2020 (12) TMI 1200 - AT - Income Tax

Exemption u/s 10(23C)(iv) denied - activities of the assessee Trust as hit by the proviso to section 2(15) - according to AO assessee s activities of providing food and beverages, accommodation against which charges are made from the members and non-members constitute commercial activities and therefore according to the AO the activities of the assessee Trust are not governed by the proviso to section 10(23C)(iv) - HELD THAT - We have gone through the record in the light of the submissions made on either side. Record reveals that the main reasons of denying exemption u/s 10(23C)(iv) of the Income Tax Act by the learned Assessing Officer is that the activities of the assessee Trust are hit by the proviso to section 2(15) and according to the learned Assessing Officer, assessee s activities of providing food and beverages, accommodation against which charges are made from the members and non-members constitute commercial activities and therefore according to the Assessing Officer, the activities of the assessee Trust are not governed by the proviso to section 10(23C)(iv) of the Act. Ld. Assessing Officer has also noted that although the assessee claims that it is working on no profit and no loss basis , yet the income and expenditure account of the assessee Trust reveals that it earning surplus year after year. Reasons for denying the exemption by the learned Assessing Officer in 2013-14 and 2014-15 or identical to the reasons recorded for earlier years, namely, Assessment Year 2009-10 by the learned DIT in his order u/s 263 of the Income Tax Act and thereafter, on the identical grounds and by making similar observations the exemption has been denied. It is also not in dispute that the order u/s 263 for the Assessment Year 2009-10 was quashed by a coordinate Bench of this Tribunal 2015 (5) TMI 515 - ITAT DELHI wherein it was held that the activities of the Trust of providing accommodation and food and beverages etc. does not constitute commercial activities and activities of the Trust are not hit by any proviso to section 2(15) of the Act. There is no denial of the fact contended by the Ld. AR that though Revenue carried the matter in appeal to the Hon ble Delhi High Court, such an appeal was dismissed by Hon ble High Court. Further there is no denial of the contention of the assessee that the order of the Tribunal for the Assessment Year 2009- 10 was followed another Bench of this Tribunal in Assessment Year 2011-12 2017 (10) TMI 1410 - ITAT DELHI against which the Revenue challenged before dismissed by Hon ble Supreme Court in SLP due to low tax effect.

Summary

Issues:
Challenging orders of CIT(A) for assessment years 2013-14 and 2014-15, Revenue appealed on identical grounds regarding exemption u/s 10(23C)(iv).

Analysis:
The assessee, an institution engaged in cultural and intellectual activities, claimed exemption u/s 10(23C)(iv) for income from other sources. The Assessing Officer found the activities partly covered by this provision and partly by the principle of mutuality. The AO denied exemption, citing that all activities must be seen in totality, and observed a lack of complete identity between contributors and participators. The AO invoked provisions of Section 2(15) and Section 143(3), holding that services provided were commercial. The CIT(A) granted relief based on earlier orders in the assessee's favor.

The Revenue contended that the activities were commercial, not charitable, and fell outside Section 2(15)'s purview. They argued that being notified u/s 10(23C)(iv) didn't automatically grant exemption, especially for profit-generating activities. The AR argued that the CIT(A) correctly followed previous judgments without any change in facts or law.

The Tribunal reviewed the record and noted the Assessing Officer's reasons for denying exemption under Section 10(23C)(iv). Previous orders regarding similar activities were cited, where the Tribunal and High Court ruled in favor of the assessee. The Tribunal found no illegality in the CIT(A)'s orders and dismissed the Revenue's appeals, confirming the earlier findings.

In conclusion, the Tribunal upheld the CIT(A)'s decision, considering the consistency of previous judgments in the assessee's favor. The Revenue's appeals were dismissed, and the orders were pronounced in open court on 30/12/2020.