TMI Blog2019 (7) TMI 620X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2017 (10) TMI 1466 - ITAT CHENNAI] was available when the Tribunal decided the impugned appeals. In the said decision, the Tribunal elaborately discussed the issue, examined the memorandum of association of the said assessee association and held in favour of the assessee. In this case also the earlier decision of the Tribunal has been referred to. We have pointed out these orders only for the purpose that in those cases the objectives of the concerned assessee were analysed by the Tribunal. However, we find such exercise was not done in the instant case, which was required to be done. We also make it clear that we have not expressed any opinion on the merits of the matter but, what we are concerned is that, an exercise should be done to examine the contention advanced by the assessee. More particularly, the contention which were raised in this appeal and the decisions which were cited at the bar. As per assessee proceeding proposing to cancel the said registration u/s 12AA was dropped and till date the assessee is enjoying such registration. However, Mr.J. Narayanaswami, learned Senior Standing Counsel, does not have any instructions in that regard but would submit that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The assessment for the years under consideration was completed by the Assessing Officer vide orders dated 28.12.2011, 04.02.2013 29.11.2013 respectively. The Assessing Officer held that, there is no denying to the fact that wattle extract purchased from abroad was sold at a lower price which is not less than the cost of the goods. The explanation given by the assessee that this is an activity of distribution was rejected by the Assessing Officer and it was held that the assessee has earned profits out of the activity of selling wattle extract. Since the assessee enjoyed the benefit of exemption by virtue of registration under Section 12AA of the Act, the Assessing Officer recommended for cancellation of the registration and proceeded to assess the appellant/assessee as an association of persons (AoP). 5. The assessee filed appeals before the Commissioner of Income Tax(Appeals)-VII (CIT(A)) raising various contentions and relying upon several decisions. The CIT(A) by order dated 28.03.2016 allowed the appeals. 6. The Revenue preferred appeals before the Tribunal contending that the assessee's activities are purely in the nature of trade, commerce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace 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 any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, 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 section 2(15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be charitable organizations would now be governed by the additional conditions stipulated in the proviso to section 2 (15). 11. Further, we may note the decisions on this point more particularly the followings: India Trade Promotion Organization Vs. The DGIT (371 ITR 333); Institute of Chartered Accountants of India Vs. DGIT (358 ITR 91); ACIT Vs. South India Hire Purchase Association (116 ITR 793 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import formalities, the Association pooled the demand and placed bulk orders resulting in large economy. Even this activity of the Association is assumed to, but without conceding, in the nature of service rendering to any trade, commerce or business, but definitely not carried out for any cess or fee or any other consideration. i.) Proviso to section 2(15) of Income Tax Act doesn't exclude the activity involves in the nature of trade, commerce or business or rendering any service in relation to any trade, commerce, or business in entirety from the definition of charitable purpose , but it outlined the above referred activities from the ambit of the definition of charitable purpose only if it is carried out for a cess or fee or any other consideration. j.) In our Association's case, from the wattle extract distribution activity some surpluses are arising due to the following reasons. i.) At the time of clearing the consignment of wattle extract from foreign countries, the exact cost per ton could not be ascertained because of interest rate and uncertainty in the period of repayment of loan availed from the bank for importing the raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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