In a major relief to Bombay Chamber of Commerce & Mackinnon Mackenzie Building, the Income-tax appellate tribunal(ITAT) exempted the assessee trust from Income Tax for rendering services in relation to commercial activity for which fees were charged.
The assessee, Bombay Chamber of Commerce & Mackinnon Mackenzie Building 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 as a section 25 company 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. For the assessment year under consideration, the assessee filed its return of income on 30.09.2009 claiming exemption under section 11 of the Act.
The assessee received an assessment order wherein the ITO denied exemption under section 11 of the Act. However, exemption under the principle of mutuality was granted only to membership subscription but Surplus from non-members was taxed along with interest Income, unutilized accumulation of earlier years, and disallowance under section 14A of the Act. Aggrieved, the assessee preferred the appeal before the Commissioner of Income Tax (Appeals).
The CIT(A) confirmed the action of the AO and did 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 the first and second proviso under section 2(15) of the Act.
The coram headed by the Vice President, Mahavir Singh, and Accountant Member Manoj Kumar Aggarwal noted that the amounts received are 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 we are a non-profit making body formed with the promotion of protecting the trade, commerce, and manufacture of India and in particular the Bombay Presidency).
The ITAT held that the activities carried out by the assessee chamber continue to be charitable in nature even under the amended definition under section 2(15) of the Act and the assessee is entitled to exemption under section 11 of the Act.
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