The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), denied income tax exemption under Section 10(23C)(vi) of the Income Tax Act on not existing solely for purposes of education.
The assessee is an Indian company incorporated under section 26 of the Indian Companies Act, 1913. 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.
The assessee claiming itself to be an educational institution existing solely for educational purposes and not for the purpose of profit filed an application seeking exemption under Section 10(23C)(vi) of the Income Tax Act for the assessment year 2017-18.
The Department alleged 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. Thus, no general public is being served with the services of the institution and the assessee is not imparting any formal education or normal schooling which shows that it does not exist solely for education.
The 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 Counsel for the assessee submitted that the assessee charges a one-time fee of Rs 1500 which is initially taken to the balance sheet and then annually proportionately 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 Income Tax Act. The Two-Member Bench of the Tribunal comprising Om Prakash Kant, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “Since the assessee has been found to be not „existing’ solely for the purposes of education on the basis of the above findings, therefore, the other aspects raised in the impugned order become academic. Accordingly, the denial of exemption under section 10(23C)(vi) of the Income Tax Act is upheld.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
