Case Law Details
Confederation of Indian Textile Industry Vs ITO (ITAT Mumbai)
The issue under consideration is whether the exemption u/s 11 will be allowed against the interest income, exchange gain, and miscellaneous income to the Confederation of Indian Textile Industry?
In the present case, the AO applied the principles of mutuality and observed that the regular income derived by the assessee from its members is exempt from the principles of mutuality. However, with regard to the interest income, exchange gain, and miscellaneous income as tabulated in the aforesaid table, the AO observed that these incomes were derived by the assessee from its non-members and accordingly, the same would not be exempt on the principles of mutuality. AO applied the proviso to Section 2(15) of the Act and consequently rejected the claim of exemption under Section 11 of the Act.
ITAT states that, they do not find any finding at all by the Assessing Officer or even by the CIT(A) that any of the activities of the assessee are with a profit motive so as to attract proviso to Sec. 2(15) of the Act. So far as the Principle of Mutuality is concerned, the same is with reference to the services vis-a-vis the members and qua the income received by assessee from non-members, the other provisions of the Act would govern. In any case, an entity cannot be denied charitable character merely because some element of its income is exempt from the Principles of Mutuality. Thus, on this aspect also, we find no reason to uphold the stand of the Revenue. In the result, ITAT hereby set-aside the order of CIT(A) and the Assessing Officer is directed to allow the benefit of Sec. 11/12 of the Act to the assessee and thereafter recompute the income, as per law.
FULL TEXT OF THE ITAT JUDGEMENT
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