Exemption cannot be denied to Charitable Entity merely because Advertisement of Scholarship to Poor Student was published in One News Paper Only: Delhi HC [Read Order]

A division bench of the Delhi High Court has held that the exemption under the provisions of the Income Tax Act, 1961 cannot be denied to a charitable entity merely for the reason that the advertisement for the scholarship to poor students was published in a single news paper.

The Revenue challenged the order of the Tribunal wherein the order of the income tax department was quashed. The Revenue contended that the order of the Tribunal ignored the fact that the assessee has paid most of the scholarship amount to the students of a particular religious community which is a clear violation of Section 13(1)(b) of the Income Tax Act, 1961.

Earlier, the Assessing Officer had found that the Respondent-assessee had given merit-cum scholarship/financial assistance to candidates predominantly belonging to a particular religious community which is violative of Section 13(1)(b) of the Act. He further states that the advertisement for educational scholarship was published by the assessee in Urdu language and, that too, in one newspaper only. According to him, this clearly indicates that the assessee wanted to restrict the circulation of the scholarship advertisement as its intent was to provide benefit to a particular religious community only.

Justice Manmohan and Justice Dinesh Kumar Sharma observed that “moreover, just because advertisement was published in Urdu language and that too in one newspaper, it cannot be presumed that it was targeted at the students belonging to a particular community only. In fact, a similar finding of CIT(A) in the assessment year 2010-11 was accepted by the revenue and was not even challenged before the Tribunal.”

“Undoubtedly, the principle of res-judicata and estoppel are not applicable in taxation matters. However, it has been held that a departure from a finding during the past years would result in a contradictory finding (Commissioner of Income Tax vs. Sridev Enterprises (1991) 192 ITR 165). Consequently, this Court is of the view that consistency of approach must be maintained. Accordingly, no substantial question of law arises in the present batch of appeals and the same is dismissed,” the Court said.

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