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2016 (7) TMI 520 - AT - Income TaxContinuance of registration under section 12AA denied - commercial v/s charitable activity - Held that:- By introduction of proviso to section 2(15) of the Act with effect from 01.04.2009, the “Charitable purpose” has been well defined and includes relief of the poor, education, medical relief, preservation of environment including water sheds, forests and wildlife and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. While carefully going through the object of the applicant, the objects of the applicant are neither charitable in nature nor advancement of any general public utility but for the only benefit of the members of the company. With regard to principles of mutuality, the AR of the applicant has very well accepted in person before the ld. DIT(E) and also in the written submissions that the activities of the applicant was primarily aimed at benefitting the members and their sponsored persons. Before the ld. DIT(E), the ld. AR of the applicant has also accepted that there is no question of continuance of registration under section 12AA of the Act since the beneficiaries are only the members and benefit is not passed on to the public at large in any way. Therefore, the objects and activities of the applicant cannot be called as “charitable” within the definition of main provision of section 2(15) of the Act. Also in the written submissions before the ld. DIT(E), the applicant has very clearly accepted that catering charges, hall charges, etc. are given to members for their staff on commercial basis and, in fact, these activities are commercial in nature and on verification of records, such receipts exceeded ₹.10 lakhs in the financial year 2008-09 relevant to the assessment year 2009-10, which attracts first and second proviso to section 2(15) of the Act. In view of the above, the applicant’s case is covered under the above said proviso and loses the character of charitable purposes. - Decided against assessee.
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