Delhi High Court
Commissioner Of Income Tax vs Professional Assistance For ... on 15 July, 2022
$~182
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 198/2022 & C.M.No.30914/2022
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr.Ajit Sharma, senior standing
counsel for the Revenue.
versus
PROFESSIONAL ASSISTANCE FOR DEVELOPMENT ACTION
..... Respondent
Through: Mr.Piyush Kaushik, Advocate.
% Date of Decision: 15th July, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMOHAN, J (Oral):
1. Present Income Tax Appeal has been filed challenging the Order
passed by the Income Tax Appellate Tribunal ('ITAT') in ITA
No.3662/Del./2015 for the Assessment Year 2011-12.
2. Learned Counsel for the Appellant states that the ITAT has erred in
not appreciating the fact that the activities of rendering services etc. by the
respondent are in the nature of trade commerce or business which are not
charitable in nature and therefore hit by proviso to section 2(15) of the
Income Tax Act 1961 ('the Act').
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Digitally Signed By:JASWANT
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3. He also states that the ITAT has erred in directing the Assessing
Officer to allow the exemption under Section 11 of the Act without
appreciating the fact that the Assessee cannot be treated to be engaged in
charitable activities.
4. A perusal of the paper book reveals that the assessee is engaged in
activities for upliftment of the poor, providing training and skill
development of the poor in the rural areas in the backward districts of the
states like, Bihar, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh and
West Bengal etc. The assessee gets grant from Central and State
Government and also donation from the various organization like, 'Gate
foundation' etc. The assessee has been allowed benefit of exemption under
section 11 of the Act continuously up to assessment year 2010-11. However,
in the instant assessment year, the assessee has been denied said exemption
by the Assessing Officer invoking the proviso to section 2(15) of the Act.
On further appeal, the CIT(A) allowed the exemption under section 11 of the
Act with all consequential benefits.
5. The Revenue, being aggrieved by the Order of the CIT(A), preferred
an appeal before the ITAT. The ITAT upheld the decision of the CIT(A)
holding that the assessee is not engaged in any trade, commerce or business
and thus proviso of section 2(15) is not attracted to the case of the assessee.
6. The ITAT also noted that the assessing officer has not brought on
record any evidences which would suggest that the activities of the assessee
had been carried out with profit motive. The Revenue could not controvert
the fact that the assessee has not charged any fee from the clients except the
cost of project actually incurred. Even in the sanction letter of grant to the
assessee, there is mention of supervision or monitoring of activities by the
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donor, but that in itself is not sufficient to hold that any profit motive is
involved. The ITAT further holds that it is quite normal that a donor would
want to verify whether the grants have been incurred for the intended
purpose which in our opinion, in any manner does not establish that the
activities of the assessee is business activity.
7. The ITAT further observed that in the assessment years 2009-10 and
2010-11, the assessing officer has held the assessee is engaged in providing
relief to poor within the meaning of Section 2(15) of the Act. The assessee
has claimed that its activity during the year under consideration has
remained same and there is no change as compared to assessment years
2009-10 and 2010-11. The ITAT following the rule of consistency dismissed
the appeal of the Revenue.
8. This Court in the case of Institute of Chartered Accountants of India
and Anr. Vs. Director General of Income Tax (Exemptions), Delhi and
Ors., (2013) SCC OnLine Del 2401 with reference to State of Andhra
Pradesh Vs. H Abdul Barhi & Bros Vs. (1964) 15 STC 644 (SC) has
observed that merely because a fee or some other consideration is collected
or received by an institution, it would not lose its character of having been
established for a charitable purpose. Furthermore, this Court in the case of
PCIT vs Servants of People Society [ITA 161/2021] has held as under:
"5. 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 essentially 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 regular business with profit
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motive with intent to distribute the profit to the
shareholders/owners.
6. A perusal of the paper book 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.
7. In any event, the assessee/society is charitable in nature as the
profit, if any, made by the assessee/society is being ploughed back
for charitable activities. 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 findings of the
CIT(A) and 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. Further, Supreme Court in
State of Haryana &Ors. vs. Khalsa Motor Limited &Ors., (1990) 4
SCC 659 has held that the High Court was not justified in law in
reversing, in second appeal, the concurrent finding of the fact
recorded by both the Courts below. 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
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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
findings of the CIT(A) and ITAT."
9. Consequently, this Court is of the view that no question of law arises
for consideration in the present appeal. Accordingly, the same is dismissed.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
JULY 15, 2022
KA
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Digitally Signed By:JASWANT
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