AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 1224
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....he revenue has raised the following grounds of appeal which are as under: - "1. Whether, on the facts and in the circumstances 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 I.T. Act relying on the decision of the Hon'ble ITAT in ITA No.5762/ Mum/2015 dated 06.09.2022, [ITA No.5761/Mum/2015 dated 06.09.2022 & ITA No.6888/ Mum/ 2016 dated 06.09.2022 in assessee's own cases respectively for A. Y.2011-12, A.Y 2012-13 & A.Y 2013-14 wherein the exemption u/s 11 was allowed ignoring the fact that the objects of assessee falls under the category of "advancement of any other object of general public utility". The main objects have been reproduced at the time of Assessment proceedings in which none of points mentioned either in the main objects or in its ancillary objects mentions that it is for the person who is non-member or general public at large. Thus, the benefit of the Company is not utilized by all the persons of the society. It is benefited to limited person i.e. Members of the assessee company only, hence the proviso to section 2(15) of the LT. Act is applicable and not entitled to exemption u/s 11 ....
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....on u/s.11 of the Income Tax Act, 1961 without appreciating that the income of the assessee consists of membership fees, advertisement, sale of publication, sponsorship fees, etc. arising from regular and systematic activities which are in the nature of trade, commerce or business? 6. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in allowing the claim of the assessee for exemption u/s.11 of the Income Tax Act, 1961 ignoring that the Respondent is carrying out activities for the benefit of its own members with commercial objectives and hence the same are not educational in nature and no charitable benefits to the society ensure as such? 7. Whether on the facts and circumstances of the case and in law, the Hon'ble Tribunal is justified in allowing the claim of the assessee for exemption u/s.11 of the Income Tax Act, 1961 ignoring that the assessee is basically an organization of professionals and therefore is a mutual organization with commercial objectives? 8. Whether on the facts and circumstances of the case and in law in the light of Civil Appeal No.21762 of 2017 in various batch of appeals and SLP's [lead c....
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....e in facts of the earlier assessment years, and he has already taken similar view (supra) in the earlier years, he reiterated the same view and held at para no. 11 of assessment order that the income out of receipts from non-members is hit by the proviso to section 2(15) of the Act and thus computed income under the head "Business Income" [within the meaning of first proviso to section 2(15) of the Act r.w.s. 13(8) for non charitable purpose] and to that extent, claim of exemption u/s 11 of the Act was rejected. Thus, he computed the business income of the assessee at Rs. 22,99,70,934/- and allowed exemption only in respect of contribution fee from members to the tune of Rs. 3,32,10,000/- on the basis of "Principle of Mutuality". And thus, the income of the assessee was computed as under: - Particulars Rs. Rs. Income as per Income & expenditure account 26,31,80,934 Less: Business Income as discussed above 22,99,70,934 Less: Income covered under mutuality 3,32,10,100 Computation of Business Income 22,99,70,934 Less Business Expenditure 8,76,32,742 Add: Depreciation and amortization expenses a....
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....lar No. 11 of 2008 issued by the CBDT clearly provides that whether an assessee has for its object 'the advancement of any other object of general public utility' is a question of fact to be examined keeping in view the facts of each case. It is admitted position that the Appellant was registered under Section 12A of the Act since 09.01.1996 and was granted the benefit of exemption in terms of Section 11 of the Act in the preceding assessment years even though the Appellant had receipt registration fee for certified agents, certification test fee etc. It is admitted position that the registration and certification activities were carried out by the Appellant as per the directives of SEBI. Further, the Appellant has been holding investor education camps and publishes material/information. In our view, the aforesaid activities of the Appellant are directed towards the benefit of investors and potential investors forming part of the general public and are not limited to the benefit of its members. The Appellant has also maintained separate accounts in respect of these activities. As regards activities of the Appellant directed towards the benefit of its members are concern, th....
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....ssee received are from non-members and therefore the said receipts cannot be exempt income as "Mutuality Principle" is not attracted for the receipts like (1) ARN Fees (Rs. 1894.40 Lakhs) (2) ARN Data fees & Due diligence fee (Rs. 1.00 Lakh) (3) AMFI Summit Collection (Rs. 31.09 Lakh) and (4) Other income including interest (Rs. 373.20 Lakh). According to the Ld. DR, since the assessee received the aforesaid receipt from non- members, the AO held it to be business receipts and the AO after allowing deduction on account of business expenditure and depreciation has rightly assessed the taxable income at Rs. 1476.53 Lakhs. According to the Ld. DR, the Ld. CIT(A) erred in allowing the claim of the assessee by merely relying on the order of the Tribunal dated 06.09.2022 for AY. 2011-12 to AY. 2013-14. Further, according to him, while doing so, the Ld. CIT(A) has not taken into consideration, the ratio of the recent Hon'ble Supreme Court decision in the case of Ahmedabad Urban Development Authority (supra) passed on 19.10.2022; and the Ld. DR pointed out that in any case, the Tribunal before passing its order dated 06.09.2022 for earlier year could not have considered the Hon'ble Supreme....
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....ts or institutions which provide services in relation to trade, commerce or business, for fee or other consideration - has made a difference. Organizing meetings, disseminating information through publications, holding awareness camps and events, would be broadly covered by trade promotion. However, when a trade promotion body provides individualized or specialized services - such as conducting paid workshops, training courses, skill development courses certified by it, and hires venues which are then let out to industrial, trading or business organizations, to promote and advertise their respective businesses, the claim for GPU status needs to be scrutinised more closely. Such activities are in the nature of services "in relation to" trade, commerce or business. These activities, and the facility of consultation, or skill development courses, are meant to improve business activities, and make them more efficient. The receipts from such activities clearly are 'fee or other consideration' for providing service "in relation to" trade, commerce or business. 203. The revenue has appealed to this court, in respect of two assessment years, in the case of Apparel Export P....
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....ts, and other such receipts are within the limit prescribed by the sub-clause (ii) to proviso to section 2(15). If they are within the limits, AEPC would be - for that year, entitled to claim benefit as a GPU charity. (iv) Non-statutory bodies - ERNET, NIXI and GS1 India." Thus, according to Ld. DR in order to decide whether the assessee's case falls under mischief of proviso to section 2(15) of the Act, one needs to examine whether fees charges by it are significantly higher than the cost incurred and whether receipts on account of such fees is more than 20% of the total receipts. According to him, from the details available in the assessment order, receipts held as business income of Rs. 22.99 crores is approximately 87% of the total receipts of Rs. 26.31 crores. Further, as against the total business receipts of Rs. 22.99 crores, the total expenditure incurred by the assesse is only Rs. 8.23 crore which is approximately 36% of the total business receipts. In other words, the assessee has earned profit of nearly 180% on the cost incurred by it. Hence, the Ld. DR asserted that there cannot be two opinion about the conclusion that the fees charged by the assesse is sign....
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....ny interference from our sides. 8. After considering the submission of both parties, we note that the main grievance of the revenue is that the relevant year under consideration is AY 2018-19; and the Parliament had substituted the first and second proviso of section 2(15) of the Act by Finance Act, 2015 w.e.f 01.04.2016 which is applicable for the year under consideration. According to Ld DR, the Hon'ble Supreme Court by order dated 19.10.2022 had laid the law on the 'lis' before us in the case of Ahmedabad Urban Development Authority (supra) after considering the proviso to section 2(15) of the Act, which admittedly the Ld. CIT(A) did not consider, even though he passed the impugned order on 28.10.2022; and Ld CIT(A) erroneously, followed the order of Tribunal dated 06.09.2022 [passed in assessee's own case for AY. 2011-12 to AY. 2013-14 (supra)]. Thus, according to Ld DR, the Ld CIT(A) erred in following the decision of Tribunal in earlier years without considering the ratio laid by the Hon'ble Supreme Court passed in the case of Ahmedabad Urban Development Authority (supra). We find force in the contention of Ld DR. We note that the relevant year under consideration is AY 20....