Commissioner of Income Tax V. Truck Operators Association, Hansi

ITA/382/2009

AI Insights

The case involves the Commissioner of Income Tax as the appellant and M/s Truck Operators Association, Hansi as the respondent. The core issue was whether the income of the Truck Operators Association was exempt under Section 11 and 12 of the Income Tax Act, 1961, given that its activities were restricted to a particular community (drivers and conductors) and did not serve the public at large. The Tribunal initially held the income exempt, but this decision was challenged by the revenue, leading to the present appeal. The High Court found that the Tribunal erred in law by dismissing the revenue's appeal and not considering the restrictive nature of the assessee's activities in the context of a charitable purpose as defined under Section 2(15) of the Act.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 799686 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 12-08-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Versus M/s Truck Operators Association
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SANJEEV KAUSHIK
• Keywords: Charitable purpose; Exemption; Income Tax; Re-assessment; Transport Booking Agent
• Section: 148; 143(1); 11; 12; 260A; 2(15)

Judgement Text

"ITA No. 382 of 2009 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 382 of 2009 Date of Decision: 12.8.2010 Commissioner of Income Tax ....Appellant. Versus M/s Truck Operators Association, Hansi ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Sanjeev Kaushik, Advocate for the appellant. None for the respondent. AJAY KUMAR MITTAL, J. 1. This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 3.10.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench “H”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 436/Del/2008 for the assessment year 2002-03 proposing following question of law:- “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal has erred in law in dismissing the appeal of revenue and holding the income of the assessee exempt under Section 11 and 12 of the Income Tax Act, 1961 ITA No. 382 of 2009 -2- ignoring the facts that activities carried out by the assessee are not for the public at large but restricted to a particular community only, i.e. drivers and conductors and also for preventing the outsiders or non-members to carry on the business of transportation within the area of Hansi Town and the activities of the assessee do not come within the ambit of the definition of charitable purpose under section 2(15) of the Income Tax Act, 1961?” 2. Facts necessary for adjudication as narrated in the appeal may be noticed. The assessee filed its return on 31.10.2002 declaring nil income. The said return was processed under Section 143 (1) of the Act on 12.3.2004 on the returned income and notice under Section 148 of the Act was issued on 7.9.2005 on the ground that the total receipts as declared in the income tax return did not correspond to the TDS claim. During the course of re-assessment proceedings, the assessee contended that it was acting as transport booking agent and facilitated transportation of trucks on behalf of its members and out of total receipts of Rs.85,64,762/-, it charged commission of Rs.7,80,824/- as per bye-laws and after applying the above commission income for charitable purpose under Section 11 of the Act, there was deficit of Rs.80,025/-. The Assessing Officer observed that the activities carried out by the Truck Operators Association were not for the purpose of public at large but restricted to a particular community only and, therefore, the assessee was not entitled to exemption of its income and the entire income amounting to Rs.85,64,762/- was held to be taxable ITA No. 382 of 2009 -3- and added to the taxable income vide order dated 27.11.2006. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] who allowed the appeal holding that the Assessing Officer should have followed the order of the Tribunal and should have allowed exemption to the assessee when there was registration granted to it by the CIT. Feeling aggrieved, the revenue filed an appeal before the Tribunal who dismissed the same vide order dated 3.10.2008. Hence, the present appeal. 3. Vide order of even date passed in ITA No. 542 of 2006 (Commissioner of Income Tax Versus M/s Truck Operators Association) it has been held that the respondent-assessee was not covered under Section 2(15) of the Act as it was not a Charitable Institution. 4. Accordingly, the appeal is allowed and the substantial question of law as claimed is answered in favour of the revenue and against the assessee. Consequently, setting aside order dated 3.10.2008 passed by the Tribunal, the matter is remitted to the CIT (A) to decide the same afresh in accordance with law after issuing notice to the assessee. (AJAY KUMAR MITTAL) JUDGE August 12, 2010 (ADARSH KUMAR GOEL) gbs JUDGE "