The Supreme Court of India remanded mater to the Assessing Officer (AO) regarding exemption of Newspaper’s Income utilised for charity.
The respondent/assessee society, Servants of People Society, stated that it was founded in 1921 by the legendary freedom fighter Lala Lajpat Rai during the freedom struggle for nation-building, general awareness, and the welfare of the people. In 1928, the famous freedom fighter of Odisha, Pandit. GopaBandhuDass, made a will of his property and his printing press, which is now managing the Oriya newspaper “Samaj” for the people’s welfare.
The assessee was building a hospital in the name of GopaBandhu Medical Research Centre in Odisha. The assessee was also allowed an exemption under Section 1 1 (1), but the same has been denied during the years 2010-11 and the Assessing Officer denied the exemption by invoking the proviso to Section 2(15) on the ground that the assessee is involved in trade, commerce, or business as it manages and runs a printing press and a newspaper.
The Counsel for the assessee argued that it was primarily a non-profit institution involved in charitable activities and did not engage in any trade, commerce, business, or any other activity. The assessee approached the Appellate Commissioner, who allowed its plea and directed that the income earned by it ought to enjoy the benefit of exemption. The revenue appealed the case to the ITAT and the High Court, both of which were unsuccessful.
The Counsel for the Department contended that the Appellate Commissioner and the Tribunal fell into error in granting the exemption to the assessee. The assessee is not merely earning revenue from the sale of newspapers but has also earned substantial advertisement revenue.
The division bench of Justice S. Ravindra Bhat and Justice Dipankar Datta has relied on the decision of CIT v. Ahmedabad Urban Development Authority and remitted the matter to the AO for fresh consideration of the nature of receipts in the hands of the assessee, which is engaged, inter alia, in publishing a newspaper, and to render fresh findings on the issue of whether the assessee is a charitable trust, entitled to exemption of its income under Section 11.
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