DCIT Vs Indian Broadcasting Foundation (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) decided the Revenue’s appeal against the order of the National Faceless Appeal Centre (NFAC) for Assessment Year 2017-18 arising from the assessment made under Section 143(3) of the Income-tax Act, 1961.
The Revenue challenged the CIT(A)’s order on two issues. The first related to allowing exemption under Sections 11 and 12 despite the assessee’s investment of ₹15 lakh in equity shares of Broadcast Audience Research Council (BARC), which the Assessing Officer treated as a violation of Section 11(5), attracting Section 13(1)(d). The second concerned the assessee’s claim that provision for doubtful debts, gratuity and leave encashment constituted application of income.
The Tribunal noted that the assessee, a not-for-profit company incorporated under Section 25 of the Companies Act, 1956 and registered under Section 12A, is an association of broadcasters whose objects include protecting stakeholders in the television broadcasting industry, spreading awareness of industry developments and supporting its members. The assessee had claimed exemption under Sections 11 and 12 while filing its return declaring nil income. During the relevant year, it subscribed to 1,50,000 equity shares of BARC for ₹15 lakh. The Assessing Officer treated this investment as one not falling within the modes specified under Section 11(5), held that Section 13(1)(d) had been violated and consequently denied exemption under Section 11.
