Loading judgment…
Facts
The assessee, Sasha Association for Craft Producers, filed appeals against orders from the National Faceless Appeal Centre for AYs 2013-14 to 2015-16, with a delay of 349 days. The Ld. CIT(A) had dismissed the appeals, denying exemption under Sections 11 and 12A of the Income Tax Act, deeming the assessee's activities as commercial under the proviso to Section 2(15) due to receipts exceeding ₹25 lacs.
Held
The Tribunal condoned the delay in filing the appeals, applying a liberal interpretation of 'sufficient cause'. On merits, the Tribunal set aside the Ld. CIT(A)'s orders, directing the Ld. AO to allow the exemption under Sections 11 and 12 of the Act, citing its own consistent decisions in the assessee's prior assessment years.
Key Issues
Whether the delay in filing the appeals before the Tribunal should be condoned. Whether the assessee, a charitable trust, is entitled to exemption under Sections 11 and 12/12A of the Income Tax Act, despite its activities being considered commercial under the proviso to Section 2(15).
Sections Cited
2(15), 11, 12, 12A, 143(3), 249, 250, 253, 11(6), Indian Limitation Act, 1963, Section 5
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
At the outset, we note that there is a delay in filing the appeal by the assessee by 349 days, for which the assessee has filed condonation petition along with affidavit of Shri Roopa Mehta Executive Director of assessee’s trust. It was stated in the affidavit that the assessment order u/s 143(3) for A.Y. 2013-14 was passed on 23.06.2026, which was appealed before the ld. CIT (A) and the ld. CIT (A) dismissed the appeal vide order dated 05.08.2023. It was further argued that the
We have duly considered the rival contentions and gone through the record carefully.Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression "sufficient cause" employed in this Section has also been used identically in sub-Section 3 of Section 249 of the Act, which provides power to the Id. Commissioner to condone the delay in filing of the appeal before the Commissioner. Similarly, it has been used in Section 5 of the Indian Limitation Act, 1963. Whenever interpretation and consideration of this expression has fallen for consideration before the Hon'ble High Courts as well as before the Hon'ble Supreme Court then, the Hon'ble Courts were unanimous in their conclusion that this expression has to be construed liberally. We may make reference to the following observations of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353 wherein it has been held that where substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the
Moreover, making the appeal time-barred has not been used by the assessee as a tactics to avoid the litigation with the Revenue because such strategy would not give any benefit to the assessee in this type of litigation. Therefore, we condone the delay and proceed to decide the appeal on merit.
ITA No. 19354/KOL/2024 for A.Y. 2013-14
The ld. Counsel for the assessee stated that the assessee is a charitable trust and filed the return of income on 28.09.2013, declaring total income as NIL. The case of the assessee was selected under CASS for scrutiny and statutory notices were duly issued and served upon the assessee along with questionnaire. The assessee’s trust was registered under section 12A of the Act vide registration dated 28.11.2019. The charitable activities of the trust covers services to the poor craftsman in the nature of providing relief for affording and holding working environment, tools and implements assisting to get market of the handicraft products and updating the knowledge of design and demand. These poor people being artisan and craftsman of our society who are not only financially handicapped but are also not in a position to get proper price for their product, therefore, the assessee has been providing these activities/ assistances which are not of charitable in nature. According to the ld. AO the said activity is hit by the proviso to Section 2(15) of the Act and accordingly, the assessee falls within the category of advancement of any other of general public utility . Accordingly, the net profit as per the income
In the appellate proceedings, the appeal of the assessee was dismissed by the ld. CIT (A) by observing that in the general test u/s 2(15) of the Act set by the Hon'ble Apex Court while deciding the case of ACIT exemptions) Vs. Ahmedabad Urban Development in Civil appeal No. 21762 of 2017 dated 19.10.2022, that the assessee has seen to be engaged in trade and commerce which are not for general public utility and further the receipt from such business or commercial activity for service in relation thereto, exceed the quantified limit of ₹25 lacs and thus, the assessee fall within the purview of changed definition of charitable Trust with effect from 01.04.2009 and thus, the assessee is not entitle to get exemption u/s 11 and 12A of the Act.
After hearing the rival contentions and perusing the materials available on record, we find that the case of the assessee is squarely covered by the decision of the co-ordinate bench in assessee’s own case for A.Y. 2008-09 in dated 27.04.2016 for A.Y. 2008-09 & to 441/KOL/2017 for A.Ys. 2009-10, 2011-12 and 2012-13, IT No. 147/KOL/2023 for A.Y. 2010-11 vide order dated 27.09.2023, wherein identical issue has been decided in favour of the assessee by allowing the claim of the assessee u/s 11 of the Act. We also find that the ld. CIT (A) in A.Y. 2016-17 has allowed the appeal and the copy of order is available from page no.28 to 43. For the sake of ready reference, the decision of the co-ordinate Bench for A.Y. 2018-19 in ITA No.980/KOL/2023 is extracted below:-
“6. We, after going through the fact of the case and perusing the material available in the record and also considering the judgment rendered by the Tribunal in the case of the assessee where claim of the assessee was allowed by the Tribunal by dismissing the Revenue’s appeal in 441/KOL/2017 & 1936/KOL/2024 for A.Y. 2014-15 and 2015-16, respectively 09. The issue raised in these appeals are similar as decided in for A.Y. 2013-14, wherein we have directed the ld. AO to allow the exemption u/s 11 and 12 of the Act. Accordingly, our decision in the above ITA 1934/Kol/2024 A.Y.2013-14 would apply mutatis mutandis in this appeal in ITA Nos.1935 & 1936/KOL/2024 for AYs 2014-15 and 2015-16 As well and accordingly we direct the ld. AO
In the result, the appeals of the assessee are allowed.
Order pronounced in the open court on 15.01.2025.