DCIT (E), NEW DELHI vs. M/S. QUALITY COUNCIL OF INDIA, NEW DELHI

This appeal by the Revenue is preferred against the order of the CIT(A) - 40, New Delhi dated 25.02.2015 pertaining to A.Y 2011-12.

The solitary grievance of the Revenue is that the ld. CIT(A) has erred in ignoring that commercial activities of the assessee which are squarely covered under the last limb of proviso to section 2(15) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] as the assessee is rendering services and charging fees for it and generating surplus, therefore, the benefit of sections 11 and 12 are not allowable to the assessee.

Briefly stated, the facts of the case are that the assessee has been established by the Ministry of Industry. The Certifying bodies, Educational Institutions and Hospitals apply to their respective Boards under the assessee. Such Boards are National Accreditation Board for Certification Bodies, National Accreditation Board for Education and Training, National Accreditation Board for Hospitals and healthcare Providers and National Board for Quality Promotion seeking accreditation from the assessee.

During the course of assessment proceedings and on perusing the audited statement of account, the Assessing Officer found that the assessee is charging fees, receiving grant and has made expenditure. The Assessing Officer was of the opinion that since the assessee is charging fees for accreditation and is receiving money from organizing seminars, therefore, proviso to section 2(15) of the Act squarely apply. Taking a leaf out of the said proviso, the Assessing Officer was of the opinion that the provisions of section 13(8) of the Act are applicable and surplus has to be taxed at maximum marginal rate. The Assessing Officer concluded the assessment by taxing the net taxable income at maximum marginal rate of taxes.

The assessee carried the matter before the ld. CIT(A) and vehemently contended that the assessee is a non-profit making organization engaged in charitable activities and, therefore, provisions of section 2(15) of the Act are not applicable and the assessee is eligible for exemption u/s 11(1) of the Act.

After considering the facts and submissions and drawing support from various judicial decisions, the ld. CIT(A) was convinced that the assessee is a charitable society and is not involved in any trade, commerce or business and, therefore, eligible for exemption u/s 11 of the Act.

Aggrieved by this, the Revenue is before us. The ld. DR strongly supported the findings of the Assessing Officer.

The ld. counsel for the assessee drew our attention to the order of the coordinate Bench and pointed out that in earlier assessment years i.e. 2009-10 and subsequent assessment year 2013-14 the bench has allowed exemption u/ss 11 and 12 of the Act.

We have carefully considered the orders of the authorities below. We have also gone through the decision of the coordinate bench for assessment year 2009-10 and 2013-14. We find that the matter travelled upto the Hon'ble jurisdictional High Court of Delhi and the Hon'ble High Court in Tax Appeal No. 867 of 2016 has found that the decision of the Tribunal is sound in law and on facts and, therefore, no substantial question of law arises and the Hon'ble High Court dismissed the appeal of the Revenue.

As no distinguishing decision has been brought on record in favour of the Revenue, respectfully following the decisions of the co-ordinate benches and also the Hon'ble jurisdictional High Court, the appeal of the Revenue is dismissed.

In the result, the appeal of the Revenue in is dismissed.