ITAT grants section 11 exemptions to charitable trust on the principle of consistency

DCIT (Exemption) Vs Yug Nirman Yojna Vistar Trust (ITAT Delhi)

Facts- The assessee is a trust, registered u/s 12A of Income Tax Act. Perusal of assessment order dated 29.12.2016 passed by the Assessing Officer u/s 143(3) of Income Tax Act; shows that registration u/s 12A was granted to the assessee by order dated 01.05.2009 of Ld. CIT(A), Agra. However, the Assessing Officer, vide aforesaid assessment order dated 29.12.2016, denied benefit of exemption u/s 11A read with section 12A of Income Tax Act and treated the assessee’s income, amounting to Rs.3,16,43,346/- as business income instead of exempt income as claimed by the assessee. Assessee filed appeal before the Ld. Commissioner of Income Tax (Appeal)-2, Agara (“Ld. CIT(A)” for short). Vide impugned appellate order dated 28.09.2018, the Ld. CIT(A) allowed the assessee’s appeal; deleting the aforesaid addition of Rs.3,16,43,346/-; by holding that the assessee was eligible to claim exemption under provisions of section 11 of Income Tax Act.

Conclusion- It is not in dispute that registration of the assessee trust u/s 12A of Income Tax Act has remained in force continuously since the grant of registration vide aforesaid order dated 01.05.2009 implying that charitable character of the assessee has been accepted by Revenue continuously. It is not in dispute that exemption u/s 11 read with section 12A of Income Tax Act has been never denied to the assessee, in identical facts and circumstances, except in Assessment Year 2014-15 (to which this appeal pertains). It is also not in dispute that assessment orders have been passed for Assessment Year 2012-13, 2013-14, 2015-16, 2017-18 and 2018-19 granting the benefit of exemption to the assessee u/s 11 read with section 12A of Income Tax Act. We are of the view that the impugned order of the Ld. CIT(A) is a just and fair order in accordance with law, having regard to facts and circumstances of the case. Neither side has brought any materials for our consideration to persuade us to interfere with the impugned order of the Ld. CIT(A).

Held that the assessee’s claim of being a charitable trust has consistently been accepted by Revenue.

FULL TEXT OF THE ORDER OF ITAT DELHI

(A) This appeal by Revenue is filed against the order of Learned Commissioner of Income Tax (Appeals)-2, Agra [Ld. CIT(A)”, for short], dated 28.09.2018 for Assessment Year 2014-15. The only dispute in this appeal, is whether the assessee is eligible for exemption u/s 11 of Income Tax Act, in respect of an amount of Rs.3,16,43,346/- claimed by the assessee as exempt income; but assessed by the Assessing Officer as taxable income. The assessee is a trust, registered u/s 12A of Income Tax Act. Perusal of assessment order dated 29.12.2016 passed by the Assessing Officer u/s 143(3) of Income Tax Act; shows that registration u/s 12A was granted to the assessee by order dated 01.05.2009 of Ld. CIT(A), Agra. However, the Assessing Officer, vide aforesaid assessment order dated 29.12.2016, denied benefit of exemption u/s 11A read with section 12A of Income Tax Act and treated the assessee’s income, amounting to Rs.3,16,43,346/- as business income instead of exempt income as claimed by the assessee. Assessee filed appeal before the Ld. Commissioner of Income Tax (Appeal)-2, Agara (“Ld. CIT(A)” for short). Vide impugned appellate order dated 28.09.2018, the Ld. CIT(A) allowed the assessee’s appeal; deleting the aforesaid addition of Rs.3,16,43,346/-; by holding that the assessee was eligible to claim exemption under provisions of section 11 of Income Tax Act. The relevant portion of the aforesaid impugned appellate order of the Ld. CIT(A) is reproduced as under:

“3. In this case, assessment has been made by the A.O. at an income of Rs.3.16,43,346.65 as against the returned income of Rs. Nil. The appellant trust’s claim of exemption under the

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religious purposes or partly charitable purposes and partly religious. Hence it can be stated that if a charitable trust is established only for the benefit of any particular religious community, then the provisions of section 11 would not be applicable. But in the case of a trust or an institution for religious purposes wherein certain activities can be termed as charitable activities for the benefit of any particular religious community or caste, clause (b) would not be applicable.”

6.3  Having considered the above facts and legal interpretation of the relevant provisions of the Act, I am inclined to accept the appellant’s argument that it is eligible to claim exemption under the provisions of section 11 of the Act. Therefore, addition of Rs. 3,16,43,346/- to the appellant’s returned income is deleted and grounds no. 1, 2, 3, 4, 5 and 6 are allowed accordingly.

Ground no. 7, being general in nature, is not being adjudicated upon.”

(B) The present appeal has been filed by Revenue against the aforesaid impugned appellate order of the Ld. CIT(A). In the course of the appellate proceedings in Income Tax Appellate Tribunal (“ITAT for short); the following documents were filed from the assessee’s side:

(C) At the time of hearing before us, the Ld. Senior Departmental Representative (“Sr. DR” for short) for Revenue relied on the order of the Assessing Officer. The Ld. Counsel for the assessee relied on the aforesaid documents mentioned in foregoing paragraph No. B.1 and supported the impugned appellate order of the Ld. CIT(A). He further drew our attention to the fact that benefit of exemption u/s 11 read with section 12A of Income Tax Act has been allowed by the Assessing Officer, on identical facts and circumstances, in assessment orders for Assessment Years 2012­13, 2013-14, 2015-16, 2017-18 and 2018-19. He further submitted that, on identical facts and circumstances, the benefit of exemption u/s 11 read with section 12A of Income Tax Act has never been denied by Revenue to the assessee in any year except Assessment Year 2014-15, to which the present appeal pertains. He further submitted that the registration u/s 12A of Income Tax Act granted by the Ld. CIT has never been revoked or cancelled; and further, that registration u/s 12A of Income Tax Act has remained in force continuously since the grant of registration vide order dated 01.05.2009 of the Ld. CIT, Agra; implying that the assessee’s claim of being a charitable trust has consistently been accepted by Revenue. In view of these submissions and contentions, the Ld. Counsel for assessee submitted that the present appeal filed by Revenue is devoid of any merit and should be dismissed.

(C.1) The Ld. Senior Departmental Representative (“Sr. DR” for short) did not controvert the aforesaid submissions and contentions of the Ld. Counsel for the assessee.

(D) We have heard both sides. We have perused the materials on record. Relevant facts are not in dispute. It is not in dispute that registration of the assessee trust u/s 12A of Income Tax Act has remained in force continuously since the grant of registration vide aforesaid order dated 01.05.2009 implying that charitable character of the assessee has been accepted by Revenue continuously. It is not in dispute that exemption u/s 11 read with section 12A of Income Tax Act has been never denied to the assessee, in identical facts and circumstances, except in Assessment Year 2014-15 (to which this appeal pertains). It is also not in dispute that assessment orders have been passed for Assessment Year 2012-13, 2013-14, 2015-16, 2017-18 and 2018-19 granting the benefit of exemption to the assessee u/s 11 read with section 12A of Income Tax Act. We are of the view that the impugned order of the Ld. CIT(A) is a just and fair order in accordance with law, having regard to facts and circumstances of the case. Neither side has brought any materials for our consideration to persuade us to interfere with the impugned order of the Ld. CIT(A). In view of the foregoing, and in the specific facts and circumstances of the case before us, we decline to interfere with the impugned order of the Ld. CIT(A).

(E) In the result, this appeal filed of the Revenue is accordingly dismissed.

Our decision was already pronounced orally on 19.05.2022 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. This written order is now signed today on 24.05.2022.