2008 (4) TMI 16 - SC - Income Tax

Assessee Entitled to s.10(23) Exemption; Objects Held Charitable and Organization Qualifies under s.2(15); Appeals Dismissed

Asstt. Commissioner of Income Tax, Surat Versus Surat City Gymkhana

SC dismissed the appeals, holding the assessee entitled to exemption under s.10(23) as its objects are exclusively charitable and it qualifies as an Act ... Exemption u/s 10(23) on the basis that the objects of the respondent-assessee are exclusively charitable - Act of 'General Public Utility' u/s 2(15) - HELD THAT:- On a perusal of the judgment of the Gujarat High Court in the case of Hiralal Bhagwati [2000 (4) TMI 14 - GUJARAT HIGH COURT], we now find that Question No. 'B' is also concluded by the said judgment [refer to 1st para of page 196]. Since the Revenue did not challenge the decision in the said case, the same has attained finality. Question No. 'B', therefore, is to meet the same fate as Question No. 'A' as this Court had declined to grant leave in respect of Question No. 'A' on the ground that the Revenue did not challenge the correctness of the decision in the case of Hiralal Bhagwati (supra). It appears that the fact, that Question No. 'B' was also covered by the aforementioned judgment, was not brought to the notice of their Lordship and, therefore, leave was granted restricted to question No. 'B'. In this view of the matter, these appeals deserve to be dismissed. Issues:Exemption under Section 10(23) of the Income-tax Act for Assessment Years 1991-92 and 1992-93.Interpretation of the objects of the Trust under Section 2(15) of the Income Tax Act.Relevance of Registration under Section 12-A in determining the scope of further probe into the Trust's objects.Exemption under Section 10(23) of the Income-tax Act:The respondent-assessee claimed exemption under Section 10(23) for the Assessment Years 1991-92 and 1992-93 based on the charitable nature of its objects. The assessing officer and the Commissioner of Income-tax (Appeals) rejected the claim. However, the Income Tax Appellate Tribunal allowed the appeals filed by the respondent-assessee. Subsequently, the High Court dismissed the appeals based on a previous decision. The Supreme Court granted leave only in respect of Question No.'B' related to the Registration under Section 12-A. Ultimately, the Court found that both questions were concluded by a previous judgment, leading to the dismissal of the appeals.Interpretation of the objects of the Trust under Section 2(15) of the Income Tax Act:The key issue was whether the objects of the Trust, restricting benefits to the members of the Club, fell within the definition of 'General Public Utility' under Section 2(15) of the Income Tax Act. The Tribunal had held that the Trust's objects constituted a section of the public and not a Body of Individuals. The High Court, relying on a previous decision, dismissed the appeals. The Supreme Court noted that the appeals were rightly dismissed as the appellant did not challenge the correctness of the previous judgment. The Court found that the matter was concluded by the previous judgment, leading to the dismissal of the appeals.Relevance of Registration under Section 12-A in determining the scope of further probe into the Trust's objects:The second substantial question of law was whether Registration under Section 12-A prevented the Assessing Officer from further probing into the objects of the Trust. The High Court dismissed the appeals based on a previous decision, which was not challenged by the appellant. The Supreme Court granted leave only in respect of this question but found that it was also concluded by the previous judgment. As the Revenue did not challenge the decision in the previous case, the Court held that both questions deserved to be dismissed, ultimately ordering the dismissal of the appeals.In conclusion, the Supreme Court upheld the dismissal of the appeals, finding that both issues raised had been conclusively addressed in a previous judgment. The Court emphasized that as the appellant did not challenge the previous decision, the matters had attained finality, leading to the dismissal of the appeals.