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2014 (10) TMI 924 - AT - Income TaxBenefit of exemption u/s 11 - whether the activities of the assessee-society are in the nature of business for a cess or fee, irrespective of the nature of use or application or retention of the income from such activity? - AO disallowing claim for exemption u/s 11 made by the assessee and assess its income under the head “Profits and gains of business or provision” when the registration granted u/s 12A was in operation - commercial activity of office-bearers - Held that:- Considering that the assessee was constituted as an entity on 11.04.2008 and got registration u/s 12AA of the I.T.Act w.e.f 08.10.2008, the past commercial activity of its office-bearers, even though under the same brand name, cannot cast a shadow of taint on it. Unless the assessee is tainted by the failure to satisfy the procedural requirements for exemption, the benefit of exemption cannot be denied to it simply because the persons connected with it were carrying out similar activities as a business in the past or, for that matter, are carrying out the same even at present separately in their personal capacity. Hon’ble Gujarat High Court in the case of Ahmedabad Urban Development Authority vs DRIT (2010 (3) TMI 847 - Gujarat High Court) holding that on the date when the assessment order was framed, the income of the petitioner was exempt entirety and the AO could not have travelled beyond the certificates of registration granted u/s 12AA, once the procedure is complete as provided in sub-section (1) of the section 12AA and a certificate issued granting registration to the trust or institution, it is apparent that the same is a document evidencing satisfaction that conditions laid down in section 12A stand fulfilled. The fact of the certificate cannot be ignored by the AO by adopting a stand that the trust or institution is not fulfilling conditions for applicability of section 11 & 12 of the Act. - Decided in favour of assessee
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