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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
ORDER Per Prashant Maharishi, AM:
This appeal, by the revenue is directed against the order dated 10/9/2013 passed by the Commissioner Of Income Tax – XXI , New Delhi raising following grounds of appeal ;- 1) On the facts and in the circumstance of the case and in law, theLd. CIT (A) has erred in treating the assessee as a charitable institution exempt u/s 11 of the Income Tax Act, 1961. 2) On the facts and in the circumstances of the case and in law the Ld. CIT (A) has failed to appreciate the facts that the AO denied the claim of exemption to the assessee u/s 11 & 12 of the Income Tax Act 1961 as the assessee association is catering to the benefits of its members only
02. Brief facts of the case is that assessee is an association of the telecom service providers and its main object is to collect and diffuse useful knowledge and information for the promotion of basic telephone services, to promotescientific an education servicesin basic telephone services and to facilitate bridge between the subscribers and basic telephone network operator etc. the association is registered u/s 12A of the Act . It has 2 Association of Unified Telecom Service Providers of India A Y 2009-10 claimed exemption u./s 11 & 12 of the Income Tax Act submitting that its activities are falling within the definition of charitable purposes u/s 2 (15) of the income tax act 1961. Revenue is of the view that activities of the trust are not falling within the definition of ‘Charitable purposes’ u/s 2 (15) of the Income Tax Act and therefore the exemption provided u/s 11 & 12 of the act is denied. For this year Assessee filed its return of income on 30.9.2009 declaring Nil Income. Assessment u/s 143(3) of the Income tax Act was passed on 30.12.2011 where in AO has denied the benefit of section 11 & 12 to the assessee however accepted the alternative contention of the assessee that the assessee is a mutual association and on principles of mutuality determine the total income of the assessee at Rs Nil. Aggrieved by the order of AO, assessee preferred an appeal before CIT (A) who allowed the appeal of the assessee holding that assessee trust is charitable association and is eligible for exemption provided u/s 11 & 12 of the act. CIT (A) followed the orders of ITAT in case of assessee for AY 2002-03, 2003-04, 2005-06 and 2008-09. Now revenue is in appeal before us against the order of CIT (A).
Before us Ld. DR submitted that assesse is not carrying on charitable activities but a “mutual Association” therefore the benefit of section 11 & 12 cannot be granted to the trust. Therefore he submitted that order of Ao may be upheld.
In response to this Ld. AR submitted that assessee is a trust carrying on charitable activities as defined u/s 2 (15) of the act and therefore eligible for exemption benefit u/s 11 & 12 of the Income Tax Act. He further submitted that now this issue is covered in favour of the assessee in its own case by the orders of ITAT from AY 2002-03, 2003-04, 2005-06 and 2008- 09, 2010-11 and 2011-12. He submitted that therefore CIT (A) has rightly allowed the claim of the assessee for exemption u/s 11 & 12. 05.We have carefully considered the rival contentions as well as the decision in the case of the assessee rendered by coordinates benches for various
3 Association of Unified Telecom Service Providers of India A Y 2009-10 previous assessment years where it has been held that the assessee is carrying on activities of Charitable Purposes as defined u/s 2(15) of The Income Tax Act and therefore eligible for exemption u/s 11 & 12 of the Income tax Act. The issue was first decided by Coordinate for the A. Y. 2002-03. For a ready reference para no. 5 of the order of the Tribunal for the A. Y. 2002-03 is being reproduced hereunder: “5. We have considered the facts of the case and rival submissions. On review of the ratio of various cases cited by rival parties, namely, Andhra Chamber of Commerce, Surat Art Silk Cloth Manufacturers Association, Bar Council of Maharashtra and Federation of Indian Chamber of Commerce & Industries, we find that promotion of trade, commerce or industry is an object of general public utility and, therefore, it constitutes a charitable purpose. The only condition is that the activity should not be carried on with a profit motive. In other words, if such activities are undertaken and they result in a surplus, the surplus should not be passed on directly or indirectly to the settler, the trustees, the members or any one claiming through them. Such surplus should remain for application ITA No. 2686/D/2014 M/s Association of Unified Telecom Providers of India 3 towards the objects of general public utility. In the case of Indian Sugar Mills Association, the rules contained provision to the effect that profits could be distributed to the members on passing of a resolution. The Hon'ble Supreme Court pointed out that this amounted to private gain and, therefore, the purpose could not be held to be charitable purpose. It is also clear that the activities, undertaken for the benefit of public at large, will not cease to be charitable purpose if any benefit incidentally arises to the members, settler or the trustee, as the case may be. Therefore, the argument that the litigation was pursued for the gain of the members does not hold good in the light of the fact that the objects were for promotion of basic telephone services, whose benefits ensured to public at large being the 4 Association of Unified Telecom Service Providers of India A Y 2009-10 industries and the users. The benefits to the members, if any, was incidental and it was not the dominant object of the association. Therefore, we agree with the ld. CIT (A) that the objects of the assessee are charitable in nature. This conclusion also gets some sustenance from the fact that even after passing of the assessment order, the Director of Income Tax (E) did not cancel the registration u/s 12 A of the Act. It may be pointed out that registration by the Director of Income Tax (E) is not an empty formality and unless reasons exist about the genuineness of the activities of the association, the exemption cannot be denied u/s 11(1) (a) if a charitable institution pursues its objects, which were considered to be charitable in nature by the director. Thus, we are of the view that the assessee society is entitled to exemption u/s 11(1) (a)."
Since the CIT (A)’s order is based on the order of the Tribunal in the case of the assessee itself on identical issue for the A.Y. 2002-03 and subsequent years and latest one being AY 2011-12, and in absence a of any change pointed out in the facts, law or activities of the trust, we do not find any infirmity in the order of CIT (A) in this regard. The same is upheld. Therefore ground no 1 & 2 of the appeals are dismissed.
In the result, appeal of the revenue is dismissed.
(Order Pronounced in the Court on 07/10/2015)