TMI Blog2018 (8) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT]. However, the appellant stated that the said interest income has already been offered to tax in the return of income for the A.Y.2011.12. Disallowance of capital expenditure incurred by the appellant as application of income for the objects of the trust - Held that:- The assessee raised the exemption u/s 11 of the Act and also claimed the capital expenditure incurred for fix assets to the tune of ₹ 15,000/-. AO disallowed the same on the ground of claim of depreciation on the said amount. There is no claim of depreciation. Since there is no plausible reason on record to decline the claim of the assessee, therefore, we set aside the finding of the CIT(A) on this issue and restored this issue before the AO to decide the issue afresh in accordance with law. - I.T.A. No.5681/M/2015 & 6393/M/2016 - - - Dated:- 31-7-2018 - Shri G. S. Pannu, Am And Shri Amarjit Singh, JM Assessee by : Shri Sunil Nahta ( AR ) Department by : Shri Rajesh Kumar Yadav ( DR ) ORDER Per Amarjit Singh, JM The assessee has filed the above mentioned appeals against the order dated 21.10.2015 16.09.2016 passed by the Commissioner of Income Tax (Appeals)-1, Mumbai [hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fees of ₹ 7,61,075/- as income chargeable to tax without appreciating that the said receipts are exempt from income tax under the principle of mutuality and the reasons assigned for doing so are wrong and contrary to the facts of the case, provisions of the income tax Act, 1961 and rules made thereunder. 4(b) On the facts and in the circumstances of the case and in law, the learned CIT(A) action of charging to tax the subscription received from members and entrance fees is contrary to the decision of the Hon'ble 1TAT in the appellant's awn case in ITA No. 285 286/Bom/95 for A.Ys 1989-90 1990-91. The appellant craves leave to add, alter, amend and/or modify all or any of the above grounds of appeal on or before the date of hearing. 4. The brief facts of the case are that the assessee filed its return of income for the A.Y. 2011-12 on 28.09.2011 along with the income Expenditure Account, Balance Sheet and Audit Report in form no. 10B declaring total income at Rs. Nil. The institution was registered as a Charitable Organization with DIT (Exemption), Mumbai u/s 12A vide Registration No. INS/14619 dated 11/11/1982. The assessee accordingly claimed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed the present appeal before us. ISSUE NOs.1:- 5. Under this issue the assessee has challenged the denial of claim for exemption u/s 11of the Act, 1961 by invoking the provision u/s 2(15) of the Act. The Ld. Representative of the assessee has argued that the assessee company was incorporated on 28.04.1948 under the Companies Act, 1956 with the name as Audit Bureau Circulations Limited with a dominant object to secure accurate figures of circulation of newspapers and periodicals published in the country through a standard process of independent audit to assist the advertisers in estimating the value of any publication for reaching consumers. The Bureau gives ABC certificate at free of cost to members and in case members requires any extra copies, the same is provided on nominal charge to recover the cost of copying. The Bureau obtained the registration u/s 12A of the I.T. Act, 1961 on 11.11.1982 and thereafter, the appellant was continuously claiming the exemption u/s 11 of the I.T. Act and the exemption was allowed by Income Tax Authority but after the amendment of Section 2(15) of the Act, the claim of the assessee was declined whereas there was no change in the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as declined in the year of 1989-90 1990-91 which was allowed by Hon ble ITAT in appeal. In brief, the claim of assessee was allowed till the present order was passed after the amendment in Section 2(15) of the Act. Before going further it is necessary to advert the object of the assessee s company on record. Clause 3 of the Memorandum of Association is hereby reproduced below:- 3. The objects for which the Association is established are: a) To secure accurate circulation figures and data relating to all periodicals and media that sell advertising space and in regard to such publications to obtain information as to area of and fix standard forms and methods for ascertaining the net sales figures and generally all information that Will be of assistance to advertisers in estimating the value of an publication for advertising purposes and to record such information and circulate it to members of this Association and, publications and the circulation of them for the benefit of members of this Association such service to be known as the A.B.C. service or by such other name or description as the Council fl91ttftn may determine from time to time. aa)To set up a new divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt all or any of the property or assets of the Association as may be thought expedient with a view to the promotion of its objects. e) To undertake and execute any trusts which may law-fully be undertaken by the Association and may be conducive to its objects. f) To borrow or raise money for the purposes 01 the Association on such terms and on such security as may be thought fit. g) To invest the moneys of the Association rot immediately required for Its purpose in or upon such investments, securities or property as may be thought fit. h) To establish and support or aid in the establishment and support of any charitable or benevolent associations or institutions and to subscribe or guarantee money for charitable or benevolent purposes in any way connected with the purposes of the Association or calculated to further Its objects. 1) 10 do all such other things as are incidental as the association may think conducive to the attainment of the above objects or any of them. j) To pay all the expenses connected with the formation and incorporation of the Association- k) Except as otherwise expressly stated to do all or any of the foregoing things anywh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentatives. (b) The other half of the members for the time being of the Council, shall consist of and include both (i) members of the Association who advertise commodities or services in any newspaper or periodical, or their representatives and (ii) members of the Association who are advertising agents or their representatives. 6. The liability of the members is limited. 7. Every member of the Association undertakes to contribute to the assets of the Association, in the event of the same being wound up during the time that he is a member, or within one year afterwards, for payment of the debts and liabilities of the Association contracted before the time at which he ceases to be a member, and of the costs, charges and expenses of up the same, and for the adjustment of the rights of the contributories amongst themselves, such amount as may be required not exceeding Rupees Fifteens 8. If upon the winding up or dissolution of the Association there remains after the satisfaction of all As debts and liabilities any property whatsoever, the same shall not be paid to or distributed among the members of the Association, but shall be given or transferred to some other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agencies advertisers and Government publicity Department. It also distribute information relating to aforesaid matters to the Government and other association having objects and similar to those of this associations. The bureau certifies circulation figures of members publication based and on comprehensive audit by the auditor from a panel of approved auditors. This is one of the main activity of the assessee company. How the objects became commercial in nature is not understandable. The objects of the company are for the ultimate benefit of the public, but in what circumstances the objects of the assessee become commercial in nature, is not substantiated by the revenue in fact, even a single transaction of trade or commercial or business has not been referred to by the revenue. There was no change in the activity of the assessee since past years, and therefore, the amendment by insertion of the proviso u/s 2(15) of the Act would not make the activity of the assessee as trade, business and commerce in nature specifically in the circumstances when there is not a single instance of any business on record. The dominant purpose if any is charitable and incidental activities are not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord to decline the claim of the assessee, therefore, we set aside the finding of the CIT(A) on this issue and restored this issue before the AO to decide the issue afresh in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. In result, appeal filed by the assessee is hereby ordered to be partly allowed. ITA NO.6393/M/2016;- 11. The assessee has filed the present appeal against the order dated 16.09.2016 passed by the commissioner of income tax (A)-1, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the assessment year 2012-13. 12. The assessee has raised the following grounds:- 1. 1(a) On the facts and in the circumstances of the case and in law, the learned Commissioner of income Tax (Appeals) (hereinafter referred as CIT(A)'t erred in confirming the action of the Ld. Assessing Officer of denial of claim for exemption under section 11 of the Income Tax Act, 1961 and the reasons assigned for doing so is wrong and contrary to the facts and circumstances oi the case, provisions of Income Tax Act, 1961, and Rules made there under. 1(b) (i) On the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 and the reasons assigned for doing so is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and Rules made there under. 2(a) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the learned Assessing Officer of treating subscription received members ₹ 1,45,12,844 and entrance fees of ₹ 1,58,750/- as income chargeable to tax without appreciating that the said receipts are exempt from income tax under the principle of mutuality and the reasons assigned for doing so are wrong and contrary to the facts of the case, provisions of the 1iconie.tax Act, 1961 and rules made. thereunder. 2(b) On the facts and in the circumstances of the case and in law, the action of lower authorities in charging to tax the subscription received from members and entrance fees is contrary to the decision of the Hon ble ITAT in the appellant's own case in ITA No. 285 286/Bom/95 for AX's 1989-90 . 1990-91. The appellant craves leave to add, alter, amend and/or modify, all or any of the above grounds of appeal on or before the date of hearing. 13. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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