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Case Law Details

Case Name : Xavier Institute of Management Vs ITO (ITAT Cuttack)
Appeal Number : ITA Nos.98,99,100 & 101/CTK/2016
Date of Judgement/Order : 27/07/2018
Related Assessment Year : 2005-06
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Xavier Institute of Management Vs ITO (ITAT Cuttack)

The Cuttack bench of the Income Tax Appellate Tribunal (ITAT) has held that the income received by a charitable institution imparting education shall not be charged for receiving training and consultancy fee from corporates as the same cannot be treated as a ‘commercial activity’ for denying tax exemption.

The assessee society is a charitable institution duly registered under Section 12AA of the Income Tax Act. The assessee is running Management Institute and imparts education on management of business to the students. Because of the above activity, the Faculty of the Institute acquires expertise knowledge of the subject. The Corporates with the intent to educate their officers and staff send them to the Institute and the assessee Institute to attain their objects of education imparts training to those persons also. The assessee Institute charges fee from such Corporates which is termed as training and consultancy.

The Assessing Officer observed that the income derived from training and consultancy by the assessee was not incidental to the objects of the institution for which registration under the Income Tax Act was given and the assessee has not maintained separate books of account as envisaged in section 11(4A) of the Act.

The Tribunal held that the activity of rendering training and consultancy services cannot be held as business activity in the case of the assessee.

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