2018 (6) TMI 964 - AT - Income Tax

Exemption u/s 11 - Registration u/s 80G r.w.s. 12A - Charitable activity - relief of the poor - activities concerned in the nature trade, commerce or business or not - Held that - Assessee-society is registered body with the Registrar of Societies, West Bengal since 18.03.1988 - as per CBDT s Circular No.11/2008 it is clear that relief of the poor includes within its ambit any purpose such as relief to indigent artisans - AO has himself accepted that the assessee to have been working with poor, marginal artisans and women crafts producers assisting them in enterprise development, skills and technical upgradation as well as in providing them market access for their corresponding products - thus we observe the assessee to be covered under the specified category of relief of the poor as per Board s beneficial circular issued u/s 119 of the Act. We therefore are of the view that Revenue s sole grievance deserves to be rejected - Decided against the revenue.

Summary

Issues involved:
Revenue's appeals challenging correctness of the Commissioner of Income Tax (Appeals) order for assessment years 2009-10, 2010-11, and 2012-13 regarding exemption claimed under section 11 of the Income Tax Act, 1961.

Analysis:

Issue 1: Interpretation of Section 2(15) of the Act
The primary issue in this case revolves around the interpretation of Section 2(15) of the Income Tax Act, particularly the proviso added by the Finance Act, 2008. The Revenue argued that the assessee did not have a specific object clause in its trust deed indicating relief of the poor and instead was engaged in trade, commerce, and business activities. The Assessing Officer disallowed the exemption claim based on this interpretation. However, the CIT(A) reversed this decision, considering the broader scope of relief of the poor as per CBDT's Circular No. 11/2008. The Circular clarified that relief to indigent artisans falls within the ambit of relief of the poor, making the assessee eligible for exemption.

Issue 2: Activities and Objects of the Assessee
The activities and objects of the assessee, a registered society established to assist artisans and small-scale industries, were scrutinized. The society aimed to provide marketing assistance, raw material sourcing, design inputs, and exhibition opportunities to artisans. The Assessing Officer highlighted the profit margin on products and the absence of a specific clause related to relief of the poor in the trust deed. However, the CIT(A) observed the society's extensive work with artisans and its contribution to their enterprise development and market access. This led to the conclusion that the society fell under the category of relief of the poor, as per the Circular.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, rejecting the Revenue's contention that the assessee's activities were solely commercial in nature. By considering the broader interpretation of relief of the poor and the societal impact of the assessee's work with artisans, the Tribunal affirmed the exemption claim under section 11 of the Act. The Revenue's appeals were dismissed, and the CIT(A)'s order was upheld for all three assessment years.