Institute Management Committee of Government ITI Peth Vs ITO (ITAT Pune)
Income Tax Appellate Tribunal (ITAT) Pune allowed an appeal filed by the Institute Management Committee (IMC) of Government ITI Peth, Nashik, granting them exemption under Section 10(23C)(iiiab) of the Income-tax Act, 1961, for Assessment Year 2022-23. The core issue was whether the institute, primarily funded through interest earned on government grants, qualified for the exemption available to educational institutions substantially financed by the government.
The Central Processing Centre (CPC) and the Additional/Joint Commissioner of Income Tax (Appeals) [Addl./JCIT(A)] had denied the exemption, arguing that the institute was not substantially government-financed. The ITI’s income primarily consisted of interest earned on fixed deposits made from a ₹2.50 crore grant received from the Central Government’s Ministry of Labour and Employment. The remaining income came from student fees.
The ITAT, however, overturned the lower authorities’ decisions. The tribunal emphasized that the institute had received a substantial grant from the government, which was invested in fixed deposits, and the interest earned from these deposits constituted a major portion of the institute’s income. This, the ITAT reasoned, clearly demonstrated that the institute was substantially financed by the government, fulfilling the criteria for exemption under Section 10(23C)(iiiab).
The ITAT relied on a similar case decided by the Jodhpur bench of the ITAT, IMC of ITI vs. ITO, where an identical issue was considered. In that case, the tribunal held that an institute funded by a government grant and utilizing the interest earned on that grant for its objectives was eligible for the exemption. The Pune ITAT, citing this precedent and several other High Court and Tribunal decisions, concluded that the present case was squarely covered by the principle established in those rulings.
The ITAT highlighted that the institute’s primary objective was to improve vocational training and skill development on a non-profit basis. The tribunal, therefore, held that the Addl./JCIT(A) had erred in denying the exemption. Consequently, the ITAT allowed the institute’s appeal, reversing the order of the Addl./JCIT(A) and granting the exemption under Section 10(23C)(iiiab).
FULL TEXT OF THE ORDER OF ITAT PUNE
