TaxTMI 
TaxTMI 
2016 (6) TMI 1387
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....the appellant's primary activities were not for the benefit of the public at large and were also not of charitable nature. 3.0 Re: Taxability of Capital Receipts / Corpus Donations: 3.1 That on the facts and in the circumstances of the case and in law, Learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer in adding back a sum of Rs. 5,18,57,100/- (the correct figure being Rs. 4,82,57,100) on account of life membership fees of Rs. 4,61,57,100 and the corpus donations of Rs. 57,00,000 (the correct figure being Rs. 21,00,000) on the ground that since the appellants were not entitled to claim the exemption under section 11, the same were liable to be taxed. 3.2 That on the facts and in the circumstances of the case and in law, Learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer in failing to appreciate the fact that even presuming, without admitting, that the appellants were not entitled to claim exemption under section 11, the said capital / corpus receipts, being of capital nature ,could not be taxed even under the general principles of law and that income could on....
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.... the assessee firm was not entitled for the exemption u/s.11 of the Income Tax Act, 1961( in short "the Act"). Therefore, declined the life membership accounts and corpus donations and other expenses under challenge which were confirmed by the learned CIT(A) hence the assessee has filed the present appeal before us. ISSUE NO.1 4. Issue no.1 is formal in nature which does not require any adjudication at all. ISSUE NO.2 5. At the very outset the learned representative of the assessee has argued that the Hon'ble Income Tax Appellate Tribunal, Mumbai Bench in ITA No.5725/Mum/2012 in assessee's own case for A.Y.2008-09 dated 11.02.2015 has decided this issue in his favour, therefore present issue is liable to be decide in favour of the assessee being there is no change in circumstances at all. However, on the other hand the learned representative has strongly relied upon the order passed by the learned CIT(A). The order dated 11.02.2015 passed by the ITAT in assessee's own case for A.Y.2008-09 perused. The Hon'ble ITAT on seeing object and activity of the appellant company has decided this issue in the favour of the assessee. The relevant para 9 to 21 are hereby reproduced b....
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.... been brought up only for the purpose of development of baking personnel for/in the banking industry. The institute imparts education to the candidates who are connected with the banking industry. It has library facility, organizes lectures, seminars and undertake examinations for promoting bank officers. 15. In so far as its investments are concerned it was explained, the surplus, if. any; arising out of the activities of the Institute is not distributed by way of dividend, bonus or by way of profits to the Members of the Institute. This is evident from Clause 4 of the MOA, which is reproduced herein below for your Honor's ready perusal. 16. The income and property of the Institute, whensoever derived, shall be applied solely towards the promotion of the objects of the Institute as set forth in this Memorandum of Association; and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus or otherwise howsoever by way of profit, to the members of the Institute. Provided that nothing herein shall prevent the payment, in good faith, of remuneration to any officer or servant of the Institute, or to any member of the Institu....
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....ed that as per section 11 of the Act the assessee could spend 85% of its income towards charitable objects. It was submitted that if there was a surplus, it could be legally accumulated under section 11 (2) of the Act The AR submitted that the assessee has always complied with the said requirement in each of the years. The accumulation of the corpus, if any, has been spent in accordance with the provisions of section 11(2) of the Act. Accept for this fact, the AR submitted, the revenue authorities, did not have any argument, which could render the benefit of section 11 unavailable to the assessee. 18. The AR further submitted that looking from the point of view of disposal of its funds, i.e. the entire expenses incurred towards the educational activity has been done out of the educational receipts only, which resulted in a. deficit in financial years 1999-2000t~'2007-08 (APB 72). Any interest and/or write back has been excluded from the gross receipt, meaning that receipts as shown are pure, out of the educational activity . 19. Since the assessee has also provided details of the courses being run by it, along with the fee structure in respect of each of the c....