2020 (6) TMI 525 - AT - Income Tax

Exemption u/s 11 - receipts of the assessee like interest, rent receipt and lease receipt of commercial land are not charitable in nature - HELD THAT - We find in the facts of the present case the Assessing Officer has misdirected himself in understanding the word development as akin to activities of development boards, etc. We find that no specific instance of establishing identical facts has been brought on record by the Assessing Officer and even in the present appeal, no fact or instance supporting the claim of near similarity of facts with either Jammu Development Board, etc., or HUDA, PUDA, etc., has been brought to our notice by the Revenue. On the contrary, we find that there was no similarity of activity with M/s. Jammu Development Authority, namely, developmental activities like that of a real estate builder, etc. Thus, the reliance placed thereon by the Revenue has to be discarded. Whether the expenses incurred and the receipts received by the assessee specifically from the light and sound show and maintenance of museum, etc., can be said to arise from the activities of the assessee which can be said to be covered under section 2(15)? - HELD THAT - International Conventions to which Indian is a signatory in the context of the activities found discussed in the respective orders along with the contextual background wherein the assessee functions, we hold that the assessee has been formed for the objects falling within the four corners of the main clause of section 2(15) of the Act. We have seen that the activities undertaken by the assessee were unlike those undertaken by M/s. Jammu Development Authority. This issue, we have addressed at length in the earlier part of this order. The activities undertaken by the present assessee like light and sound show, present security service charges for preserving and maintaining/upgradation and maintenance of Krishna Museum expenditure of celebration of Geeta Jayanti, etc., are all relatable activities commensurate with its aims and objects involving no activity in the nature of trade, commerce or business. Thus, for the detailed reasons set out hereinabove, we are of the view that in the absence of any fact, instance or example on record to show that the activities of the trust are commercial ventures, we find no good reason to vary the conclusion drawn. - Decided against revenue.

Summary

Issues Involved:
1. Deletion of addition amounting to ?4,93,67,440 on the grounds that the assessee's receipts were not charitable in nature.
2. Deletion of addition amounting to ?4,93,67,440 on the grounds that the assessee's expenses were not charitable in nature.
3. Whether the activities of the assessee fall under section 2(15) of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Deletion of Addition Based on Receipts Not Being Charitable
The Revenue challenged the deletion of the addition of ?4,93,67,440, arguing that the assessee's receipts like interest, rent, and lease receipts of commercial land were not charitable in nature. The Assessing Officer compared the assessee with other development boards whose activities were commercial and thus not covered under section 2(15) of the Income-tax Act. However, the Commissioner of Income-tax (Appeals) found that the assessee's activities, such as maintaining historical places and providing facilities for tourists/pilgrims, were charitable and aligned with the trust's aims and objects. The Tribunal upheld this view, noting that no evidence was provided to support the assertion that these activities were commercial.

Issue 2: Deletion of Addition Based on Expenses Not Being Charitable
The Revenue also contested the deletion of the addition on the grounds that the assessee's expenses, including light and sound show security service charges, upgradation of Krishna Museum, and expenditure on Geeta Jayanti celebration, were not charitable. The Commissioner of Income-tax (Appeals) held that these expenses were in line with the trust's objectives to provide facilities to tourists/pilgrims and maintain historical places. The Tribunal agreed, emphasizing that the assessee's activities were not driven by profit motives and were primarily funded by government grants.

Issue 3: Applicability of Section 2(15) of the Income-tax Act
The Revenue argued that the assessee's activities did not qualify as charitable under section 2(15) of the Income-tax Act. The Assessing Officer had previously denied exemption under section 11, citing that the assessee's activities were similar to those of real estate builders and lacked charitable intent. However, the Commissioner of Income-tax (Appeals) and the Tribunal found that the assessee's activities were indeed charitable, focusing on the preservation of cultural heritage and providing public utility services without profit motives. The Tribunal noted that the assessee's registration under section 12A was intact and no proceedings for its cancellation were pending, distinguishing the case from the Jammu Development Authority, where such registration was canceled.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the Commissioner of Income-tax (Appeals)'s decision to delete the addition of ?4,93,67,440. The Tribunal found that the assessee's activities were charitable in nature, aligned with the aims and objectives of the trust, and did not involve any commercial ventures. The decision was based on a thorough examination of the facts, submissions, and relevant legal provisions, affirming the charitable status of the assessee's activities under section 2(15) of the Income-tax Act.