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Additional Director of Income Tax (E) I(2), Room No.504, 5th Floor, Parel, Mumbai-400012. Vs. Samudra Institute of Maritime Studies Trust, 507, 5th floor, Sai Commercial Complex, Govandi, Mumbai-400088
May, 19th 2014
                     ,                  ""          

         .. ,      ,      

                   (   / Assessment Year: 2008-09)

     Additional Director of           /     Samudra Institut e of Maritime
     Income Tax (E) I(2),             Vs.   Studies Trust,
      Room No.504, 5th Floor,               507, 5 t h floor,
     Piramal Chambers, Parel,               Sai Commercial Complex,
     Mumbai-400012.                         BKS Devshi Marg, Govandi,

          . /   . /PAN/GIR No. : AACTS9557L
     ( /Appellant)   ..    (  / Respondent)

             / Appellant by             :   Shri Girija Dayal
               /Respondent by               Shri S.A.Mukadam

                 / Date of Hearing
                                                 : 6.5.2014
             /Date of Pronouncement : 16 .5.2014

                                  / O R D E R


       This appeal is preferred by the Revenue against the order of ld. CIT(A)-

1, Mumbai, dated 7.3.2012 and in the solitary ground raised therein, the

Revenue has challenged the action of the ld. CIT(A) in holding that the assessee

is entitled to exemption u/s 11 of the Income Tax Act, 1961 (the Act).

2.     The assessee in the present case is a charitable trust with its main object

being to impart post-sea and pre-seal training to all seamen.     It has got post

sea training   centre at   Govandi,    Mumbai and       Pre-sea training centre at

Lonavala. It is duly registered u/s 12A of the Act.       The return of income for

the year under consideration was filed by the assessee trust on 29.9.2008

declaring total income at NIL after claiming exemption u/s 11 of the Act.    From

the relevant details furnished by the assessee in respect of courses conducted, it
                                                             I.T.A.No.   .2668/Mum/2012
was noted by the AO that there are two to categories of courses, one approved

and recognized by the Directorate General of Shipping and other category of

courses which were not approved and recognized by the Directorate General of

Shipping.    According to the AO, the courses which were not approved and

recognized by the Directorate     General of     Shipping were conducted by        the

assessee as private coaching classes and the same could not              be treated as

having character of charitable purposes as provided under section 2(15). He

held that these courses were conducted by the assessee purely as a commercial

activity with only motive of earning profit.    He therefore disallowed the benefit

of exemption claimed by the assessee u/s 11 of the Act and completed an

assessment u/s 143(3) vide order dated 21.12.2010 assessing the total income

of the assessee at Rs.38,13,726/-.

3.     Against the order passed by the AO u/s 143(3) of the Act, the appeal was

preferred by the assessee before the ld.         CIT(A) and after considering the

submissions made on behalf of the assessee and following the decision of the

Tribunal rendered in assessee's own case on similar issue for assessment year

2007-08 vide its order dated 30.11.2011 passed in ITA No.5760/Mum/2010 , the

ld.   CIT(A) vide para 4 of his order        allowed the claim of the assessee for

exemption u/s 11 of the Act by observing as under :

       "4.     The AO analyzed the courses actually conducted during the period
       relevant to the Assessment Year 2007-08. From the various details
       furnished by the assessee he noted that the assessee has made profit of
       Rs.99,22,167/- on account of DG Shipping approved courses conducted at
       Lonavala and made a profit of Rs.2,08,19,001/- on account of non
       approved courses conducted at Govandi, Mumbai. The AO was of the
       opinion that this is an indicator of the assessee's indulgence in the
       commercial and profit making activities under the garb of Charitable
       Institution. He, therefore, asked the assessee to explain as to why the
       claim of the assessee for exemption u/s.11 of the I.T. Act should not be
       rejected. Rejecting the various explanation offered by the assessee he
       noted that the assessee is projecting the courses which are more
       profitable and provide more earning to the assessee, rather than offering
                                                           I.T.A.No.   .2668/Mum/2012
      education through recognized courses. The entire institution is being run
      with a sole motive of earning profit. However, a feeble attempt has been
      made by the assessee of giving the colour of charitable institution to the
      Trust whose activities are not covered within the meaning of education as
      contemplated u/s.2(15) of the I.T. Act. Relying on the decision of Hon'ble
      Patna High Court in the case of Bihar Institute of Mining and Mine
      Surveying Vs. CIT reported in 208 ITR 608 and the decision of the Hon'ble
      Supreme Court in the case of Sole Trustee Loka Shikshana Trust vs. CIT
      reported in 101 ITR 234, the decision in the case of Mazgaon Docks Ltd.
      vs. CIT reported in 34 ITR 368 at 376 and various other decisions he held
      that the activities of the assessee in connection with the conducting of
      commercial courses are clearly business activities within the meaning of
      sec.2(13) of the I.T. Act., since all the elements of business are present
      in these courses. He accordingly rejected the claim of exemption u/s.11 of
      the I.T. Act."

4.    Aggrieved   by the order of ld. CIT(A), the Revenue has preferred this

appeal before the Tribunal.

5.    We have heard the arguments of both the sides and also perused the

relevant material on record. It is observed that the claim for the assessee for

exemption u/s 11 was disallowed by the AO in AY -2007-08 on the similar

ground and the order of the ld     CIT(A) reversing the     order of the AO and

allowing the claim of the assessee for exemption claim u/s 11 was upheld by

the Tribunal vide its order dated 30.11.2011 passed in ITA No.5760/Mum/2010

for the reasons given in para 9.6 which reads as under :

      "9.6 We find the Delhi Bench of the Tribunal in the case of S.R.M
      Foundation of India (supra) while deciding the issue u/s.10(22) of the I.T.
      Act has held that there is no requirement prescribed u/s.10(22) that the
      institution should be recognized by an University or State or Central
      Government. The Tribunal in the said decision held 33 lessons of what is
      termed as Science of Creative Intelligence (SCI) which are in the nature of
      Yoga Classes as education. The Tribunal while deciding the issue has
      considered the decision of the Hon'ble Supreme Court in the case of Sole
      Trustee, Lok Shikshan Trust (supra). We find the various other decisions
      relied on by the Ld. Counsel for the assessee also support its case. The
      decision in the case of Bihar Institute of Mining and Mine Surveying
      (supra) in our opinion is not applicable to the facts of the present case. In
      that case it was coaching of students for particular examination, for which
      it was held that coaching institution is not a charitable institution within
      the meaning of section 2(15). However, in the instant case the assessee is
      giving training in the area of Pre Sea and Post Sea to sea men. The
      various other decisions relied on by the AO are also distinguishable and
                                                            I.T.A.No.   .2668/Mum/2012
       not applicable to the facts of the present case. In our opinion, merely
       because the courses are not approved by the DG Shipping or merely
       because there is huge surplus in the non-approved courses than the
       approved courses cannot be a ground for denial of exemption u/s.11 as
       long as the Trust is imparting education as per the objects of the Trust. In
       this view of the matter and in view of the detailed observations given by
       the Ld. CIT(A) on this issue we do not find any infirmity in the same and
       accordingly the same is upheld. The grounds raised by the Revenue are
       accordingly dismissed."

6.     As the issue involved in the year under consideration as well as all the

material facts relevant thereto are similar to that of assessment year 2007-08,

we respectfully following the decision of Co-ordinate Bench of this           Tribunal

rendered for assessment year 2007-08 and uphold the order of the ld. CIT(A)

allowing the claim of the assessee for exemption u/s 11 of the Act.

7.     In the result, appeal of the revenue is dismissed.

       Order pronounced in the open court on 16 th May, 2014

                                             16 th     May, 2014    

             Sd                                              sd
     (  /VIVEK VARMA)                                 (.. / P.M.JAGTAP)
     / JUDICIAL MEMBER                             / ACCOUNTANT MEMBER

                  on this    16 th day of May, 2014

. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant /Applicant
2.  / The Respondent.
3.      () / The CIT(A)-
4.       / CIT
5.       ,     ,         /
      DR, ITAT, Mumbai
6.      / Guard file.
                                                              / BY ORDER,
             True copy
                                                        (Asstt. Registrar)
                                        ,  /ITAT, Mumbai
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