DEPUTY COMMISSIONER OF INCOME-TAX, (EXEMPTION) CIRCLE,, PUNE vs. PYC HINDU GYMKHANA,, PUNE

The relevant facts as culled out from the material on record are as under :-

The grounds raised by the assessee in ITA No. 1421/PUN/2017 reads as under : “On facts and in law, 1] The learned CIT(A) erred in confirming the denial of exemption u/s. 11 to the assessee trust on the ground that the trust was carrying commercial activities and hence, the case of the assessee was clearly covered by the first proviso to Section 2(15). 2] The learned CIT(A) erred in not appreciating that the main object of the assessee trust was to promote sports which constituted an educational activity and therefore, the first proviso to Section 2(15) was not applicable to the assessee's case and hence, the exemption u/s.11 should have been allowed to the assessee trust. 3] The learned CIT(A) erred in holding that the exemption u/s.11 is not allowable to the assessee trust on the ground that the assessee trust was carrying out commercial activities in the form of running a restaurant, leasing conference hall etc. and charging hefty fees or the same and therefore, the exemption u/s.11 could not be allowed to the assessee. 4] The learned CIT(A) failed to appreciate that the assessee trust had not carried out any commercial activities and hence, the first proviso to Section 2(15) was not applicable to the assessee's case and thereby, the exemption u/s. 11 should have been allowed. 5] The learned CIT(A) ought to have appreciated that— a. The various activities carried out by the assessee trust by charging fees were in order to achieve the objects of the trust and therefore, there was no reason to deny the exemption u/s. 11. b. The assessee had not carried out any activities in the nature of trade, commerce or business and the fees were charged to meet the administrative and other expenses required for providing the various facilities and therefore, the first proviso to Section 2(15) was not applicable to the facts of the assessee’s case. 6 The learned CIT(A) erred in not appreciating that the assessee was entitled to exemption u/s 11 and was entitled to claim deduction in respect of Capital expenditure of Rs.1,64,73,141/- as well as Rs.54,38,810/- (being 15% of Rs.3,62,58,733/-). 7] The CIT(A) erred in not granting deduction for payment of interest on service tax /VAT/ESIC of Rs.70,493/- while assessing Total Income of the Appellant Trust. 8] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

Before me, at the outset, Ld. A.R. submitted that the identical issue arose before the Tribunal in assessee’s own case in earlier assessment years and the Tribunal had remanded the issue of “profit motive”, surplus funds and related issue of exempt nature of profits for examination by the Assessing Officer in view of the “principle of mutuality” with necessary directions contained herein. In support of the contentions that the grounds raised in the earlier assessment years are similar to the year under consideration he pointed to the grounds raised by the assessee in assessment year 2011-12 and the grounds raised by the assessee in assessment year 2010-11 which are reproduced in the Tribunal’s order. He further submitted that assessee has also raised ground No. 7 which is with respect to non-

I have heard the rival submissions and perused the material on record. I find that the issues in assessment year under appeal are similar to the earlier assessment years. In earlier years i.e. assessment years 2009-10, 2010-11 and for assessment year 2012- 13, the Co-ordinate Bench has remanded the issue to the file of Assessing Officer for examination as per the directions contained herein. Before me, ld. AR has requested that ground No. 7 be also remitted to Assessing Officer. Considering the aforesaid facts, I deem it proper to remand the issues raised by the assessee in the present appeal to the file of Assessing Officer for fresh adjudication with similar directions as in earlier years. Needless to state that the Assessing Officer shall afford reasonable opportunity of hearing to the assessee. Thus, grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal of assessee is allowed for statistical purposes.

It is brought to my notice that the grounds raised in this appeal relating to principle of mutuality involving entrance fees and membership fees are identical to the additional grounds raised by assessee in assessment year 2010-11. In the aforementioned paras, I have decided to remand additional grounds raised by the assessee to

In the result, the appeal of Revenue is allowed for statistical purpose.

To sum up, the appeals of assessee and Revenue are allowed for statistical purpose.