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TMI Blog2019 (10) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act, 1961 (hereinafter 'the Act'). 2. The first issue in this appeal of assessee is against the order of CIT(A) denying the claim of exemption to the assessee under section 11 to section 13 of the Act by holding that the assessee is carrying on the activity in the nature of trade, commerce or business or related activity in view of the proviso to section 2(15) of the Act. For this assessee has raised the following three grounds: - "1. On the facts, and in the circumstances or the case, and in law, the learned Commissioner of Income Tax (Appeal) [CIT(A)] has legally erred in denying exemption to Applicant under the provisions of Section II to Section 13 read with section 2(15) of the Act by holding that the Appellant is carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of any services thereto. The Tribunal observed in Para 4 to 7 as under: - "4. We have heard the rival contentions and gone through the facts and circumstances of the case. We have gone through the object clauses and noted that none of the objects are in any way in the nature of carrying on any trade, commerce or business or rendering any service thereto. During the course of proceedings before tribunal, it was claimed by the assessee that assessee being a Trade Association of Advertising agencies is not in any way carrying on any activity in the nature of trade, commerce or business nor any activity of rendering any service in relation to any trade, commerce or business for a cess or a fee or any other consideration. We find from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here has been a surplus. The intention of collecting subscription is not to make a surplus but the same is to cost of conducting the fest. The surplus has arisen due to an unprecedented response including last minute entries. Further Circular 11/2008 dated 19 December 2008 also says that the insertion of the proviso to section 2(15) of the Act is to curb the activity of assessee who carry on trade, commerce or business under a mask or a device of charitable purpose, which is clearly not so in this case. 5. We find that in the case of assessee not a single transaction is in nature of trade, commerce or business and the Goa Fest from the detailed facts enumerated above is abundantly and clearly & wholly towards the advancement of Its object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(15) of the Act. Hon'ble Delhi High Court observed as under: The assessee Association is a non-profit and non-trading company representing the interests of fertilizer manufacturers, distributors, importers, equipment manufacturers, research institutes and suppliers of inputs, registered under Section 25 of me Companies Act, 1956. In scrutiny assessment for AY 2010-11, the AO was of the opinion that the exemption under Section 2(15) of he Act by virtue of the amendment of 2009 i e that the assessee was engaged in the advancement of general public utility, disentitled it To claim exemption m lax from payment of tax One of the main grounds which influenced the AO to hold as it did, were The sums of money received by the assessee on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Delhi High Court in ITPO Case (supra) as well as the judgment of Apex Court in Andhra Pradesh Chamber of Commerce (supra) and the test of dominant object has not been altered even after the said amendment. We therefore, hold (hat the denial of exempt/on under section 11 and 12 in the case of the assessee is not in accordance with law and accordingly the additions made by the AO and confirmed by the CIT(A) are deleted." 5. Having regard to the entirety of circumstances especially that the ITAT took note of the relevant decisions such as Surat Art Silk Cloth Manufacturers Association (supra), CIT vs. Andhra Chamber of Commerce55 ITR 722 and India Trade Promotion Organization (supra), the ratio of which were correctly applied, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) has grossly erred in adding an amount of Rs. 15,000 being amount paid towards corpus fund, to the taxable income of the Appellant. " 6. Admittedly, the entrance fee received from members i.e. onetime fee from new members and same is being recorded under corpus fund is being in the nature of capital receipt and this issue has been decided favour of assessee by the decision of Hon'ble Bombay High court in the case of CIT vs. W.I.A.A. Club Ltd. [1982] 136 ITR 569 (Bombay), wherein Hon'ble Bombay High Court held that entrance fee was a fee in the nature of return for vesting their right of membership and hence, the same would be in the nature of capital r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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