M/S MADHYA PRADESH MADHYAM,BHOPAL vs. THE ACIT (EXEMPTION (CIRCLE), BHOPAL

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ITA 257/IND/2019Status: DisposedITAT Indore21 September 2022AY 2012-134 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's activities were for charitable purposes and eligible for exemption under Section 11. The previous order of a co-ordinate bench on similar issues for earlier assessment years was followed.

What were the facts?

The assessee, Madhya Pradesh Madhyam, a government-owned society registered under Section 12A, claimed exemption under Section 11 for its activities of publishing a newspaper and producing films. The AO rejected the exemption, treating excess income as business income, which was upheld by the CIT(A).

What were the issues?

Whether the assessee's activities of publication and film production constitute 'charitable purposes' eligible for exemption under Section 11, and if the proviso to Section 2(15) applies to deny such exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 2(15),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: Ms. MADHUMITA ROY & SHRI BHAGIRATH MAL BIYANI

For Appellant: Shri Gagan Tiwari, Adv
For Respondent: Shri Ashish Porwal, Sr.D.R
Hearing: 19.09.2022

The instant appeal filed by the assessee is directed against the order dated 31.01.2019 passed by the Commissioner of Income Tax (Appeals)-2, Bhopal arising out of the order dated 26.03.2015 passed by the Assistant Commissioner of Income Tax (Exemption) (Circle), Bhopal under Section (Madhya Pradesh Madhyam vs. ACIT(E)) Asst.Year.– 2012-13 - 2 - 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2012-13.

2.

The assessee, registered under the Society’s Registration Act with effect from 01.10.1983 and also registered under Section 12A of the Act with effect from 29.01.1986, filed its return of income on 25.09.2012 declaring total income at Nil after claiming exemption under Section 12 of the Act. The assessee is an institution wholly owned by the Government of Madhya Pradesh. It is engaged in the activities of publication of Rozgar Nirman Newspaper etc., production of documentary films, T.V. reports etc. for the State Government and public sector undertakings. The assessee society has shown gross receipts of Rs.10,88,47,870/- against which the society has claimed revenue expenditure of Rs.10,50,48,104/- and capital expenditure of Rs.49,07,203/- thereby claiming a deduction of Rs.10,99,55,308/- as expenditure. It has claimed a net deficit of Rs.11,07,437/- in the computation of income. The claim of the assessee for deduction under Section 11 has been rejected by the Ld. AO holding that the assessee’s activities were not for ‘charitable purposes’ within the meaning of 2(15) of the Act. Consequentially, the excess of income over expenditure of Rs.3799766/- has been treated as business income of the assessee which has further been confirmed by the first appellate authority. Hence, the instant appeal before us.

3.

At the time of hearing of the instant appeal, learned counsel for the assessee submitted before us that the issue raised before us by the appellant is covered by its own judgment passed by the Co-ordinate Bench in & 692/Ind/2013, A.Ys. 2009-10 & 2010-11. A copy whereof has duly been submitted for our perusal. Such submissions made by the Ld.AR has not been controverted by the Ld.DR with all his fairness.

(Madhya Pradesh Madhyam vs. ACIT(E)) Asst.Year.– 2012-13 - 3 -

4.

We have heard the rival submissions made by the respective parties. We have also perused the orders passed by the authorities below including the order passed by the Co-ordinate Bench in & 692/Ind/2013, A.Ys. 2009-10 & 2010-11. It appears that by allowing the issue in favour of the assessee, the Co-ordinate Bench has been pleased to observe as follows:

“ 9. We have given our thoughtful consideration to the facts of the present case and the case-laws relied upon by the parties. We find that assessee's activities have not been changed at all since the date of its inception and the assessee was fully eligible for exemption u/s 11 & 12 of the I.T. Act. The assessee society was constituted by the State Govt. for the benefit of General Public to provide them information regarding employments, education institutions and other information of the govt. schemes. The objectives of the assessee society are publication of weekly newspaper namely "Rozgar Aur Nirman" to supply the material related to advertisement of public welfare schemes of Government of Madhya Pradesh and its undertaking and do such all other acts that are necessary for achievement of the objectives of the society. Therefore, the Revenue Authorities are not justified in holding that the assessee was involved in carrying on the activity in the nature of trade, commerce or business. We find that prior to the introduction of the proviso to section 2(15), there was no dispute that the assessee was established for charitable purposes. The main object of the assessee is for the benefit of General Public to provide them information regarding employments, education institutions and other information of the govt. schemes, therefore, we find force in the contention of the assessee that profit making is not the driving force or objective of the assessee and income generated by the assessee does not find its way into the pockets of any individuals or entities. It is to be utilized fully for the purposes of the objects of the assessee. Further, the expression 'charitable purpose' should be construed not in a vacuum, but in the specific context of section 10(23C)(iv), which specifically deals with the income received by any person on behalf of, inter alia, an institution established for charitable purposes. Therefore, the meaning of the expression 'charitable purposes' has to be examined in the context of section 10(23C)(iv). We are of the view that since the object of promoting employments/educational institutions/govt. schemes for the general public is a charitable purpose, the expression 'charitable purpose', as defined in section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of section 10(23C)(iv) as also held in the above judicial pronouncements. On consideration of these facts in the light of the aforesaid judgments, we are of the view that the authorities below are not justified in (Madhya Pradesh Madhyam vs. ACIT(E)) Asst.Year.– 2012-13 - 4 - disallowing the entire exemption. We, therefore, direct the Assessing Officer to delete the disallowances. Thus, ground nos. 1 to 5 are allowed.”

In the absence of changed circumstance, we do not find any reason to deviate from the stand taken by the Co-ordinate Bench. Hence, respectfully relying upon the order passed by the Co-ordinate Bench, we allow the appeal preferred by the assessee holding that the assessee is a charitable institution under Section 11 of the Act. Consequentially, the addition made by the authorities below is, therefore, deleted.

5.

In the result, assessee’s appeal is, therefore, allowed.

This Order pronounced in Open Court on 21/09/2022 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 21/09/2022 S. K. Sinha, Sr. PS TRTUE COPY आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

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