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Thursday, 21 April 2016 13:27

Rejection of Claim u/s 11 - When the Assessee Trust is Registered with the DIT(E) u/s 12A of the Act as Charitable Institution Claim u/s 11 Cannot be Rejected - Mumbai Tribunal

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Rejection of Claim u/s 11 Rejection of Claim u/s 11

Rejection of Claim u/s 11

When the assessee trust is registered with the DIT(E) u/s. 12A of the Act as charitable institution claim u/s 11 cannot be rejected


1.  The assessee is a Chamber of Commerce registered u/s. 12A of the Act

2. The assessee being a company incorporated u/s. 25 of the Companies Act, 1956 without share capital and does not distribute any dividend to its members and also its entire receipts are expended for fulfillment of its objects as it is a charitable Association

3. The assessee is an Association of various Institutions formed in 1976 for development of trade, industry and commerce

4. AO during the course of assessment proceedings held that the assessee Institution is predominantly a mutual association and non charitable objects and the object of mutual benefits are contradictory to each other

5. According to him u/s. 11 of the Act as a charitable trust and principles of mutuality are mutually exclusive of each other

6. In the mutual association the members subscribe for the primary purpose of benefiting themselves, while in a charitable institution people subscribe for charitable object without any expectation in return

7. In the case of the assessee, the members have contributed only for the purpose of their own benefit and for acquiring certain amenities

8. Therefore, the assessee is treated as mutual association and not as charitable institution

9. Accordingly, he denied exemption u/s. 11 of the Act in view of the proviso to section 2(15) of the Act as introduced w.e.f. 01.04.2009 by the Finance Act, 2008

10. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO and after considering the submissions of the assessee

11. Aggrieved, now assessee is in second appeal before Tribunal


We find that the assessee trust is registered with the DIT(E), Mumbai u/s. 12A of the Act as charitable institution. The assessee falls under the definition of charitable purposes under the last limb of definition to charitable purposes u/s. 2(15) of the act i.e. “the advancement of any other object of general public utility”. We find that the case of assessee is covered by the orders of coordinate benches of the ITAT in the case of Japanese Chamber of Commerce & Industry of Chennai Bench and Indian Chamber of Commerce of Kolkata Bench, supra. In view of the above, we allow this ground of appeal of the assessee.

Cases referred to

1. Japanese Chamber of Commerce & Industry Vs. director of Income Tax (exemptions) (2014) 99 DTR 145

2. Barendra Prasad Ray v. Income-tax Officer (129 ITR 295) SC

3. Commissioner of Income-tax v. Dharma Reddy (A) (73 ITR 751) SC

4. Sole Trustee, Loka Shikshana Trust v. Commissioner of Income-tax (101 ITR 234 SC)

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Read 2282 times Last modified on Wednesday, 04 May 2016 11:57
Deepak Kumar

A Post Graduate and Chartered Accountant Deepak Sinha is a member of Taxpundit's core team. An analytical, result oriented professional with more than 10 years of combined experience in industry and consultancy.

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