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TMI Blog2017 (5) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... n with significant observations made in the above order dated 14-2-2017 in North Indian Association (2017 (3) TMI 37 - BOMBAY HIGH COURT). Thus, enquiry and examination by learned DIT(E) is further required to arrive at a conclusion whether activities of the assessee are genuine or not in context of Section 11 of the Act read with amended Section 2(15) of the Act and breach of threshold limit over a period of time. The learned DIT(E) shall also examine whether services were only rendered to members or was it also rendered to non-members. The learned DIT(E) shall also examine every activity carried on by the assessee before concluding on merits as to whether activities of the assessee are hit by amended provisions of Section 2(15) of the Act. - Appeal filed by the assessee allowed for statistical purposes. - I.T.A. No. 602/Mum/2012, I.T.A. No 4638/Mum/2013 - - - Dated:- 18-4-2017 - Shri Joginder Singh, Judicial Member And Shri Ramit Kochar, Accountant Member Assessee by Sh. Arvind Sonde and Sh. Jayant Gokhale Revenue by Shri N P Singh , CIT-D.R. ORDER Per Joginder Singh, Judicial Member The appeal, filed by the assessee, being ITA No. 602/Mum/2012, is direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2011 passed u/s 12AA of 1961 Act. 3. At the outset learned Senior Counsel for the assessee submitted that ground no. 1 is not pressed and the same should be dismissed as Not pressed . The learned CIT-DR raised no objection to the dismissal of ground no. 1 as contended by learned Senior Counsel for the assessee. After considering the submissions of both sides, we are inclined to dismiss Ground no. 1 as not being pressed. We order accordingly. 4. The Brief facts of the case are that earlier the assessee was granted registration by the Revenue on the grounds that the assessee is carrying on the activities which are in the nature of advancement of objects of general public utility. Later on, a proposal was received by learned DIT(E) from learned ADIT(E)-1(2), Mumbai for cancellation of registration as the activities of the assessee are in the nature of trade, commerce or business , and gross receipts are in excess of ₹ 10 lacs and hence newly inserted proviso to Section 2(15) of 1961 Act, w.e.f. assessment year 2009-10, is hit, consequentially, applicable for the impugned assessment year 2009-10. The learned DIT(E) sent show cause notice, dated 20-12-2011, to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced hereunder:- The following clause (15) shall be substituted for clause (15) of section 2 by the Finance Act, 2008, w.e.f. 1-4-2009 : (15) charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Following Proviso is inserted by Finance Act , 2010 w.e.f. 01-04- 2009 [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year;] 4.3. The assessee, during the previous year relevant to the impugned assessment year, shown receipt from Banquet Hall Hiring Charges of ₹ 87.59 lacs, ₹ 132.90 lacs from Hospital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Charges of ₹ 87.59 lacs, ₹ 132.90 lacs from Hospitality (Restaurants ) and ₹ 35.53 lacs from Permit Room(Bar), which exceed threshold limit of ₹ 10 lacs as stipulated u/s 2(15) of 1961 Act, but that cannot be ground for cancellation of registration u/s 12AA(3) of 1961. It was submitted that at best the Assessing Officer can deny exemption on these activities while framing assessments u/s 143(3) r.w.s. 143(2) of 1961 Act which are found to be hit by newly inserted proviso to Section 2(15) of 1961 but the registration u/s 12A of 1961 Act cannot be cancelled, if it is found that the activities of the assessee are not genuine or that activities are not carried out in accordance with the objects of the assessee as contemplated u/s 12AA(3) of 1961 Act. It was pleaded that identical activities are carried out by assessee for last several years which is known to the Revenue. The learned counsel also relied upon the provision of Section 13(8) of 1961 Act. It was submitted that in earlier years matter travelled upto Hon ble Bombay High Court in the case of the assessee itself and claim of the assessee for exemption u/s 11 of 1961 Act was upheld. It was submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled for exemption u/s 11 of 1961 Act and hence registration was rightly cancelled by learned DIT(E) by orders passed u/s 12AA(3) of 1961 Act. Plea was also raised that if the assessee is allowed to continue with registration, whole purpose of amendment in Section 2(15) of 1961 Act will be defeated and the amendment carried out in statute in Section 2(15) of 1961 Act would be a dead words. It was submitted that reliance on CBDT circular no 21/2016 dated 23-05-2016, by the assessee, is misplaced as the assessee turnover is not marginally higher than minimum threshold limit prescribed u/s 2(15) of 1961 Act, rather it is significantly higher than minimum threshold limit of ₹ 10 lacs which was later enhanced to ₹ 25 lacs and then to 20% from time to time by carrying amendment to Section 2(15) of 1961 Act. He also tried to distinguish the case laws relied upon by Senior counsel for the assessee. 7.1. At this stage a very recent decision from Hon ble Bombay High Court in the case of DIT(E) v. North India Association ( 2017) 79 taxmann.com 410(Bom.) dated 14-02- 2017 came into notice, which was brought to the notice of both the parties, wherein, Hon ble Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Following Proviso is inserted by Finance Act , 2010 w.e.f. 01-04- 2009 [Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year;] 8.1. The assessee had shown receipts of ₹ 87.59 lakhs from Banquet Hall Hiring charges, ₹ 132.90 lakhs from Hospitality (Restaurants) and ₹ 35.53 lakhs from Permit Room (Bar). The Ld. DIT(E) has observed that the assessee s objects are not in the nature of advancement of any other objects of general public utility and the activities as carried out, by way of banquet hall hiring, restaurant and permit room(bar) are in the nature of trade, commerce, business, etc. and further the receipts are far in excess of monetary threshold limit as laid down in the aforesaid proviso to Section 2(15) of 1961 Act i.e. exceeding ₹ 10 lacs, which has led to the contraventio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as identical activities are carried out by assessee for last several years which is known to the Revenue. The Reliance was placed on provisions of Section 12AA(3) of 1961 Act and Section 13(8) of 1961 Act and CBDT circulars no 11 dated 19-12-2008 and 21/2016 dated 27-05-2016. The learned senior counsel for the assessee had also relied on following judicial precedents to bring home his above contentions: 1. Hon ble Bombay High Court in the case of DIT(E) v. Khar Gymkhana( (2016) 70 taxmann.com 181(Bom.HC)) 2. Mumbai Cricket Association v. DIT(E) (2012) 24 taxmann.com 99(Mum.-trib) 3. Bombay Presidency Golf Club Limited v. DIT(E) (2012) 23 taxmann.com 319(Mum.) 4. Khar Gymkhana v. DIT(E) in ITA no. 373/Mum/2012(Mum-trib.) for assessment year 2009- 10 5. DIT v. MIG Cricket Club in ITA(L) no. 2378-81 of 2009, orders dated 30-11-2009 of Hon ble Bombay High Court 8.2. We find that the Hon ble Bombay High Court in a recent decision in DIT(Exemption) v. North Indian Association, (2017) 79 taxman.com 410 (Bom.) dated 14-2-2017, wherein, a significant observations in context of amended provisions of Section 2(15) of 1961 Act in para-9 was made contemplating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee are hit by amended provisions of Section 2(15) of the Act. We would like to clarify that the learned DIT(E) shall denovo adjudicate this issue and give its finding on merits uninfluenced by our prima-facie findings as given by us in this order. Thus this matter/issue needs to be restored to the file of the Ld. DIT(Exemption) for denovo determination of the issue on merits in the light of the amended Section 2(15) of the Act read with Section 11 of the Act, considering the decision of Hon ble Bombay High Court in the case of DIT(Exemption) v. North Indian Association (supra). We order accordingly. 9. In the result, appeal in ITA no 602/Mum/2012 filed by the assessee is allowed for statistical purposes. 10. Now, we shall take the appeal in ITA No.4638/Mum/2013 for assessment year 2009-10. In this appeal, the Ld. Assessing Officer has denied the benefit of exemption u/s 11 and 12 of 1961 Act, pursuant to the cancellation of registration of the assessee u/s 12AA(3) of the Act by the Ld. DIT(Exemption) vide order dated 29/12/2011, which was subject matter of the appeal in ITA No.602/Mum/2012, which has been adjudicated by us in preceding paras and the issue of registration wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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