2021 (1) TMI 415 - HC - Income Tax

Exemption u/s 11 - Appeal admitted on the following substantial questions of law - whether the assessee is covered under the proviso to Section 2(15) of the Act i.e. the advancement of any other object of general public utility ? - Tribunal justification in holding that predominant object of the assessee Trust are to provide practical and theoretical training in the field of 'yoga, which would ultimately provide medical relief to the society' at large - whether Appellate Tribunal was justified in allowing the exemption under section 11 and 12 of the Act for remaining income which is not forfeited for exemption without appreciating that once the provisions of section 13(3) are applicable the assessee would not eligible for the benefit of exemption under section 11 and 12 of the Act? - ITAT allowing donation, corpus donation AND Loss on sale of asset as application of income

Issues:
1. Interpretation of Sections 11 and 12 for the assessee Trust.
2. Classification of 'yoga' as a charitable activity.
3. Eligibility for exemption under Sections 11 and 12 in relation to section 13(3).
4. Application of income and corpus donation under section 2(15) rws 13(8).
5. Allowance of loss on the sale of assets under section 2(15) rws 13(8).

Analysis:
1. The first issue pertains to the interpretation of Sections 11 and 12 for the assessee Trust. The substantial question of law revolves around whether the Appellate Tribunal was justified in allowing the benefit of Sections 11 and 12 to the assessee, considering the proviso to Section 2(15) of the Act. The Tribunal's decision in this regard is being challenged by the Revenue.

2. The second issue involves the classification of 'yoga' as a charitable activity. The Appellate Tribunal's decision to hold that the predominant object of the assessee Trust is to provide training in yoga for medical relief to society is under scrutiny. The question arises as to whether 'yoga' can be considered a charitable activity, especially concerning its inclusion in Section 2(15) of the Income Tax Act from a specific date.

3. Moving on to the third issue, it concerns the eligibility for exemption under Sections 11 and 12 in relation to section 13(3). The Appellate Tribunal's decision to allow exemption for remaining income not forfeited is being contested, with the argument that once section 13(3) applies, the assessee would no longer be eligible for the benefit of exemption under Sections 11 and 12.

4. The fourth issue relates to the application of income and corpus donation under section 2(15) rws 13(8). The Tribunal's decision to allow a significant application of income and corpus donation is being questioned, particularly in light of the provisions of section 2(15) read with section 13(8) of the Act.

5. Lastly, the fifth issue concerns the allowance of a loss on the sale of assets under section 2(15) rws 13(8). The Tribunal's decision to permit the loss on the sale of assets is being challenged, with the argument that the assessee falls under the provisions of section 2(15) read with section 13(8) of the Act, which may impact such allowances.

Overall, the judgment involves a detailed analysis of various legal and factual aspects concerning the interpretation of relevant sections of the Income Tax Act and the applicability of exemptions and benefits to the assessee Trust. The decision of the Appellate Tribunal is being scrutinized on multiple grounds, highlighting the complexity and significance of the issues at hand.

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