2020 (7) TMI 543 - AT - Income Tax

Exemption u/s 11 - Charitable purpose u/s 2(15) - whether the provisions of Section 11(4A) were attracted to the assessee s case? - why the receipts from charges received by the Chamber should not be considered as commercial in nature and why the receipts should not be hit by the provisions of section 2(15)? - whether by rendering specific services to members and non-members for a fee, a trade, professional or similar association can be said to be carrying on a business activity? - HELD THAT - Respectfully following the consistent decisions of the Tribunal in assessee s own case for the preceding assessment years 2017 (9) TMI 1458 - ITAT DELHI , 2018 (5) TMI 2009 - ITAT NEW DELHI we do not find any infirmity in the order of the CIT(A) in holding that the activities of the assessee are charitable in nature and the assessee is entitled to the claim of exemption u/s 11 of the IT Act. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility for exemption u/s 11 of the IT Act.
2. Nature of activities and applicability of exemption u/s 11.
3. Principle of mutuality and its application.
4. Interpretation of provisions of section 13(1) & 13(2) of the Income Tax Act.

Eligibility for exemption u/s 11 of the IT Act:
The appeal filed by the Revenue challenged the order of the CIT(A) regarding the eligibility of the assessee for exemption u/s 11 of the IT Act for the assessment year 2013-14. The AO had initially determined the total income of the assessee at a specific amount after noting that the society's activities might not fall under the charitable nature as per the amended provisions of section 2(15) of the Act. However, the CIT(A) held that the activities of the assessee were indeed charitable, thus making it eligible for deduction u/ss 11, 13(1), and 13(2) of the Act.

Nature of activities and applicability of exemption u/s 11:
The Tribunal analyzed previous judgments in the assessee's own case for different assessment years to determine the nature of the activities and the applicability of exemption u/s 11. The Tribunal upheld the order of the CIT(A) in allowing the claim of exemption u/s 11 based on the principle that the society's activities were charitable in nature. The Tribunal cited precedents where the High Court had ruled in favor of the assessee, emphasizing that the activities did not fall under the category envisaged in the proviso to Section 2(15) of the Act.

Principle of mutuality and its application:
The Tribunal considered the principle of mutuality in the context of the society's activities and income sources. It noted that the principle of mutuality did not apply in the case of the assessee as the income was derived from membership fees, specialized services, meetings, seminars, and other sources. The Tribunal found that the income from non-members exceeded that from members, indicating that the principle of mutuality was not applicable in this scenario.

Interpretation of provisions of section 13(1) & 13(2) of the Income Tax Act:
The Revenue raised concerns regarding the interpretation of provisions of section 13(1) & 13(2) of the Income Tax Act. However, the Tribunal, based on consistent decisions in the assessee's own case for preceding assessment years, dismissed the grounds raised by the Revenue. It concluded that the activities of the assessee were charitable in nature, and hence, entitled to the claim of exemption u/s 11 of the IT Act.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, upholding the order of the CIT(A) regarding the eligibility of the assessee for exemption u/s 11 of the IT Act for the assessment year 2013-14. The Tribunal's decision was based on the charitable nature of the society's activities and the principles established in previous judgments.