2018 (11) TMI 1891 - AT - Income Tax

Exemption u/s 11 - Proof of charitable activities u/s 2(15) - HELD THAT - AO enumerated certain activities to say that they are not charitable in nature but only commercial ones it is not established before us that these are activities that are undertaken by the assessee in the year under consideration only but neither earlier nor subsequently. There is nothing contrary to the submission on behalf of the assessee that as a matter of fact all these activities have been undertaken by the assessee right from the year 2007-08 2016 (2) TMI 1259 - DELHI HIGH COURT but merely because the AO has chosen to enumerate certain activities for certain years does not render the binding precedence applicable to the facts of the case. It is not open for us to take a different view in the absence of any compelling reasons to do so. Further the decision in the case of Devki Devi Foundation vs DCIT 2015 (4) TMI 186 - ITAT DELHI rendered by a coordinate bench of this Tribunal was in appeal before the Hon ble jurisdictional High Court 2016 (2) TMI 1259 - DELHI HIGH COURT set aside the order and restores appeal to the Tribunal for fresh decision according to law. So no reliance can be placed by the revenue on this decision which is no longer in force. In these circumstances we are of the considered opinion that the learned CIT(A) rightly followed the rule of consistency and allowed the claim of the assessee. We find no reason to interfere with the same. We accordingly uphold it. Appeal of the revenue being devoid of merit is liable to be dismissed. The appeal of the revenue is accordingly dismissed.

Summary

Issues involved:
Challenge to order disallowing exemption u/s 11(1) of the Income-tax Act for a charitable society running a hospital due to commercial activities.

Detailed Analysis:

1. Issue of Exemption u/s 11(1) of the Act:
The case involved a challenge to an order disallowing the claim of exemption u/s 11(1) of the Income-tax Act for a charitable society running a hospital. The Revenue contended that the society's activities were commercial in nature, particularly due to an agreement with a private hospital, and thus, exemption should not be allowed. The Revenue cited a judgment of a coordinate bench to support its argument.

2. Contentions of the Revenue:
The Revenue argued that the society's activities, such as rental income and agreements with commercial entities, indicated a commercial nature, justifying the denial of exemption u/s 11(1) of the Act. The Revenue highlighted clauses in agreements that allegedly compromised the charitable nature of the trust, making it subject to commercial control. The Revenue relied on the judgment of a coordinate bench to support its position.

3. Contentions of the Assessee:
The Assessee contended that the activities highlighted by the Revenue were not new and had been ongoing since the society's inception. The Assessee argued that the consistency of allowing exemption u/s 11(1) by authorities in previous years supported their claim. The Assessee also pointed out that a previous judgment cited by the Revenue had been set aside by the High Court, rendering it non-binding.

4. Judgment and Analysis:
The Tribunal analyzed the activities of the society and found that they had been consistent over the years, with exemption u/s 11(1) being allowed in previous assessments. The Tribunal noted that the Revenue failed to establish that the activities in question were specific to the year under consideration. The Tribunal upheld the rule of consistency and dismissed the Revenue's appeal, citing lack of compelling reasons to deviate from previous decisions. The Tribunal also highlighted that the cited judgment was no longer valid, as it had been set aside by the High Court.

5. Conclusion:
The Tribunal upheld the order allowing exemption u/s 11(1) of the Act for the charitable society running a hospital, based on the principle of consistency and lack of new evidence to justify a different decision. The Revenue's appeal was deemed devoid of merit and dismissed accordingly.

This detailed analysis of the judgment highlights the key arguments, legal reasoning, and the final decision regarding the challenge to the exemption u/s 11(1) of the Income-tax Act for the charitable society involved in the case.