Case Number: ITA 529/DEL/2019
Appellant: IMC of ITI Dadri, Dadri
Respondent: ITO (Exemption) Ward, Ghaziabad
Assessment Year: 2015-16
Result: 2015-16
Case Filed on: January 24, 2019
Order Type: Final Tribunal Order
Date of Order: March 10, 2021
Pronounced on: March 10, 2021
The case ITA 529/DEL/2019 involves the IMC of ITI Dadri, as the appellant, and the ITO (Exemption) Ward, Ghaziabad, as the respondent. This case pertains to the assessment year 2015-16 and addresses the claim for exemption under Section 10(23C)(iiiab) of the Income Tax Act, 1961. The appeal was filed on January 24, 2019, and the final order was pronounced on March 10, 2021.
The appellant, IMC of ITI Dadri, is a registered society under the U.P. Society Registration Act. The society aims to assist in the improvement of vocational training standards and skill development in the country, specifically targeting the upgradation of ITI Dadri into a center of excellence. The society is registered under Section 12AA of the Income Tax Act, which provides it certain tax exemptions.
For the assessment year 2015-16, the appellant claimed an exemption under Section 10(23C)(iiiab) of the Income Tax Act, asserting that it is an educational institution existing solely for educational purposes and not for profit, and that it is substantially financed by the government. The Assessing Officer (AO) denied this exemption, stating that the appellant did not meet the necessary conditions under Section 10(23C)(iiiab).
The appellant appealed against the AO’s decision to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the AO’s decision. The CIT(A) concluded that the appellant did not qualify as an educational institution under the strict interpretation of the Income Tax Act. The CIT(A) emphasized that the appellant’s activities did not directly constitute the imparting of education, and the funding received from the government was in the form of a repayable loan, not a grant or aid.
The appellant argued that its activities fall within the broader definition of ‘education’ as it supports and improves vocational training at ITI Dadri. The appellant emphasized that the society’s purpose is educational, even if it does not directly impart education. The appellant also argued that the interest-free loan received from the government should be considered substantial financing.
The Departmental Representative argued that the CIT(A) correctly interpreted the provisions of Section 10(23C)(iiiab). The respondent maintained that the appellant is neither a university nor an educational institution as defined by the Income Tax Act. Furthermore, the funding received by the appellant was a loan, not a grant, and thus did not meet the requirement of being substantially financed by the government.
The Tribunal reviewed the facts of the case and the submissions made by both parties. The Tribunal referred to the provisions of Section 10(23C)(iiiab), which exempts any income received by a university or other educational institution existing solely for educational purposes and not for profit, provided it is wholly or substantially financed by the government.
The Tribunal noted that the appellant is not recognized as a university or educational institution affiliated with any board or university. The appellant’s activities, though educational in nature, do not align with the traditional definition of imparting education, as interpreted by various judicial precedents. The Tribunal also observed that the interest-free loan from the government does not qualify as substantial financing under the provisions of Section 10(23C)(iiiab).
The Tribunal upheld the decision of the CIT(A) and dismissed the appeal filed by the appellant. The Tribunal concluded that the appellant does not qualify for the exemption under Section 10(23C)(iiiab) as it is neither a recognized educational institution nor substantially financed by the government.
The appeal filed by the IMC of ITI Dadri was dismissed, and the decision of the CIT(A) to deny the exemption under Section 10(23C)(iiiab) was upheld. The Tribunal’s order emphasized that the appellant’s activities did not meet the criteria for an educational institution as defined by the Income Tax Act and that the funding received from the government was not substantial enough to warrant the exemption.
Order pronounced in open court on March 10, 2021, by the members of the Tribunal:
[Bhavnesh Saini]
Judicial Member
[Dr. B. R. R. Kumar]
Accountant Member
Copy forwarded to:
//By Order//
Assistant Registrar, ITAT, New Delhi
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