Activities of Society for Benefit of Investors and Potential Investors forming part of General Public, eligible for Income Tax Deduction: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that activities of society for benefit of investors and potential investors forming part of general public, eligible for deduction under Section 11 of the Income Tax Act, 1961.

The appeal has been filed by the assessee against the three separate orders passed by the Commissioner of Income Tax for the Assessment Years 2011-12, 2012-13 and 2013-14 whereby the CIT(A) has confirmed the order passed by the Assessing Officer denying the claim of exemption under Section 11 of the Act made by the Appellant and dismissed the appeal filed by the Assessee against the respective assessment order passed under section 143(3) of the Income Tax Act, 1961.

The Appellant, M/s Association of Mutual Funds in India a Section 25 Company incorporated under the provisions of the Companies Act, 1956 and holding valid registration under Section 12A of the Act, filed its return of income on 30.09.2011 declaring “Nil” income after claiming exemption under Section 11 and 12 of the Act.

The Assessing Officer observed that where industry or trade association claims to be, both, charitable institution and mutual organization, their claim to be charitable organizations would be governed by the provisions contained in First Proviso to Section 2(15) of the Act as regards their dealings with non-members are concerned. However, the Assessing Officer denied exemption under Section 11 read with Section 2(15) of the Act and brought to tax gross receipts from non-members without allowing any deduction for expenditure incurred. The CIT(A) also dismissed the appeal and hence the assessee is in appeal before the Tribunal.

A Division Bench of the Tribunal consisting of Pramod Kumar, Vice President and Rahul Chaudhary, Judicial Member held that “The aforesaid activities of the Appellant are directed towards the benefit of investors and potential investors forming part of the general public and are not limited to the benefit of its members. The Appellant has also maintained separate accounts in respect of these activities. In view of the above, the Assessing Officer is directed to allow exemption under Section 11 of the Act to the Appellant.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.