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2021 (7) TMI 936 - AT - Income TaxExemption u/s. 11 12 - Charitable activity u/s 2(15) - HELD THAT - Mere circumstances of collection of such amounts did not results in the assessee losing their essential character of being established for charitable purpose and held that since the case if similar to those for the earlier assessment year, respectfully following the decision of Hon'ble Delhi High Court 2016 (12) TMI 1860 - DELHI HIGH COURT and Hon'ble ITAT (Delhi) in Appellant's own case for AY 2009-10 2016 (5) TMI 38 - ITAT DELHI Assessing Officer was directed to allow exemption with all consequential benefits. Appeal filed by the Revenue is dismissed.
Issues:
1. Allowance of exemption u/s. 11 & 12 of the Income Tax Act, 1961 2. Deletion of total addition made by the AO in the assessment order 3. Interpretation of section 2(15) of the Income Tax Act Analysis: Issue 1: Allowance of exemption u/s. 11 & 12 of the Income Tax Act, 1961 The appeal filed by the Revenue challenged the order of the Ld. CIT(A) granting exemption u/s. 11 & 12 to the assessee. The Revenue contended that the activities of the assessee were in the nature of trade, commerce, or business, and hence, the exemption should not be available as the receipts exceeded the monetary limit prescribed in the proviso to section 2(15). The assessee, Quality Council of India, argued that it operated as a non-profit entity with no profit motive. The Ld. CIT(A) ruled in favor of the assessee, holding that the QCI activities fell under charitable purposes u/s. 2(15) of the Income Tax Act. The Ld. CIT(A) relied on previous judgments in the appellant's own case and directed the Assessing Officer to allow exemption with all consequential benefits for the relevant assessment years. Issue 2: Deletion of total addition made by the AO in the assessment order The AO had made a total addition of &8377; 6,20,24,427/- in the assessment order, which was subsequently deleted by the Ld. CIT(A). The Ld. CIT(A) examined the nature of the receipts and expenditures of the assessee and concluded that the activities of the Quality Council of India were in line with charitable purposes as defined under the Income Tax Act. The Ld. CIT(A) provided detailed reasoning for granting relief to the assessee and cited previous judgments in support of the decision. Issue 3: Interpretation of section 2(15) of the Income Tax Act The interpretation of section 2(15) of the Income Tax Act was a crucial aspect of this case. The proviso to section 2(15) specifies that the advancement of any object of general public utility shall not be considered charitable if it involves activities in the nature of trade, commerce, or business. The assessee contended that its activities did not have a profit motive and were not business activities. The Ld. CIT(A) agreed with the assessee's position, emphasizing that the QCI activities aligned with charitable purposes and were eligible for exemption under the Income Tax Act. In conclusion, the Appellate Tribunal upheld the decision of the Ld. CIT(A) and dismissed the appeal filed by the Revenue. The Tribunal found that the Ld. CIT(A) had provided a detailed and reasoned order, supported by previous judgments in the assessee's own case. The judgment highlighted the importance of determining whether activities qualify as charitable under the provisions of the Income Tax Act, emphasizing the need to assess the nature and purpose of the organization's operations in granting exemptions.
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