA IN PUBLIC PROCUREMENT 2. GDMM GRADUATE DIPLOMA IN MATERIALS MANAGEMENT 3. PGDMM POST GRADUATE DIPLOMA IN MATERIALS MANAGEMENT 4. PGDLM POST GRADUATE DIPLOMA IN LOGISTICS MANAGEMENT 5. DSM DIPLOMA IN STORES MANAGEMENT 6. DIT DIPLOMA IN INTERNATIONAL TRADE 7. IPSCM INTERNATIONAL DIPLOMA IN PURCHASING & SUPPLY CHAIN MANAGEMENT 8. CPM CERTIFIED PURCHASING MANAGER 6. THE ASSESSEE WAS DERIVING INCOME FROM THE SAID C OURSE WHICH WAS APPLIED FOR THE PROMOTION OF THE OBJECTS OF TH E INSTITUTION. THE COURSES RUN BY THE ASSESSEE ARE RECOGNISED BY THE GOVERNMENT OF INDIA VIDE ANNEXURE II-D NO.F.1-6/7/T 7/T DATED 29 TH JULY 1999 ISSUED BY THE MINISTRY OF HRD. IT IS NO T IN DISPUTE ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 8 THAT THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE A SSESSEE FOR THE A.Y.2008-09. THE AMENDMENT IN SECTION 2(15) OF THE ACT WAS RESTRICTED TO THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY. THEREAFTER IT IS THE CLARIFICATION IN VIEW OF THE CIRCULAR NO.11/2008 DATED 19.12.2008 WHEREIN IT IS SPECIFICA LLY MENTIONED THAT THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT WOULD NOT APPLY IN RESPECT OF THE FIRST THREE LIMBS OF SE CTION 2(15) OF THE ACT I.E. RELIEF OF THE POOR EDUCATION OR MEDICAL R ELIEF. ACCORDINGLY THE CHARITABLE TRUST WAS FOUND TO BE C ARRYING OUT CHARITABLE ACTIVITIES OTHER THAN ADVANCEMENT OF GEN ERAL PUBLIC UTILITY THE PROVISO WILL NOT APPLY AS IN THE CASE OF APPELLANT BECAUSE THE CLAIM OF THE ASSESSEE WAS TO CARRY OU T CHARITABLE ACTIVITY IN THE FIELD OF EDUCATION. THE ASSESSEE I S NOTIFIED BY THE CENTRAL GOVERNMENT VIDE NOTIFICATION F.NO.196/1/77- IT(AI) U/S.10(23A) OF THE ACT IN REFERENCE TO COURSE OF MA TERIAL MANAGEMENT RECOGNIZED BY THE CENTRAL GOVT. VIDE S.O . NO.3081 DATED 04.08.1978. IT IS NOT IN DOUBT THAT THE ASS ESSEE IS DURING THE RELEVANT YEAR IMPARTING EDUCATION IN A SYSTEMAT IC AND ORGANIZED MANNER RUNNING COURSES WHICH HAVE BEEN D ULY RECOGNISED BY THE HRD MINISTRY. THE ASSESSEES INC OME FROM EDUCATIONAL ACTIVITIES WOULD THEREFORE FALL TO BE R EGARDED AS FROM CHARITABLE PURPOSES / OBJECTS. THE DECISION IN THE CASE OF GUJARAT STATE CO-OPERATIVE UNION VS. CIT (1992) 195 ITR (GU J.) WOULD THUS APPLY IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. FURTHER THE DECISION IN LOKA SKIKSHANA TRUST VS COMMISSIONER OF INCOME TAX (1975) 101 ITR 234 (SC) IS DISTINGUISHABLE ON FACTS. WE ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 9 HOWEVER OBSERVE THE ASSESSEE TO BE UNDERTAKING OTH ER ACTIVITIES AS WELL INCOME FROM WHICH HAS BEEN RECORDED AND WO RKED OUT SEPARATELY (REFER PARA 5/ PAGES 2-4 OF THE ASSESSME NT ORDER). THE ORDER OF THE CIT(A) IS SILENT ON THESE ACTIVITIES I.E. WHETHER THEY QUALIFY AS CHARITABLE ACTIVITIES OR A CHARITABLE PU RPOSE OR NOT. HOWEVER AS THE NET INCOME FROM THESE ACTIVITIES IS IN THE NEGATIVE (REFER PARA 10 OF THE ASSESSMENT ORDER) THE ACCURA CY OF WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER NO USEFU L PURPOSE IN OUR VIEW SHALL BE SERVED BY REMANDING THE MATTER ON THIS ASPECT OF THE MATTER (APPEAL) TO THE FILE OF THE LEARNED CIT( A); THE ASSESSEE HAVING CLAIM EXEMPTION U/S.11 ONLY ON THE NET INCOM E FROM ALL THE ACTIVITIES INCLUDING EDUCATIONAL (CHARITABLE) ACTIVITY. THE ORDER OF THE CIT(A) IS ACCORDINGLY UPHELD. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS HERE BY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER 2016 SD/- SD/- (SANJAY ARORA) (AMARJIT SINGH) / ACCOUNTANT MEMBER #$ /JUDICIAL MEMBER % & MUMBAI; ' DATED : 24 TH OCTOBER 2016 MP MP MP MP ITA NO.5123/MUM/2014 ASSESSMENT YEAR: 2009-10 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ( ) / THE CIT(A)- 4. ( / CIT 5. )*+ $$ - - % & / DR ITAT MUMBAI 6. +./ 0 / GUARD FILE. / BY ORDER ) $ //TRUE COPY// / ! ' (DY./ASSTT. REGISTRAR) # $ % & / ITAT MUMBAI