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2017 (7) TMI 1271 - AT - Income TaxClaim for exemption u/s. 11 r.w.s. 12A and section 2(15) denied - Charitable activity - HELD THAT - CIT(A) observed that the activities of Sabarmati Ashram Gaushala Trust 2014 (1) TMI 1539 - GUJARAT HIGH COURT are similar to the activities of the appellant and the objects are also similar to the objects of Sabarmati Ashram Gaushala Trust. Therefore, respectfully following the binding decisions, the ld. CIT(A) correctly allowed the claim of exemption. D.R. could not bring any distinguishing decision in favour of the revenue. Per contra, the ld. counsel for the assessee once again relied upon the decision of the Tribunal in the case of Sabarmati Ashram Gaushala Trust. - Decided in favour of assessee.
Issues:
- Appeal by Revenue against deletion of addition made by AO for disallowing exemption u/s. 11 r.w.s. 12A and section 2(15) of the Act. - Whether the activities of the assessee trust qualify for exemption under the relevant provisions of the Act. Analysis: 1. The appeal before ITAT Ahmedabad involved the Revenue challenging the deletion of an addition made by the AO regarding the disallowance of exemption claimed by the assessee under section 11 r.w.s. 12A and section 2(15) of the Income Tax Act for the assessment year 2010-11. 2. The Revenue contended that the assessee trust, engaged in cattle and buffalo development and recognized u/s. 80G of the Act, was involved in profit-making activities, specifically the sale of semen, which triggered the proviso to Section 2(15) of the Act, leading to the disallowance of exemption and addition of a specific amount. 3. The assessee, relying on the decision of the Tribunal in a similar case, argued before the CIT(A) that its activities were akin to those of another trust, which had been granted exemption by the High Court. The CIT(A) allowed the claim of exemption, emphasizing the similarity in objects and activities between the trusts. 4. Upon appeal by the Revenue, the ITAT considered the arguments and found that the facts of the assessee trust were indeed similar to the trust granted exemption by the High Court. The ITAT noted that the High Court had affirmed the Tribunal's decision and highlighted the charitable nature of the trust's activities, emphasizing public utility and charitable purposes. 5. The High Court's findings emphasized that the trust's objectives were aligned with public utility and charitable purposes, focusing on cattle breeding, agricultural activities, educational initiatives, and other allied institutions. The Court clarified that profit-making was not the primary aim and that the generation of incidental surpluses did not change the nature of the activities to trade or business. 6. The High Court's judgment stressed the need to examine each case based on its facts and apply relevant legal principles to determine whether an activity qualifies as business, trade, or commerce. The Court dismissed the Revenue's appeal, affirming the Tribunal's decision and upholding the grant of exemption to the trust. 7. Ultimately, the ITAT dismissed the Revenue's appeal, concluding that no interference was warranted as the CIT(A) had correctly followed the binding decision of the High Court. Additionally, the ITAT directed the AO to allow the set off of brought forward deficit against any surplus for the relevant assessment year in response to the cross objection raised by the assessee.
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