CONFEDERATION OF INDIAN TEXTILE INDUSTRY,MUMBAI vs. THE INCOME TAX OFFICER (EXEMPTION)-1(2), MUMBAI

& 2243/Mum/2023 AYs. 2015-16 & 2016-17 Confederation of Indian Textile Industry 2. In both the appeals common grounds raised are; firstly, the Ld. NFAC has erred in deciding the appeal of the assessee ex-parte without adjudicating the issues on its merits; secondly, non- granting of exemption u/s. 11 of the Act); and lastly, not relying the decision of earlier years including the current years to be carried forward for set-off in subsequent years. Apart from that in A.Y. 2016-17 assessee has taken ground for relief of TDS amounting to Rs. 1,496/-.

Brief facts are that the assessee is registered u/s 12A of the Act looking to its charitable objects and its income and expenditure account was subject to computation and exemption u/s 11 of the Act. The assessee is confederation of Indian Textile Industry registered u/s 25 of the companies Act. Objects of the trust have been incorporated and the assessment order. The Ld. AO observed that, as per the memorandum of association assessee’s nature of activity is limit to its member only and working on ‘mutuality’ concept. However, he noted that income from non members be treated as business income and also after referring to CBDT circular no. 11/2008 dated 19/12/2008 and held that the assessee is a mutual association and not a charitable entity. Accordingly, he held that and entire receipt received from non members is actually business income and denied exemption u/s. 11. & 2243/Mum/2023 AYs. 2015-16 & 2016-17 Confederation of Indian Textile Industry 4. The Ld. CIT (A) has dismissed the appeal of ex-parte on the ground that notices send to the assessee was not complied with and without adjudicating on merits has confirmed the addition.

Before us the Ld. Counsel brought on record that in AY 2013- 14, this Tribunal by order dated 17/07/2020 in has allowed the exemption u/s 11 on exactly similarly set of facts. However, Ld. DR submitted that the matter should be restored back to the file of the first appellate authority for deciding the issues on merits.

We have considered the material on records and find that Ld. NFAC/CIT(A) has decided the ex-parte without adjudicating on merits and accordingly, without even considering the judgment of Tribunal in assessee’s own case on similarly set of facts. Accordingly, we restore both the appeals to the file of Ld. CIT (A)/NFAC to decide the issue on merits after considering the decision of the Tribunal and assessee’s own case and grant consequential relief.

In the result, both the appeals of the assessee are allowed for the statistical purpose.