ITO(E), WARD- 1(1), NEW DELHI vs. ASSOCIATION OF CORPORATIONS & APEX SOCIETIES OF HANDLOOMS (ACASH), NEW DELHI

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ITA 6457/DEL/2017Status: DisposedITAT Delhi22 February 2021AY 2013-145 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, relying on its previous decisions for Assessment Years 2010-11 and 2011-12. It found that the assessee's activities were for promoting the handloom sector and not for profit, thus not attracting the proviso to Section 2(15).

What were the facts?

The assessee, a society promoting the Handloom Sector, was denied the benefit of Sections 11 & 12 of the Income Tax Act by the Assessing Officer. The AO held that its activities fell under the proviso to Section 2(15) as business. The CIT(A) partly allowed the assessee's appeal.

What were the issues?

Whether the activities of the assessee society promoting the handloom sector are charitable in nature and eligible for exemption under Sections 11 & 12, or if they are business activities attracting the proviso to Section 2(15).

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: SHRI G. S. PANNU & MS SUCHITRA KAMBLE

Hearing: 15.02.2021Pronounced: 22.02.2021

ORDER PER SUCHITRA KAMBLE, JM

This appeal is filed by the Revenue against order dated 24/08/2017 passed by CIT (A)-40, Delhi for assessment year 2013-14.

2.

The grounds of appeal are as under:-

“ On the facts and in the circumstances of the case and in law, Ld.CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring that the activities of the trust were not within the purview of Section 2(15) of the Act, 1961 during the year.”

3.

The assessee is a registered under the Societies Registration Act, 1860, u/s as well as u/s 12A of the Income Tax Act, 1961 since 11/3/1992. The Society is constituted by the Development Commissioner (Handloom), Ministry of Textiles, Government of India. The main object of the society is to promote the Handloom Sector. It works as the implementing agency for the Development Commissioner (Handloom), Government of India for organizaing exhibitions in different parts of the country for display and sale of Handloom fabrics/cloth manufactured by Handloom weavers and handloom society. During the course of assessment proceedings, the assessee was asked as to show its activities are charitable and why the same should not be treated as business and why the same should not be covered by the proviso to Section 2(15) of the Act. The assessee filed response to the said notice. The Assessing Officer observed that the activities of the assessee do not fall in the category of relief of poor, education, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest. Thus, the Assessing Officer computed the total income of Rs. 1,31,99,671/- towards the access of income as declared in the income and expenditure account.

4.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

6.

At the time of hearing, none appeared for the assessee, we are taking the submissions of the assessee before the Assessing Officer as well before the CIT(A) as the submissions before us.

7.

The Ld. DR submitted that the Department is relying upon the assessment order. The Ld. DR further clarified that in Assessment Year 2010- 11 and 2011-12, the Tribunal has decided the issue in favour of the assessee and against the Revenue (ITA No. 4788/Del/2016 order dated 27/03/2019, Assessment Year 2010-11 and order dated 4/07/2019 Assessment Year 2011-12).

8.

We have heard the Ld. DR and perused the material available on record. As the Ld. DR submitted that in Assessment Year 2010-11, the Tribunal has decided this issue in favour of the assessee and against the Revenue. We have gone through the order dated 27/03/2019 passed by the Tribunal passed by the Tribunal in wherein the Tribunal held as under:-

“ 5.3 Evidently, the activity of the assessee are of advancement of any other object of the general public unity, which falls under the definition of the charitable purpose as defined under section 2(15) of the act. But the contention of the Assessing Officer is that said object of general public utility shall not be charitable because the assessee is engaged in the activity in the nature of trade, commerce or business or rendering any service in relation to any trade, commerce and business for cess or fee. We find that activity of the assessee are primarily motivated with the objective of promoting handloom sector in India and said activity are not for gain or profit of an individual. The executive committee of the Society also consist of all government officials with no motive of profit sharing or personal interest. The member subscription is received by the assessee in proportion of the supply by the agency and the rate decided. The said subscription fee received cannot be equated with the cess or fee against services rendered. We are of the view that the Assessing Officer has not appreciated the activities and objective of the society properly and therefore he is not justified in holding that provision to section 2(15) will be attracted in the case of the assessee. In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned, and we do not find any error in the same. Accordingly we uphold the same. The ground of the appeal of the Revenue is accordingly dismissed.” Since, the issues are identical in the present appeal as well and there is a clear finding of the CIT(A) that since the facts of the case are same as in Assessment Year 2010-11, 2011-12 & 2012-13, the Assessing Officer was directed to allow the benefit of Section 11 with consequential benefits. Thus, there is no need to interfere with the order of the CIT(A) in the present assessment year. Hence, the appeal of the Revenue is dismissed.

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