Serving of Liqour on Seminars conducted by Federation of Delhi Textile Merchants is not 'Charitable Activity': ITAT directs Fresh Adjudication [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi bench, while directing the income tax department to conduct a fresh adjudication in granting tax exemption to Federation of Delhi Textile Merchants, has held that serving of liquor on seminars cannot be treated as “charitable activity” under section 80G of the Income Tax Act, 1961.

While considering the income tax returns filed by the assessee for the relevant year, the Commissioner of Income Tax (Exemption) held that, the activity involving serving of liquor cannot be set to be charitable, usage of money collected from donors is to be utilized for welfare of general public, not for enjoyment of people enjoying the state of affairs of the federation. The serving of the liquor cannot be considered as charitable activity for the welfare of general public. The department further held that since the assessee failed to provide proper explanation, the genuine of the charitable activities cannot be verified.

It was argued on behalf of the department that the assessee has been serving the liquors, which emanates from the bills of seminar along with hotel bills. Serving of liquor cannot be charitable activities u/s 2(15) of the Act, therefore, justified and relied on the order of Commissioner of Income Tax (Exemption) in rejecting the Application for grant of exemption u/s 80G of the Act.

A bench of Shri Shamim Yahya, Accountant Member and Shri Yogesh Kumar U.S., Judicial Member agreed with the contention of the department that ‘serving of liquor is not charitable activity u/s 2(15) of the IT Act.

Directing fresh adjudication, the Tribunal held that “But the Commissioner of Income Tax (Exemption) has not mentioned the details of such activities conducted by the appellant in the order impugned. The Ld. Commissioner of Income Tax (Exemption) has relied on various bills of the Appellant wherein the service of liquor has been mentioned, but the Ld.CIT(A) has not mentioned the details of clarification/reply given by the Applicant in the order impugned and not adjudicated the reply given by the Applicant. The order of the Ld.CIT(A) is non speaking one. Therefore, we deem it proper to set aside the matter to the fileof the CIT(Exemption) to decide the matter afresh in accordance with law and pass appropriate speaking order. Needless to say that an opportunity of being heard be given to the Appellant herein.”

To Read the full text of the Order CLICK HERE

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