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.