ITO (E), NEW DELHI vs. M/S. THE POORVA SANSKRITIK KENDRA, NEW DELHI

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ITA 3566/DEL/2015Status: DisposedITAT Delhi12 September 2018AY 2011-125 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's activities did not constitute trade, commerce, or business, and therefore the proviso to Section 2(15) was not attracted. The CIT(A)'s decision to grant exemption was upheld.

What were the facts?

The assessee, a charitable society promoting Indian art and culture, had a revenue-sharing agreement for restaurant and club facilities. The Assessing Officer invoked the proviso to Section 2(15) to deny exemption, citing commercial activities.

What were the issues?

Whether the assessee's activities, including revenue sharing from club facilities, fall under the proviso to Section 2(15) and thus disqualify it from charitable exemption.

Which sections of the Income-tax Act were involved?

Section 2(15),Section 11(1),Section 12AA(1)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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

Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE

Hearing: 11.09.2018Pronounced: 12.09.2018

This appeal is filed by the Revenue against the order dated 26/3/2015 passed by CIT(A)-40, New Delhi for Assessment Year 2011-12.

2.

The grounds of appeal are as under:-

“1. On the facts and in the circumstances of the case and in law, the Ld.CIT (A) has erred in ignoring the facts that the property held by the assessee was utilized purely for commercial activities.

2. On the facts and in the circumstances of the case and in law, the Ld.CIT (A) has erred in ignoring the facts that the assessee’s activity falls under the category of ‘Advancement of any other object of ‘General Public Utility’ and commercial in nature. Hence, the first proviso to Section 2(15) is clearly applicable to it.”

3.

The assessee is established by the Government of Delhi and is registered under the Societies Registration Act, 1860 dated 01/11/2004 and is also registered u/s 12AA(1) of the I.T Act, 1961 dated 27/04/2007 as a charitable society. The main object of the assessee is to promote Indian art and culture etc. and to run a cultural centre in Laxmi Nagar, Delhi. The assessee is having a revenue sharing agreement with G&S Sarovar Park Hospitality Ltd. for providing the facilities of restaurant and club etc. to the members of the society and the assessee is to get the share of 14% revenue from the above company. The case for A.Y 2009-10 was taken up for scrutiny and the Assessing Officer had invoked the Proviso to section 2(15) and had denied the exemption u/s 11(1) to the assessee but the same was allowed by the CIT(A) and the departmental appeal has also been dismissed by the Tribunal vide the order dated 04/08/2014 in ITA No. 3506/Del/2013. Earlier the DIT (Exemption) had cancelled the registration u/s 12AA(3) for the A.Y. 2006-07 to 2008-09 but the same was restored by the Tribunal vide the order dated 30/11/2011 in ITA No. 1786/Del/2011. The Assessing Officer following the order for earlier years again denied the exemption u/s 11(1) by invoking the Proviso to section 2(15) vide the order of the Assessing Officer.

4.

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

5.

The Ld. DR submitted that the CIT(A) ignored the fact that the property held by the assessee was utilized purely for commercial activities and the said activity does not fall under the category of advancement of any other object of general public utility and thus commercial in nature. Therefore, the first proviso to Section 2(15) is clearly applicable to the assessee’s case and the Assessing Officer rightly denied the exemption u/s 11(1) of the Income Tax Act, 1961.

6.

The Ld. AR submitted that the CIT(A) rightly allowed the exemption u/s 11(1) by following the earlier year decision in the assessee’s own case for Assessment Year 2009-10 (ITA No. 3506/Del/2013 order dated 4/8/2014). The Ld. AR submitted that the Hon’ble Delhi High Court in case of India Trade Promotion Organization Vs. DGIT (E) 53 Taxman.com 404 (Delhi) upheld the Constitutional validity of the proviso to Section 2(15) and further held that merely receipt of fee or charge cannot be said that the assessee is involved in any trade, commerce or business.

7.

We have heard both the parties and perused all the relevant material available on record. The facts are identical to the facts of the case decided by the Tribunal for Assessment Year 2009-10 in assessee’s own case. The Tribunal held as under:-

“6. There is no dispute that proviso to scction-2(15) of the Act inserted from the assessment year 2009-10 is applicable in the year under consideration and the same can be invoked only if the assessee is involved in carrying on any activity in the nature of trade, commerce or business, or any activity of running any services in relation to any trade, commerce or businesses for a cess or fee for any other consideration, irrespective of the nature of use or application or utilization of the incoem from such activity. Since all these similar ctivities have already been examined and considered by the ITAT in ITA No. No.l786/Del/2011 in the case of assessee itself and after discussing it in detail, the ITAT has come to the conclusion that these activities of the assessee society do not involve the carrying of any activity in the nature of trade, commerce or business or any activity of running any service in relation to any trade, commerce or business. We are thus of the view that the proviso inserted in sec. 2(15) of the Act. w.e.f. 01.04.2009 is not attracted in the case of the assessee. We, therefore, hold that the Learned CIT(Appeals) following the said order of the ITAT has rightly decided that the Assessing Offices was not justified in denying the benefit of exemption under sections 11 and 12 of the Act available to the assessee by applying the proviso to section 2(15) of the Act. The first appellate order being comprehensive and reasoned one thus does not need any interference. The same is upheld and the grounds are accordingly rejected.”

Since, the CIT(A) while granting relief to assessee has followed the decision of the Tribunal as well as the decision of the Hon’ble Jurisdictional High Court in case of India Trade Promotion Organization (supra), therefore, in absence of any contrary material brought to our notice, we find no infirmity in order of the CIT(A). Hence, appeal of the Revenue is dismissed.

8.

In result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 12th September, 2018.

Sd/- Sd/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12/09/2018 *R.N Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT NEW DELHI Date of dictation 11.09.2018 Date on which the typed draft is placed before the 11.09.2018 dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS

Date on which the fair order is placed before the Dictating Member for pronouncement

Date on which the fair order comes back to the Sr. 12.09.2018 PS/PS Date on which the final order is uploaded on the 12.09.2018 website of ITAT Date on which the file goes to the Bench Clerk 12.09.2018 Date on which the file goes to the Head Clerk

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