INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Assessee received amounts as commercial fee - No personal gain to assessee

Assessee-company was registered under section 12AA. AO found that assessee received amounts as commercial fee. Further, it was found that some projects of assessee were not for undertaking any charitable activity but for providing ancillary professional services to the agencies/Government Departments in undertaking the charitable activities. Accordingly, AO disallowed exemption to assessee under section 11, as according to him, the assessee was covered by the proviso to amended definition in section 2(15). Assessee contended that even if for the services rendered for charitable purpose, some fees were charged, exemption under section 11 could not be denied so long as there was no private gain. Held: AO in subsequent assessment years considered similar objects of assessee and after examining the details found that objects of the assessee-company were charitable, within the meaning of section 2(15). The returned 'nil' income was thus accepted. It is well-settled law that though the principles of res judicata do not apply to the income tax proceedings, but rule of consistency shall have to be applied by the Income Tax Authorities. Since similar claim of assessee for exemption under section 11 was accepted by AO on same facts in subsequent assessment years, there was no justification to take a contrary view in the subject appeal. Further, even if assessee received some amount, the same was received for charitable purposes only and no personal gain was obtained by it from such amount. Hence, assessee would be entitled to avail exemption under section 11.

ReliedRadhasoami Satsang v. CIT (1992) 193 ITR 321 (SC): 1992 TaxPub(DT) 858 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

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