Otters Club v. DIT (E), Mumbai
[Citation -2016-LL-0930-253]

Citation 2016-LL-0930-253
Appellant Name Otters Club
Respondent Name DIT (E), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 30/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags charity commissioner • deeming provision
Bot Summary: 09.2016 / O R D E R PER AMARJIT SINGH JM: The assessee moved an application u/s.254(2) of the Income Tax Act 1961( in short the Act ) for the rectification of the mistake in the order dated 03.02.2016 passed by the Tribunal in ITA 2658/M/2012. Earlier to the present order dated 03.02.2016 the Trust was found eligible for claim of exemption u/s.11 of the Act in different years mentioned in para 3 of the application. The registration of the trust could only be cancelled u/s.12A of the Act only on the satisfaction of following condition :- i. the activities of the trust are not genuine; or ii such activities are not being carried out in accordance with the objects of the trust. The order dated 03.02.2016 speaks that the 4 M.A. 102/M/16 A.Y. 2009-10 registration u/s.11 of the Act was not cancelled merely on the ground of that the receipt of the assessee exceeds the permissible limit. Thus in view of the facts and circumstances as discussed above I therefore accordingly hold that the assessee trust has become non genuine for the purpose u/s.12AA(3) read with section 11 of the I.T.Act as for allowing exemption the Trust / Institution should be for charitable / religious purpose therefore the registration as allowed to it is hereby cancelled / withdrawn w.e.f A.Y.2009-10 and the assessee trust is accordingly held as non charitable Trust / Institution. With regard to assessee s contention that order was passed beyond 90 days we found that necessary administrative clearance had been taken and the order was passed on 03.02.2016. In the result miscellaneous application of the assessee u/s.254(2) of the Income Tax Act 1961( in short the Act ) for the rectification of the mistake in the order dated 03.02.2015 passed by the Tribunal in ITA 2658/M/2012 is hereby ordered to be dismissed.


IN INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE S/SHRI R.C.SHARMA ACCOUNTANT MEMBER AND AMARJIT SINGH JUDICIAL MEMBER M.A. NO. 102/M/2016 (Arising out of ITA No. 2658/Mum/2012) ( / Assessment Year: 2009-10) Otters Club / DIT (E) Carter Road Bandra Piramal Chambers Vs. Mumbai - 400050 6 t h Floor Lalbaug Mumbai - 400013 . / . /PAN/GIR No. : AAATO00013F ( /Appellant) .. ( / Respondent) Assessee by: Shri Nitesh Joshi Department by: Smt. Surabhi Sharma / Date of Hearing: 16.09.2016 /Date of Pronouncement:30.09.2016 / O R D E R PER AMARJIT SINGH JM: assessee moved application u/s.254(2) of Income Tax Act 1961( in short Act ) for rectification of mistake in order dated 03.02.2016 passed by Tribunal in ITA 2658/M/2012. M.A. 102/M/16 A.Y. 2009-10 2. applicant was formed as charitable Trust in year 1972 by Trust deed dated 08.12.1972 and was registered with Charity Commissioner under Bombay Public Trusts Act 1950. It has also been registered with Director of Income Tax (Exemption) Mumbai [hereinafter referred to as DIT(E) ] u/s.12A of Act on 16.03.1974. activity of Trust was to provide swimming pool facilities for aquatic events and training facilities for other sports like squash billiards and table tennis etc. said activities were carried out for period w.e.f. 1972-73. plot was leased out by Government of Maharashtra for promoting said object. Earlier to present order dated 03.02.2016 Trust was found eligible for claim of exemption u/s.11 of Act in different years mentioned in para 3 of application. On 02.02.2012 respondent issued notice for cancellation u/s.12A of Act. registration of trust could only be cancelled u/s.12A of Act only on satisfaction of following condition :- i. activities of trust are not genuine; or ii such activities are not being carried out in accordance with objects of trust. These conditions were not satisfied but DIT(E) has wrongly cancelled registration by virtue of order dated 01.03.2012 under challenged. It is also objected that Tribunal did not pass order 2 M.A. 102/M/16 A.Y. 2009-10 within period of 90 days therefore order dated 03.02.2016 passed by Tribunal is wrong against law and facts and is liable to be recalled. It is also stated that it is not case of respondent that activities of trust was not being carried out in accordance with its objects. It is also stated that Tribunal failed to consider law relied by applicant properly such as SAE India Vs. DIT(E) (2015)67 SOT 15 and DIT(E) Bangalore Vs. Karnataka Industrial Area Development Board (2015) 229 Taxman 539 (Karn) and Kodava Samaj Vs. DIT(E) ITA No.200/Ban/2012 and Khar Gymkhana Vs. DIT(E) ITA No.175/Mum/2012 and other law which has been mentioned in para 9 of application therefore order of Tribunal is wrong against law and facts and is liable to be recalled and rectified in accordance with provision of section 254(2) of Act. 3. Notice given. 4. We have carefully gone through Miscellaneous Application filed by assessee as well as order of Tribunal. Through this Miscellaneous Application assessee has requested to Bench to recall it s order dated 03.02.2016 or passed such order as may be think. However no mistake much less apparent mistake was pointed out in Miscellaneous Application. Under provisions of section 254(2) of Act Tribunal is empowered to rectify apparent mistake and not to review its own order or to reach at different conclusion. After going through Miscellaneous Application it 3 M.A. 102/M/16 A.Y. 2009-10 appears that learned AR wanted to change conclusion already drawn by Tribunal which is not permitted u/s.254(2) of Act. bone contention of applicant is that exemption u/s.12A of Act could not be cancelled merely because receipt of applicant exceeded threshold limit as provided to section 2(15) of Act. It is also argued that exemption can only be denied when activities of Trust are not genuine and are not being carried out in accordance with objects of Trust / institution and in this case these points have not been decided by DIT(E) therefore in said circumstances exemption cannot be denied in interest of justice. It is also argued that exemption has been denied retrospectively for period w.e.f 2009-10 which is also wrong against law and facts because order was passed on 01.03.2012 and accordingly this order is liable to be amended / rectified in accordance with law. 5. Before going further it is made clear that in appeal filed by assessee Tribunal has upheld order of DIT(E) dated 01.03.2012 in question wherein registration was cancelled / withdrawn for period w.e.f. 2009-10. bone contention of representative of assessee is that exemption cannot be cancelled on basis of this fact that receipt of assessee has been exceeded permissible limit as mentioned in proviso of section 2(15) of Act. order dated 03.02.2016 speaks that 4 M.A. 102/M/16 A.Y. 2009-10 registration u/s.11 of Act was not cancelled merely on ground of that receipt of assessee exceeds permissible limit. Infact activity of assessee was found to be nature of trade commerce and business. That registration u/s.12A of Act could be cancelled specifically in two circumstances such as when activity of trust / institution was not being carried out in accordance with objects of trust and activity of trust/ institution was not found to be genuine. DIT(E) has also specified this fact that activity of trust was no in accordance with its object. Here concerned para at page 5 of DIT(E) is hereby reproduced below: With regard to income shown by assessee club from social activities like social functions library pavilion hall board room open terrace etc. Hon ble ITAT in assessee club s own case for A.Y.2003-04 had held that these activities cannot be said to be for object of club except for function being organized on Independence day Republic day and Diwali and has further held that these activities would not qualify for exemption u/s.11 of Act. Therefore above activities clearly partake character of trading activities as well as not being in accordance with object of club. said observation has been made by Income Tax Appellate Tribunal in assessee s own case in ITA No.6042/Mum/2006 for 5 M.A. 102/M/16 A.Y. 2009-10 A.Y.2003-04 dated 28th January 2009. There is nothing on record that these findings have been set aside by any court. However DIT(E) has also placed reliance upon this observations. law relied by representative of applicant has duly been discussed in order and Tribunal has arrived at this conclusion that confirmation of cancellation of registration was not merely on basis of excess expenditure u/s.2(15) of Act but same was also for not working in accordance with object of club. However we reproduced finding of DIT(E) under challenge. Once charitable Trust / Institution hit by aforesaid proviso then there is deeming provision that such entity shall not be for charitable purpose. Hence once assessee Trust / Institution looses its charitable character then obviously there is change in status of such assessee and it is no longer can be hold to be for charitable purpose. Once it is held that assessee is not for charitable purpose then trust itself becomes non genuine for purpose of Section 11 of I.T.Act as it looses its public charitable status and accordingly provision of Section 12AA(3) of Act gets attracted. As discussed in earlier paragraph that Hon ble ITAT in assessee s own case has held that some of activities as carried out by assessee cannot be said to be for object of club. Hence activities are not in accordance with objects sought to be 6 M.A. 102/M/16 A.Y. 2009-10 pursued by Institution. Thus in view of facts and circumstances as discussed above I therefore accordingly hold that assessee trust has become non genuine for purpose u/s.12AA(3) read with section 11 of I.T.Act as for allowing exemption Trust / Institution should be for charitable / religious purpose therefore registration as allowed to it is hereby cancelled / withdrawn w.e.f A.Y.2009-10 and assessee trust is accordingly held as non charitable Trust / Institution. In view of said circumstances it is quite clear that registration of applicant has not been cancelled merely on ground of access expenditure of permissible limit u/s 2(15) of Act and applicability of law is also clear which has been discussed while passing order dated 3-2-2016 which does not require to be discussed again. Any how observation in case i.e Bangalore Vs. Karnataka Industrial Area Development Board (2015) 229 Taxman 539 (Karn) has duly been complied with. With regard to assessee s contention that order was passed beyond 90 days we found that necessary administrative clearance had been taken and order was passed on 03.02.2016. Accordingly we are of view that present M.A. is liable to be dismissed as there is no mistake much apparent mistake in order of Tribunal dated 03.02.2016. 7 M.A. 102/M/16 A.Y. 2009-10 7. In result miscellaneous application of assessee u/s.254(2) of Income Tax Act 1961( in short Act ) for rectification of mistake in order dated 03.02.2015 passed by Tribunal in ITA 2658/M/2012 is hereby ordered to be dismissed. Order pronounced in open court on 30th September 2016. Sd/- Sd/- (R.C.SHARMA) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER Mumbai; Dated : 30th September 2016. MP /Copy of Order forwarded to : 1. / Appellant 2. / Respondent. 3. ( ) / CIT(A)- 4. / CIT 5. / DR ITAT Mumbai 6. / Guard file. / BY ORDER //True Copy// / (Dy./Asstt. Registrar) / ITAT Mumbai 8 Otters Club v. DIT (E), Mumbai
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