AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 1025
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....ssued by CBDT entitled to continue the benefit enjoyed U/s. 2(15) of the Act as the proviso to Sec.2(15) of the Act would not be applicable to the case of the assessee-society. 3. The brief facts of the case are that the assessee is a society registered under Societies Act, 1975 and also registered U/s. 12A(a) of the Act, filed its return of income for the assessment year 2009-10 on 14.09.2009. The case was taken up for scrutiny and assessment was completed U/s. 143(3) r.w.s 147 of the Act on 30.12.2011 wherein the Ld. Assessing Officer brought to tax the income of the assessee as AOP denying the benefit of Sec.11 & Sec.12 of the Act and also recommended the case to the Director of income tax (Exemptions) for cancellation of the registration U/s. 12AA (3) of the Act. While doing so, the Ld. Assessing Officer cited the following reasons:- i) The contention of the assessee that the society does not fall under the object of 'general public utility' cannot be accepted. ii) The activities of the society consisted of mainly on supplying raw materials to the members. iii) The objects such as carrying on scientific research, educating technicians, skill labore....
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....l be applicable in the case of the assessee because the assessee was involved in the activity of carrying on business. iii) The assessee was in receipt of huge amount of interest from third parties, which further confirmed the fact that the assessee was carrying on business. iv) The earlier orders of the Tribunal for the assessment years 1986-87 to 1993-94 do not have any relevance considering the facts and circumstances of the relevant assessment year. v) The principles of mutuality would not be applicable in the case of the assessee since the assessee society is a charitable institution for advancement of general public utility. 5. The Ld. A.R. submitted before us that the assessee society only consists of members who are engaged in business mainly in leather and tannering industry and the society was formed to encourage and assist the members in their business activity and also to act as a representative body to redress the problems faced by the members in the industry. During the relevant assessment year, the main activity of the assessee society was to import wattle extract from Zimbabwe, South Africa etc., and distributing the same among its memb....
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....e society considering the facts and circumstances of the case, which is reproduced herein below for reference:- "CBDT Circular F.No.134/34/2008-TPL dated 19th December, 2008 3. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility' i.e. the fourth limb of the definition of 'charitable purpose' contained in sec.2(15). Hence, such entities will not be eligible for exemption U/s. 11 or U/s. 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of act which will be decided based on the nature, scope, extent and frequently of the activity. 3.1. There are industry and trade associations who claim exemption from tax U/s. 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no de....
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....lso are of the considered view that the matter need not be remitted back to examine the trading activity with non-members because there is no specific findings by both the Revenue Authorities that the assessee society was engaged in trading activity with non-members. Further, as pointed out by the Ld. A.R. that the Tribunal in the assessee's own case in ITA No.2749 to 2751/Mds./1994 for the assessment years 1998-99, 1990-91 & 1991-92 vide order dated 25.03.2013 has categorically held that:- "23. There is no dispute that assessee was not a public religious organization. Hence, sub-clause (a) above will not apply to it. The only question is whether it will fall within sub-clause (b). As pointed out by the learned A.R., assessee is the apex association of various tanners association. The work in connection with the import of wattle extract was only carried out by the office-bearers of the assessee, who were nominated by its members, or appointed by its members. So, we cannot say that even if the import of wattle extract is considered as a business, it was not a business carried out by the beneficiaries of the assessee. When viewed against the predominant and primary objects o....
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....ble Supreme Court in the case of CIT v. Andhra Chamber of Commerce (55 ITR 722), it is not necessary that objects should be benefit the whole of mankind or all persons living in a particular country or province. It is sufficient if the intention is to benefit a sufficiently large section of the public as distinguished from specified individuals. But the section of the community sought to be benefitted must be sufficiently defined and identifiable by some quality of public or personal nature. Hon'ble Gujarat High Court in the case of HiralalBhagwati v. CIT (246 ITR 188) held a Gujarat Law Society to be entitled for registration under Section 12A(a) of the Act, despite its object being only to grant financial aid to employees in the event of their death during employment, illness or permanent disability. Proviso to Section 2(15) which place fetters on an association, having an object of general public utility, was not at all there in the impugned assessment years. 25. We are, therefore, of the view that assessee was entitled to exemption under Sections 11 and 12 of the Act and could not have been denied such exemption for the impugned assessment years. For the same reasons, asses....