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TMI Blog2020 (1) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... oses its character being hit by the proviso to section 2(15) of the Act, the only blanket available to it, was principle of mutuality. Further the ITAT also failed to appreciate the fact that interest income earned from non-members could neither be exempted from tax u/s 11 of the Act, as it had lost its charitable character being hit by proviso to section 2(15) nor could be exempted under the principle of mutuality as the interest income was earned from nonmembers? (b) Whether on the facts of the case and in law the ITAT erred in not appreciating the fact that in the case of Escorts Ltd. Vs. UOI 199 ITR 43 it was held that since section 11 of the Income Tax Act provides for deduction of capital expenditure incurred on assets acquired for the objects of the trust and does not specifically & expressly provide for double deduction on account of depreciation on the same very assets acquired from such capital expenditure, no deduction shall be allowed u/s.32 for the same or any other previous year in respect of that asset as it amounts to claiming a double deduction? (c) Whether, on the facts and in the circumstances of the case and in law the ITAT erred in relying upon the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and deleted the additions made by the Assessing Officer as affirmed by the Commissioner of Income Tax ( Appeals). 8. Aggrieved, revenue has preferred the present appeal before us raising the above questions. 9. Submissions made have been considered. 10. In so far addition of interest income of Rs. 2,36,07,023.00 is concerned, Tribunal found no merit in the stand taken by the lower revenue authorities. Relevant portion of the order passed by the Tribunal is as under :- 12.6 We have considered the rival submissions. Sections 11 to 13 of the Act deal with the provisions relating to income derived properties held for charitable or religious purposes. The assessee before us is a trust registered under the Bombay Public Trust Act, 1950 and also continues to hold the registration granted to it by the Commissioner of Income Tax under section 12A of the Act since 5/12/1997 as a charitable trust. Notably, the main objects of the assessee trust are stated to be the promotion of sports, games and recreation facilities to the public at large and for the physical development and healthy life style as well as promotion of other charitable objects. The factum of the promotion of sports an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see by deleting the said addition. 13. In the course of hearing it has been brought to our notice that against the order passed by the Tribunal in the case of Bombay Presidency Golf Club Limited, Revenue had preferred an appeal before this court being Income Tax Appeal No.235 of 2017. This court by order dated 2nd April, 2019, dismissed the appeal of the Revenue by upholding the finding of the Tribunal holding that no question of law arose therefrom. 14. Coming to the other three additions, Tribunal held as under :- "12.8 Likewise, the other three categories of income namely, compensation from the caterer (restaurant), compensation from decorator for gymkhana functions and Miscellaneous income are concerned, herein also it cannot be said that the same involve carrying on of any activity in the nature of trade, commerce or business. It is quite clear that the scope and ambit of the exemption envisaged in sections 11 & 12 of the Act relate to the receipt of income derived from the property held under trust for charitable or religious purposes to the extent to which such income is applied to such purposes in India. Before proceeding further, we may reiterate that there is no charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the public at large and such like receipts on account of compensation from the Decorator against gymkhana function, miscellaneous income and compensation from caterer (restaurant) cannot be construed as activity in the nature of trade, commerce or business for the purposes of the proviso to section 2(15) of the Act. Therefore, having regard to the facts and circumstances of the case, in our view, the CIT (A) erred in departing from his stand in earlier years by wrongly relying on the proviso to section 2(15) of the Act in the instant year because the activities in question cannot be construed to be in the nature of trade, commerce or business so as to fall within the purview of the proviso to section 2(15) of the Act. Thus, on this aspect assessee succeeds." 15. Thus Tribunal held that there was no charge or allegation against the assessee at any stage that there was application of income for any purpose other than the object of the Trust. Tribunal opined that mere charging of fee ipso-facto would not enable an activity to be governed by the proviso to Section 2(15) of the Act. In the present case, Tribunal held that object of the assessee is undoubtedly promotion of sports, ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otive. What is necessary to be considered is whether having regard to all the facts and circumstances of the case, the dominant object of the activity is profit making or carrying out a charitable purpose. If it is the former, the purpose would not be a charitable purpose, but, if it is the latter, the charitable character of the purpose would not be lost." 18. Following the Supreme Court decision, this court in Shree Nahsik Panchvati Panjrapole (supra) emphasized that the test that should be applied whether it was income earned from business or income earned from incidental activity is the test of dominant object of the trust i.e., what is the dominant object of the activity. If the dominant object of the activity is profit making, the purpose would not be charitable but if the dominant object of the activity is charitable then notwithstanding making of profit, the charitable character of the purpose would not be lost. 19. On careful consideration of the order of the Tribunal, we find that Tribunal has returned a finding of fact on all the counts to the effect that the income under the above heads were earned only as activity incidental to the dominant activity of the Trust and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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