2019 (1) TMI 1890 - AT - Income Tax

Exemption u/s 11 - charitable activity u/s 2(15) - whether assesses has violated the provisions of Section 11(5) of the Act and that provisions of Section 13(1)(d) of the Act were applicable? - HELD THAT - We find that the Tribunal 2017 (11) TMI 1707 - ITAT AHMEDABAD has allowed appeal of the assessee and held that it is to be treated as charitable institution, which is entitled for exemption under sections 11 and 12. Its income has to be determined accordingly. Since very basic for determination of assessee s taxable income has been changed, therefore, all consequential issues were to be examined by the AO while giving effect to order of the Tribunal. The issues agitated in the CO are no more relevant and no specific finding is required to be recorded in the present proceedings. All these things should be taken care of by the AO while passing fresh assessment order in pursuance of the Tribunal s order in the appeal of the assessee. Status of the assessee has been changed. It is to be treated as a charitable institution and its income is accordingly to be determined. Thus, no fresh directions are required to be issued to the AO, more so, the issues agitated in the CO are being not arisen from the assessment order. Hence, there is no force in the grounds taken in the CO. Cross Objection of the Revenue is dismissed.

Summary

Issues:
1. Appeal against order of ld.CIT(A) for Asstt.Year 2012-13
2. Cross objections filed by Revenue against the impugned order
3. Applicability of proviso to s.2(15) for charitable institution status

Analysis:

1. The assessee filed an appeal against the order of ld.CIT(A) for the Asstt.Year 2012-13. The Revenue also filed cross objections against the impugned order. The Tribunal decided both appeals and cross appeals of the parties for the Asstt.Year 2013-14. However, the cross objection of the Revenue filed in the Asstt.Year 2012-13 remained unadjudicated as it was not brought to the notice of the Tribunal.

2. The Revenue raised grounds in the cross objections related to the violation of provisions of Section 11(5) and Section 13(1)(d) of the Act by the assessee. The Tribunal found that the assessee is to be treated as a charitable institution eligible for exemption under sections 11 and 12. The Tribunal upheld the claim of the assessee that its activities were for charitable purposes. The Hon'ble Jurisdictional High Court also supported this view, stating that the assessee's activities were not commercial in nature.

3. The core issue in controversy was the applicability of the proviso to s.2(15) for determining the charitable status of the institution. The Tribunal found that the activities carried out by the assessee were for charitable purposes and fell within the definition of 'charitable purpose' under s.2(15) of the Act. The Tribunal endorsed that the activities of the assessee were of charitable nature and required re-examination of all other issues raised in the appeals of both the assessee and the Revenue.

4. The Tribunal directed the Assessing Officer to re-examine all other issues in the light of the conclusion drawn in favor of the assessee regarding the applicability of section 2(15) of the Act. The status of the assessee was changed to that of a charitable institution, and its income was to be determined accordingly. Therefore, the issues raised in the cross objections were deemed irrelevant, and no specific finding was required in the present proceedings. The Tribunal dismissed the Cross Objection of the Revenue.

5. In conclusion, the Tribunal dismissed the Cross Objection of the Revenue, stating that all consequential issues should be examined by the Assessing Officer while giving effect to the Tribunal's order. The assessee was recognized as a charitable institution eligible for exemption under sections 11 and 12, and its income was to be determined accordingly.

(Order pronounced on 9th January, 2019 at Ahmedabad)