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2021 (7) TMI 83 - AT - Income TaxExemption u/s 11 - Registration u/s 12A - Charitable activity u/s 2(15) - HELD THAT - We find that assessee is a chamber of commerce registered under 12A of the Act having main objects to promote and extend the commercial and industrial relations between Italy and India and the development of commercial exchanges between their respective industries, trades and businesses and to further the economic interest of Italy and India. The assessee is in existence with further objects to assist and facilitate new contracts between the trade, economic and industrial interest of both the countries. From the perusal of the aforesaid grounds of the Revenue, it could be seen that the issue in dispute is squarely covered by the Co-ordinate Bench of this Tribunal in the case of Indian Merchant Chambers 2016 (7) TMI 107 - ITAT MUMBAI for A.Y.2009-10 which has been followed by the ld. CIT(A) while granting relief to the assessee by way of granting exemption u/s.11 of the Act, apart from placing reliance on other various decisions. CIT(A) had also relied on the assessment orders in assessee s own case for A.Yrs. 2010-11, 2012-13, 2014-15 and 2016-17 where the claim of exemption u/s.11 of the Act has been accepted and granted under similar facts and circumstances by the ld. AO u/s.143(3). We find that the ld. CIT(A) has only followed Co-ordinate Bench decision of this Tribunal in the case of Indian Merchant Chambers in 2016 (7) TMI 107 - ITAT MUMBAI for A.Y.2009-10 which is after the amendment brought in Section 2(15) of the Act and that the Revenue s grievance is only that since the decision has been agitated by them before the Hon ble Bombay High Court, they had not accepted the Tribunal decision and that the same had not attained finality. We find that the decision of this Tribunal is binding on us on the same set of facts and circumstances and hence, we deem it fit not to deviate from the said decision. We find that the ld. CIT(A) had rightly granted relief to the assessee in the instance case by following the decision of the Tribunal. Accordingly, the grounds raised by the Revenue are dismissed.
Issues Involved:
1. Legitimacy of the exemption claimed under Section 11 of the Income Tax Act, 1961. 2. Applicability of the proviso to Section 2(15) of the Income Tax Act, 1961. Detailed Analysis: 1. Legitimacy of the exemption claimed under Section 11 of the Income Tax Act, 1961: The Revenue questioned whether the Commissioner of Income Tax (Appeals) [CIT(A)] was correct in allowing the appeal of the assessee by relying on the decision of the Mumbai Bench of the ITAT in the case of Indian Merchant Chambers for A.Y. 2009-10. The Revenue argued that this decision was not accepted and was pending adjudication before the Hon'ble High Court of Bombay. The assessee, a chamber of commerce registered under Section 12A of the Act, filed its return for A.Y. 2009-10 declaring a loss. The Assessing Officer (AO) determined a net loss but denied the exemption under Section 11 of the Act, stating that the assessee's activities were business activities under Section 2(15) and did not qualify as charitable purposes. The CIT(A) allowed the appeal, relying on the ITAT decision in the case of Indian Merchant Chambers, which held that activities incidental to the main charitable purpose, even if profitable, did not disqualify the entity from claiming exemption under Section 11. The CIT(A) also noted that the AO had allowed the exemption in subsequent years (A.Y. 2010-11, 2012-13, 2014-15, and 2016-17), indicating consistency in the assessee's claim. 2. Applicability of the proviso to Section 2(15) of the Income Tax Act, 1961: The AO invoked the proviso to Section 2(15), arguing that the assessee's activities were in the nature of business and thus did not qualify for exemption as charitable purposes. The AO cited various judicial decisions to support this view. The CIT(A) disagreed, noting that the assessee's activities were in line with its objects of promoting commercial relations between Italy and India, which fell under the definition of "charitable purposes" as per the last limb of Section 2(15). The CIT(A) relied on the ITAT decisions in similar cases, including Indo French Chamber of Commerce and Japanese Chamber of Commerce, which supported the view that such activities were charitable. The CIT(A) also emphasized the principle of consistency, given that the AO had allowed the exemption in subsequent years. The CIT(A) directed the AO to allow the exemption under Section 11 for the year in question. Conclusion: The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal. The Tribunal found that the CIT(A) had correctly followed the ITAT's decision in the case of Indian Merchant Chambers and noted the consistency in the AO's treatment of the assessee's exemption claim in subsequent years. The Tribunal reiterated that the decision of the Co-ordinate Bench was binding and that the CIT(A) had rightly granted relief to the assessee. Order: The appeal of the Revenue was dismissed, and the order was pronounced on 22/06/2021.
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