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2015 (6) TMI 571 - ITAT MUMBAI

2015 (6) TMI 571 - ITAT MUMBAI - [2015] 42 ITR (Trib) 67 (ITAT [Mum]) - Claim of exemption under section 11 denied - the income earned by the assessee-trust cannot be treated as income from educational activity and hence it has to be treated as business income - assessee let out its premises partly to Jet Airways and others and the income earned therefrom is assessable to tax as business income - Held that:- As long as the trust is imparting education as per the object of the trust, income earne .....

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stitute without charging any interest for a short period - as per revenue assessee advanced some amount to Don Bosco Institute out of accumulated income set apart for application, in terms of section 11(2) which is in violation of the provisions of section 11(5) - Held that:- The claim of the assessee is not disputed by the learned D.R. Having regard to the circumstances of the case and in the light of the decision in the case of Acme Educational Society [2010 (7) TMI 159 - DELHI HIGH COURT], ob .....

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plea taken before us by the assessee merits acceptance and we direct the AO to grant exemption under section 11 of the Act on the income earned by the assessee, including lease rent, etc. - Decided in favour of assessee. - ITA No. 5973/Mum/2013 - Dated:- 17-6-2015 - Shri D. Manmohan And Shri Sanjay Arora,JJ. For the Appellant : Shri Anil Thakrar For the Respondent : Shri Akhilendra P. Yadav ORDER Per D. Manmohan, V.P. This appeal by the assessee trust is directed against the order passed by CIT .....

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by the assessee was claimed as exempt under section 11 of the Income Tax Act. 3. The case having been selected for scrutiny, the AO called for the details with regard to the activities carried on by the assessee and noticed that the following activities cannot be considered as charitable activities: - (a) Providing technical training to Jet Airways India Ltd. and other private companies employees; assessee received compensation of ₹ 87,84,000/- for training and also for providing space on .....

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eering college in the campus of the society. Due to insufficiency of funds they temporarily borrowed funds from St. Joseph s Technical School. Since that society is also running an educational institution, the amount advanced cannot be treated as an activity falling outside the ambit of provisions of section 11/13 of the Act. Similarly, assessee received some amount from Tata Sky; the trainees from Tata Sky were trained in short term technical courses, who had to reside in the premises of the so .....

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t filed another letter dated 05.12.2011 wherein it was submitted that the assessee has provided funds to Don Bosco Institute for a short period which was immediately returned in the next assessment year. Placing reliance upon the decision of the Hon'ble Delhi High Court in the case of DIT vs. Alarippu 244 ITR 358 it was submitted that the loan given by the assessee would not constitute either investment or deposit and hence the assessee could not have charged interest so as to invoke provisi .....

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, exemption should not be denied so long as the object of leasing out the property was to enable the trust to carry out its object of education. In other words, it cannot be treated as business income since it was let out to Tata Sky for the purpose of imparting technical education. 6. The AO was, however, of the view that the assessee provided technical services to various companies and fee was received for professional/ technical services. The term education means to bring up children by train .....

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that the activities of consultancy and technical & professional services for which the institute receives payment are not certainly an educational activity but they are the jobs done for third parties against consideration. The AO distinguished the decisions of the Apex Court in the case of Sole Trustee, Lok Sikshana Trust vs. CIT 101 ITR 234 as well as the decision of the Hon'ble Gujarat High Court in the case of Gujarat State Cooperative Union vs. CIT 195 ITR 279. On the facts of the .....

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an given to Don Bosco Institute of Technology, the college run by the Bombay Salesian Society, the AO was of the opinion that the transaction between the two trusts can be hit by the provisions of section 13(2)(a) of the Act since the assessee has given money to another trust without adequate interest/security and hence even provisions of section 11(5) are attracted in which event assessee would lose the right to exemption in the light of the decision of the Hon'ble Delhi High Court in the c .....

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assessee has not violated provisions of section 13(2)(a) r.w.s. 11(5) of the Act. Assessee also relied upon several case law in support its contention that it was an approved professional training institute affiliated to the National Council for Vocational Training, DGET, Ministry of Labour & Employment, Government of India. It was also submitted that the decision of the Hon'ble Delhi High Court in the case of Alarippu (supra) was wrongly applied by the AO to the facts of the case. 9. T .....

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income. Though the case of the assessee is that the activity of consultancy, technical and professional services are job done for third parties against consideration, the CIT(A) applied the decision of the Hon'ble Patna High Court in the case of Bihar Institute of Mining & Mine Surveying 208 ITR 608 as well as the decision of the Hon'ble Supreme Court in the case of Sole Trustee, Lok Sikshana Trust vs. CIT 101 ITR 234 to conclude that providing accommodation and granting computer la .....

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activity. He thus confirmed the order of the AO. 10. Further aggrieved, assessee is in appeal before us. The learned counsel for the assessee placed before us a chart chronologing the reasons given by the AO as well as the CIT(A) and the remarks against the reasons given by the tax authorities to submit that the trust had already been granted registration under section 12A and section 80G of the Income Tax Act and it has been granted exemption from year to year. Even in the subsequent year, i.e. .....

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not in dispute that assessee s main object is imparting vocational training and it is a recognised institution. The charges collected by the assessee for imparting education are much less than what the private/unaided institutions, which are not recognised, are charging. It is also not in dispute that assessee has been running certified courses. The net income of the assessee is, undoubtedly, utilised/applied for the purpose of charity. When additional space was available it was let out to Tata .....

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the rented premises certain class timings are maintained and assessee also has been training students in which event it would amount to an educational activity falling within the meaning of section 2(15) of the Act. The order of the learned CIT(A) for A.Y. 2010-11 was accepted by the Revenue. In fact in the aforesited decision the learned CIT(A) has also taken into consideration that the amount given as loan to Don Bosco Institute cannot be treated as deposit or investment within the meaning of .....

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roved by the DG Shipping and another which was not recognised, going by the broader definition of Education and the principle laid down by the Apex Court in the case of Sole Trustee, Lok Sikshana Trust vs. CIT 101 ITR 234 it is not necessary that, in order to claim exemption, the institution should be affiliated with a University or Board. In this regard he referred to the decision of the Hon'ble Bombay High Court in the case of DIT vs. National Safety Council 305 ITR 257 and contended that .....

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15) will not apply where the purpose of the trust or institution is education even if it incidentally involves commercial activity. In other words, the view of the CBDT was that so long as the case of the assessee falls within the broader spectrum of advancement of general public utility it may amount to charitable purpose. In the instant case the assessee was mainly engaged in imparting technical training which were approved by the NCVT. By letting out the premises, the space is utilised for tr .....

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01 dated 31st March, 2011) wherein the court observed that if the rental income was received by way of subletting, to enable the trust to carry out its charitable object in effective manner, exemption cannot be denied. He thus strongly submitted that assessee is still engaged in educational activity and letting out of premises is extension of its activity since the space is utilised for the same purpose, i.e. vocational training. At any rate, it falls within the meaning of education since it is .....

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However, he has not denied the fact that the presumption can be rebutted by the assessee by producing sufficient material to prove that the income earned in the course of the activity falls outside the ambit of expression advancement of any other object of the general public utility since the purpose of the trust was providing education which constitutes charitable purpose even if it incidentally involves commercial activity. 13. We have heard the rival submissions and carefully perused the reco .....

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easing out property was for advancement of the object of general public utility; assessee was engaged in imparting vocational training and the institute was recognised by NCVT. The property was let out for no other purpose than for giving technical training. Jet Airways and others to whom the premises were let out was also engaged in imparting technical training and the assessee had also earned income by participating in the training programmes conducted by them in the form of offering the servi .....

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repairing and servicing of cars as well as providing hands-on practical training in automobile repairs to the students of the assessee free of cost. Training timings are to be observed strictly as per normal schooling. In the case of DIT vs. Sahu Jain Trust 56 DTR 402 (Calcutta) it was observed that exemption under section 11 cannot be denied on the ground that the trust had let out property for efficient utilisation of its assets. The CBDT in its circular dated 19th December, 2008 clarified by .....

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d. In other words, as long as the trust is imparting education as per the object of the trust, income earned by such trust should be allowed the benefit of exemption under section 11 of the Act. Having regard to the case law cited before us we are of the view that so long as the assessee has let out the property for efficient utilisation of its assets with a larger purpose of imparting technical training in the said campus, assessee can be said to be carrying on a charitable activity and income .....

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