ACIT (Exemption), Circle-2(1), New Delhi V. PHD Chamber of Commerce & Industry, New Delhi

ITA 5806/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8667 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Assessee Lawyers: MUKUL BAGLA
• Keywords: Charitable institution
• Section: 12A; 201; 13(2); 13; 12; 2; 11

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F - V/C : NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, J UDICIAL MEMBER ITA NO. 5806 /DEL/201 7 ASSESSMENT YEAR : 2013 - 14 ACIT (EXEMPTIONS), CIRCLE - 2(1), NEW DELHI. VS PHD CHAMBER OF COMMERCE & INDUSTRY, 4/2, PHD HOUSE, AUGUST KRANTI MARG, SIRI INSTITUTIONAL AREA, NEW DELHI. PAN: AAACP1438L (APP ELL A NT ) (RESPONDENT) A SSESSEE BY : SHRI MUKUL BAGLA, CA RE VENUE BY : SHRI SARAS KUMAR, SR. DR DATE OF HEAR ING : 0 6 . 07 . 20 20 DATE OF PRONOUNCEMENT : 21 . 0 7 . 20 20 ORDER PER R. K. PANDA, AM : TH IS A PPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 2 1 ST JUNE, 2017 OF THE CIT(A) - 4 0, DELHI , RELATING TO ASSESSMENT YEAR 2013 - 14 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED U/S 12A OF THE IT ACT, VIDE ORDER NO. DIT(E) / 94 - 95 /P - 324/89/67 DATED 23 RD MAY, 1994 . IT FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER, 2013 DECLARING NIL INCOME. ITA NO. 5806 /DEL/201 7 2 THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ACTIVITIES OF THE SOCIETY ARE TO PROMOTE THE GENERAL MERCANTILE AND INDUSTRIAL INTEREST OF INDIA ACTING AS ARBITRATOR IN SETTLEMENT OF DISPUTES, ORGANIZING PERIODICAL SEMINARS, MEETINGS AND SYMPOSIA WITH GOV ERNMENT. AS PER INCOME & EXPENDITURE ACCOUNT THE ASSESSEE HAD SHOWN TOTAL RECEIPTS OF RS.21,67,04,5 11. FROM THE DETAILS FURNISHED BY THE ASSESSEE, HE NOTED THAT THE INCOME INCLUDES INCOME FROM MEMBERS AND NON - MEMBERS AS WELL. 3. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE RECEIPTS FROM CHARGES RECEIVED BY THE CHAMBER SHOULD NOT BE CONSIDERED AS COMMERCIAL IN NATURE AND WHY THE RECEIPTS SHOULD NOT BE HIT BY THE PROVISIONS OF SECTION 2(15) OF THE IT ACT, 1961. THE AO NOTED THAT AMENDMENT HAS BEEN MADE IN SECTION 2(15) OF THE ACT W.E.F. A.Y. 2009 - 10 IN CASE OF GENERAL PUBLIC UTILITIES AND THEY WILL NO LONGER BE ENJOYING CHARITABLE STATUS IF THEY ARE INVOLVED IN CARRYING ON OF ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY RENDERING ANY SERVICE IN ADDITION TO ANY TRADE, COMMERCE OR BUSINESS FOR CESS OR FEE OR ANY OTHER CONSIDERATION IN RESPECT OF NATURE OF USE OR APPLICATION OR RETENTION OF INCOME FROM SUCH ACTIVITY. HE NOTED THAT THE ASSESSEE SOCIETY FALLS IN THE LAST CATEGORY OF GENERAL PUBLIC UTILITY AS PER THE DEFINITION OF SECTION 2(15) AND, IN VIEW OF THE ABOVE AMENDMENT, THE SOCIETY FALLS UNDER THE LAST CATEGORY I.E., ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILIT Y AND, THEREFORE, IS NOT ENTITLED TO CARRY ON ANY BUSINESS OR COMMERCIAL ACTIVITIES EVEN IF IT IS INCIDENTAL TO ITA NO. 5806 /DEL/201 7 3 CHARITABLE PURPOSES. HE FURTHER NOTED THAT MANY MEMBERS HAVE BEEN CONTRIBUT ING MORE THAN RS.50,000/ - AS MEMBERSHIP FEE AND THEY ALL BECOME BEN EFICIARY AS PER SECTION 13(3)(B) OF THE IT ACT AND SINCE THE ASSESSEE IS WORKING FOR THE INTEREST OF ITS MEMBERS AND A SUBSTANTIAL NUMBER CONSISTS OF MEMBERS WHO HAVE CONTRIBUTED MORE THAN RS.50,000/ - , HE HELD THAT THEY ALL ARE BENEFICIAR IES AND THE CHAMBE R IS WORKING FOR THE INTEREST OF ITS MEMBERS AND, THEREFORE, COVERED U/S 1 3 (1) AND 13 (2) OF THE IT ACT. HE, THEREFORE, HELD THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 11 AND 12 OF THE ACT. THE AO ACCORDINGLY DETERMINED THE TOTAL INCOME OF THE ASS ESSEE AT RS.3,32,38,822/ - AFTER DEDUCTING THE EXPENDITURE AS PER INCOME & EXPENDITURE ACCOUNT FROM THE TOTAL INCOME. 4. IN APPEAL, THE LD.CIT(A) HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE AND THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S S 11 , 13 (1) AND 13(2) OF THE ACT. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS: - 1. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORIN G THE FACT THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE I.T.ACT,1961. 2. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ASSESSEE IS RENDERING SPECIFIC SERVICES TO IT S MEMBER AS WELL AS NON - MEMBERS AND CHARGING FEE FROM THEM WHICH IS LIABLE TO BE TAXED UNDER THE HEAD PROFIT & GAINS OF BUSINESS AND PROFESSION AND AS SUCH, ITS ACTIVITIES ARE NOT IN CHARITABLE NATURE. 3. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE AND THAT ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S. 11 OF THE I.T. ACT, 1961 BY IGNORING THE FACT THAT PRINCIPLE OF MUTUALITY IS NOT APPLICABLE ITA NO. 5806 /DEL/201 7 4 IN CASE OF THE ASSESSEE AS THE CONTRIBUTIONS BY MEMBERS OVER & ABOVE RS. 50,000/ - BECOME BENEFICIARIES AS PER SECTION 13(3)(B) OF THE ACT, 1961. 4. ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONSIDERING THE ASSESSEE S GROUND THAT LD. AO WRONGLY REFERRED TO THE PROVISIONS OF SECTION 13(1) & 13(2) OF THE INCOME TAX ACT. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 6. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND, IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2010 - 11. WE FIND, THE TRIBUN AL, VIDE ITA NO.1388/DEL/2015, ORDER DATED 23 RD MAY, 2018 AT PARA 7 OF THE ORDER UP HELD THE ORDER OF THE CIT(A) IN ALLOWING CLAIM OF EXEMPTION U/S 11 OF THE IT ACT AND DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER: - 7. THE ONLY ISSU E FOR DENYING THE EXEMPTION U/S.11 BY THE LEARNED ASSESSING OFFICER IS THAT IN TERMS OF PROVISO TO SECTION 2(15) THE ASSESSEE'S ACTIVITIES ARE IN THE NATURE OF TRADE AND COMMERCE OR BUSINESS. WE FIND THA T FIRST OF ALL IN THE ASSESSMENT YEARS 2006 - 07 & 2007 - 08, THE HON'BLE HIGH COURT AFTER DETAILED DISCUSSION HAD HELD THAT ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION U/S.11, VIDE JUDGMENT AND ORDER DATED 19TH OCTOBER, 2012 IN ITA NO.368 & 369/2012. AGAIN FO R THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10, THE REVENUE'S APPEAL HAS BEEN DISMISSED VIDE JUDGMENT AND ORDER DATED 22ND JULY, 2016 PASSED IN ITA NO. 321 AND 355/2016. IN THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10, THE TRIBUNAL HAS TAKEN INTO NOTE THE SCOPE OF PROVISO TO SECTION 2(15) AND FOLLOWING THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DGIT (E), HELD THAT NONE OF THE ACTIVITIES OF THE ASSESSEE FALLS IN THE CATEGORY AS ENVISAGED IN THE PROVISO. THUS, RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF THE ASSESSEE, WE HOLD THAT ASSESSEE IS ENTITLED FOR CLAIM OF EXEMPTION U/S.11. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) IS AFFIRMED. ITA NO. 5806 /DEL/201 7 5 7. WE FIND, THE TRIBUNAL IN ASSESSEE S OWN CASE, VIDE ITA NO.2598/DEL/2015, ORDER DATED 4 TH JUNE, 2018 FOR A.Y. 2011 - 12, UPHELD THE ORDER OF THE CIT(A) AND DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER: - 4. WE HAVE HEARD THE PARTIES AND GONE THROUGH THE RELEVANT ORDERS WHICH ARE AVAILABLE ON RECORD. THE ISSUE WITH REGARD TO THE RENDERING SPECIFIC SERVICES TO MEMBER AS WELL AS NON - MEMBERS BY CHARGING FEES AND APPLICABILITY OF EXEMPTION U/S 11 OF THE ACT HAS ALREADY BEEN DECIDED BY THE HON'BLE DELHI HIGH COURT, VIDE ITS ORDER DATED 19.10.2012 PASSED IN THE ASSESSEE'S OWN CASE RELEVANT TO THE AY 2006 - 07 & 2007 - 08 BY HOLDING THAT THE ASSESSEE SOCIETY IS ENTITLED TO GET BENEFIT U/S 11 OF THE ACT. THE SAID OR DER PASSED BY THE HON'BLE HIGH COURT WAS FURTHER FOLLOWED BY THE HON'BLE HIGH COURT ITSELF, VIDE ORDER DATED 27.07.2016 PERTAINS TO THE AY 2008 - 09 & 2009 - 10. EVEN OTHERWISE, IN THE INSTANT CASE, THE LD. CIT (A) HAS CATEGORICALLY HELD IN PARA NO. 4.5 OF THE IMPUGNED ORDER THAT THE CASE OF THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF HIS PREDECESSOR FOR THE AY 2006 - 07, 2007 - 08, 2008 - 09, 2009 - 10 & 2010 - 11 AND ALSO BY THE HON'BLE DELHI HIGH COURT IN THE ASSESSEE'S OWN CASE FOR THE AY 2006 - 07 AND 2007 - 08 WHICH REQUIRED TO BE FOLLOWED. AS THE LD. DR ALSO RAISED AN ISSUE THAT POST AMENDMENT TO THE PROVISO TO SECTION 2(15) OF THE ACT , THE SITUATION HAS BECOME ALTOGETHER DIFFERENT FROM THE AY 2009 - 10 ONWARDS AND THE ACTIVITIES OF THE ASSESSEE ARE LIABLE TO BE TREATED AS BUSINESS ACTIVITIES, HOWEVER, WE REALIZED THAT CO - ORDINATE BENCH OF ITAT AT DELHI, VIDE ITS ORDER DATED 16 - 02 - 2015 IN THE ASSESSEE'S OWN CASE FOR THE AYS 2008 - 09 & 2009 - 10 DUL Y CONSIDERED AND ADJUDICATED THE SAID ISSUE AND ANOTHER CO - ORDINATE BENCH AT DELHI VIDE ITS ORDER DATED 23 - 05 - 2018 WHILE DECIDING THE APPEAL PERTAINING TO A.Y. 2010 - 11, RESPECTFULLY FOLLOWED THE SAID JUDGMENT AND NOTHING IS BROUGHT ON RECORD BY LD. DR, CO NTRARY TO THE SAID JUDGMENTS AND/OR FILING OF ANY APPEAL AGAINST THE SAME . ON THE AFORESAID CONSIDERATION AND OBSERVATIONS, WE DO NOT FIND ANY INFIRMITY, PERVERSITY OR ILLEGALITY IN THE ORDER PASSED BY THE LD. CIT (A), HENCE, THE APPEAL OF THE REVEN UE - DE PARTMENT STANDS DISMISSED. 8. WE FIND, THE TRIBUNAL, VIDE ITA NO.5408/DEL/2015, ORDER DATED 6 TH SEPTEMBER, 2017, HAS UPHELD THE ORDER OF THE CIT(A) IN ALLOWING EXEMPTION U/S 11 AND DISMISSED THE APPEAL OF THE REVENUE BY OBSERVING AS UNDER: - ITA NO. 5806 /DEL/201 7 6 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE IS AN ASSOCIATION OF PROFESSIONAL AND BUSINESSMAN TO PROTECT AND PROMOTE THE INTEREST OF ITS MEMBERS. THE INCOME OF THE AS SESSEE IS FROM MEMBERSHIP FEES FROM ITS MEMBERS, SPECIALIZED SERVICES, SERVICES AND FACILITIES, MEETINGS, SEMINARS AND TRAINING PROGRAMMES, SALE OF PUBLICATION ETC. IT IS ALSO NOTED THAT THE INCOME OF THE ASSESSEE FROM OTHER NON - MEMBERS OF THE INSTITUTION ARE MORE AND AS SUCH THE PRINCIPLE OF MUTUALITY IS APPARENTLY NOT APPLICABLE IN THE CASE OF THE ASSESSEE. WE FURTHER NOTE THAT THE CASE OF THE ASSESSEE IS COVERED IN ITS FAVOUR BY THE ORDERS OF THE LD. CIT(A)'S PREDECESSORS FOR THE ASSESSMENT YEARS 2006 - 07 TO 2011 - 12 AND ALSO BY THE ORDER OF THE HON'BLE DELHI HIGH COURT IN ASSESSEE'S OWN CASE FOR THE AY 2006 - 07 & 2007 - 08. THE DEPARTMENTAL APPEAL FOR THE AY 2008 - 09 & 2009 - 10 HAS ALSO BEEN DISMISSED BY THE TRIBUNAL. THEREFORE, THE LD. CIT(A) HAS RIGHTLY OBSER VED THAT THERE IS NO SUFFICIENT REASON TO DEVIATE FROM THE APPELLATE ORDERS OF THE LD. CIT(A) OF THE EARLIER YEARS ALLOWING THE EXEMPTION U/S. 11(1) AND ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW THE EXEMPTION U/S. 11(1) WITH ALL CONSEQUENTIAL BENEFITS, WHI CH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY THE REVENUE AND ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE REVENUE. 9. RESPECTFULLY FOLLOWING THE C ONSISTENT DECISION S OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE PRECEDING ASSESSMENT YEARS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE AND THE ASSESSEE IS ENTITLED TO T HE CLAIM OF EXEMPTION U/S 11 OF THE IT ACT. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 10 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 .07 .201 9 . SD/ - SD/ - ( AMIT SHUKLA ) ( R. K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST J ULY, 201 9 DK ITA NO. 5806 /DEL/201 7 7 COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI