This Court In The Case Of Institute Of Chartered Accountants Of Indiaand Anr v. Professional Assistance For Development Action

$~182 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 198/2022 & C.M.No.30914/2022 COMMISSIONER OF INCOME TAX ..... Appellant Through:Mr.Ajit Sharma, senior standingcounsel for the Revenue.counsel for the Revenue.versus PROFESSIONAL ASSISTANCE FOR DEVELOPMENT ACTION ..... Respondent Through:Mr.Piyush Kaushik, Advocate. % Date of Decision: 15[th]July, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORAJ U D G M E N T MANMOHAN, J (Oral): 1.Present Income Tax Appeal has been filed challenging the OrderpassedbytheIncomeTaxAppellateTribunal(‘ITAT’)inITANo.3662/Del./2015 for the Assessment Year 2011-12.2.Learned Counsel for the Appellant states that the ITAT has erred innot appreciating the fact that the activities of rendering services etc. by therespondent are in the nature of trade commerce or business which are notcharitable in nature and therefore hit by proviso to section 2(15) of theIncome Tax Act 1961 (‘the Act’). 3.He also states that the ITAT has erred in directing the AssessingOfficer to allow the exemption under Section 11 of the Act withoutappreciating the fact that the Assessee cannot be treated to be engaged incharitable activities. 4.A perusal of the paper book reveals that the assessee is engaged inactivitiesforupliftmentofthepoor,providingtrainingandskilldevelopment of the poor in the rural areas in the backward districts of thestates like, Bihar, Jharkhand, Orissa, Madhya Pradesh, Chhattisgarh andWest Bengal etc. The assessee gets grant from Central and StateGovernment and also donation from the various organization like, 'Gatefoundation' etc. The assessee has been allowed benefit of exemption undersection 11 of the Act continuously up to assessment year 2010-11. However,in the instant assessment year, the assessee has been denied said exemptionby the Assessing Officer invoking the proviso to section 2(15) of the Act.On further appeal, the CIT(A) allowed the exemption under section 11 of theAct with all consequential benefits. 5.The Revenue, being aggrieved by the Order of the CIT(A), preferredan appeal before the ITAT. The ITAT upheld the decision of the CIT(A)holding that the assessee is not engaged in any trade, commerce or businessand thus proviso of section 2(15) is not attracted to the case of the assessee. 6.The ITAT also noted that the assessing officer has not brought onrecord any evidences which would suggest that the activities of the assesseehad been carried out with profit motive. The Revenue could not controvertthe fact that the assessee has not charged any fee from the clients except thecost of project actually incurred. Even in the sanction letter of grant to theassessee, there is mention of supervision or monitoring of activities by the donor, but that in itself is not sufficient to hold that any profit motive isinvolved. The ITAT further holds that it is quite normal that a donor wouldwant to verify whether the grants have been incurred for the intendedpurpose which in our opinion, in any manner does not establish that theactivities of the assessee is business activity. 7.The ITAT further observed that in the assessment years 2009-10 and2010-11, the assessing officer has held the assessee is engaged in providingrelief to poor within the meaning of Section 2(15) of the Act. The assesseehas claimed that its activity during the year under consideration hasremained same and there is no change as compared to assessment years2009-10 and 2010-11. The ITAT following the rule of consistency dismissedthe appeal of the Revenue. donor, but that in itself is not sufficient to hold that any profit motive isinvolved. The ITAT further holds that it is quite normal that a donor wouldwant to verify whether the grants have been incurred for the intendedpurpose which in our opinion, in any manner does not establish that theactivities of the assessee is business activity. 7.The ITAT further observed that in the assessment years 2009-10 and2010-11, the assessing officer has held the assessee is engaged in providingrelief to poor within the meaning of Section 2(15) of the Act. The assesseehas claimed that its activity during the year under consideration hasremained same and there is no change as compared to assessment years2009-10 and 2010-11. The ITAT following the rule of consistency dismissedthe appeal of the Revenue. 8.This Court in the case of Institute of Chartered Accountants of Indiaand Anr. Vs. Director General of Income Tax (Exemptions), Delhi andOrs., (2013) SCC OnLine Del 2401 with reference to State of AndhraPradesh Vs. H Abdul Barhi & Bros Vs. (1964) 15 STC 644 (SC) hasobserved that merely because a fee or some other consideration is collectedor received by an institution, it would not lose its character of having beenestablished for a charitable purpose. Furthermore, this Court in the case ofPCIT vs Servants of People Society has held as under: “5. This Court in ITA No.154/2021 titled ‘Commissioner ofIncome Tax (Exemptions) Delhi vs. Association of State RoadTransport Undertakings has held that it is settled law that the firstproviso to Section 2(15) of the Act does not exclude entities whichare essentially for charitable purpose but are conducting someactivities for a consideration or a fee. This Court has further heldthattheobjectofintroducingfirstprovisoistoexcludeorganizations which are carrying on regular business with profitIncome Tax (Exemptions) Delhi vs. Association of State RoadTransport Undertakings has held that it is settled law that the firstproviso to Section 2(15) of the Act does not exclude entities whichare essentially for charitable purpose but are conducting someactivities for a consideration or a fee. This Court has further heldthattheobjectofintroducingfirstprovisoistoexcludeorganizations which are carrying on regular business with profit motivewithintenttodistributetheprofittotheshareholders/owners. 6. A perusal of the paper book reveals that the assessee/society isrunning a printing press and publishing a newspaper. The profit sogenerated is used for charitable purposes and apparently there isno profit motive in the activities of the assessee. As such it cannotbe said that the assessee is involved in any trade, commerce orbusiness. Consequently, the mischief of Proviso to Section 2(15) ofthe Act is not attracted. 7. In any event, the assessee/society is charitable in nature as theprofit, if any, made by the assessee/society is being ploughed backfor charitable activities. Further, the appellant itself has grantedthe assessee registration under Section 12A, recognition underSection 10(23C)(vi) and Exemption under Section 80G of the Act. 8. Consequently, this Court is in agreement with the findings of theCIT(A) and ITAT that the assessee/society does not carry on anybusiness, trade or commerce with the intent of earning anddistributing profit. 7. In any event, the assessee/society is charitable in nature as theprofit, if any, made by the assessee/society is being ploughed backfor charitable activities. Further, the appellant itself has grantedthe assessee registration under Section 12A, recognition underSection 10(23C)(vi) and Exemption under Section 80G of the Act. 8. Consequently, this Court is in agreement with the findings of theCIT(A) and ITAT that the assessee/society does not carry on anybusiness, trade or commerce with the intent of earning anddistributing profit. 9. The Supreme Court in the case of Ram Kumar Aggarwal & Anr.vs. Thawar Das (through LRs), (1999) 7 SCC 303 has reiteratedthat under Section 100 of the Code of Civil Procedure thejurisdiction of the High Court to interfere with the orders passed bythe Courts below is confined to hearing on substantial question oflaw and interference with finding of the fact is not warranted if itinvolves re-appreciation of evidence. Further, Supreme Court inState of Haryana &Ors. vs. Khalsa Motor Limited &Ors., (1990) 4SCC 659 has held that the High Court was not justified in law inreversing, in second appeal, the concurrent finding of the factrecorded by both the Courts below. The Supreme Court in HeroVinoth (Minor) vs. Seshammal, (2006) 5 SCC 545 has also heldthat “in a case where from a given set of circumstances twoinferences of fact are possible, the one drawn by the lowerappellate court will not be interfered by the High Court in secondappeal. Adopting any other approach is not permissible.” It has also held that there is a difference between question of law and a“substantial question of law”.Consequently, this Court finds that there is no perversity in thefindings of the CIT(A) and ITAT.” 9.Consequently, this Court is of the view that no question of law arisesfor consideration in the present appeal. Accordingly, the same is dismissed. MANMOHAN, J JULY 15, 2022KA MANMEET PRITAM SINGH ARORA, J