ALL INDIA LIQUID BULK IMPOERTERS & EXPORTERS ASSSOCIATION, MUMBAI V. ADIT(E)-II(2), MUMBAI, MUMBAI

ITA 1604/MUM/2020

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 2054 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC-1
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 142(1); 12A; 12AA; 10B; 143(2); 48; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 1604/Mum/2020 (A.Y: 2011-12) All India Liquid Bulk Importers & Exporters Association 501- Mulratna, 334- Katha Bazar, Masjid, Mumbai – 400009. Vs. ADIT(E)-II(2) Piramal Chambers, Lalbaug, Parel, Mumbai – 400012. ./ज आइआर ./PAN/GIR No. : AAGCA5018F Appellant .. Respondent Appellant by : Mr.Paresh Shaparia.C.A. AR Respondent by : Mr.Kailash Mangal.Sr.DR Date of Hearing 08.02.2022 Date of Pronouncement 14.02.2022 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of the CIT(A)-3, Mumbai passed u/s 143(3) and 250 of the Income Tax Act, 1961.The assessee has raised the fallowing grounds of appeal: I. CONFIRMAT ION OF TREATMENT OF THE NON-PROF IT ORGAN ISATION AS A MUTUAL CONCERN AND DENYING EXEMPTION U/S 11: 1. The Learned C1.T(A) erred in conf irming tre atmen t of the ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 2 - appellant as a mutual asso ciation cre ated exclusivel y f or the benef it of its membe rs. 2. The Le arned C IT (A) f ailed to appreciate the f ac t that the basic conditions of the concept of mu tuality are not satisf ied, hence the same is no t applicable to the appell ant. 3. The concept of mutuality should no t be applied and the appellant require s to be considered as a chari table trust, eligible f or benef its 11 of the Income Tax Act, 1961, IL CONFIRMATION OF ADD IT ION OF ANNUAL MEET C OLLECTION OF RS. 6,60,000 REC EIVED FROM NON- MEMBERS AS TAXABLE INCOME 1, The Le arned C1T(A) has erred in considering the gross annual mee t collection (d onation) received f rom non membe rs of Rs. 6,60,000/- as taxable on mu tuality concept basis o ut of to tal coll ection of Annual Mee t Collection of Rs. 30,00,0000/-, 2. The ad dition of Rs. 6,60,000/- being annual meet collection f rom non me mbers as taxable income required to be d ele ted . 3. Wi thou t prejudice to the above, the direct expenses incurred in relation to annu al mee t are Rs. 28,99,366/- which requires to be allo wed against the collection of Rs. 6,60,000/- f rom non members III.CONFIRMAT ION OF ADDIT ION OF BANK FIXED DEPOSIT INTEREST INCOME OF RS. 11,375/- AS TAXABLE INCOME: 1, The Learned C IT(A) erred in treating the In tere st Inco me on B ank Fixed Deposi t of Rs. 11,375/- as taxable income on mutuality concept basis. ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 3 - 2. The ad dition of in terest income of Rs. 11,375/- as tax able income requires to be d eleted. The appellant craves leave to ad d amend, al ter or mod if y the ground or grounds of appeal bef ore the hearing. At the time of hearing, the Ld.AR submitted that there is a delay of 69 days in filing the appeal. The assessee has filed the application for condonation of delay . We found the facts mentioned are reasonable and the delay is neither willful nor wanton, accordingly we condone the delay and admit the appeal. Contra, Ld. DR has no specific objections. 2. The brief facts of the case that the assessee is a nonprofit organization registered u/s 25 of the Companies Act on 02.04.2007 and the assessee was issued registration u/s 12AA of the Act by DIT (Exmp), Mumbai on 18.08.2008 and the main objects of the assessee are as under: “The main objects o f the assessee is to work to wards He alth y and ord erly growth of the countrys trad e in liquid bulk cargoes in general and to work to wards th e gro wth of country’ s economy by promoting unity, unanimity and mutual cooperation among al l the payers in the logistic chain with the object of promoting, saf eguarding and securing the interest of ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 4 - importers, exporters and service providers at the micro and macro level. In ad dition to this, there various obje cts incid ental or ancillary to the attainment of main objects.” 3. The assessee has filed the return of income for the A.Y 2010-11 on 30.09.2011 declaring a total income of Rs. Nil after claiming benefit of exemption u/sec11 of the Act. The return of income was filed along with Audited income and expenditure, Balance sheet and Audit report in Form no -10B. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with questionnaire was issued. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the details. The A.O on verification of the information submitted in the course of the proceedings has dealt on the objects of the trust and has issued a show cause notice on the assessee to explain why the concept of mutuality should not be applied in the case of the assessee as it is based on the mutual cooperation of members. The assessee has filed the submissions on 5-3-2014 and explained that the concept of mutuality is not applicable in the case of non profitable organizations u/s 25 of the Companies Act and the assessee was granted ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 5 - registration u/s 12AA of the Act. Further the test of mutuality requires the contributors to the common fund and the participations in surplus or identical and relied on the judicial decisions. The A.O. was not satisfied with the explanations and objects of the trust and observed at Para 5.i to 5.ix of the order as under: “5.1 The above submission of the assessee is considered but the same is no t acce pted because of f ollowing reasons: I. The assessee has described its objects incidental or ancil lary to the attainmen t of the main objects in its memorandum of association in detail s at VI. B. f rom point No. 1 to 16. However, none of points me ntioned in its ancillary objects or in the main objects men tion that it is for the person who is non member or general public at l arge. Thus, the benef it of the Compan y is not utilized by all the persons of the society. It is benef ited to limited person i.e. Members of the asse ssee Company onl y. II. The cardinal requiremen t is that al l the contributors to the common f und must be entitled to participate in the surplus and all the participators in the surplus must be contribu tors to the common f und ; in other words, th ere must be co mplete identity between contributors and the par ticipators and this f act is also men tioned by the assessee in its submission dated 1403-2014. If this requirement is satisf ied, the particular f orm which the association takes is immaterial In o ther words if all the participators to the common f und are also contributors and their identity is e stablished then the te st of mutuality is satisf ied. III. The contributors to the common f und and the participators in the surplus must be an identical body. That ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 6 - does not mean th at e ach member should contribu te to the common f und or that each member should particip ate in the surplus or get back f rom the surplus precisely wh at he has paid. Wh at is required is that the members as a cl ass should contribute to the co mmon f und and participators as a cl ass must be able to participate in the surplus. It is immate rial whether the surplus is paid back to the members in cash or pu t to reserve wi th the activ ities in appropriate cases be separated and the prof its if any f rom the members can be taken f or exemption on the basis of actnal f rom the accounts or at any rate by e stimate if it should become necessary ( C IT Vs madras Race Race Club 105 ITR 433 Madras) and the prof its d erived f rom non members can be brough t to tax (Sports Club of Mad ras Ltd. v . / s C IT 171 rat 504). V i . C IT V s . R a n c h i Club Ltd 196 ITR 137 (Patna Full Bench), Spl Le ave pdration granted by the Supreme Court 194 IT R (ST) 236 (SC). The s---rplus receipts of members over its expenses have been sough t to be f rom Inco me tax on the principle of Mutuality. This principl e is based on the premise th at no men can make prof it out of himself , but this principle cannot h ave an y application in respect of the surplus received f rom non- members. It is no t dif f icult to conceive of cases where one and the same concern may indulge in activities which are partly ' mutu al and partl y non-mutual. True, keeping in v iew the principle of mutu ality, the surplus accruing to members f rom the subscription charges received f rom its members cannot be said to be income within the me aning of the Act. But, if such receipts are f rom sources o ther than members then no exemption can be claimed in respect of such receipts on the plea of mutuality. V. The caref ul examination of the assessee's actu al ac tiv ities as well as the perusal of objects and obje cts incidental or ancil lary to the attainment of the main object show that the dominan t or rather the predomin ant objec t of the assessee is to provide benef it to its members Vi. It is pertinent to make men tion here the f amour case of ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 7 - Cricke t Club of India Bombay. The CCI has been conducting world clas matches, te st matches and Ran ji Trophy Matc hes and other simil ar to urnaments, f rom generations. The CC I is al so registered u/s Companie s A and was earl ier assessed to tax in this Range only and it w as a] cl aiming Exemption u/ s. 11 & 12 of the Income T ax Act, 1961. in case, it has been held by the Honb1e Supreme Court that it is mutual organization (ref er the case of Bankipur Club Ltd . 226 ITR 97 wherein the CCI Club was also a party). The object to promote or manage or assist in the promo tion or management f or the development of trade and commerce f or its me mbers clearly sho w that the d ominant object of the asse ssee is to provid e amenitie s and f acilities to the members of the asse ssee Compan y onl y. It is, theref ore, held that the asse ssee is a mutual organization. vii. The assessee is predominantl y a mutu al association. The charitable objects and the object of mu tual benef its are contradictory to each o ther. It must be appreciated th at Exemption u/s. 11 as a charitable trust and principles of mutuality are mu tually exclusive of each o ther. In the mutual asso ciation the members subscribe f or the primary purpose of benef iting themselves, wh ile in a charitable institu tion people subscribe f or charitable object withou t any expectation in return. In the c ase of the asse ssee, the members h ave contributed onl y f or the purpose of their o wn benefit and f or acquiring certain be nef its. Theref ore, the assessee is tre ated as mutual association and no t as ch aritable insti tution. Viii. It may also be stated that the concept of charity is necessarily al truistic in nature an dinvolves the id ea of benef it to o thers. The essence of charity is that the persons d oing charity exclud e themselves f rom benef its of the charity. Non exclusion of contribu tors to charity f und f rom the benef its arising out of that is nothing but serving the interest of self in an organized manner. In f act the entire scheme of Sec. 11 to 13 and par ticularly sec 13(1 )(c) and 13(3 ) is based on this basic principle or essence of 'charity'. Thus in a case of even ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 8 - charitable institu tio n, if benef it is proved to be for certain categories of people ref erred to in sec.13(3) the Exemption u/s. 11, 12 is not ad missible. Theref ore, the question of granting benef it to such Institution where the objects themsel ves are not charitable and are f or the benefit of its members, cannot be considered as charitable objects. The concept of charity and mutual ity are mu tual ly exclusive of each o ther. A ch aritable Institution is f or the benef it of the public and no t f or the mu tual benef it of the contributors to the common f und. To quote f rom K amp. 86 Pal ldaival a. "The Law and Prac tice of Income-tax" Vol-1 Eighth Edition, Page 381. Xi "Such a mutual association is held non charitable f or two reasons, as B aron Pollock pointed out in Linen 8s Wollen Drapers In stitu tion VIR, f irst, al though a me mber, accord ing to his poverty or misf ortune, might share in the funds held by the society f or the mutual benef it of the subscribing members, it cannot be said that he had subscribed f or a charitable purpose, whereas in the trust he had subscribed f or the primary purpose of pro tec ting himself or his f amily in periods of age, sickness or distre ss. Secondly, in a mutual socie ty a member can cl aim benef its as of right in return f or his own and his considered-me mber's subscription. Charity must be by way of bounty, it cannot be by way of bargain. Under this act a mutual associatio n would be non charitable on the f urther ground that the be nef it of the subscribing members is not public benef it, where as the def inition in sec. 2(15) requires charity to be a public charac ter." 4. Finally the A.O observed that the assessee is a mutual concern of members and is not charitable in nature. The A.O. has applied the concept of mutuality and treated the receipts/collections of Annual meet from non members of Rs 6,60,000/- and interest income on fixed deposits of Rs.11,375/- as income of ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 9 - the assessee and applied the first proviso of Sec. 2(15) of the Act and assessed the total income of Rs.6,71,375/- and passed the order u/s 143(3) of the Act on 27.03.2014. 5. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the A.O and dealt on the ground of appeal No. 1, 2 & 3 with respect of denying of exemption u/s 11 of the Act and addition of annual meet collections from non members and bank interest income has observed at page 9 Para 4.2 of the order read as under: 4.2 Decision on ground nos.1, 2 and 3: I have caref ully consid ered the f acts of the case, AO's contentions, submissions of the appellan t as well as the case laws relied u pon by the appellant. The f acts of the case are that the appellant is a compan y u/s 25 of the Companie s Act, 1956 and registe red with the Director of Income Tax (Exemption), Murnbai u/s 12A of the Act, In this case, re turn of income has been f iled on 30.09.2011 at N IL total income. Assessment order u/s 143(3) was comple ted on 27.03.2014 asse ssing to tal income at Rs.6,71,375/-. The main objec t of the asse ssee is to work to wards He al th and orderly gro wth of the Country's trade (including import & export) in liquid Bulk Cargoes in general and to work to ward s the gro wth of country's Economy by promoting Unity, Unanimity and mutual Cooperation among all the players in the logistic ch ain with ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 10 - the object of promo ting, saf eguarding and securing the in terest of importers, exporters and service provid ers at the micro and macro level. During the course of assessmen t proceedings, the AO asked the assessee to expl ain as to why th e doctrine of mutual ity should no t be applied as the asse ssee's activ ity is based on mutual cooperation. In response the asse ssee stated th at mutuality concept is not appl icable as it is a non-prof it organization u/s 25 of the Companies Act and also registered u/s 1 2AA of the Act. The asse ssee also stated that the test of mutuality required th at the con tributors to the common f und and participators in the surplus are identical. T he A.O has considered and common f und. If this requirement is satisf ied, the par ticul ar f orm which the association takes is immaterial. In o ther words if all the participators to be common f und are al so contribu tors and their identity is establ ished then the test of mutu ality is satisf ied. It is immaterial whe ther the surplus is paid back to the members in cash or put to reserve with the Company for its developmen t and f or providing benefits to its members. The surplus receipts of members over its expense s have been sought to be exempted f rom Income T ax on the principle of Mutuality. This principle is based on the premise that no man can make prof it ou t of himself , but this principl e cannot have any application in respec t of the surplus received f rom non-members. Keeping in view the principle of mutuality, the surplus accruing to me mbers f rom the subscription charges received f rom its members canno t be said to be income within the me an ing of the Act. But, if such receipts are from sources o ther th an members then no exemption can be cl aimed in r e s p e c t of such receipts on the plea of mutu ality. The AO relied on the f amous case of Cricke t club of India, Bombay where CC I has been conducting world class matches. test matches and Ran ji Trophy Matches and other simil ar tournaments f rom generations. The CC! is also registered u/s 25 of the Companie s Act and it was al so cl aiming exemption u/s 11 and 12 of the Act. In this case, it has been held by the Ho nble Su preme Court that it is mutual organ ization. In the case of ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 11 - the assessee, the me mbers have co ntribu ted only f or the purpose of their own benef it and f or the acquiring certain benef its. Theref ore, the asse ssee is tre ated as mutual asso ciation and not a charitable institution. Further the AO noted th at the interest income can by no stretch of reaso ning and imagination be said to have been received f rom the members. Hav ing regard to f ull f acts of the case I f ind myself in agreemen t wi th the AO that on the f ac ts of the present case the inco me derived by the appellant in the f orm of interest income of Rs. 11,375/- and f rom the annual mee t collection f rom non members of Rs. 6,60,000/- was not eligible to the exemption claimed on these u/s 11 of the Income T ax Act 1961. The action of the AO in bringing the se income to tax is upheld and the grounds of appeal in th is regard are dismissed . In respect of the other grounds of appeal, the CIT(A) has granted partial relief and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal. 6. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the A.O. denying the exemption U/sec 11 of the Act and taxing the annual meet collections from non members and interest income as taxable applying the concept of mutuality association. The CIT(A) has not considered the facts on non applicability of concept of mutuality and the charitable activities of the ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 12 - assessee. The Ld. AR substantiated the activities of the trust and the nature of work filed in the paper book. On the other issues with respect to annual meet collections from non members and interest income from fixed deposits are made taxable on the principle of mutuality is bad in law. The Ld. AR substantiated the submissions with the judicial decisions and paper book and prayed for allowing the appeal. Contra, the Ld. DR relied on the orders of the CIT(A). 7. We heard the rival submissions and perused the material on record. The first disputed issue is with respect to concept of mutuality were both the authorities A.O and the CIT(A) has treated it as a mutuality of members and applied the principles of mutuality. The Ld. AR substantiated the submissions on the applicability of exemption u/sec11 of the Act and referred to the main objects at VI.A.(a) and incidental objects -B at page 13 to 15 of the paper book and emphasized on the main object of the trust and other objects-C-Nil and the objects shall extend the whole of India. The Ld. AR emphasized and ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 13 - demonstrated the activities/achievements at page 29 to 48 of the paper book. The Ld. AR highlighted the achievements (i) major breakthroughs in octroi (ii) customs (iii) port (iv) state government and (v) police at page 33 & 34 of paper book read as under: Major breakthroughs in Octroi • The current 168 hours (i.e. 7 d ays) of f ree time f or movement of goods out of octroi l imits is no w enhanced to 6 months. • - The issue of Less Charge demands, against some of our members, was taken u p with the octro i off icials, resulting in amicable solu tions. • Constant interaction with Octroi au thorities to minimise / eliminate hurdles and f acilitate smooth pass age of tankers has been made possibl e. • Remov al of Bank Guaran tee f or Import of Edible Oil s, with AILB IEA's undertaking, exclusively f or all our members. Customs Constan t interac tion with Custom authorities has been mad e possibl e, at JN PT and Mumbai, to discuss issues on procedures and EDT systems, f or Liquid Bulk Consignmen ts. • Simplif ying Bonding Procedures • In troduction of Discharge Permission, in lieu of documents at Pirpau jetty, f or a l l Imports • In troduction of Discharge Permission, in lieu of documents at Mumbai's commercial d ocks, f or Clearance in Tank Lorries f or bonded consignments • Sys te matizing Join t Bonding and other related procedures • Representing v arious issues on Edibl e Oil imports and imports of other Chemical s, Pe trochemical s and Alcohols ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 14 - Port • Regularizing of stream discharge issues, vis-a-vis Barges • Regular mee tings and interactions with Port off icials, discussing issues relating to Liquid Bulk Imports • Follo w-u p with Port f or Third Liquid Chemical Je tty at Pirpau • Regular f ollo w-u p wi th TAMP f or issues related to Port Tariff s • Taking-up of security issues, with regard s to movement of tankers inside the Port State Government • Made a f orceful representation to the Hon'ble Finance Minister of Maharashtra Shri Jayant Patil, raising and highlighting issues rel ating to S tamp Duty, APMC Cess, Encroachments on P.D'Mello Road e tc. • Persis ting with Gov ernment on issues relating to S tamp Duty and APMC Cess. • Met wi th a f air d egree of success in clearing of major impedimen ts and illegal hutments on P. D'Mello Road Police • Representing co mplain ts of members with Jt. Commissioner of Police (Crime) 8. The contentions of the Ld. AR are that the concept of mutuality does not apply considering the role of the assesse in the society. Further, the transactions/activities of the assessee are for the ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 15 - benefit of the society at large but the A.O has denied the exemption u/sec11 of the Act and applied principle of mutuality and has not made any observations in respect of provisions of Sec. 2(15) of the Act. Further, in the ground of appeal no 2 & 3 the A.O has treated the annual meet collections from the non members as income and also interest income from bank deposits are treated as taxable. But the fact remains that though the A.O. has treated collections as income attributed towards the non members. Without prejudice the Ld. AR submitted that even the deduction has to be granted to that extent. We find the submissions of the Ld. AR are prima-facie on the nature of activities and duly supported with the audited financial statements and Audit report in form 10B for the F.Y.2010-11 i.e A.Y.2011-12. 9. We find the Hon’ble Tribunal in the case of Bombay Chambers of Commerce & Industries Vs. ITO (Exemp) ITA no.5832/Mum/2019 dated 30.09.2021 where the similar issue of concept of mutuality and exemption under section 11 of the Act was considered and ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 16 - observed at page 75 Para 9 to 14 of the order read as under: 9. From the read ing of the af oresaid clauses, it is clear th at the members of the assessee chamber do no t stand to gain person ally since no portion of the income or property is paid or transf erred directl y or ind irectly by way of dividend or bonus or otherwise. Further, even on winding up, the me mbers canno t cl aim an y share in the surplus assets. These f acts highlight the f undamental f act that the assessee by and l arge strives to pro mote and protect th e tr ad e, commerce and manuf acturers of India without seeking to make profits f or its me mbers. 10. No w, we have gone through the amended def inition of the term 'charitable purpose' under section 2(15 ) of the Act by the Finance Act, 2008 w.e.f . 1 April 2009, read s as under: "charitabl e purpose includes relief of the poor, education , medical relief preserv ation of environment (incl uding watersheds, f orests and wildlif e) and preservation of monuments or pl ace s or objects of artis tic or historic in terest, and the adv ancement of any o ther object of ' general public u tility: Provided that the ad vance ment of any o ther object of general publ ic utility sh all not be a charitabl e purpose, if it involves the carrying on of any activ ity in the nature of trad e, commerce or business, or any activ ity of rendering any service in relation to any trade, commerce or business, f or a cess or f ee or any o ther consideratio n, irrespective of the nature of use or application, or retention, of the income f rom such activ ity. Provided f urther that the f irst proviso sh all not apply if the aggre gate v alue of the receipts f rom the activ ities ref erred to therein is ten lakh rupees or less in the previous year". 11. Further, learned counsel f or the asse ssee invited our atten tion to the speech of Finance Minister and the relevant extract of the speech is reproduced hereunder:- "180. 'Charitable purpose' includ es rel ief of the poor, education, med ical relief and other object of general public u tility. These ac tiv ities are tax exe mpt, as the y should be. ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 17 - Ho wever, so me en tities carrying on regular trad e, commerce or business or providing services in relation to any trad e, commerce or business and e arning incomes have sought to claim th at the ir purposes would also f all under 'charitable purpose'. Obviously, this was not the in tention of the Parliament and, hence. I propose to amend that l aw to exclude the af oresaid cases. Genuine charitabl e organizations will no t in any way be aff ected. I once again assure the House that genuine charitable organizations will not in any way be aff ected. The CBDT will, f ollowing th e usual prac tice, issue an explanatory circular containing guid elines f or d etermining whe ther an entity is carrying on any activ ity in the nature of trade, co mmerce or business or any activity of rendering any service in relation to an y trad e, commerce or business. Whether the purpose is a charitabl e purpose will depend on the total ity of the f acts of the case. Ord inarily, Chambers of Commerce and simil ar organ izations rendering services to their members wo uld not be aff ected by the amend ment and their activ itie s would continue to be regarded as ― ad vancement of any other object of general public utility‖ (Emphasis su ppl ied ,)‖ 12. From a perusal of the FM's speech it is apparent that the inten t behind the amend ment was that only such entities which are carrying on regular trade, commerce or business would not f al l within the def inition of the term 'charitable purpose. It was never intended to affect genuine charitable organizations in any way. The le arned Counsel f or the assessee stated th at as discussed above, the terms "trade", "commerce" and "business" imply carrying on an ac tivi ty f or prof it since no trad er/businessmen would like to carry on its activitie s at a loss. The d ef inition of the term "charitable purpose" was prac tically the same as was contained in the l ast para of sectio n 4(3 ) of the 1922 Act excep t f or the addition of the words "not involving the carrying on of an y activity f or prof it" at the end. Section 2(15) read as und er: 'ch aritable purpose" includes relief of the poor, education, medical relief , and the adv ancement of any o ther object of general public u tility no t involving the carrying on of any activity f or prof it". ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 18 - 13. The words "not involving the carrying on of any ac tiv ity f or prof it" occurring at the end were omitted by the Finance Act, 1983 with eff ect f rom 01.04.1984. 14. We noted that the term "no t involving any activity f or prof it" came up f or discussion bef ore the Su preme Court in ACIT v. Surat Art S ilk Cloth Manuf acturers Association (121 ITR 1) (SC). The majority vie w was that the condition that th e purpose should no t involve the carrying on of any activity f or- prof it would be satisf ied if prof it-making is not the re al object. The theory or d ominant or primary object of the trust has, theref ore, been tre ated to be the determining f actor, even in regard to the f ourth bead of charity, viz the adv ancement of any other objec t of general public util ity, so as to make the carrying on of business activity mere ly ancillary or incidental to the main object. Further, in C IT v. Fed eration of Indian Chambers of Commerce & Industries (130 ITR 186) (SC) a question was raised bef ore the Supreme C ourt regard ing the in terpre tation of the words "no t involving the carrying on of any activ ity f or prof it" in the d ef inition of "charitable purpose" contained in section 2(15 ) of the Act. 10. Further the Hon’ble Tribunal considered the facts, provisions of law, judicial decisions and granted the relief held at Para 19 to 21 of the order which is read as under: 19. We noted that the observations of the C IT (A) mentioned in the order of Asse ssment Year 2010-11 and 2011-12 is incorrect because the Kolkata T ribunal in Indian Chamber of C ommerce (supra) has considered the eff ect of the proviso to section 2(15) of the Act in arriv ing at its conclusion. One of the griev ance s raise d in the appeal f iled by Indian Chamber of Commerce (su pra) f or AY 2009-10 bef ore the T ribunal re ad as under (para 311 ): ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 19 - "Thai on the f ac ts and circumstances of the case of the appellant, the Ld . CIT(A) erred in conf irming the allegation of the Ld. AO that the appell ant was hit by the proviso to section 2(15) of the Income-tax Act inserted w. e.f. 01.04.2009, in as much as the appellan t was allegedly involved in the rendering of service in relation to trade, commerce or business, f or cess or f ee or any oth er consideration ". The Tribunal in para 32 stated as under: "We have already discussed the fac ts above in ITA N o1491/Kol/2012 for AY 2008-09, which are unchanged in this appeal also i.e. f or AY 2009-10 bu t in view of amend ment in Section 2(15) of the Act vid e Finance Act 2008, w.e.f 01/04/2009, whereby new prov iso was inserted and accord ing to lo wer authoritie s the activ ities of assessee association of conducting Environment Man age ment Centres, meetings, conf erences & se minars and issuance of certif icate of origin were all in the nature of "rend ering of service in relation to business, f or consideration" and f alling under the l ast limb of charitable purpose, i.e. "adv ancement of any o ther object of general public utility", thus covered by the proviso to section 2(15) of the Act. In co nnection to the above it would be relevant to kno w the amend ed section 2(15,) of the Act in vie w of legisl ative intent behind such amend ment......................... 20.We no ted that the tribunal af ter considering the prov isio to section 2(15 ) of the Act and the CBDT circular No11/2008 d ated 19-12-2008(which was issued pursu ant to the provisio being inserted in th e Act) held in para 38 that the def inition of the term “charitable Purpose” remained unal tered even on amend ment in the section 2(15) of the Act w.e.f 01-04-2009 though the restrictive f irst prov isio was inserted therein.Hence the asse ssee was no t hit by newl y inserted provisio to section 2(15 ) of the Act. 21. we no ted.........................In view thereof , we hold the actrivitie s carried out by the assessee ch amber continue to be charitable in nature even under the amended def inition ITA No. 1604/Mum/2020 All Inida Liquid Bulk Importers & Exporters Association, Mumbai. - 20 - under section 2(15 ) of the Act and the assessee is entitled for exemption under section11 of the Act. We d irect accordingly. 11. We apply the ratio of decision to the facts of the present case which is identical in respect of the activities of the organization. We respectfully fallow the judicial precedence and direct the Assessing officer to grant the exemption U/s 11 of the Act. Since the assessee is entitled for exemption u/s 11 of the Act, and again deciding on additions of the A.O. become academic and are left open. We order accordingly and allow grounds of appeal in favour of the assessee. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 14.02.2022. Sd/- Sd/- (OM PRAKASH KANT) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 14.02.2022 KRK, PS /Copy of the Order forwarded to : 1. / The Appellant