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TMI Blog2021 (5) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years no scrutiny assessment has been made; however, fact remains that assessee's claim of exemption has been accepted over the years - the activities/objects on the basis of which claim of exemption under section 11 of the Act was accepted in other assessment years have not changed in the impugned assessment years. In fact, the registration granted under section 12A of the Act still continues. That being the case, even applying the rule of consistency, assessee's claim of exemption under section 11 of the Act has to be allowed. The decisions relied upon by the learned counsel for the assessee clearly supports this view. Assessee having maintained its status as charitable organization is entitled for exemption under section 11 of the Act, subject to fulfillment of conditions prescribed under sections 11, 12 and 13 of the Act. However, in the facts of the present appeals there is no allegation by the departmental authorities that the assessee has violated any of the conditions of the aforesaid provisions, except, the allegation that the assessee is a mutual concern. That being the case, all its income including the interest and donations received from non-members wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of mutuality. Having held so, he proceeded to treat the interest income earned on deposits as well as a part of the donation received as taxable, since, they were received from non-member; hence, outside the purview of mutuality. In the process, the Assessing Officer also disallowed assessee's claim of exemption under section 11 of the Act. The assessee contested the aforesaid decision of assessing officer by filing appeals before learned Commissioner of Income-tax (Appeals). However, by the impugned order, learned Commissioner of Income-tax (Appeals) upheld the decision of the assessing officer. While doing so, he observed that merely because the assessee has been granted registration under section 12A of the Act, exemption under section 11 of the Act cannot be allowed, unless, the conditions of sections 11, 12 13 are fulfilled. Further, referring to the proviso to section 2(15) of the Act, learned Commissioner of Income-tax (Appeals) observed, since the assessee has earned income from commercial activities, it cannot be treated as a charitable organization. Accordingly, he upheld the disallowance of exemption under section 11 of the Act. 4. Dr. K. Shivram, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of Income-tax (Appeals) have erred in not appreciating that principle of mutuality is not applicable to the assessee as it is a charitable trust and its income has to be computed as per sections 11, 12 and 13 of the Act. Refuting the claim of the departmental authorities that the assessee has not brought any evidence to demonstrate that it has rendered any direct services to the public at large, learned counsel submitted, number of documentary evidences was submitted before the departmental authorities to demonstrate that various seminars and conferences were held at different locations. He submitted, the assessee has also held moot court competition amongst law students at all India level. He submitted, during the lockdown period of lockdown arising due to Covid-19, the assessee has conducted more than hundred webinars on tax and other laws and accountancy, which were completely free and accessible to all. He submitted, the assessee maintains a free website which anyone can access and publications/materials available there can be freely downloaded. Drawing my attention to the memorandum of association, he submitted, on dissolution of the society the corpus will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (Bom.) (HC) SLP of revenue is dismissed on the ground of low tax effect in DIT (Exemption) v. Gemological Institute of India [2019] 105 taxmann.com 180/263 Taxman 348 (SC) 17. CIT v. Sun Engineering Works [1992] 64 Taxman 442/198 ITR 297 (SC) 18. ADIT (Exemption) v. Jeevan Vidya Mission [2015] 64 taxmann.com 62/155 ITD 1150 (Mum.) 19. CIT v. United Way of Baroda [2020] 121 taxmann.com 5/275 Taxman 328/423 ITR 596 (Guj.) 5. The learned Departmental Representative relying upon the observations of the Assessing Officer and learned Commissioner of Income-tax (Appeals) submitted, the activities of the assessee are mostly confined to its members; hence, has to be treated as a mutual concern. Further, she submitted, the assessee was unable to demonstrate that it is carrying out any educational activity or activity of general public utility benefiting the public at large. She submitted, assessee's activities are not only confined to members but they are of commercial nature as the assessee is charging fees for membership as well as for its publications. Thus, she submitted, the assessee not being a charitable organization, cannot be granted exemption under section 11 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is subject to sections 11, 12 13 of the Act, however, some sanctity has to be attached to the registration granted under section 12A of the Act. More so, if such registration granted to assessee still continues. This pre-supposes that the department continues to treat the assessee as an organization existing for charitable purpose. 8. In the facts of the present case, undisputedly, registration under section 12A of the Act has been granted to the assessee vide order dated 29-1-1999 passed by the Director of Income-tax (Exemption), Mumbai. A careful perusal of memorandum of association of the assessee, a copy of which is placed at page 1 of the paper book, it is seen that the main object of the assessee is as under:- To spread education in matters relating to tax laws, other laws and accountancy. 9. Of course, the assessee has various other objects mentioned in the memorandum of association. However, all such objects are ancillary and incidental to its main object. Though, a couple of such ancillary and incidental objects speaks of providing facilities/help to the members; however, in no way the objects of the assessee can be interpreted to mean that the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on amongst law students at All India level. By holding such competition, assessee immensely helps in building the skill set of the students in the field of law in becoming legal professionals. Further, the assessee also maintains a free website accessible to all. All publications and periodicals are available in the website which can download free of cost. All these facts and evidence on record clearly demonstrate that the assessee has carried out activities to promote its objects of providing education and towards advancement of its object of general public utility. There is nothing on record to suggest that the assessee's activities are confined only to its members so as to treat it as a mutual concern. 11. The next issue which needs to be addressed is, whether the assessee loses its character as 'charitable organisation' due to applicability of Proviso to section 2(15) of the Act. It is relevant to observe, by Finance Act, 2008 section 2(75) was amended with effect from 1-4-2009 by inserting the following Proviso:- Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involved the carrying on any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. 13. In the facts of the present case, it is very much clear that the assessee has carried out activities in furtherance of its objects. In the process, the assessee might have earned some income by way of subscriptions, sale of publications, etc. However, this income earning activities of the assessee cannot be treated to be in the nature of trade, commerce or business. In any case of the matter, from its very inception the assessee has been granted exemption under section 11 of the Act. Only, in the impugned assessment years its claim of exemption has been denied. Though, it may be a fact that while granting exemption in earlier as well as subsequent assessment years no scrutiny assessment has been made; however, fact remains that assessee's claim of exemption has been accepted over the years. Further, the activities/objects on the basis of which claim of exemption under section 11 of the Act was accepted in other assessment years have not changed in the impugned assessment years. In fact, the registration granted under section 12A of the Act still continues. That being the case, even applying the rule of consistency, assessee's claim of exemption under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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