DY. COMMISSIONER OF INCOME TAX(EXEMPTIONS)-2(1), MUMBAI, MUMBAI vs. SOCIETY FOR APPLIED MICROWAVE ELECTRONIC ENGINEERING RESEARCH BOMBAY, MUMBAI
Facts
The assessee, a society for applied Microwave Electronic Engineering Research Bombay, claimed exemption under Section 11 of the Income-tax Act for AY 2010-11. The Assessing Officer denied this exemption, holding that the society's activities were commercial in nature and hit by the proviso to Section 2(15). The CIT(A) allowed the assessee's appeal, holding that the dominant purpose was charitable and activities did not constitute business.
Held
The Tribunal noted that similar issues for earlier years were decided in favor of the assessee by restoring the appeals to the Assessing Officer for examination in light of Supreme Court decisions, and the assessee's claims were accepted. The Tribunal found no change in facts or law for the current year compared to previous years where exemption was allowed. Therefore, the Revenue's appeal was dismissed.
Key Issues
Whether the assessee's activities were charitable or commercial, and thus eligible for exemption under Section 11 of the Income-tax Act, considering the proviso to Section 2(15).
Sections Cited
11, 12A, 143(3), 147, 148, 2(15), 10(21), 144B, 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
PER PRASHANT MAHARISHI, AM:
ITA No. 1427/Mum/2024, for A.Y. 2010-11, is filed by the Dy. 01. Commissioner of income Tax, Exemption 2(1), Mumbai against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)], dated 5th February, 2024, wherein the appeal filed by the assessee against the assessment order passed under Section 143(3) read with section 147 of the Income-tax Act, 1961 (the Act) dated 29th March, 2016, passed by the Income Tax Officer, Exemption 2(3), Mumbai, was allowed.
“1. "Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in not acknowledging the fact that the objectives of the society are commercial in nature and the income received by the society from its activities in the form of trade and commerce is more than Rs. 10 Lakhs and hence the exemption u/s 11 shall not be granted to it as per the provisions of the proviso to section 2(15).
Whether, on the facts and in the circumstances of the case and in law, the Ld. CTT(A) erred in ignoring the fact that even if the activities of assessee are considered charitable, such activities will fall in the category of advancement of any other object of general public utility only hence applicability of proviso to section 2(15) should have been examined as the same result into denial of exemption u/s 11 of the I.T. Act.
Whether on the facts and circumstances of the case and in law and in light of the law laid down by Hon'ble Supreme Court in Civil Appeal No. 21762 of 2017 in various batch of appeal and SLP's (lead case ACIT (Exemptions) Vs. Ahmedabad Urban Development Authority [2022] 143 taxmnn.com 278(SC)), the Ld.CIT(A) erred in not appreciating that even if the activities of the assessee are held to be covered under
The brief facts of the case shows that assessee is an association of persons, who filed its return of income on 12th October, 2010, total income of ₹ nil. Assessee is registered under Section 12A of the Act vide registration dated 24th June, 1992. The assessment was completed under Section 143(3) of the Income-tax Act, 1961 (the Act) on 23rd January, 2012, at total income of ₹7,73,12,319/-.
The case of the assessee was reopened by issue of notice under 04. Section 148 of the Act on 31st March, 2015, in response to that assessee submitted a letter dated 11th January, 2016, reiterating the original income. Assessee raised objections against reopening which were disposed off on 12th February, 2016.
It was found that assessee is engaged in a research work in the area 05. of Micro Wage (electronics) and has claimed benefit of exemption under Section 11 of the Act. As the activities of the assessee are pure research work, the assessee is required to be taxed and assessed under Section 10(21) of the Act subject to fulfillment of conditions. It was noticed that assessee claiming it to be an autonomous research and development institute under the control of department of Information Technology, Ministry of Communication and Information Technology. It carries research in the field of linear oscillator radar based instrumentation, etc. Therefore, the learned
Aggrieved by the re-assessment order, assessee preferred the appeal 06. before the learned CIT (A), who on considering the various clauses of memorandum of association held that assessee is not in the business activity and does not lose its exemption under Section 11 and 12 of the Act. The learned CIT (A) also noted that the assessee is set up by the Government of India to make the country reliant in Micro Wave Technology through incentive research and development. Thereafter considering several judicial precedents, the learned CIT (A) held that dominant purpose of assessee is charitable and activities also does not mean to carry on business accordingly, appeal of the assessee was allowed.
The learned Authorized Representative submitted that identical issue 08. arose and in case of assessee for A.Y. 2009-10, 2011-12, 2012-13, wherein in ITA No.4311, 5551 and 7414, as per order dated 25th November, 2022, restore the orders of the learned CIT (A) to the file of the learned Assessing Officer for examination in accordance with the decision of Hon'ble Supreme Court in case of Ahmedabad Urban development authority. The learned Assessing Officer passed the order for both the years on 2nd February, 2024, under Section 143(3) read with section 254 of the Act read with section 144B of the Act on 25th March, 2024 26th March, 2024, and 27th March, 2024, wherein the case of the assessee is accepted and the return of income filed by the assessee was accepted. It was further stated that assessment year passed for A.Y. 2016-17 on 27th march, 2024, for A.Y. 2017-18 on 26th March, 2024 and for A.Y. 2022-23, under Section 143(3) read with section 144B of the Act and accepted the claim of the assessee. Thus, the claim of the assessee is accepted therefore, appeal of the learned Assessing Officer deserves to be dismissed.
We have carefully considered the rival contentions and perused the 09. orders of the lower authorities. On careful consideration of the fact, we find that the assessee is established by Department of Electronics, Government of India and form the permission of Microwave Electronics Ltd. to make the country as reliant in the
In the result, the appeal of the learned Assessing Officer is dismissed.
Order pronounced in the open court on 26.07. 2024.
Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 26.07.2024 Sudip Sarkar, Sr.PS
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai
