TMI Blog2019 (8) TMI 1821X X X X Extracts X X X X X X X X Extracts X X X X ..... f road transport services and coordination between any form and road transport or any other form of road transport. Surplus of receipts over expenses after payment of interest/dividend on capital as provided by Central/State Government and providing for depreciation and reserves etc. is to be applied for amenities to the passenger, welfare of labour employed, financing the expansion programme etc., as approved by the Government and remainder, if any, is to be handed over to the State Government for the purpose of development. It is noted that there is no change in the activity of the assessee since beginning and it is all along providing road transportation facility to the general public for a ticket as a token contribution. Prior to introduction of proviso to section 2(15), there was no dispute that the assessee was established for charitable purpose and assessee has all along been granted relief u/s. 2(15) and exemption under section 11 of the Act. Revenue s plea that amendment to section 2(15) of the Act shall take assessee s activity subject to denial of exemption u/s. 11 has been rejected by Hon'ble Karnataka High Court in the case of Karnataka State Road Transport C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is beyond comprehension. The Assessing Officer s inference is totally unjustified. Details of other income which has been considered by the Revenue to be of a large scale pale into absolute insignificance when the same is considered as percentage to the non-operative revenue to operating revenue, which bring them to be lesser than 1% to the operating revenue. Hence figures quoted by the Assessing Officer for inferring that the assessee is engaged in profit motive activity in large scale is totally absurd - the finding given by the Assessing Officer that assessee is engaged commercial and profit motive activity is totally unsustainable. It may not be out of place to mention here that to remove/prevent the mischief which can be caused to the assessee such as the present large State, the present proviso No. (ii) to section 2(15) provides that if the aggregate receipt from such activity or activities during the previous year do not exceed 25% of the total receipts of the entity, the exclusion provision will not apply. - Decided in favour of assessee. - I.T.A. No. 5577/Mum/2017 - - - Dated:- 8-8-2019 - Shri Shamim Yahya (AM) And Shri Amarjit Singh (JM) For the Assessee : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, in not adjudicating the ground in respect of claim of depreciation by holding that the same does not arise from the assessment order and; xii. Learned CIT (Appeals) has further erred in not adjudicating ground raised before him that services include activities towards preservation of environment and ecosystem consideration, thus coming within the ambit of the definition of charitable purpose under clause (15) of section 2 of the j Act. xiii. All the above grounds are to the exclusion of each other. 3. The assessee in this case is a Trust registered with DIT(E), Mumbai u/s. 12A. In its return filed on 28.9.2012, the assessee declared total income at nil. However, the Assessing Officer show-caused the assessee proposing denial of exemption u/s. 11. The assessee made elaborate submission. However, Assessing Officer was not satisfied. 4. First contention of the assessee was that it is the agency of Government of Maharashtra and its income is not taxable. However, the Assessing Officer referred to the decision of Hon'ble Supreme Court in the case of APSRTC (52 ITR 524). He referred to the decision elaborately for the proposition that Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune Raigad Ropeway Trip No. 3 Ozar-Lenydri-Malshej Ghat Trip No. 4 Lonavala, Bhushi Dam via Mulshi Trip No. 5 Ashtavinayak Darshan Trip No. 6 Hyderabad, Ramoji Filmcity, Shree Shailyam Trip No. 7 Mini South India Trip No. 8 Konkan Darshan 9. On the basis of above the Assessing Officer concluded that the assessee is running passenger transport, other transport, parcel and courier service and tour and travel business on large scale. That the assessee is also charging fees/charges for providing all the services. That in view of the above, these activities carried out in large scale shall be considered as a commercial activity and hence activity of the assessee can be considered as business activity . Thereafter the Assessing Officer proceeded to elaborate upon the meaning of term business . 10. The Assessing Officer also noted the assessee s contention that pricing also is decided through government intervention and is not ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for any exemption under section 11 of the Act and accordingly taxed entire income of assessee denying benefit of section 11. 12. Upon assessee s appeal, learned CIT(A) reproduced the submissions of the assessee. However, learned CIT(A) was not convinced. He found that the assessee was not entitled to any benefit for the proposition that it being a corporation created by the legislature is not assessable to Income Tax since it is an agent of the State. For this he referred to the Assessing Officer s discussion and Hon'ble Supreme Court decision in the case of APSRTC (52 ITR 524). He distinguished the decision relied upon by the assessee from the ITAT, Mumbai in the case of CIDCO. 13. Learned CIT(A) observed that the assessee stated that its activities are charitable in nature and hence proviso to section 2(15) and provisions of section 13(8) of the Act will not apply. For not agreeing with this, he referred to Assessing Officer s observation about the website information that the assessee was also running air conditioned and comfortable buses in large scale, which is not for common men. That it was also running tour and travel package. That the assessee was having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated road transport i.e. a public utility for general public in the State of Maharashtra. Learned counsel submitted that the assessee has received approval u/s. 12A of the Act on 4.1.1989 and it is still valid. He submitted that hence the assessee is eligible for exemption u/s. 11 of the Act. He submitted that there is no change in the activities of the assessee since beginning and it is all along providing road transport facility to general public for a ticket as a token contribution. Learned counsel submitted that prior to introduction of proviso to section 2(15), there was no dispute that the assessee was established for charitable purposes and the assessee has all along been granted relief u/s. 2(15) and exemption u/s. 11 of the Act. 20. Learned counsel submitted that amendment to section 2(15) by the Finance Act, 2008 is not applicable to the assessee. He submitted that the assessee is engaged in the activities for charitable purpose by way of relief of the poor, preservation of environment and advancement of object of general public utility. Learned counsel submitted that the first proviso to section 2(15) does not apply where the services are rendered for fees but it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscule percentage. He submitted that from the website the Assessing Officer has copied eight tours and considered it large scale activity. He submitted that 8 tours cannot be a representative of 100s and 1000s of transportation activities of the assessee. Learned counsel further relied upon several case laws in this regard. 24. Per contra learned Departmental Representative submitted that learned CIT(A) has passed a very elaborate order. He fully placed reliance thereupon. Further learned Departmental Representative submitted that Hon'ble Supreme Court in the case of APSRTC (159 ITR 1) has on similar facts clearly held that in the context of Article 289 of the Constitution of India the income of APSRTC cannot be held as income of the State Government. Learned Departmental Representative submitted that in fact the assessee (MSRTC) has never claimed nor has been allowed exemption from the tax on the basis that it is an agent of Maharashtra Government. Learned Departmental Representative further relied upon the decision of ITAT in the case of Maharasthra Industrial Development Corporation in ITA No. 6552/Mum/2014 vide order dated 27.3.2015. He further relied upon Hon'ble Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r learned Counsel of the assessee submitted that the fact that the activities of the corporation would come within the ambit of advancement of any other object of general public utility is not denied. In this regard he referred to the decision of Hon'ble Bombay High Court in the case of Mr. Jayant Bhagwantrao Satam Vs. State of Maharashtra and Ors. (supra). He further referred to the decision of Hon'ble Apex Court in the case of CIT Vs. Andhra Pradesh Road Transport Corporation (159 ITR 1). 27. Learned Counsel of the assessee submitted that second limb of the proviso to section 2(15) of the Act is not applicable. He submitted that this limb covers the cases involving carrying on of any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration. In this regard learned counsel referred to the decision of Hon'ble Kerala High Court in the case of Info Parks Vs. DCIT (329 ITR 404), wherein this aspect was elaborately expounded. Learned counsel submitted that this view was followed and approved by Hon'ble High Court of Andhra Pradesh in their judgement dated 17.12.2012 in the case of Andhra Pradesh Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue that introduction of proviso to section 2(15) shall lead to denial of exemption to Karnataka State Road Transport Corporation has been rejected by Hon'ble Karnataka High Court in the case of Karnataka State Road Transport Corporation in ITA No. 302 of 2015 vide order dated 12.2.2015. We further note that import of incorporation of proviso to section 2(15) was considered by Hon'ble Kerala High Court in the case of Info Parks (supra) and Hon'ble Court have expounded as under :- 15. Yet another important aspect to be noted in this context is that, after the amendment by incorporating proviso to section 2(15), the 4th limb as to the advancement of any other object of general public utility will no longer remain as charitable purpose, if it involves carrying on of :- (a) any activity in the nature of trade, commerce or business. (b) any activity of rendering any service in relation to any trade, commerce or business for a cess or a fee or any other consideration, irrespective of the nature of use or application-or retention of the income from such activity. The first limb of exclusion from charitable purpose under clause (a) will be attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(15) is not sustainable. 31. In this regard, we also note that this Tribunal in the case of National Institute of Bank Management Vs. ACIT in ITA No. 2913 Others vide order dated 25.1.2018 has elaborately considered the significance of the provision of section 2(15) in similar case of denial of exemption by invoking provision of section 2(15) of the Act. We may gainfully refer to the Tribunal s adjudication in this case as under :- 8. We have carefully considered the rival submissions. Sec. 2(15) of the Act defines the expression 'charitable purpose'. So far as it is relevant for our purpose, the expression 'charitable purpose' seeks to include 'education'. The case of the assessee is that its activities fall within the scope of the expression 'education' and, therefore, it is covered within the meaning of 'charitable purpose' contained in Sec. 2(15) of the Act. The stand of the Revenue is to the contrary as, according to it, the activities of the assessee are merely to carry out training, seminars, post-graduate training and, that too, against collection of fees and, therefore, cannot be considered as 'education'. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e University of Pune as an approved centre for post-graduate research and also by the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. It is pointed out that assessee is conducting post- graduate Diploma courses and many Ph.D students are also registered with it for their Doctorial dissertation under the supervision of assessee's faculty members. It has also been pointed out that assessee has thirty full-time faculty of academicians from a wide range of disciplines, viz., Economics, Finance, Commerce, Business Management, Computer Science, Agricultural Science, etc. At the time of hearing, the learned representative has also emphasised that assessee has class rooms to conduct regular classes and the library in the educational campus has more than 60,000 books. It was also pointed out that assessee offers programmes in collaboration with Kellogg School of Management, Northwestern University USA, The London School of Economics and Political (LSC), UK and CME Group, Chicago, etc. All these assertions of the assessee have not found any negation by the assessing authority or even by the Revenue before us. 10. Before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courses for Higher Diploma in Co-operation, Diploma in Land Development Banking, Certificate Course in Co-operative Credit and Banking and Specialised Short-term Courses/ Orientation Courses. The assessee therein was also conducting seminars and running training centres for employees of Urban Co-operative Banks, District Co-operative Banks, etc. The Hon'ble Gujarat High Court understood such activities to be falling within the expression 'education'. In coming to such a conclusion, the Hon'ble Court referred to the judgment of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust vs. CIT, 101 ITR 234 (SC) to contend that the word 'education' should not be confined only to scholastic instructions, but other forms of education are also included in the expression 'education'. Though the decision of the Hon'ble Gujarat High Court is in the context of Sec. 10(22) of the Act, yet, it is of relevance for us since it has explained the meaning of the expression 'education' which, in our view, is germane to decide the controversy before us. The assessee before us is indisputably engaged in conducting higher education train ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od by the Hon'ble Court to be an educational institution. 14. When we apply the aforesaid principles to the admitted nature of activities in the present case, we have no hesitation in holding that assessee is an educational institution and, therefore, it falls within the scope of the expression 'charitable purpose' contained in Sec. 2(15) of the Act. 15. Now, we may deal with the reference to proviso to Sec. 2(15) of the Act made by the Assessing Officer. Pertinently, the proviso to Sec. 2(15) of the Act is relevant qua the activity of 'advancement of any other object of general public utility' contained in Sec. 2(15) of the Act and not in relation to other limbs of activities contained therein. While in the earlier paras we have already held that the assessee is engaged in 'education', therefore, on this basis, it will be in the fitness of things to deduce that assessee is not ousted from Sec. 2(15) of the Act because the proviso is not applicable to it. In any case, if one is to examine the applicability of the proviso on merit, even then we find that the same does not come into operation in the present case. Firstly, the CBDT in its Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining and Development of Higher Banking Personnel carved out the role of assessee as being an entity to translate national policies relating to the banking sector into meaningful training programmes at the level of individual bank and help the implementation of those policies by creating a climate of intellectual appreciation and emotional dedication . Therefore, looking at the background of the formation of the assessee and its stated objects, which we have reproduced in the earlier part of this order, the assessee-institute was to act as a catalyst for the new banking policy of the Government of India towards evolving appropriate guidelines for banks in the areas of management capabilities and improving the technical expertise of banking and awareness of national priorities in the banking profession. The stated objects clearly bring out that the activities of the assessee are exclusively in the field of education and research in the field of banking and finance. Not elaborating further on this aspect, as we have already inferred earlier that assessee is in the field of education, at this stage it would suffice for us to note that there is no commercial intent behind setting-up o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit motive is to find out the purpose for which the resultant surplus is being applied for. Factually speaking, in the present case, there is no allegation, much less any evidence, brought out by the Revenue to say that any amount has been applied by the assessee for purposes other than its stated objects, which ostensibly is in the field of education. Pertinently, upto Assessment Year 2008-09, assessee was accepted to be an entity engaged in education and in even in the captioned years there is no charge against the assessee that any of its activities have undergone any change. Therefore, merely because of insertion of the proviso, the nature of activities do not undergo a change unless it can be made out that profit motive is dominant all- pervading in the activities, an aspect which is absolutely absent in the present case. Therefore, even if we were to go along with the stand of the Assessing Officer that the activities of assessee fall within the expression 'advancement of any other object of general public utility' contained in Sec. 2(15) of the Act, even then, from Assessment Year 2009-10 onwards, the insertion of proviso does not take away the benefits of Sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Assessing Officer himself this includes Deluxe buses-48, air conditioned buses-46 and midi-10. From the above how can the Assessing Officer make a deduction that the assessee is running luxury buses in large scale defers all sense of proportionality. To state the obvious assumption of the Assessing Officer is absurd. 33. Another limb of Assessing Officer s inference that assessee is engaging into profit oriented activities is that the assessee is arranging tour and travel packages on commercial basis for fees/charges. For this he has noted eight trips from the website. How will these eight trips stand against thousands of trips undertaken by the assessee for transporting ordinary passengers is beyond comprehension. The Assessing Officer s inference is totally unjustified. Details of other income which has been considered by the Revenue to be of a large scale pale into absolute insignificance when the same is considered as percentage to the non-operative revenue to operating revenue, which bring them to be lesser than 1% to the operating revenue. The same is emanating from the following chart submitted by learned Counsel of the assessee. 34. Hence figures quote ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
