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2018 (1) TMI 1331 - AT - Income TaxExemption u/s 11 - charitable object - merger of the judgment - Held that - The assessee has been allowed exemption u/s 11 consistently in the past, either by the AO himself or by virtue of the orders of the Tribunal as affirmed by the Hon ble High Court. This settled position ought not to have been ordinarily disturbed. The authorities below have chosen to deviate from the earlier consistent view by harping on the dismissal of SLP against the judgment of the Hon ble J&K High Court in Jammu Development Authority. Two reasons for not accepting the Departmental stand. Firstly, the issue before the Hon ble Jammu and Kashmir High Court was cancellation of registration by the CIT u/s 12AA(3) of the Act and not the denial of exemption, as is prevailing in the extant case. Admittedly, the assessee s registration has not been canceled by the Commissioner. A mere dismissal of SLP without giving any reasons, cannot be equated with exposition of law by the Hon ble Supreme Court so as to indicate the imprimatur on the reasoning and/or the ratio decidendi of the High Court in the judgment. There is no merger of the judgment of the Hon ble High Court. The decision taken by the Hon ble jurisdictional High Court in several cases including that of the assessee itself holds the field and, accordingly, the benefit of exemption u/s 11 of the Act cannot be denied. - Decided in favour of assessee.
Issues:
Denial of exemption u/s 11 of the Income-tax Act based on the applicability of the proviso to section 2(15) in the case of an Authority formed under the Rules and Regulations of the UP Urban Planning and Development Act, 1973. Analysis: Issue 1: Denial of Exemption u/s 11 The judgment dealt with the denial of exemption u/s 11 of the Income-tax Act to the assessee, an Authority formed under the Rules and Regulations of the UP Urban Planning and Development Act, 1973. The Assessing Officer contended that the assessee's activities were not charitable, invoking the proviso to section 2(15) due to engagement in the real estate business. The Assessing Officer relied on the dismissal of SLP by the Hon'ble Supreme Court against the judgment of the Hon'ble J&K High Court in a similar case. However, the Tribunal noted that the assessee had been consistently allowed exemption u/s 11 in the past, either by the AO or by the Tribunal orders affirmed by the High Court. The Tribunal emphasized that the dismissal of SLP does not establish a binding precedent and does not confirm the reasoning of the High Court's decision. Therefore, the Tribunal held that the benefit of exemption u/s 11 cannot be denied based solely on the dismissal of SLP, and the decision of the jurisdictional High Court in favor of the assessee prevails. Issue 2: Similarity in Assessment Year 2013-14 The judgment noted that the facts and circumstances of the appeal for the assessment year 2013-14 were similar to the preceding year. Following the decision to grant exemption u/s 11 for the earlier assessment year, the Tribunal vacated the impugned order for the subsequent year and directed the granting of exemption u/s 11 of the Act. Both parties agreed that the issues for the assessment year 2013-14 were similar to those of the previous year, leading to the allowance of exemption u/s 11. In conclusion, the Tribunal allowed both appeals, overturning the denial of exemption u/s 11 of the Income-tax Act for the assessment years 2012-13 and 2013-14. The judgment emphasized the importance of considering the consistent application of exemptions in past cases and highlighted that the dismissal of SLP does not establish a binding precedent.
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