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2017 (3) TMI 1334 - AT - Income TaxDenial of exemption under section 11(1) - non charitable activity - adding the income received towards the corpus fund -addition of voluntary contributions and training programme fee which was not received by the appellant - Held that - We agree with the submissions made by the assessee that mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption. The dominant object of the assessee remains charitable and the aforesaid activities are only incidental to the main activity of the assessee. The activities of the assessee are benefiting the public at large at submitted by the assessee. Furthermore, it is not the case of the department that any change in objects had taken place in the relevant year so as to take the assessee outside the ambit of section 2(15). The effect of the amendment has been discussed elaborately by the Hon ble Delhi High Court in ITPO Case (2015 (1) TMI 928 - DELHI HIGH COURT) as well Andhra Pradesh Chamber of Commerce (1964 (10) TMI 19 - SUPREME Court ) wherein held the expression object of general public utility would not necessarily mean that the object should be to benefit the whole of mankind and the test of dominant object has not been altered even after the said amendment. We therefore hold that the denial of exemption under section 11 and 12 in the case of the assessee is not in accordance with law and accordingly the additions made by the AO and confirmed by the CIT(A) are deleted. - Decided in favour of assessee
Issues Involved:
1. Legality of the order passed by the Ld. CIT(A). 2. Opportunity of being heard provided to the appellant by the AO. 3. Denial of exemption under section 11(1) of the Income Tax Act, 1961. 4. Addition of income received towards the corpus fund exempt under section 11(1)(d). 5. Addition of voluntary contributions and training program fees not received by the appellant. Detailed Analysis: 1. Legality of the Order Passed by Ld. CIT(A): The Assessee challenged the legality of the order passed by the Ld. CIT(A), asserting that the order was "bad in law." The Tribunal found that the CIT(A) had partly allowed the appeal of the Assessee by deleting an addition of ?10,57,458/-. However, the CIT(A) confirmed the AO's action regarding the denial of exemptions under sections 11 and 12 of the Act. 2. Opportunity of Being Heard: The Assessee contended that no proper opportunity of being heard was provided by the AO. The Tribunal did not find any specific discussion or evidence in the judgment that directly addressed this contention. Therefore, the issue of whether the Assessee was given a proper opportunity to be heard remains unclear from the judgment. 3. Denial of Exemption Under Section 11(1): The AO denied exemptions under sections 11 and 12, arguing that the Assessee's activities were in the nature of trade, commerce, or business, thus falling outside the scope of "charitable purpose" as defined in section 2(15) post the 2009 amendment. The Tribunal, however, noted that neither the AO nor the CIT(A) pointed out any specific object violated by the Assessee. The Tribunal referred to the judgment of the Hon’ble Delhi High Court in the case of India Trade Promotion Organization Vs. Director General of Income Tax (Exemptions), which held that charging fees for services does not alter the charitable nature of an institution if the dominant objective remains charitable. 4. Addition of Income Received Towards the Corpus Fund: The AO added funds received towards the corpus, which the Assessee claimed were exempt under section 11(1)(d). The Tribunal found that the AO and CIT(A) failed to demonstrate any violation of section 11, 12, or 13 by the Assessee. The Tribunal held that the dominant objective of the Assessee remained charitable and that the activities were incidental to the main charitable purpose. 5. Addition of Voluntary Contributions and Training Program Fees: The AO added voluntary contributions and training program fees to the Assessee's income, which the Assessee argued were not received. The Tribunal found that the Assessee's activities, including charging fees for seminars and training, were incidental to its main charitable objective. The Tribunal emphasized that the dominant purpose of the Assessee was to promote agriculture and improve soil fertility, benefiting the public at large. Conclusion: The Tribunal concluded that the denial of exemption under sections 11 and 12 was not justified. The Assessee's activities were found to be charitable, and the additions made by the AO were deleted. The appeal of the Assessee was allowed, and the order of the CIT(A) was overturned to the extent it denied exemptions under sections 11 and 12. The Tribunal's decision emphasized the importance of the dominant objective test in determining the charitable nature of an institution's activities.
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