TMI Blog2017 (8) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the AO nor the Ld. CIT(A) has examined the above aspects while arriving at their conclusion. In view of the above, we set aside the order of the Ld.CIT(A) and restore the matter to the file of the AO to make a fresh assessment in the light of our observation at para 7.3 here-in-above and after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant details before the AO. Appeal is allowed for statistical purposes. - ITA No. 6489/MUM/2016 - - - Dated:- 24-8-2017 - Shri Mahavir Singh (Judicial Member) And Shri N.K. Pradhan (Accountant Member) Assessee by : Shri N.M. Porwal, AR Revenue by: Shri Rajat Mittal, DR ORDER Per N.K. Pradhan, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-1, Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the Act ). 2. The Ld. Counsel of the assessee submits before us that the assessee would press only 1st, 9th to 11th and 14th ground of appeal filed on 24.10.2016. The said grounds of appeal read as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts entitled to claim benefits of Sections 11 12, and, therefore, its fundamental status cannot be changed to mutual association to impose tax by denying exemption u/s.11 so long as registration u/s.12A is subsisting and in force. 2. The Ld. CIT(A) erred in not appreciating that the proviso to Section- 2(15) which denies exemption to a charitable institution carrying on commercial activities does not apply to institutions carrying out relief to the poor, education or medical relief but applies only to sports and athletic activities carried out by the appellant trust and even there the dominant and prime objective of the appellant trust was not to earn any profits but to do charity through advancement of an object to general public utility. 3. The Ld. CIT(A) erred in not appreciating that the expression any other object of general public utility in Section-2(15) of the Income-tax Act, 1961 would prima facie include all objects which promotes the welfare of the general public. The Ld. CIT(A) failed to appreciate that the athletic sports activities undertaken by the appellant trust promoted the welfare of the General Public. 4. The Ld. CIT(A) erred in not appreciating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, the assessee filed an appeal before the Ld. CIT(A). We find that in the statement of facts filed before the CIT(A), the assessee-trust has stated that (i) it is registered as a public charitable trust under the Societies Registration Act, 1860, (ii) it is a registered u/s 12A of the Income Tax Act 1961 and its owners are entitled to exemption u/s 80G, (iii) none of its activities are restricted to any members and it is open to the benefit of general public, (iv) it has never claimed any income as arising out of mutuality and exempt from tax. However, the Ld. CIT(A) was not convinced with the above submission of the assessee and he held that registration u/s 12A would not ipso facto entitle the assessee to claim exemption u/s 11 in view of the decision in the case of Surat Tennis Club vs. CIT (2000) 75 ITD (Ahd). The Ld. CIT(A) further found that the assessee-trust is engaged in activity of rendering any service in relation to the business for a cess or fee . According to him, this is evident from the fact that in object clause (h) of the assessee-trust, it is mentioned that it may give its property on rent. As per the copy of hall booking form in Prabodhan Kridabha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies on the order passed by the Ld. CIT(A). He submits that a club is generally a mutual association as its membership is restricted to a particular section and only the members and their guests are entitled for the services of the club. A charitable institution can run a club but the income attributable to the activities of the club would be governed by the principles of mutuality and not charitable purpose as its activities are not meant for the advancement of any other object of general public utility. The Ld. DR further submits that since the assessee is engaged in providing services to its members these activities are not for charitable purpose but hit by the proviso to section 2(15) of the Income Tax Act. 7. We have heard the rival submissions and perused the relevant materials on record. In Sree Anjaneya Medical Trust vs. CIT [2016] 67 taxmann.com 230 (Kerala),it is held that while granting registration to a trust, authorityis empowered to examine only genuineness of trust and its activities; during assessment only eligibility in terms of sections 10, 11 and 12 is to be verified as to whether or not what was professed was indeed in Deed of trust. 7.1 We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by giving the same or similar facilities to all alike in respect of the one and the same business carried on by it, the dealings as a whole, disclose the same profit-earning motive and are alike tainted with commerciality and the resultant surplus is profit-income liable to tax. B. In respect of proviso inserted by the Finance Act 2008 to section 2(15), one has to keep in mind that such entities shall not be eligible for exemption u/s 11 or u/s 10(23C) of the Act, if they carry on commercial activities. One has to examine the nature, scope, extent and frequency of such activity. We have perused the relevant materials on record and find that neither the AO nor the Ld. CIT(A) has examined the above aspects while arriving at their conclusion. In view of the above, we set aside the order of the Ld.CIT(A) and restore the matter to the file of the AO to make a fresh assessment in the light of our observation at para 7.3 here-in-above and after giving reasonable opportunity of being heard to the assessee. We direct the assessee to file the relevant details before the AO. As we have restored the matter to the file of the AO, we are not adverting to the case laws relied on by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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