2017 (5) TMI 1697 - HC - Income Tax

Exemption u/s 11 - charitable activity u/s 2(15) - whether the Respondent/Assessee is a charitable organisation and could be said to be doing business to attract the mischief of amended Section 2(15)? - HELD THAT - While the CIT(A) appears to have also proceeded on the fact that for the earlier AYs the contention of the Revenue stood negated, the ITAT in the impugned order examined it on merits and has returned certain factual findings. The finding was that mere receipt of fees during the AY under consideration by the Assessee did not mean that it was involved in trade, commerce or business . Further, the mere deduction of tax at source could not lead to conclusion that receipt was taxable in nature. Having examined the impugned order of the ITAT and having considered the submission of learned counsel for the Revenue, the Court is not persuaded that the impugned order of the ITAT suffer from any infirmity or gives rise to any substantial question of law. - Decided against revenue

Summary

Issues:
1. Delay in re-filing the appeal.
2. Characterization of the Respondent as a charitable organization and its activities under Section 2(15) of the Income Tax Act, 1961.

Analysis:
1. The judgment begins with addressing the delay in re-filing the appeal, which is condoned by the court for 37 days. This procedural aspect is efficiently dealt with in the initial part of the judgment, ensuring that the appeal can proceed despite the delay.

2. Moving on to the substantive issue, the appeal by the Revenue questions whether the Respondent, characterized as a charitable organization, can be considered as 'doing business' under the amended Section 2(15) of the Income Tax Act, 1961 for the Assessment Year 2011-2012. The Commissioner of Income Tax (Appeal) had previously negated the Revenue's contention for earlier Assessment Years, but the Income Tax Appellate Tribunal (ITAT) in the impugned order examined the matter on merits. The ITAT found that the mere receipt of fees by the Assessee during the relevant Assessment Year did not imply engagement in 'trade, commerce, or business'. Additionally, the deduction of tax at source did not automatically render the receipt as taxable income.

3. The High Court, after a thorough examination of the ITAT's order and the Revenue's arguments, concluded that the ITAT's findings were sound and did not raise any substantial question of law. The court was not convinced that the ITAT's order was flawed in any manner, leading to the dismissal of the appeal by the Revenue. This detailed analysis showcases the court's reasoning and application of legal principles in determining the matter at hand.

4. Overall, the judgment provides a comprehensive overview of the issues involved, starting from procedural aspects such as condoning the delay in re-filing the appeal to delving into the substantive legal question regarding the characterization of the Respondent as a charitable organization and its activities under the relevant provisions of the Income Tax Act. The court's meticulous examination and reasoning culminate in the dismissal of the Revenue's appeal, highlighting the thoroughness and clarity of the judicial decision-making process.