2021 (4) TMI 339 - AT - Income Tax

Exemption u/s.11 - society was not a religious society and there was a violation of section 13(1)(b) - Assessee argued that assessee has been allowed exemption for all the preceding years - HELD THAT - As the provisions of section 13(1)(b) are attracted in case of charitable societies only and not in case of religious societies and hence there is no violation of section 13(1)(b) as alleged by the Assessing Officer, since this assessee is religious society. Keeping in view of the facts and circumstances of the case and respectfully following the orders of the ITAT in assessee's own case, we decline to interfere with the reasoned order of the ld. CIT(A). Appeals of the revenue are dismissed.

Summary

Issues:
Exemption u/s. 11 of the Income Tax Act, 1961 denied for violation of Section 13(1)(b) - Appeal against orders of ld. CIT(A)-40, New Delhi - Common issues in multiple assessment years - Interpretation of religious society status - Application of case laws.

Analysis:
1. The appeals were filed by the revenue challenging the denial of exemption u/s. 11 for violating Section 13(1)(b) in the assessment year 1992-93. The assessee contended that it is a religious society and not a charitable society, hence not subject to the provisions of Section 13(1)(b). The ld. CIT(A) allowed the appeal based on the continuity of exemption granted in preceding years and cited the case of CIT vs. Barkate Saifiyah Society (1995) 213 ITR 492 (Guj.) to support the decision. The Tribunal also upheld the ld. CIT(A)'s order in ITA No. 6323/Del/1995 dated 09.04.2001.

2. In subsequent years, the Assessing Officer continued to deny exemption to the assessee under Section 13(1)(b) based on the nature of the society and cited legal precedents like State of Kerala Vs. M.P. Shanti Verma Jain, 231 ITR 787 (SC) 1998 and Ghulam Mohidin Trust Vs CIT 248 ITR 587 (J&K) 2001 to support the decision.

3. The ld. CIT(A) reversed the Assessing Officer's decision for assessment years 2007-08 to 2012-13 based on earlier orders and decisions of the ITAT, allowing the appeal of the assessee consistently. The ITAT Delhi for assessment year 2010-11 referred to past decisions favoring the assessee and upheld the ld. CIT(A)'s order, emphasizing the continuity of exemption granted to the assessee.

4. The ITAT reiterated that Section 13(1)(b) applies to charitable societies and not religious societies, hence no violation was found in the case of the assessee being a religious society. Relying on past judgments and the nature of the society, the ITAT declined to interfere with the ld. CIT(A)'s reasoned order and dismissed the revenue's appeals.

5. The judgment pronounced on 24/03/2021 upheld the decisions of the ld. CIT(A) and dismissed both appeals of the revenue, emphasizing the distinction between charitable and religious societies in the context of exemption u/s. 11 of the Income Tax Act, 1961.