TMI Blog2023 (5) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 10B, 80IB, etc., which provides for the satisfaction of formation conditions as well as continuing conditions, and the fulfilment of formation conditions are to be tested only in the initial year. We find that other decisions relied upon by the learned AR rendered in assessee s own case pertains to either exemption u/s 11 or registration u/s 12A, wherein the provisions are not as stringent as section 10(23C)(vi) of the Act. Since the assessee has been found to be not existing solely for the purposes of education, denial of exemption under section 10(23C)(vi) of the Act is upheld. As a result, the appeal filed by the assessee is dismissed. - Shri Om Prakash Kant, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Nitesh Joshi, Ms. Mrunmayee Kajrekar For the Revenue : Shri Purushottam Tripuri, Ms. Richa Gulati ORDER PER BENCH The present batch of 4 appeals has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner since inception and that similar exemption has been granted to the Appellant in the past under the erstwhile section 10(22); 4. not appreciating that the sole purpose of existence of the Appellant is imparting education and training bank officers and personnel and not to earn profit and these courses have been recognized and accepted by institutions like Reserve Bank of India which is the Apex Bank of the Country. 5. not appreciating that the activities such as counselling and consulting, publication of books are carried out by the Appellant only as incidental activities, that too in the field of banking for the purpose of guiding various other organizations with regards to banking education and training. 6. not appreciating that there is no prohibition under the section 10(23C) (vi) of the Act against earning surplus from the activities of an assessee provided the purpose of existence thereof is not for profit and such surplus is ploughed back to advance the educational objects of the Appellant. 7. not appreciating the fact that the Members were not entitled to any surplus made by the Appellant and that Appellant's bye-laws prohibited any distribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E) vide impugned order did not agree with the submissions of the assessee and rejected the application filed by the assessee seeking exemption under section 10(23C)(vi) of the Act. The learned CIT(E) held that since the assessee is conducting very substantial non-educational activities such as collecting fees for examination, earning Royalty from publications, providing services to members, and earning hefty fees for membership, it certainly cannot be said to be existing solely for education. The learned CIT(E) further held that the assessee is carrying out the activities with a clear objective of earning profit year after year and generating surplus and by its activities, it certainly cannot be said that it solely exists for education and not for profit, which is the spirit of section 10(23C)(vi) of the Act. Being aggrieved, the assessee is in appeal before us. 5. During the hearing, the learned Authorised Representative ( learned AR ) submitted that the main object of the assessee is to facilitate the study of the theory and practice of banking and finance and hold examinations with a view to provide the certificate to successful candidates upon completion of the courses. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them except a few courses wherein only members of the assessee are entitled to enrollment. The learned AR by referring to the annual report of the assessee highlighted the various activities such as examination, e-learning, seminars and lectures, training, research, etc. conducted by the assessee. The learned AR also referred to the RBI s letter dated 24/04/2008 in support of the submission that the Reserve Bank of India had requested the Indian Banks‟ Association to formulate a certificate course for Direct Recovery Agents in consultation with the assessee. Further, once the course is introduced by the assessee, the RBI directed the banks to ensure that over a period of one year, all their Recovery Agents undergo the above training and obtain the certificate from the assessee. The learned AR submitted that the assessee is using funds for the object of the assessee and has constructed education centres in New Delhi, Mumbai, Kolkata, and Chennai. The learned AR submitted that earlier the course material was published by the assessee but thereafter the assessee gave the same to the publishers, namely, Taxmann and MacMillan, and is earning royalty. The learned AR submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities are solely for the purpose of education, therefore it is entitled to exemption under section 10(23C)(vi) of the Act. In order to decide the claim of the assessee, it is relevant to analyse the provisions of section 10(23C)(vi) of the Act, which reads as under:- (vi) any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority; 8. Thus, for the applicability of the aforesaid provision following criteria are to be fulfilled:- (i) the person claiming the exemption must be a university or other educational institution; (ii) such university or education institution must exist solely for educational purposes and not for the purpose of profit; and (iii) education institution must be approved by the prescribed authority. As per the assessee, in the assessment year 1996-97, for the first time, assessee s claim for exemption under section 10(22) of the Act was denied on the ground that it was not an educational institution as its primary activity was that of conducting the examination. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct considered all the previous decisions and came to the conclusion that a trust, university or other institution imparting education should necessarily have all its objects aimed at imparting or facilitating education, for the purpose of claiming the exemption under the aforesaid section. The Hon ble Supreme Court further in para 51 held that the expression solely is therefore important. The Hon ble Supreme Court also held that the predominant object test laid down in Surat Art Silk Cloth Manufacturers‟ Association (supra) was in the context of charitable organisations set up for the advancement of objects of general public utility and the same was wrongly adopted in subsequent decisions in American Hotel and Lodging Association vs CBDT, [2008] 301 ITR 86 (SC) and Queen's Educational Society v. CIT [2015] 372 ITR 699 (SC). Accordingly, the Hon ble Supreme Court overruled the decisions rendered in American Hotel and Lodging Association (supra) and Queen's Educational Society (supra). We find that the Hon ble Supreme Court in New Noble Educational Society (supra) further upheld that surplus generated in the course of providing education or education activities is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and finance; developing the professional qualified and competent bankers and finance professionals through a process of education, training, examination; testing and certifying attainment of competence in the profession of banking and finance; lectures, discussions to promote information on banking and finance. While other deals with the collection, analysis, and provision of information needed by professionals in banking and finance; encouraging innovation and creativity among finance professionals so that they could face competition and succeed. Thus, the first leg of assessee s objectives may seem to be for the purpose of education, while the other objectives appear to be to promote professional development, sharing information with such professionals, and sharing statistics relating to the business of banking and finance. In the list of activities of the assessee, on page 3 of the paper book, it is mentioned that the assessee provides a daily e- newsletter, publishes monthly newsletter and quarterly journal on banking, finance, and allied subjects, to its over 3 lakh members free of cost every month. It is also mentioned that these publications are also available on the portal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books would then be made available by the publishers across the country, in respect of which the assessee received Royalty on books. During the hearing, it was submitted that the reason for providing copyright in the course material to the publishing house is to provide easy access to the books to everyone. We, however, do not agree with such a basis for providing copyright to the publishing house. As per assessee s own submission, the candidates, who pursue its courses, are spread over the whole country. If that be the case, the earlier mode of publishing its own courseware and then transporting it to the candidate‟s doorstep ensures the availability of the course material even to the candidate at a remote place in India. The provision of study material through posts to the students by the Institutes, like ICAI and ICSI, is not unknown. On the other hand, books published by a publishing house have to be purchased from the bookstore, without any guarantee of their availability. It is pertinent to note that in the assessment year 1996-97, when the coordinate bench of the Tribunal decided the claim of exemption under section 10(22) in its favour, the assessee was, inter-alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Noble Educational Society (supra) in para-76(f) of the judgment:- f. While considering applications for approval under section 10(23C), the Commissioner or the concerned authority as the case may be under the second proviso is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, trust or institution genuinely seeks to achieve the objects which it professes. The observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, trusts etc. the proviso under section 10(23C) is not confined to newly set up trusts - it also applies to existing ones. The Commissioner or other authority is not in any manner constrained from examining accounts and other related documents to see the pattern of income and expenditure. (emphasis supplied) 16. Since the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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