Charitable trust: Tax Exemption cannot be denied just because it published an advertisement in a particular language: It cannot be presumed that it gave benefit which targeted a particular community

The appeal was filed by the Commissioner of Income Tax (Exemptions) Delhi raising a common question of law, namely, as to whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal (ITAT) was correct in allowing the appeal of the Charitable trust ignoring the fact that the assessee has paid most of the scholarship amount to the students of a particular religious community which is a clear violation of Section 13(1)(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

Contention of Department

Learned counsel for the appellant states that the ITAT while passing the impugned order, overlooked the fact that the Assessing Officer had found that the Respondent-assessee had given merit-cum- scholarship/financial assistance to candidates predominantly belonging to a particular religious community which is violative of Section 13(1)(b) of the Act. He further states that the advertisement for the educational scholarship was published by the assessee in Urdu language and, that too, in one newspaper only. According to him, this clearly indicates that the assessee wanted to restrict the circulation of the scholarship advertisement as its intent was to provide benefit to a particular religious community only.

Court Order

4. However, upon perusal of the paperbook, this Court finds that both, the Commissioner Income Tax (Appeal) and Tribunal, have given a concurrent finding of fact that the benefit of scholarship to the poor and needy students was not confined to students of a particular community and a perusal of the list submitted by the assessee showed that the benefit had been granted to students from all communities without any discrimination.

5. Moreover, just because advertisement was published in Urdu language and that too in one newspaper, it cannot be presumed that it was targeted at the students belonging to a particular community only. In fact, a similar finding of CIT(A) in the assessment year 2010-11 was accepted by the revenue and was not even challenged before the Tribunal.

6. Undoubtedly, the principle of res-judicata and estoppel are not applicable in taxation matters. However, it has been held that a departure from a finding during the past years would result in a contradictory finding (Commissioner of Income Tax vs. Sridev Enterprises (1991) 192 ITR 165).

7. Consequently, this Court is of the view that consistency of approach must be maintained. Accordingly, no substantial question of law arises in the present batch of appeals and the same is dismissed.