TMI Blog2024 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... Institution. In the present case, undoubtedly, the objects and activities of the Trust are in the nature of trade, commerce or business and hit by proviso to Sec. 2(15) of the Act. Therefore, the assessee entitlement for exemption needs to be examined in light of gross-receipts and receipts from the activity of trade, commerce or business. The gross income of the assessee from conducting conference is more than 20% of the gross-receipts of the assessee for the impugned assessment year. We have gone through the computation filed by the assessee s Society and we find that the Ld.Counsel for the assessee has considered net income after expenses from conducting conference and then, compared with gross- receipts of the assessee to work out the limit prescribed under provisions of Sec. 2(15) - working furnished by the Ld.Counsel for the assessee is not in accordance with law, because, as per provisions of Sec. 2(15) of the Act, if gross receipts from the GPU activity, i.e. from trade, commerce or business exceeds 20% of gross receipts, then, the assessee is not entitled for exemption u/s. 11 of the Act. If you consider the gross-receipts from conducting conference, then undisputedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case. 2. The CIT (Appeals) erred in rejecting the claim for application of income to the extent of Rs. 12.55 Lakhs based on the revised Form No. 10 filed in the course of assessment proceedings in acknowledgement No. 556697020310315 dated 31.03.2015 as per Rule 17 of the Income Tax Rules, 1962 in the tax exemption computation u/s. 11 of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that having not appreciated the subsequent judicial trend especially the decision of the Madras High Court, the purposes shown in Form No. 10 on the facts of the case should not be reckoned as multiple or vague, thereby vitiating the findings in para 4.2 of the impugned order. 4. The CIT (Appeals) erred in dismissing the grounds alternatively raised on the applicability of principles of mutuality for total tax exemption in para 4.1 of the impugned order without assigning proper reasons and justification. 5. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles of natural justice would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e profession of mobility engineering, etc. 5. The AO, on the basis of objects of the assessee and the activities carried during the impugned assessment year, came to the conclusion that the objects of the assessee falls under last limb of the definition of charitable purpose as defined u/s. 2(15) of the Act, i.e. any other objects of General Public Utility (in short GPU ). Therefore, called upon the assessee to explain as to why exemption u/s. 11 of the Act, shall not be denied. In response, the assessee submitted that the Society was formed with the object of imparting education in the field of Mobility Engineering. The assessee organizes technical meetings, workshops, seminars and other educational programs which are for the benefit of members of the society and in the nature of the education as defined u/s. 2(15) of the Act. Therefore, the assessee cannot be considered as GPU Trust for the purpose of determining exemption u/s. 11 of the Act. 6. The AO after considering relevant submissions of the assessee and also taken note of objects of the assessee s Trust and its activities carried out during the impugned assessment year, came to the conclusion that the activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of purpose for which accumulation was sought to be made by the assessee is too general in nature and suffers from vagueness. Therefore, upheld the additions made by the AO towards taxation of corpus donations of Rs. 12.55 lakhs. Aggrieved by the order of the Ld.CIT(A), the assessee as well as the Revenue are in appeals before us. 8. The Ld.DR, Shri P. Sajit Kumar, submitted that the Ld.CIT(A) is erred in holding that the assessee s Trust is eligible for exemption u/s. 11 of the Act, and not hit by amended provisions of Sec. 2(15) of the Act, without appreciating the fact that the objects of assessee s Trust and its activities falls under the last limb of charitable purpose i.e. any other object of GPU and once the receipts from said activity exceeds the prescribed limit, assessee will lose benefit of exemption u/s. 11 of the Act. The Ld.DR further referring to the decision of the Hon ble Supreme Court in the case of ACIT v. Ahmedabad Urban Development Authority reported in [2022] 449 ITR 1 (SC) submitted that the Hon ble Supreme Court has explained the concept of GPU charity and Trust/Society coming under other limb of charitable purpose and the Hon ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust as per their Memorandum of Association and as per the objects, the assessee is conducting technical meetings, workshops, seminars and other educational programs and specialty conference for development of Mobility Engineering, etc. On perusal of main objects of the assessee s Trust and activities carried out for the impugned assessment year, it is undoubtedly clear that the assessee falls under the last limb of the definition of charitable purpose as defined u/s. 2(15) of the Act i.e. any other object of GPU, and this principle is supported by the decision of the Hon ble Supreme Court in the case of ACIT v. Ahmedabad Urban Development Authority (supra), wherein, it has been clearly held that Trust/Societies which provides services in relation to trade, commerce or business for fees or other consideration has to be broadly covered by trade promotion. Further, when a trade promotion provides individualized or specialized services such as conducting paid workshops, training courses, skill development courses, and other services to promote and advertise their respective businesses, the claim for GPU status needs to be scrutinized in light of provisions of Sec. 2(15) of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for relevant AY. 12. The Ld.Counsel for the assessee had also made an alternative argument in light of principles of mutuality for total tax exemption to receipts of assessee s Trust on the ground that the society is exclusively working for the benefit of members and out of contribution received from the members. If the assessee is mutual society and the benefits of the assessee s Trust is only for the members and out of contributions received from members, then, the applicability of principles of mutuality needs to be examined. But, in the present case, as per facts brought on record by the lower authorities, there is no clarity whether the income of the assessee is only from members or from non-members. Further, even the assessee could not file any evidences to prove its arguments that it is a mutual benefit society. This fact also needs to be verified. If, the arguments of the assessee is right, then, the applicability of principles of mutuality needs to be examined with reference to income received by the assessee and expenditure incurred for the impugned assessment year and also any other income received by the assessee like interest income, etc. This fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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