2018 (5) TMI 1814 - HC - Income Tax

Charitable activity - exemption u/s 11 - promoting technology or technology related activities - ITAT held that the assessee s activities are charitable and that it was not engaging in any business or commercial activity - Held that - Revenue felt that the assessee is engaged in non-charitable and business activities because of certain services it provided for consideration; these were video conferencing facilities, provision for conferencing in workshops etc. The ITAT relied upon the ruling of this Court in GS1 India vs. Director General of Income Tax 2013 (10) TMI 19 - DELHI HIGH COURT where it was held that the similar activities of promoting technology or technology related activities could not be considered commercial or business activities, per se. Having regard to the facts of this case, the Court is of the opinion that the ratio of GS1 India (supra) applies in this case as well. - decided against revenue

Summary

Issues:
- Whether the assessee's activities are charitable or engaged in business or commercial activity?
- Interpretation of the Income Tax Act, 1961 regarding the registration of the assessee under Section 12AA.
- Application of legal precedent in determining whether certain services provided by the assessee are charitable or business activities.

Analysis:
The High Court's judgment addressed the issue of the nature of the assessee's activities, focusing on whether they were charitable or involved in business or commercial activities. The Revenue contended that the assessee engaged in non-charitable and business activities due to services provided for consideration, such as video conferencing facilities and workshops. However, the Income Tax Appellate Authority (ITAT) held that the assessee's activities were charitable. The Court noted that the assessee, a society registered under the Societies Registration Act and promoted by the Department of Electronics, was registered under Section 12AA of the Income Tax Act, 1961, with objectives to advance computer communication and promote technological growth in India.

Regarding the interpretation of the Income Tax Act, the Court considered the registration of the assessee under Section 12AA. The Court highlighted that the ITAT had previously ruled in favor of the assessee for the Assessment Years 2009-10 and 2010-11. The Court also referenced the ITAT's reliance on the judgment in 'GS1 India vs. Director General of Income Tax', where it was held that activities promoting technology could not be automatically classified as commercial or business activities. Applying this precedent to the current case, the Court found that the activities of the assessee aligned with charitable purposes rather than commercial endeavors.

Ultimately, the Court concluded that no question of law arose in the appeal, leading to the dismissal of the appeal along with the pending application. The judgment emphasized the charitable nature of the assessee's activities based on its objectives and the application of legal precedent regarding the classification of activities promoting technology.