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2021 (5) TMI 1002 - AT - Income TaxExemption u/s 11 denied - addition applying principle of mutuality - AO denied exemption primarily on the reasoning that the assessee exists only for its members and its activities are directed only to the members; hence, it is a mutual concern - revenue bringing to tax the income earned by the assessee from interest and donation from non-members by applying the principles of mutuality - HELD THAT:- In the facts of the present case, it is very much clear that the assessee has carried out activities in furtherance of its objects. In the process, the assessee might have earned some income by way of subscriptions, sale of publications, etc. However, this income earning activities of the assessee cannot be treated to be in the nature of trade, commerce or business. In any case of the matter, from its very inception the assessee has been granted exemption under section 11 of the Act. Only, in the impugned assessment years its claim of exemption has been denied. Though, it may be a fact that while granting exemption in earlier as well as subsequent assessment years no scrutiny assessment has been made; however, fact remains that assessee's claim of exemption has been accepted over the years - the activities/objects on the basis of which claim of exemption under section 11 of the Act was accepted in other assessment years have not changed in the impugned assessment years. In fact, the registration granted under section 12A of the Act still continues. That being the case, even applying the rule of consistency, assessee's claim of exemption under section 11 of the Act has to be allowed. The decisions relied upon by the learned counsel for the assessee clearly supports this view. Assessee having maintained its status as charitable organization is entitled for exemption under section 11 of the Act, subject to fulfillment of conditions prescribed under sections 11, 12 and 13 of the Act. However, in the facts of the present appeals there is no allegation by the departmental authorities that the assessee has violated any of the conditions of the aforesaid provisions, except, the allegation that the assessee is a mutual concern. That being the case, all its income including the interest and donations received from non-members would also be exempt from taxation. Addition to the income on the allegation that the surplus funds accumulated in assessment year 2005-06 has not been utilised before 2010-11 - contention of assessee that the assessee has already offered the amount of ₹ 1 lakh as income in the return of income filed for the assessment year 2010-11, therefore, no further addition should have been made - HELD THAT:- Having considered rival submissions, I direct the assessing officer to verify assessee's claim and in case it is found that the assessee has already offered the amount of ₹ 1 lakh as income in assessment year 2010-11, addition should be deleted. This ground is allowed for statistical purpose.
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