Case Law Details
Bombay Chamber of Commerce & Mackinnon Mackenzie Building Vs ITO (ITAT Mumbai)
Concluion: In present facts of the case, while allowing the appeal, it was held that the activities of Assessee comes under “charitable purpose” as defined under Section 2(15) of the Act and is eligible for exemption, because the amounts received by the assessee were not in nature of trade (since there is no exchange of goods either for goods in return or money) or commerce (since it is not engaged in purchase and sale of goods) or business (since assessee is a non-profit making body formed with the promotion of protecting the trade, commerce and manufacture in India and in particular the Bombay Presidency).
Facts: In present facts of the case, the assessee is a non-profit company incorporated in 1924, inter alia for the purposes of promoting and protecting the trade, commerce and manufacturers of India and in particular the trade, commerce and manufacturers of the Bombay Presidency. It is registered under the erstwhile Companies Act, 1956. The assessee was registered as a charitable trust under section 12A of the Act by order dated 22.09.1998. Upto and including the assessment year 2008-2009 the assessments were made granting exemption under section 11 of the Act. The Director of Income-tax (Exemptions) Mumbai [in short DIT(E)] passed an order dated 16.12.2011 under section 12AA(3) of the Act withdrawing the registration under section 12A of the Act on the ground that the assessee is not covered under the term “charitable purpose” as defined in section 2(15) of the Act.
The CIT(A) vide order dated 28.08.2014 dismissed the assessee’s appeal. On further appeal, the ITAT vide its common order dated 15.01.2016 has remanded the matter to the file of the ITO to decide the issue afresh considering that it had re-stored the assessee’s registration under section 12A of the Act. The ITAT also heard the appeal of the assessee against the DIT(E)’s order cancelling 12A registration, the ITAT held that for cancellation of registration under section 12AA(3) of the Act, the provisions of section 2(15) of the Act cannot be brought into play and accordingly set- aside the order of the DIT(E) and directed him to re-store the registration. The CIT(A) confirmed the action of the AO and not consider the assessee’s charitable institution for the purposes of section 2(15) of the Act. He stated that the activities of Trust would be hit by first and second proviso under section 2(15) of the Act.
The Hon’ble Tribunal noted that the relevant Clause 4 of the MOA provides that the income and property of the Association whensoever derived shall be applied solely towards the promotion of the objects of the Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividend or bonus or otherwise howsoever by way of profit to the persons who at any time are or have been members of the Association or to any person claiming through any of them. Further, Clause 8 of the MOA provides that on winding up, the surplus property remaining after satisfaction of all the debts, shall not be paid or distributed among the members, but shall be transferred to some other institution or institutions having similar objects similar to the objects of the Association which is to be determined by the members of the Association.
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