2019 (6) TMI 1582 - AT - Income Tax

Tribunal Upholds Exemption u/s 12A, Rejects Revenue's Interpretation and Affirms Deletion of Bank Interest Addition.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions favoring the assessee. It maintained the exemption under Section 12A, ... Exemption u/s 11 - exemption u/s 12A - denial of exemption as activities of the assessee involve rendering of services in relation to carrying on of commerce or business and hence, proviso to Section 2(15) is clearly application in the case of the assessee - HELD THAT:- Hon’ble Delhi High Court in assessee’s own case vide judgment dated [2011 (10) TMI 173 - DELHI HIGH COURT] has held that there is no case made out by the Revenue that the surplus are being appropriated by any individual or by a group of individuals and hence restored the exemption granted u/s 12A of the Act to the assessee. There is a clear finding by the CIT(A) that the assessee has not generated any surplus for anyone - Members or Non-Members. there has never been any dispute as to the continuation of the same set of facts in all these years, right from the AY 1990-91 at different level either it is at the first appellate authority stage or the Tribunal or the Hon’ble High Court, the consistent view has been that the assessee is a charitable institution and its income has to be computed u/s 11, 12 & 13 of the Act. Unless and until, any change in the fundamental facts is brought on the record, we find it difficult to take a different view for this assessment year. Our this view is well fortified by the decisions of the Hon’ble Jurisdictional High Court in the assessee’s own case for the earlier assessment year so also the consistent view taken by the Tribunal for the AYs 2008-09 and 2009-10. - Decided in favour of assessee. Issues:1. Interpretation of Section 2(15) regarding the activities of the assessee.2. Treatment of bank interest under the principle of mutuality.Issue 1: Interpretation of Section 2(15)The appeal involved a dispute regarding the applicability of the proviso to Section 2(15) of the Income Tax Act to the activities of the assessee. The Revenue contended that the activities of the assessee involved rendering services in relation to commerce or business, thus falling under the proviso. However, the CIT(A) and the assessee argued that there was no generation of surplus for any individual, and the exemption under Section 12A should be maintained. The Tribunal referred to previous judgments in the assessee's case and held that there were no distinguishing factors in the present year, leading to the dismissal of the Revenue's appeal.Issue 2: Treatment of Bank Interest under Mutuality PrincipleThe second issue revolved around the treatment of bank interest under the principle of mutuality. The Revenue had made an addition of a specific amount on account of bank interest, claiming it was not covered under the principle of mutuality. The assessee contested this addition, citing the judgment of the Supreme Court in the case of Bangalore Club vs. CIT. The Tribunal considered the arguments and upheld the CIT(A)'s decision to delete the addition, emphasizing that the principles established in previous years and the mutuality aspect remained consistent, leading to the dismissal of the Revenue's appeal.In conclusion, the Tribunal dismissed the Revenue's appeal, maintaining the decisions of the CIT(A) in favor of the assessee based on the interpretation of Section 2(15) and the treatment of bank interest under the principle of mutuality. The judgment highlighted the importance of consistency in applying legal principles across assessment years and reiterated the significance of previous rulings in determining the outcome of current disputes.