THE PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLUB TRUST, MUMBAI V. ITO (E) II(1), MUMBAI

ITA 1039/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9760 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Business income; Charitable institution; Benefit of exemption
• Section: 142(1); 12A; 12AA; 11

Judgement Text

1 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.1039 & 1040/MUM/2016 (ASSESSMENT YEARS: 2010-11 & 2011-12) & ITA NO.510/MUM/2017 (ASSESSMENT YEAR : 2009-10) THE PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLUB TRUST, NETAJI SUBHASH ROAD, CHOWPATTY, MUMBAI-7 PAN : AAATT9571H VS ITO (EEMP.).II(1), MUMBAI APPELLANT BY SHRI PERCY PARDIWALA / NISHANT THAKKAR / MS. JASMIN AMALSADVALA REVENUE BY SHRI RAJAT MITTAL DATE OF HEARING 12-03-2018 DATE OF PRONOUNCEMENT 21-03-2018 O R D E R PER G MANJUNATHA, AM : THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A)-1, MUM BAI DATED 17-12-2015 AND 02-11-2016. SINCE FACTS ARE IDENTICAL AND ISSU ES ARE COMMON, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED MORE OR LESS COMMON GROU NDS OF APPEAL FOR ALL THE THREE YEARS. FOR THE SAKE OF BREVITY A ND CONVENIENCE, GROUNDS 2 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST OF APPEAL RAISED FOR AY 2010-11 IN ITA NO.1039/MUM/ 2016 ARE EXTRACTED BELOW:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS BY CONFIRMING THE ORDER OF THE ASSESSING OFFICER DENYING EXEMPTION U/S 11 OF T HE ACT. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS DI SMISSING THE CONTENTION OF THE APPELLANT THAT, AS PER CBDT CIRCULAR 1 1/.2008 PROVISO TO S.2(15) IS NOT APPLICABLE TO THEM, AS THEY ARE CHARITABLE AS WELL AND HELD TO BE A MUTUAL CONCERN BY THE ASSESSING OFFICER. 3. THE LEARNED CIT{A) ERRED IN LAW AND ON FACTS B Y CONFIRMING THAT ALLOWING THE GUESTS ACCOMPANIED BY MEMBERS WAS AN ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THE FEES RECEIVED FORM GUE STS AMOUNTING TO RS.35, 57,9607- WAS IN THE NATURE OF BUSINESS INCOM E, IGNORING THE FACTS THAT THIS ACTIVITY IS IN FURTHERANCE TO THE OBJECTS OF T HE TRUST AND WITHOUT ANY PROFIT MOTIVE OR EVEN OTHERWISE COVERED BY PRINCIPLE OF MU TUALITY.. 4. THE LEARNED CIT{A) ERRED IN LAW AND ON FACTS B Y CONFIRMING THAT LEARN TO SWIM CAMPS CONDUCTED BY THE APPELLANT WAS AN ACTIVI TY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THE FEES RECEIVED FORM LEA RN TO SWIM AMOUNTING TO RS.5,10,136/- WAS IN THE NATURE OF BUSINESS INCOME. , IGNORING THE FACTS THAT THIS ACTIVITY IS IN FURTHERANCE TO THE OBJECTS OF T HE TRUST AND WITHOUT ANY PROFIT MOTIVE. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, THE LEARNED CLT{A) ERRED IN LAW AND ON FACTS IN NOT ALLOWING DEDUCTION FOR THE ENTIRE EXPENSES INCURRED BY YOUR APPELLANT RESULTING IN OVER ASSESSMENT AS THE NET SURPLUS FOR THE YEAR IS ONLY RS.17,16,877/-WHEREAS THE ASSESSED INCOME IS R S.1, 25,71, 700/-, IGNORING THAT IF HE DOES NOT CONSIDER THE APPELLANT AS A MUTUAL CONCERN THEN THE COMPUTATION OF INCOME OUGHT TO BE MADE ALLOWING THE ENTIRE EXPENSES AGAINST THE INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER BOMBAY PUBLIC TRU ST ACT, 1950 IN THE YEAR 1953 AND ALSO REGISTERED U/S 12A OF THE INCOME -TAX ACT, 1961. THE MAIN OBJECT OF THE ASSESSEE TRUST IS PROMOTION OF S WIMMING AND OTHER ALLIED SPORTS ON A NO PROFIT BASIS. THE ASSESSEE H AS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 28-09-201 0 DECLARING TOTAL INCOME AT NIL. THE CASE HAS BEEN SELECTED FOR SCRU TINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPO NSE TO NOTICES, THE 3 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS, AS CALLED FOR. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ON VERIFIC ATION OF INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR 2010-11, IT WA S SEEN THAT THE ASSESSEE HAD EARNED INCOME BY WAY OF GUEST FEE OF R S.28,11,345 AND LEARN TO SWIM FEE OF RS.1,84,154. THE AO FURTHER O BSERVED THAT THE DIT (EXEMPTION) WITHDREW REGISTRATION GRANTED U/S 12A O F THE ACT, TO THE ASSESSEE W.E.F. AY 2009-10 VIDE HIS ORDER DATED 16- 12-2011 AS THE ASSESSEES OBJECTS WERE IN THE NATURE OF ADVANCEMEN T OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY AND ITS ACTIVITIE S ARE CARRIED OUT IN THE NATURE OF TRADE, COMMERCE, BUSINESS, ETC. SINCE TH E ASSESSEES REGISTRATION U/S 12A HAS BEEN WITHDRAWN, THE AO CAL LED UPON THE ASSESSEE TO COMPUTE INCOME ON ACCOUNT OF NON MUTUAL ITY RATIO OF MUTUAL INCOME TO NON MUTUAL INCOME AND EXPENDITURE AND V ICE VERSA TO NON MUTUAL INCOME. IN RESPONSE TO SHOW CAUSE NOTICE, A SSESSEE, VIDE LETTER DATED 01-03-2013 SUBMITTED THAT IT IS ENGAGED IN TH E ACTIVITY OF PROMOTION OF SPORTS AND MAINLY FOCUSED ON SWIMMING. THE ASSESSEE FURTHER CONTENDED THAT EVEN IF THESE ACTIVITIES HAD BEEN CONSIDERED AS BUSINESS ACTIVITIES, YET, THE PROVISIONS OF SUB SEC TION (4A) OF SECTION 11 OF THE ACT WOULD NOT BE ATTRACTED AS THE ACTIVITIES WERE INCIDENTAL TO THE MAIN OBJECT AND THAT AS REGARDS THE PROVISO TO SECT ION 2(15), NONE OF THE ACTIVITIES OF THE CLUB WERE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS 4 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST AND AS SUCH, THE PROVISO WAS NOT APPLICABLE AND SIN CE ALL THE EXPENSES WERE INCURRED FOR EARNING THE INCOME AND ALSO IF TH E ELEMENT OF INCOME HAD TO BE CONSIDERED TAXABLE, THEN THE ENTIRE EXPEN SE SHOULD BE ALLOWED AGAINST SUCH INCOME. THE AO, AFTER CONSIDERING REL EVANT SUBMISSIONS OF THE ASSESSEE REJECTED EXEMPTION CLAIMED U/S 11 AND COMPUTED INCOME BY APPLYING THE CONCEPT OF MUTUALITY AND ALLOWED BE NEFIT OF MUTUALITY TO THE EXTENT OF INCOME RECEIVED FROM ITS MEMBERS; HOW EVER, TREATED THE ACTIVITY OF INCOME GENERATED FROM GUESTS FEE AND L EARN TO SWIM FEE AS INCOME GENERATED FROM TRADE, COMMERCE AND BUSINESS. INSOFAR AS INTEREST INCOME, THE AO HELD THAT EVEN THOUGH THE A SSESSEE HAS CLAIMED THE BENEFIT OF MUTUALITY IN RESPECT OF ITS CORE ACT IVITY, YET, INTEREST INCOME EARNED FROM INVESTMENTS IS TAXABLE IN VIEW OF LAW L AID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF BANGALORE CLUB VS CIT & ORS IN CIVIL APPEAL NO.124 OF 2007 DATED 14-01-2013 WHEREI N IT IS HELD THAT INCOME EARNED BY THE ASSESSEE FROM THE BANKS WOULD NOT FALL WITHIN THE AMBIT OF THE MUTUALITY PRINCIPLE AND WILL, THEREFOR E, EXIGIBLE TO INCOME-TAX IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT THE AS SESSEE IS A CHARITABLE TRUST ENGAGED IN THE ACTIVITY OF PROMOTI ON OF SPORTS AND MAINLY FOCUSED ON SWIMMING. THEREFORE, MERELY BECAUSE IT HAS COLLECTED GUEST 5 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST FEE FROM GUESTS OTHER THAN MEMBERS, THE ACTIVITIES OF THE TRUST CANNOT BE BROUGHT WITHIN THE AMBIT OF PROVISO TO SECTION 2(15 ) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE FURTHER ARGUED THAT IT HAS THAT THE WHOLE AMOUNT COLLECTED FROM ITS MEMBERS AND GUESTS TOWARD S DEVELOPMENT OF SPORTS WHICH IS EVIDENT FROM THE FACT THAT IN ALL T HE YEARS ITS FEES COLLECTION FROM THE OBJECTS OF THE TRUST IS LESS TH AN ITS EXPENDITURE INCURRED TOWARDS OBJECT OF THE TRUST AND ASSESSEE H AS INCURRED HUGE DEFICIT FROM ITS CORE ACTIVITY. THE ASSESSEE FURTH ER CONTENDED THAT THE ITAT, MUMBAI BENCH C VIDE ITS ORDER DATED 30-10-2 015 HAS SET ASIDE THE ORDER OF DIT (EXEMPTION) DATED 16-10-2011 CANCE LLING THE REGISTRATION U/S 12AA OF THE ACT. WITH THIS ORDER, THE BASIS OF DENIAL OF EXEMPTION U/S 11 BY THE AO STOOD RESOLVED AND THE A SSESSEE CONTINUED TO ENJOY THE BENEFIT OF EXEMPTION U/S 11. THEREFOR E, THERE IS NO REASON FOR THE AO TO DENY BENEFIT OF EXEMPTION, MERELY BEC AUSE AMOUNT HAD BEEN COLLECTED FROM GUESTS. 5. THE CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO RELYING UPON THE DECISION OF ITAT, SETTING ASIDE TH E ORDER PASSED BY THE DIT (EXEMPTION) CANCELLING REGISTRATION U/S 12A OBS ERVED THAT THE ITAT HAS NOT DECIDED THE ISSUE ON MERIT WITH REGARD TO T HE FINDING OF THE AO THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATU RE OF TRADE, COMMERCE OR BUSINESS AND HENCE, OBJECTS ARE NOT CHARITABLE A S PER PROVISO TO SECTION 2(15). THE CIT(A) FURTHER OBSERVED THAT TH OUGH THE ASSESSEE 6 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST RELIED UPON CIRCULAR NO.11/2005 DATED 19-10-2008 TO ARGUE THAT THE ENTITY CLAIMING BOTH AS CHARITABLE AND MUTUAL IS OU TSIDE THE PURVIEW OF PROVISIONS OF SECTION 2(15), ON PERUSAL OF THE ASSE SSMENT ORDER IT IS NOTED THAT THE AO HAS APPLIED THE PRINCIPLES OF MUT UALITY IN RESPECT OF ITS CORE ACTIVITY; HOWEVER, THE INTEREST INCOME WAS HEL D TO BE TAXABLE, RELYING UPON THE JUDGEMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF BANGALORE CLUB VS CIT & ORS (SUPRA), THEREFORE, THE RE IS NO MERIT IN THE CONTENTION OF THE ASSESSEE. THE CIT(A) FURTHER OBS ERVED THAT THOUGH THE ASSESSEE CLAIMS THAT IT IS CHARGING NOMINAL AMOUNT UNDER GUEST FEE AND LEARNED TO SWIM FEE RESULTING INTO DEFICIT. ON PE RUSAL OF THE SUBMISSIONS OF THE ASSESSEE, IT IS NOTED THAT THE WORKING FOR T HE SAME INVOLVES ASSUMPTIONS AND ESTIMATES AND THERE IS NO EXACT WOR KING OF THE COST INCURRED HAS BEEN PROVIDED BY THE ASSESSEE WITH REF ERENCE TO THE SERVICES RENDERED BY IT TO THE MEMBERS AS WELL AS N ON MEMBERS. FURTHER, THERE IS NO DISPUTE THAT THE ASSESSEE HAS RENDERED SERVICE FOR WHICH THE FEE HAS BEEN CHARGED AND HENCE, IT IS HIT BY THE PROVISO TO SECTION 2(15) AND ACCORDINGLY, THE AO WAS RIGHT IN DENYING EXEMPTION U/S 11 AND COMPUTING INCOME BY APPLYING THE PRINCIP LE OF MUTUALITY. WITH THESE OBSERVATIONS, THE CIT(A) DISMISSED APPEA L FILED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. 6. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) ERRED IN 7 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST LAW AND ON FACTS CONFIRMING THE ORDER OF THE AO DEN YING EXEMPTION U/S 11 OF THE ACT, WITHOUT APPRECIATING THE FACT THAT T HE ASSESSEE IS A CHARITABLE TRUST ENGAGED IN THE ACTIVITY OF PROMOTI ON OF SWIMMING. THE LD.AR FURTHER SUBMITTED THAT THOUGH THE ASSESSEES ACTIVITIES ARE LIMITED TO ITS MEMBERS, SUCH MEMBERSHIP IS OPEN TO GENERAL PUBLIC WITHOUT LIMITING IT TO ANY CASTE, CREED OR COMMUNITY AND AN Y GENERAL PUBLIC CAN BECOME MEMBER OF THE SWIMMING CLUB. THE LD.AR FURT HER SUBMITTED THAT THE ASSESSEE HAS COLLECTED GUEST FEE FROM NON MEMBERS, WHO ACCOMPANIED BY THE MEMBERS TO RECOVER THE COST OF P ROVIDING SERVICES WHICH CANNOT BE CONSIDERED AS ACTIVITY OF RENDERING SERVICES WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS WHICH IS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. THE LD.AR REFERRING TO T HE ORDER OF ITAT, SETTING ASIDE ORDER PASSED BY THE DIT (EXEMPTIONS) WITHDRAWING EXEMPTION GRANTED U/S 12A SUBMITTED THAT THE ITAT H AS SET ASIDE THE ORDER OF THE DIT (EXEMPTIONS) WHICH MEANS THE ASSES SEES ACTIVITY ARE CHARITABLE IN NATURE AND ITS ACTIVITIES ARE CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. THE AO, WITHOUT APPRECIATING THE FACT THAT ASSESSEE IS A CHARITABLE TRUST AND PROMOTING SPORTS, WHICH IS IN THE NATURE OF THIRD LIMB OF THE DEFINITION OF CHARITABLE PURPOSE AND ALSO WHICH COMES UNDER THE CLAUSE OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTIT LITY, DENIED THE BENEFIT OF EXEMPTION MERELY BECAUSE THE ASSESSEE HAS COLLEC TED FEES FROM GUESTS AND LEARN TO SWIM PROGRAMMES. IN THIS REGAR D, HE RELIED UPON THE 8 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST DECISION OF ITAT, MUMBAI BENCH D IN THE CASE OF C HEMBUR GYMKHANA (2017) 80 TAXMAN.354 AND THE DECISION OF ITAT, MUMB AI BENCH SMC IN THE CASE OF DAHISAR SPORTS FOUNDATION (2017) 87 TAXMAN.COM 313. 7. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED ORDER OF THE CIT(A) AND SUBMITTED THAT THE ACTIVITIES ARE SQUARE LY COMING WITHIN THE DEFINITION OF PROVISO TO SECTION 2(15) AS IT HAS CO LLECTED FEES FROM NON MEMBERS FOR RENDERING SERVICES WHICH IS IN EXCESS O F THE PRESCRIBED LIMIT PROVIDED THEREIN, THEREFORE, THE AO WAS RIGHT IN DE NYING THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT. THE LD.DR FURTHER ARG UED THAT THOUGH THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED U/ S 12A, ITS ACTIVITIES ARE LIMITED TO ITS MEMBERS BUT NOT OPEN TO GENERAL PUBL IC. THEREFORE, THE ASSESSEE CANNOT CLAIM THE STATUS OF PUBLIC CHARITAB LE TRUST AND ITS BENEFITS ARE OPEN TO GENERAL PUBLIC WITHOUT ANY LIM ITATION TO CASTE, CREED OR COMMUNITY. THE ASSESSEES ACTIVITIES WERE IN TH E NATURE OF TRADE, COMMERCE OR BUSINESS AND AS SUCH, THE PROVISO IS AP PLICABLE AND ACCORDINGLY, THE AO WAS RIGHT IN COMPUTING INCOME G ENERATED FROM THE ACTIVITY OF TRADE, COMMERCE OR BUSINESS. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED UNDER BOMBA Y PUBLIC TRUST ACT, 1950 IN THE YEAR 1953 WITH THE OBJECT OF PROMOTING SPORTS ACTIVITIES. THE TRUST IS OPERATING A SEPARATE SWIMMING POOL FOR GEN TS AND LADIES. THE 9 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST TRUST WAS REGISTERED U/S 12A OF THE INCOME-TAX ACT, 1961 AND ALLOWED THE BENEFIT OF EXEMPTION U/S 11 UPTO AY 2008-09. THE D IT(EXEMPTION) WITHDREW REGISTRATION GRANTED U/S 12A BY INVOKING P ROVISIONS OF SECTION 12AA W.E.F. AY 2009-10 AFTER NEWLY INSERTED PROVISO TO SECTION 21(15) ON THE GROUND THAT THE ASSESSEES ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, WHICH IS EVIDENT FROM THE FAC T THAT THE ASSESSEE IS COLLECTING FEES FROM GUESTS AND LEARN TO SWIM PR OGRAMMES WHICH EXCEEDS THE LIMIT PRESCRIBED IN THE PROVISO TO SECT ION 2(15) OF THE ACT. THE AO DENIED THE BENEFIT OF EXEMPTION U/S 11, ON T HE BASIS OF WITHDRAWAL OF REGISTRATION GRANTED EARLIER U/S 12A AND ALSO ON THE BASIS OF PROVISO TO SECTION 2(15). ACCORDING TO THE AO, THE ASSESSEE HAS COLLECTED FEES FROM GUESTS FOR RENDERING SERVICES W HICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND WHICH IS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. THE AO FURTHER OBSERVED THAT THE ACTIVITY OF THE ASSESSEE IS LIMITED TO ITS MEMBERS, BUT NOT OPEN TO GENERAL PUBLIC WITHOUT ANY CASTE, CREED OR COMMUNITY, THEREFORE, T HE ASSESSEE CANNOT TAKE THE BENEFIT OF CHARITY TO CLAIM THE BENEFIT OF EXEMPTION U/S 11 OF THE ACT; ACCORDINGLY, DENIED THE BENEFIT U/S 11 AND APP LIED THE PRINCIPLES OF MUTUALITY IN RESPECT OF ITS CORE ACTIVITY AND COMPU TED INCOME FROM BUSINESS IN RESPECT OF AMOUNT RECEIVED FROM GUESTS AND FEES COLLECTED FROM LEARN TO SWIM PROGRAMME. THE AO ALSO TAXED IN TEREST INCOME UNDER THE HEAD, INCOME FROM OTHER SOURCES BY FOLL OWING THE PRINCIPLES 10 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST OF HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF B ANGALORE CLUB VS CIT & ORS (SUPRA). 9. IT IS THE CONTENTION OF THE ASSESSEE THAT IT IS A PUBLIC CHARITABLE TRUST ENGAGED IN THE ACTIVITY OF PROMOTION OF SPORTS. TH E ASSESSEE FURTHER CONTENDED THAT ITS FACILITIES ARE OPEN TO GENERAL P UBLIC WITHOUT ANY RESTRICTION TO CASTE, CREED OR COMMUNITY AND ANY GE NERAL PUBLIC CAN BECOME MEMBER OF THE CLUB. THE ASSESSEE FURTHER CO NTENDED THAT IT IS OPERATING A SWIMMING POOL FOR DEVELOPMENT OF SWIMMI NG AND ALSO CONDUCTS TRAINING CAMPS FOR WHICH IT HAS COLLECTED CERTAIN AMOUNT OF FEES; HOWEVER, THE ASSESSEE HAS NOT CARRIED OUT ITS ACTIVITY WITH AN INTENTION TO EARN PROFIT WHICH IS EVIDENT FROM THE FACT THAT IT HAS INCURRED DEFICIT FROM ITS MAIN ACTIVITY. THE ASSESSEE FURTH ER CONTENDED THAT BUT FOR ITS INCOME FROM INVESTMENTS, IT HAS INCURRED DEFICI T IN ALL THE YEARS, WHICH MEANS THAT IT HAS APPLIED ITS TOTAL RECEIPTS GENERA TED FROM ITS CORE ACTIVITY TO THE OBJECTS OF THE TRUST, THEREFORE, TH E AO WAS INCORRECT IN TREATING THE ASSESSEE AS HAS BEEN ENGAGED IN THE AC TIVITY OF PROVIDING SERVICES WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS WHICH IS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. 10. THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGIS TERED U/S 12A OF THE INCOME-TAX ACT, 1961. ITS MAIN OBJECTS ARE PROMOTI ON OF SPORTS AND FOCUSED ON SWIMMING. THE ASSESSEE IS CARRYING OUT ITS ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS. THE ASSESSEE IS OPERA TING A SEPARATE 11 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST SWIMMING POOL FOR GENTS AND LADIES. THERE IS NO OB SERVATION FROM THE AO THAT THE ASSESSEES OBJECTS ARE NOT CHARITABLE I N NATURE. THE AO ALSO NOT POINTED OUT ANY ACTIVITIES WHICH ARE NOT I N THE NATURE OF CHARITABLE ACTIVITIES. THE AO DENIED THE BENEFIT M ERELY ON THE BASIS OF COLLECTION OF FEES FROM NON MEMBERS ON THE ALLEGATI ON THAT THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF TRADE, COMMERC E OR BUSINESS WHICH IS HIT BY PROVISIONS TO SECTION 2(15) OF THE ACT. THE AOS ACTION IS BASED ON THE FACT THAT THE DIT (EXEMPTION) HAS WITHDRAWN REGISTRATION GRANTED U/S 12A OF THE INCOME-TAX ACT, 1961. THE REGISTRAT ION GRANTED U/S 12A HAS BEEN RESTORED BY THE ITAT WITH THE OBSERVATIONS THAT THERE IS NO RECORDING OF SATISFACTION BY THE AO THAT THE ACTIVI TIES OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORD ANCE WITH THE OBJECTS OF THE TRUST. THE ASSESSEE IS CONTINUED TO ENJOY T HE BENEFIT OF REGISTRATION 12A. ONCE THE ASSESSEE CONTINUED TO E NJOY THE BENEFIT OF REGISTRATION , THE BENEFIT OF EXEMPTION U/S 11 CAN BE DENIED ONLY WHEN THE OBJECTS OF THE ASSESSEE TRUST ARE NOT CHARITABL E IN NATURE AND ITS ACTIVITIES ARE NOT CARRIED OUT IN ACCORDANCE WITH I TS OBJECTS. THE PROVISO TO SECTION 2(15) OF THE INCOME-TAX ACT IS APPLICABL E TO A CASE WHERE THE TRUSTS ARE CARRYING OUT ITS ACTIVITIES ON COMMERCIA L BASIS WITH AN INTENTION TO EARN PROFIT. IN THIS CASE, ON PERUSAL OF THE DE TAILS AVAILABLE ON RECORD, THERE IS NO FINDING FROM THE LOWER AUTHORITIES THAT THE ASSESSEE IS CARRYING OUT ITS ACTIVITIES FOR THE PURPOSE OF EARN ING PROFIT. THE ALLEGATION 12 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST OF THE LOWER AUTHORITIES IS ONLY WITH ITS FEES COLL ECTIONS FROM GUESTS AND LEARN TO SWIM PROGRAMME WHICH IS IN EXCESS OF THE P RESCRIBED LIMIT PROVIDED U/S 2(15) AND WHICH IS HIT BY THE PROVISO, THEREFORE, THE ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF TRA DE, COMMERCE OR BUSINESS. 11. HAVING CONSIDERED RELEVANT FACTS, WE DO NOT FIN D ANY MERIT IN THE FINDINGS OF THE LOWER AUTHORITIES FOR THE REASON TH AT PROVIDING SPORTS FACILITIES TO GENERAL PUBLIC WITHOUT RESTRICTION TO ANY CASTE, CREED, RELIGION OR PROFESSION IS SQUARELY COMES WITHIN THE DEFINITI ON OF CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE INCOME-TAX ACT, 1961 AND HENCE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE AC T. IN THIS CASE, ON PERUSAL OF THE FACTS, IT IS ABUNDANTLY CLEAR THAT T HE ASSESSEE IS RUNNING ITS ACTIVITIES IN ACCORDANCE WITH ITS MAIN OBJECT AND C ONTINUED TO PROVIDE SERVICES TO ITS MEMBERS BY COLLECTING NOMINAL FEE. WE FURTHER OBSERVE THAT THE ASSESSEE HAS DEFICITS FROM ITS CORE ACTIVI TY OF PROMOTING SWIMMING FOR ALL THE YEARS. THE ASSESSEES COLLECT IONS FROM ITS MEMBERS IS LESS THAN THE AMOUNT SPENT FOR ITS OBJEC TS. BUT FOR INCOME FROM INVESTMENTS, THE ASSESSEE IS ALWAYS INCURRING DEFICIT FOR ALL THE YEARS. THEREFORE, WE ARE OF THE CONSIDERED VIEW TH AT THERE IS NO MERIT IN THE FINDINGS OF THE AO THAT THE ASSESSEE IS CARRYIN G OUT ITS ACTIVITIES ON COMMERCIAL LINES WITH AN INTENTION TO EARN PROFIT. 12. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE 13 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST ASSESSEE HAS RELIED UPON THE DECISION OF ITAT, MUMB AI BENCH IN THE CASE OF CHEMBUR GYMKHANA (SUPRA). WE FIND THAT THE CO-ORDINATE BENCH OF ITAT, UNDER SIMILAR SET OF FACTS HAS HELD THAT IN ORDER TO INVOKE FIRST PROVISO TO SECTION 2(15), IT IS NECESSARY AND INCUMBENT ON THE PART OF THE AO TO GIVE A FACTUAL FINDING THAT ASSESSEE H AS DERIVED INCOME BY ENGAGING ITSELF IN TRADE, BUSINESS OR COMMERCIAL AC TIVITY. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- UNDISPUTEDLY, THE ASSESSEE HAS BEEN REGISTERED AS A CHARITABLE TRUST NOT ONLY WITH THE CHARITY COMMISSIONER BUT ALSO UNDER SECTIO N 12A. THOUGH, THE REGISTRATION GRANTED UNDER SECTION 12A WAS SUBSEQUE NTLY CANCELLED BY THE DIT(E) UNDER SECTION 12AA(3), HOWEVER, THE TRIBUNAL , WHILE SETTING ASIDE THE ORDER OF THE DIT(E) RESTORED THE REGISTRATION GRANT ED UNDER SECTION 12A. THUS, THE GRANT OF REGISTRATION UNDER SECTION 12A TO THE ASSESSEE PRE-SUPPOSES THAT THE OBJECTS OF THE ASSESSEE ARE FOR CHARITABLE PURP OSE. IN OTHER WORDS, THE ASSESSEE IS A CHARITABL E TRUST. THE ASSESSING OFFICER AT THE TIME OF COMPLETION OF ASSESSMENT HAS NOT POINTE D OUT ANY CHANGE IN THE OBJECT OF THE ASSESSEE TRUST. AS IT APPEARS, RELYIN G UPON THE ASSESSMENT ORDER PASSED IN CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE IS MUTUAL CONCE RN, AS IT DOES NOT TREAT THE MEMBERS AND NON-MEMBERS AT PAR. HE HAS ALSO STATED THAT SINCE IT EXTENDS BENEFIT TO THE PERSONS SPECIFIED UNDER SECTION 13(L )(C), THE CONDITIONS OF THE SAID PROVISIONS HAVE BEEN VIOLATED, HENCE, THE ASSE SSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11. THUS, IN SUM AND SUBSTANCE, THE ASSESSING OF FICER HAS DENIED ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 11 BY TREATING IT AS A MUTUAL CONCERN OF THE MEMBERS. HOWEVER, THIS IS NOT THE FIRST TIME THE RE VENUE HAS TREATED THE ASSESSEE AS A MUTUAL CONCERN WHILE DENYING CLAIM OF EXEMPTION UNDER SECTION 11. THE DISPUTE AROSE FOR THE FIRST TIME IN ASSESSM ENT YEARS 1996-97 AND CONTINUED IN THE SUBSEQUENT ASSESSMENT YEARS. IT IS NECESSARY TO OBSERVE, WHILE COMPLETING ASSESSMENT FOR THOSE ASSESSMENT YEARS, T HE ASSESSING OFFICER TOOK A COMPLETELY IDENTICAL VIEW BY HOLDING THAT THE ASSES SEE WAS A MUTUAL CONCERN, HENCE, RECEIPTS FROM NON-MEMBERS BY WAY OF CANTEEN FEE, INTEREST, COACHING, ETC., IS TAXABLE. HOWEVER, THE TRIBUNAL WHILE DECID ING THE APPEALS OF THE ASSESSEE FOR ASSESSMENT YEARS 1996-97 TO 2000-01, H ELD THAT AS PER THE OBJECT OF THE TRUST, IT IS TO BE CONSIDERED AS A CHARITABL E ORGANISATION AS THE OBJECTS SHOW THAT THE ASSESSEE-TRUST WAS ENGAGED IN THE BRO AD AREAS OF GAMES AND SPORTS AS WELL AS IN PROMOTION AND/OR MANAGEMENT OF SOCIAL INTERCOURSE OR ATHLETIC SPORT AND CULTURAL AND EDUCATIONAL ACTIVIT IES FOR ITS MEMBERS. CONSIDERING THE OBJECTS AND ACTIVITIES OF THE ASSES SEE, THE TRIBUNAL HELD THAT IT 14 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST IS IN THE NATURE OF GENERAL PUBLIC UTILITY AS IT IS FOR THE WELL BEING OF A SECTION OF PUBLIC AT LARGE. WHILE DEALING WITH THE OBJECTION O F THE REVENUE THAT THERE IS RESTRICTION ON THE MEMBERSHIP ADMISSION, THE TRIBUN AL HELD THAT SO LONG AS MEMBERS ADMISSION INTO THE CLUB IS NOT ARBITRARY, T HE COMMITTEE'S DISCRETION TO RESTRICT THE MEMBERSHIP DOES NOT INTERFERE WITH THE OBJECT OF PUBLIC UTILITY. THE TRIBUNAL, WHILE DEALING WITH THE ALLEGATION OF THE DEPARTMENT THAT THE ASSESSEE IS A MUTUAL CONCERN, CONCLUDED THAT THE OBJECT OF T HE TRUST OF PROVIDING FOR LAND AND BUILDING AS WELL AS FOR PROMOTION OR MANAGEMENT OF SOCIAL INTERCOURSE OR ATHLETIC SPORTS AND CULTURAL AND EDUCATIONAL ACTIVI TIES FOR ITS MEMBERS CONSTITUTE OBJECT OF GENERAL PUBLIC UTILITY. HENCE, THE TRUST IS CHARITABLE ORGANISATION. THE TRIBUNAL FURTHER OBSERVED, THE ME MBERS OF THE TRUST REPRESENT A CROSS SECTION OF PUBLIC AT LARGE AND IT IS NOT FOR GROUP OF PRIVATE FAMILIES OR PRIVATE MEMBERS ALONE. HENCE, THE PRINC IPLE OF - MUTUALITY WILL NOT APPLY TO THE ASSESSEE'S CASE. WITH THE AFORESAI D OBSERVATION, THE TRIBUNAL ALLOWED ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 11. THE AFORESAID DECISION OF THE TRIBUNAL WAS UPHELD BY THE HIGH COURT. [PARA 7] THE ASSESSING OFFICER IN THE ASSESSMENT ORDE R NOR HAS NOT BROUGHT ANY MATERIAL TO DEMONSTRATE THAT THERE IS ANY CHANGE IN THE OBJE CT OF THE TRUST IN THE IMPUGNED ASSESSMENT YEAR AS COMPARED TO EARLIER ASSESSMENT Y EARS, WHEREIN, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THAT BEING THE C ASE, CONSISTENT WITH THE VIEW OF THE TRIBUNAL AND THE HIGH COURT IN ASSESSEE'S OWN CASE IT HAS TO BE HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 11 AS A CHAR ITABLE TRUST. [PARA 8] AT THIS STAGE, IT IS NECESSARY TO DEAL WITH THE SUBMISSIONS OF THE REVENUE THAT IN VIEW OF THE FIRST PROVISO TO SECTION 2(15), AS IT E XISTED IN THE STATUTE BOOK AT THE RELEVANT TIME, THE ASSESSEE CANNOT BE CONSIDERED TO BE EXISTING FOR CHARITABLE PURPOSE. FIRSTLY, THE ASSESSING OFFICER IN THE ASSESSMENT OR DER, HAS NOT RECORDED ANY FACTUAL FINDING THAT THE ASSESSEE HAS DERIVED INCOME BY ENG AGING ITSELF IN ANY TRADE, BUSINESS OR COMMERCIAL ACTIVITY. THE ASSESSING OFFICER HAS P ROCEEDED ON THE FOOTING THAT THE ASSESSEE BEING A MUTUAL CONCERN, THE RECEIPTS DERIV ED FROM THE MEMBERS FOR USER OF FACILITIES IS NOT TAXABLE, WHEREAS, RECEIPTS FROM N ON-MEMBERS FOR USER OR FACILITIES IS TAXABLE. IN THIS CONTEXT, THE ASSESSING OFFICER HAS PASSED THE IMPUGNED ASSESSMENT, ORDER, THUS, IT HAS TO BE ASSUMED THAT THE ASSESSIN G OFFICER WHILE COMPLETING THE ASSESSMENT WAS CONSCIOUS OF THE FIRST PROVISO TO SE CTION 2(15), WHICH HAS COME TO THE STATUTE BOOK BY THAT TIME. IN SPITE OF THAT THE ASS ESSING OFFICER HAS NOT RECORDED ANY FINDING THAT THE OBJECTS OF THE ASSESSEE ARE NOT FO R CHARITABLE PURPOSE IN VIEW OF THE FIRST PROVISO TO SECTION 2(15). ON THE CONTRARY, TH E ASSESSING OFFICER BY TREATING THE ASSESSEE AS A MUTUAL CONCERN, HAS BROUGHT TO TAX TH E RECEIPT FROM NON-MEMBERS ONLY. FOR INVOKING THE FIRST PROVISO TO SECTION 2(15), IT IS NECESSARY AND INCUMBENT ON THE PART OF THE ASSESSING OFFICER TO GIVE A FACTUAL FIN DING THAT THE ASSESSEE HAS DERIVED INCOME BY ENGAGING ITSELF IN TRADE, BUSINESS OR COM MERCIAL ACTIVITY. IN THE ABSENCE OF ANY SUCH FINDING THE FIRST PROVISO TO SECTION 2(15) CANNOT BE ATTRACTED. MORE SO, WHEN THE TRIBUNAL AND THE HIGH COURT IN THE PRECEDING AS SESSMENT YEARS HAVE HELD THAT THE OBJECTS OF THE ASSESSEE QUALIFY THE OBJECT OF GENER AL PUBLIC UTILITY, HENCE, IS EXISTING FOR CHARITABLE PURPOSE AS PER SECTION 2(15). IN VIEW OF THE AFORESAID, THE COMMISSIONER ( APPEALS) WAS JUSTIFIED IN ALLOWING ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTIO N 11. 13. THE ASSESSEE ALSO RELIED UPON THE DECISION OF I TAT, MUMBAI BENCH IN THE CASE OF DAHISAR SPORTS FOUNDATION VS ITO (SU PRA) WHEREIN IT WAS 15 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST HELD THAT WHERE MAIN OBJECT OR PURPOSE OF ASSESSEE S CHARITABLE TRUST WAS PROMOTION OF SPORTS AND GAMES, MERELY BECAUSE T RUST COLLECTED CERTAIN CHARGES FROM COACHING CAMPUS MEANT FOR PROM OTION OF SPORTS AND GAMES, COULD NOT ALTER ITS CHARACTER OF BEING C HARITABLE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- UPON CAREFUL CONSIDERATION I FIND THAT THE MAIN OBJ ECT OF THE TRUST IS TO PROMOTE THE SPORTS AND GAMES. THE AUTHORITIES BELOW HAVE DRAWN ADVERSE INFERENCE AND INVOKED THE AMENDED PROVISIONS OF SEC TION 2(15) BY HOLDING THAT BY ENGAGING INTO COACHING CAMPS AND OBTAINING RECEIPTS THEREFROM, THE ASSESSEE IS ENGAGING INTO ACTIVITIES OF COMMERCIAL NATURE. I FI ND THAT THIS PROPOSITION IS NOT AT ALL SUSTAINABLE. IN THE CASE OF TAMIL NADU CRICKET ASSO CIATION (SUPRA) IN A CASE WHERE THE ASSESSEE IS A CRICKET ASSOCIATION WAS RECEIVING INCOME FROM HOLDING OF MATCHES AND WAS RECEIVING SUMS THEREFROM WAS DENIED EXEMPTI ON ON THE GROUND THAT IT WAS ENGAGED IN THE ACTIVITIES IN THE NATURE OF TRADE OR COMMERCE OR BUSINESS. THE HON'BLE HIGH COURT REVERSED THE ORDER HOLDING THAT SUBSTANT IAL/REGULAR SURPLUS CANNOT TAINT RECEIPTS AS ARISING FROM BUSINESS/COMMERCE. BY THE VOLUME OF RECEIPT ONE CANNOT DRAW INFERENCE THAT THE ACIVITY IS COMMERCIAL. 1 FI ND THAT THIS CASE LAW APPLIES TO ALL FOURS TO THE PRESENT CASE. HERE ALSO THE AUTHORITIE S BELOW HAVE DRAWN ADVERSE INFERENCE ON THE GROUND THAT AMOUNT RECEIVED FROM T HE COACHING CAMP BEING LESS THAN THE EXPENDITURE INCURRED. SIMILARLY, IN THE CASE OF ICAI V. DGIT(E) [20131 358 ITR 91/217 TAXMAN 152/35 TAXMANN.COM 140 (DELHI), THE HON'BLE DELHI HIGH COURT HAS EXPOUNDED AS UNDER: (A) THERE WAS NO FINDING THAT THE PREDOMINANT OBJECT IN DOING THEIR ACTIVITIES WAS TO GENERATE PROFITS. (B) THESE ACTIVITIES WERE ANCILLARY ACTIVITIES TO THE MAIN ACTIVITY/ OBJECT. (C) THE SURPLUS GENERATED OUT OF THESE ACTIVIT IES IS UTILISED TOWARDS THE INFRASTRUCTURE DEVELOPMENT AND OTHER STUDENT/ MEMBE RS RELATED ACTIVITIES. (D) SECTION 2 (15) DEFINES THE TERM 'CHARITABL E PURPOSE'. THEREFORE, WHILE CONSTRUING THE TERM 'BUSINESS' FOR THE SAID SECTION , THE OBJECT AND PURPOSE OF THE SECTION HAS TO BE KEPT IN MIND. WE DO NOT THINK THAT A VERY BROAD AND EXTENDED DEFINITION OF THE TERM 'BUSINESS' IS INTEN DED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO SECT ION 2 (15) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FEE OR MONEY. AN ACTI VITY WOULD BE CONSIDERED 'BUSINESS' IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE . THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. THE EXPRESSIONS 'BU SINESS', 'TRADE' OR 'COMMERCE' AS USED IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIVELY AND WHERE THE DOMINANT OBJECT OF AN ORGANIZATION IS CHARITABLE ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FA LL WITHIN THE EXPRESSIONS 'BUSINESS', 'TRADE' OR 'COMMERCE'. (E) IF THE OBJECT OR PURPOSE OF AN INSTITUTION IS CHARITABLE, THE FACT THAT THE INSTITUTION COLLECTS CERTAIN CHARGES DOES NOT ALTER THE CHARACTER OF THE INSTITUTIONS. IT IS NOT NECESSARY THAT IT SHOULD PR OVIDE SOMETHING FOR NOTHING OR FOR LESS THAN IT COSTS OR FOR LESS THAN THE ORDINAR Y PRICE. 11.1 FIND THAT THE ABOVE CASE LAW ALSO SUPPORTS THE ASSESSEE'S POINT OF VIEW. IT IS 16 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST UNDENIABLE THAT THE OBJECT OR PURPOSE OF THIS TRUST IS PROMOTION OF SPORTS AND GAMES AND THUS CHARITABLE. THE FACT THAT THE TRUST COLLEC TS CERTAIN CHARGES FROM COACHING CAMPS MEANT FOR PROMOTION OF SPORTS AND GAMES CANNO T ALTER THE CHARACTER OF THE INSTITUTION. TO REPEAT THE PROPOSITION AS EXPOUNDED ABOVE, IT IS NOT NECESSARY THAT THE TRUST SHOULD PROVIDE SOMETHING FOR NOTHING OR FOR L ESS THAN IT CAUSE OR FOR LESS THAN THE ORDINARY TRUST. ACCORDINGLY, IN MY CONSIDERED O PINION, IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, THE ORDERS OF T HE AUTHORITIES BELOW ARE SET ASIDE. ACCORDINGLY, I HOLD THAT THE ASSESSEE TRUST SHOULD NOT BE VISITED WITH DENIAL OF EXEMPTION. HENCE, THE ORDERS OF THE AUTHORITIES BEL OW IS SET ASIDE AND ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. 14. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DI T VS GOREGAON SPORTS CLUB (2012) 347 ITR 338 (BOM) HELD THAT PROV IDING SPORTS FACILITIES TO GENERAL PUBLIC WITHOUT RESTRICTION TO ANY CASTE, CREED, RELIGION OR PROFESSION IS ELIGIBLE FOR EXEMPTION U/S 11 OF I NCOME-TAX ACT, 1961. 15. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOL LOWING THE RATIOS OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE IN COME-TAX ACT, 1961. THEREFORE, WE DIRECT THE AO TO ALLOW EXEMPTION U/S 11 OF THE ACT. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITAS NO.1040/MUM/2016 & 510/MUM/2017 17. THE GROUNDS RAISED IN THESE APPEALS ARE AKIN TO GROUNDS RAISED IN APPEAL IN ITA NO.1039/MUM/2016 WHICH HAS BEEN DECID ED BY US ABOVE. WE HAVE ALREADY FOUND AND HELD THAT THE ASSESSEE IS RUNNING ITS ACTIVITIES IN ACCORDANCE WITH ITS MAIN OBJECT AND C ONTINUED TO PROVIDE SERVICES TO ITS MEMBERS BY COLLECTING NOMINAL FEE. WE FURTHER OBSERVE THAT THE ASSESSEE HAS DEFICITS FROM ITS CORE ACTIVI TY FOR PROMOTING SWIMMING FOR ALL THE YEARS. THE ASSESSEES COLLECT IONS FROM ITS 17 PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLU B TRUST MEMBERS IS LESS THAN THE AMOUNT SPENT FOR ITS OBJEC TS. BUT FOR INCOME FROM INVESTMENTS, THE ASSESSEE IS ALWAYS INCURRING DEFICIT FOR ALL THE YEARS. THEREFORE, CONSISTENT WITH OUR VIEW, WE DI RECT THE ASSESSING OFFICER TO GRANT EXEMPTION U/S 11 OF THE ACT. AS A RESULT, THESE APPEALS, TOO ARE ALLOWED. 18. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 21 ST MARCH, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI