2018 (5) TMI 1090 - AT - Income Tax

Exemption u/s 11 - whether assessee performs a charitable purposes within the meaning of proviso to section 2(15) as providing sports facilities - Held that - Respectfully following the decision of Hon ble Bombay High Court in assessee s own case for assessment year 2003-04 2012 (4) TMI 214 - BOMBAY HIGH COURT as held that providing sports facilities to general public without restriction of any caste, creed, religion or profession is eligible for exemption under section 11. Thus we are of the considered view that the assessee is eligible for exemption under section 11 of the Income Tax Act, 1961. Therefore, we direct the AO to allow the benefit of exemption under section 11 of the Income Tax Act, 1961. - Decided in favour of assessee

Summary

Issues Involved:
1. Whether the assessee performs charitable purposes within the meaning of proviso to section 2(15) of the Income Tax Act, 1961.
2. Whether the activities of the assessee fall within the definition of "Charitable purpose" as per Section 2(15) of the Income Tax Act, 1961.
3. Whether the Ld CIT(A) erred in relying upon previous orders and judgments without appreciating the pending appeals before the Hon'ble Supreme Court.

Analysis:

Issue 1:
The Revenue challenged the Ld. CIT(A)'s decision on whether the assessee performs charitable purposes within the meaning of the Income Tax Act. The AO observed that the assessee's main object is to impart physical education through various sports disciplines. The assessee claimed exemption under section 11 of the Act, arguing that ITAT had granted exemption for earlier years. The AO, however, denied the exemption for the current year. The Ld. CIT(A) directed the AO to allow the benefit of exemption under section 11, citing consistent decisions in favor of the assessee in previous years.

Issue 2:
The Ld. CIT(A) was criticized for directing the AO to allow exemption under section 11 to the assessee, despite arguments that the activities were akin to those of a mutual association and did not meet the definition of charitable purposes. The assessee contended that previous ITAT and High Court decisions supported their claim for exemption under section 11. The ITAT upheld the CIT(A)'s order, emphasizing that the activities of the assessee, providing sports facilities to the general public without restrictions, qualified for exemption under section 11.

Issue 3:
The Ld. CIT(A) was accused of relying on previous orders and judgments without considering pending appeals before the Supreme Court. The Revenue argued against granting exemption under section 11, questioning the charitable nature of the assessee's activities. However, the ITAT and the High Court's decisions in the assessee's favor, based on the provision of sports facilities to the public, supported the grant of exemption under section 11. The ITAT dismissed the Revenue's appeal, affirming the eligibility of the assessee for exemption under the Income Tax Act.

In conclusion, the ITAT upheld the Ld. CIT(A)'s decision, allowing the benefit of exemption under section 11 to the assessee based on the charitable nature of the activities, as supported by previous judicial decisions. The consistent rulings in favor of the assessee for providing sports facilities to the general public without restrictions justified the grant of exemption under the Income Tax Act.