COMMISSIONER OF INCOME TAX vs. SIR CHHOTU RAM MEMORIAL SOCIETY

ITA/695/2010HC Punjab & HaryanaPHHC01093656201014 December 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Income Tax (CIT) is the appellant (Revenue) and Sir Chhotu Ram Memorial Society is the respondent (assessee). The appeal is filed under Section 260-A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had directed the CIT to grant renewal of approval under Section 80G(5)(vi) of the Act to the assessee society. The CIT had declined the renewal, citing that the assessee was engaged in the business of letting out properties and publication, and that its income was not solely from property held under trust for charitable purposes. The assessee sought approval for exemption in respect of donations received.

What did the High Court hold?

The High Court held that the submission of the Revenue could not be accepted. The finding of the Tribunal that the mere fact of the assessee owning property and receiving rent thereof was not enough to hold that the assessee was not carrying on charitable activities was upheld. The Court agreed with the Tribunal that the income received was for the objects of the trust and the amount realized from publication was nominal compared to the expenditure incurred on charitable activities. The Court found that this finding of the Tribunal was not shown to be perverse in any manner. Consequently, the Court concluded that no substantial question of law arose from the ITAT's order. The appeal filed by the Revenue was dismissed.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was justified in directing the CIT to grant renewal of approval under Section 80G(5)(vi) when the conditions stipulated under clause (i) of sub-section (5) of Section 80G, read with Rule 11AA, were not fulfilled by the applicant. 2. Whether the Tribunal was justified in directing the CIT to allow renewal of approval under Section 80G(5)(vi) when the society is not eligible for exemption under Section 11(1)(a) in respect of income from properties, as it is not income from property held under trust wholly for charitable or religious purposes. 3. Whether, for the purpose of approval under Section 80G(5)(vi), the mere fact that the consideration received for services rendered was less than the expenditure incurred is sufficient compliance with clauses (a), (b), and (c) of the proviso to clause (i) of sub-section (5) of Section 80G. Arguments: The Revenue contended that the assessee society was engaged in business, received income from property, and its income was not from property held under trust wholly for charitable or religious purposes. The assessee argued that letting out property on rent is income derived from property, and the income earned from property, to the extent applied for the objects of the trust, should not form part of the total income. It also argued that income from publication was nominal compared to expenditure, and activities like donations to widows and scholarships were expenditures for the objects of the trust. The assessee also pointed out that registration was granted on identical facts in earlier years.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 80G(5)(vi),Section 11(1)(a),Section 13

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.695 of 2010 (O&M) Date of decision: 14.12.2010 The Commissioner of Income Tax. -----Appellant. Vs. Sir Chhotu Ram Memorial Society. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. I.P. Singh, Standing counsel for the Revenue. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, New Delhi in I.T.A. No.3377/Del/2008 claiming following substantial questions of law:- “(i) Whether the Hon’ble Tribunal was justified in law in directing the Commissioner of Income Tax to grant renewal of approval u/s 80G(5)(vi) of the Income Tax when the conditions as stipulated under clause (i) of sub section (5) of section 80G of the Income Tax Act read with rule 11AA were not fulfilled by the applicant.

I.T.A. No.695 of 2010 (ii) Whether the Hon’ble Tribunal was justified in law in directing the Commissioner of Income Tax to allow renewal of approval u/s 80G(5)(vi) when the society is not eligible for exemption u/s 11(1)(

The order continues below.

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