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2015 (10) TMI 739 - ITAT DELHI

2015 (10) TMI 739 - ITAT DELHI - TMI - Exemption u/s 11 - Charitable activity u/s 2(15) - Addition on account of income from Samudaik Bhawan after allowing expenses - whether net income rightly assessed by invoking proviso to section 2(15) - CIT(A) deleted the addition - Held that:- In the light of ratio laid down in the case of India Trade Promotion Organization vs Director General of Income Tax(Exemptions) (2015 (1) TMI 928 - DELHI HIGH COURT ), in the present case, we note that the use of Sam .....

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on these issues. Therefore, we are inclined to hold that the CIT(A) granted relief for the assessee on justified reasoning and cogent basis and we uphold the same. - Decided against revenue. - I.T.A.No.4950/Del/2013 - Dated:- 24-7-2015 - BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER Appellant by: Shri K.K. Jaiswal, DR Respondent by : Shri Ved Jain, Adv. Paranjal Srivastava, Adv. Shri Ashish Goel, CA ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appea .....

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was rightly assessed by invoking proviso to section 2(15) of the Income Tax Act,1961. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 8,31,2631- made by the AO on 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 ₹ 14,74,6771- made by the AO on account of income from .....

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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 have heard arguments of both the sides and carefully perused .....

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R further contended that each case would be decided on its own facts and no generalisation is possible and in the present case, the assessee claimed that their object is charitable in nature within the meaning of section 2(15) but the same would be well advised to eschew any activity which is in the nature of trade, commerce or business or rendering of any service in relation to trade, commerce or business. 4. Ld. DR further submitted that the income earned by the assessee from Samudaik Bhawan, .....

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the assessee pointed out that the assessee trust was granted registration u/s 12A of the Act dated 3.6.1976 and an order u/s 80G(5)(vi) dated 13.08.2007 which was valid from 1.4.2007 to 31.3.2010 and the assessee was carrying out charitable activities as per its Memorandum of Association right from its beginning. Ld. Counsel further contended that there was no change in the activities of the assessee society in comparison to earlier assessment years and in the assessment year under consideratio .....

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ars, 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 .....

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impugned receipts of the assessee society and the CIT(A) granted relief after analysing the totality of the facts and circumstances of the case which is balanced and justified. 6. On careful consideration of above rival submissions and vigilant perusal of material placed on record including paper book of assessee spread over 172 pages, assessment order and impugned order of the CIT(A), we note that the CIT(A) granted relief for the assessee society with following observations and conclusion:- 3. .....

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upto the 12th Standard In the name of Maharaja Agarsain Public School ii) Running a hospital in the name of Maharaja Agarsain Hospital, iii) Running a Physiotherapy unit under Maharaja Agarsain Hospital. iv) Running a Dharamshala called Maharaja Agarsain Bhawan & v) Running a Fitness Centre with sophisticated machines. These machines are not available in the physiotherapy centre, the fitness centre is basically used by the patients of Maharaja Agarsain Hospital. However, the fitness centre i .....

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charitable under the meaning of section 2( 15) of the Act. How activities has' changed in AY 2009-10 and the appellant is a non-charitable in the present year is also a main issue to be addressed. 3.2 The appellant was asked to specify the list of activities carried out at the Samudayik Bhawan and Fitness Centre. A perusal of the details reveals that Samudayik and Fitness Centre/ Gymnasium are primarily being used for achieving the main objects of the appellant society. The samudayik bhawan .....

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ce. 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 .....

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. 3.4 Though there is an amendment in the Act w.e.f. AY 2009-10, it has been clarified by the CBDT vide circular No. 11/2008 dated 19.12.2008, wherein, it has been emphasized that each case would be decided on facts and no generalization is possible. So, I find that by taking the shelter of the amendment, AO cannot hold that activity done by the appellant society has become noncharitable because of the amendment in section. After considering the reply of the appellant and finding of the AO, I am .....

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ii) For Physiotherapy centre under the name Maharaja Agarsain Hospital (Physio Wing). iv) For other miscellaneous activities under the name Agarwal Welfare Society (Regd) which includes Samudaik Bhawan & Fitness Centre . 3.5 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 the quantification of profits received from Samudayik Bhawan and Fitness Centre does not r .....

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bjects mentioned in its Memorandum 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( .....

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e 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 various patients through physiotherapy. It was also explained by the assessee society that 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 cons .....

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ced that the receipts/profits from the alleged activities were wholly and exclusively used for the objectives of the society and there was no allegation of profit motive or commercial activity in the nature of trade, commerce or business. 8. In view of above noted facts and circumstances, we reach to a logical conclusion that the AO applied/invoked amended provisions of section 2(15) of the Act without any reasoning and justified basis and the same was rightly deleted by the CIT(A) after due exa .....

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ed reliance upon the judgment of Hon ble Jurisdictional High Court of Delhi in the case of India Trade Promotion Organization vs Director General of Income Tax(Exemptions) (W.P. (C) 1872/2013 dated 20.1.2015 and submitted that it is clear from the facts of the case that the driving force of the activities is not the desire to earn profit but the object of promoting trade and commerce not for itself but for the nation - both within India and outside India. Ld. Counsel also pointed out that in thi .....

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