2025 (10) TMI 709 - SCH - Income Tax

Appeals allowed, challenged orders set aside and matter sent back for fresh consideration under s.2(15), ss.11 and 12AA

The SC allowed the appeals, set aside the impugned orders and restored the matter to the HC for fresh consideration. The Court held that earlier HC ... Charitable-purpose benefits - Applicability of proviso of section 2(15) - Exempted Income u/s 11 - Registration u/s 12AA - denial of exemption on the ground of commercial transactions - registration of the assessee regarding its charitable purpose to enable benefit(s) available under the Act were dismissed by holding that the issues raised in the appeal(s) were squarely covered by earlier decision(s) of the High Court in Commissioner of Income Tax vs. Lucknow Development Authority [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] HELD THAT:- As we find that the decision of this Court in Ahmedabad Urban Development Authority [2022 (10) TMI 948 - SUPREME COURT] deals with several issues including as to when an authority can be said to serve a charitable purpose whereas the impugned orders(s) in these appeals are cryptic without elaborating the admitted factual situation, in our view, the law cannot be applied in the abstract. Therefore, in our view, the High Court would have to reconsider the appeal of the Revenue by taking into consideration the decision of this Court in Ahmedabad Urban Development Authority (supra). Consequently, we allow these appeals, set aside the impugned order(s) and restore the Income Tax Appeal on the file of the High Court for a fresh consideration in accordance with law including the law laid down by this Court in Ahmedabad Urban Development Authority (supra). Delay in Diary No. 37337 of 2019 was condoned and leave granted. Two connected appeals arise from High Court orders dismissing Revenue appeals under Section 260A of the Income Tax Act, 1961 against registration decisions granting charitable-purpose benefits; the High Court relied on earlier authorities. Both parties accept that the law is settled by the three-Judge bench decision in Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority (2023) 4 SCC 561 (and clarification (2023) 7 SCC 249), but dispute its impact. The Court observed that Ahmedabad Urban Development Authority deals with several issues, including 'when an authority can be said to serve a charitable purpose,' and held that the impugned High Court orders were cryptic and did not examine facts to determine applicability of the law. The appeals were allowed, impugned orders set aside, and Income Tax Appeal Defective No. 154 of 2014 and Income Tax Appeal No. 550 of 2008 restored to the High Court for fresh consideration in accordance with Ahmedabad Urban Development Authority. 'We have not expressed any opinion on the merits of the claim of either side.' Pending applications disposed of.