Activities of animal care is advancement of object of general public utility u/s 2(15)-High Court

Activities of animal care is advancement of object of general public utility. Society was entitled to benefit of Section 80G as amount spent was less than Rs. 10 lacs – High Court

ABCAUS Case Law Citation:
ABCAUS 2215 (2018) (02) HC

The Challenge/Grievance:
The case law involves the appeal filed by the Income Tax Department (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT/Tribunal) in granting of relief to the assessee under Section 80G of the Income Tax Act, 1961 (the Act).

The Questions of Law framed:
The question was if is ITAT was justified in directing grant of exemption u/s 80-G of the. Act when the respondent society  was carrying out the activities pertaining to Animal Care which was not covered under the definition of  ‘Charitable Purpose’ u/s 2(15) of the Act.

Brief Facts of the Case:
The respondent assessee was a Society involved in animal care and was incurring expenses towards animal care such as food, medical etc. The assessee was registered under Section 12-A of the Act by the Commissioner of Income Tax-Exemption (CIT) as charitable institution. However the same CIT dismissed the application filed by the assessee under Section 80G(5)(vi) of the Act holding that the activities carried out by the Society did not fall within the meaning of charitable activities as laid down under Section 2(15) of the Act. The CIT relied on the first proviso which read as under;

“Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or applications, or retention, of the income from such activity:”

On appeal by the society, the Tribunal upheld the contention of the assessee that the activities carried out by it would qualify as charitable activities in view of the second proviso to Section 2(15), which provides that the first proviso shall not apply if the aggregate value of the receipts from the activities in the nature of trade, commerce or business is ten lakh rupees or less in the previous year.

Observations made by the High Court:
The Hon’ble High Court opined that the Tribunal  had rightly held that the activities being carried out by the assessee would qualify as charitable activities in view of the proviso to Section 2(15).

The Hon’ble High Court also observed that the Finance Act, 2012 introduced sub-Section (8) to Section 13 of the Act with retrospective effect from 1.4.2009 which provides exception to Section 11 in certain cases. The sub-section reads as below:-

“Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause 15 of section 2 become applicable in the case of such person in the said previous year.”

The Hon’ble High Court noted that the record reflected that the amounts, which were expended by the assessee towards all these activities were less than Rs. 10,00,000/- and therefore, the activities would clearly be included to be covered under the provisions of Section 2(15) of the Act and in view of that the benefit of Section 80G(5)(vi) would also enure to the assessee.

The Hon’ble High Court also pointed out that in a recent judgment, a similar question arose with regard to charitable activities related to mid day meal activity. The Division Bench took a view that where the amount was less than Rs.10,00,000/- it would get the benefit of Section 2(15) of the Act.

Decision/ Conclusion/Held:
The question framed was answered against the Revenue assessee and in favour of the assessee.