Case Law Details

Case Name : The Indian Institute of Banking & Finance Vs CIT (Exemp.) (ITAT Mumbai)
Appeal Number : ITA No. 6763/Mum./2017
Date of Judgement/Order : 02/08/2019
Related Assessment Year : 2016-17
Courts : All ITAT (7341) ITAT Mumbai (2112)

The Indian Institute of Banking & Finance Vs CIT (Exemp.) (ITAT Mumbai)

The issue under consideration is whether rejection of approval u/s 10(23C) on the allegation of institution existing not solely for the purpose of education but for the purpose of profit is justified in law?

In the present case, the nature and character of the assessee is that of a Charitable Institution. The assessee claiming itself to be an educational institution existing solely for educational purpose and not for the purpose of profit. The assessee sought approval of the competent authority for claiming exemption u/s 10(23C), however, assessee’s applications were rejected. Reason for denial of approval primarily is, the assessee cannot be considered to be an Educational Institution, as it does not provide any formal education as is provided in Schools, Colleges, etc. Further, looking at the financials of the assessee and the surplus generated, learned Commissioner (Exemp.) observed, it does not satisfy the condition of “not existing for the purpose of earning profit”.

ITAT states that the assessee is an Educational Institution and created for the purpose of imparting education cannot be rejected considering the fact that it undertakes various courses for imparting education to candidates appearing in banking service. He submitted, the objects of the assessee also make it clear that it is created for the purpose of imparting education. He submitted, sale of books, study materials and holding examinations are ancillary and incidental to the main object of imparting education. Therefore, it cannot be said that the assessee has been created with profit motive.He submitted, the surplus generated is as a result of corpus donation accumulated over the years and not due to any commercial activity carried on by the assessee with profit motive. He submitted, when the assessee has been held to be a Educational Institution and having charitable object without any profit motive by the Tribunal in the earlier assessment years, the concerned authority was not justified in rejecting assessee’s application under section 10(23C)(vi) of the Act. Thus, assessee’s application of exemption under section 10(23C)(vi) of the Act should be allowed.

FULL TEXT OF THE ITAT JUDGEMENT

Captioned Appeal has been filed by the assessee challenging the order dated 28th September 2017, passed by the learned Commissioner of Income Tax (Exemption), Mumbai, rejecting assessee’s application seeking approval under section 10(23C)(vi) of the Income Tax Act, 1961 (for short “the Act”) for the assessment year 2016–17.

2. Brief facts are, the assessee is a company incorporated under section 26 of The Indian Companies Act, 1913, on 30th April 1928. In other words, the nature and character of the assessee is that of a Charitable Institution. The principal objects of the assessee, as per the Memorandum of Association, are as under:–

(i) To encourage the study of the theory of banking and for that purpose to institute a scheme of examinations and to give certificates, scholarships and prizes.

(ii) To promote information on banking and kindred subjects by lectures, discussions, books, correspondence with public bodies and individuals or otherwise.

(iii)  To collect and circulate statistics and other information relating to the business of banking in India.

(iv)  To acquire by purchase, donation or otherwise and to maintain extend and improve a library consisting of works on banking, commerce, finance, political economy and kindred subjects.

3. The assessee claiming itself to be an educational institution existing solely for educational purpose and not for the purpose of profit had initially claimed exemption under section 10(22) of the Act. However, assessee’s claim of exemption under section 10(22) of the Act in assessment years 1996–97 to 1998–99, was disallowed by the Department. The assessee challenged the disallowance of exemption under section 10(22) of the Act before the Tribunal. While deciding the issue in the assessment year 1996–97, the Tribunal in ITA no.6103/Mum./1999, dated 12th February 2001, allowed assessee’s claim of exemption under section 10(22) of the Act. The same view was expressed by the Tribunal while deciding the appeals for the subsequent assessment years i.e., 1997–98 and 1998–99. However, section 10(22) of the Act was omitted from the statute by Finance (No.2) Act, 1998, w.e.f. 1st April 1999, and in its place, the legislature introduced sub–section (23C)(vi) w.e.f. 1st April 1999, providing for exemption to any University or other Institution existing solely for educational purpose and not for the purpose of profit. After introduction of the aforesaid provision, though, the assessee sought approval of the competent authority for claiming exemption under the said provision, however, assessee’s applications were rejected repeatedly in each assessment year and it is stated that the dispute, is now pending before the Hon’ble Jurisdictional High Court. Be that as it may, for the impugned assessment year i.e., 2016–17, the assessee made an application to the concerned authority seeking approval under section 10(23C)(vi) of the Act. However, in the impugned order, the learned Commissioner (Exemp.) again rejected assessee’s request for approval by following the footsteps of his predecessors–in–office. Reason for denial of approval primarily is, the assessee cannot be considered to be an Educational Institution, as it does not provide any formal education as is provided in Schools, Colleges, etc. He observed, formal education pre–supposes approval by the educational bodies of Central/State Government. Whereas, the assessee has not been recognized as an Educational Institutional by any competent authority. He observed, recognition by Reserve Bank of India of some courses provided by the assessee is not relevant as it is not competent to recognize educational institutions. He observed, publishing of books or holding examinations cannot be considered to be an educational activity. He observed, the main source of income of the assessee is from examination fees and a major part of the expenditure excluding administrative and employees’ expenditures are incurred towards holding examinations. Referring to the audit report for the financial year 2007–08, learned Commissioner (Exemp.) observed, as per assessee’s own admission, training is not a major activity of the Institution, but the Institution is often asked to conduct training in areas where it has specialized focus and certification possibility. Thus, the learned Commissioner (Exemp.) observed, the Institution is called for by other Institutions for its specialized focus and certification purpose, which cannot be considered as educational activity. In this context, he referred to various judicial precedents. Further, looking at the financials of the assessee and the surplus generated, learned Commissioner (Exemp.) observed, it does not satisfy the condition of “not existing for the purpose of earning profit”. Thus, broadly on the aforesaid premises, he rejected assessee’s application seeking exemption under section 10(23C)(vi) of the Act. Being aggrieved with the aforesaid decision of learned Commissioner (Exemp.), the assessee has filed the present appeal. Apart from the main grounds raised in the memorandum of appeal, the assessee has raised the following additional ground:–

“1. As per 9th proviso below section 10(23C)(vi) of the Act, the appellant’s application dated 27th September 2015, for grant of approval ought to be regarded as allowed in the absence of an order rejecting the application.”

4. Shri Nitesh Joshi, learned Counsel for the assessee opening his arguments on the additional ground submitted, that the assessee had applied for approval under section 10(23C)(vi) of the Act for the assessment year 2015–16, on 27th September 2015, before the competent authority. However, no orders have yet been passed by the competent authority either granting or refusing the approval. Drawing our attention to the 9th proviso to section 10(23C)(vi) of the Act, he submitted, in a case where the application for approval is made after coming into effect of Taxation Laws (Amendment) Bill, 2006, approval shall be either granted or rejected by an order passed within a period of twelve months from the end of the month in which such application was received by the concerned authority. He submitted, in assessee’s case, though, the application seeking approval under section 10(23C)(vi) of the Act was received by the competent authority on 27th September 2015, no order has been passed by him within the period of 12 months, as prescribed in the statutory provision, rejecting the application of the assessee. He submitted, though, the competent authority has not passed any order granting approval under section 10(23C)(vi) of the Act for the assessment year 2015–16, however, since he has also not rejected the application to the assessee within the stipulated period, approval under section 10(23C)(vi) of the Act is deemed to have been granted to the assessee. To demonstrate that the assessee had filed application seeking approval under section 10(23C)(vi) of the Act for the assessment year 2015–16 and such application has not been rejected, the learned Authorised Representative drew our attention to the copy of the said application at Page–91 of the paper book and copy of the written submissions filed before learned Commissioner (Exemp.) on 20th September 2017 (at Page–110 of the paper book). In this context, the learned Authorised Representative drew our attention to the CBDT Circular no.01 of 2017, dated 27th July 2007. Thus, he submitted, since assessee’s application seeking approval under section 10(23C)(vi) of the Act for the assessment year 2015–16 has not been rejected, it is deemed to have been allowed and in that event, there was no need for the assessee to again seek approval in the impugned assessment year. Therefore, the approval deemed to have been granted for the assessment year 2015–16 would also apply to the impugned assessment year, hence, assessee’s claim of exemption under section 10(23C)(vi) of the Act should be allowed.

5. The learned Departmental Representative submitted, the additional ground raised by the assessee should not be admitted, as the issue raised therein was not raised before learned Commissioner (Exemp.). Without prejudice to the aforesaid submission, the learned Departmental Representative submitted, merely because the competent authority has not passed any order rejecting the application for approval under section 10(23C)(vi) of the Act for the assessment year 2015–16, it cannot be said that the approval for the said assessment year is deemed to have been granted by the assessee. He submitted, the provision contained under the 9th proviso to section 10(23C)(vi) of the Act is directory and not mandatory. It cannot be considered to be a deeming provision. In support of such contention, the learned Departmental Representative relied upon the following decisions:–

i) CIT v/s Muzaffarnagar Development Authority, [2015] 372 ITR 209 (All.);

ii) CIT v/s Sheela Christian Charitable Trust, [2013] 354 ITR 478 (Mad.); and

iii)  CIT v/s Karimangalam Onriya Pengal Semipu Amaipu Ltd., [2013] 354 ITR 482 (Mad.)

6. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. The issue raised in the additional ground was not raised in course of proceedings before the learned Commissioner (Exemp.). However, considering the fact that this issue is a purely legal issue and can be decided on the basis of facts and materials on record, we are inclined to admit the additional ground and proceed to deal with the issue herein after. It is stated by the learned Counsel for the assessee that for the assessment year 2015–16, the assessee had filed application seeking approval under section 10(23C)(vi) of the Act before learned Commissioner (Exemp.) on 27th September 2015, which has not yet been disposed of by a specific order. It is the contention of the learned Counsel before us that since the authority concerned has not passed any order rejecting assessee’s application under section 10(23C)(vi) of the Act within the stipulated period, approval under the said provision is deemed to have been granted to the assessee. It is noticed, though the provision contained under clause (vi) under section 10(23C) of the Act, was introduced to the statue by Finance (No.2) Act, 1998, w.e.f. 1st April 1999, however, it did not prescribe any time limit for disposal of assessee’s application seeking approval by either accepting or rejecting it. By Taxation Laws (Amendment) Act, 2006, which was brought with retrospective effect from 1st April 2006, the legislature introduced 9th proviso to section 10(23C)(vi) of the Act, which reads as under:–

Provided also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, every notification under sub-clause (iv) or sub-clause (v) shall be issued or approval under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) shall be granted or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received:”

7. As could be seen, by bringing the aforesaid proviso, a time limit of twelve months from the end of the month in which the application was received is fixed for passing the order either granting or rejecting the application seeking approval. From the CBDT Circular no.1 of 2007, dated 27th April 2007, it appears that the intention of the legislature in bringing the 9th proviso to section 10(23C)(vi) of the Act is to remove the difficulty faced by the applicants due to pendency of the applications for long period in the absence of any time limit for passing an order either approving or rejecting the application. There is nothing either in the statutory provision or even in the circular to even remotely suggest that non–disposal of assessee’s application under section 10(23C)(vi) of the Act either way would lead to deemed approval under section 10(23C)(vi) of the Act. Therefore, when the statutory provision or the circular explaining such provision does not provide for any such deemed approval, it cannot be read into the provision. It is relevant to observe, similar provision for grant or rejection of registration under section 12AA of the Act has been enacted under sub–section (2) of section 12AA of the Act. However, while interpreting the said provision, different High Courts have held that absence of an order passed by the competent authority rejecting the application for registration within the stipulated period of six months would not lead to deemed grant of registration, as the said provision stipulating the time limit for disposal of application is directory. In this context, we may refer to the decisions cited by the Learned Departmental Representative noted above.

8. Moreover, it  is  a  fact  on  record  that  assessee’s  applications seeking approval under section 10(23C)(vi) of the Act have been rejected in all other assessment years prior to assessment year 2015– 16 and also in the impugned assessment year. Therefore, if for any reason, the application filed by the assessee seeking approval under section 10(23C)(vi) of the Act has not been disposed of, it will not lead to deemed grant of approval. More so, when the application seeking approval under section 10(23C)(vi) of the Act for the impugned assessment year has been rejected by the competent authority in an order passed within the stipulated time period. That being the case, the submissions made by the learned Counsel in support of deemed grant  of  approval  under  section  10(23C)(vi)  of  the  Act  must  fail.

Accordingly, the additional ground is dismissed.

9. Insofar as the main grounds challenging the rejection of approval under section 10(23C)(vi) of the Act are concerned, the learned Counsel for the assessee submitted, the fact that the assessee is an Educational Institution and created for the purpose of imparting education cannot be rejected considering the fact that it undertakes various courses for imparting education to candidates appearing in banking service. He submitted, the objects of the assessee also make it clear that it is created for the purpose of imparting education. He submitted, sale of books, study materials and holding examinations are ancillary and incidental to the main object of imparting education. Therefore, it cannot be said that the assessee has been created with profit motive. In this context, the learned Counsel for the assessee drew our attention to the courses offered by the assessee. He submitted, the assessee is carrying on its objects from past so many years and it was also allowed exemption under section 10(22) of the Act in the assessment year 1996–97, 1997–98 and 1998–99. Drawing analogy between the provisions contained under sections 10(22) and 10(23) of the Act, he submitted, there is no material difference between the aforesaid provisions as the basic character is the same. He submitted, in the assessment year 1996–97, 1997–98 and 1999– 98, the Tribunal has clearly and categorically held that the assessee is an Educational Institution and existing for the purpose of education, therefore, allowed assessee’s claim of exemption under section 10(22) of the Act. He submitted, when the Tribunal has held that the assessee is an Educational Institution existing solely for educational purpose and not for the purpose of profit, it is entitled to claim exemption under section 10(23C)(vi) of the Act. He submitted, even in the subsequent assessment years also, the Tribunal has held that the assessee is a Charitable Institution and its objects are for charitable purpose, hence, entitled to claim exemption under section 11 of the Act. In this context, he drew our attention to the orders passed by the Tribunal. He submitted, though, assessee’s registration under section 12A of the Act was cancelled on the allegation that it is undertaking commercial activity with profit motive, however, the Tribunal not only restored the registration under section 12A of the Act, but also held that the assessee is a Charitable Institution. Thus, he submitted, in face of the orders passed by the Tribunal in the preceding assessment years, it cannot be said that the assessee is carrying on commercial activity with profit motive, hence, cannot be treated as Educational Institution. He submitted, learned Commissioner (Exemp.) has refused to grant approval basically for the reason that the assessee cannot be treated as Educational Institution since it does not conduct classes like Schools and Colleges. He submitted, now it is well settled that for imparting education, it is not necessary to conduct classes like Schools and Colleges. Further, he submitted, increase in examination fee is because of increase in candidates, hence, that cannot be criteria to hold that assessee is having profit motive. Further, he submitted, the examination fee received is utilized for the purpose of creating infrastructure, thereby, for achieving the object of the assessee. He submitted, the surplus generated is as a result of corpus donation accumulated over the years and not due to any commercial activity carried on by the assessee with profit motive. He submitted, when the assessee has been held to be a Educational Institution and having charitable object without any profit motive by the Tribunal in the earlier assessment years, the concerned authority was not justified in rejecting assessee’s application under section 10(23C)(vi) of the Act. The learned Counsel for the assessee fairly submitted, similar applications filed by the assessee in the preceding assessment years have been rejected by the concerned authority and against such rejection orders, assessee has filed Writ Petition before the Hon’ble Jurisdictional High Court which are still pending. He submitted, since the order passed under section 10(23C)(vi) of the Act was not appealable earlier, the assessee had to file Writ Petitions in the High Court seeking redressal. Thus, he submitted, assessee’s claim of exemption under section 10(23C)(vi) of the Act should be allowed. In support of such contention, the learned Counsel relied upon the following decisions:–

1. Queens Educational Society v/s CIT, [2015] 55 taxmann.com 255; 

2. Aditanar Educational Institution v/s ACIT, [1997] 224 ITR 310 (SC); 

3. Council for the Indian School Certificate Examination v/s DGIT, [2014] 362 ITR 436 (Del.); and 

4. DIT(E) v/s Sumudra Institution of Maritime Studies Trust, [2014] 369 ITR 645 (Bom.).

10. The learned Departmental Representative submitted, in course of proceedings before learned Commissioner (Exemp.), the assessee failed to furnish plausible explanation to various queries raised by him, such as, increase in examination fees, increase in surplus, nature and character of the institution etc. Drawing our attention to certain factual details, he submitted, examination fee received by the assessee is very high compared to expenditure incurred by the assessee for holding examinations. Thus, he submitted, the aforesaid facts clearly reveal that the assessee is having profit motive. He submitted, merely because assessee’s claim of exemption under section 10(22) of the Act was allowed by the Tribunal in assessment year 1996–97 to 1998–99 or its claim of exemption under section 11 of the Act was allowed in the some of the past assessment years, that does not automatically entitle the assessee for exemption under section 10(23C)(vi) of the Act, as, the conditions of the said provision has to be satisfied by the assessee in each assessment year. He submitted, the principle of res judicata does not apply to the tax proceedings. Further, he submitted, assessee’s applications seeking approval under section 10(23C)(vi) of the Act have been rejected in the past assessment years also and the assessee has challenged such orders by filing Writ Petitions in the High Court, which are still pending. Thus, he submitted, the impugned order of learned Commissioner (Exemp.) should be upheld.

11. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. From the facts on record, it emerges that the assessee was incorporated in the year 1928 with the main object of imparting the study of theory of banking and for that purpose to institute a scheme of examination and to give certificates, scholarship and prizes. Further, to promote information on banking and kindred subjects by lectures, discussions, books, correspondences with public bodies and individuals otherwise. It is to be noted that the objects of the assessee have not undergone any material change over the years. Undisputedly, prior to introduction of section 10(23C)(vi) of the Act, the assessee treating itself as an Educational Institution existing solely for the purpose of education and not for the purpose of earning profit, had claimed exemption under section 10(22) of the Act. After omission of section 10(22) of the Act and introduction of section 10(23C)(vi) of the Act, the assessee started claiming exemption under section 10(23C)(vi) of the Act. It is a fact on record that exemption claimed by the assessee under section 10(22) of the Act in the assessment year 1996–97 was rejected by the Assessing Officer and thereafter by learned Commissioner (Appeals). While considering assessee’s appeal against the order of learned Commissioner (Appeals), the Tribunal in ITA no.6103/Mum./1999, dated 12th February 2001, held that the assessee satisfies the conditions of section 10(22), hence, entitled to claim exemption there under. The same view was expressed by the Tribunal while deciding assessee’s appeals for the assessment year 1997–98 and 1998–99 in ITA no.4449/Mum./2001, dated 31st August 2004 and ITA no.586/Mum./2002, dated 10th January 2005 respectively. In other words, the Tribunal accepted assessee’s claim that it is an Educational Institution existing solely for educational purpose and not for the purpose of profit. At this juncture, it would be worthwhile to examine the provisions of section 10(22) of the Act (now omitted) and section 10(23C)(vi) which are relevant for our purpose.

Section 10(22)

(22) any income of a university or other educational institution, existing solely for educational purposes and not for purposes of profit;

Section 10(23C)(vi)

“(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;”

12. A conjoint reading of the aforesaid provisions would make it clear that the basic condition enshrined in both the provisions remain same. The first condition which has to be satisfied is, the person claiming exemption must be a University or other Educational Institution. The second condition is, such University or Educational Institution must exist solely for educational purpose and not for the purpose of profit and the third condition is the educational institution must be approved by the prescribed authority. Reference to the aforesaid provisions assumes importance considering the fact that the objects and activities of the assessee have remained unchanged over the years. Therefore, the decisions of the Tribunal holding the assessee to be a educational institution existing solely for the purpose of education and allowing its claim of exemption under section 10(22) will certainly have a crucial bearing while deciding assessee’s claim of exemption under section 10(23C)(vi) of the Act. Therefore, learned Commissioner (Exemp.) cannot simply brush aside the decisions of the Tribunal by taking shelter behind the adage “principle of res judicata will not apply to tax proceedings”. In that event, learned Commissioner has to demonstrate that decisions of the Tribunal would not apply due to material difference  in  facts.   A  perusal   of  the   impugned  order   of   learned Commissioner  (Exemp.)  reveals  that  he   has  refused  to  treat  the assessee as an Educational Institution existing solely for the purpose of education broadly because of the following factors:–

i) It does not have any system of imparting formal education as is done in Schools and Colleges recognized by the Central or State Government education bodies;

ii) Publishing and selling books cannot be considered to be educational activity and major share of its receipts is from examination fees and major expenditure is also for holding examinations;

iii) The assessee does not impart any training, rather, it acts as a consultant to various Banks. Only in six course the assessee has issued log I.D. and password to the candidates for availing e–learning, web class and mock test.

13. Thus, ultimately, he has concluded that the assessee is not existing solely for the purpose of education and is earning profit, hence, approval under section 10(23C)(vi) of the Act cannot be granted. On a perusal of the impugned order of learned Commissioner (Exemp.), it appears, except few cosmetic changes, it is a replica of similar orders  passed by his predecessors–in–office in earlier  assessment years rejecting assessee’s application for approval under section 10(23C)(vi) of the Act. Learned Commissioner (Exemp.) has not objectively considered various submissions made by the assessee in the course of proceedings before him. Moreover, overlooking the decisions of the Tribunal in past assessment years simply on the reasoning that principle of res judicata does not apply, in our view, is improper without properly examining the factual context in which such decisions have been rendered. It is relevant to observe, even in assessment years 2008–09 and 2009–10, assessee’s claim of exemption under section 11 of the Act have been allowed by the Tribunal accepting the assessee as a Charitable Institution. The impact/applicability of the aforesaid decisions of the Tribunal certainly have to be examined/evaluated while deciding assessee’s claim of exemption under section 10(23C)(vi) of the Act, since, the core issue which has to be seen is whether the assessee is an Educational Institution existing solely for the purpose of education and not for the purpose of profit. From the materials placed before us, we find that the assessee is running the following courses:–

14. Flagship Courses

> JAIIB

> CAIIB

>CAIIB Electives

> Diploma in Banking and Finance (DB & F)

 15. Specialized Diploma Courses

> Diploma in Banking Technology

> Diploma in  Treasury,  Investment  and  Risk  Management  (OLD SYLLABUS)

> Diploma in Treasury, Investment and Risk Management (REVISED SYLLABUS) > International Banking and Finance

> Commodity Derivatives for Bankers

Advanced Wealth Management (OLD SYLLABUS) Advanced Wealth Management (REVISED SYLLABUS)

Diploma in Home Loan Advising

> Diploma in Retail Banking

> Urban Co-op Banking (OLD SYLLABUS)

> Urban Co-op Banking (REVISED SYLLABUS)

16.  Specialized Blended Certificate Courses

Certified Bank Trainer

Certified Banking Compliance Professional > Certified Credit Officer Certified Treasury Dealer

Risk in Financial Services

 17. Certificate Courses

> MSME Finance for Bankers

> Certificate in International Trade Finance

> Certificate Examination in Information System Banker

> Certificate Examination in AML/KYC

> Customer Services and Banking Codes and Standards

> Certificate Examination in IT Security

> Certificate Examination in Rural Banking Operations

> Certificate Examination in Prevention of Cyber Crimes and Fraud Management

> Certificate Examination in Foreign Exchange Facilities for Individuals 

> Certificate Examination in Micro Finance Card Operations (for employees of IT, and BPO Companies) 

> Functions of Banks (for employees of I.T. and BPO Companies)

> Basics of banking (for employees of I.T. and BPO Companies)

> Certificate Examination of DRA

> Certificate Examination for DRA Telecallers

> Business Correspondents/Facilitators

> Certificate Course in Foreign Exchange

> Certificate Course in Digital Banking

> Introduction in Banking (For sub-ordinate staff of banks) in English and Hindi Medium

18. It is also to be noted that the Reserve Bank of India as well as NABARD have also advised the Banks to take assistance of the assessee for training employees and agents for certain core activities of the Banks.

19. Though, learned Commissioner (Exemp.) has mentioned in his order that only in six courses the assessee has issued login I.D. and password to the candidates for availing e–learning, web class and mock test. However, on what basis he has recorded such finding is not transparent. Further, it is not forthcoming whether the assessee was given sufficient opportunity to furnish all documentary evidences and material to demonstrate that it has imparted training/education in respect of the courses offered. Therefore, without conducting in depth enquiry/verification and examining the relevant materials, it cannot be concluded that the assessee is not a Educational Institution existing solely for the purpose of education and not for the purpose of profit. Such enquiry and examination by the competent authority is all the more relevant and necessary considering the fact that while allowing assessee’s claim of exemption under section 10(22) of the Act, the Tribunal has held that the assessee is an Educational Institution existing solely for the purpose of education and not for the purpose of profit. In our considered opinion and which is also evident from the impugned order of the learned Commissioner (Exemp.), he has rejected assessee’s application under section 10(23C)(vi) of the Act simply following the orders of his predecessors–in–office while rejecting assessee’s application under section 10(23C)(vi) of the Act in assessment years 2013–14 and 2014–15.

20. The Hon’ble Supreme Court in Queens Educational Society (supra) has held that if the surplus generated by an Education Institution is ploughed back for educational purpose, it has to be held that the institution exists solely for educational purpose and not for the purpose of profit. In case of Aditanar Educational Society (supra) it has been held that a trust or other similar body running an Educational Institution solely for educational purpose and not for the purpose of profit can be regarded as other Educational Institution coming within the purview of section 10(22) of the Act. The Hon’ble Supreme Court further observed, availability of exemption under section 10(22) has to be evaluated each year to find out whether the institution existed solely for education purpose and not for the purpose of profit during the relevant year. Further, the Hon’ble Supreme Court observed, after meeting the expenditure if any surplus results incidentally from the activity lawfully carried out by the Educational Institution, it will not cease to be one solely for educational purpose since the object is not one to make profit. In case of Tolani Educational Society (supra), the Hon’ble Jurisdictional High Court has expressed similar view while following the decision of the Hon’ble Supreme Court in Aditanar Educational Institute (supra). The Hon’ble Delhi High Court in Council for the Indian School Certificate Examination (supra) has held that the words “Educational Institution” and “Educational Purpose” used in section 10(23C)(vi) of the Act does not mean that to qualify as a Institution established for educational purpose it has to conduct teaching class or lecture. The Hon’ble Jurisdictional High Court in Samudra Maritime Studies Trust (supra) has held that imparting education in the area of pre–sea and post–sea training to seamen so as to prepare them for all duties can be considered to be Charitable Institution existing for education.

21. The ratio laid down in the aforesaid decisions would also have a crucial bearing while deciding the issue whether the assessee is an Educational Institution existing solely for the purpose of education as per section 10(23C)(vi) of the Act. On a perusal of the impugned order of learned Commissioner (Exemp.), we find that he has not examined the applicability of the ratio laid down in the aforesaid decisions to the facts of the assessee’s case. Therefore, on overall consideration of the facts and material on record, we are of the view that the entire issue relating to assessee’s application seeking approval under section 10(23C)(vi) of the Act needs to be restored back to the file of learned Commissioner (Exemp.) for de novo adjudication after properly examining assessee’s claim keeping in view all the materials on record as well as the ratio laid down in the judicial precedents referred to above or which may be cited by the assessee in course of the proceedings. Accordingly, we restore the issue to the file of the

learned Commissioner (Exemp.) for de novo adjudication after providing reasonable opportunity of being heard to the assessee. These grounds are allowed for statistical purposes.

22. In the result, assessee’s appeal is partly allowed for statistical purposes.

Order pronounced in the open Court on 02.08.2019

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