ACIT (EXEMPTION), CIRCLE-2(1), NEW DELHI vs. PHD CHAMBER OF COMMERCE & INDUSTRY, NEW DELHI

(Appellant) (Respondent) Assessee by : Shri Mukul Bagla, CA Revenue by : Shri Saras Kumar, Sr. DR Date of Hearing : 06.07.2020 Date of Pronouncement : 21.07.2020 ORDER

PER R.K. PANDA, AM:

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 government. As per Income & Expenditure account the assessee had shown total receipts of Rs.21,67,04,511. From the details furnished by the assessee, he noted that the income includes income from members and non-members as well.

1. 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 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 its 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 3 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.”

“7. The only issue 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 that 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 & 369/2012. Again for 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.”

“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 order 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 duly 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, contrary 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 Revenue-Department stands dismissed.”

We find, the Tribunal, vide order dated 6th 8. 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:-

“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 assessee 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 observed 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, which 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.”