Case Law Details
All India Federation of Tex Practitioners Vs ITO (ITAT Mumbai)
Conclusion: Since there was no allegation by the departmental authorities that assessee had violated any of the conditions of the provisions of sections 11, 12 and 13, except, the allegation that assessee was a mutual concern and even applying the rule of consistency, assessee’s claim of exemption under section 11 had to be allowed.
Held: The core issue in both the appeals revolved around denial of assessee’s claim of exemption under section 11 and bringing to tax the income earned by assessee from interest and donation from non members by applying the principles of mutuality. Apart from these, there was an additional issue in assessment year 2011-12 relating to disallowance of Rs.1 Iakh on account of alleged non utilization of accumulated funds. In the facts of the present case, it was very much clear that assessee had carried out activities in furtherance of its objects. In the process, assessee might have earned some income by way of subscriptions, sale of publications, etc. However, this income earning activities of assessee could not be treated to be in the nature of trade, commerce or business. In any case of the matter, from its very inception assessee had been granted exemption under section 11. Only, in the impugned assessment years its claim of exemption had been denied. Though, while granting exemption in earlier as well as subsequent assessment years no scrutiny assessment had been made; however, fact remained that assessee’s claim of exemption had been accepted over the years. Further, the activities/objects on the basis of which claim of exemption under section 11 was accepted in other assessment years had not changed in the impugned assessment years. In fact, the registration granted under section 12A still continued. Even applying the rule of consistency, assessee’s claim of exemption under section 11 had to be allowed. Assessee having maintained its status as charitable organization was entitled for exemption under section 11, subject to fulfillment of conditions prescribed under sections 11, 12 and 13. However, there was no allegation by the departmental authorities that assessee had violated any of the conditions of the aforesaid provisions, except, the allegation that assessee was a mutual concern. That being the case, all its income including the interest and donations received from non-members would also be exempt from taxation. AO was directed to verify assessee’s claim and in case it was found that the assessee has already offered the amount of Rs.1 lakh as income in assessment year 2010-11, addition should be deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Captioned appeals by the same assessee arise out of a common order dated 10-05-2019 of learned Commissioner of Income Tax (Appeals)-3, Mumbai for the assessment years 2011-12 and 2013-14.
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