2023 (3) TMI 1163 - HC - Income Tax

Exemption u/s 11 - res judicata - Denial of exemption as assessee is primarily engaged in commercial activities - Scope of rule of consistency - as per AO activities carried out by the assessee during instant assessment year were not found to be covered by the limb of 'charitable purpose' as defined in section 2(15) - ITAT dismissed appeal of revenue denying the benefit of section 11 - HELD THAT - Since primary facts affecting the claim of exemption on the strength of 'charitable purpose' pursued by the assessee remained common for all Assessment Years, as were specifically examined during the assessment proceedings for A.Y. 2010-11, as have remained unaltered throughout, it is to be seen if any different view may have been taken by the revenue authorities despite application of rule of consistency as enunciated by the Supreme Court in Radhasoami Satsang vs. Commissioner of Income Tax 1991 (11) TMI 2 - SUPREME COURT Revenue has not pointed out any fact difference- of fact or in law having arisen in the Assessment Year in question. That aspect has not been pressed. Activity pursued by the assessee having remained same and it not being in dispute that the assessee was granted registration under Section 12 A of the Act which registration has also remained intact, it is not possible to allow the revenue to entertain another view in the subsequent Assessment Year solely because each Assessment Year is a separate unit. While none may successfully contend or invoke res judicata in taxation matters, at the same time, in absence of any difference of fundamental fact or law arising in subsequent Assessment Year and in face of the same dispute having been thrashed out inter partes in earlier Assessment Year and a definite opinion having been formed by the Tribunal for the same as had also attained finality and has been consistently applied in the case of the assessee itself (over different Assessment Years), which orders have also attained finality, the rule of consistency would commend that view to prevail, in all succeeding Assessment Years. Findings recorded by the Tribunal do not give rise to any substantial question of law - Decided against revenue.

Summary

Issues involved:
The issues involved in the judgment are whether the Income Tax Appellate Tribunal was justified in dismissing the appeal of the Revenue and allowing benefits under Section 11 of the Income Tax Act, 1961 without considering the commercial activities of the assessee, whether the activities carried out by the assessee were covered under the definition of 'charitable purpose,' and whether the principle of res judicata applies in income tax proceedings.

Issue 1:
The Swami Omkarananda Saraswati Charitable Trust was granted registration under Section 12A of the Income Tax Act and had been enjoying exemption under Section 11/12 of the Act since the Assessment Year 2002-03. The Tribunal found that the surplus generated by the trust in pursuit of its charitable purpose could not be taxed as profit, a view consistent with previous orders that had attained finality.

Issue 2:
The Tribunal upheld the order of the CIT (Appeals) regarding the disallowance of depreciation and the allowance of inter-organisational donations and corpus donations, relying on its earlier decision for the Assessment Year 2010-11. The Tribunal applied the rule of consistency, considering the absence of any change in law or fresh facts for the current Assessment Year.

Issue 3:
The Tribunal concluded that since the primary facts affecting the claim of exemption remained common for all Assessment Years and had been specifically examined during the assessment proceedings for the AY 2010-11, no different view could be taken by the revenue authorities. The Tribunal emphasized the importance of consistency in tax litigation to ensure predictability and certainty.

Separate Judgment:
The judgment was delivered by Hon'ble Pritinker Diwaker, Acting Chief Justice, and Hon'ble Saumitra Dayal Singh, J. The Tribunal's findings did not give rise to any substantial question of law requiring consideration by the Court, leading to the dismissal of the appeal.