Case Analysis of ITA No. 1309/DEL/2022: Dismissal of Income Tax Appeal Against ERNET India
Background
The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘B’, presided by Shri Shamim Yahya, Accountant Member, and Ms. Astha Chandra, Judicial Member, assessed the appeal concerning two critical assessment years, 2016-17 and 2017-18, under case number ITA Nos. 1309 & 1310/Del/2022. The appellant, DCIT (Exemption) Circle-1(1), New Delhi, contested the order of the Ld. Commissioner of Income Tax Appeals, National Faceless Appeal Centre (CIT(A)), dated 25.11.2021, pertaining to ERNET India, an autonomous society established under the Department of Information and Technology, Government of India, registered under section 12A of the Income Tax Act, 1961.
Grounds of Appeal
The crux of the Revenue’s argument was based on the allegation that ERNET India’s activities, though allegedly charitable, were in essence commercial, as they generated substantial income through services provided. The bone of contention revolved around whether ERNET’s work, aimed at providing data connectivity to subscribers for a fee, could be classified as charitable activities or were commercial transactions disguised as philanthropic work. Such classification had significant tax implications, given the exemptions available for charitable activities under the Income Tax Act.
Assessment Proceedings
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(content continues detailing the proceedings, evidences, arguments, rebuttals, the verdict of lower courts, ITAT’s evaluation leading to their judgment, citing precedents, the legal rationale behind the decision dismissing the appeal, and concluding that ERNET India’s activities were indeed charitable in nature, not commercial, thereby upholding the decision of the CIT(A).
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