TMI Blog2024 (1) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax proceedings. In other words, there is no rule that different view cannot be taken for subsequent years when a view has been taken for earlier assessment years. In our considered view, it is always possible to take a different view, in case, the facts brought on record is apprised in right perspective of law. Therefore, the arguments of the Ld.DR that the AO has failed to take note of earlier assessment orders while completing assessment is incorrect and not acceptable We are of the considered view that assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue. First of all, the AO has considered the issue of exemption u/s. 11 of the Act, while completing assessment u/s. 143(3) of the Act, which is evident from the assessment proceedings, where, the AO has called for various details, and in reply, the assessee has submitted relevant details. The sole basis for the CIT(Exemptions) to invoke provisions of Sec.263 of the Act, is the decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority ( 2022 (10) TMI 948 - SUPREME COURT ] and in our considered view, said judgment canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction in view of lack of independent satisfaction on his part to reckon the assessment order as erroneous causing prejudice to the interest of the revenue. 5. The CIT(E)failed to appreciate that conclusion reached in reckoning the appellant trust as not a educational trust was wrong, erroneous, incorrect Ig invalid, unjustified and not sustainable both on facts and in law. 6. The CIT(E)failed to appreciate that decision rendered in reckoning the appellant as a GPU trust was wrong, erroneous, incorrect, invalid, unjustified and-not sustainable both on facts and in law. 7. The CIT(E)failed to appreciate that having not recorded independent findings with regard to the determination of the status of the appellant trust, related findings from para 7 of the impugned order were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 8. The CIT(E)failed to appreciate that even in the context of reckoning the appellant trust as a GPU trust, reading along with the law laid down by the Supreme Court, the receipts from the prohibited activities as per the proviso to the Section 2(15) of the Act had not exceeded the 20% threshold l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to have appreciated that the decision to direct the NaFAC to revisit the issue should be reckoned as bad in law, especially in view of the decision referred to by the SC being supportive to the stand taken by the appellant trust herein. 15. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are that the assessee s Trust is a registered charitable Trust u/s. 12AA of the Income Tax Act, 1961 (in short the Act ) from AY 1976-77 onwards. The main objects of the Trust as per its Trust Deed dated 11.10.1973 is to promote science, literature, fine arts and useful knowledge and organize competitions, debates, and examinations, etc. The assessee has filed its return of income for AY 2018-19 on 01.10.2018 admitting nil total income by claiming exemption u/s. 11 of the Act. The assessee had also filed Form No.10 on 29.09.2018 and had accumulated amount of Rs. 7,62,339/- for subsequent years to be applied for charitable purpose as per the objects of the Trust. The case has been subjected to scrutiny assessment and the assessment has been completed u/s. 143(3) r.w.s.143(3A) 143(3B) of the Act, on 16.03.2021 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, issued notice u/s. 142(1) of the Act, on various dates and called for necessary details, including objects of the Trust and its activities and also application of income for charitable purpose. The assessee has filed various details. The AO after considering relevant facts has rightly accepted exemption u/s. 11 of the Act. Therefore, it cannot be said that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue. 6. The Ld.CIT(Exemptions) after considering relevant submissions of the assessee and also taken note of certain judicial precedents, including the decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra) observed that assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue, because, the AO has failed to carry out required enquiries, he ought to have been carried out in light of objects and activities of the Trust and has simply allowed exemption claimed u/s. 11 of the Act. The Ld.CIT(Exemptions) has discussed the issue at length in light of decision of the Hon ble Supreme Court in the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Trust are squarely falls under the definition of education as defined u/s. 2(15) of the Act. Therefore, the Ld.CIT(Exemptions) is clearly erred in directing the AO to invoke provisions of Sec.2(15) of the Act and consider the objects of the Trust as GPU in nature in light of subsequent decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra) without appreciating the fact that the Hon ble Supreme Court, subsequently, has clarified that said judgement is applicable subsequent to the assessment year, in which, said judgment has been passed. In the present case, the sole basis for the Ld.CIT(Exemptions) to set aside the assessment order is decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra), but the Ld.CIT(Exemptions) failed to make out a case as to how the objects of the Trust do come under the objects of any other object of the GPU. Therefore, he submitted that the order of the Ld.CIT(Exemptions) should be set aside. 9. The Ld.DR Shri R. Clement Ramesh Kumar, CIT, supporting the order of the Ld.CIT(Exemptions) submitted that the sole basis for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(Exemptions) assumed jurisdiction u/s. 263 of the Act, on the ground that assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue. According to the Ld.CIT(Exemptions), the AO failed to carry out required enquiries he ought to have been carried out in light of objects and activities of the Trust and gross receipts earned by the Trust for the impugned assessment year. The Ld.CIT(Exemptions) has discussed the issue at length in light of gross receipts of the assessee s Trust and observed that the assessee s Trust has derived income from hiring of premises, rent, advertisement and license fee, etc., and said receipts are in the nature of trade, commerce and business, but not charity as defined u/s. 2(15) of the Act. The Ld.CIT(Exemptions) further observed that the case of the assessee is squarely covered by the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra) where the Hon ble Supreme Court has clearly explained charitable Trust and GPU trust and further, if GPU trust carries out activities which are in the nature of trade, commerce and business, then, the provisions of Sec.2(15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, in our considered view, the Ld.CIT(Exemptions) cannot substitute his view and claim that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue. 12. Having said so, let us come back to the observations of the CIT(Exemptions) with regard to objects and activities of the Trust and further, classifying the Trust as GPU which falls under the mischief of proviso to sec.2(15) of the Act. The sole basis for the CIT(Exemptions) to arrive at above conclusion is the nature of income/receipt generated by the assessee for the impugned assessment year. The CIT(Exemptions) further observed that major portion of the gross receipts of the assessee s Trust is from hire charges, rent, advertisement and interest, etc., and thus, said activity is only a trade, commerce and business but not charity. We do not agree with the findings of the CIT(Exemptions) for the simple reason that the income/receipts of any Trust, will not determine whether the activities carried out by the said Trust, is chartable in nature or trade, commerce and business. Further, the nature of the Trust has to be seen in light of objects and its activities. Admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing music programs on par with rent charged by any other persons. The CIT(Exemptions), simply on the basis of gross receipts of the assessee s Trust came to the conclusion that the activities are in the nature of trade, commerce or business. Therefore, we are of the considered view that the observations of the CIT(Exemptions) that the assessee s Trust is carrying out activities which are in the nature of trade, commerce or business or without any basis and devoid of merits, and thus, rejected. 13. Further, the CIT(Exemptions) has taken support from the order of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra). In our considered view, the basis for the CIT(E) to issue show cause notice u/s. 263 of the Act dated 06.03.2023 is the decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra). The Hon ble Supreme Court has held that if GPU Trust carrying out activities which are in nature of trade and commerce, then, provisions of Sec.2(15) of the Act, is applicable and gross receipts from said activity exceeds prescribed limit, then, such Trust cannot claim exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incorrect and not acceptable. 15. At this stage, it is relevant to consider the decision of the ITAT in the case of Madras Motors Sports Club (AOP) in ITA No.510/Chny/2023. The Tribunal has considered an identical issue and after considering the decision of the Hon ble Supreme Court in the case of ACIT(Exemptions) v. Ahmedabad Urban Development Authority (supra), has held as under: 7. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the CIT(Exemption) while passing revision order has not at all examined the aspect of violation of the proviso to provision of section 2(15) of the Act and moreover the AO while framing assessment u/s. 143(3) of the Act has examined the claim of exemption u/s. 11 of the Act, as is evident from the above computation reproduced from the assessment order. We noted that the Hon ble Supreme Court while delivering judgment vide order dated 19.10.2022 in the case of Ahmedabad Urban Development Authority, supra has elaborately laid down certain principles and legal position was interpreted vis-a-vis the claim of exemption u/s. 11 12 r.w.s. 2(15) of the Act. But subsequently vide order dated 03.11.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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