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TMI Blog2017 (11) TMI 1986X X X X Extracts X X X X X X X X Extracts X X X X ..... sting for charitable purpose as per section 2(15) - Decided in favour of assessee. - ITA No. 363/Mum./2016 - - - Dated:- 23-11-2017 - Shri Saktijit Dey, Judicial Member And Shri G. Manjunatha, Accountant Member For the Revenue : Shri Rajat Mittal. For the Assessee : Shri Prasad Bapat. ORDER PER SAKTIJIT DEY, J.M. This is an appeal by the Department against the order dated 10th November 2015, passed by the learned Commissioner (Appeals) 1, Mumbai, for the assessment year 2011 12. 2. We have heard the rival contentions and perused the material on record. The issue arising for consideration in the present appeal is whether assessee s claim of exemption under section 11 of the Income-tax Act, 1961 (for short the Act ) as Charitable Institution is allowable or not. 3. The assessee a trust is registered with the Charity Commissioner, Mumbai, as well as with Director of Income Tax (Exemption), Mumbai, under section 12A of the Act. For the assessment year under dispute, the assessee filed its return of income on 30th September 2011, claiming exemption under section 11 of the Act. In the course of assessment proceedings, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not eligible for exemption under section 11 of the Act. Thus, in sum and substance, the Assessing Officer has denied assessee s claim of exemption under section 11 by treating it as a mutual concern of the members. However, as noted by us, this is not the first time the Revenue has treated the assessee as a mutual concern while denying claim of exemption under section 11. The dispute arose for the first time in assessment year 1996 97 and continued in the subsequent assessment years. It is necessary to observe, while completing assessment for these assessment years, the Assessing Officer took a completely identical view by holding that the assessee is a mutual concern, hence, receipts from non members by way of canteen fee, interest, coaching, etc., is taxable. However, the Tribunal while deciding the appeals of the assessee for assessment year 1996 97 to 2000 01, in ITA no.1564/Mum./2006 and others, dated 24th August 2009, held that as per the object of the trust, it is to be considered as a charitable organisation as the objects show that the trust is engaged in the broad areas of games and sports as well as in promotion and/or management of social intercourse or athletic spor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an amount of nearly ₹ 50 lakhs on constructing a swimming pool. The fact that the assessee provides service to its members does not detract from the position that it advances a general public utility. The advancement of any object of benefit to the public or a section of the public as distinguished from a benefit to an individual or a group of individuals would be a charitable purpose Gujarat Maritime Board case (supra). As the Tribunal noted, the membership of the society is drawn from a diverse cross-section of the society. The assessee does not exist only for an individual or a group of individuals. On these facts, the primary issue which has been decided by the Tribunal must be answered by holding that the assessee for the assessment year 1996-97 fulfilled the definition of the expression charitable organization in section 2(15). The first question of law would, accordingly, have to be answered in the affirmative. 8. Section 11(1)(a) of the Act provides, inter alia, that income derived from property held under trust wholly for charitable purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Departmental Representative that in view of the first proviso to section 2(15), as it existed in the statute book at the relevant time, the assessee cannot be considered to be existing for charitable purpose. We must observe that the Assessing Officer in the assessment order, has not recorded any factual finding that the assessee has derived income by engaging itself in any trade, business or commercial activity. The Assessing Officer has proceeded on the footing that the assessee being a mutual concern, the receipts derived from the members for user of facilities is not taxable, whereas, receipts from non members for user or facilities is taxable. In this context, we must observe that the Assessing Officer has passed the impugned assessment order on 4th January 2013, thus, it has to be assumed that the Assessing Officer while completing the assessment was conscious of the first proviso to section 2(15) of the Act, which has come to the statute book by that time. In spite of that the Assessing Officer has not recorded any finding that the objects of the assessee are not for charitable purpose in view of the first proviso to section 2(15). On the contrary, the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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