2018 (6) TMI 964 - AT - Income Tax

Tribunal affirms assessee's exemption eligibility under Income Tax Act Section 11 for societal impact.

Income Tax Officer (E), Ward-1 (3), Kolkata Versus Sasha Association For Craft Producers

Income Tax Officer (E), Ward-1 (3), Kolkata Versus Sasha Association For Craft Producers - TMI Issues involved:Revenue's appeals challenging correctness of the Commissioner of Income Tax (Appeals) order for assessment years 2009-10, 2010-11, and 2012-13 regarding exemption claimed under section 11 of the Income Tax Act, 1961.Analysis:Issue 1: Interpretation of Section 2(15) of the ActThe primary issue in this case revolves around the interpretation of Section 2(15) of the Income Tax Act, particularly the proviso added by the Finance Act, 2008. The Revenue argued that the assessee did not have a specific object clause in its trust deed indicating relief of the poor and instead was engaged in trade, commerce, and business activities. The Assessing Officer disallowed the exemption claim based on this interpretation. However, the CIT(A) reversed this decision, considering the broader scope of relief of the poor as per CBDT's Circular No. 11/2008. The Circular clarified that relief to indigent artisans falls within the ambit of relief of the poor, making the assessee eligible for exemption.Issue 2: Activities and Objects of the AssesseeThe activities and objects of the assessee, a registered society established to assist artisans and small-scale industries, were scrutinized. The society aimed to provide marketing assistance, raw material sourcing, design inputs, and exhibition opportunities to artisans. The Assessing Officer highlighted the profit margin on products and the absence of a specific clause related to relief of the poor in the trust deed. However, the CIT(A) observed the society's extensive work with artisans and its contribution to their enterprise development and market access. This led to the conclusion that the society fell under the category of relief of the poor, as per the Circular.Conclusion:The Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's contention that the assessee's activities were solely commercial in nature. By considering the broader interpretation of relief of the poor and the societal impact of the assessee's work with artisans, the Tribunal affirmed the exemption claim under section 11 of the Act. The Revenue's appeals were dismissed, and the CIT(A)'s order was upheld for all three assessment years.