COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. APPAREL EXPORT PROMOTION COUNCIL

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ITA/808/2016HC DelhiDLHC01219612201622 November 2016Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the ITAT's order. Regarding the first issue, the Court noted that the ITAT had relied on its own previous rulings in India Trade Promotion Organisation vs Director General of Income Tax and The Institute of Chartered Accountants of India vs Director General of Income Tax (Exemptions), which implicitly supported the assessee's position that the receipts were not for a disqualifying commercial purpose. Concerning the second issue of depreciation, the Court referred to its judgment in Director of Income Tax vs Vishwa Jagriti Mission, which held that the grant of depreciation does not result in a double or undue benefit to a charitable organization. Therefore, the appeal was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax (Exemptions), filed an appeal before the High Court of Delhi against an order passed by the Income Tax Appellate Tribunal (ITAT). The appeal concerned the assessment of the Apparel Export Promotion Council for unspecified assessment years. The core dispute revolved around whether certain amounts received by the Council should be excluded from its charitable status due to commercial purposes and whether the depreciation claimed by the Council was permissible. The High Court noted that the ITAT had relied on previous judgments of the High Court in similar matters.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether the amounts received by the assessee (Apparel Export Promotion Council) could be excluded from the description of a charitable organization because they involved rendering services for a commercial purpose, as per Section 11 of the Income Tax Act, 1961. 2. Whether the depreciation claimed by the assessee could not have been granted. The Revenue contended that the amounts received were for commercial purposes, disqualifying the organization from charitable status. Regarding depreciation, the Revenue argued that granting it would result in a double benefit, as the assessee was a charitable organization enjoying exemptions. The assessee's contentions are not explicitly recorded, but the ITAT's reliance on High Court judgments suggests the assessee argued in line with those precedents. The Revenue relied on the principle that income from commercial activities is not charitable.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

$~35 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 808/2016 & CM Nos. 43251-43252/2016 COMMISSIONER OF INCOME TAX (EXEMPTIONS) ..... Appellant Through: Ms. Vibhooti Malhotra, Adv. versus APPAREL EXPORT PROMOTION COUNCIL ..... Respondent Through CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI O R D E R % 22.11.2016 1. The questions of law sought to be urged by the Revenue in this appeal are: (i) Whether the amounts received by the assessee could be sought to be excluded from the description of the charitable organisation since it involves rendering of services for commercial purpose? And (ii) Whether the depreciation claimed by it could not have been granted? 2. We notice that the Income Tax Appellate Tribunal (ITAT) has relied upon the rulings of this Court in India Trade Promotion Organisation vs Director General of Income Tax (2015) 371 ITR 333 and judgment dated 04.07.2013 in WP(C) 3147/2012, titled: The Institute of Chartered Accountants of India and Anr. vs Director General of Income Tax (Exemptions), Delhi & Ors. No question of law, therefore, arises.

3.

As far as second question urged with respect to permissibility of depreciation, here the Revenue urges that the grant of depreciation would result in a double benefit given that the assessee is a charitable organization and, therefore, beneficiary of all exemptions. In the judgment rendered by the Court in Director of Income Tax versus Vishwa Jagriti Mission (2013) 262 CTR 558 it was held that grant of depreciation does not result in a double or undue benefit. 4. Having regard to the fact that in both questions this Court has ruled against the Revenue, no substantial question of law arises. The appeal is, accordingly, dismissed. S. RAVINDRA BHAT, J NAJMI WAZIRI, J NOVEMBER 22, 2016/kk

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