Delhi High Court
Commissioner Of Income Tax ... vs Servants Of People Society on 11 February, 2022
$~19-22
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 26/2022
COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI
..... Appellant
Through Mr. Abhishek Maratha, Advocate.
versus
SERVANTS OF PEOPLE SOCIETY ..... Respondent
Through None.
20
+ ITA 27/2022
COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI
..... Appellant
Through Mr. Abhishek Maratha, Advocate.
versus
SERVANTS OF PEOPLE SOCIETY ..... Respondent
Through None.
21
+ ITA 28/2022
COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI
..... Appellant
Through Mr. Abhishek Maratha, Advocate.
versus
SERVANTS OF PEOPLE SOCIETY ..... Respondent
Through None.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:14.02.2022 ITA 26/2022 & connected matters Page 1 of 6
20:17:37
22
+ ITA 29/2022
COMMISSIONER OF INCOME TAX (EXEMPTIONS) DELHI
..... Appellant
Through Mr. Abhishek Maratha, Advocate.
versus
SERVANTS OF PEOPLE SOCIETY ..... Respondent
Through None.
% Date of Decision: 11th February, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE NAVIN CHAWLA
JUDGMENT
MANMOHAN, J: (Oral)
The hearing has been done by way of video conferencing.
1. Present appeals have been filed challenging the order dated 1st,
November, 2019 passed by Delhi Bench 'A' of Income Tax Appellate
Tribunal in ITA No.3658/Del/2018, ITA No.3081/Del/2017, ITA No.
3082/Del/2017, ITA No.3659/Del/2018 for Assessment Years (AY) 2010-
11, 2012-13, 2013-14, 2014-15, whereby the appeals filed by appellant were
dismissed. The relevant portion of the impugned order is reproduced
hereinbelow:-
"5. We have heard both the parties and perused the
records especially the impugned order, Paper Book filed
by the Assessee and the case laws relied therein as well as
the relevant provisions of the Act on the issue in dispute.
We find considerable cogency in the contention of the Ld.
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By:KRISHNA BHOJ
20:17:37
Counsel for the assessee that the assesse is a charitable
institution and mere receipt of fees and income etc. cannot
be said that the assessee is involved in any trade,
commerce or business. The assessee is carrying the
mandate of the Will of Late Shri Gopa Bandhu Dass in
running the printing press and the newspaper and the
income so generated is used for charitable purposes and
apparently there is no profit motive in the activities of the
assessee and as such it cannot be said that the assessee is
involved in any trade, commerce or business and as such
the mischief of the Proviso of section 2(15) is not
apparently attracted. We further note that the Hon'ble
Delhi High Court in the case of India Trade Promotion
Organization vs. DGIT9E) 53 Taxmann.com, 404 (Delhi)
2015 order dated 22.1.2015 has upheld the constitution
validity of the proviso of section 2(15) which was under
challenge being discriminatory in view of the Article 14
(Equality before law) of the Constitution of India but the
Hon'ble High Court has read down the strict and literal
interpretation of the Proviso to Section 2(15) and has held
that mere receipt of fee or charge cannot be said that the
assessee is involved in any trade, commerce or business
and has accordingly allowed the relief to the aforesaid
case. After considering all the facts and circumstances of
the case, we are of the considered view that the assessee is
a charitable and non-profit institution and also found that
assessee is not involved in any trade, commerce or
business activity which attracts the mischief of the Proviso
of section 2(15) of the Act and the assessee has been
enjoying the exemption u/s. 11(1) and also u/s.
10(23C)(iv) in the past and accordingly following the
principle of consistency the AO was rightly directed to
allow the exemption to the assessee u/s. 11( 1 )of Act with
all the consequential benefits by the Ld. CIT(A). Hence,
we do not find any infirmity in the order of the Ld. CIT(A),
therefore, we uphold the same and reject the grounds
raised by the Revenue and accordingly, dismiss the appeal
filed by the Revenue.
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By:KRISHNA BHOJ
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2. In the present appeals, the Principal Commissioner of Income Tax
(Exemptions) Delhi has proposed the following questions of law:-
"(1)Whether Hon'ble Income Tax Appellate Tribunal was
correct in the eyes of the law in allowing benefit of
exemption u/s 11 of the Income Tax Act, 1961 in the facts
and circumstances of the present case?
(2)Whether Hon'ble income Tax Appellate Tribunal was
justified in the eyes of law in treating the assessee as a
charitable institution, even when the activities of the
assessed fall under the last limb of Section 2(15) of the
Income Tax Act, 1961, i.e. advancement of any other
object of general public utility and the same is hit by the
amended proviso to the said section?
(3)Whether Hon'ble Income Tax Appellate Tribunal was
justified in the eyes of law in passing the impugned order
overlooking the fact that the activities carried out by the
assessee yielded income/profit to the society and are
commercial in nature?
(4)Whether Hon'ble Income Tax Appellate Tribunal was
justified in the eyes of law in holding the income earned by
commercial activity is charitable because of the
application of the said income for the charitable-object of
the society?
(5)Whether the Ld. Income Tax Appellate Tribunal was
justified in the eye of law in passing the impugned order
without testing the case in terms of the Judgement of the
Constitutional Bench of Hon'ble Supreme Court in the
case of Additional Commissioner of Income Tax Gujarat
Vs. Surat Art Silk Cloth Manufacturers Association(1980)
121 ITR 1 (SC)?"
3. Learned Counsel for the appellant states that the Tribunal erred in
allowing benefit of exemption under Section 11 of the Income Tax Act,
1961 (hereinafter referred to as the 'Act') in the facts and circumstances of
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the present case. He submits that the Tribunal erred in treating the assessee
as a charitable institution, even when the activities of the assessee fell under
the last limb of Section 2(15) of the Act. He emphasises that the activities
carried out by the assessee yielded income/profit to the society and were
commercial in nature.
4. This Court in ITA No.154/2021 titled 'Commissioner of Income Tax
(Exemptions) Delhi vs. Association of State Road Transport
Undertakings' has held that it is settled law that the first proviso to Section
2(15) of the Act does not exclude entities which are for charitable purpose
but are conducting some activities for a consideration or a fee. This Court
has further held that the object of introducing first proviso is to exclude
organizations which are carrying on business with profit motive with intent
to distribute the profit to the shareholders/owners.
5. A perusal of the paper books reveals that the assessee-society is
running a printing press and publishing a newspaper. The profit so generated
is used for charitable purposes and apparently there is no profit motive in the
activities of the assessee. As such it cannot be said that the assessee is
involved in any trade, commerce or business. Consequently, the mischief of
proviso to Section 2(15) of the Act is not attracted to the present batch of
matters.
6. In any event, the assessee-society is charitable in nature as the profit,
if any, made by the assessee-society is ploughed back for charitable
activities. It is pertinent to mention that the assessee-society was set up by
the late freedom fighter Lala Lajpat Rai.
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7. Further, the appellant itself has granted the assessee registration under
Section 12A, recognition under Section 10(23C)(vi) and Exemption under
Section 80G of the Act.
8. Consequently, this Court is in agreement with the finding of the ITAT
that the assessee-society does not carry on any business, trade or commerce
with the intent of earning and distributing profit.
9. The Supreme Court in the case of Ram Kumar Aggarwal & Anr. vs.
Thawar Das (through LRs), (1999) 7 SCC 303 has reiterated that under
Section 100 of the Code of Civil Procedure the jurisdiction of the High
Court to interfere with the orders passed by the Courts below is confined to
hearing on substantial question of law and interference with finding of the
fact is not warranted if it involves re-appreciation of evidence. The Supreme
Court in Hero Vinoth (Minor) vs. Seshammal, (2006) 5 SCC 545 has also
held that "in a case where from a given set of circumstances two inferences
of fact are possible, the one drawn by the lower appellate court will not be
interfered by the High Court in second appeal. Adopting any other approach
is not permissible." It has also held that there is a difference between
question of law and a "substantial question of law". Consequently, this
Court finds that there is no perversity in the finding of ITAT.
10. Accordingly, the present appeals being bereft of merit are dismissed
along with pending applications.
MANMOHAN, J
NAVIN CHAWLA, J
FEBRUARY 11, 2022
AS
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