ADDITIONAL DIRECTOR OF INCOME TAX (E) Vs. SAMUDRA INSTITUTE OF
LAWS(IT)-2014-5-55
INCOME TAX APPELLATE TRIBUNAL
Decided on May 16,2014

Appellant
VERSUS
Respondents

JUDGEMENT

P.M.JAGTAP - (1.) THIS appeal is preferred by the Revenue against the order of Id. CIT(A) -1, Mumbai, dated 7.3.2012 and in the solitary ground raised therein, the Revenue has challenged the action of the Id. CIT(A) in holding that the assessee is entitled to exemption u/s 11 of the Income Tax Act, 1961 (the Act).
(2.) THE assessee in the present case is a charitable trust with its main object being to impart post -sea and pre -seal training to all seamen. It has got post sea training centre at Govandi, Mumbai and Pre -sea training centre at Lonavala. It is duly registered u/s 12A of the Act. The return of income for the year under consideration was filed by the assessee trust on 29.9.2008 declaring total income at NIL after claiming exemption u/s 11 of the Act. From the relevant details furnished by the assessee in respect of courses conducted, it was noted by the AO that there are two to categories of courses, one approved and recognized by the Directorate General of Shipping and other category of courses which were not ap allowed the claim of the assessee for exemption u/s 11 of the Act by observing as under :proved and recognized by the Directorate General of Shipping. According to the AO, the courses which were not approved and recognized by the Directorate General of Shipping were conducted by the assessee as private coaching classes and the same could not be treated as having character of charitable purposes as provided under section 2(15). He held that these courses were conducted by the assessee purely as a commercial activity with only motive of earning profit. He therefore disallowed the benefit of exemption claimed by the assessee u/s 11 of the Act and completed an assessment u/s 143(3) vide order dated 21.12.2010 assessing the total income of the assessee at Rs.38,13,726/ -.
(3.) AGAINST the order passed by the AO u/s 143(3) of the Act, the appeal was preferred by the assessee before the ld. CIT(A) and after considering the submissions made on behalf of the assessee and following the decision of the Tribunal rendered in assessee's own case on similar issue for assessment year 2007 -08 vide its order dated 30.11.2011 passed in ITA No.5760/Mum/2010 , the ld. CIT(A) vide para 4 of his order allowed the claim of the assessee for exemption u/s 11 of the Act by observing as under : "4. The AO analyzed the courses actually conducted during the period relevant to the Assessment Year 2007 -08. From the various details furnished by the assessee he noted that the assessee has made profit of Rs.99,22,167/ - on account of DG Shipping approved courses conducted at Lonavala and made a profit of Rs.2,08,19,001/ - on account of non approved courses conducted at Govandi, Mumbai. The AO was of the opinion that this is an indicator of the assessee's indulgence in the commercial and profit making activities under the garb of Charitable Institution. He, therefore, asked the assessee to explain as to why the claim of the assessee for exemption u/s.11 of the I.T. Act should not be rejected. Rejecting the various explanation offered by the assessee he noted that the assessee is projecting the courses which are more profitable and provide more earning to the assessee, rather than offeringI.T.A.No. .2668/Mum/2012 education through recognized courses. The entire institution is being run with a sole motive of earning profit. However, a feeble attempt has been made by the assessee of giving the colour of charitable institution to the Trust whose activities are not covered within the meaning of education as contemplated u/s.2(15) of the I.T. Act. Relying on the decision of Hon'ble Patna High Court in the case of Bihar Institute of Mining and Mine Surveying Vs. CIT reported in 208 ITR 608 and the decision of the Hon'ble Supreme Court in the case of Sole Trustee Loka Shikshana Trust vs. CIT reported in 101 ITR 234, the decision in the case of Mazgaon Docks Ltd. vs. CIT reported in 34 ITR 368 at 376 and various other decisions he held that the activities of the assessee in connection with the conducting of commercial courses are clearly business activities within the meaning of sec.2(13) of the I.T. Act., since all the elements of business are present in these courses. He accordingly rejected the claim of exemption u/s.11 of the I.T. Act." Aggrieved by the order of ld. CIT(A), the Revenue has preferred this appeal before the Tribunal.;


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