AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 1523
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....nder section 143(3) r.w.s. 250(6) of the Act. 2. The Revenue has raised several grounds in its appeals, however, the crux of the common issue in these three appeals is as follows:- "The learned Commissioner of Income Tax (Appeals) has erred by holding that the assessee society is a mutual organization as well as charitable institution registered under section 12AA of the Act and by virtue of circular no.11/2008 dated 19.12.2008 issued by CBDT entitled to continue the benefit enjoyed under section 2(15) of the Act as the proviso to section 2(15) of the Act would not be applicable to the case of the assessee society." 3. At the outset, the learned Authorized Representative submitted that the same issue was decided by the ....
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....among its members. Retaining of a minimum amount of surplus is essential for attending the day to day activities of the assessee's society and to meet out its other charitable objects. Thought the Ld. Assessing Officer and the Ld. CIT (A) have been pointing out that the assessee society was engaged in trading activity with the non-members, their findings point out only with respect to interest received from the amount advanced to them and not trading with non-members. Precisely there is no clear cut finding from both the Revenue authorities that the assessee society was indulging in any trade activity with non-members. Further, the Circular referred by the Ld. A.R. is very relevant to the case of the assessee society considering the facts a....
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....s mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to sec 2(15) owning to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be charitable organizations would now be governed by the additional conditions stipulated in the proviso to sec 2(15). 3.2. In the final analysis, however, whether the assessee has for its object, 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade commerce, or busine....
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....e 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, wh....
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....es only to its members. In our opinion, what is to be considered is the predominant object of the assessee and the predominant nature of the objects does show charity, as already mentioned by us at paras 17 & 18 above. As held by Hon'ble Apex Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association (121 ITR 1), definition of "charitable purpose" would still be satisfied even if an activity for profit is carried on in the course of actually carrying out the primary purpose of the trust or institution. We cannot say that import of wattle extract and distribution of it among its members was an activity not connected to the primary purpose of the assessee organization. To constitute a valid charity, it is not necessa....
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.... 11 and 12 of the Act and could not have been denied such exemption for the impugned assessment years. For the same reasons, assessee could not be subjected to levy of wealth-tax also." 8. Since the facts and circumstances of the case for the relevant assessment year are identical to the case decided by the Tribunal cited supra vide order dated 25.03.2013, we are of the view that the assessee is entitled for exemption under sections 11 & 12 of the Act and accordingly, allow the appeal of the assessee and further hold that the reference made by the learned Assessing Officer to the learned Director of Income Tax (Exemptions) recommending cancellation of the registration under section 12AA(3) of the Act to be erroneous. It is pertinen....