2021 (12) TMI 872 - AT - Income Tax

Exemption u/s 11 and 12 - denial of exemption as the receipts of income in relation to hiring of auditorium and conference hall and running of Hostel/canteen activities are in the nature of business receipts and thus, would fall outside the ambit of expression charitable purpose contemplated u/s. 2(15) - HELD THAT - The issue is squarely covered in favour of the assessee. On a broader reckoning, it was held by the coordinate bench that the aforesaid income of the trust is incidental to attainment of the main objects of the trust that is to establish, maintain and conduct one or more National or International Youth Centers in India for the benefit of foreign students and youth delegations as well as individuals visiting India which activity has been recognized as charitable activity and the registration has been granted to the assessee by the Income Tax Department. The issue having been decided in favour of the assessee in identical facts situation in the earlier years, we do not see any reason to depart there from. We thus, see no merit in the appeal of the Revenue.

Summary

Issues involved:
Revenue's appeal against CIT(A)'s orders for assessment years 2013-14 & 2014-15 regarding denial of exemption under sections 11 and 12.

Analysis:
1. The appeals were filed by the Revenue challenging the CIT(A)'s orders concerning the denial of exemption under sections 11 and 12 for the assessment years 2013-14 & 2014-15. The Assessing Officer treated the income from hostel/canteen activities and auditorium/conference hall bookings as commercial, denying the exemption claimed by the trust under section 11 of the Act.

2. The CIT(A) reversed the AO's decision and allowed the exemption, stating that the trust's activities were charitable in nature and essential for achieving its main objectives. The CIT(A) referred to previous years' orders and decisions by the ITAT and the Delhi High Court that supported the trust's claim for exemption under section 11.

3. The Revenue appealed to the Tribunal, arguing that the trust's income was commercial and not related to charitable activities, contrary to the Act's provisions. The Tribunal, after considering both parties' submissions, upheld the CIT(A)'s decision, stating that the issue was settled in favor of the assessee based on previous judgments and the trust's charitable objectives.

4. The Tribunal found that the trust's income was incidental to its main charitable objectives of establishing and maintaining youth centers, which were recognized as charitable activities by the Income Tax Department. The Tribunal noted that the issue had been consistently decided in favor of the assessee in previous years, and there was no reason to deviate from that precedent.

5. Consequently, the Tribunal dismissed the Revenue's appeal for both assessment years 2013-14 & 2014-15, as the trust's activities were deemed charitable, and the exemption under sections 11 and 12 was allowed. The Tribunal held that the Revenue's arguments did not merit interference with the CIT(A)'s orders, as the trust's income was deemed to further its charitable objectives.

6. In conclusion, the Tribunal upheld the CIT(A)'s decision to grant exemption to the trust under sections 11 and 12, dismissing the Revenue's appeals for both assessment years. The judgment was pronounced on 07/12/2021.