Case Law Details
Internet & Mobile Association of India Vs ACIT (ITAT Mumbai)
we noticed that the assessee trust was established to promote internet and e-commerce. In order to promote and popularize the objects, assessee has to arrange and organize the seminars and other medium of promotion. In that process, assessee has organized some sponsorship and collected fees. The existence of these kind of trust depends upon the systematic programs and organizing seminars in that process, they have to collect fees for that effort. In that process, we would not say profit but surplus in order to survive self-reliant and meet out the administration cost of the trust. In our considered view, the Hon‟ble Bombay High Court adjudicated in the case of Shree Nashik Panchvati (supra) that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Therefore, the activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee‟s activities under mutuality concept. We are aware that in order to claim the mutuality, assessee has to maintain the separate books for the service rendered to members and nonmembers. Even the assessee has to prove that the identities of the contributors to the common fund must be entitled to participate in the surplus and the participators to the surplus must be the same persons who have contributed to the common fund. Unless these conditions are satisfied, the assessee cannot be treated as mutual organization. In the given case, AO has not verified nor assessee has claimed any benefit under mutuality. We notice that the assessee has not maintained any separate register for the services rendered to members and non-members. Therefore, it cannot be classified under mutuality.
We also noticed that the registration under section 12AA is restored and the Co-ordinate Bench has already adjudicated that mere holding seminars cannot be termed a commercial or business activity. Therefore, the registration granted after evaluating the objects of the trust as charitable and now merely because of organizing seminars itself cannot make the trust non charitable or commercial. In our considered view, the invoking of section 2(15) of the Act merely because of revenue from organizing seminar cannot make the trust looses the character of charity. The AO himself classified the activities under objects of general public utility. Therefore, the activities carried on by the assessee is only incidental to the main object and the ratio laid down in the case of Shree Nashik Panchvati (supra) is applicable to this case. Therefore, we are inclined to accept the plea of the assessee and accordingly, all the grounds raised by the assessee are allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-1, in short „Ld. CIT(A)‟, Mumbai, dated 23.08.2016 for AY 2009-10.
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