OTTERS CLUB, MUMBAI V. DDIT (E)-II(1), MUMBAI

ITA 648/MUM/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5738 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Keywords: Business income; Charitable institution; Opportunity of being heard; Retrospective amendment; Tax effect; Cancellation of registration; Set aside
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO. 648 /MUM. /2013 ( ASSESSMENT YEAR: 20 09 10 ) ITA NO. 1551 /MUM. /2015 ( ASSESSMENT YEAR: 20 10 11 ) ITA NO. 1552 /MUM. /2015 ( ASSESSMENT YEAR: 20 11 12 ) ITA NO. 6913 /MUM. /2016 ( ASSESSMENT YEAR: 20 12 13 ) ITA NO. 6914 /MUM. /2016 ( ASSESSMENT YEAR: 20 13 14 ) OTTERS CLUB CARTER ROAD MUMBAI 400 050 PAN AAATO0013F . APPELLANT V/S INCOME TAX OFFICER (EXEMP.) WARD 2(2), MUMBAI . RESPONDENT REVENUE BY : SHRI ABIRAMA KARTIKEYAN ASSESSEE BY: SHRI PORU S KAKA A/W SHRI NITESH JOSHI DATE OF HEARING 09.05.2019 DATE OF ORDER 07.08.2019 O R D E R PER BENCH CAPTIONED APPEAL S BY THE ASSESSEE ARISE OUT OF SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2009 10, 2010 11, 2011 12, 2012 13 AND 2013 14. 2 OTTERS CLUB 2 . SINCE ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE INVOLVING CO MMON ISSUE ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 3 . THE ONLY COMMON DISPUTE IN THE PRESENT APPEAL S IS CONFINED TO DISALLOWANCE OF EXEMPTION CLAIMED UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SINCE , THE FACTS RELATING TO THE AFORESAID DISPUTED IS MORE OR LESS COMMON IN ALL THE APPEALS,FOR THE SAKE OF BREVITY , WE ARE NARRATING TH E FACTS INVOLVED IN THE APPEAL IN ITA NO. 648/MUM./2013, FOR ASSESSMENT YEAR 2009 10 , WHICH IS TAKEN UP AS THE LEAD APPEAL . 4 . BRIEF FACTS ARE, THE ASSESSEE IS A PUBLIC CHARITABLE TRUST PROVIDING SWIMMING POOL FACILITIES FOR TRAINING AND FOR OTHER AQUATIC EV ENTS. IT ALSO PROVIDES FACILITIES FOR OTHER SPORTS SUCH AS SQUASH, BILLIARDS, ETC. THE ASSESSEE IS NOT ONLY REGISTERED WITH THE CHARITY COMMISSIONER, MUMBAI , BUT HAS ALSO BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 15 TH SEPTEMBER 2009, DECLARING LOSS OF ` 22,19,047. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, ON VERIFYING MATERIALS ON RECORD, FOUND THAT THE ASSESSEE IS ALSO PROVIDING FACILITIES O F PLAYING CARDS AND ALSO HAVING PERMIT ROOM, BAR AND RESTAURANTS FOR CATERING AND SOFT DRINKS. NOTICING THIS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN HOW PROVIDING 3 OTTERS CLUB FACILITIES OF PLAYING CARDS AT STAKE, PERMIT ROOM, BAR AND RESTAURANTS, CONSTITUTE CHARITABLE ACTIVITIES AND WHY IT SHOULD NOT BE TREATED AS BUSINESS ACTIVITY AS PROVIDED IN SECTION 11(4A) OF THE ACT. FURTHER, HE OBSERVED , AS PER INCOME AND EXPENDITURE STATEMENT, THE ACTIVITIES OF THE ASSESSEE ARE CLEARLY DIFFERENT FROM THE OB JECT OF THE TRUST. HE OBSERVED , THE BENEFIT OF THE TRUST IS NOT UTILIZED FOR ALL THE PERSONS OF THE SOCIETY, BUT IS LIMITED TO THE MEMBERS OF THE CLUB ONLY. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE , IN THE PRECEDING ASSESSMENT YEARS, CLAIM OF EXEMPTIO N UNDER SECTION 11 OF THE ACT WAS ALLOWED BY THE TRIBUNAL. FURTHER, THE ASSESSEE RELIED UPON THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN B REACH CANDY SWIMMING BATH TRUST. H OWEVER, THE ASSESSING OFFICER WAS NOT IMPRESSED WITH THE SUBMISSIONS OF THE ASSESS EE. HE OBSERVED ,AGAINST THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 05, THE REVENUE HAS FILED SPECIAL LEAVE PETITION( SLP ) BEFORE THE HON'BLE SUPREME COURT WHICH IS PENDING. FURTHER, HE OBSERVED , THE ASSESSE E IS A CLUB A ND ENTRY TO C LUB IS NOT OPEN TO GENERAL PUBLIC. IN THIS CONTEXT, HE REFERRED TO LOCAL ENQUIRIES MADE BY H IM REVEALING THAT ENTRY TO THE C LUB IS RESTRICTED TO MEMBERS, THEIR FAMILY MEMBERS AND GUESTS ACCOMPANYING THEM. HE OBSERVED , NON MEMBERS ARE ADMITTED BY CHARGING COACHING FEE FOR THE GAMES IN WHICH THEY ARE INTERESTED. ON PERUSING THE DETAILS OF COACHING FEES CHARGED FROM THE MEMBERS AND NON MEMBERS, THE ASSESSING OFFICER OBSERVED THAT FOR ADMITTING 4 OTTERS CLUB MEMBERS THE C LUB CHARGES HUGE FEES. THUS, HE OBSERVED , THE ASSESSEE IS NOT CARRYING O N ANY ACTIVITY WHICH IS OF CHAR ITABLE NATURE. REFERRING TO DIFFERENT CATEGORIES OF MEMBERS AND MEMBERSHIP FEES CHARGED, THE ASSESSING OFFICER OBSERVED , THOUGH , THE MEMBERSHIP OF THE C LUB IS OPEN TO PUBLIC, IT IS RESTRICTED IN MANY WAYS AND IT IS NOT EASY TO GET MEMBERSHIP OF THE C LUB. THUS, H E OBSERVED , THE ASSESSEE IS A MUTUAL CONCERN GOVERNED BY THE PRINCIPLES OF MUTUALITY. THEREFORE, HE HELD THAT IT CANNOT BE CONSIDERED TO BE A CHARITABLE INSTITUTION. THE ASSESSING OFFICER OBSERVED , THE PREDOMINANT OBJECT OF THE ASSESSEE IS TO PROVIDE SERVICES TO ITS MEMBERS. THOUGH, H E OBSERVED , VARIOUS FACILITIES , SUCH AS , RESTAURANT AND SPORTS RELATED FACILITIES ARE ALSO TO SOME EXTENT PROVIDED TO THE NON MEMBERS, HOWEVER, THE MEMBERSHIP TO THE C LUB IS EXTREMELY DIFFICULT AND EXPENSIVE , THEREBY , MAKING IT EXCLUSIVE. THUS, HE HELD THAT THE ASSESSE E IS NOT A TRUST CREATED/ ESTABLISHED FOR CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT READ WITH ITS PROVISO . ACCORDINGLY, THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT AND ITS INCOME HAS TO BE COMPUTED AS NORMAL BUSINESS INCOME. HOWEVER, TREATING THE ASSESSEE AS A MUTUAL CONCERN, THE ASSESSING OFFICER PROCEEDED TO TAX THE R ECEIPT S FROM NON MEMBERS AND OTHER SOURCE S SUCH AS DIVIDEND, INTEREST, ETC., AND ACCORDINGLY DETERMINED THE TAXABLE INCOME AT ` 3,89,29,816. THE 5 OTTERS CLUB ASSESSEE CHALLENGED THE AFORESAID DECISION OF THE ASSESSING OFFICER BY FILING APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5 . HOWEVER, LEARNED COMMISSIONER (APPEALS) ALSO CONCURRED WITH THE VIEW EXPRESSED BY THE ASSESSING OFFICER. 6 . SHRI PORUS KAKA, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THE ASSESSEE IS A PREMIER INSTITUTION PROVIDING FACILITIES FOR SWIMMING. HE SUBMITTED , MANY SWIMMERS TR AINED IN THE SWIMMING FACILITIES PROVIDED BY THE ASSESSEE HAVE REPRESENTED THE COUNTRY AND THEIR RESPECTIVE STATES IN NATIONAL AND INTERNATIONAL EVENTS AND WON SEVERAL MEDALS. DR AWING OUR ATTENTION TO THE TRUST DEED, A COPY OF WHICH IS PLACED AT PAGE 1 OF THE PAPER BOOK, THE LEARNED SR. COUNSEL SUBMITTED , THE TRUST WAS CREATED IN THE YEAR 1970 AS A PUBLIC TRUST FOR THE BENEFIT OF PERSONS OF ALL CAST E S AND COMMUNITIES . DRAWING OUR ATTENTION TO THE OBJECTS OF THE TRUST, HE SUBMITTED, THE MAIN OBJECT OF THE ASSESSEE IS TO CON STRUCT , ESTABLISH, OPERATE AND MAINTAIN SWIMMING POOLS AND OTHER SPORTS FACILITIES FOR THE BENEFIT OF PERSONS OF ALL COMMUNITIES AND CAST E S. HE SUBMITTED , LOOKING AT THE CHARITABLE NATURE OF THE OBJECT AND THE PURPOSE FOR WHICH THE TRUST WAS CREATED , NOT ONLY IT WAS GRANTED REGISTRATION BY THE CHARIT Y COMMISSIONER, MUMBAI, BUT THE COMMISSIONER OF INCOME TAX ALSO GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE COPY OF THE REGISTRATION CERTIFICATE GRANTED UNDER 6 OTTERS CLUB SECTION 12A OF THE ACT ON 16 TH MARCH 1974. TH E LEARNED SR. COUNSEL SUBMITTED , IN A SPAN OF 46 YEARS, THE ASSESSEE HAS PRODUCED S WI MMERS AND S QUASH CHAMPIONS WHO HAVE ACHIEVED H IGHEST N ATIONAL S POR T S A WARDS SUCH AS ARJUNA, SHIV CHATRAPATI AWARD, ASIAN R ECORD H OLDER OF THE E NGLISH CHANNEL, ASIAN AGE GR OUP GOLD , SILVER, BRONZEMEDALISTS , S ENIOR NATIONAL CHAMPIONS, AG E GROUP NATIONAL CHAMPIONS AND SCORES OF W INNER S AT STATE LEVEL AQUATIC MEETS , JUNIOR AND SENIOR SCHOOL , COLLEGE AND UNIVERSITY. CONTESTING THE OBSERVATIONS OF THE DEPARTMENTAL AUTHORITIES THA T THE CLUB IS A MUTUAL CONCERN PROVIDING SERVICES TO ITS MEMBERS ONLY, THE LEARNED SR. COUNSEL SUBMITTED , THE CLUB HOSTS LEARN TO SWIM CAMPS FOR NON MEMBERS ROUND THE YEAR . HE SUBMITTED , THE CAMP S ARE OPEN TO THE MEMBER S OF PUBLIC REGARDLESS OF CASTE AND CR EED . THE LIFE TIME AND LIFE SAVING SCHEME OF SWIMMING IS TAUGHT BY EFFICIENT SWIMMING STAFF TO OVER 600 PARTICIPANTS IN CAMPS HELD DURING SUMMER, AUTUMN AND WINTER VACATIONS. HE SUBMITTED , COMPETITIVE CAMP IS HOSTED DURING CHRISTMAS VACATION AND COMPETITIO NS ARE HELD IN WATER POLO, D IVING, SWIMMING AND SYNCHRONIZED SWIMMING THROUGHOUT THE YEAR. HE SUBMITTED , DURING THE ACADEMIC YEAR SCHOOL STUDENTS ARE GIVEN FREE SWIMMING COACHING AND ON A N AVERAGE 100 STUDENTS ARE T A UGHT SWIMMING EVERY DAY. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE DETAILS OF SWIMMING CAMPS HELD THROUGHOUT THE YEAR. HE ALSO DREW OUR ATTENTION TO VARIOUS COMPETITIONS HELD BY THE ASSESSEE FOR SCHOOLS IN ITS SWIMMING POOLS. 7 OTTERS CLUB FURTHER, DRAWING OUR ATTENTION TO A LIS T OF INDIVI DUALS WHO WON MEDALS/LAURELS AT STATE, NATIONAL AND INTERNATIONAL LEVEL, LEARNED SR. COUNSEL SUBMITTED , SW IMMERS TR AINED AT THE SWIMMING FACILITIES OF THE CLUB HAVE WON A NUMBER OF MEDALS IN DIFFERENT CATEGORIES AND HE ALSO DREW OUR ATTENTION TO THE INDIVI DUAL S WHO EXCELLED IN SUCH EVE NTS. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE PROVIDES FACILITIES OF PLAYING CARDS AT STAKE, THE LEARNED SR. COUNSEL SUBMITTED , THE ASSESSEE DOES NOT PROVIDE ANY FACILITY OF PLAYING CARDS FOR STAKE S. HE SUBMITTED , THE ASSESSEE HAS A BRIDGE ROOM WHERE ONLY BRIDGE TOURNAMENTS ARE HELD TWICE A YEAR AND THERE IS NO PLAYING OF CARDS FOR STAKES. THE LEARNED SR. COUNSEL SUBMITTED , FROM THE VERY INCEPTION, THE ASSESSEE IS CARRYING ON THE SAME ACTIVITY IN FU RTHERANCE OF THE OBJECTS MENTIONED IN THE TRUST DEED. HE SUBMITTED , IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 1975 76, THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 11 OF THE ACT WHICH WAS DENIED BY THE ASSESSING OFFICER. HE SUBMITTED , WHEN THE ISSUE AGAIN CAME BACK TO THE ASSESSING OFFICER AFTER BEING SET ASIDE BY THE TRIBUNAL, HE GRANTED EXEMPTION TO THE ASSESSEE UNDER SECTION 11 OF THE ACT WHICH CONTINUED CONTINUOUSLY FOR TEN YEARS. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDER DATED 29 T H SEPTEMBER 1982, PASSED IN ITA NO.1918/BOM./1981. HE SUBMITTED , ASSESSEE S CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT WAS AGAIN REJECTED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 1985 86 AND 1991 92. HE SUBMITTED , WHILE 8 OTTERS CLUB DECIDING ASSESSEES APPEA L IN ITA NO.5576/BOM./ 1993 AND ITA NO.6413/BOM./1994, DATED 23 RD AUGUST 2001, THE TRIBUNAL RELYING UPON THE SPECIAL BENCH DECISION IN BREACH CANDY SWIMMING BATH CLUB HELD THAT ASSESSEES INCOME FROM SWIMMING POOL, OTHER SPORTS ACTIVITIES, BAR AND RESTAURA NTS, ETC. ARE FROM THE ACTIVITIES CARRIED OUT TOWARDS THE OBJECT OF THE TRUST , EXCEPT, INCOME FROM FACILITIES PROVIDED FOR PLAYING CARDS FOR STAKES. THUS, THE TRIBUNAL ULTIMATELY CONCLUDED THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF ALL ITS INCOME EXCEPT THE INCOME FROM PROVIDING FACILITIES OF PLAY CARDS. HE SU BMITTED , SIMILAR VIEW WAS EXPRESSED BY THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS AS WELL. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDERS OF THE TRIBUNAL IN OTHER ASSESSMENT YEARS TILL THE ASSESSMENT YEAR 2008 09. THE LEARNED SR. COUNSEL SUBMITT ED , THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR S 2004 05, 2006 07 AND 2007 08, HAVE ALSO BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDERS OF THE HON'BLE JURISDICTIONAL HIGH COURT WHILE DISMISSIN G THE APPEALS FILED BY THE REVENUE. THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , EVEN THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSMENT YEAR 2004 05 HAS BEEN DISMISSED , THOUGH , DUE TO LOW TAX EF FECT. THE LEARNED SR. COUNSEL SUBMITTED , MERELY BECAUSE OF AMENDMENT TO SECTION 2(15) OF THE ACT, BY FINANCE ACT, 2010, WITH RETROSPECTIVE 9 OTTERS CLUB EFFECT FROM 1 ST APRIL 2009, THE OBJECT OF THE ASSESSEE DOES NOT CEASE TO BE CHARITABLE AND CANNOT BE TREATED AS COMME RCIAL ACTIVITY. THE LEARNED SR. COUNSEL SUBMITTED , WHEN THE OBJECT OF THE ASSESSEE OVER THE YEARS HAS REMAINED UNCHANGED, MERELY BECAUSE OF INSERTION OF PROVISO TO SECTION 2(15) OF THE ACT, ASSESSEE CANNOT LOSE ITS CHARITABLE CHARACTER. HE SUBMITTED , THE M AIN OBJECT OF THE ASSESSEE STILL REMAINS CHARITABLE AS IT IS FOR GENERAL PUBLIC UTILITY. HE SUBMITTED , THE OTHER ACTIVITIES LIKE RUNNING A BAR AND RESTAURANT OR GIVING ROOM ON RENT ARE ONLY INCIDENTAL AND ANCILLARY TO THE MAIN OBJECT OF THE ASSESSEE WHICH STILL REMAINS CHARITABLE IN NATURE. REBUTTING THE ALLEGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE FACILITIES OF BAR AND RESTAURANTS, RENTING OF ROOM, ETC., ARE PROVIDED ONLY TO THE MEM BERS WHICH IS A MUTUAL ACTIVITY, LEARNED SR. COUNSEL SUBMITTED , THE MONEY RECEIVED FROM THESE ACTIVITIES SUBSIDIZE AND SUPPLEMENT THE MAIN OBJECTS AND ACTIVITIES OF THE ASSESSEE IN MAINTAINING AND RUNNING SWIMMING AND OTHER SPORTS FACILITIES AND PROVIDING THEM FOR THE TRAINING AND COMPETITION OF THE PUBLIC AT LARGE. THE LE ARNED SR. COUNSEL SUBMITTED , AFTER THE INSERTION OF PROVISO TO SECTION 2(15) OF THE ACT, ASSESSEES REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT WAS ALSO CANCELLED FOR THE VERY SAME REASON ON WHICH THE ASSESSING OFFICER REJECTED ASSESSEES CLAIM OF EX EMPTION. HE SUBMITTED , WHILE DECIDING ASSESSEES APPEAL AGAINST THE CANCELLATION OF REGISTRATION UNDER SECTION 12A OF THE ACT, THE TRIBUNAL VIDE ORDER DATED 15 TH JUNE 2018, PASSED IN 10 OTTERS CLUB ITA NO.2658/MUM./2012, RESTORED THE REGISTRATION GRANTED UNDER SECTION 12 A OF THE ACT. WHILE DOING SO, HE SUBMITTED , THE TRIBUNAL HELD THAT MERELY BECAUSE OF INSERTION OF PROVISO TO SECTION 2(15) OF THE ACT, THE NATURE OF ASSESSEES ACTIVITY DOES NOT CHANGE. THE LEARNED SR. COUNSEL SUBMITTED , EVEN THE OBSERVATIONS OF THE ASSESSING OFFICER THAT ASSESSEES ACTIVITY ARE OF BUSINESS NATURE AND COMES UNDER SECTION 11(4A) OF THE ACT, CANNOT BE ACCEPTED AS WHILE DECIDING ASSESSEES APPEAL IN PRECEDING ASSESSMENT YEAR S , THE TRIBUNAL HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE DOES NOT COME WITHIN SECTION 11(4A) OF THE ACT. THE LEARNED SR. COUNSEL SUBMITTED , THE PROVISO TO SECTION 2(15) OF THE ACT HAS TO BE APPLIED ON THE BASIS OF PREDOMINANT OBJECT. HE SUBMITTED , IF THE PREDOMINANT OBJECT OF THE ASSES SEE IS CHARITABLE IN NATURE , ANY INCOME OR PROFIT GENERATED THROUGH OTHER ACTIVITIES WOULD BE INCIDENTAL AND ANCILLARY TO THE PREDOMINANT OBJECT, HENCE, WOULD NOT VITIATE THE CHARITABLE CHARACTER OF THE TRUST. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) DIT(E) V/S SHREE NASHIK PANCHAVATIPANJRAPOLE, [2017] 81 TAXMANN.COM 375 (BOM.); II ) INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V/S DGIT(E), [2013] 35 TAXMANN.COM 140 (DEL.); III ) GS1 INDIA V/S DGIT(E), [2013] 38 TAXMANN.COM 364 (DEL.); IV ) THE INDIAN MERCHANTS CHAMBERS V/S DDIT(E), ITA NO.4076/MUM./2013, DATED 29.06.2016; V ) ADIT(E) V/S JEEVAN VIDYA MISSION, [2015] 64 TAXMANN.COM 62 (MUM.) (TRIB.); AND 11 OTTERS CLUB VI ) ITO V/S KALINGA CULTURAL TRUST, ITA NO.332/HYD./ 2017, DATED 10.11.2017. 7 . HE SUBMITTED , EVEN AFTER INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT, EXEMPTION U/S 11 OF THE ACT HA S BEEN ALLOWED BY THE TRIBUNAL IN CASE OF VARIOUS OTHER CLUBS ON THE REASONING THAT THE PREDOMINANT OBJECT OF THE CLUBS IS OF CHARITABLE NATURE. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: I ) ITO(E) V/S CHAMBUR GYMKHANA, [2017] 80 TAXMANN.COM 354 (MUM. TRIB.); II ) ANDHERI RECREATION CLUB V/S ITO, [2017] 86 TAXMANN.COM 36 (MUM. TRIB.); III ) DAHISAR SPORTS FOUNDATION V/S ITO, [2017] 87 TAXMANN.COM 313 (MUM. TRIB.); AND IV ) THE PRANSUKHLAL MAFATLAL HINDU SWIMMING BATH & BOAT CLUB TRUST, ITA NO.511/MUM./2017, DATED 30.07.2018. 8 . FURTHER, LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , INCOME RECEIVED FROM SPECIFIC ACTIVITY LIKE SALE OF LIQUOR , PROVIDING FOOD IN RE STAURANTS, ETC., OR INTEREST RECEIVED WOULD NOT DETRACT FROM THE FACT THAT THEY ARE INCIDENTAL AND ANCILLARY TO THE MAIN OBJECT OF THE ASSESSEE, HENCE, WOULD ALSO COME WITHIN THE PURVIEW OF CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE ACT. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) DELHI & DISTRICT CRICKET ASSOCIATION V/S DIT(E), [2015] 58 TAXMANN.COM 292 (DEL.)(TRIB.); 12 OTTERS CLUB II ) DDIT(E) V/S MATUNGA GYMKHANA, ITA NO.1809/MUM./ 2010, ETC., DATED 30.11.2016; III ) DIT(E) V/S CHAMBUR GYMKHANA, [2013] 33 TAXMANN.COM 526 (BOM.); IV ) DIT(E) V/S SHRI VILE PARLE KELAVANI MANDAL, [2015] 58 TAXMANN.COM 288 (BOM.); V ) DIT(E) V/S GOREGAON SPORTS CLUB, [2012] 21 TAXMANN.COM 479 (BOM.); VI ) CALCUTTA CRICKET & FOOTBALL CLUB V/S ITO, [2017] 88 TAXMANN.COM 384 (KOL.) (TRIB.); AND VII ) PHD CHAMBER OF COMMERCE & INDUSTRY V/S DIT(E), [2012] 28 TAXMANN.COM 161 (DEL.). 9 . THUS, HE SUBMITTED , ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT SHOULD BE ALLOWED. 10 . SHRI ABIRAMA KARTIKEYAN, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS) AND THE ASSESSING OFFICER SUBMITTED , THE ACTIVITIES RELATING TO SALE OF LIQUOR, FOOD, ETC., CANNOT BE CONSIDERED TO BE ACTIVITIES OF CHARITABLE NATURE, HENCE, ARE COMME RCIAL ACTIVIT IES COMING WITHIN THE PROVISO TO SECTION 2(15) OF THE ACT. IF THE ASSESSEE CLAIMS THAT IT IS PROVIDING SPORTING FACILITIES LIKE SWIMMING POOLS, SQUASH, BILLIARD, ETC., IT IS NOT NECESSARY FOR THE ASSESSEE TO RUN A BAR AND RESTAURANT NEAR TO SU CH FACILITIES . T HEREFORE, FACILITIES BAR AND RESTAURANT NEAR SWIMMING POOLS, MAKES IT CLEAR THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF SELLING LIQUOR AND FOOD WHICH IS A COMMERCIAL ACTIVITY. THAT BEING THE CASE, ASSESSEE CANNOT BE TREATED AS A 13 OTTERS CLUB CHARITABL E TRUST . THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , AGREED THAT THE ASSESSEE PROVIDES SWIMMING POOL AND SPORTS FACILITIES AND BY USING THEM VARIOUS INTERNATIONAL STANDARD SWIMMERS AND PLAYERS HAVE BEEN PRODUCED, HOWEVER, THE PREDOMINANT OBJECT OF THE ASSESSEE HAS TO BE SEEN. HE SUBMITTED , THE DEPARTMENTAL AUTHORITIES HAVE CLEARLY DEMONSTRATED THAT THE FACILITIES OF THE ASSESSEE ARE EXCLUSIVELY FOR THE USE OF MEMBERS AND NOT OPEN TO GENERAL PUBLIC. THEREFORE, IT HAS TO BE TREATED AS A MUTUAL CONCERN. T HUS, HE SUBMITTED , ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT WAS RIGHTLY REJECTED BY THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS). 11 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO APPLIED OU R MIND TO THE DECISIONS RELIED UPON. FACTUAL MATRIX OF THE CASE REVEALS THAT THE ASSESSEE TRUST WAS CREATED WITH THE CHARITABLE OBJECT TO CONSTRUCT, ESTABLISH, OPERATE AND MAINTAIN SWIMMING POOLS AND OTHER SPORTS FACILITIES FOR THE BENEFIT OF ALL COMMUNITI ES AND CASTES. IN ADDITION TO THE AFORESAID OBJECTS, THE TRUST DEED ALSO PROVIDED FOR MAINTAIN ING A CLUB HOUSE IN THE NAME OF T HE OTTERS CLUB . THE CHARITABLE NATURE OF THE ASSESSEE CAN BE APPRECIATED FROM THE FACT THAT NOT ONLY IT IS REGISTERED WITH CHARITY COMMISSIONER, MUMBAI, BUT WAS ALSO GRANTED REGISTRATION AS A CHARITABLE INSTITUTION UNDER SECTION 12A OF THE ACT IMMEDIATELY AFTER ITS CREATION IN THE YEAR 1974. IT IS ALSO A FACT THAT AFTER BEING GRATED REGISTRATION UNDER SECTION 14 OTTERS CLUB 12A OF THE ACT, THE ASSESSEE STARTED CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. HOWEVER, ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 WAS REJECTED BY THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT FOR THE ASSESSMENT YEAR 1975 76. THE DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT WAS PRIMARILY FOR THE REASON THAT THE ACTIVITIES OF THE ASSESSEE IN PROVIDING SERVICES TO MEMBERS CANNOT BE CONSIDERED TO BE FOR CHARITABLE PURPOSE. HOWEVER, WHILE DECIDING REVENUES APPEAL , THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO DECIDE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT AFRESH. IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER ALLOWED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE AC T. 12 . FURTHER, THE DEPARTMENT ALLOWED ASSESSEES CLAIM OF EXEMPTION CONTINUOUSLY FOR SUCCEEDING 10 YEARS AND AGAIN IN THE YEAR 1985 86, THE DEPARTMENT REJECTED ASSESSEES CLAIM OF EXEMPTION PRIMARILY ON THE GROUND THAT THE ACTIVITY OF PROVIDING FOOD AND LIQU OR IN THE CLUB PREMISES AND THE FACILITIES FOR PLAYING CARDS AT STAKE ARE NOT ACTIVIT IES WHICH CAN BE SAID TO BE OBJECT S OF GENERAL PUBLIC UTILITY. FURTHER, THE ASSESSING OFFICER OBSERVED , SUCH ACTIVITIES AMOUNT TO CARRYING ON BUSINESS AS PER SECTION 11(4A ) OF THE ACT. WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR S 1985 86 AND 1991 92 , THE TRIBUNAL IN ITA NO.5576/BOM./1993 AND ITA NO.6413/BOM./1994, DATED 23 RD AUGUST 2001, AFTER FOLLOWING THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN BREACH CANDY SWI MMING BATH TRUST V/S ITO, CONCLUDED THAT EXCEPT 15 OTTERS CLUB THE INCOME DERIVED FROM THE ACTIVITY OF PROVIDING FACILITIES FOR PLAYING CARDS AT STAKE , ALL OTHER INCOME FROM SWIMMING POOL AND OTHER SPORT ACTIVITIES, BAR AND RESTAURANTS, ETC., WILL BE FROM THE ACTIVI TIES OF CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY, HENCE, ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT. IT IS RELEVANT TO OBSERVE , WHILE DEALING WITH THE IDENTICAL ISSUE RELATING TO ASSESSEES CLAIM OF EXEMPTION IN THE SUBSEQUENT ASSESSMENT YEARS T ILL THE ASSESSMENT YEAR 2008 09 , THE TRIBUNAL ALLOWED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THE LATEST ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 09, WAS VIDE ITA NO.2250/MUM./ 2012, DATED 13 TH SEPTEMBER 2013. IT IS ALSO RELEVA NT TO OBSERVE , THE DECISION OF THE TRIBUNAL ALLOWING ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT IN THE ASSESSMENT YEAR S 2004 05, 2006 07 AND 2007 08, HAVE ALSO BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT. IN FACT, WHILE DECIDING REV ENUES APPEAL FOR THE ASSESSMENT YEAR 2007 08 IN I NCOME TAX APPEAL NO.200 OF 2013, DATED 19 TH JANUARY 2015, THE HON'BLE JURISDICTIONAL HIGH COURT EXPRESSED ITS DISPLEASURE WITH THE APPROACH OF THE DEPARTMENT IN REPEATEDLY FILING APPEALS WHEN THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE NOT ONLY BY THE TRIBUNAL, BUT BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE PRECEDING ASSESSMENT YEARS. IT HAS ALSO BEEN BROUGHT TO OUR NOTICE BY THE LEARNED SR. COUNSEL FOR THE AS SESSEE THAT THE SLP FILED BY THE DEPARTMENT AGAINST THE DECISION OF THE HONBLE HIGH COURT IN THE 16 OTTERS CLUB ASSESSMENT YEAR 2004 05 IN THE MEANTIME HAS BEEN DISMISSED DUE TO LOW TAX EFFECT. 13 . THUS, FROM THE AFORESAID FACTS, IT IS EVIDENT THAT ALL ALONG TILL THE ASSES SMENT YEAR 2008 09, ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT HAS BEEN ALLOWED NOT ONLY BY THE TRIBUNAL BUT BY THE HON'BLE JURISDICTIONAL HIGH COURT , THEREBY , ACKNOWLEDGING THAT THE ASSESSEE IS A CHARITABLE INSTITUTION HAVING CHARITABLE OBJ ECTS AND ALSO IS CARRYING ON CHARITABLE ACTIVITIES IN ACCORDANCE WITH ITS OBJECT. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT THE OBJECTS ON THE BASIS OF WHICH THE ASSESSEE TRUST WAS CREATED REMAINED UNCHANGED EVEN IN THE IMPUGNED ASSESSMENT YEAR. EVEN , T HE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE IN SIMILAR LINES AND THERE IS NO MAJOR CHANGE IN THE ACTIVITIES OF THE ASSESSEE. THE DEPARTMENTAL AUTHORITIES HAVE REJECTED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, BROADLY ON THE REASONING THA T THE ASSESSEE IS A MUTUAL CONCERN PROVIDING SERVICES/FACILITIES EXCLUSIVELY TO ITS MEMBERS. FURTHER, IT IS CARRYING ON COMMERCIAL ACTIVITIES BY LETTING OUT R OOMS, SELLING LIQUOR, FOOD STUFF, ETC. T HE CLUB PREMISES ARE NOT OPEN TO GENERAL PUBLIC AND IT CHA RGES HUGE MEMBERSHIP FEES FOR ADMITTING DIFFERENT CATEGORIES OF MEMBERS. THUS, IT HAS BEEN CONCLUDED BY THE DEPARTMENTAL AUTHORITIES THAT WITH THE INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT, ACTIVITIES CARRIED ON BY THE ASSESSEE ARE OF COMMERCIAL/ BUSINESS NATURE, HENCE, IT CANNOT BE CONSIDERED TO BE FOR CHARITABLE PURPOSE. AS DISCUSSED 17 OTTERS CLUB EARLIER, TILL THE ASSESSMENT YEAR 2008 09 ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT HAS BEEN ACCEPTED BY THE TRIBUNAL AND IN SOME OTHER ASSESSMENT YE AR S , THE HON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED THE VIEW EXPRESSED BY THE TRIBUNAL. 14 . AT THE COST OF REPETITION, IT NEEDS TO BE REITERATED , THE OBJECTS AND ACTIVITIES CARRIED ON BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR REMAINED UN CHANGED . THE ONLY DISTINGUISHING FEATURE IN THE IMPUGNED ASSESSMENT YEAR WHICH NEEDS EXAMINATION IS , THE APPLICABILITY OF PROVISO TO SECTION 2(15) OF THE ACT . 15 . AS COULD BE SEEN FROM THE LANGUAGE OF THE AFORESAID PROVISO, IT APPLIES ONLY TO THE 4 TH CATEGORY OF ACTIVITY COMING WITHIN THE EXPRESSION C HARITABLE PURPOSE VIZ. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE PROVISO SAYS , THE OBJECT OF GENERAL PUBLIC UTILITY CANNOT BE CONSIDERED TO BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON OF ALL/ANY ACTIVITY IN THE NATURE OF TR ADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICES IN RELATION TO ANY TRADE, COMMER CE OR BUSINESS FOR A CESS OR FEE OR ANY CONSIDERATION. BEFORE WE EXAMINE THE IMPLICATION OF PROVISO TO SECTION 2(15) OF THE ACT QUA ASSESSEES CLAIM OF EXEMPTION, IT IS NECESSARY TO DEAL WITH THE ALLEGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE FACILITI ES OF THE ASSESSEE ARE NOT EASILY ACCESSIBLE TO GENERAL PUBLIC. IN OUR VIEW, THE AFORESAID OBSERVATION OF THE DEPARTMENTAL AUTHORITIES IS CONTRARY TO 18 OTTERS CLUB THE FACTS BROUGHT ON RECORD. FROM THE MATERIALS PLACED BEFORE US, WE FIND THAT THE ASSESSEE PROVIDES ITS S WIMMING POOLS/ SPORTING FACILITIES FOR TRAINING AND LEARNING OF STUDENTS OF DIFFERENT SCHOOLS, COLLEGES AND INSTITUTIONS AND FOR THAT PURPOSE NOT ONLY IT HOLD S CAMPS REGULARLY, BUT HOLDS VARIOUS COMPETITIONS EVEN INVOLVING VARIOUS SCHOOLS . I T ALSO PROVIDES SWIMMING COACHING TO KIDS INCLUDING MENTALLY CHALLENGED KIDS FOR PREPARING THEM FOR PARTICIPAT ING IN SPECIAL OLYMPICS AND EVENTS. FOR THIS PURPOSE, THE ASSESSEE HAS CREATED INTERNATIONAL STANDARD INFRASTRUCTURE WHICH HAS RESULTED IN CREATING CHAMPION SWIMM ERS WHO HAVE PARTICIPATED IN S TATE AND N ATIONAL LEVEL AS WELL AS INTERNATIONAL EVENTS AND WON MEDALS AND AWARDS. FROM THE MATERIAL PLACED BEFORE US, IT IS TO BE NOTED THAT BETWEEN THE PERIOD 1976 TO 2016, SWIMMERS TRAINED IN THE FACILITIES PROVIDED BY THE ASSESSEE HAVE WON THE FOLLOWING MEDALS. APPROXIMATE TALLY OF MEDALS 1976 2016 : GOLD SILVER BRONZE INTERNATIONAL 14 9 10 NATIONAL OPEN, JR. SUB JR. 432 341 248 STATE LEVEL OPEN, JR. SUB JR. 945 503 402 16 . THE FACT THAT THE ASSESSEE IS PROVIDING ITS INFRASTRUCTURE AND TRAINING FACILITIES TO TRAIN AND GROOM SWIMMERS FOR COMPETING AT STATE, NATIONAL AND INTERNATIONAL LEVEL IS EVIDENT FROM THE F ACT THAT CHAMPION 19 OTTERS CLUB SWIMMER S LIKE A NITA SOOD, BIJOY JAIN, REZA SHIRAZI, GAURAV KAPOOR, PALLAVI SHETTY, KAVITA SOOD, MILIN D SOMAN , AMONGST OTHERS HAVE EXCELLED AT DIFFERENT LEVELS OF SWIMMING COMPETITIONS. SIMILARLY, A NUMBER OF WORLD CLASS PLAYERS IN BILLIARDS AND SQUASH HAVE COME UP USING THE INFRASTRUCTURE AND TRAIN ING FACILITIES OF THE ASSESSEE. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE SERVICES AND FACILITIES OF THE ASSESSEE ARE NOT ACCESSIBLE TO THE GENERAL PUBLIC. ON THE CONTRARY, THE FACTS ON RECORD PROVE THAT THE ASSESSEE HAD BEEN CARRYING ON ITS ACTIV ITIES FULLY IN CONFORMITY WITH THE OBJECTS FOR WHICH IT WAS CREATED. HAVING SAID SO, IT IS NOW NECESSARY TO DEAL WITH THE APPLICABILITY OF THE PROVISO TO SECTION 2(15) OF THE ACT T O THE ASSESSEE. UNDISPUTEDLY, REFERRING TO THE AFORESAID PROVISO, THE DEPART MENTAL AUTHORITIES HA VE HELD THAT ASSESSEES ACTIVITIES OF SELLING LIQUOR, FOOD STUFF, LETTING OUT ROOMS FOR FEES AMOUNTS TO COMMERCIAL ACTIVITIES NOT ONLY AS PER THE AFORESAID PROVISION, BUT ALSO UNDER SECTION 11(4A) OF THE ACT. THE PROVISO TO SECTION 2(1 5) OF THE ACT WHICH WAS BROUGHT TO THE STATUTE BY FINANCE ACT, 2010, WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2009, CAME UP FOR JUDICIAL SCRUTINY TIME AND AGAIN. THE COURTS WHILE INTERPRETING THE SAID PROVISION HAVE HELD WHILE APPLYING THE PROVISO TO SECTI ON 2(15), THE PREDOMINANT OBJECT OF THE ASSESSEE HAS TO BE SEEN. IF THE PREDOMINANT OBJECT OF THE ASSESSEE IS OF GENERAL PUBLIC UTILITY AND WHILE CARRYING OUT SUCH OBJECT INCIDENTALLY ACTIVITY IN THE NATURE OF TRADE , COMMERCE OR BUSINESS IS CARRIED OUT GEN ERATING SOME INCOME, 20 OTTERS CLUB THE SAME WOULD NOT MAKE THE ACTIVITY OF THE ASSESSEE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THIS VIEW HAS BEEN EXPRESSED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN SHREE NASHIK PANCHAVATI PANJRAPOLE (SUPRA). THE HONBLE DELHI H IGH COURT IN INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (SUP R A) WHILE INTERPRETING THE PROVISO TO SECTION 2(15) OF THE ACT HELD THAT THE PURPORT OF THE PROVISO TO SECTION 2(15) OF THE ACT IS NOT TO EXCLUDE ENTITIES WHICH ARE ESSENTIAL LY FOR CHARITABLE PUR POSE, BUT ARE CONDUCTING SOME ACTIVITIES FOR A CONSIDERATION OR FEE. BUT TO EXCLUDE ORGANISATIONS WHICH ARE CARRYING ON REGULAR BUSINESS AND COMMERCIAL ACTIVITIES IN ORGANIZED MANNER IN THE GARB OF OBJECT OF GENERAL PUBLIC UTILITY. T HE SAME VIEW WAS EXPRES SED BY THE HONBLE DELHI HIGH COURT IN GS 1 INDIA (SUPRA). EVEN , THE OTHER DECISIONS CITED BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE ALSO EXPRESS SIMILAR VIEW. THEREFORE, WHEN THE ASSESSEE TILL ASSESSMENT YEAR 2008 09 HAS BEEN RECOGNIZED AS A CHARITABLE INSTITUTION WITH CHARITABLE OBJECTS AND ITS CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT WAS ALLOWED CONSISTENTLY , EVEN , BY THE HON'BLE JURISDICT IONAL HIGH COURT , MERELY DUE TO INTRODUCTION OF THE PROVIS O TO SECTION 2(15) OF THE ACT, ASSESSEE CANNOT LOSE ITS NATURE AND CHARACTER OF CHARITABLE INSTITUTION OVERNIGHT. EVEN , AFTER INTRODUCTION OF PROVIS O TO SECTION 2(15) OF THE ACT, IT IS NECESSARY TO EXAMINE WHAT IS THE PREDOMINANT OBJECT OF THE ASSESSEE. ON A PERUSAL OF THE FACTS AND MATERIAL ON RECORD, THERE CANNOT BE ANY DOUBT THAT PREDOMINANT OBJECT 21 OTTERS CLUB OF THE ASSESSEE IS THE OBJECT OF GENERAL PUBLIC UTILIT Y AND THE ACTIVITIES CARRIED ON BY THE ASSESSE E ARE ALSO FOR ACHIEV ING THAT OBJECT. THE INCOME GENERATED BY THE ASSESSEE FROM SALE OF LIQUOR , FOOD STUFF AND ROOM RENT ARE ONLY INCIDENTAL TO THE PREDOMINANT OBJECT OF GENERAL PUBLIC UTILITY. THAT BEING THE CASE, IN OUR VIEW, THE ASSESSEE SATISFIES THE C ONDITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT . M ORE SO , WHEN THE VERY SAME ACTIVITIES CARRIED ON BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEARS HAVE BEEN FOUND TO BE CHARITABLE IN NATURE, HENCE, ASSESSEES CLAIM OF EXEMPTION UNDER SECTIO N 11 OF THE ACT WAS ALLOWED. SINCE , THERE IS NO MATERIAL CHANGE IN THE ACTIVITY OF THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR , MERELY DUE TO INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT, ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT CA NNOT BE DENIED. AS REGARDS THE OBSERVATIONS OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE IS A MUTUAL CONCERN PROVIDING FACILITIES/SERVICES TO ITS MEMBERS ONLY, WE DO NOT FIND IT ACCEPTABLE. AS PER THE DISCUSSIONS IN THE FORGOING PARAGRAPHS, IT IS ESTA BLISHED THAT THE ASSESSEE PROVIDES ITS INFRAS TRUCTURE AND FACILITIES TO A LARGE SECTION OF PUBLIC AND MANY OF THEM HAVE BENEFITED BY UTILIZING THE FACULTIES AND TRAINING PROVIDED BY THE ASSESSEE. EVEN , IN CASE OF VARIOUS OTHER CLUBS THE TRIBUNAL HAS HELD T HAT THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT IS ALLOWABLE. THE FACTS OF ASSESSEES CASE IS MORE OR LESS IDENTICAL TO THE FACTS OF THE OTHER CLUBS IN RESPECT OF WHOM THE TRIBUNAL HAS RENDERED 22 OTTERS CLUB DECISIONS ALLOWING CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. IN VARIOUS DECISIONS CITED BEFORE US, THE TRIBUNAL HAS ALSO HELD THAT INCOME DERIVED FROM SALE OF LIQUOR, FOOD STUFF, ETC., CANNOT BE CONSIDERED TO BE A COMMERCIAL ACTIVITY WITHOUT CONSIDERING THE PREDOMINANT OBJECT OF THE ASSESSEE. IT IS NOT T HE CASE OF THE DEPARTMENT THAT THE ASSESSEE IS CARRYING ON ANY BUSINESS OR COMMERCIAL ACTIVITY IN ORGANIZED MANNER. RATHER THE SALE OF LIQUOR, FOOD STUFF, LETTING OF ROOMS, ETC., IS INCIDENTAL TO ITS MAIN ACTIVITY OF CONSTRUCTING , MAINTAINING AND PROVIDING FACILITIES OF SWIMMING POOL AND OTHER SPORTS TO GENERAL PUBLIC AT LARGE. IN FACT, IN CASE OF CHE MBUR GYMKHANA (SUPRA), THE HON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED THE DECISION OF THE TRIBUNAL THAT THE ASSESSEE FULFILLS THE CONDITION OF SECTION 2(15 ) OF THE ACT IN SPITE OF THE FACT THAT IT PROVIDED FOR SALE OF ALCOHOL IN ITS RESTAURANTS WHICH , ACCORDING TO THE TRIBUNAL , IS AN ACTIVITY INCIDENTAL TO OTHER MAIN ACTIVITY. EVEN , THE OBSERVATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS HIT BY SECTION 11(4A) OF THE ACT, IS UNACCEPTABLE, AS IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR S 1985 86 AND 1991 92. THUS, ON OVERALL CONSIDERATI ON OF THE FACTS AND MATERIAL ON RECORD AND APPLYING THE RATIO LAID DOWN IN THE DECISIONS RELIED UPON , INCLUDING THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE HAVE NO HESITATION IN HOLDING THAT THE ASSESSEE IS CARRYING OUT OBJECTS OF GENERAL PUBL IC UTILITY, HENCE, FULFILS THE CONDITION OF CHARITABLE PURPOSE UNDER SECTION 23 OTTERS CLUB 2(15) OF THE ACT. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT. IT IS WORTH MENTIONING, AFTER INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT, THE DIT(E) CANCELLED THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT BY HOLDING THAT AS PER THE SAID PROVISO, THE ASSESSEE IS ENGAGED IN COMMERCIAL ACTIVITY. HOWEVER, THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL IN ITA NO.2658/MUM./2012, DATED 15 TH JUNE 2018, REVERSED THE DECISION OF THE DIT(E) AND RESTORED THE REGISTRATION GRANTED TO THE ASSESSEE BY HOLDING THAT SINCE THERE IS NO CHANGE IN THE ACTIVITY OF THE ASSESSEE FROM THE PAST ASSESSMENT YEARS , REGISTRATION CANNOT BE CANCELLED MERELY BECAUSE O F PROVISO TO SECTION 2(15) OF THE ACT. THUS, ON OVERALL CONSIDERATION OF FACTS AND MATERIAL ON RECORD AND KEEPING IN VIEW THE RATIO LAID DOWN IN THE DECISIONS CITED BEFORE US , INCLUDING THE DECISIONS OF THE TRIBUNAL AND THE HON'BLE JURISDICTIONAL HIGH COUR T IN ASSESSEES OWN CASE IN THE PAST ASSESSMENT YEARS, WE HOLD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF INCOME GENERATED FROM ALL OTHER ACTIVITIES EXCEPT THE INCOME FROM PLAYING CARDS FOR STAKES . AS REGARDS THE I NCOME GENERATED FROM PLAYING CARDS, IT IS THE CONTENTION OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE BEFORE US THAT THE ASSESSEE DOES NOT PROVIDE FACILITIES FOR PLAYING CARD FOR STAKES BUT IT HOLDS BRIDGE TOURNAMENTS. THE AFORESAID CLAIM OF THE ASSESSEE HA S TO BE VERIFIED BY THE ASSESSING OFFICER AND THE NATURE OF INCOME DERIVED FROM PLAYING CARDS AND ITS ENTITLEMENT TO EXEMPTION 24 OTTERS CLUB UNDER SECTION 11 OF THE ACT CAN BE DECIDED AFTER FACTUALLY EXAMINING ASSESSEES CLAIM . NEEDLESS TO SAY , THE ASSESSING OFFICER SHA LL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE . 17 . IN THE RESULT, APPEAL IS PARTLY ALLOWED IN TERMS INDICATED ABOVE. 18 . AS REGARDS OTHER APPEALS UNDER CONSIDERATION , THE FACTS BEING IDENTICA L, OUR DECISION IN PARA 11 TO 16 WOULD APPLY MUTATIS MUTANDIS TO THE M . 19 . IN THE RESULT, APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 07.08.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 07.08.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI