2018 (8) TMI 984 - HC - Income Tax

Exemption u/s 11 - Charitable activity - whether the activities of the assessee authority are covered by first and second proviso to section 2(15) of the Act and thus not entitled to exemption u/s. 11 and 12 as per provisions of section 13(8) of the Act? - Held that - as the issues involved in the present Tax Appeal/s are now not res integra and since the decision of the Division Bench of this Court is against the Department in view of the aforesaid decision in the case of the very assessee but with respect to different assessment years both the Tax Appeals deserve to be dismissed and are accordingly dismissed. - Decided against the revenue.

Summary

Issues:
1. Appeal against judgment and order of ITAT
2. Questions of law regarding ITAT's decision
3. Denial of exemptions under sections 11 and 12
4. Disallowance of certain additions made by AO
5. Treatment of receipts as revenue receipts

Analysis:
The High Court addressed the issues raised in the present Tax Appeals against the judgment and order of the Income Tax Appellate Tribunal (ITAT). The Revenue challenged the ITAT's decision on various grounds, including the justification for allowing the appeal of the assessee and directing re-adjudication by the Assessing Officer (AO) based on previous court judgments. The Court considered whether the activities of the assessee were covered by specific provisions of the Income Tax Act, leading to a denial of exemptions under sections 11 and 12. The ITAT's failure to uphold the CIT(A)'s order confirming additions made by the AO, such as denying accumulation and deduction of receivables, was also a point of contention. Additionally, the Court examined the correctness of the ITAT's decision on treating certain receipts as revenue receipts, including funds from various sources and premium on lease sale of properties.

The Court noted that the issues raised in the present Tax Appeals were previously addressed in a decision by the Division Bench of the Court in a similar case involving the same assessee. The Court observed that the earlier decision was against the Revenue and that the issues were conclusively settled. Although the decision was under appeal before the Supreme Court, with a hearing scheduled in July 2018, the Court adjourned the present Appeals to await the outcome. However, as the issues were no longer res integra and the Division Bench's decision was unfavorable to the Revenue, the Court decided to dismiss both Tax Appeals based on the precedent set by the earlier judgment in the case of the same assessee for different assessment years.

In conclusion, the High Court dismissed the Tax Appeals, upholding the decision against the Revenue based on the precedent established in a previous case involving the same assessee. The Court's decision was influenced by the settled nature of the issues and the unfavorable outcome for the Revenue in the earlier judgment by the Division Bench. The dismissal of the Appeals reflected the Court's adherence to established legal principles and interpretations of the Income Tax Act in similar cases.