2022 (7) TMI 860 - AT - Income Tax

Exemption u/s 80G - charitable activity u/s 2(15) - appellant has been serving the liquors, which emanates from the bills of seminar along with hotel bills - Whether Serving of liquor cannot be charitable activities u/s 2(15)? - HELD THAT - We are fully agree with the contention of the Ld. DR that serving of liquor is not charitable activity u/s 2(15) but the CIT (Exemption) has not mentioned the details of such activities conducted by the appellant in the order impugned. CIT(Exemption) has relied on various bills of the Appellant wherein the service of liquor has been mentioned, but the CIT(A) has not mentioned the details of clarification/reply given by the Applicant in the order impugned and not adjudicated the reply given by the Applicant. The order of the Ld.CIT(A) is non speaking one. Therefore, we deem it proper to set aside the matter to the file of the CIT(Exemption) to decide the matter afresh in accordance with law and pass appropriate speaking order. Needless to say that an opportunity of being heard be given to the Appellant herein. Accordingly, we allow the Assessee s Grounds of Appeal for statistical purpose.

Issues:
1. Rejection of application under section 80G(5)(vi) of the Income-tax Act, 1961.
2. Consideration of serving liquor as a charitable activity under section 2(15) of the IT Act.
3. Rejection of application without considering charitable activities.
4. Lack of details in the order of the Commissioner of Income Tax (Exemption).
5. Non-speaking order by the Ld. Commissioner of Income Tax (Exemption).

Analysis:
1. The appeal was filed against the order of the ld. Commissioner of Income Tax (Exemptions) for the Assessment Year 2019-20, rejecting the application under section 80G(5)(vi) of the Income-tax Act, 1961. The appellant contended that the rejection was erroneous both in law and fact.

2. The Commissioner of Income Tax (Exemption) held that the activity involving serving of liquor cannot be considered charitable under section 2(15) of the IT Act. The appellant was asked to explain how serving liquor is charitable and how the activities of the Federation qualify as charitable activities. The Commissioner concluded that the conditions for granting exemption under section 80G were not met due to the nature of the activities.

3. The appellant's reply was considered, but the Commissioner found the explanation inadequate to verify the genuineness of the charitable activities. The Commissioner emphasized that funds collected should be used for the welfare of the general public, not for personal enjoyment. The rejection was based on the lack of proper explanation and verification of charitable activities.

4. During the appeal, the Ld. DR argued that serving liquor does not qualify as a charitable activity under the IT Act. However, it was noted that the Commissioner's order lacked details on the appellant's activities and did not address the clarification provided by the appellant. The order was considered non-speaking, leading to a decision to remand the matter back to the CIT(Exemption) for a fresh decision.

5. The Tribunal agreed with the Ld. DR that serving liquor is not charitable but found the Commissioner's order lacking in details and clarity. As a result, the matter was set aside for a fresh decision, emphasizing the need for a speaking order and ensuring the appellant's right to be heard. The appeal was allowed for statistical purposes.

This detailed analysis highlights the issues raised in the appeal, the arguments presented, and the Tribunal's decision to remand the matter back for a fresh decision based on the lack of details and clarity in the original order.

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