2017 (11) TMI 805 - HC - Income Tax

Exemption u/s 11 denied - charging of fee from members or non-members for rendering services like training, conducting seminars - Held 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. Also, the activities of the assessee are benefiting the public at large at submitted by the Ld. Counsel for 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 in ITPO Case (2015 (1) TMI 928 - DELHI HIGH COURT) as well as Andhra Pradesh Chamber of Commerce (1964 (10) TMI 19 - SUPREME Court ) 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. No substantial question of law - Decided against revenue

Summary

Issues involved:
1. Exemption under Section 2(15) of the Income Tax Act for a non-profit association.
2. Interpretation of the dominant object test for charitable activities.
3. Application of relevant case laws in determining tax exemption eligibility.

Detailed Analysis:
1. The main issue in this case was the exemption under Section 2(15) of the Income Tax Act for a non-profit association engaged in charitable activities. The Assessing Officer (AO) disallowed the exemption for the assessee for the assessment years 2010-11 and 2011-12, citing the amendment of 2009 and the receipt of registration charges for seminars/workshops as grounds. The AO's decision was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)), leading the assessee to approach the Income Tax Appellate Tribunal (ITAT). The ITAT, considering the relevant amendments and case laws, held that the denial of exemption was not in accordance with the law, and the additions made by the AO were deleted.

2. The interpretation of the dominant object test for charitable activities was crucial in this judgment. The ITAT emphasized that charging fees for services like training and seminars does not automatically disqualify an organization from claiming exemption if the dominant object remains charitable. The ITAT highlighted that the activities of the assessee were benefiting the public at large and were only incidental to its main charitable purpose. The tribunal referred to various case laws, including the decision of the Delhi High Court in India Trade Promotion Organization v. Director General of Income Tax, to support its conclusion that the denial of exemption was unwarranted.

3. The application of relevant case laws played a significant role in determining the tax exemption eligibility of the assessee. The ITAT considered precedents like Surat Art Silk Cloth Manufacturers Association and CIT v. Andhra Chamber of Commerce to establish that the denial of exemption was not justified. The court, after reviewing the entire circumstances and the correct application of relevant case laws by the ITAT, concluded that no substantial question of law arose. The court dismissed the appeals, emphasizing that the questions regarding the application of income not exempt under Section 11 were not relevant to the present case.

Overall, the judgment focused on the correct interpretation of the law regarding tax exemption for non-profit associations engaged in charitable activities, emphasizing the importance of the dominant object test and the application of relevant case laws in determining eligibility for exemption under the Income Tax Act.