TMI Blog2024 (2) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... es and contractual income. Secondly, there is no element of activity in the nature of trade, commerce or business, or any activity or rendering any service in relation to any trade, commerce or business. Thirdly, in absense of any cogent reason, receipts in question cannot be 'advancement of any other object of general public utility'. If the deductor in its Income Tax Return, under misconception, deducts TDS under Sections 194C and 194J of the Act, the same would not disentitle the assessee to claim benefit under Sections 11 and 12 of the Act unless the case of assessee is specifically hit by the Proviso of Section 2(15) of the Act, which is not the case here. Proviso to Section 2(15) of the Act would not get attracted merely on the basis of deduction of TDS by the donor under a particular head. Deduction of TDS by donor would not be the determinative factor for denial of benefits under Sections 11 and 12 of the Act. The respondent-Revenue, in the instant case, in the preceding years as well as in the succeeding years, under almost similar circumstances, has accepted the exemption claimed by the assessee under Sections 11 and 12 of the Act and, therefore, should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee receives various grants from the Government as well as the private sector which is exempted from tax under Sections 11 and 12 of the Act. 3. The present writ petition relates to Assessment Year [ AY ] 2017-18. It is the case of the assessee that at no point of time, except for the AY 2017-18 was the charitable status of the assessee doubted by the respondent-Revenue and for all previous AYs, specifically for the AYs 2011-12, 2012-13, 2013-14, and 2015-16, under similar circumstances, exemption under Sections 11 and 12 of the Act was granted to the assessee and even for the subsequent AY i.e., AY 2018-19 as well, similar benefit was extended. However, the benefits for the relevant AY in question have been denied merely on the ground that the donor has deducted tax at source [ TDS ] under Sections 194C and 194J of the Act, while allocating requisite grants to the assessee. 4. The assessee submits that neither in the assessment order nor in the revisional order, whereby, the revision has been dismissed, was any reason assigned to lawfully deny benefits under Sections 11 and 12 of the Act. According to the assessee, the donor s deduction of TDS under a particular h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing them as professional/contractual fees paid to the assessee. It is, thus, submitted that those receipts cannot be treated to be in the nature of the voluntary contribution of the assessee and accordingly, no interference is called for by this Court. 8. We have heard learned counsel appearing on behalf of the parties and perused the record. 9. A bare perusal of the assessment order dated 22.12.2019 would indicate that for the year in question i.e., AY 2018-19, the assessee s foundation had disclosed total receipts as per the income and expenditure account to the tune of Rs.20,32,12,834/-. The said receipts include receipts amounting to Rs.5,90,42,892/- allegedly in the nature of consultancy fees and contractual receipts which comprise 29.05% of the total income. 10. As per the assessment order, the rationale for describing the receipt of Rs.5,90,42,892/- as consultancy fees and the contractual receipts is founded on the ground that the deductors such as the Grantor Companies, have deducted TDS under Section 194C of the Act for contractual works or Section 194J of the Act for consultancy services, respectively and the assessee acted as per the instructions of the Grantor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently not eligible for benefits of exemptions of section 11 12 of the Act by virtue of operation of section 13(8) of the Income Tax Act 1961. Thus, benefits of exemptions of section 11 12 are denied to the assessee and is assessed as normal AOP under chapter IV of the Income Tax Act 1961 15. The assessee being dissatisfied by the aforesaid order, filed a revision under Section 264(1) of the Act before the revisional authority. In terms of paragraph 2.18 of the revision petition, the assessee had, besides other grounds, set up a specific case that deduction or non-deduction of TDS by some of the donors would not alter the status of the assessee being charitable in character, so long as the activities of the assessee are relatable to a charitable purpose. 16. The revisional authority by the impugned order dated 27.03.2021 dismissed the revision petition of the assessee while reiterating the conclusion arrived at by the AO inter alia holding that the assessee s foundation falls under the sixth limb of Section 2(15) of the Act i.e. Advancement of any other object of general public utility . Paragraphs 4.3 to 4.6 of the order passed by revisional authority read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvation 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 involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, 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 actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;] 18. The Proviso to Section 2(15) of the Act would indicate that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutions, tied-up grants received from donors if meant to be utilized for charitable purposes and not for other purposes, then those grants are non-taxable and thus, the charitable institutions are eligible to avail the benefits under Sections 11 and 12 of the Act. The relevant paragraphs of the said decision are reproduced herein:- 7. With regard to the second contention, the findings recorded by the tribunal are that the respondent-assessee had received grants for specific purposes/projects from the government, non-government, foreign institutions etc. These grants were to be spent as per the terms and conditions of the project grant. The amount, which remained unspent at the end of the year, got spilled over to the next year and was treated as unspent grant. The Commissioner of Income Tax (Appeals) while deleting the said addition had observed as under:- I have considered the assessment order and submissions of the appellant along with evidences placed on record. On perusal of the evidences regarding the project grants placed on record, it is seen that the said amounts are received/sanctioned for a specific purpose/project to be utilized over a particular period. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions laid down in Sections 11 to 13 of the Act and the total income of the assessee returned at NIL, was accepted. The extract of the assessment order dated 06.03.2014 reads as under: Assessment Order Return declaring NIL income was filed in this case on 26.09.2012. The case was selected for scrutiny on the basis of guidelines for selection of cases for scrutiny. Notice u/s l43(2) was issued on 08.08.2013 fixing the case for hearing on 26.08.2013 and various dates. In response to the notices u/s l43(2) / l42(l) Sh. Nand Kishore Pandey, CA authorized representative of the. assesses attended the proceedings from time to time, filed the details, submissions and explanations as called for. The books of accounts were examined on test check basis. The Assesses registered u/s 12A since 01.04.2002. The society is also registered u/s 80G (5)(vi) vide DlT(E) 201 l-2012/A-1544/2067 order dated 10.10.2011 which is valid from 01.04.2010 onwards till it is rescinded. 24. Similarly, for AY 2013-14, TDS to the tune of Rs.24,59,409/- was deducted. In terms of the assessment order dated 26.11.2015, the assessee was found to fulfil the conditions laid down under Sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. The society is registered u/s 12A of the Income Tax Act, 1961 vide order F. No. DlT(E)/2002-03/A-l544/109 dated 28.04.2003. It is also registered u/s 80G(5)(vi) vide order no. DlT(E) /2011-12/A-l544/2067 dated 10.010.2011. From the details submitted by the assessee, it is seen that the assessee engaged in social development and welfare activities to uplift the poor and underprivileged children, women and youth through programmes health and environment in various states of Indian the receipts of Project are donations for Gail India, WAPCOS Limited, Ministry of Rural Development, Oil and Natural Gas Corporation Ltd etc, to carry out these activity for fulfilling their objects and purpose for all type community. The objects of the society appears to be charitable in nature within the meaning of section 2(15) of the Income-tax Act, 1961. The benefit of section 11 12 is allowed to the assessee. Assessed at NIL income u/s 143(3) of the Act. Issue necessary forms. Deficit, if any, is not allowed to be carried forward. Give credit for prepaid taxes after verification. 26. More interestingly, even for the subsequent year i.e., AY 2018-19 again TDS was deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d question. It is true that each assessment year being independent of the other, the doctrine of res judicata does not strictly apply to income-tax proceeding's, but where an issue has been considered and decided consistently in a number of earlier assessment years in a particular manner, for the sake of consistency, the same view should continue to prevail in subsequent years unless there is some material change in the facts. In the present case, learned counsel for the Revenue has not been able to point out even a single distinguishing feature in respect of the assessment year in question which could have prompted the Assessing Officer to take a view different from the earlier assessment years, in which the same income was brought to tax as income from business. 29. Furthermore, in the landmark case of Radhasoami Satsang v. CIT [AIR 1992 SC 377], the Hon ble Supreme Court while recognizing the importance of a consistent approach by the respondent-Revenue in taxation matters, held as under:- 16. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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