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TMI Blog2023 (5) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... were heard together and are being disposed off by way of this consolidated order. With the consent of the parties, the assessee's appeal for the assessment year 2017-18 is taken up as a lead case and the decision rendered therein shall apply mutatis mutandis to other appeals. 3. For reference, the grounds raised by the assessee in its appeal for the assessment year 2017-18 are reproduced as under:- "Based on the facts and circumstances of the case, Indian Institute of Banking & Finance (hereinafter referred to as the "Appellant') craves leave to prefer an appeal against the order passed by the learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as the learned CIT") under section 10(23C)(v) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act'), on the following grounds, each of which are without prejudice to one another. Non-grant of exemption under Section 10(23C)(vi): On the facts and circumstances of the case and in law, the learned CIT, has erred in: 1. holding that the Appellant does not exist solely for educational purpose and is involved in commercial activities within the meaning of section 10(23C) (vi) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 4. The brief facts of the case as emanating from the record are: The assessee is an Indian company incorporated under section 26 of the Indian Companies Act, 1913 on 30/04/1928. Initially, the company was an association called the Indian Institute of Bankers and subsequently, the assessee's name was changed to the Indian Institute of Banking and Finance from 28/08/2003. The assessee claiming itself to be an educational institution existing solely for educational purposes and not for the purpose of profit filed an application dated 24/10/2017 seeking exemption under section 10(23C)(vi) of the Act for the assessment year 2017-18. Upon perusal of the aforesaid application and the details filed by the assessee, it was observed that the object of the assessee prima facie shows that the entire work of the institution is related to developing professionally qualified and competent bankers and financial professionals, to encourage innovation and creativity among finance professionals. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (22) of the Act. The said order was followed in assessment years 1997-98 and 1998-99. The learned AR submitted that the objects of the assessee continued to remain the same without any change. For assessment years 1999-2000 to 2007-08, assessee's applications for grant of exemption under section 10(23C)(vi) of the Act are still pending disposal. For the assessment years 2008-09 to 2014-15, the assessee's claim for grant of approval was rejected by the prescribed authority which orders have been the subject matter of challenge before the Hon'ble jurisdictional High Court by way of the writ petition, wherein the Hon'ble Court has admitted the petitions and same are pending for final disposal. For the assessment year 2016-17, the coordinate bench of the Tribunal restored the assessee's application for de novo consideration, which has again been rejected by the learned CIT(E) and the assessee is in appeal before the Tribunal in the present batch. The learned AR by referring to the list of activities conducted by the assessee and the details of courses forming part of the paper book submitted that the assessee conceptualises the courses which may be relevant for the field of banking and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtionately credited to the income and expenditure account over a period of 35 years. Thus, it was submitted that the assessee was existing solely for the purpose of education and therefore it is entitled to exemption under section 10(23C)(vi) of the Act. 6. On the contrary, the learned Departmental Representative ("learned DR") by vehemently relying upon the impugned order submitted that the RBI never approved the assessee and only the committee of RBI recommended that one of the courses may be offered by the assessee. The learned DR submitted that the assessee is only involved in the capacity building of existing employees of the bank and its membership is only for skill upgradation. By referring to the compilation, the learned DR submitted that out of 50 courses, the e-learning facility is only available in 13 courses. Further, the main source of income of the assessee is from examination, and even for more than one attempts the assessee is charging the examination fees. By referring to para 7.2 of the impugned order, the learned DR submitted that the assessee has earned a huge surplus in comparison to the preceding year. Thus, it was submitted that the assessee was only engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has also been relied upon by the learned CIT(E) in the present case, and held there is nothing in the judgment to suggest that the court meant to convey that educational activities could be pursued only in a formal atmosphere such as a school or college in the sense in which we know them. The coordinate bench after referring to the decision of the Hon'ble Supreme Court in ADIT vs Surat Art Silk Cloth Manufacturers‟ Association [1978] 121 ITR 1 (SC) held that the law does not place an embargo on profit-making or surplus resulting, and what is prohibited is profiteering or the profit motive. The coordinate bench further held that the assessee has collected subscriptions from its members including institutional members (banks) which are substantial, which in part have gone to subsidise the expenses of conducting tutorial classes and examinations and the supply of study material. Accordingly, the coordinate bench directed the Assessing Officer to grant exemption to the assessee under section 10(22) of the Act. 9. We find that before its omission by Finance (No.2) Act, 1998, w.e.f. 01/04/1999, section 10(22) read as under:- "any income of a university or other educationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt. In any case, the Hon'ble Supreme Court in Aditanar Educational Institution vs ACIT, [1997] 224 ITR 310 (SC) held that availability of exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and not for purposes of profit. 12. We find that the following objectives of the assessee are enumerated on page 107 of the paper book:- "3(c)(i) To facilitate the study of the theory and practice of banking and finance and for that purpose to institute a scheme of certificates, scholarships, and prizes. (ii) To develop professionally qualified and competent bankers and finance professionals primarily through a process of education, training, examination, consultancy, counseling and continuing professional development programs. (iii) To test and certify attainment of competence in the profession of banking and finance. (iv) To collect, analyse and provide information needed by professionals in banking and finance. (v) To promote continuous professional development. (vi) To promote and undertake research relating to operations, products, instruments, process etc. in banking and finance. (vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionately crediting to the income and expenditure account over a period of 35 years, the assessee in the year ending 31/03/2017 has still declared lifetime membership fees of Rs.4,85,04,165 in its profit and loss account as compared to Rs.2,92,53,302 in the preceding year. Further, it is undisputed that the membership is available only to employees of the bank and financial institutions. Therefore, from the above, we are of the considered opinion that all the objects of the assessee are not for the purpose of education but the same also include the dissemination of information helpful to professionals in the banking and finance industry for their professional development. Thus, from the above, it is evident that all the objects are not aimed at or related to imparting education or in relation to educational activities. In this regard, the observation of the Hon'ble Supreme Court in Sole Trustee Lok Shikshana Trust (supra) becomes relevant wherein it was held that the word "education" has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. 14. From the perusal of financials of the assessee, forming p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course and is only interested in the subject. It cannot be denied that payment of Royalty generally depends on the amount of sale. Therefore, we are of the considered opinion that the decision of the assessee, to provide copyright in the course material to the publishing houses and earn royalty from them, is to earn more profit and is not solely for the purpose of education. 15. Therefore, from all the above findings, it is evident that even if the objects of the assessee, as claimed, have remained the same since the preceding years, the assessee has modified the way of its functioning and thus cannot be said to be existing "solely" for the purpose of education. It is pertinent to note that in section 10(23C)(vi) of the Act, before the term "solely for educational purposes and not for purposes of profit", the word "existing" is used. Therefore, even if for any year the taxpayer is found to be existing solely for educational purposes and not for purposes of profit, the assessee still has to continuously satisfy this pivotal condition each and every year. Section 10(23C)(vi) of the Act is not worded in the same manner as other provisions pertaining to deduction such as sections 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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