TMI Blog2017 (12) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... objects. So it cannot be said that the assessee is involved in any business activity. It is apparent that the assessee exists only for the Welfare of its members and there is nothing on record to prove that the assessee is involved in any business activities. In the assessment years 2009-10 to 2012-13, the AO similarly denied exemption under section 11 of the act. However the Ld.CIT(A) allowed the appeals of the assessee in all these years, copies of the orders are placed in the paper book. The assessee in all these years submitted before the Ld.CIT(A) that the issue is covered by the judgement of Delhi High Court in the case of PhD Chamber of Commerce and Industry vs. DIT(E) (2012 (11) TMI 429 - DELHI HIGH COURT) and the Ld.CIT(A) allowed the claim of the assessee. In the Assessment Year 2009-10 the department filed an appeal before the Tribunal which was dismissed vide order dated 30th December, 2015 finding the tax effect being below ₹ 10 lakhs. However, nothing is explained about the remaining years. It is well settled law that the rule of consistency do apply to the income tax proceedings It may also be noted here that the claim of the assessee has been denied under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry items purchased by the assessee were being misused by the persons covered u/s 13(3) of the Act. The Cross Objection is filed on the following grounds. 1(A) That the Ld.CIT(A) has failed to adjudicate ground of appeal no.4 specifically raised in the memo of appeal filed before the Ld.CIT(A). The said ground of appeal challenging the additions and disallowances made by the Ld.AO have been omitted from consideration by the Ld.CIT(A). 1(B) That adjustment to Income and expenditure account by the AO i.e. adding sale proceeds of assets of ₹ 2,76,899/- and disallowing loss on sale of assets of ₹ 44,690/- and not allowing depreciation is erroneous. The impugned order passed by the AO in computing the taxable income of the assessee is also not based on any discussion or reasoning and therefore the additions/disallowances made therein need to be deleted. 2. I have heard the Ld. Representatives of both parties and perused material on record. 3. The facts of the case are that the assessee is a company registered under section 26 of the Indian Companies Act, 1913 which corresponds to Section 25 of the Indian Companies Act,1956. The assessee filed its re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as per the guidelines provided by Ministry of Commerce, Government of India. The nominal fees are incidental to the main objects of the assessee. The issue is covered by the decision of Hon ble Delhi High Court in the case of PhD Chamber of Commerce and Industry vs DIT(Exemption) reported in 212 Taxman 192. The motive of the assessee is not to earn any profit since there are no profit that can be distributed. The surplus or profit remains with the assessee and is applied solely towards promotion of its objects and no portion is transferred to members. In earlier AYs 2009-10, 2010-11, 2011-12 and 2012-13, the AO had denied exemption under section 11(1) of the Act but the same had been allowed by the Ld.CIT(A). With regard to purchase of vehicles and other articles, it was stated that these were necessary for officials of chamber and are used for meetings with delegations and for attending/visiting conferences, seminars and keeping with the times and advancement of Technology, these tools are necessary and they are not luxury items. The order of the AO is based on surmises and conjectures and not on actual facts. 5. The ld.CIT(A) considering the issue in the light of judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidental to the attainment of the objectives of trust or institution and whether separate books of account were maintained in respect of such activities. There can be no doubt that the activities of the nature described above, in the case of an assessee such as the present one, which is a trade association-Chamber of Commerce and Industry, established to protect the interests of trade and industry in Punjab, Haryana and Delhi - were activities which are incidental to the attainment of the objects of the chamber. We do not think that the Tribunal is justified in taking the view that the assessee, which is a chamber of commerce and industry, is carrying on business activities which require compliance with the conditions of section 11 (4A). In CIT v. Andhra Chamber of Commerce [1965} 55 ITR 722, it was held by the Supreme Court that advancement or promotion of trade, commerce and industry leading to economic prosperity ensured for the benefit of the entire community; that prosperity would be shared also by those who engaged in trade, commerce and industry, but on that account the purpose was not rendered any the less an object of general public utility. Echoing these sentiments anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial question of law framed by us in the negative, in favour of the assessee and against the . Revenue ... 4.2.4 The Hon'ble ITAT Delhi Bench B , in the case of Disha India Micro Credit Vs. CIT in ITA No. 1374/Delj2010 (dated 28.01.2010), inter alia, examined the issue whether profit, even if to be ploughed back, would be liable to income-tax or not. The Hon'ble Tribunal, in para 22 of the order observed as under: 22. It is well settled that when a profit is used towards the achievement of the charitable objects of the trust, it would be considered to be incidental to the achievements of the objects of the trust notwithstanding the profit and gain involved therein. In this respect, a reference may be made to the decision of Hon ble Supreme Court in the case of Asstt. CIT vs, Thanthi Trust (2001) 247 ITR 785(SC). Thus, mere because there was a surplus from the activity of micro financing, that by itself cannot be a ground to say that the assessee does not exist for charitable purpose particularly when under the Memorandum of Association and Articles of Association, it has been clearly provided that the profit shall not be distributed amongst the members bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (supra), decision of the Hon'ble Delhi IT AT in the case of Disha India Micro Credit Vs. CIT (supra) and following the appellate orders of my Id. predecessors CIT (A)-XXI/40 for assessment years 2009-10, 2010-11, 2011-12 and 2012-13 on the principle of consistency, the Assessing Officer is directed to allow the exemption under section 11. These grounds of appeal are, therefore, allowed. 6. Ld.D.R. relied upon the order of the AO and submitted that the departmental SLP is pending before the Honorable Supreme Court in the case of PhD Chamber of Commerce and Industry (supra). On the other hand Ld.Counsel for the assessee reiterated the submissions made before the authorities below and submitted that in the assessment year 2009-10 the department appealed against order of Ld.CIT(A) before the Tribunal, but the departmental appeal has been dismissed because of the low tax effect vide order dated 30th December,2015, a copy of which is placed on record. 7. I have considered rival submissions and do not find any merit in the departmental appeal. It is an admitted fact that the assessee is registered under section 12A of the act. The main objects of the assessee are to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry (supra) wherein on identical facts the claim of the assessee for exemption u/s 11 have been allowed. The AO has not brought any evidence on record as to what business activities are conducted by the assessee with a profit motive and whether the items purchased for achieving the objects are misused by any of the persons covered u/s 13(3) of the Act. Merely because SLP of the department is pending before the Hon ble Supreme Court in the case of Phd Chamber of Commerce and Industry (supra) is no ground to take a different view against the assessee. Considering the facts and circumstances I do not find any merit in the departmental appeal and the same is dismissed. 8. As regards the cross objection of the assessee, it is stated that Ground number 4 of the appeal of the assessee has not been decided by the Ld.CIT(A). I therefore restore this issue to the file of the Ld.CIT(A) with a direction to decide ground no.4 in accordance with law by passing reasoned order by giving reasonable and sufficient opportunity of being heard to the assessee. Thus the Cross Objection is allowed for statistical purposes. 9. In the result the appeal of the department is dismissed and the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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