All India Federation of Tax Practitioners v. ITO(E) I(2), ITAT, Mumbai in (2021)

Assessee trust, whose main aim is to spread education in matters relating to tax laws and other laws, was registered under section 12A of the Income Tax Act and had been approved under section 80G, which are typically indicative of a charitable organization's status.
The point of dispute was whether the trust's activities were acting as a mutual concern rather than a charitable organization. The Assessing Officer (AO) categorized the trust's income as coming from reciprocal arrangements (mutuality) because it mainly benefited its members, which would undermine its status for tax exemption under section 11.
However, the ITAT Mumbai found that, while the trust's activities might incidentally benefit its members, they did not do so solely, nor were the activities primarily commercial in nature. The ITAT argued that incidental earning of profit did not detract from the trust's main objective being of charitable purpose, and hence the trust should not be considered a mutual concern. Therefore, the provisions of section 2(15) of the Act, which pertain to charitable purpose, should still protect the trust's income from tax, allowing it to be exempt under section 11.