CIT (Exemptions) Vs Indian Broadcasting Foundation (Delhi High Court)
Delhi High Court held that application of funds by Indian Broadcasting Foundation in BARC doesn’t qualify as deployment was not intended to yield income/profit hence denial of exemption u/s. 11 and 12 of the Income Tax Act not justified.
Facts- The Indian Broadcasting Foundation was incorporated on 27.09.1999 as a not-for-profit company u/s. 25 of the Companies Act, 1956. The Assessee was also registered under Section 12A of the Act vide order dated 10.01.2001. The Assessee is an association of broadcasters formed to protect the interests of various stakeholders and related entities in the field of television broadcasting, including the television viewing audience. Its objectives include spreading awareness about the latest developments in the television industry, disseminating knowledge among its members, and supporting, protecting, and defining the rights of its members.
The Assessee filed its return of income declaring Nil income on 29.09.2014 for the AY 2014-15, claiming exemption u/s. 11 and 12 of the Act. The case was subsequently selected for scrutiny assessment.
AO after considering the submissions and documents, concluded that the Assessee had violated Section 13(1)(d) of the Act by making an investment of ₹15,00,000/- in equity shares (1,50,000 shares of ₹10/- each) and ₹2,85,00,000/- in Share Application Money in BARC, which was not in compliance with Section 11(5) of the Act. As a result, the AO denied the benefit of exemption u/s. 11 and 12 of the Act and assessed the income under the normal provisions as per Chapter IV of the Act. The income of the Assessee was assessed at ₹5,51,84,040/-, which was held as taxable at Maximum Marginal Rate in accordance with provisions of Section 164(2) of the Act.
