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September 22, 2022

Section 2(15) states that serving liquor is not a charitable activity 

by CA Shivam Jaiswal in Income Tax

Section 2(15) states that serving liquor is not a charitable activity 

Facts and issues of the case

This appeal is filed by the assessee against the order dated 30.07.2019 of the ld. Commissioner of Income Tax (Exemptions), New Delhi  [hereinafter referred to CIT (E)] for Assessment Year 2019-20. The assessee has raised the following ground of appeal:-

  • That the Ld. Commissioner of Income  Tax  (Exemptions)  has erred in matter of law and fact by passing his order under section 80G(5)(vi) of the Income-tax Act, 1961 (‘Act) for rejection of the application of the applicant under section 80G of the Act.
  • That the Ld. Commissioner of Income Tax  (Exemptions)has grossly erred in  matter  of  fact and  law by holding  that  the  ‘activity’ of the applicant involves serving of liquor.
  • That the Ld. Commissioner of Income Tax  (Exemptions)has grossly erred in matter of law and fact in taking an unreasonable decision of rejecting the application  of  the  applicant  under  section 80G without considering the charitable activities of the applicant.
  • That each of the above  mentioned grounds are  without prejudice to one another and the appellant craves leave to add/amend to the grounds in the interest of justice.

In light of  the abovementioned grounds it is most humbly prayed that the appeal of the appellant be allowed and the order of the CIT (Exemptions) dated 30.07.2019 be quashed and set aside. “

The appellant filed an application electronically on 24/01/2019 in Form No. 10G seeking exemption u/s 80G of the IT Act. The appellant was issued letter dated 26/03/2019 requesting to submit certain documents in support of its claim of exemption u/s 80G.

The Appellant has filed reply and after considering the reply, the Commissioner of Income Tax (Exemption) held that,  the  activity  involving serving of liquor cannot be set to be charitable, usage of money collected from donors is to be utilized for welfare of general  public,  not  for  enjoyment  of people enjoying the state of affairs of the federation. The serving of the liquor cannot be considered as charitable activity for the welfare of general public. Further held that, since the assessee failed to provide proper explanation, the

genuine of the charitable activities cannot be verified. Accordingly, concluded that the conditions for granting exemption u/s 80G are not satisfied and rejected the application for granting of Exemption under Section 80G of the Act vide order dated 30/07/2019.

Aggrieved by the order  dated  30/07/2019,  the  appellant  has  preferred the present appeal on the grounds mentioned above. None appeared for the assessee even after service of the notice issued by the Registry of this Tribunal.  Therefore, we constrained to decide the appeal on hearing the Ld. DR. The Ld. DR vehemently contended that, the appellant has been serving the liquors, which emanates from the bills of seminar along with hotel bills. Serving of liquor cannot be charitable activities u/s 2(15) of the Act, therefore, justified and relied on the order of Commissioner of Income Tax (Exemption) in rejecting the Application for grant of exemption u/s 80G of the Act.

Observation by the court

Court had heard the argument of Ld.  DR,  verified  the  material  on  record and gave our thoughtful consideration. We are fully agree with the contention of the Ld. DR that ‘serving of liquor is not charitable activity  u/s 2(15) of the IT Act, but the Ld. Commissioner of Income Tax (Exemption) has not mentioned the details of  such  activities  conducted  by  the  appellant  in  the  order impugned. The Ld. Commissioner of Income Tax (Exemption) has relied  on various bills of the  Appellant  wherein  the  service  of  liquor  has  been mentioned, but the Ld.CIT(A) has  not  mentioned  the  details  of clarification/reply given by the Applicant in the order impugned and not adjudicated the reply given by the Applicant. The order of the Ld.CIT(A) is non speaking one.

Therefore, court deem it proper to set aside the matter to the file of the CIT(Exemption)  to decide the matter afresh in accordance with law and pass appropriate speaking order. Needless to say that an opportunity of being heard be given to the Appellant herein. Accordingly, court allow the Assessee’s Grounds of Appeal for statistical purpose.


In the result, the appeal filed by the assessee is allowed for statistical purpose.


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