TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 907
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....tices were issued under sections 143(2) and 142(1) to initiate assessment proceedings. In the course of assessment, it has been found that the chamber is registered under section 12A in terms of the order dated 23-5-1994. The assessee showed aggregate receipts of Rs. 5,96,72,018 as under:- (i) "Membership subscription 1,37,85,850. (ii) Specialized services 1,00,18,475 (iii) Services and facilities 2,83,33,423 (iv) Meeting, seminars and training programs: 40,58,134 (v) Legal and Arbitration fees 1,41,200 (vi) Sale of publication 84,075 (vii) Miscelaneous 32,56,661" 2.1 The Assessing Officer has also noted the break up of income by way of "specialized services" and "services and facilities" as under:- "The details of Specialized services are given in the Schedule 15 annexed with the Balance sheet which is as under:- Certification fee 92,90,975 Secretarial Affiliates 7,27,500 1,00,18,475 The details of the income of Services and Facilities are mentioned in Schedule 16 which is as under:- Committee room services 49,79,994 Services and facilities 2,26,37,738 EMC Project 6,64,081 SIB Helpl....
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....der section 2(15) has been amended with effect from 1-4-2009, under which the advancement of any other object of general utility shall not be a charitable purpose, if any activity carried out or service is rendered in relation to any trade, or business for a cess or fee. This provision is not applicable to the facts of this year. It may be that certain income falls within the ambit of section 28(iii) of the Act, which may be termed as business income. However, this income has to be added to the other incomes and thereafter the provisions contained in section 11 are to be applied for the grant of deduction. In other words, in the case of a charitable organization, the provision contained in section 28(iii) does not override the provision contained in section 11. Thus, the Assessing Officer was directed to compute the income at nil against the computation of Rs. 1,03,77,510. Aggrieved by this finding, the revenue is in appeal before us. 3.1 The learned counsel for the assessee submits that the amendment to section 2(15) comes into force with effect from 1-4-2009 and, therefore, applies to the proceedings of assessment year 2009-10 and onward. Therefore, this amendment is not applica....
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....account are maintained for the said business. 5.2 The appellant has been granted registration under section 12A and exemption under section 11 of the Act in the preceding years rather since its inception. The objects of the appellant as mentioned in its memorandum of association are to promote the growth of trade, commerce and Industry which is an object of the general public utility as mentioned in clause 2(15) and also held by the Hon'ble Apex Court in CIT v. Andhra Chamber of Commerce 55 ITR 722 (SC) that primary object of the assessee was to promote and protect trade, commerce and industries and to aid, stimulate and promote the development of trade, commerce and industries in India. Such objects enure for the benefit of the entire community. Thus the objects are of general public utility and income from property of such a trust is exempt. Similar view has been taken in CIT v. Federation of Indian Chambers of Commerce And Industry 130 ITR 186 (SC), wherein it been held that main objects of promotion, protection and development of trade and industry in India, amounted to 'object of general public utility' within the meaning of section 2(15). The Assessing Officer has not mentio....
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....ng separate books of account is only to enable the Assessing Officer to find out true income and also whether the assessee fulfils the conditions laid down under section 11 for exemption and also whether running of such undertaking is for profit motive or incidental to the object of the trust. The Bench held that it is not mandatory and non-maintenance of separate books of account shall not prove fatal to the claim of the assessee for exemption under section 11 of the IT Act. 5.6 The contention of the Assessing Officer that exemption under section 11 will not be available to the appellant as it rendered to members and non-members is not correct. When the exemption is claimed under the concept of mutuality, then it is necessary to see that the services should be rendered to the members only. In that case the contributors and the beneficiaries should be the same. However, while claiming exemption under section 11, there is no such condition. Section 11 does not specifically provide how the income has to be earned or it has to be received only from the members. If the appellant would have claimed exemption on the concept of mutuality then the issue of receipts from members or non-mem....
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....incomes are taxable under section 28(i) as per the provisions of the Act, but then after including the same under the head 'business income', total income has to be computed and then exemption under section 11 for which the appellant is eligible should be allowed. Section 28(i) cannot override the provisions of section 11. Thus, If the appellant is charitable organization then it is entitled for exemption under section 11 notwithstanding the income of the nature mentioned in section 28(iii) derived by the assessee. 5.9 In view of the above facts and findings, I am of the opinion that the appellant is eligible for exemption under section 11 of the Act and, therefore, the addition of Rs. 1,03,77,510." 4. The learned DR fairly submitted that the amended provision of section 2(15) come into force from assessment year 2009-10 only. In earlier years, the position is governed by un-amended provisions. Under un-amended provisions, there is no bar on carrying out business, which is incidental to attainment of the objects of the charitable institution. However, the income from the business is subject to grant of deduction under section 11 only if the business is incidental in nature and se....
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....titled to other deductions under section 11. However, the other deductions will become inadmissible in respect of business income if the aforesaid two conditions are cumulatively satisfied. This is a statutory provision and rule of consistency cannot override the provision. Therefore, it cannot be held that looking to the past assessments, this provision ought to be ignored. In other words, this provision will have to be applied. The admitted position of fact is that the assessee has been carrying on business activities. However, it is not clear whether separate books of account have been maintained for such business or businesses. The finding of the Assessing Officer is that the assessee is carrying on business activity by rendering professional services to members and non-members and it is not carrying on any charitable activity. The latter finding of the Assessing Officer cannot be upheld in view of the fact that the assessee's objects are charitable in nature and it has been registered under section 12A. Therefore, the only thing which can be done on the facts of the case is to ascertain the business income, whether such income is incidental to the objects, whether books are ma....