TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1094
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....edings before the learned CIT(A) arising from the assessment order dated 30th December, 2011 passed by learned Assessing Officer (hereinafter called "the AO") u/s 143 (3) of the 1961 Act. The assessee has raised the following grounds of appeal:- "1 .The Learned DIT(E) erred in fact and in law in passing the impugned order: a) without granting a 'reasonable' opportunity of being heard as mandated by proviso to Sec 12AA(3) and also in violation of principles of natural justice, thereby effectively denying the Appellant its right of legal representation b) without considering the binding precedents cited by the Appellant in this regard. c) without appreciating fully the facts of the case and arriving at an independent satisfaction re: activities being nongenuine or in breach of objects of the Trust. 2. The Learned DIT(E) erred in fact and in law in treating the activity of the Appellant as not Charitable in nature on the basis of Proviso to S. 2(15) - Definition of "Charitable purpose 3. The Learned DIT(E) erred in fact and in law in treating the activity of the Appellant non-genuine on the basis of erroneous appreciation of facts and concluding that activity ....
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....contended that Revenue has in earlier years considered the similar activities of the assessee as charitable in nature vide assessment orders framed u/s 143(3) of 1961 Act and allowed exemption u/s 11 of 1961 Act to the assessee. It was also submitted that for the assessment year 1998-99, the matter travelled up-to Hon'ble Bombay High Court which has allowed the claim of the assessee for exemption u/s 11 of 1961 Act on similar receipt by confirming the order of Mumbai-tribunal which earlier upheld the claim of the assessee for exemption u/s 11 of 1961 Act. The assessee also submitted, without prejudice, that the withdrawal of exemption can only take place w.e.f. 01-06-2010 and not before the said date. The assessee relied upon the decision of Hon'ble Allahabad High Court in the case of Oxford Academy for Career Development v. CCIT (2009) 315 ITR 383(All.) which was subsequently followed in Kapoor Educational Society v. CIT (2010) 44 DTR 97. The assessee also contended that reasonable opportunity of heard should be granted to the assessee before cancelling registration to the assessee, which was granted in earlier year by the Revenue u/s 12A of 1961 Act. 4.2. The learned DIT(E) reje....
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....nuine, for the purposes of claiming exemption u/s 11 of 1961 Act as for allowing exemption to trust/institution, the same should be charitable / religious which the assessee has ceased to be due to newly inserted proviso to Section 2(15) of 1961 Act and hence registration granted to the assessee was cancelled by learned DIT(E) w.e.f. assessment year 2009-10, vide orders dated 29-12-2011 passed u/s 12AA (3) of 1961 Act. 5. Aggrieved by the orders dated 29-12-2011 passed by learned DIT(E) u/s 12AA(3) of 1961 Act, the assessee filed appeal before the Tribunal. 6. The learned Senior Counsel for the assessee has strenuously argued against the cancellation of registration of the assessee u/s 12A of 1961 Act by learned DIT(E) by passing an order u/s 12AA(3) of 1961 Act. It was submitted that the assessee is engaged in activities of advancement of objects of general public utilities and was rightly granted exemption u/s 12A of 1961 Act by Revenue since 1980's. It was argued that the assessee was consistently and continuously allowed exemption u/s 11 of 1961 Act for past several years since 1980's and the same cannot be denied to the assessee. It was also argued that Hon'ble Bombay High C....
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.... proviso to Section 2(15) of 1961 Act. The learned senior counsel relied upon CBDT circulars no 11 dated 19-12-2008 and circular no. 21/2016 dated 27-05-2016. Reliance was also placed on following judicial precedents in support of above contentions: 1. Hon'ble Bombay High Court in the case of DIT(E) v. Khar Gymkhana( (2016) 70 taxmann.com 181(Bom.HC)) 2. Mumbai Cricket Association v. DIT(E) (2012) 24 taxmann.com 99(Mum.-trib) 3. Bombay Presidency Golf Club Limited v. DIT(E) (2012) 23 taxmann.com 319(Mum.) 4. Khar Gymkhana v. DIT(E) in ITA no. 373/Mum/2012(Mum-trib.) for assessment year 2009- 10 5. DIT v. MIG Cricket Club in ITA(L) no. 2378-81 of 2009, orders dated 30-11-2009 of Hon'ble Bombay High Court 7. The learned CIT-DR contended that the assessee was granted registration u/s 12A of 1961 Act by Revenue w.e.f. 04- 12-1979 and the assessee was claiming exemption u/s 11 of 1961 Act. Now, w.e.f. assessment year 2009-10, Section 2(15) of 1961 Act was amended and the activities of the assessee which are far in excess of threshold limit of Rs. 10 lacs are hit by first proviso to Section 2(15) of 1961 Act, as the activities of the assessee of hiring banquet hall, resta....
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....12A of the Act since 1980's as the assessee's activities were considered to be for advancement of objects of general public utilities u/s 2(15) of 1961 Act. The Revenue was allowing exemption to the assessee u/s 11 of 1961 Act consistently since 1980's considering the activities of the assessee charitable in nature. The matter for assessment year 1998-99 to 2001-02 travelled to Hon'ble Bombay High Court wherein claim for exemption of the assessee u/s 11 of 1961 Act was allowed, by affirming the appellate order of Mumbai-Trib. in ITA no 2378-81 of 2009. Similarly, claim for exemption of the assessee u/s 11 of 1961 Act for assessment year 2003-04 to 2005-06 was allowed by Hon'ble Bombay High Court in ITA No2416 & 2538 of 2011 and 98 of 2012. However, an amendment was made in Section 2(15) of 1961 Act w.e.f. assessment year 2009-10, wherein first proviso was added to Section 2(15) of 1961 Act w.e.f. assessment year 2009-10. There was further amendment which is also relevant for us was by Finance Act, 2010 wherein second proviso was added to Section 2(15) of 1961 Act w.e.f. assessment year 2009-10. Section 2(15) of 1961, as amended, is reproduced hereunder:- " The following clause (1....
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....sessee's favour and hence exemption was allowed by Revenue in earlier years. The orders of Hon'ble Bombay High Court in assessee's own case in DIT v. MIG Cricket Club in ITA(L) no. 2378-81 of 2009 for assessment year 1998-99 to 2001-02, orders dated 30-11-2009 of Hon'ble Bombay High Court have been perused by us, wherein Hon'ble Bombay High Court has affirmed the claim of the assessee for exemption u/s 11 of 1961 Act. Similarly, claim of exemption of the assessee u/s 11 of 1961 Act for assessment year 2003-04 to 2005-06 was allowed by Hon'ble High Court in ITA No2416 & 2538 of 2011 and 98 of 2012. It was submitted that no doubt that the assessee had during the previous year relevant to the impugned assessment year 2009-10 had shown receipt from Banquet Hall Hiring Charges of Rs. 87.59 lacs Rs. 132.90 lacs from Hospitality (Restaurants ) and Rs. 35.53 lacs from Permit Room(Bar) , which exceed threshold limit of Rs. 10 lacs as stipulated u/s 2(15) of 1961 Act, but that cannot be ground for cancellation of registration u/s 12AA(3) of 1961 and it was submitted that at best Assessing Officer can deny exemption on these activities while framing assessment u/s 143(3) r.w.s 143(2) of 1961 ....
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....further probe / inquiry before concluding that the trust is not genuine." 8.3. In the light of the above observation and respectfully following the same, we are prima facie of the opinion that the activities of the assessee of Banquet Hall Hiring, Hospitality (Restaurants) and Permit Room (Bar) are in the nature of carrying on trade, commerce, or business for consideration, which are hit by proviso to Section 2(15) of 1961 Act. We further observe that the receipts from these activities, during the previous year relevant to the impugned assessment year 2009-10, are far in excess of minimum prescribed threshold limit. This requires detailed enquiry and examination by the Ld. DIT(Exemption) as to the various activities undertaken by the assessee over a period of time and its nexus with activity of rendering of trade commerce or business as contemplated and mandated by amended Section 2(15) of 1961 Act read in conjunction with significant observations made in the above order dated 14-2-2017 in North Indian Association(supra). Thus, enquiry and examination by learned DIT(E) is further required to arrive at a conclusion whether activities of the assessee are genuine or not in context o....