Facts of the Case

The appeal was filed by the Revenue challenging the order dated 06.08.2021 passed by the Income Tax Appellate Tribunal concerning Assessment Year 2013–14. The dispute centered on whether the activities of GS1 India qualified as “charitable purpose” under Section 2(15) of the Act.

The respondent/assessee, GS1 India, claimed exemption on the basis that it was engaged in activities advancing general public utility. However, the Revenue contested this claim, arguing that the nature of its activities and receipts did not fall within the permissible limits of charitable purpose under the amended provisions.

Additionally, there was a delay of 300 days in refiling the appeal, which was condoned by the Court as it was not opposed by the respondent.

Issues Involved

  1. Whether the activities of GS1 India fall within the scope of “charitable purpose” under Section 2(15) of the Income Tax Act, 1961.
  2. Whether the Income Tax Appellate Tribunal’s order granting relief to the assessee was sustainable in light of the Supreme Court ruling.

Petitioner’s Arguments (Revenue)

  • The Revenue argued that the Tribunal erred in granting relief to the assessee.
  • It was contended that GS1 India’s activities generated substantial receipts from trade and business entities, thereby attracting the proviso to Section 2(15).
  • The exemption claimed was inconsistent with the amended statutory framework governing charitable institutions.

Respondent’s Arguments (Assessee)

  • The assessee relied on the judgment of the Supreme Court of India in
    Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority
  • It was submitted that the issue had already been settled by the Supreme Court, including findings directly concerning GS1 India.
  • The assessee did not object to setting aside the Tribunal’s order in terms of the Supreme Court ruling.

 Court’s Findings / Order

  • The Delhi High Court noted that the issue was squarely covered by the Supreme Court judgment in Ahmedabad Urban Development Authority.
  • The Court observed that as per paragraph 253.E.2 of the Supreme Court judgment:
    • GS1 India is engaged in advancement of general public utility;
    • However, its services benefit trade and business entities and generate significant receipts;
    • Therefore, exemption under Section 2(15) cannot be granted under the amended provision.
  • Accordingly:
    • The order of the Income Tax Appellate Tribunal was set aside;
    • The appeal was disposed of in terms of the Supreme Court judgment.

Important Clarification by the Court

  • The Court clarified (as per Supreme Court ruling) that:
    • Future claims of exemption by GS1 India are not barred;
    • Such claims may be independently assessed if:
      • Services are provided on a cost basis, and
      • Only a nominal markup is charged.

Link to download the order - 

https://delhihighcourt.nic.in/app/showFileJudgment/RAS21072023ITA3912023_142112.pdf

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