2023 (5) TMI 475 - HC - Income Tax

Exemption u/s 11 and 12 - Charitable activity u/s 2(15) - HELD THAT - The proviso is suggestive of the fact that advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. A finding of the fact has been returned by the Tribunal to the effect that the assessee is not engaged in trade, commerce and business, and its dominant and prime objective is charitable in nature and, thus, the activity in which it is engaged falls within the scope and ambit of Section 2(15) of the Act. As recorded in the aforementioned order assessee is an important constituent of the Central Government a facet that perhaps lends weight to the finding returned by the Tribunal. No substantial question of law arises.

Summary

Issues involved:
The issues involved in this judgment are the condonation of delay in filing and re-filing appeals, and the question of law regarding the entitlement to exemption under Sections 11 and 12 of the Income Tax Act, 1961.

Condonation of delay:
The applications were moved on behalf of the appellant/revenue seeking condonation of delay in filing and re-filing the appeals due to a delay of 37 days in filing and 205 days in re-filing. The delay was condoned based on the reasons given in the applications, and the applications were disposed of.

Question of law - Exemption under Sections 11 and 12:
The appeals concerned Assessment Year (AY) 2013-14 and AY 2014-15, where the appellant/revenue sought to challenge the order passed by the Income Tax Appellate Tribunal. The question of law revolved around whether the respondent/assessee was entitled to exemption under Sections 11 and 12 of the Income Tax Act, 1961.
In the context of the proviso appended to Section 2(15), it was highlighted that advancement of any other object of general public utility shall not be considered a charitable purpose if it involves activities related to trade, commerce, or business for a fee or consideration. The Tribunal found that the respondent/assessee's activities were charitable in nature and fell within the scope of Section 2(15) of the Act.
The Tribunal's previous decision in the respondent/assessee's own case for AY 2009-10 supported this finding, where it was noted that the respondent/assessee, an important constituent of the Central Government, was not engaged in trade, commerce, or business primarily.
Therefore, it was concluded that no substantial question of law arose for consideration in the appeals, and the appeals were closed accordingly.