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TMI Blog2015 (10) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of income from Fitness Centre after allowing expenses i.e. net income. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 14,74,6771- made by the AO on account of income from license Fee." 2. Briefly stated the facts giving rise to this appeal are that the AO picked up the case for scrutiny and finalised the assessment u/s 143(3) of the Income Tax Act, 1961 (for short the Act) determining the taxable income at Rs. 60,92,730 as against the nil returned income of the assessee. The AO, applying the amended provisions of section 2(15) of the Income Tax Act, held that the income from Samudaik Bhawan, Fitness Centre, and license fee in the form of rent from book seller, uniform seller, canteen, medical shop and bank etc. is not exempted u/s 11 of the Act being clearly hit by the amended provisions of section 2(15) of the Act and the same was brought to tax in the said assessment order. The aggrieved assessee preferred an appeal before the CIT(A) which was allowed by passing the impugned order. Now, the aggrieved revenue is before this Tribunal with the grounds/issues as reproduced hereinabove. 3. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption u/s 11 of the Act on these receipts and there was no valid reason during the year under consideration to take a deviated view from earlier assessment years, therefore, action of the AO was not sustainable and in accordance with law which was rightly dismissed by the CIT(A). Supporting the impugned order, ld. Counsel took us through the operative para 3 to 3.5 of the impugned order and submitted that since the basic activity of operating Samudaik Bhawan and Fitness Centre has been considered as charitable in nature, the issue raised by the AO in the remand report with respect to quantification of profits received from Samudaik Bhawan and Fitness Centre does not require any specific treatment or different treatment from earlier assessment years. Ld. Counsel parted with the argument with a final submission that the assessee society has applied the complete receipts from these activities in achieving the basis objects of the society; therefore, it cannot be said that the receipts from these activities are taxable being commercial in nature. Ld. Counsel also pointed out that the AO was not correct in denying exemption u/s 11 of the Act on impugned receipts of the assessee societ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r achieving the main objects of the appellant society. The samudayik bhawan has been utilized by the members of the society for various social events like bhajan sandhyas, condolence meetings, marriages, religious events, etc. and the fitness centre (gymnasium) has been utilized to treat various patients through physiotherapy. Also the same has been utilized to facilitate good health of the members of society. The charges levied by the appellant for the use of these premises are very nominal and cannot be construed to have been received in the nature of trade or commerce. The same have been levied just to recover the basic expenses incurred by the society on maintaining the same. 3.3 The fact that the basis activities of the society are charitable in nature is not in dispute. The last limb of the definition under section 2(15) is "any other object of general public utility". The appellant has been able to clearly demonstrate that through its Samudayik Bhawan and Gymnasium it is engaged in providing services which are in the nature of general public utility, but not in the nature of trade, commerce or business. The receipts from the same or the profit from the same is utilized who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dum of Association and there was no change in the objects and activities of the organisation since a number of earlier assessment years from the year under consideration. The CIT(A) also observed that during the earlier assessment years, the assessment orders were passed u/s 143(3) of the Act after due scrutiny and the AO allowed exemption u/s 11 of the Act treating the activities of the assessee as charitable under the meaning of section 2(15) of the Act. The CIT(A) also noticed that there was no change in the objects and activities of the organisation during the relevant financial year and assessment year under consideration. The authorities below specifically asked to specify the list of activities carried out at the Samudaik Bhawan and Fitness Centre in view of amended provisions of section 2(15) of the Act. The assessee replied that the Samudaik Bhawan and Fitness Centre were primarily used for achieving the main object of the assessee society and the Samudaik Bhawan had been utilized by the Trust of the society for various social events like Bhajan Sandhya, condolence meetings, marriages, religious events, etc. and the fitness centre (gymnasium) has been utilized to treat var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses which has as its motive the advancement of an object of general public utility, to which the exception carved out in the first proviso to section 2(15) of the Act, the same amended provision would not apply to the present case. 10. In the light of ratio laid down by the Hon'ble High Court in the case of India Trade Promotion Organization vs Director General of Income Tax(Exemptions) (supra), in the present case, we note that the use of Samudaik Bhawan and Fitness Centre and receipts of charges/fees therefrom cannot be held as an activity in the nature of trade, commerce or business or rendering of any service in relation to trade, commerce or business and hence the action of the AO was not in accordance with the provisions of the Act which was rightly dismissed by the CIT(A). On the basis of foregoing discussion and respectfully following the ratio laid down by the Hon'ble High Court in the case of India Trade Promotion Organization vs Director General of Income Tax(Exemptions) (supra), we are unable to see any infirmity, perversity or any other valid reason to interfere with the conclusion of the CIT(A) on these issues. Therefore, we are inclined to hold that the CIT(A) grant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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