2014 (5) TMI 815 - AT - Income Tax

Entitlement for exemption u/s 11 of the Act Charitable activities u/s 2(15) of the Act - Revenue contended that the main activity of the assessee was propagation of Christianity by printing of the holy bible and its distribution through various places - Held that - Just because of the main activity of the assessee, ignoring the other activities of the assessee, it cannot be said that the assessee is merely pursuing a religious activity - this activity cannot disentitle the assessee to the claim for exemption Relying upon Commissioner of Income-Tax Versus Social Service Centre 2001 (2) TMI 69 - ANDHRA PRADESH High Court - the placement and distribution of Bible and New Testament is for the benefit of the general public is one of the charitable purposes referred to in S.2(15) of the Act, being advancement of any other object of general public utility - exemption u/s 11 is available for trusts which are charitable or religious or partly charitable and partly religious - even if the income is earned by trust, which is charitable as well as religious and part of the income is applied for religious purposes, exemption u/s 11(1)(a) is still available - the assessee is entitled to exemption u/s 11 of the Act Decided against Revenue.

Summary

Issues:
1. Appeal against CIT(A) order granting exemption under Section 11 of the Income-tax Act, 1961 for assessment year 2008-09.

Detailed Analysis:
1. The Revenue appealed against the CIT(A) order granting exemption under Section 11 of the Income-tax Act, 1961 for the assessment year 2008-09. The main issue was the eligibility of the assessee for exemption under Section 11, based on the nature of its activities and compliance with charitable definitions.

2. The assessee trust, registered under Section 12A of the Act, filed its return for the assessment year 2008-09 claiming exemption under Section 11. The Assessing Officer, during scrutiny assessment, noted the main activity of the assessee was the propagation of Christianity through printing and distribution of the Holy Bible. The AO held that this activity did not align with charitable definitions under Section 2(15) and denied exemption under Section 11, resulting in an assessed total income of Rs. 9,25,585.

3. On appeal, the CIT(A) considered the submissions and case-law, emphasizing that Section 11 applies to religious activities as much as charitable ones. The CIT(A) held that the distribution of the Bible aligned with the trust's objects and thus, the assessee was entitled to exemption under Section 11.

4. The ITAT, after hearing both sides and reviewing the orders, emphasized that the main activity of distributing the Bible was in line with the trust's objectives and did not solely constitute a religious activity to disqualify the assessee from exemption. Referring to legal precedents, including the decision in the case of Social Service Centre, the ITAT concluded that the distribution of the Bible served the general public utility, falling under the charitable purposes defined in Section 2(15). The ITAT also noted that trusts with both charitable and religious activities could still qualify for exemption under Section 11.

5. Consequently, the ITAT upheld the CIT(A) order, dismissing the Revenue's appeal and affirming the assessee's entitlement to exemption under Section 11 of the Income-tax Act, 1961.

6. The judgment was delivered by the ITAT Hyderabad on 7th May 2014, with the appeal against the CIT(A) order granting exemption under Section 11 for the assessment year 2008-09 being dismissed.