2018 (9) TMI 958 - AT - Income Tax

Benefit of section 11 denied - activities of assessee are involved the rendering of services in relation to carrying on commercial or business activities and is clearly covered by the new proviso to section 2(15), therefore, the assessee cannot be treated to be engaged in charitable activities - Held that - We find that the CIT(A) allowed the claim of exemption u/s 11 and 12 on the ground that in the immediately preceding assessment year, CIT(A) has allowed the claim of exemption u/s 11 and the Revenue has not challenged the same. In the immediately succeeding assessment year the Assessing Officer himself has allowed the claim of exemption u/s 11 by treating the activities of the assessee as charitable in nature. No infirmity in the order of the CIT(A) since in the immediately preceding assessment year the CIT(A) has allowed the claim of exemption u/s 11 which has attained finality and the Assessing Officer himself in the subsequent assessment year has treated the activities of the assessee as charitable in nature and has allowed the claim of exemption u/s 11 therefore, the order of the ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

Summary

Issues:
1. Exemption u/s 11 and 12 of the Income Tax Act, 1961 - Commercial activities vs. charitable activities.
2. Correct computation of interest u/s 244A.

Analysis:

Issue 1: Exemption u/s 11 and 12 of the Income Tax Act, 1961 - Commercial activities vs. charitable activities:

The appeal filed by the Revenue challenged the order of the CIT(A) related to the assessment year 2012-13. The Assessing Officer denied the claim of exemption u/s 11 and 12, asserting that the activities of the assessee involved commercial aspects and were covered by the proviso to section 2(15) of the Income Tax Act. The Assessing Officer contended that the assessee was not engaged in charitable activities. However, the CIT(A) allowed the claim of exemption u/s 11 and 12, highlighting that in the preceding assessment year, the claim was allowed by the CIT(A) and not challenged by the Revenue. Moreover, in the subsequent assessment year, the Assessing Officer treated the activities of the assessee as charitable and allowed the exemption u/s 11. Consequently, the Tribunal upheld the CIT(A)'s order, dismissing the Revenue's grounds.

Issue 2: Correct computation of interest u/s 244A:

The Cross Objection filed by the assessee raised concerns about the short computation of interest u/s 244A by the Assessing Officer. The grievance was regarding the calculation of interest until the issuance of the refund instead of until the receipt of the refund. The Tribunal directed the Assessing Officer to recompute the interest u/s 244A correctly, considering the period until the receipt of the refund. The assessee was granted the opportunity to be heard during the recalculations. The ground raised by the assessee in the Cross Objection was allowed for statistical purposes.

In conclusion, the appeal filed by the Revenue was dismissed, and the Cross Objection filed by the assessee was allowed for statistical purposes. The Tribunal's order upheld the exemption claim u/s 11 and 12 for the assessee and directed the correct computation of interest u/s 244A by the Assessing Officer.