2022 (11) TMI 1253 - AT - Income Tax

Benefit of exemption u/s 11 - society or trust draws its inspiration for certain charitable activities from religious tenents - Claim denied as activities carried out by the society during the instant assessment year were not found to be covered by any limb of charitable purpose as defined in section 2 (15) - CIT-A allowed the exemption - HELD THAT - As decided in own case 2018 (3) TMI 1903 - ITAT DELHI imparting of education in theology, of the nature given in the New Theological College, is very much an education within the meaning of education as defined by the Hon'ble Supreme Court in the case of Sole Trustee LokShikshan Trust 1975 (8) TMI 1 - SUPREME COURT and which would entitle an institution to claim exemption under the beneficial provisions of the Income Tax Act. It also flows that merely because a society or trust draws its inspiration for certain charitable activities from religious tenents, as long as charitable activities of the society are not confined to the benefit of any particular community, it is entitled to exemption u/s 11 of the Income Tax Act. In the present case of the assessee, while the donors to the society may have been giving to it in the belief that they were propagating and promoting Christianity, the society itself has confined its activities to the aims and objectives laid down in the Memorandum of Association in as much as in Theology can be described as vocational training and the school, run by it, impart a secular education. Accordingly, merely because it bears its activities on the basis of a religious calling, there is no reason to hold that section 13 (1) (b) of the Income Tax Act would be attracted to it. Therefore, in considered opinion, the assessee society is eligible to claim exemption u/s 11 of the Income Tax Act. - Decided against revenue.

Summary

Issues:
- Whether the assessee is entitled to exemption under Section 11 of the Income Tax Act for the assessment years 2014-15 & 2016-17 based on the charitable purpose of its activities.

Analysis:
1. The case involved appeals by the assessee against the order of the ld. CIT (Appeals) for the assessment years 2014-15 & 2016-17. The primary issue was whether the activities of the assessee society qualified as charitable purposes under Section 2(15) of the IT Act, thus entitling it to exemption under Section 11 of the Act.

2. The assessee, a Society registered under the Societies Act and Section 12AA of the Act, was engaged in educational activities in Uttarakhand and Western UP. The Assessing Officer (AO) disallowed the exemption claimed by the assessee under Section 11, stating that the activities were for the benefit of a particular community and not charitable in nature as per Section 2(15) of the Act. The AO determined a loss for the assessee, which was contested in an appeal before the ld. CIT (Appeals).

3. The ld. CIT (Appeals) allowed the appeal of the assessee, emphasizing that the society's activities were not aimed at serving a particular religious community. The society was found to be imparting secular education without discrimination based on religion, caste, or creed. The CIT (A) referred to various legal precedents to support the contention that educational activities, even in theology, could be considered charitable and qualify for exemption under Section 11.

4. The Tribunal, after considering the arguments of both parties and reviewing the orders of lower authorities, upheld the decision of the ld. CIT (Appeals) based on previous judgments in the assessee's own case for assessment years 2009-10 and 2011-12. The Tribunal found that the society was eligible for exemption under Section 11 of the Act, as its activities were not restricted to benefitting a particular community but aligned with the objectives laid down in its Memorandum of Association.

5. The Tribunal dismissed the Revenue's appeal, stating that the issue had already been decided in favor of the assessee by a coordinate bench in previous assessment years. The Tribunal found no reason to differ from the earlier decision, as the facts and circumstances remained the same. Consequently, the appeals filed by the Revenue were dismissed, affirming the assessee's entitlement to exemption under Section 11 of the Income Tax Act for the relevant assessment years.