COMMISSIONER OF INCOME-TAX Vs. JYOTI PRABHA SOCIETY

JUDGEMENT

(1.) Both these appeals, preferred under Section 260A of the Income-tax Act, 1961 (hereinafter referred as the Act ) are directed against the same judgment and order dated 31-10-2006, passed by the Income-tax Appellate Tribunal, Delhi Bench G , New Delhi (ITAT), whereby the said authority has dismissed the appeals of the revenue, and affirmed the order passed by the Commissioner of Income-tax (Appeals)-II, Dehradun [hereinafter referred as CIT(A)-II ], holding that the respondent/assessee is entitled to the exemptions under Section 11 of the Act.

(2.) Heard learned Counsel for the parties and perused the record.

(3.) Brief facts of the case are that the assessee-society M/s. Jyoti Prabha Society, Nainital, filed its return of income for the assessment year 1996-97 showing net deficit of Rs. 9,50,000 and for the assessment year 2001 -02, showing nil income. Said returns were processed under Section 143(1)(a) of the Act. The Assessing Officer (hereinafter referred as the AO) took the view that the assessee/respondent is not involved in the charitable activity, as such, he re-opened the cases under Section 147 of the Act, and issued notices under Section 148 thereof. After receiving the reply from the assessee/respondent, the Assessing Officer found that, though, the assessee is registered under Section 12A of the Act, as a charitable society, but its activity of letting out the building to other Society to run the educational institution does not constitute the charitable purpose. Consequently, after examining the income and current expenditures shown by the assessee, the Assessing Officer assessed tax to the tune of Rs. 7,89,668 (for assessment year 1996-97) and a sum of Rs. 6,86,959 (for assessment year 2001-02). Aggrieved by the assessment, the respondent preferred Appeals before the CIT(A)-II, Dehradun. Said authority considering the fact that the respondent-society and the society to whom the buildings are let out are charitable societies and have the similar object of imparting education, took the view that the charitable purpose is not lost by merely letting out the building to another charitable society. It took note of the fact that the assessee (present respondent) has a historical background, as under: