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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI JOGINDER SINGH & SHRI G. MANJUNATHA
Per G. Manjunatha, Accountant Member:
This appeal filed by the Revenue is directed against the order of the Ld. CIT(A)-1, Mumbai dated 09.09.16 and it pertains to assessment year 2012-13. The Revenue has raised the following grounds of appeal:
1. Whether, on the facts and in the circumstances of the case and in law, the Ld CIT(A) was right in holding that the assessee performs a charitable purposes within the meaning of proviso to section 2(15) of the Income Tax Act, 1961.
2. Whether on the facts and circumstances of the case and in law the ld.CIT(A) erred in ignoring the decision, being the facts are same, the Hon'ble ITAT "B" Bench Mumbai in the case of Navi Mumbai Merchants Gymkhana, vide order No. 96/Mum/2013 dated 21.05.2014, in which it has been held that the
3. Whether, on the facts and in the circumstances of the case and in law, the Ld CIT('A) erred in directing to allow exemption u/s 11 to the assessee when the activities of assessee are akin to those of a mutual association and do not fall within the definition of "Charitable purpose" as per Section 2(15) of the Income Tax Act, 1961.
4. Whether, on the facts and in the circumstances of the case and in law the Id CIT(A) erred in relying upon the orders of his predecessor which based on judgment of Hon'ble high Court in the assessee's own case for A. Y. 2003-04, without appreciating the fact that Department has not accepted the decision on merit and filed SLPs on this issue for AYs. 2001-02, 2003-04 and 2005-06, which are pending for adjudication before Hon'ble Supreme Court.
5. The Appellant prays that, to the extent of above grounds, the order of the Commissioner of Income Tax Appeal)-I, Mumbai be set aside and that of the Assessing Officer be restored.
6. The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”
The brief facts of the case are that the assessee M/s. Goregaon Sports Club is registered as a charitable organization with CIT (Exemption) under section 12A of the Income Tax Act, 1961. The assessee has filed its return of income for assessment year 2012-13 on 28.09.12 declaring nil total income by claiming exemption under section 11 of the Income Tax Act, 1961. The case was selected for scrutiny and notices under section 143(2) and 142(1) of the Act, were issued. In response to notices, the authorised representative of the assessee appeared from time to time and furnished the details as called for. During the course of assessment proceedings, the AO observed that the main object of the assessee is to impart physical education by training and coaching in various sports disciplines as per its objects clause. The AO further observed that the assessee has derived various
3 M/s. Goregaon Sports Club incomes including income from hiring and royalty, therefore, called upon the assessee to explain as to why the benefit of exemption claimed under section 11 shall not be denied in view of the fact that the activities undertaken by the assessee are coming within the ambit of proviso to section 2(15) of the Income Tax Act, 1961. In response, the assessee submitted that the AO has denied the benefit of exemption for earlier assessment years right from assessment year 2000-01 onwards, however, on appeal ITAT vide its order dated 29.07.09 for assessment years 2003-04 and 2004-05 has allowed the benefit of exemption under section 11 to the assessee, therefore, requested to allow the benefit of exemption claimed under section 11 of the Income Tax Act, 1961. The AO, though, accepts the fact that the ITAT has granted the benefit of exemption under section 11 of the Act for the earlier years, denied the benefit of exemption claimed under section 11 and allowed the benefit of mutuality in respect of assessee’s main activity. However, computed business income in respect of income generated from hiring and royalty and other services on the ground that the department has not accepted the orders of the ITAT and has preferred further appeal before the Hon’ble Bombay High Court which are pending for adjudication.
Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A) the assessee reiterated its submissions made before the AO to argue that it is engaged in the activity of promoting
4 M/s. Goregaon Sports Club sports which comes within the meaning of charitable purposes as defined under section 2(15) of the Act, under third limb i.e. any other object of general public utility and which has been accepted by the ITAT for earlier years and allowed the benefit of exemption claimed under section 11 of the Income Tax Act, 1961. The Ld. CIT(A) after considering the relevant submissions of the assessee and also by following the decision of ITAT, in assessee’s own case for earlier year observed that since there is no change in facts during the year under consideration the AO was directed to allow the benefit of exemption claimed under section 11 of the Income Tax Act, 1961. The relevant portion of the order of the Ld. CIT(A) is extracted as below: “5.2. I have considered the facts and circumstances of the case, gone through the assessment order of the A.O and the submissions of the appellant and also discussed the case with the AR of the appellant. The contentions and submissions of the appellant are being discussed and decided here in under: i. The appellant has contested the denial of exemption u/s. 11 in Ground No. 1 of appeal. The A.O in paragraph 7 of his order has reproduced and placed reliance on the observations of his predecessor contained in the assessment order for assessment years 2009-10, 2010-11 and 2011-12. Further in paragraph 8 of his order the A.O relying upon the same has held the activities of assessee trust as business and completed the assessment on the same lines as that of the last years which has been specifically mentioned. Thus, as mentioned by the AO there is no change in facts in the year under consideration as compared to assessment year 2009-10, 2010-11 and 2011-12. The appellant has placed reliance on the orders of CIT(A) and Hon. ITAT for the years. In assessment year 2009-10 the then CIT(A) vide order dated 25.3.2013 has decided the same issue observing as under -
"8. I have carefully considered the facts of the case, submissions of the appellant and the assessment order. I find that the nature of activities of the appellant Trust are the same as carried out from year to year. I also find that the Assessing Officer has not brought out any material on record contrary to the claim of exemption u/s 11. It is observed that on identical facts Hon. High Court of Mumbal in 21 taxmann.com 479 (Born) for A,Y. 2003-04 in appellant's own case held that the asseessee is a charitable Institution entitled to 5 M/s. Goregaon Sports Club exemption u/s II. Similarly, the Hon. ITAT right from A. Y. 1998-99 to A. Y. 2006-07 have also decided in favour of the appellant. Also my predecessor held that the assessee is entitled to exemption u/s 11 of the Act. Respectfully relying on the order of Hon. High Court and orders of Honorable Tribunal in the case of appellant the appellant is entitled to exemption under section 11 of the Income tax Act. Therefore ground no. 1 is allowed." The above findings of the CIT(A) were upheld by Hon. TAT vide order dated 2.3.2015 observing as under :- "5, We have carefully perused the orders of the authorities below and the relevant decision of the Tribunal in ITA No. 6621/M112 for A.Y. 2008-09. We find force in the contention of the Ld. Counsel. The issues involved in the year under consideration were also there before the Tribunal in A. Y, 2008-09. We find that the Tribunal has followed the order of the Hon'ble Jurisdictional High Court in assessee's own case for the assessment year 2003-04 vide order dt. 14.2.2012 and finally concluded that the assessee's claim that it is entitled for exemption u/s. 11 has been upheld from the stage of High Court.
6. Now that it has been held that the assessee is a charitable institution and duly recognized u/s. 12A therefore, the income has to be computed in accordance with the provisions of Sec. 11 of the Act. Respectfully following the earlier years order, we direct the AO to compute the total income of the assessee in terms of Sec. 11 to 13 of the Act. This ground of the Revenue is dismissed." Further in A.Y.2010-11 the CIT(A) vide order dated 13.02.2015 has again decided the same issue observing as under – "6. I have carefully considered the facts of the case, the submissions of the appellant and the assessment order passed by the AO. I find that the nature of activities of the appellant trust are the same as carried out from year to year. I also find that the Assessing Officer has not brought out any material on record which would distinguish the activities of the appellant in the current year from earlier years. It is observed that on identical facts, Hon'ble Bombay High Court [in 21 taxmann.com 479(Bom)] for A. Y. 2603-04 in appellant's own case has held that the appellant is a Charitable Institution entitled for exemption under section 11 of the Act. Similarly, Hon'ble ITAT right from AY. 1998-99 to A. Y. 2009-10 has decided this issue in favour of the appellant. Hence, respectfully relying on the order of the Hon'ble Bombay High Court and orders of Hon'ble Tribunal in the case of the appellant, I hold that the appellant is entitled to exemption under section 11 of the Act. The AO is directed accordingly to grant exemption under section 11 of the Act" This order of CIT(A) has also been upheld by Hon ITAT vide order dated
6 M/s. Goregaon Sports Club 23.09.2015. As there is no change in facts, observations of the Assessing Officer in the year under consideration, and the submissions made as compared to the preceding years, Assessing Officer is directed to follow the findings of my Id. Predecessor as well as Hon. ITAT as above for this year also.”
The Ld. D.R. submitted that the Ld. CIT(A) was erred in holding that the assessee performs charitable activities within the meaning of proviso to section 2(15) of the Income Tax Act, 1961. The Ld. D.R. further submitted that the Ld. CIT(A) erred in directing the AO to allow exemption under section 11 to the assessee when the activities of the assessee are akin to those of mutual association and do not fall within the definition of charitable purposes.
The Ld. A.R. for the assessee, on the other hand, submitted that the case is squarely covered in favour of the assessee by the decision of ITAT, in assessee’s own case for assessment year 2011-12 and also the decision of Hon’ble Bombay High Court for assessment year 2003-04 in Income Tax Appeal No.6301 of 2010 dated 14.02.12 wherein under similar facts and circumstances the benefit of exemption under section 11 of the Act has been allowed.
We have heard both the parties and perused the materials available on record. We find that the co-ordinate bench of ITAT, Mumbai G-Bench in for assessment year 2011-12 has allowed the benefit of exemption under section 11 of the Income Tax Act, 1961. The relevant portions of the ITAT’s order is reproduced herein under:
7 M/s. Goregaon Sports Club “7. Learned AR placed on record the order of Tribunal in assessee's own case for the A.Y.2010-11 dated 23/09/2015, wherein similar claim of assessee was allowed by dismissing the Revenue's appeal. Respectfully following the order of the Tribunal in assessee's own case, we do not find ITA No.2139/Mum/2016 Goregaon Sports Club any infirmity in the order of CIT(A) for allowing assessee's claim of exemption u/s.11 r.w.s. 2(15) of IT Act.”
The Hon’ble Bombay High Court in the case of DIT (Exemption) vs. Goregaon Sports Club (2012) 347 ITR 338 (Bom.) has held that providing sports facilities to general public without restriction of any caste, creed, religion or profession is eligible for exemption under section 11 of the Income Tax Act, 1961. The relevant portion of the order is extracted below: “In the case of DIT ('Exemption) v. Chembur Gymkhana [Income Tax Appeal No. 5568 of 2010, dated 13-2-2012], Instant Court, has held that the fact that the membership of the club is open to a section of the community would not detract from the fact that the club has been constituted for the advancement of any other object of general public utility, and the Club is not formed for the benefit of an individual or a group of individuals as such. For affirming that the object of the Club fails within the purview of Section 2(15), the Assessing Officer should determine whether as regards the application of the funds, the requirements of section 11 have been duly fulfilled.
In the instant case also the Assessing Officer did not have an occasion to consider the application of the funds with reference to provisions of section 11.
Therefore the proceedings is to be remanded to the Assessing Officer to determine whether the requirements of section 11 have been duly fulfilled as regards the application of the funds. Otherwise the assessee is a Charitable Institution.”
In this view of the matter and also respectfully following the decision of Hon’ble Bombay High Court in assessee’s own case for assessment year 2003-04, we are of the considered view that the assessee is eligible for exemption under section 11 of the Income Tax Act, 1961. Therefore, we direct the AO to allow the benefit of exemption under section 11 of the Income Tax Act, 1961.
Order pronounced in the open court on 16.05.2018.