THE TAMIL CHAMBER OF COMMERCE,CHENNAI vs. DIT, CHENNAI

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ITA 2559/CHNY/2014Status: DisposedITAT Chennai25 January 2017AY 2010-20114 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal held that the assessee failed to meet the threshold condition of having valid registration under Section 12A(a) for claiming exemption under Section 11. Furthermore, income from issuing certificates of origin was not solely from members, negating the principle of mutuality.

What were the facts?

The assessee claimed exemption under Section 11 of the Income Tax Act, 1961, and also claimed income from members was exempt based on mutuality. However, its registration under Section 12A(a) had been cancelled.

What were the issues?

Whether exemption under Section 11 can be claimed without valid registration under Section 12A(a), and whether income from issuing certificates of origin is exempt based on the principle of mutuality.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A(a),Section 12AA(3),Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ C’ BENCH (SMC

Before: SHRI ABRAHAM P. GEORGE

For Respondent: Shri. Ashish Tripathi, IRS, JCIT

आदेश / O R D E R

1.

Assessee in this appeal is aggrieved that it was denied exemption claimed by it u/s.11 of the Income Tax Act, 1961 (in short ‘’the Act’’). One other grievance raised by the assessee is that income received by it from its members was exempt under the principles of mutuality.

ITA No.2559/Mds/2014. :- 2 -:

2.

Ld. Counsel for the assessee at the outset submitted that registration granted to the assessee u/s.12A(a) of the Income Tax Act, 1961 (in short ‘’the Act’’) on 25.09.2007 was cancelled by Director of Income Tax (Exemptions) on 09.12.2011 invoking powers vested on him u/s.12AA(3) of the Act. As per ld. Counsel assessee had filed a Writ Petition challenging the order of the Director of Income Tax (Exemptions) before Hon’ble Madras High Court. Ld. Authorised Representative submitted that Hon’ble High Court had granted a stay of recovery of tax. In any case as per ld. Authorised Representative on merits issue was covered in favour of the assessee by the decision of Co-ordinate Bench in the case of Madras Chamber of Commerce and Industry vs. ACIT (2016) 46 CCH 681 and also that of Kolkata Bench of the Tribunal in the case of Indian Chamber of Commerce vs. ITO [(2015) 113 DTR 553)].

Conta, ld. Departmental Representative submitted that 3. admittedly assessee was not having registration required u/s.12A (a) of the Act and therefore could not claim exemption u/s.11 and 12 of the Act.

4.

I have considered the rival contentions and perused the orders of the authorities below. Threshold condition for claiming exemption u/.11 of the Act is that a person who is claiming such exemption is registered u/s.12A(a) of the Act. Ld. Commissioner of Income Tax

ITA No.2559/Mds/2014. :- 3 -:

(Appeals) had noted this at para 3.2 of his order that registration earlier granted to the assessee stood cancelled by Director of Income Tax (Exemptions) on 09.12.2011 w.r.f. 01.04.2009, invoking powers vested on him under subsection 3 thereof. No doubt as pointed out by the ld. Authorised Representative assessee had moved a Writ Petition before Hon’ble Jurisdictional High Court against cancellation of that registration. In the petition praying for an interim stay of the operation of the order of the Director of Income Tax (Exemptions) cancelling the registration, Hon’ble High Court had given the following direction on 22nd March, 2012 in MP No.2/2012 in W.P.

No.7037 & 7038/2012.

‘’There shall be a order of stay of recovery alone’’.

Thus, the stay is only for recovery and nothing else. Operation 5. of the order of the Director of Income Tax (Exemptions) had not been stayed. Thus merits of the case apart, assessee having not satisfied with threshold condition for claiming exemption u/s.11 of the Act, I am of the opinion that assessee was correctly denied claim of such exemption under the said section. Further, fees received by the assessee for issuing certificates of origin were for both its members as well as non members, thereby ruling out the application of principle of ITA No.2559/Mds/2014. :- 4 -: mutuality. In the above circumstances, I am not inclined to interfere with the order of the ld. Commissioner of Income Tax (Appeals).

However, if assessee succeeds in its appeal or Writ Petition against cancellation of registration u/s.12A(a) of the Act, it can definitely move a petition for reviving its appeal, in so far as it relates to application of sections 11 & 12 of the Act. With these observations, we dismiss the appeal of the assessee.

In the result, the appeal of the assessee is dismissed. 6.

Order pronounced on Wednesday, the 25th day of January, 2017, at Chennai.

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