Case Law Details
National Internet Exchange of India Vs ACIT (ITAT Pune)
National Internet Exchange of India (NIXI) is engaged in carrying out running of internet exchange and registration of domain name. For running of internet exchange, the assessee is charging membership fees, connectivity charges, data transferred differential. For registration of domain name, the assessee the charges registration charges. The assessee also claimed mutuality on the ground that the assessee was providing internet services to various ISPs who are members and other income/charges are received members only. The Assessing Officer compared receipts of the assessee and found that the assessee has accumulated approximately Rs. 109 crores of surplus which was lying in the reserve fund. It was also noted that the objects of the assessee fall within category of “advancement of general public utility” which were pursued by the assessee through setting up of internet exchanges at four metro locations and setting up, operating and maintaining IN registry, involving registration of IN domain. The Assessing Officer discussed changes made in the Income Tax Act through various amendments in respect of charitable organizations and held that proviso to section 2(15) is applicable and that the assessee is hit by the proviso to section 2(15). It was also held that the assessee is not covered by the principle of mutuality also. It was also held that the assessee is doing activities on commercial lines and that such activities are in the nature of business and that such business cannot be incidental to the objects as provided section 2(15) since the assessee is hit by the proviso section 2(15). Accordingly, the surplus generated from business activities of the assessee was held to be liable to tax under section 164 of the act.
The assessee-preferred appeal before the ld CIT (A) who decided the issue in favour of the assessee by following the decision of the coordinate bench in case of the assessee’s itself for Assessment Year 2012-13. He held that the assessee is not involved in trade, commercial or business therefore, he directed the ld AO to allow the exemption u/s 11(1) of the Act.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also perused the orders of the Hon’ble Delhi High Court dated 30.04.2019 in ITA No. 133/2019 for Assessment Year 2010-11 and order of the Hon’ble High Court dated 09.01.2018 in ITA NO. 521/2017 dated 09.01.2018 for AY 2009-10 where in Hon. High court has dismissed the appeal of the revenue. In view of this, it is clear that the issue in the case of the assessee is squarely covered in favour of the assessee by the order of the Hon’ble High Court in assessee’s own case for Assessment Year 2009-10 and 2010-11. Therefore, respectfully following the orders for both the years appeals of the revenue are dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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