TMI Blog2016 (9) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... r the concept of mutuality and the activities embedded in the Memorandum of Association of the society are charitable. Further the decisions relied upon by the Revenue are not applicable to the facts of the relevant case before us. Therefore, we hereby direct the Revenue to delete the tax imposed on the assessee by withdrawing the benefit under section 11 12 - decided against revenue. - I.T.A. Nos. 1240 to 1242/Mds/2016 - - - Dated:- 23-9-2016 - SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For the Appellant : Mr. Supriyo Pal, JCIT For the Respondent : Mrs. S.Vidya, C.A. ORDER Per A. Mohan Alankamony, AM:- These three appeals are filed by the Revenue aggrieved by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1751/Mds/2013 vide order dated 06.06.2014, following the decision of their predecessors in the assessee s own case in ITA No.2749 to 2751/Mds/1994 for the assessment years 1998-99, 1990-91 and 1991-92 being order dated 25.03.2013, wherein the Tribunal observed as under:- 7. We have heard both the parties and carefully perused the materials available on record. From the order of the Ld. Assessing Officer, it is evident that the trading activities of the assessee society with its members during the assessment years 2008-09 2009-10 generated the following financial results:- A.Y. Sales Profit % of net profit 2008-09 6,40,80,198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for exemption U/s. 11 or U/s. 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of act which will be decided based on the nature, scope, extent and frequently of the activity. 3.1. There are industry and trade associations who claim exemption from tax U/s. 11 on the ground that their objects are for charitable purpose as these are covered under any other object of general public utility . Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of sec.2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business. The aforesaid circular had made it abundantly clear that where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to sec. 2(15) owning to the principle of mutuality. In the present case before us since the assessee society had been only importing raw materials for distribution amongst its members, the principles of mutuality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of CIT v. AyaNadar Charitable Trust (TCA No.259 to 261/04 and 987 to 991/05 dated 16.8.12) when the predominant object was to carry out charitable purpose and not to earn profit, the exclusive clause under Section 2(15) which would otherwise be available to a case of general public utility, would not stand in the way of an assessee claiming exemption under Section 11 of the Act. 24. There is no finding by the Assessing Officer that the amounts utilized by the assessee or the work done by the assessee was in violation of any objects of the assessee enumerated at para 17 above. The competent authority never cancelled or attempted to cancel the registration granted under Section 12A(a) of the Act. The said registration remains intact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of Commerce (55 ITR 722), it is not necessary that objects should be benefit the whole of mankind or all persons living in a particular country or province. It is sufficient if the intention is to benefit a sufficiently large section of the public as distinguished from specified individuals. But the section of the community sought to be benefitted must be sufficiently defined and identifiable by some quality of public or personal nature. Hon'ble Gujarat High Court in the case of HiralalBhagwati v. CIT (246 ITR 188) held a Gujarat Law Society to be entitled for registration under Section 12A(a) of the Act, despite its object being only to grant financial aid to employees in the event of their death during employment, illness or perma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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