TaxTMI 
TaxTMI 
2016 (5) TMI 1179
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....ncome for AY 2009-10 declaring an income of NIL. The computation of total income filed by the assessee indicates that the only source of income declared for the purposes of Section 11 was interest on bank amounting to Rs. 2,17,92,167. From this various expenditure and deprecation was claimed. A deduction under Section 11(1)(a) of 15% was claimed and having regard to the amounts spent on the objects of the Trust viz. the promotion of Golf, the income declared was NIL. 4. On scrutiny of the heads of income, AO observed that the assessee has received interest income of Rs. 2,17,92,167/- which had been shown under the head 'Other Income'. As per AO, the said income received by the assessee is not in the nature of mutuality and is from non members. In view of the decision of the Hon'ble Bombay High Court in the case of CIT V/s. Common Effluent Treatment Plant (Thane Belapur) Association (2010) 328 ITR 362, the interest so received from the non members was held to be taxable and there is no application of principle of mutuality for such earnings. Following the decision of jurisdictional High Court, the said interest incomes was brought to tax by the AO. The AO took up the assessment a....
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....th the bank is not an activity in the nature of trade, commerce business, but is income earned on application money as mandated u/s.11(5)(iii) of the I.T.Act. Our attention was invited to clause (iii) of Section 11(5) according to which assessee is statutorily required to deposit money with a schedule bank or a cooperative society engaged in carrying on business in banking. As per ld. AR assessee club was carrying on charitable activities u/s.13(1)(d)(ii), if the funds of a trust or institution is invested in assets other than those specified in Section 11(5), the exemption under sections 11 to 13 would be withdrawn. Reliance was placed on the decision of Hon'ble Delhi High Court in the case of GS 1 India Vs. DGIT 360 ITR 138(Del) in support of the proposition that proviso to section 2(15) even where assessee trust was charging a fee having regard to the economic status of the beneficiaries, it was necessary for the operation and running expenses and the sustenance of charitable activities, that a fee could be charged. And it cannot be said that assessee was carrying on any trade or commerce. He invited our attention to the observation of the AO to the effect that all other income ....
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....e Tax Income Act, 1961 ('the Act') as it stood in Assessment Year 2009-10. The said proviso reads as follows. '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 relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or. application, or retention, of the income from such activity '. According to the Assessing Officer, the proviso to section 2(15) was applicable with effect from AY 2009-10 and once an institution was hit by the aforesaid proviso, then it would follow that such an entity does not exist for a 'charitable purpose'. The second reason given by the Assessing Officer for denying the claim of the assessee was that the registration under Section 12A had been withdrawn by the DIT (Exemptions) by an order under Section 12AA(3) of the Act dated 8th December, 2011 with effect from AY 2009-10. The third reason given by the Assessing Officer was that the Bombay High Court in CIT vs. Common....
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....i) of the Act which reads as follows :- "The forms and modes of investing or depositing the money referred to in clause (b) of sub-section (2) shall be the following, namely:- (i) investment in savings certificates as defined in clause(c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Scheme of the Government; (ii) deposit in any account with the Post Office Savings Bank; (iii) deposit in any account with a scheduled bank or a co- operative society engaged in carrying on the business of banking (including a society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank). Thus, as per the provisions of section 11(5), the assessee is permitted to deposit in any account with a scheduled bank on the deposits made therein and hence it cannot be said that interest received from the bank is in the nature of trade, commerce or business. 13. The investment in banks is not only authorised but mandated and is compulsory in so far as an entity carrying on charitable purposes ....
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.... the grounds that fees were charged by the Institute for providing coaching classes and for holding interviews with respect to campus placement. The Court held that such activities cannot be stated to be rendering service in relation to any trade, commerce or business at all. This was reiterated by the Delhi High Court in Bureau of Indian Standards v. DGIT 358 ITR 78 and in PHD Chamber of Commerce 357 ITR 296. The Gujarat High Court in DGIT Vs. Sabarmathi Ashram Gaushala Trust 44 Taxman 141 took the view that a Trust registered with the objects of breeding cattle and cows and oxen cannot be said to be carrying on activities of trade, commerce or business merely because considerable income was generated on account of production and sale of milk. The same view was taken by the Tribunal in DD!T Vs. All India Football 1 Federation 62 Taxmann.com 362 (Del Trib) dealing with a case of an Association having as its object the promoting of the game of footfall, organising tournaments, training players, coaches etc. The Tribunal held that the receipts by way of sponsorship do not alter the character of the main objects and is not affected by the proviso as it cannot be said to be engaged in ....