INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Amount deployed towards share capital of BARC treated in the nature of investment in violation of section 11(5) read with section 13(1)(d) -

Assessee was established with the main object of protecting the interest of member broadcasters in field of television broadcasting, including television viewing audiences. In accordance with Central Government policy of Ministry of Information and Broadcasting (MIB) and TRAI, assessee was promoted and registered Broadcast Audience Research Council (BARC) as a not for profit Company. Assessee claimed exemption under section 11 and assessment was concluded while denying exemption under sections 11 and 12 by invoking section 13(1)(d), holding that neither TRAI nor MIB ever mandated assessee to incorporate BARC as a not for profit organization, and assessee was not mandated to get registered under section 12A read with section 12AA. AO further observed that provisions, override the recommendations of TRAI and MIB which the assessee agitated that investment in BARC was not in violation of section 11(1)(5) read with section 13(1)(d). Held: BARC enabled assessee to fulfil its 'objects incidental or ancillary to the attainment of the main objects, like to affiliate, admit to membership, aid and to receive aid from any other society, association, company, corporation firm, partnership or person promoting. BARC, being a not for profit Company was not permitted to distribute any dividends or profits to its shareholders. On liquidation, its MOA provides that any surplus left shall be transferred to another section 25 Company undertaking similar objectives and cannot distribute any such funds to its shareholders which establishes that the deployment of funds in BARC is not for earning any income or profit, rather only to meet the objectives of assessee. It cannot be said that the assessee invested the amounts and committed violation within the meaning of section 13(1)(d). Therefore, there was no violation committed by the assessee within the meaning of the provisions under section 11(5) read with section 13(1)(d).

Distinguished:DIT v. Alarippu (2000) 111 Taxman 511 (Delhi) : 2000 TaxPub(DT) 1398 (Del-HC) DIT v. Acme Educational Society (2010) 326 ITR 146 (Delhi) : 2010 TaxPub(DT) 2142 (Del-HC)

REFERRED : CIT v. U.P. Cooperative Federation Ltd. AIR 1989 SC 915 : 1989 TaxPub(DT) 0926 (SC) Indian Broadcasting Foundation v. Chief CIT & Ors. [W.P.(C) No. 2489/2017 & CM Nos. 35798-35799/2016, dt. 17-3-2017] Anand Charitable Trust & Anr. v. CWT & Ors. (2002) 123 Taxman 494 (Delhi) : 2002 TaxPub(DT) 1325 (Del-HC) CIT v. Sir Sobha Singh Public Charitable Trust (2001) 250 ITR 475 (Delhi) : 2001 TaxPub(DT) 1507 (Del-HC) CIT v. Aloo Investment Co. (P) Ltd. (1979) 1 Taxman 433 (Bom.) : 1980 TaxPub(DT) 0540 (Bom-HC) Third ITO v. Jhaverbhai Patel Charitable Trust (1992) 43 ITD 195 (Bom.) : 1992 TaxPub(DT) 0927 (Mum-Trib)

FAVOUR : In assessee's favour

A.Y. :

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