2016 (8) TMI 1277 - HC - Income Tax

Benefits of Section 11 - whether the Tribunal was right in holding that the assessee as a charitable organization? - Held that - In earlier decision for the Assessment Years 1996-97 to 2000-01 wherein on an identical facts, the Tribunal held that the Respondent-Assessee being a charitable trust, is eligible for exemption under Section 11 of the Act. Nothing has been shown to us to indicate that appeals therefrom has been filed by the Revenue, one has to proceeds on the basis that the Revenue has accepted the same. Further, no distinguishing features in the subject Assessment Year to that in Assessment Years 1996-97 to 2000-01 has been shown. Therefore, on principle of consistency and law of precedence, it must equally apply to subject Assessment Year. - Decided in favour of assessee Contravention of provisions of Section 13(1)(c), 13(3) & 11(4A) - Tribunal correctness in allowing the benefits of Section 11 - Held that - The impugned order of the Tribunal has not given any final ruling of the extent the benefit under Section 11 of the Act is available to the Respondent-Assessee. This in view of the fact that the impugned order has upheld the directions of the Commissioner of Income Tax (Appeals) CIT(A) to the Assessing Officer to verify the claim of the Respondent-Assessee that the expenses have been applied towards object of the charitable trust. It further specifically states that only to the extent the income has been applied to the object of the charitable trust, would the Respondent-Assessee be entitled to its claim of relief under Section 11 of the Act. No substantial question of law

Summary

Issues:
1. Whether the Tribunal was right in holding the assessee as a charitable organization?
2. Whether the Tribunal was correct in allowing the benefits of Section 11 to the assessee despite contravention with certain provisions?

Analysis:

Re Question (a):
The Tribunal's order dismissed the appeal of the Respondent-Assessee based on its previous decisions for other assessment years where it held the assessee to be a charitable trust eligible for exemption under Section 11 of the Income Tax Act. The Revenue did not challenge the Tribunal's decision for the previous assessment years, indicating acceptance. As no distinguishing features were presented for the current assessment year, the principle of consistency and precedence dictates that the decision should apply equally. Therefore, the question of law regarding the charitable status of the assessee was not entertained.

Re Question (b):
The Tribunal's order did not provide a final ruling on the extent of benefits under Section 11 for the Respondent-Assessee. It directed the Assessing Officer to verify if the expenses were applied towards the charitable trust's objectives to determine eligibility for relief under Section 11. Since the Tribunal did not find any contravention of specific provisions by the assessee, the question of whether the assessee had violated Sections 13(1)(c), 13(3), and 11(4A) did not arise from the order. Consequently, the question of law related to contravention of provisions was not entertained.

In conclusion, the appeal was dismissed by the High Court, with no order as to costs.