ITO Vs Indian National Theatre Trust (ITAT Delhi)
Hiring of Auditorium Not a Commercial Activity: ITAT Delhi Upholds Section 11–12 Exemption for Theatre Trust
The Delhi ITAT “C” Bench, in ITO v. Indian National Theatre Trust (ITA No. 4881/Del/2025, AY 2017-18; order pronounced on 29.12.2026), has dismissed the Revenue’s appeal and upheld the grant of exemption u/s 11 & 12 to the Assessee-trust, notwithstanding receipts from hiring out an auditorium and providing space on rent.
The Revenue contended that the Assessee was predominantly engaged in commercial activities of renting auditorium space and, therefore, the first proviso to section 2(15) was attracted, disentitling it from charitable exemption. It was further argued that the CIT(A) erred in relying on the principle of consistency, as res judicata does not apply to income-tax proceedings.
Rejecting the Revenue’s plea, the Tribunal noted that the very same issue stood conclusively decided in favour of the Assessee in earlier years. The co-ordinate Bench of the ITAT, in Assessee’s own case for AYs 1986-87 to 1988-89, had allowed exemption, and the said view was subsequently affirmed by the Hon’ble Delhi High Court while dismissing the Revenue’s appeals. The Department fairly conceded that the issue was covered against it.
Respectfully following the binding precedents of the jurisdictional High Court and earlier ITAT orders in the Assessee’s own case, the Tribunal held that income from hiring of auditorium and allied facilities did not alter the charitable character of the trust. Consequently, the Revenue’s appeal was dismissed and exemption u/s 11 & 12 was sustained.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the Revenue is directed against the order of the Ld. CIT(A), Delhi dated 18.06.2025 pertaining to A.Y 2017-18.
