Though assessee was charging subscription as well as consultancy fees on actual, the same did not result in to the conclusion, that it was carrying on its activities which could be termed as business, trade, or commerce.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal has been filed by revenue against order dated 21/09/15 passed by Ld.CIT(A)-40 for Assessment Year 2011- 12 on the following grounds of appeal:
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the appeal of the assessee ignoring the fact that though the objects of the assessee may seem to be charitable but the activities carried out by the society which yielded income to the society are commercial in nature.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the appeal of the assessee ignoring the fact that A.O. has allowed expenditure for assets purchased during FY 2010-11 as capital expenditure for earlier years was allowed as application of income.
3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”
2. None has appeared on behalf of assessee.
3. It is observed that assessee was formed as an autonomous society in 1998 by Government of India under Ministry of Communication and Information Technology for the purpose of Research and Development in the area of communication, to provide technology and services, for the benefit of academic, research and development institutions and various government organisations like schools, colleges and hospitals etc. It is observed that assessee is registered under section 12 AA (1) of the Income Tax Act, 1961 (the Act) on 26/03/04 w.e.f. 27/01/98 and income of assessee was exempt under section 11 (1) of the During the year assessee had received income by providing connectivity to its subscribers through VSAT, leased line radio link, domain registration services etc. Ld. AO was of the opinion that assessee is not eligible for exemption under section 11 and 12 of the Act as its main objective was falling outside the scope of general public utility as per section 2 (15) of the Act.
4. On an appeal before the Ld.CIT(A) assessee was granted exemption under section 11 of the Act.
5. Aggrieved by the order of Ld.CIT(A), revenue has filed appeal before us now.
6. CIT,DR though supported the order of Ld. AO, at the outset she fairly submitted that in immediately preceding Assessment Years, being 2009-10 and 2010-11, this Tribunal in assessee’s own case in ITA No. 2873 and 2874/Del/2014 has dismissed revenue’s appeal on similar grounds.
7. On perusal of the facts narrated by Ld.CIT(A) in the impugned order, and the order of this Tribunal in assessee’s own case for immediately preceding assessment years (supra) we observe that the facts are identical.
This Tribunal decided the issue as under:
“21. All the questions raised in the order of the ld.AO has been answered by the Hon’ble Delhi High Court. With respect to the fees charged by the assessee naturally, it should be communesurating with the efforts put in by the organization and to defray its cost as well as further capital cost. It is also required to be noted that assessee is engaged in research based activity which is highly cost intensive and requires continuous spending on the innovation and new developments as it is concerning with the education of the society. The Assessee has categorically stated before the Id AO as well as before Ld CIT (A) that it is charging subscription as well as consultancy fees on actual, which fact is not denied. Therefore merely earning the surplus does not result in to the conclusion, that assessee is carrying on its activities, which can be termed as business, trade, or commerce.
22. Furthermore on perusal of the order of the ld CIT (A), we do not concur with the arguments of the ld CIT DR that order is perfunctory and devoid of reasons for the reasons that he has decided the issues relying on the decision of Honorable Delhi high According to us, the ld CIT (A) has also given his finding on all the aspects of the issues raised by ld AO.
23. In view of the above facts and respectfully relying on the decision of Hon Delhi high court in 360 ITR 138 , we find no infirmity in the order of the ld CIT (A), hence we dismiss all the grounds of appeal of revenue in ITA no 2873/del/2011 for AY 2009-10.
24. Further, the appeal of the revenue for AY 2010-11 in ITA No 2874/Del/201 1, also involves the same issues. Therefore, for the reasons given by us in appeal of revenue for AY 2009-10, we also dismiss all the grounds of appeal of revenue in ITA No 2874/Del/2011 for AY 2010- 11.”
8. On the basis of the discussions and observations made by this Tribunal in assessee’s own case for immediately preceding assessment years (supra), we do not find any infirmity in the observations of Ld. CIT (A). Respectfully following the decision of this Tribunal in assessee’s own case (supra) we uphold the order of Ld. CIT (A). Accordingly grounds raised by revenue stands dismissed.
9. In the result appeal filed by revenue stands dismissed. Order pronounced in the open court on 08/11/2018.