TaxTMI 
TaxTMI 
2025 (1) TMI 562
X X X X Extracts X X X X
X X X X Extracts X X X X
....rayed that the order of the Ld. Commissioner of Income-Tax (Appeal) may be set aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee is a company registered under Section 25 of the Companies Act, 1956 as a non-profit organization. During the course of assessment proceedings, the Assessing Officer came to know that the assessee is not registered under Section 12AA of the Act and accordingly, the benefit of deduction / exemption under Section 11 & 12 of the Act were denied to the assessee. 4. During the course of assessment proceedings, the assessee made an alternate claim before the Assessing Officer that it's income from transaction with it's members was exempt on the principles of mutuality. During the year under consideration, the assessee had carried out GIHED Fiesta property shows and Cricket Tournaments, for the purpose of which assessee received contribution from both members and non-members. During the course of assessment, the Assessing Officer denied exemption under Sections 11 & 12 of the Act on the ground that the assessee does not have registration under Section 12AA of the Act and a sum of Rs. 3,81,98,054/- was....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the A.O has denied the benefit of exemption to the appellant because of non-registration u/s.12AA of the Act. In the penal proceedings, as well, the penalty has been levied by the A.O. on the basis of non-registration u/s.12AA of the Act. Although the Hon'ble Tribunal has confirmed that the appellant would have taxable income in respect of income received from non-members, the basis of determination of income that was changed by the Hon'ble ITAT has not been considered by the A.O at the time of levying of penalty u/s.271(1)(c) of the Act. The appellant has relied upon the judgment of CIT vs Lakhdirlalji (1972) 85 ITR 77 (Guj.) and CIT vs Anand Bazar Patrika (P) Ltd. 116 ITR 416. In both the cases it has been held that when the original basis of initiation of penalty proceedings is altered or modified by the appellate authority, the authority initiating the penalty proceedings has no jurisdiction, thereafter to proceed on the basis of findings of the appellate authority. In light of the above facts and circumstances, I am of the considered opinion that the A.O was not justified in levying the penalty of Rs. 1,14,59,416/- u/s.271(1)(c) of the Act and the same is hereby cance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....basis of initiation of penalty under Section 271(1)(c) of the Act has been altered by the Tribunal, there is no scope of levy of penalty in the instant facts. 10. We have heard the rival contentions and perused the material available on record. 11. We observe that initially, the assessee filed return of income claiming benefit of exemption under Sections 11 & 12 of the Act. However, the Assessing Officer observed that the claim of the assessee was incurred since the assessee was not registered under Section 12A of the Act in the first instance. Thereafter, alternatively, the assessee submitted before the Assessing Officer that it was governed by the principles of mutuality. Before us, the Counsel for the assessee submitted that the law on the subject got clarity only vide order of Gujarat High Court in the case of Junagadh Gymkhana (supra) and at the time the assessee made claim to be governed by the principles of mutuality, there was no clarity on the subject. However, we are unable to agree with the proposition of the Counsel for the assessee on the subject. Even in the order passed by Ld. CIT(A), we observe that various judicial precedents have clearly outlined the princip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstitution with an alternative plea of mutuality exemption since providing services to its members only. The Assessing Officer noticed its non registration under section 12A to deny the former plea. He opined qua the alternative mutuality plea that it conducted property shows and cricket tournaments resulting in excess over expenditure of Rs. 1,21,54,592/- to be added back as its trading income in the hands of an AOP. He did not entertain the mutuality plea by calling it as an afterthought one. We find similar reasoning in A.Y. 2006-07 wherein the assessee filed its return in furtherance to section 148 notice dt.28-3-2013 stating income of Rs. 7,47,319/- comprising interest income of Rs. 3,77,280/-, miscellaneous income of Rs. 2,750/-, kasar of Rs. 504/- and the one from non members of Rs. 3,65,777/-(supra). The Assessing Officer observed in scrutiny that the assessee had sought to avail mutuality exemption as a default measure without section 12A registration. He heavily relied upon findings recorded in A.Y. 2010-11 hereinabove and adopted the same course of action in A.Y.2006-07 and all other assessment years in question. 7. The assessee states in the course of hearing t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Turf Ltd. (1953) 24 551 (SC) holding money realised from both members and in lieu of the very services rendered in course of the same business thereby denying mutuality exemption. Their lordships quote absence of any mutual dealing between the members interse and no putting up of a common trend for discharging common obligations undertaken by the contributors for their mutual benefits. The said assessee; an incorporated authorized to carry on an ordinary business of a racecourse company and that of victuallers and refreshment purveyors and if fact carrying on such a business. It was held that this company's dealings with non members took place in the ordinary course of business carried on with a view to earning profits as any other commercial concern. The mutuality exemption was accordingly denied to the said assessee. We reiterate the facts of the instant case wherein the assessee has dealt with members and non members in raising the impugned contributions qua its activities of organizing fiestas, property fair and cricket tournaments. ... We again revert back to the facts of the present case wherein the assessee has carried out property fairs, fieastas and cricket tourna....