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The Andheri Recreation Club Versus ITO (E) 2 (4) , Mumbai

2017 (9) TMI 833 - ITAT MUMBAI

Denying exemption U/s 11 - proof of charitable activities - nature of activities - principle of mutuality violation - Held that:- The receipt from member, fees from guest of members, compensation from caterers, locker rent, sundry receipts nowhere falls in the category of trade business and commerce. Nothing came into notice that the assessee has changed its object. The object of the assessee trust has duly been described in the memorandum of association and the expenditure seems to its ancillar .....

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le of mutuality was not violated then in the said circumstances the case of assessee is liable for exemption u/s 11. Even a single instance is not on the file which may describe this fact that the assessee has been involved in the trade, business and commerce. - It is also came into notice that the revenue allowed the claim of the assessee in the earlier years and also allowed the claim of the assessee for the A.Y. 2010-11 u/s 143(3). There is no factual change in the activity of assessee in .....

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ORDER PER AMARJIT SINGH, JM: The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals)-1, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the assessment years2011-12 & 2012-13. ITA NO.5059/M/2015:- 2. The assessee has raised the following grounds:- 1.In the facts of the case and in Law, the learned AO (Exemption] erred in denying exemption U/s 11 & the Commissioner of Income Tax [Appeal] also erred in co .....

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and thereby overlooking the fact that promotion of trade & commcerce is also qualifies u's 2(1) r w s 13[81 as charitable object and also overlooking the fact that amended provisions of section 2[15] were applicable only to cover those organizations which were tide associations only for the benefit of business, By not appreciating the fact that provision of facilities of recreation, restaurants, gymnasium and sports facilities for a charge by itself does not amount to non-charitable pro .....

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peal before its conclusion. 3. The brief facts of the case are that the assessee filed its return of income on 29.09.2011 along with the income and expenditure account, balance-sheet and audit report in form no. 10B declaring total income to the tune of Rs. Nil. The trust is registered as a Charitable Organization with DIT(E), Mumbai u/s 12A under Registration No. INS/703 and with Charity Commissioner, (Mumbai). Vide Registration no. F-1892 (Mumbai). The case was selected for scrutiny, therefore .....

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e received the income from Club House Activities to the tune of ₹ 2,05,73,296/- as mentioned below.:- Particular Amount(Rs.) Receipt from Members and Guests 81,25,708 Fees from members & Guest 1,03,44,491 Compensation from caterers 16,98,000 Locker rent 60,300 Sundry receipts 3,44,797 Total Amount 2,05,73,296 5. The assessee claimed income as exempt u/s 11 of the Act being charitable in nature. The Assessing Officer examined the record and was of the view that the case of the assessee .....

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e, the Assessing Officer declined the claimed of the assessee u/s 11 r.w.s 13(8) of the Act and assessed the income to the tune of ₹ 1,59,64,670/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the order, therefore, the assessee has filed the present appeal before us. ISSUE NO.1:- 6. We have heard the argument advanced by the Ld. Ld. representative of the parties and perused the record. The Ld. representative of the assessee has argued that the assessee cl .....

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IT(A) is wrong and against the law and fact and is liable to be set aside. It is also argued that the present case is the case of the A.Y. 2011-12 while in the case of A.Y. 2010-11 the order has been passed u/s 143(3) in which the exemption u/s 11 of the Act has been granted to the assessee but declined in the present year as well as in an another year i.e., 2012-13 wrongly and illegally without differentiating the facts, therefore, in the said circumstances the claim of the exemption u/s 11 of .....

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he assessee, hence, the finding of the CIT(A) is liable to be set aside and the claim of the assessee is liable to be allowed. In support of these contention the Ld. representative of the assessee has also relied upon the following law :- 1. Calcutta Cricket & Footbal Club Vs. Ito Exemption In ITA. Nos 466/Kol/2016 dated 05.08.2016 for A.Y. 2011-12 2. Navi Mumbai Gymkhana ITAT Mumbai ITA No. 196/Mum/2013 dated 21.05.2014 for A.Y. 2009-10. 3. Chembur Gymkhana Mumbai ITAT ITA Nos. 3033/Mum/201 .....

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n. With due to regard to the contention raised by the Ld. Representative of the parties and perusing the record. We noticed that the Assessing Officer has declined the claim of the assessee u/s 11 of the Act mainly on the basis of the exception of the Section 2(15) of the Act. We deemed it necessary to reproduce the clause 3 of the memorandum of association which explained the object of the assessee :- (a) To take over the assets, properties and engagements of the present unregistered institutio .....

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ntain and manage Reading Rooms, class Rooms, Swimming Pools, Libraries, Laboratories, Gymnasioums, Workshops, Publishing Houses, Hostels. Residential Quarters and the like. (c)To facilitate and spread education by starting, affiliating, established and maintaining of assisting in establishing and maintaining at K Ward i.e. Jogeshwari, Andheri and Versova areas of elsewhere Schools, Colleges and Academics for imparting Primary, Secondary and Higher industrial or other education with a view to tra .....

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relation to any trade, commerce and business for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activities unless - (1) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility, and (2) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or instit .....

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incurred on badminton, billiards, card room, lawn tennis swimming pool entertainment etc. are not in nature of charitable. Anyhow, on appraisal of the order passed by the AO we nowhere noticed to which it can be assumed that the assessee trust was involved any in the activities of trade, commerce and business and rendering any service related to trade, commerce and business. The receipt from member, fees from guest of members, compensation from caterers, locker rent, sundry receipts nowhere fal .....

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so and was involved in the activity of profit and also nowhere pointed out that the service of the restaurant, swimming pool etc. was provided to the outsider other than the member and family members and guest of the members also. Since, the principle of mutuality was not violated then in the said circumstances the case of assessee is liable for exemption u/s 11 of the I.T. Act. Even a single instance is not on the file which may describe this fact that the assessee has been involved in the trad .....

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the claim of the assessee for the A.Y. 2010-11 u/s 143(3) of the I.T. Act, 1961.There is no factual change in the activity of assessee in the current year. Taking into account of all the facts and circumstances of the case, we are of the view that the claim of the assessee has wrongly declined, therefore, the finding of the CIT(A) is wrong and against law and facts and is not liable to be sustainable. Accordingly, we set aside the finding of the CIT(A) on these issues and allowed the claim of t .....

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