ITO (E) 1(1), MUMBAI vs. BRAHMAN SABHA MALAD, MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 12/06/2016 of Ld. Commissioner of Income Tax, Mumbai holding that the assessee is not doing any trade, commerce or business as per the proviso to section 2(15) of the Income Tax Act, 1961 (hereinafter the Act) and further erred in granting exemption under section 11 of the Act. 2. During hearing Shri Rajesh Ojha, learned D.R. advanced arguments which is identical to the ground raised

. On the other hand, Shri S.V. Marathe, learned counsel for the assessee defended the conclusion arrived at in the impugned order by placing reliance upon the decisions mentioned in the impugned order. The learned counsel explained that they claimed exemption under section 11 of the Act and was wrongly disallowed by the Assessing Officer and the registration cancelled by the learned DIT (E) was restored by the Tribunal. The learned counsel explained the nature of the activities of the assessee by claiming that the same are charitable in nature.

3. I have considered the rival submissions and perused the material available on record. 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, I find that the assessee declared nil income in its return filed on 11.09.2009, while claiming exemption under section 11 of the Act. In view of the amendment to section 2(15) of the Act, which defines “charitable purpose” and also in view of the registration under section 12A, having been withdrawn. The Assessing Officer did not accept the claim with respect to exemption under section 11, made by the assessee by holding that the activities of the assessee are in the nature of trade, business or commerce. It was noted by the Assessing Officer that the assessee derived income from various activities such as renting out or halls, etc. Accordingly the Assessing Officer taxed the excess of income over expenditure of Rs.12,97,317/- as well as corpus donation of Rs.9,58,951/-, consequently, assessed the total income at Rs.22,56,270/-. 3.1 On appeal before the learned CIT(A) the stand of the learned Assessing Officer was challenged by making submissions dated 12th March, 2015. The learned First Appellate Authority found that the cancellation of exemption granted under section 12AA by the learned Director (Exemption) was restored by the Tribunal (ITA No. 1939/Mum/2012 dated 04.03.2015) by placing reliance upon the decision in the case of M/s. Vanita Samaj (ITA No. 1034/Mum/2012 dated 26.02.2014). The assessee trust was claimed to be functional since 1924. I perused the objects of the trust which has been discussed in the impugned order and also insufficiency of funds (para 4 of the impugned order) for carrying out structural repairs of the buildings. The submissions dated 02.06.2015 (page 6 of the order) of the assessee were also considered by the learned CIT)(A). So far as the activities purported by the learned Assessing Officer in the nature of business/ commerce is concerned the surplus funds were used by the assessee in furtherance of the charitable objects of the assessee. Therefore, the assessee gets shelter from the decision of the Hon’ble High Court of Delhi in GSI India vs. DIT (Exemption) (2013) 38 taxmann.com 364 (Del.) to the effect that if the profit is earned for a later good within the economic, financial and social context of activity of an organization, such an organization to be considered to be working for charitable purposes. The assessee is also supported by the decision in Madras Motor Sports Club (141 ITD 1) and Builders Association of India (ITA No. 550/Mum/2012 dated 12.01.2015). It is also noted that the Tribunal in the case of Institute of Chartered Accountants of India vs. DGIT (E) (2011) 245 CTR (Del.) 541 has analysed the effect of proviso to section 2(15) and decided the issue in favour of the assessee. The Department has not brought on record any evidence suggesting that the assessee was carrying out activities on business or commercial principle against the objects of the Sabha. It is also noted that the Tribunal has restored the registration under section 12A of the Act, therefore, it cannot be presumed that the assessee was indulged in non-charitable activities. Therefore I find no infirmity in the conclusion of the learned CIT(A). The decision in the case of Madhya Pradesh Madhyam 256 ITR 277 further supports the case of the assessee. Hon’ble Gujarat High Court in Hiralal Bhagawati 246 ITR 188 (Guj.) examined the effect of registration under section 12A and held that registration under section 12A is not an ideal or empty formality. It requires that the CIT has to examine the objects of the creation of the trust and also whether the assessee is carrying out charitable activity in accordance with its object. Even otherwise even after granting registration under section 12A of the Act, the Assessing Officer has not been precluded to go into factual matrix and still can go into the applicability of funds whether the same are applied in accordance with law. Considering the totality of facts and the detailed discussion made by the learned CIT(A), while adjudicating the issues, I find no infirmity in the same. The stand of the learned CIT(A) is affirmed. The appeal of the Revenue is therefore dismissed. This order was pronounced in the open court in the presence of Ld. D.R. at the conclusion of the hearing on 15/07/2016. Sd/- (Joginder Singh) �या�यक सद�य /JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 15/07/2016 ÇAÑA? P.S //.�न.स.