TaxTMI 
TaxTMI 
2023 (10) TMI 840
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....t liable to tax and has to be excluded accordingly. Thereby ignoring the fact that the objects of assessee fall under the category of "advancement of any other object of general public utility". Hence, when the benefit of the Company is not utilized by all the persons of the society and is benefited to limited person i.e. Members of the assessee company only. Then, the proviso to section 11 of the IT. Act is not applicable in the case of the assessee. 2. Whether on the facts of the case and in law the Ld. CIT(A) was justified in directing the AO to allow the benefit of exemption u/s 11 of the IT. Act even though the activities of assessee company involves providing cover for credit risk to various public through insurance, and the same are in the nature of trade, commerce or business governed by the general commercial principles and the receipts from the such activities is more than 20% of the total receipt of the trust, the proviso to section 2(15) is applicable. 3. Whether on the facts and circumstances of the case and in law and in light of the law laid down by hon'ble Supreme Court in the case of Civil Appeal No.21762 of 2017 in various batch of appeals and SLP's le....
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....Officer be directed to compute the tax by treating the Appellant as an Association of Persons which is eligible for the benefit of the slab rates of tax and the minimum threshold limit of Rs. 2,00,000/-, as applicable to the assessment year under consideration. The Appellant craves leave to add to, alter, amend, modify, substitute or withdraw the above Ground of Appeal before or at the time of hearing of the Appeal as they may be advised from time to time." 4. The brief facts of the case, as emanating from the record, are: The assessee is an association formed to promote the machine tool industry, engaged in the manufacture and trade in machine tools, small tools, cutting tools, foundry, furnace, and moulding equipments and also to render assistance to the machine tool industry in India. The assessee is registered under section 25 of the Companies Act, 1956. During the year under consideration, the assessee filed its return of income on 30/09/2014 declaring a total income of Rs. 15,92,10,230. During the assessment proceedings, from the financials of the assessee, it was observed that assessee's major income is from holding exhibitions for both members and non-members and it also h....
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....ordingly, the AO held that the activity carried on by the assessee claiming it to be a mutual concern is a trade or an adventure in the nature of trade and the transactions entered into with the members or non-members are trade or business transactions and the resultant surplus is profit-income liable to tax. Thus, the AO held that the assessee is not a mutual concern, the income being covered under the proviso to section 2(15) of the Act and the profits from the activity are taxable and no exemption can be granted to the assessee u/s 11 of the Act. 6. The learned CIT(A), vide impugned order, upheld the contention of the assessee that the principle of mutuality is applicable with respect to the receipts from members, and thus the same is not taxable in the hands of the assessee. The relevant findings of the learned CIT(A), vide impugned order, are reproduced as under:- "1.1. After having considered the facts of the case and the appellant's submission these grounds are allowed due to the following reasons- 1. The Assessing Officer has not given any cogent reasons for deviating from the tax treatment afforded to the appellant by Revenue in earlier assessment years. 1. The Asse....
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....entific and economic research relating to these industries; 6. To acquire and take over an unincorporated Association running under the name and style of Indian Machine Tool Manufacturers' Association at Bombay along with all their assets and liabilities including the registration of members thereof as on the date of registration of this Company." 9. Accordingly, in the year under consideration, the assessee had the following major activities:- (i) Holding of exhibitions in which there was participation from members and non-members; (ii) Organising seminars and conferences for members and non-members; (iii) Letting out of the exhibition centre; (iv) Receiving income from investments. 10. As per the assessee, while filing its return of income, it has offered for taxation the income from holding of exhibitions and organising of seminars arising from participation by non-members, whereas the income arising from participation by members was claimed exempt on the principle of mutuality. As regards the income derived from letting of exhibitions centre and income derived from investments, the assessee has also offered the said income to tax. As is evident from the record, the ....
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....reference was also made to page 26 of the paper book to submit that revenue from members and non-members in respect of the activities of the holding of exhibitions and seminars and other activities have been duly accounted separately in its books of accounts and the related expenditure to each activity has also been duly accounted and bifurcated between members and non-members in the ratio of actual receipts. 13. We find from the Memorandum of Association that it was also resolved that upon winding up or dissolution of the assessee if any property whatsoever remains then the same shall not be distributed amongst the members of the assessee but shall be given or transferred to such other association having similar objects. Further, it is also undisputed that the assessee is registered under section 25 of the Companies Act, 1956, and thus surplus, if any, can be applied only for the furtherance and attainment of its objects alone. Therefore, we find merit in the submissions of the assessee that on the basis of the principle of mutuality, the income earned from members in respect of holding seminars, exhibitions, and other activities is not taxable. Accordingly, the plea of the asses....