Income earned by NGO from charging Service Charges from its donor is Charitable in Nature: Delhi High Court [Read Order]

The Delhi High Court has held that, Income earned by NGO from charging Service Charges from its donor is Charitable in Nature.

The Assessee, NGO India HIV AIDS Alliance has submitted that, the ITAT was not justified in allowing exemption under Sections 11 and 12 of the Income Tax Act, 1961 to the assessee, when the actual work of the assessee is to receive and simply transfer grants to other NGOs and the assessee is found to be charging service charges from its donor in various forms like management fee, etc. for execution of projects.

The Assessee also stated that, the ITAT was not justified in holding that the activity of the assessee was charitable in nature when the activity carried out by the assessee yielded income which is commercial in nature.

While dismissing the Appeal filed by Commissioner of Income Tax (Exemptions) Delhi, a division bench comprising of Justice Manmohan and Justice Dinesh Kumar Sharma observed that, “Consequently, no substantial question of law arises for consideration as the questions sought to be raised in the present appeals are squarely covered by the decision of this Court”.

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