Trust Charging Fees Alone Does Not Attract Proviso to S. 2(15): ITAT Remands S. 11 Exemption Denial Matter for Fresh Consideration [Read Order]

The Cochin Bench of Income Tax Appellate Tribunal (ITAT) remanded Section 11 matter for fresh adjudication holding that trust charging fees alone does not attract provision to Section 2(15) of the Income Tax Act.

Centre for Socio Economic and  Environmental Studies (assessee) is a society registered under the societies registration Act with the objective of providing services to Kerala. The assessee filed Income Tax Return declaring Nil income after claiming exemption under section 11 of the Income Tax Act.

The Assessing Officer (AO) completed the assessment at a total income of Rs. 18,23,020 by denying exemption under section 11 of the Income Tax Act. The AO placed a reliance on the proviso to section 2(15) of the Income Tax Act citing that the assessee charging fees for services rendered by it.

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Aggrieved by the order of the AO, the assessee filed an appeal before the Commissioner of Income Tax (appeals)[CIT(A)]. The CIT(A) confirmed the action of the AO and dismissed the appeal of the assessee.

Aggrieved by the order of the CIT(A), the assessee filed a present appeal before the ITAT. The counsel for the assessee submitted that merely the assessee charging fees for the services rendered did not attract the provision of section 2(15) of the Income Tax Act.

The Assesee’s Counsel also requested to remand the matter by relying on the supreme court judgement in the case of ACIT v. Ahmedabad Urban Development Authority.  On the other hand, the Counsel for the Revenue opposed the remand request and sought to dismiss the appeal filed by the assessee.

The Single member Bench comprising Inturi Rama Rao (Accountant Member) observed that the AO denied exemption under section 11 of the Act solely on the ground that the assessee was charging fees for services rendered by relying on the section 2(15) of the Act.

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The tribunal also observed that the CIT(A) decided the matter without discussing the factual position as well as the law governing the issue. The tribunal set aside the order of the CIT(A).

The tribunal remanded the matter to the AO for fresh adjudication of the issue.

The tribunal clarified that the contentions were left open which to be considered by the AO at time passing fresh assessment order. The appeal filed by the assessee was partly allowed.

To Read the full text of the Order CLICK HERE

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