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TMI Blog2018 (8) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years 2011-12 & 2012-13 respectively. ITA NO.5681/M/2015:- 2. The assessee has filed the present appeal against the order dated 21.10.2015 passed by the Commissioner of Income Tax (Appeals)-1, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the assessment years 2011-12. 3. The assessee has raised the following grounds: - "1(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) (hereinafter referred as CIT(A)') erred in confirming the action of the Ld. Assessing Officer of denial of claim for exemption under section II of the Income Tax Act, 1961 to the appellant by invoking the proviso to section 2(15) of the Income Tax Act, 1961 and the reasons assigned for doing so is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961. and Rules made there under 1(b) On the facts and in the circumstances of the case and in law, the lower authorities erred in holding the appellant activity in the nature of trades commerce or business and thereby erred in holding that the appellant is not eligible for claim of exemption uls 11 of the Income Tax Act, 1961. 2 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, notices u/s 143(2) & 142(1) of the Act along with questionnaire were issued and served upon the assessee. The Assessing Officer withdrew the exemption u/s 11 of the I.T. Act, 1961 in pursuant to the change in the definition of Section 2(15) of the I.T. Act, 1961. The assessee was incorporated as a company under Section 25 for the purpose of securing accurate circulation figures and data relating to all periodicals and media and sell advertising space and also information as to the area of distribution of periodicals so as assist the advertisers in estimating the value of any publication for advertising purposes. For ascertaining the circulation figure, the assessee conducted an independent audit of its members. The Bureau gives a certificate of circulation to its members on the basis of the audit report. The ABC certificate indicates the actual number of circulation of newspapers, magazines, etc. This copy was said to be printed and supplied to members on no profit no loss basis. The ABC certificate was used by members as authenticated proof of figures of circulation with advertisers and other agencies. The publishers also used to get their quota of newsprint based on this ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and is liable to be set aside. It is also argued that the claim by the assessee u/s 11 of the I.T. Act, 1961 was declined in the A.Y. 1989-90 &1990-91 which was allowed by the Hon'ble ITAT in the assessee's own case in ITA. No.285/Bom/1995 dated 28.04.1995 and the nature of the work of the assessee did not change till date but the claim of the assessee has wrongly been declined, therefore, the finding of the CIT(A) is not liable to be sustainable in the eyes of law. It is argued that the clause 3,4 & 8 of the Memorandum of Association speaks about object of the assessee which nowhere leads the nature of the work of assessee as commercial in nature, therefore, the finding of the CIT(A) is not sustainable and the claim of the Assessee is liable to be allowed. It is also argued that after amendment of Section 2(15) of the Act, the claim of the mutuality has also wrongly been declined by revenue which is also liable to be allowed in the interest of justice. In support of the said contention, the Ld. Representative of the assessee has relied upon the cases titled as Bombay Presidency Golf Club Ltd. Vs. DIT (Ex.) (23 taxmann.com 319) (Mum ITAT), Hiralal Bhagwati Vs. CIT (246 ITR 188) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Readership Studies for carrying out Readership Surveys covering all major publications published In India, whether or not such publications are audited by the Bureau or are publications of Bureau's members, arid to record, collect and distribute such readership surveys and all information relating thereto to all users thereof, who may require the same for estimating, the value of such publications published in India. irrespective of whether or not such users are members of the Bureau. aaa) The company may undertake circulation audits, digital audits of publications printed and published within India or outside India as well as measurements of websites carrying advertisements through any electronic device and disseminate such information to all members, b) To collect and distribute amongst members of this Association information relating to all forms and methods of advertising. bb) To secure, collect, circulate and distribute information relating to all or any of the matters specified in the preceding three Sub- Clauses (a), (aa) and (b) amongst any Government in India or abroad or any statutory authority constituted by any such Government interested, directly or indirect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by its members or others, any regulation, restriction or condition which if an object of the Association would make It a Trade Union." 6. However, clause 4, 5a and 8 is also necessary to be reproduced on record for ready reference.:- "4. The income and property of the Association, whensoever derived, shall be applied solely towards the promotion of the objects of the Association as set forth in this Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly, by way of dividend, bonus or otherwise howsoever by way of profit to the members of the Association. PROVIDED that nothing herein shall prevent the payment, in good faith, of reasonable and proper remuneration to any officer or servant of the Association, or to any memorandum of the Association in return for any services actually rendered to the Association, nor prevent the payment of interest at a rate not exceeding 6 percent per annum on money lent or reasonable and proper rent for premises demised or let by any member of the Association; but so that no member of the Council of Management or Governing Body of the Association shalt be appointed to any salaried office of the Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd property among its or their members to an extent at least as great as is imposed on the Association under or by virtue of Clause 4 hereof, such institution or institutions to be deter-mined by the memorandum of the Association at or before the time of dissolution, or in default thereof by the High Court of Bombay and if and so far as effect cannot be given to such provision then to some charitable object." 7. The objects of the assessee nowhere changed however after the amendment the provision us/ 2(15) of the Act the claim of the assessee u/s 11 of the Act was declined. The amended provision u/s 2(15) is hereby reproduced below.:- "Charitable purpose" includes relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9) (Mum ITAT), Indian Chamber of Commerce Vs. ITO (ITA No. 1491 & 1284/Kol/2012 (Kol. ITAT), Bar Council of Maharashtra Vs. CIT(126 ITR 27) (1980) (Bom.HC) and Hiralal Bhagwati Vs. CIT(246 ITR 188) (2000). So far as the claim in connection with member's contribution and entrance fees are concerned, the same is not liable to be chargeable to tax in view of the law settled in CIT Vs. Wellington Sports Club etc. Further, we noticed that the claim of the assessee u/s 11 of the I.T. Act, 1961 was declined in the year of 1989- 90 & 1990-91 by revenue which was allowed by the ITAT in the assessee's own case. Since then there was no change in the objects of the assessee till date. Merely came into existence of provision of Section 2(25) of the Act nowhere makes the object of the Assessee commercial in nature. Instances of business and profession are also not on record. Taking into account all the facts and circumstances of the case, we are of the view that the CIT(A) has wrongly denied the claim of the assessee u/s 11 of the Act which is liable to be allowed in the interest of justice. Accordingly, we order, The issue no. 1 and 4 are decided in favour of the assessee against the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption under section 11 of the Income Tax Act, 1961 to the appellant 'by invoking the proviso to section 2(15) of the income Tax Act, 1961 and the reasons assigned for doing so is wrong and contrary to the facts and circumstances of the case, provisions of income Tax Act, 1961, and Rules made there under. (ii)On the facts and in the circumstances of the case and in law, the lower authorities failed to appreciate that, the amended provisions of section 2(15) dc not change the character or exempt status of the Assessee. 1(c) On the facts and in the circumstances of the case and in law, the lower authorities erred in holding that the membership subscription and entrance fees are tainted with commerciality and beyond the scope of mutuality and thereby erred in denying the appellant's claim for exemption u/s 11 of the Income Tax Act, 1961, and the reasons assigned for doing so is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961, and Rules made there under. I (d) (i) On the facts and iii the circumstances of the case and in law the action of lower authorities in holding the appellant activity in the nature of trade, commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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