Case Law Details
We are prima facie of the opinion that the activities of the assessee of Banquet Hall Hiring, Hospitality (Restaurants) and Permit Room (Bar) are in the nature of carrying on trade, commerce, or business for consideration, which are hit by proviso to Section 2(15) of 1961 Act. We further observe that the receipts from these activities, during the previous year relevant to the impugned assessment year 2009-10, are far in excess of minimum prescribed threshold limit. This requires detailed enquiry and examination by the Ld. DIT(Exemption) as to the various activities undertaken by the assessee over a period of time and its nexus with activity of rendering of trade commerce or business as contemplated and mandated by amended Section 2(15) of 1961 Act read in conjunction with significant observations made in the above order dated 14-2-2017 in North Indian Association(supra). Thus, enquiry and examination by learned DIT(E) is further required to arrive at a conclusion whether activities of the assessee are genuine or not in context of Section 11 of the Act read with amended Section 2(15) of the Act and breach of threshold limit over a period of time.
RELEVANT EXTRACT OF ITAT JUDGMENT
4. The Brief facts of the case are that earlier the assessee was granted registration by the Revenue on the grounds that the assessee is carrying on the activities which are in the nature of advancement of objects of general public utility. Later on, a proposal was received by learned DIT(E) from learned ADIT(E)- 1(2), Mumbai for cancellation of registration as the activities of the assessee are in the nature of trade, commerce or business , and gross receipts are in excess of Rs. 10 lacs and hence newly inserted proviso to Section 2(15) of 1961 Act, w.e.f. assessment year 2009-10, is hit, consequentially, applicable for the impugned assessment year 2009-10. The learned DIT(E) sent show cause notice, dated 20-12-2011, to the assessee asking to explain why registration earlier granted to the assessee by the Revenue u/s 12A of 1961 Act should not be withdrawn on the above grounds. The assessee during the previous year relevant to the impugned assessment year 2 009- 10 has shown receipt from Banquet Hall Hiring Charges of Rs. 87.59 lacs and receipt of Rs. 132.90 lacs from Hospitality (Restaurants) and Rs. 35.53 lacs from Permit Room(Bar).
4.1. The assessee made written submissions vide letter dated 28-12-2011 contesting the show cause notice. However, no personal hearing was attended by the assessee on the date fixed for hearing i.e. on 26-12-2011. The assessee mainly contended that Revenue has in earlier years considered the similar activities of the assessee as charitable in nature vide assessment orders framed u/s 143(3) of 1961 Act and allowed exemption u/s 11 of 1961 Act to the assessee. It was also submitted that for the assessment year 1998-99, the matter travelled up-to Hon’ble Bombay High Court which has allowed the claim of the assessee for exemption u/s 11 of 1961 Act on similar receipt by confirming the order of Mumbai-tribunal which earlier upheld the claim of the assessee for exemption u/s 11 of 1961 Act. The assessee also submitted, without prejudice, that the withdrawal of exemption can only take place w.e.f. 01-06-2010 and not before the said date. The assessee relied upon the decision of Hon’ble Allahabad High Court in the case of Oxford Academy for Career Development v. CCIT (2009) 315 ITR 383(All.) which was subsequently followed in Kapoor Educational Society v. CIT (2010) 44 DTR 97. The assessee also contended that reasonable opportunity of heard should be granted to the assessee before cancelling registration to the assessee, which was granted in earlier year by the Revenue u/s 12A of 1961 Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
