DCIT (E) I(1), MUMBAI V. INDIAN MERCHANTS CHAMBERS, MUMBAI

ITA 1684/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2599 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ARUNKUMAR SINGH
• Assessee Lawyers: SAROJ MANIAR RUCHIRA SHAH
• Keywords: Charitable institution
• Section: 11A; 260A; 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 1684 / MUM/20 1 7 ASSESSMENT YEAR: 2010 - 11 THE DCIT (EXEMPTION) - I(I), ROOM NO. 506, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI - 400012 VS. M/S INDIAN MERCHANTS CHAMBERS, IMC BUILDING, IMC MARG, CHURCHGATE, MUMBAI - 400020 PAN: AAATI0047H (APPELLANT) (RESPONDENT) CO NO. 139 /MUM/201 7 ASSESSMENT YEAR: 2010 - 11 IMC CHAMBERS OF COMMERCE AND INDUSTRY (FORMERLY KNOWN AS IN DIAN MERCHANTS CHAMBERS ) , IMC BUILDING, IMC MARG, CHURCHGATE, MUMBAI - 400020 PAN: AAATI0047H VS. THE DCIT (EXEMPTION) - I(I), ROOM NO. 506, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI - 400012 (APPELLANT) (RESPONDENT) REVENUE BY : SHRI CHOUDHARY A RUNKUMAR SINGH ( DR) ASSESSEE BY : SHRI SAROJ MANIAR, RUCHIRA SHAH (AR) DATE OF HEARING: 07/08 /201 8 DATE OF PRONOUNCEMENT: 17 / 08 /201 8 O R D E R PER RAM LAL NEGI, JM THESE ARE T HE APPEAL AND CROSS OB JECTION FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGAINST THE ORDER S DATED 02.12.2016 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 1 , MUMBAI PE RTAI NING TO THE 2 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 ASSESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE AGAINST ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE, THE APPEAL AND THE CROSS OBJECTION PERTAIN TO THE SAME ASSESSMENT YEAR, BOTH WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1684/MUM/2017 (ASSESSMENT YEAR: 2010 - 11 ) BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST REGISTERED WITH THE DIRECTOR OF INCOME TAX (EXEMPTION), MUMBAI U/S 12A AND 80G OF THE ACT, FILED ITS RETUR N OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME AS ( - ) 1,84,95,213. SINCE T HE CASE WAS SELECTED FOR SCRUTINY, THE AO ISSUED NOTICE U/S 143 (2) AND 142 (1) AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE (AR) ATTENDED THE PROCEEDINGS AND SUBMITTED THE DETAILS CALLED FOR. THE AO AFTER HEARING THE AR TREATED THE TRUST AS ONLY MUTUAL ASSOCIATION HOLDING THAT IN THE PRESENT CASE THE MEMBERS HAVE CONTRIBUTED ONLY FOR THE PURPOSE OF TH EIR OWN BENEFIT AND FOR ACQUIRING CERTAIN AMENITIES. 2. IT WAS SEEN THAT THE ASSESSEE HAD EARNED INCOME FROM ANNUAL SUBSCRIPTION CERTIFICATE OF ORIGIN FEES SEMINARS, TRAINING COURSE, INTEREST INCOME, INCOME FROM EXHIBITION INTERNATIONAL, EXHIBITION MUMBA I, ROYALTY FROM CATERERS AND UNCLAIMED DEPOSITS. ACCORDINGLY, THE AO AFTER HEARING THE AR COMPUTED THE ASSESSEES RECEIPTS/INCOME FROM ITS ACTIVITIES AND INTEREST INCOME ON THE PRINCIPLES OF MUTUALITY AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 2,46,75,240/ - . 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A) RELYING ON THE DECISION OF THE MUMBAI TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 ALLOWED THE APPEAL OF THE ASSESSEE AND HELD THAT THE ASSESSEE IS A CHARITABLE TRUST AND IS ELIGIBLE FOR 3 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 DEDUCTION U/S 11 OF THE ACT. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE LD CIT(A). 4. THE REVENUE HAS CHALLENGED THE ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS A CHARITABLE ORGANIZATION AND IS ELIGIBLE FOR DEDUCTION U/S 11 OF THE I T ACT 1961. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ASSESSEE BENEFIT OF SECTION 11 OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ACTIVITIES OF THE ASSESSEE DO NOT FIT INTO THE CHARACTER OF EDUCTIOAN AS DEFINED BY HONBLE SUPREME COURT I N THE CASE OF SOLE TRUSTEE LOKA SHIKSHANA TRUST AND BY HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR INSTITUTE OF MINING AND MINE SURVEYING. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ASSES SEES APPEAL IGNORING THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE LOKA SKIKSHANA TRUST AND BY HONBLE PATNA HIGH COURT IN THE CASE OF BIHAR INSTITUTE OF MINING AND MINE SURVEYING. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ASSESSES APPEAL WITHOUT APPRECIATING THE COMMERCIAL NATURE OF THE ACTIVITIES OF THE TRUST WHICH DO NOT CONSTITUTE EDUCATION. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL BY RELYING UPON THE DECISION OF HONBLE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2009 - 10, IGNORING THE FACT THE REVENUE HAS NOT ACCEPTED T HE SAID DECISION OF HONBLE ITAT AND PREFERRING AN APPEAL U/ S 260A BEFORE THE HONBLE HIGH COURT. 4 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE COMMERCIAL NATURE OF THE A CTIVITIES OF THE TRUST WHICH DO NOT FALL UNDER CHARITABLE PURPOSES DEFINED U/S 2(15) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY RELIED ON THE DECISION OF MUMBAI ITAT RENDERED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 IGNORING THE FACT THAT THE REVENUE HAS PREFERRED APPE AL AGAINST THE DECISION OF THE ITAT BEFORE THE HONBLE HIGH COURT. THE LD. DR ACCORDINGLY CONTENDED THAT SINCE THE FINDINGS OF THE LD. CIT (A) ARE NOT IN ACCORDANCE WITH THE LAW, THE SAME IS LIABLE TO BE SET ASIDE. 6. ON THE OTHER HAND , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MUMBAI BENCH OF THE ITAT HAS ALREADY DECIDED THE ISSUE INVOLVED IN THIS APPEAL IN FAVOUR OF TH E ASSESSE E IN THE ASSESSEES APPEAL OF THE A.Y. 2009 - 10. SINCE, THE LD . CIT (A) HAS DECIDED THE ISSUE IN THE AFORESAID APPEAL BY FOLLOWING THE DECISION OF ITAT. THERE IS NO INFIRMITY IN THE IMPUGNED ORDER TO INTERFERE WITH THE SAME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELO W AND THE CASES RELIED UPON BY THE PARTIES . THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS WRONGLY ALLOWED THE EXEMPTION U/S 11A OF THE ACT HOLDING THE NATURE OF ACTIVITIES AS CHARITABLE. THE LD. CIT (A) HAS DECIDED THE IDENTICAL ISSUE IN FAV OUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF ITAT RENDERED IN THE ASSESSEES OWN CASE FOR THE A.Y., 2009 - 10. THE OPERATIVE PART OF THE ORDER OF THE LD.CIT (A) READS AS UNDER: - 5.2 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, GONE THROUG H THE ASSESSMENT ORDER OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT AND ALSO DISCUSSED THE CASE WITH THE AR OF THE APPELLANT. THE CONTENTIONS AND SUBMISSIONS OF THE APPELLANT ARE BEING DISCUSSED AND DECIDED HERE IN UNDER: - 5 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 I. GROUND NO. 1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. II. THE AO HAS DENIED EXEMPTION U/S 11 AND HELD THE APPELLANT A MUTUAL ASSOCIATION. APPELLANT SUBMITTED THAT VIDE ITS LETTER DATED 29.1.2013 SUBMITTED BEFORE A.O., [ WHICH HAS BEEN REFERRED TO BY AO IN PARA 7 OF THE ASSESSMENT ORDER] IT WAS SUBMITTED THAT IT IS ELIGIBLE FOR EXEMPTION U/S 11 AND PROVISO TO SECTION 2(15) DOES NOT APPLY. THE APPELLANT FURTHER SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY HON. ITAT IN A.Y. 2009 - 10 IN ITS OWN CASE VIDE ORDER DAT E D 29.6.2016 HOLDING THAT THE ASSESSEE IS NO HIT BY PROVISO TO SECTION 2(15) AND HENCE BENEFIT U/S 11 IS TO BE ALLOWED. COPY OF THE ORDER HAS BEEN FILED. ON PERUSAL OF THE ORDER, IT IS NOTED THAT HON. ITAT HAVE DECIDED THE ISSUE OBSERVING AS UNDER : 6. FACTS AND CIRCU MSTANCES IN THE INSTANCE CASE BEFORE US ARE EXACTLY SIMILAR VIS - - VIS NATURE OF ACTIVITY BEING CARRIED OUT BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH IN THE CASE OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY, WHEREIN AFTER DISC USSING VARIOUS HIGH COURT AND SUPREME COURT JUDGMENT THE TRIBUNAL REACHED TO THE CONCLUSION THAT EVEN OF AMENDMENT OF SECTION 2(15) OF THE ACT W.E.F. 01.04.2009, ASSESSEE ASSOCIATIONS HAVING PRIMARY PURPOSE OF ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTIL ITY AND IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE WAS PROFITABLE IN NATURE. HENCE, ASSESSEE IS NO HIT BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. 7. IN THE RESULT, APPEAL OF T HE ASSESSEE IS ALLOWED. III. AS THERE IS NO CHANGE IN FACTS IN THE YEAR UNDER CONSIDERATION AS COMPARED TO A.Y. 2009 - 10, THE AO IS DIRECTED TO FOLLOW THE ABOVE FINDINGS OF HON. ITAT FOR THIS YEAR ALSO AFTER DUE VERIFICATION OF FACTS. 8. WE NOTICE THAT THE C OORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10. THE LD. CIT (A) HAS ACCORDINGLY DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF TH E COORDINATE BENCH. THE LD. DR NEITHER CONTENDED NOR PRODUCED ANY DOCUMENT TO ESTABLISH THAT THE HONBLE 6 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 HIGH COURT HAS STAYED THE OPERATION OF DECISION RENDERED BY THE COORDINATE BENCH DURING THE PENDENCY OF THE DEPARTMENTS APPEAL. UNDER THESE CIRCUMSTAN CES, WE DO NOT FIND IT NECESSARY TO KEEP THE MATTER PENDING . A CCORDINGLY , FOLLOWING THE DECISION OF THE COORDINATE BENCH RENDERED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10, WE UPHOLD THE FINDINGS OF THE LD. CIT (A) AND DISMISSED THE SOLE GROUND OF TH E APPEAL OF THE REVENUE. CO NO. 139/MUM/2017 (ASSESSMENT YEAR: 2010 - 11 ) THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND S : I. THE GROUNDS OBJECTIONS THAT FOLLOW ARE ALL INDEPENDENT AND WITHOUT PREJU DICE TO EACH OTHER. II. THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT ACCEPTING THE DECISION OF COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS BASED ON THE VARIOUS RULINGS OF HONBLE HIGH COURTS AND HONBLE TRIBUNALS AND HENCE THE APPEAL OUGHT TO BE DISMISSED . III. THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT CONSIDERING THE FACT THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD THAT THE CROSS OBJECTOR IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT, AFTER CONSIDERING THE VARIOUS ACTIVITIES UNDERTAKEN BY THE RESPONDENT BASED ON RECENT JUDICIAL PRECEDENCE IN THIS REGARD. IV. THE LEARNED ASSESSING OFFICER HAS ERRED IN ERRONEOUSLY CONSIDERING THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED EXEMPTION UNDER SECTION 11 OF THE ACT ON THE GROUND THAT THE ACTIVITIES OF CROSS - OBJECTOR ARE IN NATURE OF EDUCATION. 7 ITA NO. 1684 / MUM/2017 & CO NO. 13 9/MUM/2017 ASSESSMENT YEAR: 2010 - 11 V. THE LEARNED ASSESSING OFFICER HAS ERRED IN OBJECTING TO THE DECISION OF COMMISSIONER OF INCOME TAX (APPEALS) MERELY ON THE BASIS THAT THE ORDER OF HONBLE MUMBAI TRIBUNAL IN CROSS - OBJECTORS OWN CA SE FOR ASSESSMENT YEAR 2009 - 10 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND HAS BEEN APPEALED BEFORE THE HONBLE HIGH COURT. 2. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH, THE CROSS OBJECTION FILE D BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD. CIT (A) HAS BECOME INFRUCTUOUS. HENCE, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE AS INFRUCTUOUS. IN THE RESULT, APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE, ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 17 / 08 / 2018 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI