2024 (9) TMI 138 - AT - Income Tax

Corporation's public utility activities qualify for section 11 charitable exemption following Supreme Court precedent

The ITAT Ahmedabad held that the assessee corporation's activities constituted advancement of general public utility for charitable purposes, making it ... Eligibility of exemption u/s 11 - Charitable activity u/s 2(15) - HELD THAT:- As perused the materials available on record and the judgments passed by the Hon’ble Supreme Court and the High Court of Gujarat respectfully following the same, we hold that the activities of the assessee for advancement of any other object of ‘General Public Utility’ for charitable purpose and therefore the assessee corporation shall be entitled to exemption u/s. 11 of the Act. As clarified by the Hon’ble Supreme Court in the very same case of ACIT vs. AUDA [2022 (11) TMI 255 - SUPREME COURT] wherein it has been clearly held that the Revenues Appeals are dismissed as far as statutory Corporations/Boards. However for the future assessments, Hon’ble Supreme Court has clarified that the reference to future application has to be understood in this context, which is that for the assessment years which this court was not called upon to decide, the concerned authorities will apply the law declared in the judgment, having regard to the facts of each such assessment year. Since Revenue’s appeals [in the case of AUDA, SUDA, etc] are dismissed by the Hon’ble Supreme Court for the earlier asst. years, they are to be treated as Final. However for the present AY 2016-17 & 2017-18, we set aside the issue file of AO to consider the same in accordance with law as enumerated by the Hon’ble Supreme Court. Appeals filed by the Revenue are hereby allowed for statistical purpose. Issues:Delay in filing appealInterpretation of Section 2(15) of the Income Tax ActApplicability of exemption under sections 11 and 12 of the ActAnalysis:Issue 1: Delay in filing appealThe Department sought condonation of a 285-day delay in filing the appeal, attributing it to oversight, heavy workload, and shortage of staff. The Assessee did not object to the delay, and the Tribunal, satisfied with the reasons provided, granted the condonation.Issue 2: Interpretation of Section 2(15) of the Income Tax ActThe Assessee, an Autonomous Body, engaged in planned development activities, faced scrutiny regarding the applicability of Section 2(15) concerning 'advancement of other general public utility.' The Assessing Officer denied exemption under sections 11 and 12, citing the nature of the Assessee's activities. However, the CIT(A) ruled in favor of the Assessee, referencing relevant judgments, including one by the Hon'ble Supreme Court, to support the Assessee's eligibility for exemption.Issue 3: Applicability of exemption under sections 11 and 12 of the ActThe Revenue appealed the CIT(A)'s decision, questioning the deletion of an addition made by the Assessing Officer. The Revenue argued that the guidelines set by the Supreme Court regarding significantly high mark-up should have been considered. However, the Assessee contended that its activities were charitable in nature and eligible for exemption under sections 11 and 12, a position supported by the Gujarat High Court and the Supreme Court's dismissal of Revenue's appeals.The Tribunal, after reviewing the judgments of the Supreme Court and the High Court of Gujarat, upheld the Assessee's eligibility for exemption under section 11. It clarified that for future assessments, the law declared by the Supreme Court should be applied. The Tribunal set aside the issue for the Assessing Officer to reconsider in accordance with the law as outlined by the Supreme Court, ultimately allowing the Revenue's appeals for statistical purposes.In conclusion, the Tribunal's decision addressed the delay in filing the appeal, interpreted the relevant provisions of the Income Tax Act, and confirmed the Assessee's entitlement to exemption under sections 11 and 12 based on judicial precedents.