2021 (12) TMI 705 - AT - Income Tax

Exemption u/s 11 - assessee society is registered u/s 12A and is also notified u/s 80G - Whether activities of the assessee are commercial in nature and squarely fall under the General Public Utility and hits the proviso to Section 2(15)? - assessee is engaged in imparting educating and training paramedics in the field of first aid, home nursing, hygiene safety and first-aid, fire safety, health and stress management, heart mark and care with CPR system, health management with diabetes care and Aids and Disaster management etc. - HELD THAT - It is apparent from the activities of the assessee that it is imparting First Aid training to students, schools, companies and institutions etc and in lieu thereof, charging fees from participants. We find that the receipts shown by the assessee are in the nature of fees for rendering services. These facts have not been disputed by the AO. Objects of General Public Utility do not fall under any of these specific categories explicitly included in the definition of Advancement of any other object of General Public Utility u/s 2(15) of the Act. There is no denial that the assessee society is imparting education and therefore, in our considered opinion, proviso to section 2(15) of the Act is not applicable to the assessee on the facts of the case. The undisputed fact is that the assessee has been granted exemption since past many years and the nature of activities have not changed since its inception. Therefore, we do not find any reason why the Assessing Officer has taken a different view during the year under consideration. Considering the facts of the case in totality, in light of assessment history of the assessee, we do not find any merit in the appeal of the Revenue and the same is dismissed.

Summary

Issues involved:
Revenue's grievance regarding the applicability of the proviso to Section 2(15) of the Income-tax Act, 1961 to the activities of the assessee society.

Detailed Analysis:

1. Issue of the Revenue's Grievance: The Revenue contended that the activities of the assessee society are commercial and fall under the 'General Public Utility,' invoking the proviso to Section 2(15) of the Income-tax Act, 1961. The Revenue argued that the receipts from the activities exceed the threshold and should be treated as normal business income.

2. Assessee's Activities: The assessee society is registered under Section 12A and notified under Section 80G of the Act. It is engaged in providing education and training in various paramedic fields such as first aid, home nursing, safety, and disaster management. The society conducts these programs with trained lecturers and specialists, offering education through well-documented guidelines.

3. Assessment by the Assessing Officer: The Assessing Officer assessed the income of the assessee as normal business income, denying exemption under Sections 11 and 12 of the Act. The officer believed that the activities fell under 'Advancement of any other object of public utility' as per the proviso to Section 2(15) due to commercial nature and receipts exceeding the specified limit.

4. Appeal and Contention: The assessee appealed before the CIT(A), arguing that the Revenue had previously accepted the activities as charitable. The CIT(A) granted exemption based on the precedent of the preceding year, stating that taxing the surplus or total receipts was irrelevant if exemption was allowed.

5. Judgment by ITAT: The ITAT analyzed the activities and found that the society was imparting first aid training and charging fees for services rendered. The ITAT noted that the activities of the assessee fell under the category of education, explicitly included in the definition of charitable activities under Section 2(15) of the Act.

6. Decision and Rationale: The ITAT held that the proviso to Section 2(15) was not applicable to the assessee as its activities primarily involved education. The ITAT emphasized that the nature of activities had remained consistent over the years, and there was no justification for the Assessing Officer's change in view. Considering the assessment history and totality of the case, the ITAT dismissed the Revenue's appeal, affirming the exemption granted to the assessee.

7. Final Outcome: The ITAT dismissed the appeal of the Revenue and the cross objection, which was not pressed by the assessee. Consequently, both the appeal and cross objection were dismissed by the ITAT in favor of the assessee society.

This detailed analysis of the judgment highlights the key issues, arguments, assessment, and the rationale behind the decision rendered by the ITAT in favor of the assessee society.