DDIT (E)-1(1), MUMBAI V. MATUNGA GYMKHANA, MUMBAI

ITA 1809/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1646 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 08-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Assessee Lawyers: ARVIND SOND E PARESH SHAPARIA
• Keywords: Reopening of assessment; Depreciation; Charitable institution; Reason to believe; Unabsorbed depreciation
• Section: 143(3); 12A; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.1809/MUM/2010(A.Y. 2005-06) ITA NO.4768/MUM/2013(A.Y. 2006-07) ITA NO.6723/MUM/2010(A.Y. 2007-08) ITA NO.7376/MUM/2011(A.Y. 2008-09) THE DDIT(E) 1(1), ROOM NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI ...... APPELLANT VS. MATUNGA GYMKHANA, LAKHAMSEY NAPOO ROAD, MATUNGA, MUMBAI- 400018 PAN: AAATM 1035F ..... RESPONDENT ITA NO.4468/MUM/2013(A.Y. 2009-10) MATUNGA GYMKHANA, LAKHAMSEY NAPOO ROAD, MATUNGA, MUMBAI- 400018 ....... APPELLANT VS. THE ADIT(E) 1(1), ROOM NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI ...... RESPO NDENT REVENUE BY : SHRI M.RAJAN ASSESSEE BY : S/ SHRI ARVIND SOND E/ PARESH SHAPARIA DATE OF HEARING : 27/09/2016 DATE OF PRONOUNCEMENT : 30/11/2016 2 MATUNGA GYMKHANA ORDER PER G.S.PANNU,A.M: THE CAPTIONED ARE FIVE APPEALS, WHICH RELATE TO TH E SAME ASSESSEE INVOLVING COMMON ISSUES, THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED F OR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN BRIEF, THE FACTS RELEVANT TO THE DISPUTE ARE THAT THE CAPTIONED ASSESSEE IS A TRUST REGISTERED UNDER THE BOMBAY PUB LIC TRUST ACT, 1950 AND IS ALSO REGISTERED AS A CHARITABLE TRUST UNDER SECTION 12A OF THE ACT WITH THE COMMISSIONER ON 05/12/1997. IN ALL THE CAPTIONED A SSESSMENT YEARS, THE PRIMARY DISPUTE REVOLVES AROUND THE EXEMPTION CLAIM ED BY THE ASSESSEE UNDER SECTIONS 11 & 12 OF THE ACT ON THE GROUND THAT I T IS CARRYING ON CHARITABLE ACTIVITIES FOR THE GENERAL PUBLIC. THE ASSESSING O FFICER HAS DENIED THE CLAIM OF THE ASSESSEE IN ALL THE CAPTIONED ASSESSMENT YEARS, WHEREAS THE CIT(A) HAS UPHELD THE CLAIM OF THE ASSESSEE FOR ASSESSMENT YE ARS 2005-06, 2006-07, 2007-08 AND 2008-09, BUT FOR ASSESSMENT YEAR 2009-1 0, THE CIT(A) HAS SUSTAINED THE ACTION OF THE ASSESSING OFFICER. RES ULTANTLY, FOR ASSESSMENT YEARS 2005-06 TO 2008-09 REVENUE IS IN APPEAL AGAINST THE ORDER OF THE CIT(A) ALLOWING EXEMPTION UNDER SECTIONS 11 & 12 OF THE AC T, WHEREAS FOR ASSESSMENT YEAR 2009-10 ASSESSEE IS IN APPEAL CHALLENGING THE ORDER OF THE CIT(A) DENYING EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT. 3. BEFORE PROCEEDING FURTHER, WE MAY REFER TO THE A PPEAL FOR ASSESSMENT YEAR 2005-06 AS THE LEAD CASE IN ORDER TO APPRECIAT E THE CONTROVERSY. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-1, 3 MATUNGA GYMKHANA MUMBAI DATED 30/10/2009 WHICH IN TURN ARISES OUT O F AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31/12/2007. IN THIS APPEAL, REV ENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THAT THE ASSESSEE TRUST IS NOT COV ERED BY THE PRINCIPLE OF MUTUALITY THEREBY VIOLATING PROVISIONS OF SEC.13 WHICH DIS-EN TITLES THE TRUST FROM CLAIMING EXEMPTION U/S.11. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(APPEALS) ERRED IN TREATING THE ASSESSEE AS CHARITABLE ORGANI ZATION INSTEAD OF MUTUAL ORGANIZATION IGNORING THE RATIO LAID DOWN IN THE JU DGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. BANKIPUR CLUB LTD. 226 ITR 97'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(APPEALS) ERRED IN IGNORING THE FACT THAT THE ASSESSEE HAD VI OLATED THE PROVISIONS OF SEC.13 OF THE IT ACT WHEREIN UNDUE BENEFIT IS ENDURED ON THE PERSONS SPECIFIED U/S.13(1) OF THE ACT AND ALSO SUCH ACTIVITIES OF THE TRUST ARE NOT I NCIDENTAL OBJECTS OF THE TRUST AND HENCE THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIR EMENTS OF SEC.11(4) OF THE ACT'. 4. 'ON THE. FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(APPEALS) ERRED IN GRANTING RELIEF TO THE ASSESS EE ON INTEREST INCOME, RESTAURANT COMPENSATION AND GYMKHANA FUNCTION INCOME, IGNORING THE FACT THAT SUCH INCOME ARE EARNED FROM NON-MEMBERS'. 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(APPEALS) ERRED IN RELYING ON THE DECISION IN THE CASE OF SUR AT CITY GYMKHANA VS. ACIT REPORTED IN 300 ITR 214 WHEREIN THE DECISION HAS BEEN MIS-IN TERPRETED AS THE SAID JUDGEMENT DOES NOT BAR THE AO FROM LOOKING INTO THE ACTIVITIE S OF THE TRUST AND WHETHER THE SAME PERTAINS TO OBJECTIVES OF THE TRUST FOR WHICH SPECIFIC REGISTRATION U/S.12A WAS GRANTED'. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CO MMISSIONER OF INCOME- TAX (APPEALS)-I, MUMBAI BE SET ASIDE AND THAT OF THE AS SESSING OFFICER BE RESTORED. 4. IN ASSESSMENT YEAR 2005-06, THE ASSESSEE FILED A RETURN OF INCOME ON 30/10/2005 DECLARING NIL INCOME. THE ASSESSEE HA D SHOWN A DEFICIT OF RS.1,43,65,631/- AFTER CONSIDERING AN EXPENDITURE O F RS.2,74, 59,377/-, AND IN ADDITION, ASSESSEE RETURNED CARRIED FORWARD DEFIC IT FROM EARLIER ASSESSMENT YEARS AMOUNTING IN ALL TO RS.4,65,54,994/-. THE IN COME RECEIVED WAS BY WAY OF 4 MATUNGA GYMKHANA INTEREST, INCOME FROM OTHER SOURCES, WHICH INCLUDED INCOME FROM MEMBERS AND OTHER INCOME WHICH INCLUDED GYMKHANA FUNCTION I NCOME, COMPENSATION OF RESTAURANT, MISCELLANEOUS INCOME, ETC. THE INCO ME FROM MEMBERS INCLUDED MEMBERSHIP FEES, GUEST ENTRANCE FEES, COACHING FEES , RESERVATION CHARGES, ETC. AS PER THE ASSESSING OFFICER, THE ENTIRE SPECTRUM O F INCOME AND EXPENDITURE OF THE ASSESSEE SHOWED THAT THERE WAS NO CHARITY FOR P UBLIC AT LARGE AND MOST OF THE EXPENDITURE IS SPENT ON THE BENEFITS PROVIDED T O THE MEMBERS OF THE ASSESSEE-TRUST. AS PER THE ASSESSING OFFICER THE AC TIVITIES UNDERTAKEN BY THE ASSESSEE SHOWED THAT THE DOMINANT OBJECT OF THE TRU ST WAS TO PROVIDE SERVICE TO ITS MEMBERS, THOUGH TO SOME EXTENT THE FACILITIE S WERE ALSO BEING PROVIDED TO NON-MEMBERS. AS PER THE ASSESSING OFFICER, SINC E ASSESSEE WAS EXISTING FOR THE BENEFIT OF ITS MEMBERS, ITS TRUE NATURE AND CH ARACTER WAS THAT OF A MUTUAL CONCERN AND, THEREFORE, ANY INCOME ARISING TO IT I N DEALING WITH NON-MEMBERS WILL NATURALLY BE TAXABLE. ULTIMATELY THE ASSESSIN G OFFICER HELD THAT ASSESSEE IS NOT AN ASSOCIATION CREATED/ESTABLISHED FOR CHARI TABLE PURPOSE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 2(15) OF THE I .T.ACT . IN THIS MANNER, THE ASSESSING OFFICER COMPUTED THE INCOME OF THE ASSESS EE BY DENYING EXEMPTION UNDER SECTION 11 OF THE ACT. ACCORDINGLY, TOTAL IN COME WAS ASSESSED AT RS.79,04,208/-. 5. IN APPEAL BEFORE THE CIT(A), ASSESSEE RAISED VARIOUS GROUNDS ASSAILING THE DECISION OF THE ASSESSING OFFICER. THE ASSESSE E, INTER-ALIA, CONTENDED THAT THE ASSESSING OFFICER ERRED IN NOT TREATING THE ASS ESSEE AS A CHARITABLE INSTITUTION AND THAT IT COULD NOT BE CHARACTERIZED AS A MUTUAL CONCERN. THE ASSESSEE POINTED OUT THE CONTRADICTION IN THE STAN D OF THE ASSESSING OFFICER IN DENYING THE CLAIM OF EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT ON ONE HAND, WHILE, ON THE OTHER HAND, ASSESSEE CONTINUED TO ENJ OY REGISTRATION UNDER 5 MATUNGA GYMKHANA SECTION 12A OF THE ACT AND THE ASSESSING OFFICER HIMSELF ACCEPTING THAT ASSESSEES ACTIVITY OF DEVELOPMENT OF SPORTS WAS A CHARITABLE OBJECTIVE. THE CIT(A) CONSIDERED THE DETAILED SUBMISSIONS OF THE A SSESSEE AND DISAGREED WITH THE ASSESSING OFFICER AND UPHELD THE PLEA OF THE A SSESSEE FOR GRANT OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE FINAL C ONCLUSION OF THE CIT(A) CAN BE APPRECIATED FROM PARA 7.18 OF HIS ORDER, WHICH READS AS UNDER:- 7.18 FOR THE REASONS MENTIONED ABOVE, I AM OF THE OPINION THAT A.O HAS WRONGLY ASSUMED JURISDICTION TO EXAMINE WHETHER THE TRUST O R INSITUTIONS IS CREATED WHOLLY FOR CHARITABLE AND RELIGIOUS PURPOSE AND WHETHER THE RE GISTRATION GRANTED U/S. 12A IS RIGHT OR WRONG. IN MY VIEW, THE A.O HAS NO SUCH A UTHORITY. EVEN ON MERITS THE CASE LAWS CITED BY THE A.O TO HOLD THE APPELLANT AS MUTU AL ASSOCIATION ARE NOT APPLICABLE AS THE FACTS OF THE CASE OF THE APPELLANT ARE DIFFE RENT. THE CASE LAWS CITED BY THE A/R OF THE APPELLANT ARE ON SIMILAR FACTS AND HENCE APP LICABLE. BASED ON THE ABOVE ARGUMENTS, SUBMISSION AND OBSERVATION, AND ALSO CON SIDERING THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL AND SIMILAR TO THAT OF THE A.Y 2004-05, WHERE MY PREDECESSOR CIT(A) HAS ALSO EXAMINED THE SAID IS SUE AND DECIDED THE MATTER IN FAVOUR OF THE APPELLANT VIDE ORDER NO CIT(A)XXXII/I T-69/06-07 DATED 19.8.2008. THEREFORE, I HOLD THAT THE APPELLANT IS ENTITLED TO EXEMPTION U/S. OF THE ACT. THE A.O IS DIRECTED TO DIRECTLY ACCORDINGLY TO GRANT EXEMPT ION U/S 11 OF THE ACT. THE AFORESAID WOULD REVEAL THAT AS PER CIT(A), THE ASSESSING OFFICER HAD NO JURISDICTION TO EXAMINE WHETHER OR NOT ASSESSEE WAS AN INSTITUTION CREATED/ESTABLISHED FOR CHARITABLE PURPOSES BECAUSE THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT WAS VALID. THE CIT(A) HAS ALSO DISAGREED WITH THE ASSESSING OFFICER IN HOLDING THE ASSESSEE AS A MUTU AL ASSOCIATION. FURTHER, THE CIT(A) RELIED UPON THE ORDER OF HIS PREDECESSOR I N ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 DATED 19/08/2005, WHEREIN S IMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. IN THIS BACKGROUND, REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE DECISION OF CIT(A). 6. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE POINTED OUT THAT THE SAID APPEAL BY THE REVENUE IS MISPLAC ED INASMUCH AS THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2004-05 DATED 19/ 08/2008 TO THE SIMILAR 6 MATUNGA GYMKHANA EFFECT HAS BEEN ACCEPTED BY THE REVENUE AS IT HAS NOT FILED ANY FURTHER APPEAL BEFORE THE TRIBUNAL. THERE IS NO REBUTTAL TO THE A FORESAID ASSERTION MADE BY THE LD. REPRESENTATIVE FOR THE ASSESSEE. IN THIS C ONTEXT, WE HAVE PERUSED THE ORDER OF THE CIT(A) DATED 19/08/2008 FOR ASSESSMENT YEAR 2004-05 A COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGES 95 TO 11 4. THE CONTROVERSY DEALT WITH BY THE CIT(A) IN 2004-05 IS ON THE SAME LINE S AS THE CONTROVERSY IN THE INSTANT ASSESSMENT YEAR. IN ASSESSMENT YEAR 2004-0 5 ALSO, THE ASSESSING OFFICER HAD TREATED THE ASSESSEE AS A MUTUAL ASSOCI ATION AND TREATED THE INCOME FROM TRANSACTIONS WITH NON-MEMBERS AS TAXABL E, WHILE HOLDING THE ASSESSEE INELIGIBLE FOR EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT ON THE GROUND THAT ASSESSEE COULD NOT BE TREATED AS AN INS TITUTION CREATED/ESTABLISHED FOR CHARITABLE PURPOSES WITHIN THE MEANING OF SECTI ON 2(15) OF THE ACT. IN ASSESSMENT YEAR 2004-05, THE CIT(A) DISAGREED WITH THE ASSESSING OFFICER ON THIS COUNT AND BASED ON HIS STAND FOR ASSESSMENT YE AR 2004-05, IN THE INSTANT YEAR ALSO, THE CIT(A) HAS HELD THE ASSESSEE IS ENTI TLED FOR EXEMPTION UNDER SECTIONS 11& 12 OF THE ACT. CONSIDERING THAT THERE IS COMPLETE SIMILARITY OF FACTS AS WELL AS THE OBJECTIONS OF THE ASSESSING OFFICER, IN BOTH THE YEARS, THE ACTION OF THE CIT(A) IN ALLOWING EXEMPTION UNDER SE CTION 11 OF THE ACT, FOLLOWING HIS DECISION FOR ASSESSMENT YEAR 2004-05, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT, CANNOT BE CONSIDERED AS ERRONEOU S. APART THEREFROM, IT HAS ALSO BEEN POINTED OUT THAT FOR ASSESSMENT YEAR 2004-05, ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER BY ISSUANCE OF NO TICE UNDER SECTION 148 OF THE ACT, ON THE GROUND THAT EXEMPTION UNDER SECTION 11 WAS DENIABLE AS THE ACTIVITIES OF THE ASSESSEE TRUST CONTRAVENED THE PR OVISIONS OF SECTION 13(1)(C) AND 11(4A) OF THE ACT. IT HAS BEEN POINTED OUT THA T THE SAID ACTION OF THE ASSESSING OFFICER REOPENING THE ASSESSMENT WAS QUA SHED BY THE CIT(A) VIDE 7 MATUNGA GYMKHANA HIS ORDER DATED 12/08/2011, WHICH HAS BEEN FURTHER AFFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 30/10/2015 IN ITA NO.7375/MUM/ 2011, COPY OF WHICH HAS BEEN PLACED ON RECORD. CONSIDERING THE AFORESAID U NCONTROVERTED FACTS, IT IS QUITE CLEAR THAT THE STAND OF THE ASSESSING OFFICER TO DENY EXEMPTION TO THE ASSESSEE UNDER SECTIONS 11 & 12 OF THE ACT IN ASSES SMENT YEAR 2005-06 IS UNTENABLE AND THAT THE CIT(A) MADE NO MISTAKE IN AL LOWING THE CLAIM OF THE ASSESSEE BASED ON A SIMILAR DECISION FOR ASSESSMEN T YEAR 2004-05 WHICH STANDS ACCEPTED BY THE DEPARTMENT IN THE ORIGINAL A SSESSMENT PROCEEDINGS COMPLETED UNDER SECTION 143(3) OF THE ACT AND EVEN THE REOPENED PROCEEDINGS, STAND QUASHED BY THE TRIBUNAL VIDE ITS ORDER DATED 30/10/2015(SUPRA). IT HAS BEEN STATED BEFORE US TH AT THE ORDER OF THE TRIBUNAL CONTINUES TO HOLD THE FIELD, AS IT HAS NOT BEEN ALT ERED BY ANY HIGHER AUTHORITY. IN VIEW OF THE NEED TO IMPART CONSISTENCY AND UNI FORMITY OF APPROACH ON ISSUES WHICH PERMEATE THROUGH MORE THAN ONE ASSESSM ENT YEAR, WE FIND NO REASON TO INTERFERE WITH THE CONCLUSION OF THE CIT( A) IN ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTIONS 11& 12 OF THE ACT BASED ON HIS STAND FOR ASSESSMENT YEAR 2004-05, ESPECIALLY CONSI DERING THAT NO CHANGE IN FACTS OR LAW HAS BEEN BROUGHT OUT BY THE REVENUE . THUS, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND THE APPEAL OF THE RE VENUE FOR ASSESSMENT YEAR 2005-06 IS DISMISSED. 7. NOW, WE MAY TAKE UP THE APPEAL OF THE REVENUE FO R ASSESSMENT YEAR 2006-07, WHICH IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-1, MUMBAI DATED 31/03/2013, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29/12/2011. 8 MATUNGA GYMKHANA 8. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS:- 1. 'THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT REOPENING U/S 147 OF THE IT ACT WAS BA D IN LAW BECAUSE IT WAS MADE ON COVERED ISSUES AND NO FRESH MATERIAL WAS THERE FOR REOPENING, WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAD CLAIMED EXCESSIVE A LLOWANCE OR RELIEF 1 DOUBLE DEDUCTION IN ITS RETURN OF INCOME. 2 'THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE CLAIM OF DEFICIT OF R S.71,91,831/- AND CARRY FORWARD OF DEFICIT OF RS. 5,37,46,926/- OF EARLIER YEAR ON ACC OUNT OF DEPRECIATION ON ASSETS COST OF WHICH WAS ALREADY ALLOWED AS DEDUCTION, RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SERVICES REPORTED IN 264 ITR 110 (BOM) IGNORING THE RATIO OF JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF ESCORTS LTD. VS. UNION OF INDI A (199 ITR 43) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT DOUBLE DEDUCTION CANNOT BE PRESUMED IF THE SAME IS NOT SPECIFICALLY PROVIDED BY LAW. 3 THE APPELLANT PRAYS THAT, TO THE EXTENT OF ABOVE GROUNDS, THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS) I, MUMBAI BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 9. IN ASSESSMENT YEAR 2006-07, RELEVANT FACTS ARE T HAT ASSESSEE FILED ITS RETURN OF INCOME ON 27/10/2006 DECLARING TOTAL INCO ME AT NIL, AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. SUBSEQUENTL Y, THE ASSESSMENT WAS REOPENED UNDER SECTION 147/148 OF THE ACT ON 31/3/2 011 FOR ASSESSING AN INCOME CHARGEABLE TO TAX WHICH HAD ESCAPED ASSESSME NT. AS PER REASONS RECORDED, WHICH HAVE BEEN REPRODUCED IN THE ASSESSM ENT ORDER, IT IS REVEALED THAT THE ESCAPEMENT OF INCOME WAS ENUMERAT ED BY THE ASSESSING OFFICER ON TWO GROUNDS. FIRSTLY, AS PER THE ASSESS ING OFFICER, FOLLOWING THE ASSESSMENT ORDERS PASSED FOR OTHER ASSESSMENT YEARS , ASSESSEE WAS NOT ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT AS ASSESSEE WAS NOT AN ASSOCIATION CREATED OR ESTABLISHED FOR CHARITABLE P URPOSES WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. SECONDLY, AS PER THE ASSESSING OFFICER, EVEN IF ASSESSEE WAS TO BE HELD ELIGIBLE FOR THE CLAIM OF E XEMPTION UNDER SECTION 11 OF THE ACT, ASSESSEE HAD CLAIMED DEFICIT OF RS.71,91,9 31/-AND CARRY FORWARD OF 9 MATUNGA GYMKHANA DEFICIT OF RS.5,37,46,926/-; AND, ALSO CLAIMED DEPR ECIATION ON ASSETS, COST OF WHICH HAD ALREADY BEEN CLAIMED AS AN APPLICATION OF INCOME TOWARDS THE OBJECTS OF THE TRUST IN EARLIER YEARS. ACCORDING T O THE ASSESSING OFFICER, SUCH CLAIM OF DEPRECIATION WAS NOT ALLOWABLE AS IT WOULD AMOUNT TO DOUBLE DEDUCTION, FIRSTLY AS APPLICATION OF INCOME AND SEC ONDLY ON ACCOUNT OF DEPRECIATION ON THE VERY SAME ASSETS, WHOSE COST HA VE BEEN CLAIMED AS DEDUCTION AS AN APPLICATION OF INCOME. IN THE ENS UING ASSESSMENT FINALIZED UNDER SECTION 143(3) R.W.S 147 OF THE ACT, THE ASSE SSING OFFICER DISALLOWED ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT FOR THE SIMILAR REASONS NOTED BY US WHILE DEALING WITH THE APPEAL OF THE REVENUE FOR EARLIER ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER HAS ALSO DISAGREED WITH THE ASSESSEE ON THE ISSUE OF CALCULATION AND CARRY FORW ARD OF DEFICIT. THE TOTAL INCOME WAS ASSESSED AT RS.99,80,482/- WHICH COMPRIS ED OF INTEREST INCOME, COMPENSATION FROM CATERER, GYMKHANA FUNCTION INCOME , ETC. THE SAID ASSESSMENT WAS CARRIED IN APPEAL BEFORE THE CIT(A) BOTH ON FACTS AND IN LAW. ON THE PLEA OF THE ASSESSEE CHALLENGING THE VALIDIT Y OF THE ASSESSMENT REOPENED UNDER SECTION 147/148 OF THE ACT, THE CIT( A) HELD THE ACTION OF THE ASSESSING OFFICER AS BAD IN LAW ON THE GROUND THAT THERE WAS NO FRESH MATERIAL WITH THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT . FURTHER, IN SO FAR AS THE ISSUE OF ALLOWING EXEMPTION UNDER SECTIONS 11&12 OF THE ACT WAS CONCERNED, THE CIT(A) FOLLOWED THE ORDERS OF HIS PREDECESSOR F OR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2007-08 AND ALLOWED THE CLAIM OF THE ASSESSEE. THIRDLY, WITH REGARD TO THE ISSUE OF DEFICIT OF RS.71,91,931 /-, CARRY FORWARD OF DEFICIT OF RS.5,35,46,926/- ON ACCOUNT OF DEPRECATION ON ASSET S COST OF WHICH WAS ALREADY ALLOWED AS DEDUCTION, THE CIT(A) DISAGREED WITH THE ASSESSING OFFICER ON THE GROUND THAT THE SAID ISSUE WAS COVERED IN FA VOUR OF THE ASSESSEE BY THE 10 MATUNGA GYMKHANA JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. INSTITUTE OF BANKING, 264 ITR 110(BOM). IN THIS MANNER, THE CIT (A) ALLOWED THE PLEAS OF THE ASSESSEE, AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 9.1 AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) DOES NOT REQ UIRE ANY INTERFERENCE AS IT IS BASED ON THE ASSESSMENT YEAR 2004-05, WHEREIN THE S IMILAR STAND OF THE CIT(A) HAS BEEN ACCEPTED BY THE DEPARTMENT AND NO APPEAL H AS BEEN FILED BEFORE THE TRIBUNAL. IN SO FAR AS THE DISPUTE RELATES TO INI TIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT, THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SIMILAR DISPUTE HAD COME UP BEFORE THE TRI BUNAL IN ASSESSMENT YEAR 2005-06 AND VIDE ORDER DATED 30/10/2000(SUPRA) THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT HAVE BEEN FOUND TO BE UNSUSTAINABLE. 9.2 THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SO FAR AS THE ASSESSMENT YEAR 2006-07 IS CONCERNED, THE ORIGINAL ASSESSMENT WAS NOT MADE UNDER SECTION 143(3) OF THE ACT, BUT THE RETURN OF INCOME WAS ONLY PROCESSED UNDER SECTION 143(1) OF THE ACT; THEREFORE, UNDER THESE CIRCUMSTANCES THE REASONS RECORDED BY THE ASSESSING OFFICER WERE SUFF ICIENT TO INITIATE PROCEEDINGS UNDER SECTION 147/148 OF THE ACT. IN T HE COURSE OF HEARING, RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS PVT. L TD.,291 ITR 500(SC). 9.3 ON THIS ASPECT OF THE MATTER, IN OUR VIEW, IT I S A SETTLED POSITION THAT EVEN WHERE A RETURN IS MERELY PROCESSED UNDER SECTION 1 43(1) OF THE ACT, THE ASSESSMENT CAN BE REOPENED UNDER SECTION 147 OF TH E ACT ONLY SUBJECT TO THE 11 MATUNGA GYMKHANA FULFILLMENT OF THE CONDITIONS PRESCRIBED THEREIN. IN OTHER WORDS, EVEN IN SUCH A SITUATION, WHERE THE RETURN HAS BEEN PROCESSED UNDE R SECTION 143(1) OF THE ACT, AND NO ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS BEEN FRAMED, THE CONDITION PRESCRIBED IN SECTION 147(1) OF THE ACT F OR THE EXISTENCE OF A REASON TO BELIEVE THAT CERTAIN INCOME CHARGEABLE TO TAX H AS ESCAPED ASSESSMENT, HAS TO BE COMPLIED WITH. IN FACT, AT THE TIME OF HEARI NG, LD. REPRESENTATIVE FOR THE ASSESSEE HAD RELIED UPON THE JUDGMENT OF THE HON'BL E DELHI HIGH COURT IN THE CASE OF CIT VS. ORIENT CRAFT LTD., 354 ITR 536(DEL ), WHEREIN IT HAS BEEN HELD THAT THE FINALITY OF INTIMATION UNDER SECTION 143(1 ) OF THE ACT CAN BE DISTURBED UNDER SECTION 147/148 OF THE ACT ONLY IF THE ASSESS ING OFFICER HAS REASON TO BELIEVE THAT CERTAIN INCOME CHARGEABLE TO TAX HAS BEEN ESCAPED. THE HON'BLE DELHI HIGH COURT DULY CONSIDERED THE JUDGMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LT D. (SUPRA) AND HELD THAT THE INTIMATION UNDER SECTION 143(1) OF THE ACT CAN BE D ISTURBED ONLY AFTER COMPLYING WITH THE REQUIREMENTS OF SECTION 147(1) O F THE ACT. 9.4 IN THE PRESENT CASE, IT IS QUITE EVIDENT THAT T HE REASONS RECORDED TO REOPEN THE INTIMATION UNDER SECTION 143(1) OF THE A CT ARE SIMILAR TO THOSE RECORDED BY THE ASSESSING OFFICER WHILE REOPENING T HE ASSESSMENT FOR ASSESSMENT YEAR 2005-06. THE VALIDITY OF THE PROCE EDINGS INITIATED UNDER SECTION 147/148 OF THE ACT FOR ASSESSMENT YEAR 2005 -06 HAS ALREADY BEEN ADJUDICATED BY THE TRIBUNAL IN ITS ORDER DATED 30/1 0/2015(SUPRA), WHEREBY THE SAME HAS BEEN FOUND TO BE UNTENABLE IN LAW. IN VIE W OF THE SAID DECISION, THE REOPENING OF ASSESSMENT IN THE PRESENT YEAR HAS BEE N RIGHTLY SET-ASIDE BY THE CIT(A). IN FACT, THE CONCLUSION OF THE CIT(A) IS T HAT THERE WAS NO FRESH MATERIAL WITH THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT , A FINDING WHICH HAS NOT 12 MATUNGA GYMKHANA BEEN REPUDIATED BY THE REVENUE BEFORE US ON THE BAS IS OF ANY COGENT MATERIAL. THE FACT THAT AN ASSESSMENT ORDER UNDER SECTION 143 (3) WAS NOT PASSED IN THIS YEAR AND THE RETURN WAS MERELY PROCESSED UNDER SECT ION 143(1) WOULD NOT MAKE ANY DIFFERENCE TO THE VALIDITY OF THE PROCEEDI NGS INITIATED UNDER SECTION 147/148 OF THE ACT BECAUSE THE ABSENCE OF A FRESH T ANGIBLE MATERIAL TO JUSTIFY ESCAPEMENT OF INCOME IS A CONDITION PRECEDENT EVEN IN SUCH CASES, FOLLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT LTD.(SUPRA). THUS, THE STAND OF THE CIT(A) I S HEREBY AFFIRMED AND REVENUE FAILS IN ITS GROUND OF APPEAL NO.1. 10. IN SO FAR AS THE ISSUE RAISED BY THE REVENUE IN GROUNDS OF APPEAL NO.2 IS CONCERNED, THE SAME IS WITH REGARD TO THE MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER , WHICH WOULD NOT SURVIVE SINCE T HE PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT HAVE ALREADY BEE N FOUND TO BE UNTENABLE BY US IN THE EARLIER PARAS. EVEN OTHERWISE, THE ISSUE S RAISED THEREIN ARE COVERED BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF INSTITUTE OF BANKING (SUPRA) AND, THEREFORE, ON THIS ASPECT ALS O WE FIND NO MERIT IN SUCH GROUND OF THE REVENUE. 10.1 IN THE RESULT, APPEAL OF THE REVENUE FOR ASSES SMENT YEAR 2006-07 IS HEREBY DISMISSED. 11. AT THE TIME OF HEARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SO FAR AS THE APPEALS OF THE REVENUE FOR ASSESSMENT YEAR 2007-08 AND 2008-09 ARE CONCERNED, THE SAME INVOLVE ISSUES SIMILAR TO T HOSE CONSIDERED BY US IN THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005-06. IT WAS ALSO A COMMON 13 MATUNGA GYMKHANA POINT BETWEEN THE PARTIES THAT THE SAID APPEALS AR ISE FROM THE ASSESSMENTS FINALIZED BY THE ASSESSING OFFICER UNDER SECTION 14 3(3) OF THE ACT AND THE OBJECTIONS TAKEN BY THE ASSESSING OFFICER TO ASSESS EES CLAIM FOR EXEMPTION UNDER SECTION 11& 12 OF THE ACT ARE PARI-MATERIA T O THOSE CONSIDERED BY US IN THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005- 06 IN EARLIER PARAS. SIMILAR IS THE SITUATION WITH RESPECT TO THE RESPECTIVE OR DERS OF THE CIT(A) ALSO. IN THIS VIEW OF THE MATTER, FOLLOWING OUR DECISION IN THE E ARLIER PARAS IN RELATION TO THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2005-06, THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-0 9 ARE ALSO DISMISSED. 12. THE ONLY OTHER APPEAL LEFT FOR OUR CONSIDERATIO N IS THE APPEAL FOR ASSESSMENT YEAR 2009-09, WHEREIN THE ASSESSEE IS IN APPEAL. THIS APPEAL IS DIRECTED AGAINST AN ORDER PASSED BY THE CIT(A)-1,M UMBAI DATED 31/03/2013, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) DATED 28/12/2011. GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THIS APPEAL READ AS UNDER:- GROUNDS OF APPEAL I. TREATING OF THE CHARITABLE TRUST AS MUTUAL CONC ERN AND THEREBY DENYING EXEMPTION U/S 11: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE APPE LLANT ,A CHARITABLE TRUST AS A MUTUAL ASSOCIATION AND APPLYING THE PRINCIPLES OF MUTUALITY FOR TAXATION AND THEREBY DENYING EXEMPTION U/S 11. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FAC T THAT I) THE TRUST IS GRANTED REGISTRATION U/S 12A WHICH IS NOT WITHDRAWN; II) THE ACTIVITIES OF TRUST ARE COVERED U/S 2(15) OF THE I .T ACT, 1961 III) THE TRUST IS ELIGIBLE FOR BENEFITS U/S 11 IV) THE CIT(A) IN EARLIER YEARS HAVE ACCEPTED THE APPELLANT AS CHARITABLE TRUST U/S 2( 15) AND ALLOWED THE EXEMPTION U/S 11. V) THE DEPARTMENT HAS NOT PREFERRED AN APPEAL IN I TA T AGAINST THE ORDER OF CJT(A) GRANTING BENEFIT U/S 11 FOR AY 2004-05. 3. WITHOUT PREJUDICE TO ABOVE, THE EXPENSES INCURRE D FOR THE OBJECT OF THE TRUST IS NOT CONSIDERED WHILE DETERMINING THE INCOM E 14 MATUNGA GYMKHANA II. ADDITION OF INTEREST INCOME OF RS.2,36,07,023/- AS TAXABLE INCOME: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE INTE REST INCOME OF RS. 2,36,07,023/- AS TAXABLE INCOME 2. THE APPELLANT IS REQUIRED TO BE TREATED AS A CH ARITABLE TRUST AND THEREBY THE EXPENDITURE INCURRED AS DEEMED TO BE TREATED AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST. ILL. ADDITION OF COMPENSATION FROM RESTAURANT OF RS . 16,23,565/- AS TAXABLE INCOME: 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE AMO UNT RECEIVED AS RESTAURANT COMPENSATION OF RS. 16,23,565/- AS TAXAB LE INCOME. 2. THE APPELLANT IS REQUIRED TO BE TREATED AS A CH ARITABLE TRUST AND THEREBY THE EXPENDITURE INCURRED AS DEEMED TO BE TREATED AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST. IV. ADDITION OF COMPENSATION FROM DECORATOR OF RS. 1,65,630/- AS TAXABLE INCOME: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE AMOU NT RECEIVED AS COMPENSATION FROM DECORATOR OF RS. 1,65,630/- AS TA XABLE INCOME. 2. THE APPELLANT IS REQUIRED TO BE TREATED AS A CH ARITABLE TRUST AND THEREBY THE EXPENDITURE INCURRED AS DEEMED TO BE TREATED AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST. V. ADDITION OF MISCELLANEOUS INCOME OF RS. 20,074/ - AS TAXABLE INCOME: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE AMOU NT RECEIVED AS MISCELLANEOUS RECEIPT OF RS.20,074/- AS TAXABLE INC OME. 2. THE APPELLANT IS REQUIRED TO BE TREATED AS A CH ARITABLE TRUST AND THEREBY THE EXPENDITURE INCURRED AS DEEMED TO BE TREATED AS APPLICATION OF INCOME FOR THE OBJECT OF THE TRUST. VI. CLAIM OF DEPRECIATION AS APPLICATION OF INCOME I. THE LEARNED CIT(A) ERRED IN CONFIRMING THAT APP ELLANT IS NOT ELIGIBLE FOR EXEMPTION U/S. 11 AND DIRECTING THE A.O. TO DETERMI NING THE INCOME AS PER PROVISIONS OF CHAPTER IV OF THE INCOME TAX ACT, 196 1. 2. THE LEARNED CIT(A) OUGHT TO HAVE GIVEN SPECIFIC DIRECTION TO ALLOW DEDUCTION OF CLAIM OF DEPRECIATION. VII. NON GRANTING OF SET OFF OF CARRIED FORWARD LOS SES & UNABSORBED DEPRECIATION. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THAT APPE LLANT IS NOT ELIGIBLE FOR EXEMPTION U/S 11 AND DIRECTING THE A.O. TO DETERMIN ING THE INCOME AS PER PROVISIONS OF CHAPTER IV OF THE INCOME TAX ACT, 196 1. 2. THE LEARNED CIT(A) OUGHT TO HAVE GIVEN SPECIFIC DIRECTION TO ALLOW SET OFF CARRIED FORWARD LOSSES/ UNABSORBED DEPRECIATION. VIII. NON ACCEPTANCE OF REVISED WORKING FOR COMPUTA ION OF INCOME 1. THE LEARNED CIT(A) ERRED IN NON-ACCEPTING THE R EVISED WORKING FOR COMPUTATION OF INCOME MADE DURING THE COURSE OF ASS ESSMENT PROCEEDING 15 MATUNGA GYMKHANA AND DIRECTING THE A.O. TO DETERMINING THE INCOME AS PER PROVISIONS OF CHAPTER IV OF THE INCOME TAX ACT, 1961 2. THE LEARNED CIT(A) OUGHT TO HAVE GIVEN SPECIFIC DIRECTION TO CONSIDER THE REVISED COMPUTATION OF INCOME FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 12.1 BEFORE WE PROCEED TO ADJUDICATE THE RESPECTIVE GROUNDS OF APPEAL, A BRIEF BACKGROUND OF THE DISPUTE CAN BE SUMMARIZED A S FOLLOWS. IN ASSESSMENT YEAR 2009-10 ALSO, THE ASSESSING OFFICER DENIED AS SESSEES CLAIM FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. IN THIS ASSESSME NT YEAR, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS A MUTUAL ASSOCIATION NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT AND ACCORDINGLY HE HAD BROUGHT TO TAX INCOMES EARNED BY THE ASSESSEE FROM TRANSACTIONS WI TH NON-MEMBERS AS WAS THE CASE IN THE EARLIER ASSESSMENT YEARS. SO HOWEV ER, CIT(A) DID NOT FOLLOW HIS ORDERS FOR EARLIER ASSESSMENT YEARS ALLOWING THE CL AIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 11&12 OF THE ACT AND INSTEA D UPHELD THE ACTION OF THE ASSESSING OFFICER IN DENYING EXEMPTION TO THE A SSESSEE UNDER SECTION 11 & 12 OF THE ACT. THIS DEPARTURE BY THE CIT(A) FROM H IS POSITION IN THE EARLIER ASSESSMENT YEARS WAS PRIMARILY IN VIEW OF THE INSER TION OF THE PROVISO BELOW SECTION 2(15) OF THE ACT W.E.F. 01/04/2009. NOTABL Y, AFTER INTRODUCTION OF THE PROVISO W.E.F. 01/04/2009, THE PROVISIONS OF SECTIO N 2(15) OF THE ACT READ AS UNDER:- CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, E DUCATION MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY; PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYIN G ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY: 16 MATUNGA GYMKHANA THE EFFECT OF THE SAID AMENDMENT IS THAT ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE P URPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDER ATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 12.2 ACCORDING TO THE CIT(A), DUE TO THE ABOVE AM ENDMENT TO SECTION 2(15) OF THE ACT, THE POSITION OF ASSESSMENT IN THE CASE OF THE ASSESSEE WOULD UNDERGO A CHANGE. ACCORDING TO THE CIT(A), THE ACT IVITIES OF THE ASSESSEE FALL UNDER THE CATEGORY OF ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY AND, ASSESSEE WAS CHARGING FEES FROM OUTSIDERS FOR ALLOWING ITS PLAY GROUNDS FOR VARIOUS GAMES, ETC. AND, THEREFORE, SUCH ACTIVI TIES ARE HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT AND THE SAME CANNOT BE TREATED AS CHARITABLE IN NATURE. IN THIS MANNER, THE CIT(A) UPHELD THE STAN D OF THE ASSESSING OFFICER TO DENY ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 11&12 OF THE ACT AND SIMULTANEOUSLY ALSO AFFIRMED THE ACTION OF THE ASSE SSING OFFICER IN TREATING THE ASSESSEE AS A MUTUAL CONCERN THEREBY IMPLYING THAT THE FOLLOWING INCOMES OUT OF TRANSACTIONS WITH THE NON-MEMBERS WERE LIABLE TO BE TAXED:- (I) INTEREST INCOME - RS.2,36,07,023/-; (II)COMPENSATION FROM TH E RESTAURANT - RS.16,23,656/-; (III) COMPENSATION FROM THE DECORAT OR RS.1,65,630/-; AND, (IV) MISCELLANEOUS - RS.20,074/-. 12.3 IN SUM AND SUBSTANCE, THE ACTION OF THE ASSES SING OFFICER IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT RS.2,54,16,380/ -, AFTER DENYING THE 17 MATUNGA GYMKHANA EXEMPTION UNDER SECTION 11 & 12 OF THE ACT AND HOLD ING IT TO BE A MUTUAL CONCERN WAS AFFIRMED BY THE CIT(A). AGAINST SUCH A DECISION OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 12.4 BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSE SSEE HAS EXPLAINED THE NATURE OF THE INCOMES ON WHICH THE INCOME TAX AUTHO RITIES HAVE DENIED THE CLAIM OF EXEMPTION UNDER SECTION 11 & 12 OF THE ACT . FIRSTLY, IT IS POINTED OUT THAT THE INTEREST INCOME OF RS.2,36,07,023/- IS EAR NED ON DEPOSITS KEPT WITH THE BANKS AND THAT IT WAS A PRESCRIBED MODE OF INVE STMENT IN SECTION 11(5)(III) OF THE ACT. IT WAS, THEREFORE, CONTENDED THAT SO F AR AS EARNINGS BY WAY OF INTEREST ON SUCH DEPOSIT IS CONCERNED, IT CANNOT BE CHARACTERIZED AS ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS SO AS TO BE HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT. EVEN WITH REGARD TO THE COMPENSATION FROM THE CATERER(RESTAURANTS), COMPENSATION FROM DECORATOR A ND MISCELLANEOUS INCOME, IT HAS BEEN POINTED OUT THAT THE SAME COULD NOT BE CHARACTERIZED AS ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSI NESS. THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE CHARGE MADE BY TH E INCOME TAX AUTHORITIES THAT ASSESSEE WAS RECOVERING FEES FOR ALLOWING USE OF ITS PREMISES AND REFERRED TO THE PAPER BOOK TO POINT OUT THAT THERE WAS AN O VERALL DEFICIT FROM THE ACTIVITIES OF SPORTS AND IN ANY CASE THE LEVEL OF FEE CHARGED IS SO LOW THAT IT CANNOT BE SEEN AS AN ACTIVITY IN THE NATURE OF TRA DE, COMMERCE OR BUSINESS WITH THE VIEW OF PROFIT MAKING. IT IS SOUGHT TO BE POINTED OUT THAT THE FEE CHARGED IS NOMINAL AND IT IS INTENDED TO COVER TH E EXPENSES INCURRED BY THE ASSESSEE AND RATHER THERE IS AN OVERALL DEFICIT. FOR INSTANCE, OUR ATTENTION WAS DRAWN TO PAGE 62 OF THE PAPER BOOK, WHEREIN A FEE OF RS.4,000/- PER MONTH HAS BEEN CHARGED FROM A COLLEGE AS RENT FOR THE GRO UND USED FOR CRICKET PRACTICE. APART THEREFROM, OUR ATTENTION HAS ALSO BEEN INVITED TO PAGES 5 TO 11 18 MATUNGA GYMKHANA OF THE PAPER BOOK, WHEREIN IS PLACED THE BALANCE SH EET AND THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR UNDER CONSIDERATI ON, WHICH SHOWS THAT SO FAR AS THE SPORTS ACTIVITIES ARE CONCERNED, THERE IS A DEFICIT. AT THE TIME OF HEARING, RELIANCE WAS ALSO PLACED ON THE DECISION OF THE MUM BAI TRIBUNAL IN THE CASE OF THE BOMBAY PRESIDENCY GOLF CLUB LTD., IN ITA NO.484 3/MUM/2012 DATED 29/02/2016 TO POINT OUT THAT EARNING OF INTEREST O N DEPOSITS WITH THE BANK CANNOT BE CONSIDERED TO BE AN ACTIVITY IN THE NATU RE OF TRADE, COMMERCE OR BUSINESS SO AS TO FALL WITHIN THE SCOPE OF THE PROVISO TO SECTION 2(15) OF THE ACT. 12.5 ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTA TIVE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW BY CONTENDING THAT THE IMPUGNED INCOMES EARNED BY THE ASSESSEE HAVE BEEN RIGHTLY TAXED AS T HEY ARE HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT AND THAT THE ASSESSING OFFICER HAS CORRECTLY BROUGHT TO TAX SUCH INCOMES AS THE SAME WERE EARNED FROM TR ANSACTIONS WITH NON- MEMBERS, AND ITS TAXABILITY COULD NOT BE GOVERNED BY THE PRINCIPLES OF MUTUALITY. 12.6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SEC TIONS 11 TO 13 OF THE ACT DEAL WITH THE PROVISIONS RELATING TO INCOME DERIVED PROPERTIES HELD FOR CHARITABLE OR RELIGIOUS PURPOSES. THE ASSESSEE BE FORE US IS A TRUST REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 AND ALSO C ONTINUES TO HOLD THE REGISTRATION GRANTED TO IT BY THE COMMISSIONER OF I NCOME TAX UNDER SECTION 12A OF THE ACT SINCE 5/12/1997 AS A CHARITABLE TRUS T. NOTABLY, THE MAIN OBJECTS OF THE ASSESSEE TRUST ARE STATED TO BE THE PROMOTIO N OF SPORTS, GAMES AND RECREATION FACILITIES TO THE PUBLIC AT LARGE AND FO R THE PHYSICAL DEVELOPMENT AND 19 MATUNGA GYMKHANA HEALTHY LIFE STYLE AS WELL AS PROMOTION OF OTHER CH ARITABLE OBJECTS. THE FACTUM OF THE PROMOTION OF SPORTS AND GAMES BEING A CHAR ITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT IS NOT IN DISPU TE. IN FACT, THE ASSESSING OFFICER ALSO DOES NOT DISPUTE THE FACT THAT THE ACT IVITIES OF THE PROMOTION OF SPORTS AND GAMES CARRIED OUT BY THE ASSESSEE FALL W ITHIN THE MEANING OF CHARITABLE PURPOSE. THE ASSESSEE TRUST DERIVES I NCOME BY WAY OF RECEIPTS FROM ITS MEMBERS VIZ. MEMBERSHIP FEE, ENTRANCE FEE, IDENTITY CARD FEE, LOCKER RENT, RESERVATION CHARGES, ETC. THE ASSESSEE TRUST IS ALSO EARNING INCOMES BY WAY OF COMPENSATION FROM CATERER FOR RENT/LEASING O F PREMISES AND SUCH RECEIPTS IN THE INSTANT YEAR ARE OF A SUM OF RS.16, 23,656/-. FURTHER, IT HAS ALSO RECEIVED COMPENSATION FROM DECORATOR OF RS.1,65,63 0/- AND MISCELLANEOUS INCOME OF RS.20,074/-. APART THEREFROM, ASSESSEE HAS EARNED INTEREST INCOME OF RS.2,36,07,023/- ON RBI BONDS AND OTHER PERMITTE D INVESTMENTS AS PER SECTION 11(5) OF THE ACT. THE AFORESAID INCOMES, T OTALLING TO RS.2,54,16,380/- HAVE BEEN BROUGHT TO TAX BY THE ASSESSING OFFICER AS ACCORDING TO HIM THE SAME ARE NOT ELIGIBLE FOR THE BENEFITS OF SECTION 1 1 & 12 OF THE ACT AND SINCE, THEY HAD BEEN DERIVED FROM TRANSACTIONS FROM NON-ME MBERS, THE SAME ARE ALSO NOT EXEMPT UNDER THE PRINCIPLE OF MUTUALITY. 12.7 NOW, WE MAY FIRST TAKE UP THE STAND OF THE ASS ESSING OFFICER WITH REGARD TO THE INTEREST INCOME EARNED OF RS.2,36,07,023/-. THE SAID INCOME HAS BEEN EARNED FROM INVESTMENTS WHICH HAVE BEEN MADE IN TER MS OF THE PRESCRIPTION CONTAINED IN SECTION 11(5) OF THE ACT. THE CIT(A) HAS EMPHASIZED ON THE PROVISO TO SECTION 2(15) OF THE ACT, WHICH DENIES THE ENTITY CARRYING ON ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY, THE BENEFITS OF SECTION 11 & 12 ONLY IF SUCH ACTIVITIES INVOLVE CAR RYING ON OF ANY ACTIVITY IN THE 20 MATUNGA GYMKHANA NATURE OF TRADE, COMMERCE OR BUSINESS FOR A FEE OR CESS OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF SUCH INCOME FROM SUCH ACTIVITIES. THE MOOT QUESTIO N IS, CAN THE ACTIVITY OF KEEPING FUNDS DEPOSITED IN THE MANNER MANDATED BY T HE STATUTE I.E. SECTION 11(5) OF THE ACT CAN BE CONSTRUED AS AN ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS SO AS TO FALL WITHIN THE MEANI NG OF THE PROVISO TO SECTION 2(15) OF THE ACT. THE ANSWER IS QUITE OBVIOUS BECA USE ONCE AN ENTITY, WHICH IS GOVERNED BY THE REGIME OF SECTIONS 11 TO 13 OF THE ACT IS MANDATED TO KEEP ITS FUNDS IN A PRESCRIBED MANNER, THE EARNINGS THEREFRO M CANNOT BE VIEWED AS AN ACTIVITY OF IN THE NATURE OF TRADE, COMMERCE OR BUS INESS WITHIN THE MEANING OF THE PROVISO TO SECTION 2(15) OF THE ACT. NOTABLY, IN THE PRESENT CASE, THERE IS NO CHARGE MADE AGAINST THE ASSESSEE AT ANY STAGE T HAT SUCH EARNINGS HAVE NOT BEEN SPENT TOWARDS THE OBJECTS OF THE ASSESSEE I.E. PROMOTION OF SPORTS, GAMES AND RECREATION FACILITIES TO THE GENERAL PUBLIC AT LARGE AND PHYSICAL DEVELOPMENT AND HEALTHY LIFE STYLE. THE DECISION O F THE CO-ORDINATE BENCH IN THE CASE OF THE BOMBAY PRESIDENCY GOLF CLUB LTD.(SU PRA) IS ALSO DIRECTLY ON THE POINT WHERE BANK INTEREST EARNED BY A TRUST HAVING AN OBJECT OF PROVIDING GOLF COURSE AND ALLIED FACILITIES FOR THE PROMOTION OF THE SPORT OF GOLF WAS SOUGHT TO BE TAXED BY DENYING THE EXEMPTION UNDER SECTIONS 11 & 12 OF THE ACT. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL I S 29/02/2016(SUPRA) IS RELEVANT:- 13. THE INVESTMENT IN BANKS IS NOT ONLY AUTHORISED BUT MANDATED AND IS COMPULSORY IN SO FAR AS AN ENTITY CARRYING ON CHARI TABLE PURPOSES CONCERNED AND IN FACT, UNDER SECTION 13(1)( D)(II), IF THE FU NDS OF A TRUST OR INSTITUTIONS IS INVESTED IN ASSETS OTHER THAN THOSE SPECIFIED IN SE CTION 11(5), THE EXEMPTION UNDER SECTIONS 11 TO 13 WOULD BE WITHDRAWN. IT IS T HEREFORE NOT ONLY INEXPLICABLE, BUT ABSURD AS TO WHY THE ASSESSING OF FICER HAS TAKEN THE STAND THAT INTEREST RECEIVED FROM DEPOSITS IN BANKS FALLS FOUL OF THE PROVISO TO 21 MATUNGA GYMKHANA SECTION 2(15). IT IS TO BE NOTED THAT ALL THE OTHER ACTIVITIES AND INCOME STREAMS RECEIVED BY THE ASSESSEE HAVE BEEN HELD TO BE NOT TAXABLE BY THE ASSESSING OFFICER HIMSELF IN MAKING HIS ORDER DATED 30TH DECEMBER, 2012 ON THE GROUNDS OF MUTUALITY AND THE ONLY AMOUNT WHICH HAS BEEN ASSESSED TO TAX AS INCOME OF THE ASSESSEE IS INCOME FROM INTERE ST OF RS.2,17,92,167. THUS ACCORDING TO THE AO COMPLIANCE BY A ENTITY SET UP F OR CHARITABLE PURPOSE WITH THE PROVISIONS OF SECTION 11 (5) OF THE ACT WO ULD RESULT IN ITS STATUS OF 'CHARITABLE PURPOSES' BEING DENIED ON ACCOUNT OF TH E PROVISO TO SECTION 2( 15) OF THE ACT. THE DIRECT CONSEQUENCE OF SUCH AN INTER PRETATION WOULD BE THAT AN OTHERWISE 'CHARITABLE INSTITUTION' WOULD LOSE ITS S TATUS AS A 'CHARITABLE INSTITUTION' IF IT COMPLIED WITH SECTION 11 (5) OF THE ACT AND IF IT DID NOT COMPLY WITH SECTION 11 (5) OF THE ACT IT WOULD BE DENIED T HE BENEFIT ON THE GROUNDS THAT THE ENTITY HAS NOT COMPLIED WITH SECTION 11 (5 ) OF THE ACT. 14. SEVERAL DECISIONS HAVE CONSIDERED AND INTERPRET ED THE SCOPE, PURPOSE AND LIMITS OF THE PROVISO TO SECTION 2(15). IN GS 1 INDIA VS. DGIT 360 ITR 138 (DEL), THE TERM TRADE, COMMERCE OR BUSINESS WAS INT ERPRETED, AND IN THAT CASE EVEN THOUGH THE ASSESSEE WAS CHARGING A FEE HA VING REGARD TO THE ECONOMIC STATUS OF THE BENEFICIARIES, IT WAS HELD T HAT IT WAS NECESSARY FOR THE OPERATION AND RUNNING EXPENSES AND THE SUSTENANCE O F CHARITABLE ACTIVITIES, THAT A FEE COULD BE CHARGED. IN THE CASE OF THE A SSESSEE ON THE OTHER HAND, THERE IS NO FEE WHATSOEVER AND IN FACT, IT IS PASSI VE INCOME NOT INVOLVING ANY ACTIVITY WHATSOEVER. THEREFORE, THE AO WAS NOT CORR ECT IN HOLDING THAT ACT OF DEPOSIT OF MONEY IN SCHEDULED BANK ACCOUNT AND RECE IPT OF INTEREST THEREON AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUS INESS. THE SAME VIEW WAS TAKEN BY THE DELHI HIGH COURT IN INSTITUTE OF CHART ERED ACCOUNTANTS OF INDIA VS. DCIT 358 ITR 91 (DEL), WHERE THE INSTITUTE WAS TAXED BY THE ASSESSING OFFICER ON THE GROUNDS THAT FEES WERE CHARGED BY TH E INSTITUTE FOR PROVIDING COACHING CLASSES AND FOR HOLDING INTERVIEWS WITH RE SPECT TO CAMPUS PLACEMENT. THE COURT HELD THAT SUCH ACTIVITIES CANN OT BE STATED TO BE RENDERING SERVICE IN RELATION TO ANY TRADE, COMMERC E OR BUSINESS AT ALL. THIS WAS REITERATED BY THE DELHI HIGH COURT IN BUREAU OF INDIAN STANDARDS V. DGIT 358 ITR 78 AND IN PHD CHAMBER OF COMMERCE 357 ITR 2 96. THE GUJARAT HIGH COURT IN DGIT VS. SABARMATHI ASHRAM GAUSHALA TRUST 44 TAXMAN 141 TOOK THE VIEW THAT A TRUST REGISTERED WITH THE OBJECTS O F BREEDING CATTLE AND COWS AND OXEN CANNOT BE SAID TO BE CARRYING ON ACTIVITIE S OF TRADE, COMMERCE OR BUSINESS MERELY BECAUSE CONSIDERABLE INCOME WAS GEN ERATED ON ACCOUNT OF PRODUCTION AND SALE OF MILK. THE SAME VIEW WAS TAKE N BY THE TRIBUNAL IN DD!T VS. ALL INDIA FOOTBALL 1 FEDERATION 62 TAXMANN .COM 362 (DEL TRIB) DEALING WITH A CASE OF AN ASSOCIATION HAVING AS ITS OBJECT THE PROMOTING OF THE GAME OF FOOTFALL, ORGANISING TOURNAMENTS, TRAIN ING PLAYERS, COACHES ETC. THE TRIBUNAL HELD THAT THE RECEIPTS BY WAY OF SPONS ORSHIP DO NOT ALTER THE CHARACTER OF THE MAIN OBJECTS AND IS NOT AFFECTED B Y THE PROVISO AS IT CANNOT BE SAID TO BE ENGAGED IN ANY ACTIVITY WHICH IS IN T HE NATURE OF TRADE, COMMERCE OR BUSINESS. ................................................... ................................................... .................... 22 MATUNGA GYMKHANA 17. IN VIEW OF THE ABOVE, WE CAN SAFELY CONCLUDE TH AT THE ACTIVITY OF THE ASSESSEE DEPOSITING MONEY IN THE BANK DOES NOT CONS TITUTE TRADE, COMMERCE OR BUSINESS. THE ASSESSING OFFICER HAS IN FACT GONE MUCH BEYOND AND HELD THAT THE INTEREST ITSELF CONSTITUTES TAXABLE INCOME FALLING FOUL OF THE PROVISO TO SECTION 2(15). IF THE ASSESSING OFFICER'S VIEW IS C ORRECT, IT WILL MILITATE AGAINST THE MANDATE REQUIREMENT AND OBJECT OF SECTION 11 (5 ) OF THE ACT READ WITH SECTION 13 OF THE ACT. THESE SECTIONS REQUIRE AN EN TITY SEEKING THE SHELTER OF SECTIONS 11 TO 13 TO DEPOSIT ITS SURPLUS FUNDS IN S PECIFIED ASSETS AND IT CANNOT BE THAT THE MANDATE REQUIREMENT AND OBJECT OF SECTI ON 11 (5) WHICH SERVES TO PUT IN PLACE A MECHANISM TO REGULATE THE FUNDS O F THE CHARITABLE INSTITUTIONS ARE OVERCOME, OVERRIDDEN AND NULLIFIED BY AN INTERPRETATION SO THAT THE VERY MANDATE OF SECTION 11 (5) IF COMPLIED WITH RESULTS IN THE INSTITUTIONS BEING DECLARED TO BE NON-CHARITABLE. T HIS IS A CONTRADICTION IN TERMS AND THEREFORE MUST BE REJECTED. ACCORDINGLY, WE HOLD THAT THE INTEREST EARNED ON FIXED DEPOSIT WITH BANKS COMPLYING WITH T HE PROVISIONS OF SECTION 11 (5) IS EXEMPT AND THE PROVISO TO SECTION 2( 15) HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE. I FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WHICH HAS REFERRED TO THE JUDGMENTS OF THE HONBLE DELHI HIGH COURT IN THE C ASE OF GS 1 INDIA (SUPRA), INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (SUPRA) AND BUREAU OF INDIAN STANDARDS (SUPRA) IN COMING TO CONCLUDE THAT THE AC TIVITY OF DEPOSITING MONEY IN THE BANK AND EARNING INTEREST WOULD NOT CONSTIT UTE TRADE, COMMERCE OR BUSINESS WITHIN THE MEANING OF SECTION 2(15) R.W. PROVISO THEREOF. THUS, IN SO FAR AS INTEREST INCOME OF RS.2,36,07,023/- IS CONC ERNED, WE FIND NO MERIT IN THE STAND OF THE LOWER AUTHORITIES. 12.8 LIKEWISE, THE OTHER THREE CATEGORIES OF INCOME NAMELY, COMPENSATION FROM THE CATERER(RESTAURANT), COMPENSATION FROM DEC ORATOR FOR GYMKHANA FUNCTIONS AND MISCELLANEOUS INCOME ARE CONCERNED, H EREIN ALSO IT CANNOT BE SAID THAT THE SAME INVOLVE CARRYING ON OF ANY ACTIV ITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. IT IS QUITE CLEAR THAT THE SCOPE AND AMBIT OF THE EXEMPTION ENVISAGED IN SECTIONS 11 & 12 OF THE ACT RELATE TO THE RECEIPT OF 23 MATUNGA GYMKHANA INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS AP PLIED TO SUCH PURPOSES IN INDIA. BEFORE PROCEEDING FURTHER, WE MAY REITERATE THAT THERE IS NO CHARGE AGAINST THE ASSESSEE AT ANY STAGE THAT THERE IS AN APPLICATION OF INCOME FOR ANY PURPOSE OTHER THAN THE OBJECTS OF THE ASSESSEE TRUS T. MUCH HAS BEEN MADE OUT BY THE LOWER AUTHORITIES TO THE FACT THAT ASSE SSEE HAS CHARGED A FEE FOR ALLOWING USE OF ITS SPORTS GROUNDS, AND THEREFORE , IT IS ASSERTED THAT SUCH AN ACTIVITY IS HIT BY THE DISABILITY CONTAINED IN THE PROVISO TO SECTION 2 (15) OF THE ACT. IN OUR CONSIDERED OPINION, MERE CHARGING OF F EE IPSO-FACTO WOULD NOT ENABLE AN ACTIVITY TO BE GOVERNED BY THE PROVISO T O SECTION 2(15) OF THE ACT WITHOUT ESTABLISHING ANY PROFIT-MOTIVE IN THE CHARG ING OF FEES. IN THIS CONTEXT, ONE MAY REFER TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF GS 1 INDIA(SUPRA), WHEREIN THE EXPRESSION TRADE, CO MMERCE OR BUSINESS WAS BEING EXAMINED IN THE CONTEXT OF SITUATION WHERE A SSESSEE WAS CHARGING A FEE FOR RENDERING SERVICES. AS PER THE HONBLE HIGH CO URT THE CHARGING OF FEE WAS NECESSARY FOR CARRYING OUT THE ACTIVITIES AND THE S USTENANCE THEREOF, AND, IT WOULD NOT REFLECT ANY PROFIT-MOTIVE. THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SABARMATI ASHRAM GAUSHALA TRU ST (SUPRA) IS ALSO RELEVANT WHERE THE INCOME EARNED ON ACCOUNT OF PRODUCTION AND SALE OF MILK WAS SOUGHT TO BE COVERED WITHIN THE SCOPE OF THE PROVIS O TO SECTION 2(15) OF THE ACT ON THE GROUND THAT IT AMOUNTED TO AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE HONBLE HIGH COURT DISA GREED WITH THE VIEW OF REVENUE AND HELD THAT GENERATION OF INCOME BY WAY O F SALE OF MILK COULD NOT BE REGARDED AS ACTIVITY OF TRADE, COMMERCE OR BUSI NESS, CONSIDERING THAT THE OBJECTS OF THE TRUST WERE BREEDING OF CATTLE AND COWS AND OXEN. IN FACT, IN THE CASE OF ALL INDIA FOOTBALL 1 FEDERATION (SUPRA), TH E DELHI BENCH OF THE TRIBUNAL 24 MATUNGA GYMKHANA WAS CONSIDERING RECEIPT BY WAY OF SPONSORSHIP IN TH E CONTEXT OF THE PROVISO TO SECTION 2(15) OF THE ACT. THE TRIBUNAL HELD THAT T HE MAIN OBJECT OF THE TRUST BEING PROMOTION OF THE GAME OF FOOTBALL, ORGANIZING TOURNAMENTS, TRAINING PLAYERS, ETC., IT WOULD NOT LOSE ITS CHARACTER OF BEING CHARITABLE IN NATURE MERELY BECAUSE THERE WERE RECEIPTS BY WAY OF SPON SORSHIP BECAUSE THE ACTIVITY OF RECEIVING SPONSORSHIP FEE COULD NOT BE CONSTRUED AS AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. IN THE PRESENT CASE TOO, OBJECTS OF THE ASSESSEE ARE UNDOUBTEDLY THE PROMOTION OF SPORT S, GAMES AND RECREATION FACILITIES TO THE PUBLIC AT LARGE AND SUCH LIKE REC EIPTS ON ACCOUNT OF COMPENSATION FROM THE DECORATOR AGAINST GYMKHANA FU NCTION, MISCELLANEOUS INCOME AND COMPENSATION FROM CATERER(RESTAURANT) C ANNOT BE CONSTRUED AS ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS FOR THE PURPOSES OF THE PROVISO TO SECTION 2(15) OF THE ACT. THEREFORE, HA VING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR VIEW, THE CIT(A) ERRED IN DEPARTING FROM HIS STAND IN EARLIER YEARS BY WRONGLY RELYING ON THE PR OVISO TO SECTION 2(15) OF THE ACT IN THE INSTANT YEAR BECAUSE THE ACTIVITIES IN Q UESTION CANNOT BE CONSTRUED TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS SO AS TO FALL WITHIN THE PURVIEW OF THE PROVISO TO SECTION 2(15) OF THE ACT. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 13. AS A CONSEQUENCE TO OUR ABOVE DECISION, THE ISS UES RAISED BY THE ASSESSEE IN GROUND OF APPEAL NO. II TO V ARE ALSO C OVERED AND STAND ALLOWED. 14. IN SO FAR AS GROUNDS NO.VI & VII ARE CONCERNED, WHICH RELATE TO THE DISALLOWANCE OF DEPRECIATION AS APPLICATION OF INCO ME AND NON-GRANTING OF SET OFF- OF AND CARRY FORWARD OF DEFICIT IS CONCERNED , THE SAME ARE ALSO ALLOWED IN PRINCIPLE FOLLOWING OUR DECISION IN THE EARLIER PAR AS HOLDING THE ASSESSEE 25 MATUNGA GYMKHANA ELIGIBLE FOR EXEMPTION UNDER SECTIONS 11& 12 OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO REWORK THE AFORESAID CLAIMS OF THE A SSESSEE IN ACCORDANCE WITH LAW. 15. RESULTANTLY, APPEAL OF THE ASSESSEE IS ALLOWE D, AS ABOVE. 16. IN THE RESULT, WHILE OF APPEALS OF THE REVENUE ARE DISMISSED, THAT OF ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 30/11/2016 VM , SR. 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