ITO -E (2)(4), MUMBAI vs. INDO ITALIAN CHAMBER OF COMMERCE & INDUSTRY, MUMBAI

The Revenue has raised the following grounds of appeal:-

1. "Whether on the facts and in the circumstance of the case and law, the Ld.. CIT(A)- 1, Mumbai was right in allowing the appeal of the assessee by relying upon the decision of Mumbai Bench of Hon’ble ITAT, in the case of Indian Merchant Chambers in thd.29/06/2016 for A.Y. 2009- 10, without appreciating the fact that the Revenue has not accepted the said decision and has filed an appeal before the Hon'ble High Court of Bombay which is pending for adjudication." 2. 'The appellant prays that the order of the Commissioner of Income Tax (Appeals)-1, Mumbai be set aside and that of the Assessing Officer be restored. 3.”The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 3. None appeared on behalf of the assessee. We have heard rival DR and perused the materials available on record. We find that assessee is a chamber of commerce registered under 12A of the Act having main objects to promote and extend the commercial and industrial relations between Italy and India and the development of commercial exchanges between their respective industries, trades and businesses and to further the economic interest of Italy and India. The assessee is in existence with further objects to assist and facilitate new contracts between the trade, economic and industrial interest of both the countries.

To promote the study of all questions rotating to the several international enactment and conventions which concern the objects the Chamber has in view. The AO thereafter has noted that the assessee has shown loss of Rs2,59,03,329/- after debiting various expenses and that the assessee has shown receipts to the extent of Rs.11,68,54,661/- which comprised of Annual Subscription(Rs28,36,924). Compensation on account of Bilateral Promotion(Rs.8,46,60,729/-) and Miscellaneous lncome (Rs.4,53,679/-) The AO observed that the assessee has earned from organizing seminar & organizing commercial classes, exhibition and providing technical services etc. According to the AO, these activities were organized regular activities of the assessee and he accordingly asked the assessee to explain the as to why the same should not be treated as business activities u/s 2(15) of the Act. He also asked as to why the exemption u/s 11(4A) of the Act should not be denied as the conditions mentioned therein are not satisfied by the assessee. The assessee’s submission filed on 19.12.2011 has been reproduced in Para 6 of the assessment order, Thereafter, the AO has discussed the issue in detail at pars 7,8 & 9 of the assessment order wherein placing reliance on the decisions in the case of Sole Trustee, Loka Shikshana Trust vs, CIT 101 ITR 234(SC), Bihar Institute of Mining and Mine Surveying vs CIT 2008 ITR 604 and referring to the amendment made u/s 2(15) of the Act wet 01.04.2009, observed that the assessee is not an educational institution and that its activities do not fall under the definition of M/s.Indo Italian Chamber of Commerce & Industry charitable purposes. The AO further placed reliance on the decision of the Gujarat High Court in the case of Saurashtra Education Foundation vs CIT, 273 ITR 139 (Gujarat). The A0 further observed that the assessee is predominantly mutual association and has non-charitable objects and that the exemption u/s 11 as a charitable trust and principles of mutuality are mutually exclusive of each other. The AO further discussed the scheme of Sec.11 to 13 of the Act, particularly 13(1)(c) & 13(3) of the Act and finally concluded that the activities of the assessee are hit by the proviso of Sec 2(15) of the Act and he accordingly proceeded to deny the exemption claimed by the assessee u/s 11 of the Act. 6.2 The assessee in their detailed submission referred to the Memorandum & Articles of Association of the Trust, further gave details of the nature of activities and amount spent on such activities. The assessee thereafter referred to the Amendment in proviso to Sec.2(15) of the Act and to the Circular No.11/2006 dated 19.12.2008 of the CBDT and accordingly submitted that such proviso to Sec.2(15) will apply only to the entities whose purpose is of advancement of general public utility. It was accordingly submitted that their activities, aims and objects are not hit by the newly introduced by the proviso to Sec2(15) of the Act. The assessee also referred to the speech of the Finance Minister on the Finance Bill 2008 to emphasize that the genuine charitable institutions will not be affected by such amendment. They also submitted that ordinarily Chambers of Commerce and similar organization rendering similar services to their members would not be affected by the amendment. The assessee also placed reliance on the decision of Hon’ble Supreme Court in the case of KP.Varghese vs. ITO 131 ITR 597 (SC), in the case of Kerala State Industrial Development Corporation Ltd. vs.CIT 259 ITR 51 and R &B Falcon (A) Ply. Ltd. vs. CII 301 ITR 309(SC) so contend that the Finance Minister speech can be relied upon to throw light on the object and purposes of the particular provisions introduced by the Finance Bill and that if the language of section is ambiguous then for the purposes of interpretation, the speech delivered by the Hon'ble Finance Minister at the time of introduction of the Bill can be taken recourse of. The appellant also placed reliance on the decision of Hon’ble ITAT Chennai In the case of Japanese Chamber of Commerce 99 DTR 145 and decision of Hon’ble Kolkata Tribunal in the case of Indian Chamber of Commerce vs. ITO(E) 167 TTJ 0001/67 SOT 0176, The assessee further detailed the meaning of business and finally referring to their objects contended that their activities are not hit by the Proviso to Sec 2(15) of the Act It was also submitted that right from the inception from A.Y. 1985-86 to 2007-08 the exemption u/s 11 was allowed to them and that their purpose and objects remained unchanged and principles of consistency Should be followed. The assesssee also placed reliance on the decision of Hon’ble ITAT, Mumbai in the case of Indo French Chamber of Commerce vs ADIT(E)-11(1) Mumba, In and ITA No.1122/Mum/2013 for AY. 2009-10 and submitted that facts of their case are identical and their issue is squarely M/s.Indo Italian Chamber of Commerce & Industry covered by the decision of jurisdictional Tribunal. It was accordingly submitted that they are entitled for exemption u/s 11 of the Act and the same should be granted to them. 6.2.1. The assessee made their further submission dated 2507.2017, wherein it was submitted that their assessment for A.Yrs. 2010-11, 2012- 13. 2014-15 & 2016-17 were completed u/s 143(3) of the Act and the AO in all these years have accepted their claim u/s 11 of the Act. The assessee further placed reliance on the decision of Hon’ble Mumbai Tribunal in the case of Indian Merchant Chambers vs. ADIT(E)-11(1) in dated 29.062016 for A.Y. 2009-10. 6.3 I have carefully considered the facts of the case, oral contentions and written submissions of the assessee. discussion of the AO in the assessment order and material available on record. It is seen that the AO after going into the objects of the trust, its receipts, proposed to invoke proviso to Sec2(15) of the Act in the case of the assessee. As per the AO, the case of the assessee was hit by the proviso to Sec.2(15) of the Act. The AO further held that the assessee is a predominantly mutual association and that in the activity carried out by the appellant, the basic principle or essence of charity was missing. The AO accordingly denied the claim of exemption Sec. 11 of the Act made by the appellant. The assessee on the other side has given detailed submission and has placed reliance on the decision of the Hon'ble jurisdicitonal Tribunal in the case of lndo French Chamber of Commerce vs. ADIT(E)11(1) Mumbai in ITA No 386/Mum/2013 for A.Y.2009-10. In the said decision dated 15.04.2016, the Hon’ble Tribunal on the set of similar facts as that of the assessee and discussing the issue at length and considering the decision of Hon’ble ITAT, Chennai, in the case of Japanese Chamber of Commerce 99 DTR 145 and decision of Hon’ble ITAT. Kolkata Tribunal in the case of Indian Chamber of commerce vs ITO 1491& 1284/K/2012 dated 02.12.2014 observed that the case of the assessee Indo French of Commerce and Industry falls under the definition of charitable purpose under the last limb of definition of charitable purposes u/s 2(15) of the Act i.e. the advancement of any other object of general public utility. In the said decision the Hon'ble ITAT further observed that the case of the assessee Indo French Chamber of Commerce and Industry was covered by the orders of coordinate bench of ITAT in the case of Japanese Chamber of Commerce, Chennai Bench (Supra) and Indian Chamber of Commerce of Kolkata (supra). Accordingly, the ground raised

In the result, appeal of the Revenue is dismissed.