Council of Handicrafts Development Corporation West Block No. 7, R. K. Puram New Delhi Vs. ITO Exemptions, Ward-1(3) New Delhi
May, 15th 2020
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 22.02.2019 passed by CIT(A)-40, Delhi, for Assessment Year 2017-18. 2. The ground of appeal is as under:-
1. “That Ld.CIT(A)-40, New Delhi has erred by confirming the action of Assessing Officer regarding denial of credit of TDS of Rs. 13,94,101/- on rental income collected by the appellant under an agreement on behalf of Development Commissioner (Handicrafts) Ministry of Textiles in respect of Rajeev Gandhi Handicrafts Bhawan, New Delhi.”Date of Hearing 05.03.2020 Date of Pronouncement 15 .05.2020 2 ITA No. 2723/Del/2019
3. The assessee society was registered u/s 12A of the Income Tax Act on 5/1/1985. The main object of the assessee society is to assist grass root level organizations, NGO’s, self help group and small entrepreneur engaged in the handicrafts to enhance and adopt skill through design interventions, enhance productivity and income through technical up gradation, the society sustainable development and responsible working conditions, assist in making through domestic and international channels and provide assistance and guidance for achieving better social environment. Return of income was filed on 23/9/2015 declaring income of Rs. 8,29,540/-. However, during the course of assessment proceedings, the assessee submitted computation of income wherein income has been declared at NIL after claiming benefit of exemption u/s 11 & 12 of the Income Tax Act. The Assessing Officer observed that the assessee is neither in the field of education nor in the field of medical relief or relief of poor, preserve of environment (including water sheds, forests and wild lives) and preservation of monuments or places or objects of artistic or historic interest. The Assessing Officer held that the entire receipts of sales are arising out of commercial transactions and thus made addition of Rs. 46,48,967/- towards the deduction of admissible expenses.
4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
5. The Ld. AR submitted that the denial of credit of TDS on rental income collected by the assessee under an agreement on behalf of the development Commissioner (Handicrafts), Ministry of Textile in respect of Rajiv Gandhi Handicrafts Bhawan, New Delhi was not just and proper. The Ld. AR submitted that as the activities cannot be stated to be running of services in relation to any trade, commerce or business as per the provisions of Section 196, no tax is required to be deducted at source from any interest or dividend or other sums payable to the Government. The rental income pertains to the Government and that it was merely acting as n agent/licensee and was