2021 (10) TMI 666 - AT - Income Tax

Tribunal upholds tax exemption for assesses based on legal interpretation

DCIT, Circle-1 (1) (E) New Delhi Versus DLF Qutab Enclave Complex Educational Charitable Trust

The Tribunal upheld the assessee's entitlement to exemption under sections 11 & 12 of the Income Tax Act for the Assessment Years 2013-14 and 2014-15. ... Exemption u/s 11 - Denial of exemption by AO as objects of the assessee society may seem to be charitable, yet the activities carried out by the society, which yielded income to it are commercial in nature - CIT-A allowed benefit of exemption u/s. 11 & 12 - HELD THAT:- As decided in assessee's own case [2017 (10) TMI 721 - ITAT DELHI] appeal has been filed, just for sole reason that 'the decisions rendered by the Tribunal in assessee's own case for AY 2009-10 has not been accepted by the department and appeal has been filed in the Hon'ble High Court.' This trend of filing appeal is not only disappointing but leads to the multiplicity of the litigation because otherwise no substantial illegality or perversity has been pointed out by the Revenue. The order passed by the Director of Income-tax (Exemption) cancelling the registration of the respondent under section 12A was invalid inasmuch as the Director Income-tax (Exemptions) did not have the jurisdiction to do so till 01.06.2010 when the amendment was introduced in section 12AA(3) - In the light of the above decision of the Co-ordinate Bench of the Tribunal in the assessee's own case, in the absence of any material change in the factual matrix, we hereby decline to interfere with the order of ld. CIT(A) - Decided in favour of assessee. Issues involved:Whether the assessee is entitled to the benefit of exemption u/s. 11 r.w.s. 12 of the Income Tax Act for the Assessment Years 2013-14 and 2014-15.Comprehensive Analysis:1. Issue of Exemption Eligibility:The primary issue in this case revolves around determining whether the assessee is eligible for exemption under sections 11 & 12 of the Income Tax Act for the relevant assessment years. The Revenue raised concerns regarding the commercial nature of the activities carried out by the society, despite its seemingly charitable objectives. The Ld. CIT(A) referred to previous decisions by the ITAT and highlighted that the issue had been addressed in the assessee's favor for prior assessment years, emphasizing the consistency in decisions.2. Consistency in Decisions:The ITAT, in the assessee's case for Assessment Year 2011-12, had previously ruled in favor of the assessee, affirming the benefit of exemption under sections 11 & 12 of the Act. The Tribunal noted that the Revenue's appeal seemed to be based on challenging past decisions rather than any substantial illegality or perversity in the current case. The High Court also upheld the Tribunal's decision, further solidifying the position in favor of the assessee.3. Legal Interpretation and Jurisdiction:A crucial aspect of the judgment involved a detailed legal interpretation of the relevant sections of the Income Tax Act, particularly focusing on the power to cancel registration under section 12A. The Court emphasized that the Director of Income-tax (Exemptions) did not possess the jurisdiction to cancel registration under section 12A before a specific amendment came into effect. This legal interpretation played a significant role in establishing the validity of the assessee's claim for exemption.4. Decision and Dismissal of Appeals:Based on the consistent decisions by the ITAT and the High Court, coupled with the absence of any material change in the factual circumstances, the Tribunal declined to interfere with the order of the Ld. CIT(A). Consequently, the appeals filed by the Revenue were dismissed, affirming the assessee's entitlement to exemption under sections 11 & 12 of the Income Tax Act for the relevant assessment years.In conclusion, the judgment highlights the importance of legal consistency, interpretation of statutory provisions, and the impact of past decisions on current cases in determining the eligibility for tax exemptions under the Income Tax Act.