ITO (E) 2(1), MUMBAI vs. MATOSHRI ARTS & SPORTS TRUST, MUMBAI

This appeal by the Revenue under Section 253 of the Income Tax Act is directed against the order of the CIT(A)-1, Mumbai dated 18.11.2015 for A.Y. 2011-12.

4. We have considered the submissions of learned D.R. and also perused the record. We have noted that similar disallowance was made for Matoshri Arts & Sports Trust assessment years 2008-09 and 2009-10 by the AO and on appeal the same was allowed by the learned CIT(A). The Revenue filed an appeal before the Tribunal and the Tribunal by following the decision for A.Y. 2007-08 in dated 19.10.2015 passed the following order: -

“2.2. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 19/10/2015 for ready reference:- “The Revenue is aggrieved by the impugned order dated 23/07/2010 of the ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to granting exemption u/s 11 of the Income Tax Act, 1961 (hereinafter the Act) without appreciating the fact that the assessee is not maintaining separate books of accounts as required under provision of section 11(4A) of the Act.

2. During hearing of this appeal, the ld. DR, Shri Vijay Kumar Soni, advanced arguments, which are identical to the ground raised by contending that the assessee is not maintaining the separate books of accounts and the assessee has violated terms and conditions of trust deed, thus, not eligible for exemption u/s 11 of the Act. 2.1. On the other hand, the ld. counsel for the assessee, Shri K. Gopal, defended the conclusion arrived at in the impugned order. The assessee has also filed paper book running into 54 pages, which is kept on record. 2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a charitable trust, registered with the Charity Commissioner and also with the department u/s 12A of the Income Tax Act. It is noted that right from the date of inception itself, the assessee trust had been assessed accordingly up to A.Y. 2006-07. The main activity of the assessee trust are for the development of Arts & Sports and is still continuing. The assessee constructed a club on the land provided by BMC in terms of the agreement. The ownership of the land was with the BMC and the structure constructed thereupon was to be handed over to the BMC as per terms of the agreement but the assessee was to carry on and continue the supports activities on the land/property as per the trust deed. At the relevant time, the assessee declared loss of Rs.46,22,140/-. The Assessing Officer assessed the income of the assessee trust at Rs.13,07,205/-, disallowing the status of the assessee as a trust and treated the same as AOP broadly on the basis that Matoshri Arts & Sports Trust the property which is in dispute with the BMC authorities, the assessee is doing business activities. While coming to this conclusion, the Assessing Officer relied upon the decision in the case of Sind Cooperative Housing Society vs ITO. The stand of the assessee is that while deciding the issue, the ld. Assessing Officer completely ignored the decision from Hon’ble Apex Court in Thanthi Trust 247 ITR 785. 2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that sports activities are carried out by the assessee and even certificate u/s 80G was granted to the assessee by the department. The assessee received donations from different donors, who confirmed of making the donations. The main grievance of the Assessing Officer is that in view of section 11(4A) of the Act, the assessee trust is not maintaining separate books of accounts of its activities, therefore, he termed the assessee trust as AOP and assessed the income as business income, resultantly, denied exemption u/s 11 of the Act. There is no dispute that right from inception, the assessee trust was granted exemption u/s 11 of the Act by the tax authorities. Even, if, the property is under dispute with the BMC authorities, cannot be the sole bases for denying exemption to the assessee. So far as, non-maintenance of separate books of accounts for different sports is concerned, we are in agreement with the finding of the ld. Commissioner of Income Tax (Appeals) that different sports are single activity of sports, therefore, cannot be treated as different activities of the trust. This view find support from the ratio laid down from Hon’ble Apex Court in Thanthi Trust 247 ITR 785 (SC). There is further uncontroverted finding in the impugned order that the assessee trust is not running restaurant, bar, etc, thus, there is no question of maintaining separate registers. The activities of the assessee trust are for the attainment of objects of the trust enshrined in the trust deed. Thus, the assessee is having a valid registration u/s 12A of the Act, granted by the Director of Income Tax (Exemption) and the Assessing Officer has not specifically pointed out any violation of the trust deed as well as the provision of section 12 & 13, therefore, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). Finally, the appeal of the Revenue is dismissed.” 2.3. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, and the conclusion drawn in the Matoshri Arts & Sports Trust aforesaid order of the Tribunal dated 19/10/2015, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we note that the facts and the issue are uncontrovertedly identical to the A.Y. 2007-08. No contrary decision was brought to our notice by either side and more specifically the Revenue. We further note that the benefit u/s 80G of the Act was granted by the Department to the assessee and the assessee is a registered with the Charity Commissioner along with the benefit of section 12A of the Act to the assessee. The only grievance of the Department is that the assessee trust is not maintaining separate books of accounts of its activities, therefore, he termed the assessee trust as AOP and assessed the income as business income, resultantly, denied exemption u/s 11A of the Act. The Tribunal has already placed reliance upon the decision from Hon’ble Apex Court and the ratio laid down therein in the case of Thanthi Trust (247 ITR 785)(SC). We find no infirmity in the conclusion drawn in the respective appeal by the ld. First Appellate Authority, therefore, the appeals of the Revenue are having no merit, resultantly, dismissed. Finally, the appeals of the Revenue are dismissed.”