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TMI Blog2015 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings, the Assessing Officer has observed that the Memorandum and Article of Association filed by the assessee depicts that the Association is having six objects. 3. From the objects of the assessee, the Assessing Officer came to a conclusion that the assessee is coming under the limb"object of general public utility" under section 2(15) of the Act. The Assessing Officer further observed that the assessee is a business oriented organization formed to organize service of labour for clearing and forwarding and allied operations for the promotion of Custom House Agents Trade. The activity of the Association to gather the members and educate them in the line of the trade is within the object of general public utility and not for education purpose. The purpose is only for the betterment of the business. The contributors to the Golden Jubilee celebrations are mostly non-members who stand to be benefited by the Association. The Golden Jubilee celebrations were conducted in two parts at two places. The meeting and the affair of the trade were conducted at Hotel Lee Royal Meridian. The entertainment part of the celebration was at Trade Centre with dance programmes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic utility activities are kept outside the scope of section 2(15) of the Act. The activities which are excluded from the list of general public utility are provided in the proviso to section 2(15). As per the proviso, any activity in the nature of carrying on any trade, commerce, business or services in relation to any trade, commerce and business from such activity, are excluded from the definition of general public utility for the purpose of section 2(15) of the Act. The ld. CIT(A) has further observed that the assessee is rendering services to its members (Custom house agents), to carry out their business/professional activities. The activities of the assessee directly amount to the services rendered by it in relation to the trade, business and commerce. Therefore, the assessee is considered to be engaged in the activities which are in the nature of rendering services in relation to any trade, commerce or business, for a cess or fee or any other consideration, the second limb of proviso to section 2(15) of the Act. Hence, the assessee is directly covered by the proviso to section 2(15) and not eligible for the benefits under section 2(15) of the Act. Accordingly, the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee has submitted that as a mark of remembrance some silver mementos were purchased and gifted to the members and the assessee society has not violated any of the provisions and exemption under section 11 has to be given. 12. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee, M/s. The Chennai Custom House Agents Association, is registered under section 12A(a) of the Act dated 17.12.1986. 12A registration was also granted to the assessee for the following objects: (1) To diffuse knowledge to the members and to run and maintain library and other institutions for their training. (2) To arrange, secure and organize service of labour for clearing and forwarding and allied operations for the promotion and help, encouragements and development of Custom House Agents Trade on such terms and conditions that the Association may think fit. (3) To regulate, coordinate and formulate rules and regulation for proper working of the Custom House Agents Trade and to take all necessary steps for promoting or securing proper legislation affecting the afore said interest. (4) To encourage and promote a friendly fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic utility is eligible to be classified as charitable purpose under section 2(15) of the Act. After 01.04.2009, as per the second limb of section 2(15), any activity of rendering any services in relation to any trade, commerce and business for a cess or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity cannot come under the purview of charity. In the present case, the assessee is rendering services to its members custom house agents], to carry out their business/professional activities. Therefore, the activities of the assessee directly amount to the services rendered by it in relation to the trade, business and commerce. Hence, the assessee cannot be considered as a charitable organization and therefore, the Assessing Officer as well as the ld. CIT(A) rightly denied the exemption claim of the assessee under section 11 of the Act. 15. In so far as principle of mutuality is concerned, the Assessing Officer has denied the claim of principles of mutuality to the assessee by following various judicial precedents by observing that the assessee is not eligible for benefit of mutuality. On appeal, the ld. CIT(A), by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above, we find that the assessee is not eligible for claiming exemption under section 11 of the Act and also not eligible for claiming principles of mutuality. 18. In so far as depreciation is concerned, in the assessment order, the Assessing Officer has observed that the assessee has claimed Rs. 1,57,788/- as depreciation in the income and expenditure statement. The assessee follows the practice of claiming the capital expenditure on acquisition of assets as application of income. In this year also the assessee has claimed Rs. 53,718/- as deduction on capital expenses. The value of the assets on which depreciation has been claimed has been fully allowed as expenditure/ application in the earlier years. Hence, the present claim is only a double deduction over and above the full value of the assets. Accordingly, he denied the depreciation claim of the assessee. 19. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer by observing that the assessee has already claimed the purchase/ acquisition of all fixed assets as application of income [by way of capital expenditure] in the earlier years [i.e. in the year in which these assets are acquired] while ..... X X X X Extracts X X X X X X X X Extracts X X X X
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