SCMS Maritime Training Institute Vs Ward 25(1)(1) (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has provided relief to SCMS Maritime Training Institute, a trust, by ruling that its gross receipts cannot be fully subjected to tax even if it loses its exemption under Section 11 of the Income Tax Act, 1961. The Tribunal, in its order dated May 27, 2025, remitted the case back to the Assessing Officer for re-computation, emphasizing that only the net surplus, after allowing legitimate expenditure and depreciation, can be taxed.
The appeal was filed by the assessee against an order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated September 24, 2024, which confirmed an assessment by the Centralized Processing Centre (CPC), Bengaluru. The dispute pertained to Assessment Year 2022-23.
SCMS Maritime Training Institute, a trust registered with the Charity Commissioner, Maharashtra, operates with the objective of imparting education and pursuing other charitable activities, specifically training merchant navy candidates at subsidized rates. The trust had initially obtained registration under Section 12AA of the Act on November 1, 2010.
However, a significant amendment introduced by the Finance Act, 2021, mandated all registered trusts to apply for renewal or fresh registration under the newly inserted Section 12AB of the Act. The assessee failed to comply with this requirement for Assessment Year 2022-23. Despite this non-compliance, the trust filed its return of income claiming exemption under Section 11, albeit by mentioning its old 12AA registration number. The return reported a net surplus of Rs. 1,86,512/-.
