Director of Income Tax vs Samudra Institute of Maritime Studies Trust

The Appellant challenges the order passed by the ITAT, Mumbai in ITA No. 5760/Mum/2010 on 30th November 2011. The Assessment Year is 2007-08. Mr. Malhotra, learned counsel appearing for the Revenue submits that the sole question and which is substantial question of law is that the Tribunal in the facts and circumstances so also in law was in complete error in confirming the order of the CIT (Appeals) in allowing exemption under section 11 of the Income-tax Act, 1961 by ignoring the ratio of the judgment of the Hon''ble Supreme court in the case of The Sole Trustee, Lok Shikshana Trust Vs. The Commissioner of Income Tax, Mysore, . Mr. Malhotra has taken us through the finding rendered by the Tribunal and the Commissioner of Income-tax (Appeals). Mr. Malhotra submits that Chapter III in which section 10 falls and of which clause 23(c) is a part deals with incomes which are not included in total income. In the present case, that clause cannot be invoked nor the section. In the present case, section 2(15) of the Income-tax Act 1961 and defining charitable purpose would be relevant. In the present case, the purpose cannot be said to be charitable firstly because the Assessee has submitted a chart before the Assessing Officer which would denote that the training courses are not approved by the Director General of Shipping. Secondly, that is not educational activity inasmuch the same is not for coaching and training to those who wish to take the job of seamen and make that as their career. In such circumstances, the pre-sea and post-sea training expenses, which is the main object of the Assessee, will not be an expenditure which would qualify for exemption under section 11 of the Income-tax Act.

On the other hand, Mr. Murlidhar, learned counsel appearing on behalf of the Respondent submits that there are concurrent findings of fact and which indicate that the Tribunal was fully aware of the judgment of the Hon''ble Supreme Court in the case of Sole Trustee, Lok Shikshana Trust (supra). The Tribunal held that the activities cannot be equated with a coaching class. This is not a case where the Assessee is giving training to seamen not with an intention to prepare them to face the challenges on board a ship. In fact, the Assessee is giving training in several areas to seamen. The courses may not be approved by the Director General of Shipping or because there is huge surplus in the non-working courses than the approved work courses but the same cannot be the basis for denial of exemption under section 11 of the Act. He submits that the Assessee is imparting education and that is how it qualifies for exemption. In such circumstances, the Appeal does not raise any substantial question of law and should be dismissed.

We have perused the orders passed by the authorities including the Tribunal. We have also perused the two decisions, one of the Hon''ble Supreme Court and relied upon by both the counsel and equally a short judgment of the Division Bench of this Court in the case of DIT (Exemptions) Vs. National Safety Council, . We are of the opinion that the Tribunal has applied the correct test in concluding that the exemption under section 11 can be availed of by the Respondent-Assessee. In doing so, the Tribunal referred to the objects as set out in the Trust Deed of the Respondent-Assessee. They are to set up, administer and maintain technical training institution at various places in India for pre-sea and post-sea training for the ships and maritime industry as a Public Charitable Institute for education. That is to provide on-board and offshore training and continuing technical education for Officers, both on the deck and engine side. One of the object was to register with the Director General of Shipping and obtain other necessary approvals at the State and Central levels. We do not find that the ratio of the judgment of the Hon''ble Supreme Court or of this Court, which may be dealing with section 10(22), has been applied to such an extent as complained by Mr. Malhotra. In the present case, the Tribunal in paragraph 9.6 of the impugned order concludes that the Assessee is giving training in the above area to seamen. All the courses may not be approved by the Director General of Shipping but that by itself is no ground to hold that the purpose is not charitable. The exemption under section 11 can be claimed and bearing in mind the object of the Trust. We are of the opinion that the Tribunal and the CIT (Appeals) have approached the issue correctly and in the light of the definition so also the tests laid down came to a factual conclusion that the Respondent is entitled to exemption under section 11 of the Act. This is not a case where the purpose can be said to run a coaching class or a centre. This is an institution which imparts education in the area of pre-sea and post-sea training to seamen so as to prepare them for all duties. In such circumstances, we do not find that the concurrent findings of fact are vitiated by error of law apparent on the face of the record or perversity enabling us to entertain this Appeal. There is no substantial question of law. The Appeal is therefore dismissed with no order as to costs.