2015 (12) TMI 1672 - HC - Income Tax

Exemption under Sections 11 & 12 denied - Held that - The following questions are framed for consideration (i) Whether ITAT was correct in law and on facts in setting aside the order passed by CIT(A) and thereby denying exemption to the Assessee under Sections 11 & 12 of the Income Tax Act? (ii) Whether ITAT was correct in law and on facts in holding that the activities carried out by the Assessee fall under the 4th limb i.e the advancement of any other object of General Public Utility of the definition of the term charitable purpose under Section 2(15) of the Act and not under the 2nd limb education ? (iii) Whether ITAT could re-examine the issue already decided by it vide order-dated 30.09.1980 in favour of Assessee for AY 1975-76 and 1976-77 without referring the same to the larger bench particularly when there is no change in the activities carried out by the Assessee throughout these years? Learned counsel for the parties are permitted to file within eight weeks additional documents/papers which are part of the assessment record or were filed before the ITAT.

Summary

Issues:
1. Exemption under Sections 11 & 12 of the Income Tax Act denied by ITAT.
2. Classification of activities under "charitable purpose" - 4th limb vs. 2nd limb.
3. Re-examination of a previously decided issue by ITAT without referring to a larger bench.

Analysis:
1. The High Court considered whether the ITAT was correct in setting aside the order passed by CIT(A) and denying exemption to the Assessee under Sections 11 & 12 of the Income Tax Act. The court will assess the legal and factual correctness of ITAT's decision in this regard.

2. Another issue raised was whether the ITAT correctly classified the activities of the Assessee under the 4th limb of "the advancement of any other object of General Public Utility" instead of the 2nd limb "education" within the definition of "charitable purpose" under Section 2(15) of the Act. The court will analyze the nature of the activities to determine the appropriate classification.

3. The High Court also examined whether the ITAT had the authority to re-examine a previously decided issue without referring it to a larger bench, especially when there was no change in the Assessee's activities over the years. The court will review the procedural aspects and legal principles involved in such a re-examination by the ITAT.

The court allowed both parties to submit additional documents within eight weeks, which are part of the assessment record or were filed before the ITAT. Additionally, the interim order was made absolute during the appeal's pendency, with the next hearing scheduled for 16th March 2016. The judgment highlighted key legal questions and procedural considerations crucial for determining the Assessee's eligibility for tax exemption and the classification of their activities under the Income Tax Act.