Income Tax Appellate Tribunal - Ahmedabad
Sardar Patel Institure Of Public ... vs Assessee on 19 December, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH - AHMEDABAD
(BEFORE SHRI A. MOHAN ALANKAMONY, AM AND SHRI KUL BHARAT, JM)
ITA No.2350/Ahd/2012: AY -2009-10
Sardar Patel Institute of Public Vs The Joint Director of Income Tax
Administration, Opp. to ISRO (Exemption),
Satellite Road, Ahmedabad -15 Ahmedabad
P. A. No. AAAJS 2448 C
(Appellant) (Respondent)
Appellant by Shri M. G. Patel with
Ms. Arti Shah, AR
Respondent by Shri D. K. Singh, Sr. DR
Date of hearing: 19-12--2012
Date of pronouncement: 04-01-2013
ORDER
PER A. MOHAN ALANKAMONY: The assessee Trust has filed this appeal aggrieved by the order of the learned CIT(A)-XXI, Ahmedabad in appeal No.CIT(A)-XXI/504/11-12 dated 10-10-2012, for the assessment year 2009-10 u/s 143(3) read with section 250 of the Income Tax Act.
2. The assessee has raised three grounds in its appeal wherein ground No.3 is general in nature and does not survive for adjudication. The remaining two grounds are reproduced herein under for reference:
ITA No.2350/Ahd/2012 (AY- 2009-10) 2Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) "1. The Learned Commissioner of Income Tax (Appeals)-
XXI, Ahmedabad has erred in law as well as on facts of the case by confirming the action of the Learned Assessing Officer holding that the Appellant is neither doing educational activities nor doing charitable activities and hence not covered under the provision of section 2 (15) of the Income Tax Act, 1961 and therefore the Appellant is not entitled to benefits u/s 11 of the Income Tax Act, 1961.
2. The Learned Commissioner of Income Tax (Appeals)-
XXI, Ahmedabad has erred in law as well as on facts of the case by confirming the action of the Learned Assessing Officer holding that the Appellant is not an educational institution eligible for exemption u/s 10(23C) (iiiab) of the Income Tax Ac, 1961."
3. The assessee is a Trust filed its return of income on 19-08-2009 along with auditor's report u/s 12A (b) of the Act in form No.10B. The case was subsequently taken up for scrutiny and order u/s 143(3) of the Act was passed on 22-12-2011 wherein the assessee's claim of exemption u/s 10(23C) (iiiab) of the Act was denied. Further, the learned AO held that the activity of the assessee does not fall within the meaning of "Charity" as envisaged under the provisions of section 2(15) of the Act and thereafter proposal was submitted to Director, Income Tax (Exemption), for review of the exemption granted u/s 12AA of the Act. Subsequently the learned AO made addition to the extent of Rs.3,77,80,429/- viz., on account of (i) excess income over expenditure Rs.1,41,46,919/- and (ii) Rs.2,36,33,510/-. When the matter cropped up before the learned CIT(A), the learned CIT(A) upheld the order of the learned AO and his findings are summarized as under:
ITA No.2350/Ahd/2012 (AY- 2009-10) 3Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) "9.5 To summerise, as the activities by the appellant cannot be considered as normal schooling through which scholastic education are given nor the activities by the appellant trust could come in the ambit of 'education' as the word 'education' has not been used in wide and extended sense. In the instant case the appellant trust is primarily giving training program to the public servant to make them more equipped to handle day to day problem in general administration (refer to main object of the appellant trust in para 8.1 supra). Such training being in the nature of Human resource development, as provided by the AO, cannot be termed as 'education' within the restricted meaning given to it in section 2 (15) o the IT Act. I am thus inclined to agree with the AO that the appellant trust neither doing educational activities nor is doing charitable activities u/s 2(15). Ground 2, 3 and 4 raised by the appellant are thus dismissed.
9.6 Further for the purposes of section 10(22), which now has been re-enacted under section 10(23C), the exemption u/s 10(23C) (iiiab), would be available only to an education institution if it is solely existing for educational purposes. Since the appellant has already been considered not existing solely for 'educational purposes' the exemption u/s 10(23C) (iiiab) cannot be given to the appellant. The ground 1 raised by the appellant is also dismissed.
4. Aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. The learned AR reiterated his submission made before the revenue authorities while as the learned DR supported the orders of the revenue.
5. We have heard the rival sides and carefully perused the paper book containing 142 pages submitted by the learned AR and the case laws relied upon by the learned DR and the learned AR.
ITA No.2350/Ahd/2012 (AY- 2009-10) 4Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) 5.1 Ground No.1:- Both the revenue authorities has erred by holding that the assessee is not covered by the provisions of section 2(15) of the Income Tax Act, 1961 with respect to its activity of education for charitable purpose.
5.2 At the outset, the learned AR pointed out that the learned DIT (Exemption) vide proceedings No.DIT (E)/ABD/SPITA/2011-12 dated 02-03-2012 has held that there was no justification for action u/s 12AA (3) of the Act and the proceedings under the relevant sections for cancelling the registration are dropped accepting the submissions of the assessee listed as under:
(i) The institution was formed by a Government resolution with effect from 01-10-2004 and registered as a Society under the Societies Registration Act, 1860 and also under the Bombay Public Trust Act with the Deputy Charity Commissioner, Ahmedabad whereby registration u/s 12AA of the Act was granted with effect from 01-10-2004.
(ii) Earlier the institution was functioning as a part of Department of the Government of Gujarat before it became as independent Institution vide its registration under the Societies Registration Act, 1860.
(ii) The Society continued to receive financial and other forms of assistance from the State Government and the Central Government.
(iv) The objects of the Society is to carry out programs of imparting pre-service, education and training to Government Officers and other training programs at different stages in the Career Progression of Government Employees. The Institute also conducts programs equipped with well-furnished infrastructure including class rooms, library, auditorium and hostel. The Institute also has eminent faculty members to educate its students. The functioning of the Society are ITA No.2350/Ahd/2012 (AY- 2009-10) 5 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) governed by the Governing Councils of 25 members consisting of very senior Government Officials and representatives from eminent institutes who was specified in the Memorandum of Association and Rules of the Institute.
(v) The Institute has carried out 298 educational and training programs for government servants for public cause and therefore, the decision of the Hon'ble Apex Court in the case Lok Shikshan Vs CIT reported in 110 ITR 234 stands in support of the assessee's case.
The relevant letter dated 02-03-2012 is placed in page No. 124 to 125 of the paper book. Further the learned AR stated that the revenue has accepted the order of the learned DIT (Exemption) on this issue because they have not carried this matter any further and the learned DR could not refute to the submission of the learned AR. In these circumstances, ground No.1 raised by the assessee with regard to its grievance for holding that the appellant is neither doing educational activities nor doing charitable activities does not survive for adjudication before us at this stage because the Revenue has already accepted that the activity of the trust is for the purpose of promoting education. Hence, this ground raised by the assessee has become infructuous and therefore dismissed.
6. Ground No.2:- Both the revenue authorities have erred in holding that the assessee is not an Educational Institution eligible for exemption u/s 10 (23C) (iiiab) of the Income Tax Act, 1961.
ITA No.2350/Ahd/2012 (AY- 2009-10) 6Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) 6.1 The learned AO had rejected the submission of the assessee that the assessee was eligible for exemption u/s 10 (23C) (iiiab) of the Act due to the following reasons:-
"The submission of the assessee is considered but not found acceptable. The assessee claims exemption u/s 10(23C) (iiiab) of the Act. Section 10(23C) (iiiab) reads as under
"any university or other educational institute existing solely for educational purposes and not for the purpose of profit, and which is wholly or substantially financed by the Government; or"
The very name suggests that it is an institute for training state/central Government employees and other persons for public administration i.e. for State/Central Government which is not education in normal parlance. H'ble Apex Court has in the case of Sole Trustee Loka Shikshana Trust Vs Commissioner of Income Tax [1975] 101 ITR 234 (SC) has defined 'Education' as under:
"Per Khanna J. The sense in which the word 'education' has been used in section 2(15) is the systematic instruction, schooling or training given to the young is preparation for work of life. It also connotes the whole course of scholastic instruction which a person has received. The word 'education' has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. What education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of the students by normal schooling."
The claim of the assessee that it is an educational trust is not acceptable and hence rejected."
6.2 Further, the learned CIT(A) took a view that the moot question which is to be decided is whether the activity of the assessee could ITA No.2350/Ahd/2012 (AY- 2009-10) 7 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) be termed as "educational" in the light of the various decisions rendered by the judiciary forum. Further, relying in the decision of the case Lok Shikshan Trust Vs CIT 110 ITR 234, CIT Vs Sorabji Nusserwanji Prukesh, 201 ITR 939 (Guj.) etc. held the issue against the assessee and confirmed the order of the learned AO based on his findings as extracted in Para No.3 hereinabove. At this juncture, it is relevant to examine (a) the objects of the trust and (b) the authorities of the trust. For reference, they are reproduced herein below:
"(a) Objectives of the Institute:
The Institute shall have following objectives:
(i) To bring together the other Institutions of various Departments of State Government which desire to share their resources of common infrastructure including Hostel, Library, Transportation and administrative facilities.
However, their individual identity functionally will not be affected and yet they will function under common umbrella of Sardar Patel Institute of Public Administration for the purpose of implementing the common training policy of the Government.
(ii) To provide foundation Training to the appointees of State Government Services, non-Gazetted employees of the Secretariat Service and employees of District Administration and District Panchayats.
(iii) To organize or to assist in organizing training programs, Seminars, Conferences, discussions, dissertation, an exhibition, Research Studies, Field Surveys, Symposia, Workshops and also Capsule Courses by Expert Academicians, Administrators, researchers for officials and non officials of Non-Government Organizations, i.e. NGO's as also for Panchayati Raj Functionaries of State on issues related to government functioning and public administration.
ITA No.2350/Ahd/2012 (AY- 2009-10) 8Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption)
(iv) To assess the training needs of the different State Government Departments, Boards, Corporations, Local Self Government bodies and such other non-government organizations that may consent to be associated with it.
(v) To design courses, determine the curricula and their course content based upon the assessment of training needs for clientele in para (iv) above.
(vi) To act as the Premier State level Institute in the filed of Public Administration and also act as the nodal training agency of different training Institutions of various Departments of the State Government.
(vii) To design special programs, courses for training/coaching of meritorious students for preparing them for National level competitive Examinations conducted by the Union Public Service Commission.
(viii) To identify training institutions and to resource persons at the local State, National and International levels and to enter into contract with them for designing and conducting courses and providing other inputs.
(ix) To mobilize funds/resources from diverse sources for training skill, up gradation and human capital development in pursuance of the stated objectives.
(x) Subject to the rules of State Government, to provide facilities for sabbatical to the members of the All India Services serving in the State, the State Government Employees and other employees of collaborating Training Institutions of State Government.
(xi) To seek and also to establish relations of mutual co-
operation with Institutions of State, National and International repute for fulfillment of the above vision and objectives.
ITA No.2350/Ahd/2012 (AY- 2009-10) 9Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption)
(xii) To establish and develop information tools for research training and to promote exchange of information among the participating organizations by establishing interactive website for the same among other things.
(xiii) To bring about the publication of 'NIRNAY' or any other news letter, books, journals, reports, Occasional papers, Study Reports etc. in furtherance of the broad objective of the Organization.
(xiv) To establish and maintain libraries and information services to facilitate the study of public administration and spreading information in regard thereto;
(xv) To run full time/part time course on Public Administration /Public Policy for students/Graduates with affiliation of any other Institutions/Universities.
(a) The authorities of the Institute:
The authorities of the Institute shall be
(i) The Board of Governors
(ii) The Executive Council
(iii) Such other authorities as may be constituted by the Board of Governors or the Executive Council.
(5) Officers of the institute:
Following shall be the officers of the Institute namely:
(i) The Director General/Commissioner of Sardar Patel Institute of Public Administration (Ex-officio)
(ii) Deputy Director General/Additional Commissioner/ Joint Director/ Joint Commissioner (Admn.)(Ex-
officio) and
(iii) Such other officers as may be appointed by the Board or the (Executive Council) from time to time.
(6) Board of Governors & membership:
ITA No.2350/Ahd/2012 (AY- 2009-10) 10Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) The members of the Board of Governors shall constitute the Executive Council of the Institute and shall consist of not less than seven members.
(7) Members:
The Institute shall maintain a Register of members of the Board of Governors giving their names, occupation and addresses and every members shall sign the Register. Every change of address shall be notified to the Joint Director/ Joint Commissioner/ Additional Commissioner (Administration).
(8) Board of Governors:
The Board of Governors will consist of up to Twenty Five members appointed by the state government including representatives from the eminent institutions.
The composition of the Board of Governors shall be as follows:
1) Chief Secretary to the Government President
2) Additional Chief Secretary/ Member Principal Secretary/ Secretary (Personnel)
3) Additional Chief Secretary/ Member Principal Secretary/ Secretary (A.R.T.D.)
4) Additional Chief Secretary/ Principal Member Secretary (Finance Department)
5) Additional Chief Secretary/ Member Principal Secretary/ Secretary Health & Family Welfare Department
6) Additional Chief Secretary / Member Principal Secretary Co-operation Department ITA No.2350/Ahd/2012 (AY- 2009-10) 11 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption)
7) Additional Chief Secretary/ Member Principal Secretary Panchayat Department
8) Secretary, Rural Development Deptt Member
9) Secretary, Road & Building Deptt. Member
10) Director General & Commissioner of Member Training (Ex-officio), Sardar Patel Institute of Public Administration
11) Director OR its representative Member Indian Institute of Management, Ahmedabad
12) Joint Secretary/Deputy Secretary(ARTD) Member
13) Executive Director OR its representative Member Ahmedabad Management Association Ahmedabad
14) Director or its representative Member Gandhi Labour Institute, Ahmedabad
15) Vice Chancellor of a University of Member Gujarat
16) Director or its representative Member Sardar Patel Institute of Social and Economic Research, Ahmedabad
17) Financial Adviser (Finance Department) Member
18) Additional Commissioner Member Sardar Patel Institute of Public Secretary Administration Seven eminent persons to be nominated by the Government to represent the interest of the sectors such as Agriculture, Rural Development, Forestry, Fisheries, ITA No.2350/Ahd/2012 (AY- 2009-10) 12 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) Animal Husbandry, Business Industry, Commerce and Trade, Banking and Insurance, Public Utilities such as transport, energy and communication, public works, Social Welfare, Public relations, Regulatory Services such as Revenue, Legal Police Education, Municipal bodies etc. These persons will be selected on the basis of their expertise and contribution in the given filed on the basis of their research and other studies done by them or by having actually worked in the field and contributed to its development for a minimum of 15 years.
Note: The selection of these persons shall be based not on their official position but on their recognized achievements and contribution to development of public administration.
(9) The Board of Governors shall appoint committees of the members for such purposes as it may deem fit and delegate to such committees and the Executive Council, such powers and authorize them to perform such functions as it may deem necessary and expedient. Such delegation or authorization may be made subject to such conditions as the Board may think fit to impose.
(10) The Board of Governors may create new classes of membership from time to time for such specific period, and fill them by co-option of such members as it deems desirable and necessary in the interest of the Institute from time to time.
EXECUTIVE COUNCIL:
(33) Subject to the overall supervision and policy direction of the Board of Governors and its Committee, the Executive Council shall be responsible for the management, administration and control of the affairs of the Institute and its income and properties in accordance with these Rules and the Regulations orders and instructions if any made from time to time and shall have, and exercise, ITA No.2350/Ahd/2012 (AY- 2009-10) 13 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) powers which may be necessary, incidental, conducive or expedient for the said purpose.
COMPOSITION OF THE EXECUTIVE COUNCIL:
(34) The Executive Committee shall be composed of not more than seven members including the Director General, who shall be the Chairman of the Committee.
(i) The Director General, Sardar Patel Institute of Public Administration
(ii) One member to be nominated by the President from among the heads of State Government Directorates.
(iii) Deputy Secretary in charge of Training, General Administration Department.
(iv) One representative of a training institute to be nominated by the Chairman of Executive Council
(v) One representative from a Non Governmental organization
(vi) One expert on Financial matters of the Institute to be nominated by the Chairman
(vii) Joint Director/ Joint Commissioner (Administration) Sardar Patel Institute of Public Administration will be the Member Secretary to the Executive Council.
SECRETARY:
(49) An officer namely Joint Director/ Joint Commissioner (Administration) of the Institute shall be appointed as the Secretary of the Institute by the Board of Governors. He shall function as the ex-officio Secretary to the Board of Governors, the Executive Council and such other ITA No.2350/Ahd/2012 (AY- 2009-10) 14 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) committees and sub-committees as may be constituted by the Board of Governors and the Executive Council respectively."
6.3 From the above, it is evident that the patron of the society consists only of the High Ranking State Government Officials and persons nominated by the State Government. The learned AR further pointed out that the entire funding of the society was granted by the State Government and Central Government which could not be proved otherwise by the revenue. The learned AR also informed the Bench that all the revenue received by the society was from the government authorities and on examination of these facts the same could not be disputed. Moreover, the learned DIT (Exemption) has also clarified the legal position vide his letter dated 02-03-2012 in proceedings No.DIT (E)/ABD/SPIPA/2011-12/1709, that the activities conducted by the society are in the nature of imparting education. Section 10(23C)(iiiab) of the Act provides that any income received by any person on behalf of any University or Educational Institution solely existing for educational purpose which is wholly or substantially financed by the government will be exempt from tax. In the present case before us, it is apparent that the assessee is a Trust duly registered and all the functionaries are state government officials or nominees of the state government who are empowered to govern the management of the Trust on behalf of the state government. Further on an overall reading of the objects of the Trust reproduced herein above it is clear that the Trust's object is for imparting education and development of skill to Government staff for the benefit of public in general. Thus, it is well established that the society though registered ITA No.2350/Ahd/2012 (AY- 2009-10) 15 Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption) under the Societies Registration Act, 1860 and Bombay Public Trust Act is an extended limb of the State Government created for the purpose of imparting education and therefore, it is covered by section 10(23C) (iiiab) of the Act. We must also add here that we have taken note of all the relevant case laws furnished by the learned DR and we are of the opinion that those decisions will not support the arguments advanced by the learned DR considering the facts discussed hereinabove. Thus from our above discussions we hold this issue also in favour of the assessee. Accordingly, both the grounds raised by the assessee are held in its favour.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 04-01-2013 Sd/- Sd/-
(KUL BHARAT) (A. MOHAN ALANKAMONY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Lakshmikanta Deka/
Copy of the order forwarded to:
1. The Appellant
2. The Respondent
3. The CIT concerned
4. The CIT(A) concerned
5. The DR, ITAT, Ahmedabad
6. Guard File
BY ORDER
Asst. Registrar, ITAT, Ahmedabad
1. Date of Dictation: 19-12-12/21-12-12 (direct on computer)
2. Date on which the typed draft is placed before the Dictating Member: 26-12-12 other Member:
3. Date on which approved draft comes to the Sr.P.S./P.S.:
4. Date on which the fair order is placed before the Dictating Member for pronouncement:
ITA No.2350/Ahd/2012 (AY- 2009-10) 16Sardar Patel Institute of Public Administration Vs Joint DIT (Exemption)
5. Date on which the fair order comes back to the Sr. P.S./P.S.:
6. Date on which the file goes to the Bench Clerk:
7. Date on which the file goes to the Head Clerk:
8. The date on which the file goes to the Assistant Registrar for signature on the order:
9. Date of Despatch of the Order: