ITAT Delhi: Section 11/12 Exemption Allowed as BARC Deployment Was Pursuant to Government Policy

ACIT (E) Vs Indian Broadcasting Foundation (ITAT Delhi)

The Revenue filed appeals against the CIT(A)’s order dated 26.04.2017 for AYs 2013-14 and 2014-15. The assessee, a not-for-profit company registered under Section 12AA, had deployed Rs.15 lakh as share capital and Rs.45 lakh as share application money in Broadcast Audience Research Council (BARC) for AY 2013-14. In AY 2014-15, a further Rs.2.40 crore was deployed as share application money. The amounts were subsequently refunded to the assessee in FY 2015-16.

BARC had been promoted by the assessee in accordance with Central Government policy of the Ministry of Information and Broadcasting and Telecom Regulatory Authority of India (TRAI) recommendations. BARC was established as a not-for-profit company to conduct television audience research.

The Assessing Officer denied exemption under Sections 11 and 12 by invoking Section 13(1)(d), holding that the BARC transactions violated the investment requirements under Section 11(5). The CIT(A) reversed the finding, holding that the amounts deployed pursuant to Central Government policy and TRAI recommendations were not investments but application of income towards the assessee’s objectives. The CIT(A) accordingly directed allowance of exemption under Sections 11 and 12 and consequential relief.

Before ITAT, the Revenue contended that the BARC transactions constituted investments and that the Delhi High Court’s observations in W.P.(C) 2489/2017 had not finally decided the issue. The assessee submitted that the deployment was pursuant to Central Government policy, TRAI recommendations and MIB directions and did not involve an intention to earn profits.