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2016 (2) TMI 598 - AT - Income TaxEligibility of exemption u/s 11 - whether collection of sponsorship fee for conducting tournament, green fee for allowing non-members to use the golf ground would be an activity in the nature of trade or commerce? - claim on the principles of mutuality - Held that:- Sponsorship fee collected for conducting tournament and green fee for use of gold ground cannot be considered to be a commercial activity and therefore, it is not in the nature of trade or commerce. It may be a commercial advertisement for the individual or institution who is paying the sponsorship fee but as far as the assessee is concerned, the sponsorship fee received is an income incidental to the main activity of promoting golf in the state of Tamilnadu, therefore, at any stretch of imagination, the collection of sponsorship fee cannot be considered as commercial activity by the assessee. Similarly, the tournament fee, annual subscription fee, green fee, catering income, round charges etc. are incidental to the main activity of promoting the sport of golf. As rightly submitted by the ld. Representative for the assessee, the non-refundable membership fee collected at the time of admission is in the nature of capital receipt, therefore, it cannot be treated as income of the assessee. Therefore, the CIT(A) is not justified in saying that the assessee is engaged in activity which is similar to commerce or trade. This Tribunal is of the considered opinion that the assessee is engaged only in promoting the sport of golf and receiving subscription, tournament fee, sponsorship fees etc. are in the course of its carrying on the charitable activity. Therefore, the activity of the assessee is not similar to commerce or trade. In this case, the object of the assessee is to promote the game of golf in the State of Tamilnadu. The benefits can be available not only for the members of the assessee-society but also non-members. Therefore, the beneficiaries cannot be identified. In fact, the object of the society enables to provide training and financial assistance to all individuals. In those circumstances, this Tribunal is of the considered opinion that the principles of mutuality is not applicable to the facts of this case. In view of the above discussion, this Tribunal is of the considered opinion that the assessee is eligible for exemption u/s 11 of the Act as charitable institution in respect of the income generated in the course of its activities in furtherance of its objects. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to grant exemption u/s 11 of the Act in respect of the income of the assessee which is utilized for the object of the society. - Decided in favour of assessee
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