2019 (3) TMI 1738 - AT - Income Tax

Tribunal affirms society's charitable status promoting handloom sector for public benefit

Income Tax Officer (E), Trust Ward-1 (1), Delhi Versus M/s. Association of Corporation & Apex Societies of Handlooms,

Income Tax Officer (E), Trust Ward-1 (1), Delhi Versus M/s. Association of Corporation & Apex Societies of Handlooms, - TMI Issues:1. Whether the activities of the assessee fall under the last limb of proviso to section 2(15) of the Income Tax Act, affecting the applicability of sections 11 and 12.2. Whether the benefit of section 11 and 12 of the Act should be allowed to the assessee society.Analysis:1. The case involved an appeal by the Revenue against the order of the Ld. CIT(A) for the assessment year 2010-11. The Assessing Officer had denied the benefit under sections 11 and 12 of the Income Tax Act to the assessee society, contending that its activities were not of a charitable nature but resembled trade, commerce, or business. The society procured orders for handloom products and organized exhibitions. The Ld. CIT(A) allowed the benefit of section 11 to the assessee. The Tribunal considered the nature of the activities and objectives of the society. It observed that the society was constituted by the Ministry of Textiles and operated as a nodal and implementing agency of the government, promoting the handloom sector without a profit motive. The Tribunal held that the society's activities were not for private gain or profit, but for the advancement of objectives of general public utility, qualifying as charitable purposes under section 2(15) of the Act. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Revenue's appeal.2. The Tribunal analyzed the activities of the assessee in detail, noting that the society's main objective was to promote the handloom sector by providing a marketing platform to member societies. It further highlighted that the society's executive committee comprised government officers without profit-sharing interests. The Tribunal emphasized that the society's activities were monitored by the Ministry of Textiles, and receipts were used for society activities. The Tribunal cited relevant case laws to support its decision, emphasizing that the society's motive was not profit-oriented but aimed at providing a platform for handloom weavers. It concluded that the Assessing Officer had not properly understood the society's activities and objectives, upholding the Ld. CIT(A)'s decision to allow the benefit of section 11 to the assessee. The Tribunal dismissed the Revenue's appeal, affirming the charitable nature of the society's activities and its eligibility for the benefits under sections 11 and 12 of the Act.In conclusion, the Tribunal's detailed analysis focused on the charitable nature of the assessee society's activities, emphasizing its promotion of the handloom sector without a profit motive. The decision highlighted the society's role as a government-conferred entity working for the advancement of general public utility, qualifying it for the benefits under sections 11 and 12 of the Income Tax Act.