2021 (7) TMI 19 - AT - Income Tax

Exemption u/s 11 - Denial of exemption disputing the charitable nature of activities carried out by the assessee in terms of section 2(15) - AO was of the opinion that assessee is primarily engaged in the activity of development and sale of property and same is in the nature of business and hit by proviso to section 2(15) - CIT-A allowed deduction - HELD THAT - CIT (A), after taking note of decision of the Coordinate Bench of this Tribunal, in assessee s own case 2014 (8) TMI 305 - ITAT DELHI and other orders passed in the case of other development authorities with similar objects allowed the claim of exemption u/s 11 by holding that assessee-authority is a charitable organization and not hit by proviso to section 2(15). We are of the considered view the assessee-authority is carrying out charitable activities with object of general public utility in accordance with section 2(15) of the Act and the same cannot be termed as commercial or of business nature for the purpose of proviso to section 2(15) of the Act. Accordingly, we find no reason to interfere with the order of the Ld. CIT (A) allowing benefit of application and exemption u/s 11 of the Act. - Decided against revenue.

Summary

Issues:
Department's appeal against CIT (A)'s orders for AY 2013-14 and 2014-15 regarding exemption u/s 11 of the Income Tax Act, 1961.

Analysis:
1. The Department appealed against the CIT (A)'s orders for AY 2013-14 and 2014-15 concerning the exemption u/s 11 of the Income Tax Act, 1961. The Department disputed the charitable nature of the activities carried out by the assessee, a Development Authority set up by the Uttar Pradesh Government. The assessing officer disallowed the claim of exemption u/s 11 and made additions to the income of the assessee-authority. The CIT (A) partly allowed the appeal, upholding the addition of a specific amount transferred to the Infrastructure Development Fund while allowing the exemption u/s 11.

2. The main issue revolved around the nature of activities conducted by the assessee-authority as per section 2(15) and the validity of the claim of exemption u/s 11. The Department contended that the activities were commercial and did not meet the charitable purpose criteria. Conversely, the assessee argued that its activities were charitable, citing previous Tribunal and High Court decisions in its favor.

3. The Tribunal examined the facts and found that the assessee's activities were not profit-oriented but aimed at the welfare of the public. The Tribunal noted that previous decisions supported the charitable nature of the assessee-authority's activities. The Tribunal upheld the CIT (A)'s decision to allow the exemption u/s 11, emphasizing that the assessing officer failed to provide new evidence to challenge the previous findings.

4. The Tribunal referenced various decisions supporting its conclusion, including cases involving different development authorities. It highlighted that the assessee's activities aligned with the definition of charitable purpose u/s 2(15) and were not commercial. The Tribunal dismissed the revenue's grounds, affirming the CIT (A)'s order granting the benefit of exemption u/s 11.

5. Consequently, the Tribunal dismissed both appeals filed by the department, affirming the CIT (A)'s decision on the exemption u/s 11 for the relevant assessment years. The order was pronounced on 30th June 2021.