2024 (4) TMI 929 - AT - Income Tax

Charitable organization providing rural skill development training granted section 11 tax exemption for poverty upliftment activities

The ITAT Delhi allowed exemption under section 11 to an assessee engaged in charitable activities for upliftment of the poor, providing training and skill ... Exemption u/s 11 - Charitable activity u/s 2(15) - denial of claim as activities of the assessee involve rendering of services in relation to carrying on of a trade, commerce or business - as submitted 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 State like Bihar, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh and West Bengal etc. The assessee gets grants from Central and State Government and also donation from the various organizations like, GATES Foundation etc. HELD THAT:- As decided in own case [2021 (9) TMI 1094 - ITAT DELHI] assessee is apparently not involved in any trade, commerce or business and as such the proviso to section 2(15) is not applicable. Exemption under section 11(1) is allowed to the assessee. Accordingly, the Assessing Officer is directed to allow exemption under section 11, with all the consequential benefits. Ground of the appeal are allowed. Issues Involved:1. Eligibility of the assessee for exemption u/s 11 of the Income-tax Act, 1961.2. Interpretation of the proviso to section 2(15) of the Income-tax Act, 1961.Summary:The appeals by the Revenue are directed against the orders of the National Faceless Appeal Centre (NFAC), Delhi, pertaining to the assessment years 2015-16, 2016-17, and 2017-18. The primary issue is whether the assessee is eligible for exemption u/s 11 of the Income-tax Act, 1961.The facts reveal that the assessee is engaged in activities for the upliftment of the poor, providing training and skill development in rural areas. The assessee has been receiving grants from the Central and State Governments and donations from various organizations. The exemption u/s 11 was allowed up to A.Y. 2010-11 but was denied from A.Y. 2011-12 onwards by invoking the proviso to section 2(15) of the Act. The First Appellate Authority allowed the exemption, and the Tribunal upheld this decision for A.Y. 2011-12 to 2014-15, stating that the assessee is not engaged in any trade, commerce, or business.The learned counsel for the assessee argued that the issue is covered in favor of the assessee by earlier orders of the Tribunal, which consistently held that the assessee's activities do not attract the proviso to Section 2(15) of the Act. The learned DR opposed this, relying on the AO's order denying the exemption.Upon hearing both sides and reviewing the material, the Tribunal found that for A.Y. 2014-15, the issue had already been decided in favor of the assessee, noting that the assessee's activities were charitable and not in the nature of trade, commerce, or business. The Tribunal cited previous decisions, including the case of India Trade Promotion Organization vs. DGIT(E), where it was held that mere receipt of fees does not imply that the assessee is engaged in trade, commerce, or business.The Tribunal observed that there were no distinguishing facts for the assessment years under consideration. The impugned orders of the learned First Appellate Authority were in line with the earlier decisions of the Tribunal. Consequently, the Tribunal affirmed the orders of the learned CIT(A) for A.Y. 2015-16, 2016-17, and 2017-18, dismissing the Revenue's appeals.Order pronounced in open court on 22nd April, 2024.