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TMI Blog2014 (11) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual or a group of individuals as such - while affirming that the object of the Club falls within the purview of Section 2(15), the matter is remitted back to the AO for determination as to whether as regards the application of the funds, the requirements of Section 11 have been duly fulfilled as the AO did not have an occasion to consider the application of the funds with reference to provisions of Section 11, since he had come to the conclusion that the Assessee does not fulfill the charitable purpose as defined in Section 2(15) Thus, the AO is directed to compute the total income of the assessee in terms of sections 11 to 13 - Once the assessee is a charitable institution and duly recognised under section 12A, then income is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and that of the Assessing Officer be restored. 2. Facts in brief: The Assessee has been granted registration under section 12A, vide order dated 21st June 1980, on its objects which was mainly for promotion of sports and games. In the relevant assessment year, the assessee has filed its return of income at nill on the basis of audit report under section 12A(b) in Form no.10B, wherein the assessee has claimed exemption under section 11. Before the Assessing Officer, the assessee gave detail reasons as to why the exemption under section 11 is applicable to the assessee and how it has complied with all the conditions laid down in section 11. It was also brought to the notice of the Assessing Officer that similar exemption under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and decorators. Thus, the assessee s major income is from these operations. He also required the assessee to clarify whether any supporting books of account have been maintained for these activities. In response, the assessee filed detail submissions contending that income from hiring and royalty was not a business income but was income derived by letting out the property of the trust which has been used to fulfill the objects of the trust. Reliance was also placed on several decisions in support of this contention. The Assessing Officer rejected the assessee s contention and held that receipt from hiring of space and royalty income is to be treated as business income and the calculated at ₹ 3,07,05,637. He also calculated the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent authority, vide certificate dated 21st June 1980. Since then, the assessee has been claiming exemption under section 11, in accordance with the provisions contained from sections 11 to 13. It has been filing its return of income duly accompanied under section 12A(b) in form 10B. In the current year, there was a deficit as per income and expenditure income of ₹ 36,93,729. Once a registration under section 12A, has been granted recognising the assessee as a charitable institution, then it is a fait accompli and the income has to be computed strictly in accordance with the provisions of section 11. Such an exemption can be forfeited only if there is violation of section 13 or income has not been applied in the manner provided in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the order for granting exemption u/s. 11. Following the decision of co-ordinate bench in the case of Shree Kandivali Vyayam Mandir (supra) (unreported), we are of the view that the Assessing Officer erred in holding that the assessee is only a mutual association and not a charitable trust. We agree with the conclusion of CIT(A) that the assessee is entitled to the benefit of exemption under section 11 of the I.T. Act in respect of the interest income earned by them from deposits made to the bank. Following the order for Asst. Year 2001-02, the Tribunal has allowed the benefit of exemption u/s.ll of the Act to the assessee in A.Ys 2002-03, 2003-04, 2004-05. The issue involved in the present appeal thus is squarely covered by the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a limited group of people, being the members of the club. The Commissioner (Appeals) held on the basis of factual material on record that the Assessee had acquired land from the State government which was utilised for facilities such as providing an Olympic size swimming pool which was open to the general public on an annual membership basis without restriction as to caste, creed, religion or profession. The order of the Commissioner (Appeals) has been confirmed in Appeal by the Tribunal relying upon its decision dated 18 September 2008 and 29 July 2009 in respect of the Assessee. 3. This Court had the occasion to consider similar issues in a Judgment delivered in the case of DIT (Exemption) v. Chembur Gymkhana [Income Tax Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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