2020 (4) TMI 614 - AT - Income Tax

Exemption u/s 11 - charitable activity u/s 2(15) - assessee has rendered services by way of conducting coaching/learning classes to the individuals in the field of sports and other related activities and charging fees thereupon which is purely in the nature of business/commerce/trade - HELD THAT - As decided in own case 2019 (5) TMI 1773 - ITAT DELHI the nature of receipts as shown in the income and expenditure account and has also been noted by the Ld. AO is flowing from the activities carried out in pursuance of the objects for which it was granted registration u/s 12AA. Assessee trust has basically has received fees from the students for value education workshop and giving coaching for the sports. Such an activity ostensibly falls within the ambit of category of education and giving coaching in sports is also one of the related activities for the overall development of the youth and the sports activities. Any fees received from such activities cannot be held to be in the nature of any trade, commerce, business activities. In this case, proviso to section 2(15) may not attract in this case, because said proviso is applicable only where a trust is carrying out advancement of any other object of general public utility and here the activities of the assessee trust falls in the realm of activities of educational and sports. Accordingly, we hold that assessee is eligible for benefit u/s 11 and 12 - Decided in favour of assessee.

Summary

Issues:
- Whether the activities of the assessee fall under business/commerce/trade, invoking the first proviso to section 2(15) of the Act?
- Whether the assessee is eligible for exemption under sections 11 and 12 of the Act based on its aims and objects as a registered society promoting education in sports and allied activities?

Analysis:
1. The appeal by the Revenue challenged the order of Ld. CIT(A) regarding the nature of the assessee's activities. The AO initially denied benefits under sections 11 & 12 to the assessee, considering the receipts from various activities as business/commerce. The AO invoked the first proviso to section 2(15) of the Act. The Ld. CIT(A) accepted the assessee's contention that it is registered to promote education in sports, directing the AO to allow exemption under section 11(1) of the Act.

2. The Revenue, represented by Ld. DR, relied on previous case laws to argue that if activities beyond the aims and objects are conducted, the proviso to section 2(15) would apply. However, the assessee's counsel highlighted a previous ITAT Delhi judgment for AY 2011-12, where the Departmental appeal was dismissed. The ITAT Delhi held that the assessee's activities aligned with its registered aims and objects of promoting education and sports, making it eligible for benefits under sections 11 and 12.

3. The ITAT Delhi emphasized the importance of consistency in income tax proceedings, stating that the decision in the assessee's favor for the preceding AY 2011-12 should guide the current judgment. The Tribunal dismissed the Departmental appeal, affirming that the assessee's activities were educational and sports-oriented, not falling under trade or commerce. The ITAT Delhi upheld the Ld. CIT(A)'s decision, granting the assessee exemption under sections 11 and 12 based on its registered objectives.

In conclusion, the ITAT Delhi dismissed the Revenue's appeal, following the precedent set in the earlier judgment for AY 2011-12, where the Departmental appeal was rejected. The Tribunal affirmed that the assessee's activities aligned with its registered objectives of promoting education in sports and youth development, making it eligible for exemptions under sections 11 and 12 of the Act.