THE COMMISSIONER OF INCOME TAX - EXEMPTION vs. CONSTRUCTION INDUSTRY DEVELOPMENT COUNCIL

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ITA/386/2019HC DelhiDLHC01002002201815 April 2019Author: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE PRATEEK JALAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the two questions urged by the Revenue, namely the inapplicability of Section 2(15) and the disallowance under Section 40(ia), were covered by its previous order for AY 2008-2009 in ITA No.13/2018. In that prior order, the Court had dismissed the Revenue's appeal, observing that the ITAT's impugned order was in line with the decision in 'India Trade Promotion Organisation v. Director General of Income Tax (Exemption) & Ors.'. Consequently, the Court found that no further question of law arose in the present appeal. The appeal and pending application were dismissed.

What were the facts?

The appeal was filed by the Commissioner of Income Tax – Exemption (the Revenue) against the Construction Industry Development Council (the assessee) for the assessment year 2008-2009. The Revenue's grievance was that the Assessing Officer's determination that sums received by the assessee could not be characterized as fulfilling its charitable objectives was erroneously interfered with by the Income Tax Appellate Tribunal (ITAT). The assessee was declared a charitable trust under Section 2(15) of the Income Tax Act, 1961, and held certification under Section 12A. For AY 2008-09, the Assessing Officer made additions to the assessee's income, considering sums declared for charitable objects as profit-driven, and also made a disallowance under Section 40(ia). The CIT(A) and the ITAT had both upheld the assessee's position.

What were the issues?

1. Whether the sums received by the assessee could be characterized as fulfilling its charitable objectives, in light of Section 2(15) of the Income Tax Act, 1961. The Revenue contended that the sums were driven by a profit motive, thus not fulfilling charitable objectives. The assessee argued that it was declared a charitable trust and held Section 12A certification, implying its activities were charitable. 2. Whether a disallowance under Section 40(ia) of the Income Tax Act, 1961, was justified. The Revenue's contention was that this disallowance was made. The assessee's position, as upheld by the CIT(A) and ITAT, was that the disallowance was erroneous. The judgment does not explicitly state the Revenue's specific argument for the disallowance, but it was a point of contention.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 40(ia),Section 12A,Section 260A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~68 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 386/2019 & CM APPL. 17701/2019 THE COMMISSIONER OF INCOME TAX – EXEMPTION ..... Appellant Through : Mr. Ruchir Bhatia, Sr. Standing Counsel. versus CONSTRUCTION INDUSTRY DEVELOPMENT COUNCIL ..... Respondent Through : None. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE PRATEEK JALAN

O R D E R %

15.04.

2019

Two questions urged by the Revenue, i.e, inapplicability of Section 2(15) and disallowance of Section 40(ia) of the Income Tax Act, are covered by the previous order of this court for another AY 2008-2009. In ITA No.13/2018, Commissioner of Income Tax (Exemption) vs. Construction Industry Development Council, the court had disposed off the appeal on 15.01.2018, observing as follows:- “ITA No.13/2018

The Revenue‟s grievance in its appeal under Section 260A of the Income Tax Act, 1961 („the Act‟) is that the Assessing Officer‟s determination that the sums received by the assessee could not be characterised as fulfilling its charitable objectives was erroneously interfered with by Income Tax Appellate Tribunal (ITAT). The assessee in this case was declared to be a charitable trust within the meaning of Section 2(15) of the Act, and therefore, received certification under Section 12A of the Act. For the assessment year (A.Y.) 2008-09, its returns were finalised by adding sums declared by it to be utilised for fulfilling its objects, on the ground that they were driven by profit motive. A further disallowance under Section 40(ia) of the Act was also made. The CIT(A) interfered with the AO‟s decision on both counts. The ITAT confirmed the Appellate Commissioner‟s decision. This Court notices that the impugned order of the ITAT is in tune with the decision rendered in „India Trade Promotion Organisation v. Director General of Income Tax (Exemption) & Ors.‟, W.P.(C) No.1872/2013 on 22.01.2015. As such no question of law arises and the appeal is therefore dismissed.”

In the light of the above observation, both questions are covered by the previous order of this court. No further question of law arises. The appeal and the pending application are accordingly dismissed.

S. RAVINDRA BHAT, J

PRATEEK JALAN, J APRIL 15, 2019 mk

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