2017 (9) TMI 1294 - HC - Income Tax

Denial of benefit of Section 11 - Assessing Officer was directed by the First Appellate Authority to verify whether general administrative and employee expenses have been applied towards the object of the trust or not - Held that - The Tribunal noted that these grounds have already been dealt with, and on facts, findings have been recorded against the Revenue and in favour of the assessee. Once the orders of the Tribunal to that effect have been upheld by this Court and no factual distinction being brought on record for the assessment year in question, the Tribunal followed and applied the earlier orders to the assessment year in question/under consideration. We do not see any reason to interfere with such an order of the Tribunal. It does not give rise to any substantial question of law. The findings are essentially on facts. Once they are not found to be perverse or vitiated by any error of law apparent on the face of record, then there is no merit in the Appeal. It is dismissed. There shall be no order as to costs. - Decided against the revenue.

Summary

Issues:
Challenge to ITAT order for assessment year 2009-2010 regarding Section 11 exemption under IT Act.

Analysis:
1. The Revenue challenged the ITAT order for the assessment year 2009-2010, arguing that the assessee did not fall under the definition of a trust as per Section 2(15) of the IT Act, and hence, the benefit of Section 11 exemption cannot be granted.

2. The Commissioner of Income Tax reversed the Assessing Officer's order, stating that no exemption could be claimed based on the principle of mutuality. The respondent argued that similar issues had been decided in favor of the assessee in previous years, and the Tribunal upheld those decisions.

3. The First Appellate Authority examined the nature of the Gymkhana, concluding that the principle of mutuality applied as the services were primarily for members, with some facilities extended to nonmembers. Thus, exemption could only be claimed for income received from members, while income from nonmembers was taxable.

4. The Commissioner directed the Assessing Officer to verify if expenses were aligned with the trust's objectives. The Tribunal upheld the Commissioner's decision, stating that no substantial question of law arose, as the findings were based on facts and not erroneous in law. The Appeal was dismissed.

5. The Tribunal's order was upheld, and the matter was sent back to the Assessing Officer for verification of expenses. The Commissioner's direction was not interfered with, and the Assessing Officer was instructed to decide the issue independently and in accordance with the law, without being influenced by previous observations.

6. The Court emphasized that the findings were factual and not perverse, hence the Appeal had no merit. The Tribunal's decision was affirmed, and the case was dismissed without costs. The direction to the Assessing Officer for expense scrutiny was maintained, with all contentions left open for further consideration.