The Chennai Custom House Agents Association, CHENNAI V. JCIT (OSD), CHENNAI

ITA 365/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90642 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 18-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Keywords: Gift; Depreciation; Charitable institution; Capital expenditure
• Section: 12A; 12; 11; 139

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHE NNAI , . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A.NO.596/MDS/2013 ASSESSMENT YEAR : 2009-10 THE DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS) II, CHENNAI. VS. M/S. THE CHENNAI CUSTOM HOUSE AGENTS ASSOCIATION, NO. 40, MOORE STREET, CHENNAI 600 001. [PAN:AA ATT2214K ] ( %& %& %& %& /APPELLANT ) ( '(%& '(%& '(%& '(%& / RESPONDENT ) I.T.A.NO.365/MDS/2013 ASSESSMENT YEAR : 2009-10 M/S. THE CHENNAI CUSTOM HOUSE AGENTS ASSOCIATION, NO. 40, MOORE STREET, CHENNAI 600 001. VS. THE JOINT COMMISSIONER OF INCOME TAX(OSD) - (EXEMPTIONS) CHENNAI 600 034. ( %& %& %& %& /APPELLANT ) ( '(%& '(%& '(%& '(%& / RESPONDENT ) DEPARTMENT BY : SHRI A.V. SREEKANTH, JCIT ASSESSEE BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE ) * / DATE OF HEARING : 21.05.2015 +,- ) * /DATE OF PRONOUNCEMENT : 22.07.2015 . . . . / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : BOTH CROSS APPEALS FILED BY THE REVENUE AND THE ASS ESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI, DATED 20.12.2012 RELEVANT TO THE ASSE SSMENT YEAR 2009-10. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A TRADE ASSOCIATION REGISTERED UNDER TAMIL NADU SOCIETIES REGISTRATION ACT XXVII OF 1975 SERIAL NO. 25 OF 1958 AND ALSO REGISTERED UNDER SECTION 12 A(A) OF THE INCOME TAX ACT 1961 DATED 17.12.1986. THE ASSESSEE FILED ITS R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION BY ADMITTING NIL INCOME. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND ASSESSMENT WAS COMPLETED UNDER SECTION 1 43(3) OF THE ACT. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER H AS OBSERVED THAT THE MEMORANDUM AND ARTICLE OF ASSOCIATION FILED BY THE ASSESSEE DEPICTS THAT THE ASSOCIATION IS HAVING SIX OBJECTS. 3. FROM THE OBJECTS OF THE ASSESSEE, THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE IS COMING UNDER THE LI MB OBJECT OF GENERAL PUBLIC UTILITY UNDER SECTION 2(15) OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE IS A BUSINESS ORIENTED O RGANIZATION FORMED TO ORGANIZE SERVICE OF LABOUR FOR CLEARING AND FORWARD ING AND ALLIED OPERATIONS FOR THE PROMOTION OF CUSTOM HOUSE AGENTS TRADE. THE ACTIVITY OF THE ASSOCIATION TO GATHER THE MEMBERS AND EDUCATE THEM IN THE LINE OF THE TRADE IS WITHIN THE OBJECT OF GENERAL PUBLIC UTILITY AND NOT FOR EDUCATION PURPOSE. THE PURPOSE IS ONLY FOR THE BETTERMENT OF THE BUSIN ESS. THE CONTRIBUTORS TO THE GOLDEN JUBILEE CELEBRATIONS ARE MOSTLY NON-MEMB ERS WHO STAND TO BE BENEFITED BY THE ASSOCIATION. THE GOLDEN JUBILEE CE LEBRATIONS WERE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 3 CONDUCTED IN TWO PARTS AT TWO PLACES. THE MEETING A ND THE AFFAIR OF THE TRADE WERE CONDUCTED AT HOTEL LEE ROYAL MERIDIAN. THE ENT ERTAINMENT PART OF THE CELEBRATION WAS AT TRADE CENTRE WITH DANCE PROGRAMM ES OF THE CINE ARTISTS, FOOD, VIDEO STAGE PERFORMANCE, ETC. THIS PART OF TH E PROGRAMME WAS SPENT MOSTLY ON WHICH, COMES TO .35,51,166/- OUT OF .46,99,110/-. THE PAYMENTS BY SPONSORS ARE IN THE NATURE OF BUSINESS PROMOTION EXPENSES. THUS, THE ASSESSEE HAS RENDERED SERVICE IN RELATION TO TRADE, BUSINESS OR COMMERCE. THE ACTIVITY OF CELEBRATION ITSELF IS OF BUSINESS P ROMOTION FOR THE MEMBERS WHOSE ACTIVITIES ARE BUSINESS/PROFESSION. THE GOLDE N JUBILEE CELEBRATION WAS VIEWED AS A BUSINESS PROMOTION CAMPAIGN IN THE NAME OF THE AGE OF THE ORGANIZATION. THE CONTRIBUTORS CERTAINLY STAND TO B E BENEFITED AS COULD BE SEEN FROM THE LIST OF THE SPONSORS. ALL OF THEM ARE RELATED TO THE BUSINESS OF CLEARING AND FORWARDING ACTIVITY. THE ASSOCIATION H AS EARNED A GOOD PROFIT OF .13,05,976/- FROM THE FUNCTIONS, IN ADDITION TO SPE NDING A CONSIDERABLE PART OF THE COLLECTION ON FOOD AND ENTERTAINMENT OF THE MEMBERS AND THEIR FAMILY. ACCORDINGLY, THE ASSESSING OFFICER HAS DENIED THE C LAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. 4. SO FAR AS MUTUALITY CLAIM OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED BY FOLLOWING VARIOUS JUDICIAL PRECEDENTS A ND HELD THAT SINCE THERE IS NO IDENTITY BETWEEN THE CONTRIBUTORS AND PARTICIPAN TS, THE ASSESSEE IS NOT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 4 ELIGIBLE FOR CONSIDERING UNDER THE PRINCIPLES OF MU TUALITY. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED. 5. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE H AS SUBMITTED THAT THE ASSESSEE IS COMMITTED FOR THE CAUSE AND DEVELOPMENT OF CUSTOM HOUSE AGENTS IN INDIA AND THE MAIN OBJECTIVES ARE TO DIFF USE KNOWLEDGE AND ENCOURAGE AND DEVELOP THE CUSTOM HOUSE AGENTS IN TH E FIELDS OF CLEARING AND FORWARDING AND ALLIED OPERATIONS AND THEREFORE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT, THE ASSE SSEE, BEING ENJOYING 12A REGISTRATION. 6. THE D. CIT(A), BY CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AND ALSO SECTION 2(15) OF THE ACT, HAS OBSERVED THAT TH E MEANING OR DEFINITION OF ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY F OR THE PURPOSE OF SECTION 2(15) UNDERWENT A CLEAR CHANGE CONSEQUENT TO THE AM ENDMENT I.E. INSERTION OF PROVISO TO SECTION 2(15) OF THE ACT W.E.F. 01.04 .2009. PRIOR TO THE AMENDMENT (I.E. UPTO 31.03.2009), ALL THE OBJECTS OF ANY GENERAL PUBLIC UTILITY IS ELIGIBLE TO BE CLASSIFIED AS A CHARITAB LE PURPOSE UNDER SECTION 2(15) OF THE ACT. HOWEVER, AFTER THE AMENDMENT, CERTAIN C LASSES OF GENERAL PUBLIC UTILITY ACTIVITIES ARE KEPT OUTSIDE THE SCOPE OF SE CTION 2(15) OF THE ACT. THE ACTIVITIES WHICH ARE EXCLUDED FROM THE LIST OF GENE RAL PUBLIC UTILITY ARE PROVIDED IN THE PROVISO TO SECTION 2(15). AS PER TH E PROVISO, ANY ACTIVITY IN THE NATURE OF CARRYING ON ANY TRADE, COMMERCE, BUSI NESS OR SERVICES IN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 5 RELATION TO ANY TRADE, COMMERCE AND BUSINESS FROM S UCH ACTIVITY, ARE EXCLUDED FROM THE DEFINITION OF GENERAL PUBLIC UTIL ITY FOR THE PURPOSE OF SECTION 2(15) OF THE ACT. THE LD. CIT(A) HAS FURTHER OBSERV ED THAT THE ASSESSEE IS RENDERING SERVICES TO ITS MEMBERS (CUSTOM HOUSE AGE NTS), TO CARRY OUT THEIR BUSINESS/PROFESSIONAL ACTIVITIES. THE ACTIVITIES OF THE ASSESSEE DIRECTLY AMOUNT TO THE SERVICES RENDERED BY IT IN RELATION T O THE TRADE, BUSINESS AND COMMERCE. THEREFORE, THE ASSESSEE IS CONSIDERED TO BE ENGAGED IN THE ACTIVITIES WHICH ARE IN THE NATURE OF RENDERING SER VICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR A NY OTHER CONSIDERATION, THE SECOND LIMB OF PROVISO TO SECTION 2(15) OF THE ACT. HENCE, THE ASSESSEE IS DIRECTLY COVERED BY THE PROVISO TO SECTION 2(15) AND NOT ELIGIBLE FOR THE BENEFITS UNDER SECTION 2(15) OF THE ACT. ACCORDINGL Y, THE LD. CIT(A) HAS DENIED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM E XEMPTION UNDER SECTION 11 OF THE ACT. 7. IN SO FAR AS MUTUALITY IS CONCERNED, THE LD. CI T(A) HAS OBSERVED THAT THE ASSESSEE HAS RECEIVED CONTRIBUTION FROM THE MEM BERS OF .23,51,000/- AND FROM NON-MEMBERS .36,54,087/- AND THE TOTAL AMOUNT RECEIVED FOR THE PURPOSE OF GOLDEN JUBILEE CELEBRATION AT .60,05,087/-. THE LD. CIT(A), ON THE BASIS OF CONTRIBUTION RECEIVED AND AFTER REDUCI NG THE PROPORTIONATE ALLOWABLE EXPENSES FROM THE CONTRIBUTION OF NON-MEM BERS OF .6,98,522/-, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 6 DIRECTED THE ASSESSING OFFICER TO ASSESS THE TAXABL E INCOME AT .36,08,385/- AND THE CALCULATION IS GIVEN AS UNDER: INTEREST ON FDS ETC. FROM BANKS . 4,76,040/- RENTAL INCOME . 1,76,780/- NON-MEMBER SILVER JUBILEE INCOME .29,55,565/- TOTAL .36,08,385/- 8. ACCORDINGLY, THE LD. CIT(A) DIRECTED THE ASSESS ING OFFICER TO CALCULATE THE TAXABLE INCOME OF .36,08,385/- BEING INCOME FROM NON-MEMBERS AS AGAINST .47,30,060/- ASSESSED BY HIM. ACCORDINGLY, THE LD. CIT(A) REJECTED THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. HOWEVER, THE LD. CIT(A) HAS ALLOWED THE CLAIM OF PRINCIPLES OF MUTUALITY TO THE EXTENT OF INCOME RECEIVED FROM THE MEMBERS. 9. ON BEING AGGRIEVED, THE REVENUE AS WELL AS ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. DR HAS SUBMITTED THAT THE ASSESSEE IS NOT CARRYING ANY CHARITABLE ACTIVITY AND THEREFORE, NOT ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. HE FURTHER SUBMITTED THAT CO NSEQUENT TO THE AMENDMENT I.E. INSERTION OF PROVISO TO SECTION 2(15 ) OF THE ACT WITH EFFECT FROM 01.04.2009, THE ASSESSEE WILL COME UNDER THE P URVIEW UNDER GENERAL PUBLIC UTILITY AND NOT AS CHARITABLE ORGANIZATION. THEREFORE, THE CLAIM OF EXEMPTION UNDER SECTION 11 CANNOT BE ALLOWED. IN SO FAR AS APPLICATION OF MUTUALITY IS CONCERNED, ONCE THE ASSESSEE IS ALREAD Y A REGISTERED CHARITABLE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 7 ORGANIZATION, MUTUALITY CANNOT BE CLAIMED AND SUBMI TTED THAT THE ORDER PASSED BY THE LD. CIT(A) MAY BE REVERSED TO THE EXT ENT OF APPLICATION OF MUTUALITY PRINCIPLE IS CONCERNED. 11. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT THE ASSESSEE IS RECOGNIZED AS CHARITABLE ORGAN IZATION SINCE 1986 ONWARDS AND EXEMPTION SECTION 11 CANNOT BE DENIED B Y VIRTUE OF PROVISO TO SECTION 2(15) W.E.F. 01.04.2009. IN SO FAR AS SILVE R JUBILEE CELEBRATION IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT AS A MARK OF REMEMBRANCE SOME SILVER MEMENTOS WERE PURCHASED AND GIFTED TO THE MEMBERS AND THE ASSESSEE SOCIETY HAS NOT VIOLATED A NY OF THE PROVISIONS AND EXEMPTION UNDER SECTION 11 HAS TO BE GIVEN. 12. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIAL S ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS EE, M/S. THE CHENNAI CUSTOM HOUSE AGENTS ASSOCIATION, IS REGISTERED UNDE R SECTION 12A(A) OF THE ACT DATED 17.12.1986. 12A REGISTRATION WAS ALSO GRA NTED TO THE ASSESSEE FOR THE FOLLOWING OBJECTS: (1) TO DIFFUSE KNOWLEDGE TO THE MEMBERS AND TO RUN AND MAINTAIN LIBRARY AND OTHER INSTITUTIONS FOR THEIR TRAINING. (2) TO ARRANGE, SECURE AND ORGANIZE SERVICE OF LABO UR FOR CLEARING AND FORWARDING AND ALLIED OPERATIONS FOR THE PROMOTION AND HELP, ENCOURAGEMENTS AND DEVELOPMENT OF CUSTOM HOUSE AGEN TS TRADE ON SUCH TERMS AND CONDITIONS THAT THE ASSOCIATION MAY THINK FIT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 8 (3) TO REGULATE, COORDINATE AND FORMULATE RULES AND REGULATION FOR PROPER WORKING OF THE CUSTOM HOUSE AGENTS TRADE AND TO TAK E ALL NECESSARY STEPS FOR PROMOTING OR SECURING PROPER LEGISLATION AFFECTING THE AFORE SAID INTEREST. (4) TO ENCOURAGE AND PROMOTE A FRIENDLY FEELING AND UNANIMITY ON ALL SUBJECTS INVOLVING COMMON GOOD. (5) TO VENTILATE LEGITIMATE GRIEVANCES AND DIFFICUL TIES THAT MAY BE EXPERIENCED BY MEMBERS. (6) TO EVOLVE, FORMULATE AND ADMINISTER THE WELFARE SCHEME FOR THE LABOURERS WORKING IN CHENNAI PORT AREA AND THE STAF F OF OFFICERS WORKING IN SUCH SCHEME. 13. FROM THE ABOVE OBJECTS, IT IS CLEAR THAT THE A SSESSEE IS EXISTED FOR THE PURPOSES OF DEVELOPMENT OF CUSTOM HOUSE AGENTS TRAD E IN INDIA. THE MAIN OBJECTS ARE TO DIFFUSE KNOWLEDGE AND ENCOURAGE AND DEVELOP THE CUSTOM HOUSE AGENTS IN THE FIELDS OF CLEARING AND FORWARDI NG AND ALLIED OPERATIONS. THEREFORE, THE ASSESSEE HAS CLAIMED THAT IT IS QUAL IFIED TO BE AN ORGANIZATION ENGAGED IN ADVANCEMENT OBJECT OF GENERAL PUBLIC UTI LITY. THE POINT FOR CONSIDERATION BEFORE US IS WHETHER THE ASSESSEE IS A CHARITABLE ORGANIZATION FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT IN VIEW OF THE PROVISO OF SECTION 2(15) BROUGHT TO SUBSTITUTE W.E.F. 01.04.2009? THE PROVISIONS OF SECTION 2(15) BOTH PRIOR TO 01.04.200 9 AND AFTER 01.04.2009 ARE EXTRACTED AS UNDER: SECTION 2(15) PRIOR TO 01.04.2009 (PRE-AMENDMENT) SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 9 SECTION 2(15) W.E.F. 01.04.2009 (POST AMENDMENT) SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THE REIN IS TEN LAH RUPEES OR LESS IN THE PREVIOUS YEAR. 14. FROM THE ABOVE, IT IS VERY CLEAR THAT PRIOR TO THE AMENDMENT IE UPTO 31.03.2009, ALL THE OBJECTS OF ANY GENERAL PUBLIC U TILITY IS ELIGIBLE TO BE CLASSIFIED AS CHARITABLE PURPOSE UNDER SECTION 2(15 ) OF THE ACT. AFTER 01.04.2009, AS PER THE SECOND LIMB OF SECTION 2(15) , ANY ACTIVITY OF RENDERING ANY SERVICES IN RELATION TO ANY TRADE, COMMERCE AND BUSINESS FOR A CESS OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY CANNOT COME UNDER THE PURVIEW OF CHARITY. IN THE PRESENT CASE, THE ASSESSEE IS RENDE RING SERVICES TO ITS MEMBERS CUSTOM HOUSE AGENTS], TO CARRY OUT THEIR BU SINESS/PROFESSIONAL ACTIVITIES. THEREFORE, THE ACTIVITIES OF THE ASSESS EE DIRECTLY AMOUNT TO THE SERVICES RENDERED BY IT IN RELATION TO THE TRADE, B USINESS AND COMMERCE. HENCE, THE ASSESSEE CANNOT BE CONSIDERED AS A CHARI TABLE ORGANIZATION AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 10 THEREFORE, THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) RIGHTLY DENIED THE EXEMPTION CLAIM OF THE ASSESSEE UNDER SECTION 11 OF THE ACT. 15. IN SO FAR AS PRINCIPLE OF MUTUALITY IS CONCERN ED, THE ASSESSING OFFICER HAS DENIED THE CLAIM OF PRINCIPLES OF MUTUALITY TO THE ASSESSEE BY FOLLOWING VARIOUS JUDICIAL PRECEDENTS BY OBSERVING THAT THE A SSESSEE IS NOT ELIGIBLE FOR BENEFIT OF MUTUALITY. ON APPEAL, THE LD. CIT(A), BY TAKING INTO CONSIDERATION OF THE CONTRIBUTION RECEIVED FROM THE MEMBERS AND THE NON-MEMBERS, BY DISALLOWING PROPORTIONATE EXPENDITURE TO THE EXTENT OF CONTRIBUTION RECEIVED FROM THE MEMBERS, HELD THAT MUTUALITY IS APPLICABLE AND DIRECTED THE ASSESSING OFFICER TO CONSIDER THE SAME. WE FIND THA T THE CONTRIBUTION RECEIVED BY THE ASSESSEE FROM THE MEMBERS OF .23,51,000/- AND FROM NON- MEMBERS .36,54,087/- ARE PUT IN A COMMON KITTY AND THE ASSE SSEE HAS INCURRED THE EXPENDITURE OUT OF THE FUNDS RECEIVED FROM THE MEMBERS AS WELL AS NON-MEMBERS. THEREFORE, IT IS DIFFICULT TO IDENT IFY THE EXPENDITURE BECAUSE BOTH THE CONTRIBUTIONS I.E. FROM MEMBERS AS WELL AS NON-MEMBERS ARE KEPT IN COMMON KITTY. THEREFORE, THE LD. CIT(A) WENT IN WRO NG TO DECIDE AFTER REDUCING PROPORTIONATE ALLOWABLE EXPENDITURE FROM T HE CONTRIBUTIONS RECEIVED FROM NON-MEMBERS AND DIRECTED THE ASSESSING OFFICER TO ASSESS THE NET TAX OF .36,08,385/-. FURTHER, WE FIND THAT THE ASSESSEE HA VING 12A REGISTRATION AND CLAIMING AS A CHARITABLE ORGANIZATION NOT ELIGI BLE TO BE CLAIMED AGAIN UNDER PRINCIPLES OF MUTUALITY. THE ASSESSEE BEING C HARITABLE ORGANIZATION I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 11 CANNOT CLAIM THE BENEFIT UNDER PRINCIPLES OF MUTUAL ITY FOR THE REASON THAT THE CHARITABLE ORGANIZATION IS FOR THE PURPOSE OF THE T HIRD PARTIES AND NOT FOR ITS OWN MEMBERS. THE PRINCIPLES OF MUTUALITY PASSED ON THE BENEFITS TO THE MEMBERS THEMSELVES. THEREFORE, THE ASSESSEE BEING R EGISTERED CHARITABLE ORGANIZATION, WE FIND THAT THE CONCEPT OF CHARITY A ND PRINCIPLES OF MUTUALITY ARE MUTUALLY EXCESSIVE. HENCE, THE ASSESSEE IS DENI ED THE BENEFIT UNDER SECTION 11 OF THE ACT, THE ASSESSEE CANNOT BE PERMI TTED TO CLAIM BENEFIT UNDER THE PRINCIPLES OF MUTUALITY. THE ASSESSEE CAN NOT BLOW HOT AND COLD AT THE SAME TIME. FURTHER, THE ASSESSEE, ON THE OCCASI ON OF GOLDEN JUBILEE CELEBRATION, HAS PURCHASED 650 SILVER MEMENTOS AND DISTRIBUTED AMONGST THE MEMBERS OF THE SOCIETY. THEREFORE, THE ASSESSEE SOCIETY, BY GIFTING THE MEMENTOS AND THE MEMBERS ARE BENEFITTED, WHICH IS C LEARLY IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. 16. THE HONBLE KERALA HIGH COURT IN THE CASE OF I NVESTORS CLUB, TRISSUR V. CIT 318 ITR 427 HAS OBSERVED THAT WE DO NOT KNOW H OW THE ASSESSEE CAN CLAIM PRINCIPLES OF MUTUALITY WHEN THE ASSESSEE HAS ENTITLED TO CLAIM EXEMPTION UNDER CHARITABLE ORGANIZATION, IT HAS GOT REGISTRATION UNDER SECTION 12A OF THE ACT. 17. IN VIEW OF THE ABOVE, WE FIND THAT THE ASSESSE E IS NOT ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT AND ALSO NOT ELIGIBLE FOR CLAIMING PRINCIPLES OF MUTUALITY. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 12 18. IN SO FAR AS DEPRECIATION IS CONCERNED, IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HA S CLAIMED .1,57,788/- AS DEPRECIATION IN THE INCOME AND EXPENDITURE STATE MENT. THE ASSESSEE FOLLOWS THE PRACTICE OF CLAIMING THE CAPITAL EXPEND ITURE ON ACQUISITION OF ASSETS AS APPLICATION OF INCOME. IN THIS YEAR ALSO THE ASSESSEE HAS CLAIMED .53,718/- AS DEDUCTION ON CAPITAL EXPENSES. THE VAL UE OF THE ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED HAS BEEN FULLY ALLOWED AS EXPENDITURE/ APPLICATION IN THE EARLIER YEARS. HENCE, THE PRESEN T CLAIM IS ONLY A DOUBLE DEDUCTION OVER AND ABOVE THE FULL VALUE OF THE ASSE TS. ACCORDINGLY, HE DENIED THE DEPRECIATION CLAIM OF THE ASSESSEE. 19. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAS ALREADY CLAIMED THE PURCHASE/ ACQUISITION OF ALL FIXED ASSETS AS APPLICATION OF I NCOME [BY WAY OF CAPITAL EXPENDITURE] IN THE EARLIER YEARS [I.E. IN THE YEAR IN WHICH THESE ASSETS ARE ACQUIRED] WHILE CLAIMING THE EXEMPTION OF INCOME UN DER SECTION 11 OF THE ACT IN THE CONCERNED YEARS. HENCE, ALLOWING DEPRECIATIO N ONCE AGAIN ON THE SAID FIXED ASSETS IS NOT ONLY ALLOWABLE, BUT ALSO AMOUNT S TO DOUBLE DEDUCTION, WHICH IS NOT PERMITTED UNDER THE PROVISIONS OF THE INCOME TAX ACT. 20. WE FIND THAT THE LD. CIT(A), AFTER CONSIDERING THE ENTIRE PROVISIONS OF THE ACT, DENIED THE CLAIM OF THE ASSESSEE. THE ASSE SSEE HAS NOT PROVIDED ANY MATERIAL TO SHOW THAT HE IS ENTITLED TO CLAIM D EPRECIATION AGAIN ON THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .596 596596 596 &3 &3&3 &365 6565 65/M/ /M/ /M/ /M/13 1313 13 13 SAME ASSETS. HE HAS ONLY RELIED ON THE ORDERS OF TH E TRIBUNAL, THE CASE OF GREAT LAKES INSTITUTE OF MANAGEMENT V. DCIT(E) IN I .T.A. NOS. 931 & 932/MDS/2012 DATED 22.06.2012 HAS NO APPLICATION. T HEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). TH AT APART, ONCE THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11 OF THE ACT IS DISALLOWED, THE CLAIM OF DEPRECIATION HAS TO BE CAL CULATED AS PER THE REGULAR PROVISIONS OF THE ACT. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALSO DISMISSED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 22 ND OF JULY, 2015 AT CHENNAI. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 22.07.2015 VM/- . ) ''*/0 10-* /COPY TO: 1. %& / APPELLANT, 2. '(%& / RESPONDENT, 3. 2 ( ) /CIT(A), 4. 2 /CIT, 5. 03 ''*' /DR & 6. 4! 5 /GF.