ITAT Grants Exemption for Charitable Trust Under Section 11

The Income Tax Appellate Tribunal (ITAT), Varanasi bench, Vijay Pal Rao, Judicial Member, and Ramit Kochar, Accountant Member rule that charitable entities under Section 2(15) of Income Tax Act are eligible for exemption under Section of the Income Tax.

The taxpayer, M/s. Varanasi Development Authority, furnish an income return on 30.09.2011, declaring a total income of Rs. Nil. revenue chosen the taxpayer’s case for doing the scrutiny assessment u/s. 143(3) read with Section 143(2) of the 1961 Act. Statutory notices under Sections 143(2)/142(1) of the 1961 Act would be allotted by AO over time.

In the assessment proceedings, the taxpayer approaches AO and furnishes the answers and other information, and provides the books of accounts, bills, and vouchers, which were test checked by AO. The question is about the claim of the taxpayer for the allotment of the exemption under Sections 11, 12, and 13 of the 1961 Act, which stood disallowed by the below authorities.

Under Section 12A of the 1961 Act, the taxpayer has been registered. The taxpayer is a State Government body formed by a separate Act of State Government. Taxpayers’ object is of the general public utilities for management, regulation, and regulation of infrastructure comes within Varanasi. Under Sections 11, 12, and 13 of the 1961 Act, an exemption has been claimed by the taxpayer. The taxpayer has furnished Form-10B for needed exemptions u/s 11,12 and 13 of the 1961 Act.

Under section 44AB, the report of the audit was indeed get furnished by the taxpayer in the specified forms No. 3CB and 3CD. They see that the taxpayer’s object authority would be described under section 7 of the Uttar Pradesh Urban Planning and Development Act, 1973.

AO revealed, that the taxpayer does not belong to the education field or any field concerning the medical relief of the poor, the taxpayer’s objects and activities can be specified to come beneath the scope of ‘general public utilities’ u/s 2(15) of the 1961 Act.

Dissatisfied with the assessment framed by AO the taxpayer furnished the first appeal before CIT(A), who was happy to permit the taxpayer’s petition in the first round of litigation. As the revenue has been affected filed the second appeal with the tribunal in the first round of litigation, in which the Tribunal, restored the case to the file of CIT(A) for fresh adjudication and after that decision with respect to the taxpayer. The taxpayer files an appeal to the tribunal as he was aggrieved by the CITs order.

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The Tribunal monitors, “the assessee is a charitable entity u/s 2(15) of the 1961 Act, being engaged in the advancement of object of general public utility, with the predominant object of tackling problems of town planning and urban development in a planned manner, and shall be eligible for exemption u/s 11 of the 1961 Act.”