TMI Blog2014 (5) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... elf, cannot partake the character of charitable activity. It is not the case of the assessee trust that such sports activities are provided or have resulted into any benefit to the public at large or any section of the society. The sports activities accompanied by facilities like liquor bar, playing cards, restaurant, marriage hall, catering services etc. limited to a certain group of persons i.e. members of the club cannot be said to be a charitable activity from which any benefit is derived by the public or section of the public rather the benefits are limited to high and rich distinguishable group of persons i.e. members of the club only. There is no element of charity involved in such an activity rather the activities of the club are meant for leisure and pleasure of the members of the club and the membership has been restricted to certain individuals not to any section of the society. We therefore do not find any infirmity in the order of the AO in holding that the activities of the assessee trust do not fall in the definition of charitable purpose as defined under section 2(15) of the Act. Benefit of mutuality - We may point out that if the services of restaurant, bar r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case and in law, the learned CIT(A) Mumbai erred in holding that receipt of ₹ 28,70,211/- received by the assessee from Mahalaxmi Hospitality, Mahalaxmi Hotel Resort and Mahalaxmi Food Link for Purposes of playing cards and also having Permit Room Bar and Restaurant for catering and soft drinks and hiring income from Marriage Hall/ground as exempt u/s 11 even though these activities of the assessee are hit by first proviso to section 2(15) of the IT Act. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A)-1, Mumbai erred in not holding that assessee s activity with Mahalaxmi Group is in the nature of trade, commerce and business for which it received consideration and thus it is hit by first proviso to section 2(15) of the IT Act. 2. The brief facts are that the assessee trust, claiming itself to be a charitable trust, filed its return of income declaring the total income at nil. The Assessing Officer (hereinafter referred to as the AO) noticed that though the assessee trust was granted registration under section 12A of the Income Tax Act (hereinafter referred to as the Act), however, from the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was not entitled to exemption under section 11 of the Act. He held that the assessee trust was in fact not a charitable trust rather was a mutual organisation. He accordingly taxed the assessee s receipts from non members and other sources, such as dividend, interest etc. as income of the assessee during the year. He also noticed that the assessee had received royalty income from restaurant, decorators, halls, swimming pool, club house, collection of room rent, playing cards etc. and treated the said income of ₹ 77,51,361/- as business income of the assessee and taxed it accordingly. Aggrieved against the order of the AO, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) observed that the assessee trust had been conferred the benefit of exemption under section 11 up to assessment year 2008-09. The sports and other activities carried out by the assessee trust partake the character of general public utility which term is included in the definition of charitable purpose as defined under section 2(15) of the Act. For the current financial year, there was no change of facts and circumstances which may lead to change of status of the assessee trust. He theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... club cannot be said to be a charitable activity from which any benefit is derived by the public or section of the public rather the benefits are limited to high and rich distinguishable group of persons i.e. members of the club only. There is no element of charity involved in such an activity rather the activities of the club are meant for leisure and pleasure of the members of the club and the membership has been restricted to certain individuals not to any section of the society. We therefore do not find any infirmity in the order of the AO in holding that the activities of the assessee trust do not fall in the definition of charitable purpose as defined under section 2(15) of the Act. So far the reliance of the ld. A.R. on the decision of the Hon ble Bombay High Court in the case of Director of Income Tax vs. Chembur Gymkhana is concerned, we may find that the facts of the present case are quite distinguishable as compared to the said case as the AO has given a categorical finding in this case that the entry into the club for membership is restricted in many ways and even it is not easy to get membership of the club for the persons who count in the society. The membe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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