CIT HISAR vs. M/S TRUCK OPERATOR ASSOCIAITON HANSI

PDF · subscribers
ITA/382/2009HC Punjab & HaryanaPHHC01084484200912 August 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court, in its decision, referred to a co-ordinate bench's order in ITA No. 542 of 2006 (Commissioner of Income Tax Versus M/s Truck Operators Association), which had held that the respondent-assessee was not covered under Section 2(15) of the Act as it was not a charitable institution. Consequently, the High Court allowed the appeal filed by the Revenue. The substantial question of law was answered in favour of the Revenue and against the assessee. The order of the ITAT dated October 3, 2008, was set aside. The matter was remitted back to the CIT(A) to decide the same afresh in accordance with law after issuing notice to the assessee. The principle established is that an association whose activities are restricted to a specific community and do not benefit the public at large, and which does not qualify as a charitable institution under Section 2(15), is not entitled to exemption under Sections 11 and 12.

What were the facts?

The Revenue, Commissioner of Income Tax, filed an appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT) dated October 3, 2008, for Assessment Year 2002-03. The assessee, M/s Truck Operators Association, Hansi, had declared nil income. A notice under Section 148 was issued due to discrepancies in TDS claims. The assessee claimed its activities as a transport booking agent were for charitable purposes under Section 11, with a commission income of Rs. 7,80,824/- on total receipts of Rs. 85,64,762/-, resulting in a deficit. The Assessing Officer held the entire Rs. 85,64,762/- taxable, deeming the activities not for the public at large. The CIT(A) allowed the assessee's appeal, and the ITAT dismissed the Revenue's appeal.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in law in dismissing the appeal of revenue and holding the income of the assessee exempt under Section 11 and 12 of the Income Tax Act, 1961, ignoring the facts that activities carried out by the assessee are not for the public at large but restricted to a particular community only, i.e. drivers and conductors, and also for preventing outsiders or non-members to carry on the business of transportation within the area of Hansi Town, and the activities of the assessee do not come within the ambit of the definition of charitable purpose under section 2(15) of the Income Tax Act, 1961? Assessee's contentions: The assessee contended that it was acting as a transport booking agent, facilitating transportation for its members, and its commission income was applied for charitable purposes under Section 11, resulting in a deficit. The assessee also claimed to have registration granted by the CIT. Revenue's contentions: The Revenue argued that the activities of the assessee were not for the public at large but restricted to a particular community (drivers and conductors) and aimed at preventing non-members from operating, thus not falling within the definition of a charitable purpose under Section 2(15).

Which sections of the Income-tax Act were involved?

Section 260A,Section 11,Section 12,Section 2(15),Section 143(1),Section 148

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 12.8.2010 Commissioner of Income Tax ....Appellant. Versus M/s Truck Operators Association, Hansi ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Sanjeev Kaushik, Advocate for the appellant. None for the respondent. AJAY KUMAR MITTAL, J.

1.

This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 3.10.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench “H”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 436/Del/2008 for the assessment year 2002-03 proposing following question of law:- “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in law in dismissing the appeal of revenue and holding the income of the assessee exempt under Section 11 and 12 of the Income Tax Act, 1961 -2- ignoring the facts that activities carried out by the assessee are not for the public at large but restricted to a particular community only, i.e. drivers and conductors and also for preventing the outsiders or non-members to carry on the business of transportation within the area of Hansi Town and the activities of the assessee do not come within the ambit of the definition of charitable purpose under section 2(15) of the Income Tax Act, 1961?”

2.

Facts necessary for adjudication as narrated in the appeal may be noticed. The assessee filed its return on 31.10.2002 declaring nil income. The said return was processed under Section 143 (1) of the Act on 12.3.2004 on the returned income and notice under Section 148 of the Act was issued on 7.9.2005 on the ground that the total receipts as declared in the income tax return did not correspond to the TDS claim. During the course of re-assessment proceedings, the assessee contended that it was acting as transport booking agent and facilitated transportation of trucks on behalf of its members and out of total receipts of Rs.85,64,762/-, it charged commission of Rs.7,80,824/- as per bye-laws and after applying the above commission income for charitable purpose under Section 11 of the Act, there was deficit of Rs.80,025/-. The Assessing Officer observed that the activities carried out by the Truck Operators Association were not for the purpose of public at large but restricted to a particular community only and, therefore, the assessee was not entitled to exemption of its income and the entire income amounting to Rs.85,64,762/- was held to be taxable -3- and added to the taxable income vide order dated 27.11.2006. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] who allowed the appeal holding that the Assessing Officer should have followed the order of the Tribunal and should have allowed exemption to the assessee when there was registration granted to it by the CIT. Feeling aggrieved, the revenue filed an appeal before the Tribunal who dismissed the same vide order dated 3.10.2008. Hence, the present appeal.

3.

Vide order of even date passed in ITA No. 542 of 2006 (Commissioner of Income Tax Versus M/s Truck Operators Association) it has been held that the respondent-assessee was not covered under Section 2(15) of the Act as it was not a Charitable Institution.

4.

Accordingly, the appeal is allowed and the substantial question of law as claimed is answered in favour of the revenue and against the assessee. Consequently, setting aside order dated 3.10.2008 passed by the Tribunal, the matter is remitted to the CIT (A) to decide the same afresh in accordance with law after issuing notice to the assessee. (AJAY KUMAR MITTAL) JUDGE August 12, 2010 (ADARSH KUMAR GOEL) gbs JUDGE

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →