ITO (EXEMPTION) WARD, SURAT vs. GUJARAT HIRA BOURSE, SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 189 & 190/SRT/2020 (AYs 2014-15& 2017-18) (Hearing in Physical Court) Income Tax Officer Gujarat Hira Bourse, (Exemptions), Ward, Gem and Jewellery Park, Vs Room No. 105, 1st Floor, 2nd Floor, Administrative Anavil Business Centre, Nr. Building, Nr. GIDC Water BRTS Bus Stop, Tank ONGC, Hazira Road, Adajan, Surat Ichchhapore, Surat-394 510 PAN : AACCG 0717 B Appellant / Revenue Respondent / assessee

Assessee by Shri Nitin Gheewala, CA Revenue by Shri H.P. Meena, CIT-DR Date of hearing 31.12.2021 Date of pronouncement 31.12.2021 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by Revenueare directed against the common order of ld. Commissioner of Income tax (Appeals)-3, Surat [‘CIT(A)’ for short] all dated 30.03.2020, for the assessment years (AYs) 2014-15& 2017-18 respectively. In both the appeal, the Revenue has raised identical grounds of appeal, except variation of withdrawal of exemption under section 11 & 12 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), therefore, both the appeals are clubbed together, heard and are decided by consolidated order. For appreciation of facts, the grounds of appeal raised by the Revenue for AY

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse 2014-15 in appeal No. 189/SRT/2020 following grounds treated as ‘lead’ appeal:- “1. Whether on the facts and circumstances of the case and in law, is the ld. CIT(A) justified in not appreciating that the activities of the assessee are covered by proviso to section 2(15) of the Income-tax Act, 1961 and, thus, the assessee is not entitled to exemption under sections 11 and 12 of the Act in view of the provisions of the section 13(8) of the Act.

2.Whether the Ld. CIT(Appeals) has erred in law and on facts and in the circumstances of the case in allowing the claim of capital expenditure of Rs.1,93,18,564/- when the assessee is clearly covered under the proviso to section 2(15) r.w.s. 13(8) of the Act and thereby not eligible for claim of exemptions. 3. Whether, the Ld. CIT(Appeals) has erred in the law and on facts and in the circumstances of the case in allowing the claim of accumulation of Rs.41,74,368/- u/s 11(1)(a) when the assessee is clearly covered under the proviso to section 2(15) rws 13(8) of the Act and thereby not eligible for claim of exemptions” 2. At the outset of hearing Ld. Authorized Representative (AR) for the assessee submits that grounds of appeal raised by Revenue in both the years are squarely covered by the decision of the Co-ordinate bench of this Tribunal, in assessee’s own cases for AYs, 2010-11, 2012-13 & 2013-14 in ITA No. 2917/AHD/2014, 1967/AHD/2016 and ITA No.897/AHD/2017 respectively dated 22.06.2021. The Ld. AR of the assessee further submits that Ld. CIT(A) while allowing the relief to the assessee followed earlier years order as referred above. There is no variation in the facts for the year under consideration. 3. On the other hand, Ld. Commissioner of income-tax Departmental Representative (CIT-DR) for the Revenue have gone through the order of Assessing Officer, Ld. CIT(A) and the order of this Tribunal submits that he 2

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse fully supports the order of Assessing Officer and prayed for reversing the order of Ld. CIT(A) and to restore the order of Assessing Officer. 4. We have heard the submissions of ld CIT-DR for the Revenue and the learned authorized representative (AR) for the assessee and have gone through the order of authorities below as well as order of this Tribunal. We find that the Assessing Officer while passing the assessment order disallowed the claim of Rs.1.93 crores as capital expenditure and accumulation of Rs.41.74 lakh by taking view that the main objective of the assessee was the development of Gem and Jewellery Parks, which has not been completed in a decade’s time. Further the assessee failed to focus on advancement, protection and development of trade and commerce and industry. The Assessing Officer invoked the provision of section 13(a) r.w.s.2 (15) and denied exemption under section 11 and 12. On appeal before Ld. CIT(A), the assessee was allowed relief by following his predecessors’ decision in earlier years in AY 2010-11, 2012-13 & 2013-14 respectively. We find that against the of Ld. CIT(A) in AYs 2010-11, 2012-13 and 2013-14 on similar set of fact, the revenue filed appeal before Tribunal, wherein the order of ld CIT(A) was upheld and the appeals of Revenue were dismissed by this combination while passing the following order:- “15.We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee with the able assistance of Shri Tushar Himarni,(Senior advocate), representing the assessee and Shri Ritesh Mishra, Learned CIT(DR),representing the Revenue. 3

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse We find that one key issue arises for our apt adjudication in the instant lis, which is, whether the assessee trust ( A section 25 company, as per old Companies Act, 1956), is charitable institution or not. We note that in the instant case the assessment order u/s 143(3) was passed on 28.03.2013 determining total income at Rs.3,54,82,267/- by making following additions: (i) Amount applied to Charitable Purpose treated as business income Rs. 30,81,12,572/- and

(ii) Withdrawal of exemption claimed under section 11 and 12 of income from other sources to the tune of Rs. 1,31,94,745/-. Regarding (ii) addition, that is, withdrawal of exemption claimed under section 11 and 12 of income from other sources to the tune of Rs. 1,31,94,745/- is concerned, Shri Tushar Himarni, Sr. Advocate, invited our attention to page No. 16 of assessee`s paper book wherein “Income and Expenditure Account” of the assessee is placed. Total income of the assessee trust is Rs.2,22,87,522/- and total expenditure is at Rs.90,92,777/. Thus, resulted surplus is at Rs. 1,31,94,744/- (Rs.2,22,87,522- Rs.90,92,777). Once the gross interest income is added and again gross excess income over expenses ( Rs. 2,22,87,522 – Rs.90,92,772), Rs.1,31,94,745 is added, then it resulted in double addition/disallowance to that extent. Thus, Rs.1,31,94,745/- is double addition which is not sustainable in law. Therefore, the effective addition made by the assessing officer in assessee`s case is to the tune of Rs. 30,81,12,572/-, which is, treated as business income, by the assessing officer. 16. Now, coming to the key issue arises for our apt adjudication in the instant lis, which is, whether the assessee trust, is charitable institution or not. We note that assessee trust is a company incorporated u/s25 of the Companies Act, 1956, as non-profit making organization. The assessee is promoted by Surat Diamond Association, its other members and the Government of Gujarat for development of world class gem and Jewellery Park. The main object of the assessee is to develop the world class gem and jewellery park. The city of Surat had been traditionally the head-quarter of diamond, traded export for Gujarat. The main objects of the assessee trust are as follows: (i) To establish common facilities required to promote exports of diamonds from India and to provide for this purpose trading halls and other utilities at a central place for Indian Exporters and Overseas buyer to carry on trade and commerce in diamonds with speed and in secure conditions. 4

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse

(ii) To establish and promote effective liaison between diamond trade and industry in India and abroad with a view to promoting their sales from India in International market.

(iii) To promote, advance, protect and develop trade, commerce and industry in India relating to exports and imports of diamonds inter alia by setting up of world class gem and Jewellery Park.

(iv) To develop India as Modern and sophisticated diamond market by establishing and maintaining an international trading center in India for all those engaged as manufacturers, traders, exporters and importers, brokers/commission agents of diamonds." The setting of Gujarat Hira Bourse (GHB) has a great impact on the diamond export trade of Gujarat. By setting up of gem and Jewellery Park the India can export diamond easily and with better infrastructure facility. The Gujarat Hira Bourse (GHB-Assessee) has also set up Custom House clearing and Administrative Office through which storage and clearance of diamonds for export can be managed easily. For development of Customs House and Administrative Building and Gem and Jewellery Parks for export of diamonds, the assessee receives contribution from its members being well known gem and jewellery exporters. After development of plot as gem and jewelry park respective plots are being allotted to the respective members only. The assessee is not dealing with any outsider other than its members for the purpose of receipt of funds and utilization thereof (complete identity between contributor and participators to fund exist). The case of the Assessing officer is that in view of the First Proviso to Section 2(15), which is inserted by Finance Act, 2008, the assessee is carrying out activities in the nature of trade, commerce or business and consequently it cannot be regarded as charitable organization and therefore the exemption under sections 11 and 12 should not be allowed to the assessee. We note that the main object of the assessee trust is to develop the world class gems and jewellery park to provide common facilities required to promote exports of diamonds from India and for this purpose to establish utilities at a central place. For this purpose, contributions from the members being well known gems and jewellery exporters have been received and facilities have been provided exclusively to them. As per ld Counsel, these activities are based on principle of mutuality in view of CBDT Circular No. 11/2008 dated 19.12.2008 and the entity is not involved in carrying on any activity in the nature of 5

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse trade, commerce or business, therefore, it is not covered by the proviso to section 2(15) of the Act. 17. In this connection, the ld Counsel states that the aforesaid proviso provides for exclusion from the main object of the definition of the term "Charitable purposes" and applies only to cases of advancement of any other object of general public utility. If the conditions provided under the proviso are satisfied, any activity, even if involved in advancement of any other object of general public utility by virtue to proviso, would be excluded from the definition of "charitable purpose". However, for the application of the said proviso, what is necessary is that the entity should be involved in carrying on activities in the nature of trade, commerce or business, or any activity of rendering services in relation to any trade, commerce or business, for a cess or fee or any other consideration. In such a situation, the nature, use or application, or retention of income from such activities would not be relevant. Under the present circumstances, the important elements of application of proviso are that the entity should be involved in carrying on the activities of any trade, commerce or business or any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Such statutory amendment was explained by the Finance Minister's speech in the Parliament. Relevant portion of which reads as under: — “I once again assure the House that genuine charitable organizations will not in any way be affected. The CBDT will, following the usual practice, issue an explanatory circular containing guidelines for determining whether any entity is carrying on 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. Whether the purpose is a charitable purpose will depend on the totality of the facts of the case. Ordinarily, Chambers of Commerce and similar organizations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as "advancement of any other object of general public utility". The ld Counsel states that in consonance with such assurance given by the Hon'ble Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated 19th December 2008 explaining the amendment, which are reproduced below: "3. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is ‘advancement of any other object of general public utility' ie., the fourth limb of the definition of ' charitable purpose' contained in section 2 (15). Hence, such entities will not be eligible for exemption under section 11 or under section 10 (23C) of the Act if they carry on commercial activities. Whether such an entity is 6

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse carrying on any activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under ‘any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2 (15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be chargeable organizations would now be governed by the additional conditions stipulated in the proviso to section 2 (15). 3.2 In the final analysis, however, whether the assessee has for its object ‘the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of ' general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is ‘charitable purpose' within the meaning of section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business." 18. We have gone through the aforesaid circular of CBDT, and note that the statutory provisions, as explained in the speech of Finance Minister and the circular, is that the activity, of a trust would be excluded from the term 'charitable purpose' only if it is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business for a cess, fee and/or any other consideration. It is not aimed at excluding the genuine charitable trusts of general public utility but is aimed "at excluding activities in the nature of trade, commerce or business which are masked as ' charitable purpose'. In this connection, Ld Counsel states that the activities of the development of gem and jewellery park for its members cannot be regarded as activity in nature of trade, commerce or business on the following grounds:

(a) The assessee is a non-profit making company incorporated under section 25 of the Companies Act, 1956 7

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse

(b) The assessee obtained registration u/s 12AA of the Income Tax Act, with regard to claiming income from property held for charitable or religious purpose, specifically under the head 'General public utility'

(c) Its object is to establish a bourse for promotion of exports of diamond, gems, pearl and jewellery from India and provide for this purpose infrastructure and other facilities in India for Indian and overseas buyers and sellers of diamonds, gems, pearls and jewellery. Within its objects the assessee has taken the activity of developing gem and Jewelry Park.

(d) In assessee's case, the facts are well covered by Finance Minister's Speech read together with para 3.1 of the Circular. It is well settled law that the speech of the Finance Minister is very much relevant to interpret the provision of law. Reliance in this case is placed on the decision of Hon'ble Supreme Court delivered in the case of K.P. Varghese v. Income-tax Officer [1981] 131 ITR 597 (SC) wherein Apex Court inter alia observed as under:-

“…….the speech made by the mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is an accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible………”

(e) The First Proviso to Section 2(15) only applies where activities in the nature of trade, commerce or business are carried out with profit motive and in the present case there is no such profit motive as the assessee is incorporated as non- profit organization under section 25 of the Companies Act, 1956. 19. In support of the above contentions, the ld Counsel relies on the decision of Hon'ble Supreme Court, delivered in the case of DIT vs. Bharat Diamond Bourse (2003) 259 ITR 280 (SC). In that case the Diamond Bourse was registered as a Company limited by guarantee. The primary objects of the Bourse were to establish common facilities required to promote exports of diamonds, promote effective liaison between the diamond trade industries in India and abroad, promote, advance, protect and develop trade, commerce and industry in India relating to export and import of diamonds and to develop India as modern and sophisticated diamond market. It was held by the Hon'ble Apex Court that the assessee was an 8

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse institution established for charitable purpose and its objects were for the advancement of other objects of general public utility within the meaning of section 2(15) of the I.T. Act. The reference is also invited to the decision of Mumbai I.T.A.T. in the case of Bharat Diamond Bourse Vs. Income-Tax Officer [1999] 105 Taxman 344 (Mumbai)(MAG.) wherein I.T.A.T. inter alia, observed as under : “…….. With regard to the department's argument that the assessee-trust had been formed for the purpose of earning profits, the Memorandum of Association as well as Articles of Association clearly showed that the subscribers were desirous of being formed into a company not for profit and that the income and property of the company shall be applied solely for the promotion of its objects set forth in the Memorandum. Further, on working out the deficits for the years 1986-87 to 1997-98, by deducting from the income of the trust the expenditure incurred for the purposes of the trust and the acquisition of the fixed asset, it was found that consistent earning of profits had been only with a view to applying the same for charitable objects. Thus, relying on the observations made by the Supreme Court in Surat Art Silk Cloth Mfrs. Association's case (supra) that a charitable trust would not lose its character of charitable purpose if the predominant object of the activity is to carry out the charitable purpose and not to earn profits and if some profit arises from the activity, it would be difficult to hold that all pervading motive of the activities carried on by the assessee-trust was the making of the profit.” We note that facts of the aforesaid case of Bharat Diamond Bourse(supra), were similar to that of the assessee and insertion of First Proviso to Section 2(15) does not alter the legal position already settled by Hon'ble Apex Court, because the said Proviso only applicable to the case where the activities of trade, commerce or business are carried out under the guise of 'charity' as envisaged in para 3.1 of Circular of CBDT (No.11/2008). The contention of the ld Counsel that it is not carrying out any trade, commerce or business with profit motive is further supported by the fact that it is incorporated under section 25 of the Companies Act, 1956, as non-profit making organization which prohibits distribution of profits in the form of dividend. 20. On similar and identical issues, the Coordinate Bench of ITAT Chennai delivered decision in the case of Ambur Economic Development Organization Ltd. Vs. DIT ITA No.l88/Mds/2012, dated 28th March, 2012. The said decision is delivered after the amendment made by Finance Act, 2008 in Section 2(15) of the Act. While delivering the said decision, the Coordinate Bench has considered First Proviso to Section 2(15) of the Act and Circular of the CBDT No. 11/2008. The findings of the Coordinate Bench are as follows: “We have heard the parties and have gone through the impugned order. Board's circular no. 11 of 2008 dated 19.12.2008 clarifies exemption under section 11 in case of assessee claiming both to be charitable institution as well as mutual organization. The relevant extract of the circular is reproduced herein below:- “……. 1. Section 2(15) of the Income-tax Act, 1961 ('Act') defines "charitable purpose" to include the fallowing: — 9

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse

(i) Relief of the poor (ii) Education (iii) Medical relief, and (iv) The advancement of any other object of general public utility. An entity with a charitable object of the above nature was eligible for exemption from tax under section 11 or alternatively under section 10(23C) of the Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility in terms of the fourth limb of the definition of ‘charitable purpose'. Therefore, section 2(15) was amended vide Finance Act, 2008 by adding a proviso which states that the ‘advancement of any other object of general public utility' shall not be a charitable purpose if it involves the carrying on of— (a) Any activity in the nature of trade, commerce or business; or (b) Any activity of rendering 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, or retention of the income from such activity 3. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility' i.e., the fourth limb of the definition of ‘charitable purpose' contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations _ and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2(15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be charitable organizations would now be governed by the additional conditions stipulated in the proviso to section 2(15). 3.2 In the final analysis, however, whether the assessee has for its object 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is 10

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is 1charitable purpose' within the meaning of section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business." 21.We note that facts of the assessee's case are similar to that of Ambur Economic Development Organization Ltd(supra) and, therefore, ratio decidendi of that case can be applied in the present case. The assessee is also carrying out the activity of development of infrastructure for world class gem and Jewellery Park for its members. The assessee is also incorporated as non-profit making company u/s25 of the Companies Act, 1956 and does not allow distributing either any part of its profits to members. The said fact is given at Note No. 7 of Schedule K, "Significant Accounting Policies" to Audited Annual Accounts for the year under consideration. 22. Reliance is also placed on the decision of Coordinate Bench of Chandigarh in the case of Himachal Pradesh Environment Vs. CIT (I.T.A.T. Chandigarh), ITA No. 74/ Chd/ 2009 wherein it is inter alia held that the proviso to section 2(15) can apply only to entities whose purpose is "advancement of any other object of general public utility". It is also observed that profit motive is the essence of trade, commerce or business, and where the services are rendered without a profit motive, such services will not have anything in common with trade, business or commerce. Accordingly, to fall within the second limb of the Proviso to section 2(15), 'rendering of service to trade, commerce or business' must be such that it has a profit motive.

23.On similar and identical facts the reliance can be placed on the decision of Hon'ble Gujarat High Court, in the case of DIT vs. Sabarmati Gaushala Aashram Trust [2014] 362 ITR 539, wherein at para no. 9 of the judgment Hon'ble High Court observed that many activities of genuine charitable purposes which are not in the nature of trade, commerce or business may still generate marketable products. After setting off of the cost, for production of such marketable products from the sale consideration, the activity may leave a surplus. The law does not expect the Trust to dispose of its produce at any consideration less than the market value. If there is any surplus generated at the end of the year, that by itself would not be the sole consideration for judging whether any activity is trade, commerce or business, - particularly if generating 'surplus' is wholly incidental to the principal activities of the trust; which is otherwise for general public utility, and therefore, of charitable nature. By applying the ratio of the said decision to the assessee`s case under consideration, it can be said that whatever the surplus arises is purely incidental 11

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse and no adverse inference of carrying out trade, commerce or business should be drawn in its case. In view of the aforesaid factual and legal position, proviso to Section 2(15) of the Act, does not attract in the present case of the assessee and therefore no disallowance is called for.

"Under the IT Act, what is taxed is, the income, profits or gains earned or "arising", "accruing" to a "person". Where a number of persons combine together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to those persons cannot be regarded in any sense as profit. There must be complete identity between the contributors and the participators. If these requirements are fulfilled, it is immaterial what particular form the association takes. Trading between persons associating together in this way does not give rise to profits which are chargeable to tax. Where the trade or activity is mutual, the fact that, as regards certain activities, certain members only of the association take advantage of the facilities which it offers does not affect the mutuality of the enterprise." 25. We note that in the present case of the assessee, registration u/s12AA is granted. The assessee trust is carrying out the activities of general utility of development of infrastructure for world class gem and jewellery in Surat. Now, on insertion of First Proviso to section 2(15), the benefit of section 11 cannot be deprived as the assessee is not carrying out any trade, commerce or business and only deals with its members to attain its objects. Therefore, it cannot be considered as an entity carrying out business under the guise of charity, as referred at para 12

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse 3.2 of aforesaid CBDT Circular. Moreover, at para 3.1 of the said Circular, it is clarified that genuine industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, would not fall under the purview of the proviso to section 2 (15) of the Act, owing to the principle of mutuality. In view of the above, the assessee trust, under consideration, is carrying out only mutual activity and by no stretch of imagination can be considered as being carrying out activities in the nature of trade, commerce or business. 26. To conclude, we note that the activities of mutual organizations are to be restricted to contributions from and participation of only their members. In the case of assessee also, it can be seen from the facts discussed by assessing officer as well as assessee that the assessee organization is based on the principle of mutuality. It is clear from the facts that assessee has been allotting the plots and collecting contributions from its members only and there is complete identity between the persons who contribute the amounts to the assessee trust and beneficiaries of assessee`s activities. It is also established from the facts that assessee deals/transacts only with its members strictly for the fulfilment of its objects. The bye laws of assessee`s organization restrict the allotment of plots and receiving contributions from anyone other than members. It is also established that all the contributors as well as beneficiaries of the assessee are its members only and there is complete identity between the contributors and participants. It is further shown from the records that the assessee trust is not providing any services to the persons other than its registered members. The assessee trust does not distribute its profits among members and it does not pay higher remuneration to its employees. It is abundantly clear that the income of the mutual concern falls outside the ambit of charging section 4 of the Income Tax Act and, therefore, outside the tax net. The net effect of applicability of exemption provision in section 11 is also just the same. It was also laid down in CIT vs. Andhra Chamber of Commerce (1981) 130 ITR 184 (SC), Addl. CIT vs. Surat Art Silk Cloth Manufacturers Association 121 ITR 1 (SC) and in CIT vs. Bar Council of Maharashtra (1981) 130 ITR 28 (SC), that if the primary object of an entity like "Chamber of Commerce, professional association, a bar council, etc” is the promotion of any trade, industry, profession, etc. the fact that the business community or the profession as the case may be would be benefit therefrom, would not take away the object from the realm of object of general public utility and, therefore, they would be held established for a charitable purpose. In view of the above factual and legal position, it is quite clear that the object of the assessee is of general public utility and does not hit by first proviso to section 2(15) of the Act. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on these addition are, therefore, upheld and the grounds of appeal of the Revenue are dismissed.

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse 27. Similar issues towards “whether the assessee trust, is charitable institution or not”, have been raised by the Revenue in other captioned appeals namely, ITA No.1967/Ahd/2016 (AY 2012-13), and ITA No.897/Ahd/2017 (AY 2013-14). The facts and issues involved in all these appeals are analogous to ITA No. 2917/Ahd/2014 for AY 2010-11, wherein the grounds raised by Revenue in this appeal have been discussed in earlier paras in great length. Accordingly, our observations made in ITA No. 2917/Ahd/2014, for AY 2010-11, shall apply mutatis mutandis to the aforesaid other appeals of Revenue, namely, ITA No.1967/Ahd/2016 and ITA No.897/Ahd/2017. For the parity of reasons, we dismiss the abovementioned appeals of the Revenue in terms of directions noted in ITA No.2917/Ahd/2014 for AY 2010-11. 28. In the result, appeals filed by the Revenue (in ITA No. 2917/Ahd/2014,ITA No.1967/Ahd/2016 and ITA No.897/Ahd/2017), are dismissed.” 5. Considering the consistency view of this combination on similar set of fact and following the principle of consistency we do not find any merit in the grounds of appeal raised by Revenue. Thereby we affirm the order of ld CIT(A). Resultantly, the appeal of Revenue stands dismissed.

ITA No. 190/SRT/2020 for A.Y. 17-18 by revenue 6. As noted above, the Revenue has raised identical grounds of appeal in appeal for this year as raised in Appeal for A.Y. 204-15, except variation of withdrawal of exemption under section 11 and 12 of the Act, which have dismissed by affirming the order of Ld. CIT(A) therefore, following the principle of consistency, this appeal is also dismissed with similar direction. 7. In the result, both the appeals of Revenue are dismissed. A copy of the instant common order be placed in the respective case file(s).

ITA No.189 & 190/SRT/2020 (A.Ys.14-15 &17-18) Gujarat Hira Bourse Order pronounced in open court on 31/12/2021 at the time of hearing of appeal in the court.

Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 31/12/2021 Dkp. Out Sourcing P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Assistant Registrar, ITAT, Surat True copy/