ACIT(E), Circle-2(1), New Delhi V. Quality Council of India, New Delhi

ITA 1659/DEL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0621 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Keywords: Depreciation; Charitable institution
• Section: 12; 11

Judgement Text

I.T.A.NO.1659/DEL/2018 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER . . /. I.T.A NO.1659/DEL/2018 / ASSESSMENT YEAR: 2014-15 ACIT(E), CIRCLE 2(1) NEW DELHI. VS. QUALITY COUNCIL OF INDIA 2 ND FLOOR, INSTITUTION OF ENGINEERING BUILDING, BAHADUR SHAH ZAFAR MARG, NEW DELHI. PAN NO. AAATQ0055D APPELLANT / RESPONDENT REVENUE BY SH. GAURAV PUNDIR, SR. DR ASSESSEE BY NONE / DATE OF HEARING: 1 3 .0 7 .2021 /PRONOUNCEMENT ON 1 5 .0 7 .2021 /O R D E R PER MAHAVIR PRASAD, J.M. THIS APPEAL HAS BEEN FILED ON BEHALF OF THE REVENU E AGAINST THE ORDER OF LD. CIT(A) NO. 325/2016-17/1567 ORDER DATE D 04.12.2017. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION U/S 11 & 12 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE IGNORING T HE FACT THAT THE ASSESSEE IS DOING ACTIVITIES WHICH ARE IN NATUR E OF TRADE, COMMERCE OR BUSINESS AND SINCE THE RECEIPTS FROM TR ADE, COMMERCE OR BUSINESS EXCEED THE MONITORY LIMIT PRES CRIBED IN THE PROVISO TO SECTION 2(15), HENCE EXEMPTION U/S 1 1 & 12 SHALL NOT BE AV AILABLE TO THE ASSESSEE. 2. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, I.T.A.NO.1659/DEL/2018 2 THE LD. CIT(A) HAS ERRED IN DELETING THE TOTAL ADDI TION OF RS. 6,20,24,427/ - MADE BY THE AO IN THE ASSESSMENT ORDER. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARIN G. 2. FACTS OF THE CASE ARE THAT THE QUALITY COUNCIL O F INDIA, AN AUTONOMOUS BODY WAS SET UP BY MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF INDIA AND REGISTERED AS NON-PROFITS W ITH ITS OWN MEMORANDUM OF ASSOCIATION AND IS GOVERNED BY A COUN CIL WITH EQUAL REPRESENTATION OF GOVERNMENT, INDUSTRY AND COMMERCE . THE COUNCIL PLAYS POWER ROLE AT THE NATIONAL LEVEL IN ADOPTION AND ADHERENCE TO QUALITY STANDARDS IN ALL YEARS OF ACTIVITIES INCLUD ING EDUCATION, HEALTHCARE, PRESERVATION OF ENVIRONMENT PRODUCTION, GOVERNANCE, SOCIAL SECTOR, INFRASTRUCTURE SECTOR AND SUCH OTHER AREAS OF ORGANIZED ACTIVITIES THAT HAVE SIGNIFICANT WHEREIN EQUIPMENT, QUALITY OF LIFE AND WELL BEING OF CITIZEN OF INDIA ARISING OUT OF PENALTY ORDER DATED 03.10.2016. IN THIS INCOME TAX RETURN DECLARING NIL INCOME WAS FILED BY THE ASSESSEE. AFTER SERVING INFORMATION AND OTHER DETAILS WERE CALLED F ROM THE ASSESSEE SOCIETY AND FROM INCOME AND EXPENDITURE ACCOUNT OF THE ASSESSEE IT IS SEEN THAT ASSESSEE HAS SHOWN FOLLOWING RECEIPTS: I) INTEREST ON BANK DEPOSITS RS. 1,08,11,857/ - II) QUALITY APPLICATION ASSESSMENT & ACCREDITATION FEES RS. 22,56,36,486/ - III) QUALITY CONCLAVE SEMINAR RECEIPTS RS. 33,54,069/ - IV) HONORARIUM, SALE OF QUALITY LITERATURE & MISC. RECEIPTS RS. 2,45,211/ - V) IMPROVEMENT IN HEALTH SERVICES INITIATIVES RS. 2,57,14,551/ - VI) MEMBERSHIP FEES RS. 12,52,847/ - I.T.A.NO.1659/DEL/2018 3 THE ASSESSEE HAS SHOWN FOLLOWING MAJOR EXPENDITURES AGAINST THE ABOVE RECEIPTS : I) SALARY ALLOWANCE & BENEFIT RS. 6,19,49,992/ - II) ADMINISTRATION & OTHER EXPENSES RS. 12,42,77,807/ - III) NATIONAL QUALITY CAMPAIGN RS. 1,68,20,065/ - IV) DEPRECIATION RS. 33,49,552/ - 3. THEREAFTER, A SHOW-CAUSE NOTICE WAS ISSUED BY TH E ASSESSING OFFICER TO EXPLAIN WHY ITS RECEIPT MAY NOT BE HIT B Y PROVISO OF SECTION 2(15) OF INCOME TAX ACT. SECTION 2(15) CONTEMPLATE S AS UNDER: (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDU CATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST], AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: [ PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUA L CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVI TIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING S UCH ACTIVITY OR ACTIVITIES, OF THAT PREVIOUS YEAR;] 4. IN ITS REPLY ASSESSEE SUBMITTED THAT ASSESSEE IS NOT HAVING ANY PROFIT MOTIVE AND ITS ACTIVITIES ARE NOT BUSINESS A CTIVITIES. ASSESSEE FURTHER SUBMITTED THAT PROVISO OF SECTION 2(15) IS NOT APPLICABLE TO THE ASSESSEE BUT LD. AO DID NOT AGREE WITH THE CONTENTI ON OF THE ASSESSEE AND MADE ADDITION OF RS. 62024427/-. AGAINST THE A SSESSMENT ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE TH E LD. CIT(A) WHO I.T.A.NO.1659/DEL/2018 4 GRANTED RELIEF TO THE ASSESSEE HOLDING THAT THE QCI ACTIVITIES ARE OF CHARITABLE PURPOSE U/S 2(15) OF THE INCOME TAX ACT AND ALLOWED EXEMPTION IN AY 2009-10, 2010-11, 2011-12, 2012-13 AND 2013-14 AND FURTHER HELD THAT IN ITAT IN ITA NO. 867/2016 IN AP PELLANTS OWN CASE IT WAS RULED OUT THAT ON THE BASIS OF COURTS JUDGMENT IN INDIA TRADE PROMOTION ORGANIZATION VS. DGIT (2015) 374 ITR 333 AND IN THE CASE OF INSTITUTION OF THE CHARTERED ACCOUNTANTS VS. DGIT(E XEMPTION) 2013 (358 ITR 91) (DEL.) THAT MERE CIRCUMSTANCES OF COLLECTIO N OF SUCH AMOUNTS DID NOT RESULTS IN THE ASSESSEE LOSING THEIR ESSENTIAL CHARACTER OF BEING ESTABLISHED FOR CHARITABLE PURPOSE AND HELD THAT SI NCE THE CASE IF SIMILAR TO THOSE FOR THE EARLIER ASSESSMENT YEAR, RESPECTFU LLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT AND HONBLE IT AT (DELHI) IN APPELLANTS OWN CASE FOR AY 2009-10 ASSESSING OFFIC ER WAS DIRECTED TO ALLOW EXEMPTION WITH ALL CONSEQUENTIAL BENEFITS. 5. IN THE CASE OF THE ASSESSEE SIMILAR ACTIVITIES W ERE TREATED AS CHARITABLE FOR AY 2009-10, 2010-11, 2011-12, 2012-1 3 AND 2013-14 AND RELIEF HAD BEEN GRANTED BY THE DELHI HIGH COURT AND THE ITAT IN ASSESSEES OWN CASE SO IN OUR CONSIDERED OPINION TH E LD. CIT(A) HAS PASSED THE DETAILED AND REASONED ORDER AND SAME DOE S NOT REQUIRE ANY KIND OF INTERFERENCE AT OUR END. I.T.A.NO.1659/DEL/2018 5 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/07/2021 SD/- SD/- (N.K. BILLAIYA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.07.2021 * KAVITA ARORA, SR. P.S. COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, ITAT: DELHI BENCHES-DELHI