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2023 (1) TMI 1346 - AT - Income TaxBenefit of exemption u/s 11 and 12 - exemption denied on income from exhibition - assessee has been registered for the charitable purpose of advancement of any other object of general utility for promotion of export of gems and Jewellery, therefore, the activity of conducting exhibitions being in the nature of trade, commerce or business, the assessee is not entitled for exemption - whether the activity of conducting exhibitions & trade fair by the assessee amounts to trade, commerce or business or activity of rendering services in relation to trade, commerce or business? - HELD THAT:- The proviso to section 2(15) is attracted in case charitable activity in the nature of ‘general public utility’. The issues adjudicated by the Hon’ble Supreme Court in Ahmedabad Urban development authority [2022 (11) TMI 255 - SUPREME COURT] are related to determining the scope of the phrase “general public utility” (GPU) in the definition of “charitable purposes” primarily on the grounds that the institutions were carrying on trade, commerce or business for consideration, which does not qualify as GPU under the provisions of the Act as amended by Finance Act (FA), 2008 read with subsequent amendments. Before the Hon’ble supreme court (supra), in the cases of most of the entities, there is no dispute as to the activities involved in the appeal qualified as GPUs within the meaning of the term “charitable purposes”, but the dispute was in respect of the meaning of “fee, cess or other consideration” and its impact on construing whether the activity falls under to the description of “trade, commerce or business”. Hon’ble Supreme Court held that where “fee, cess or other consideration” is statutorily fixed or where it represents recoupment of cost or cost with nominal mark up, the activity may not be construed as “trade, commerce or business” and will be excluded from the mischief of commercial activity under the amended provision. If, however, “fee, cess or other consideration” charged is substantially higher over cost, it is tainted with “trade, commerce or business” and will qualify for tax exemption only if receipts are within the quantitative limit prescribed by the amended provision. As in the instant case it is evident that assessee has charged fee or consideration for conducting exhibitions or trade fair is slightly below the cost. The Hon’ble Supreme Court has held that activity of renting space to individual exhibitors or exporters in the exhibition or trade fair is a service in relation to trade commerce or business, but in the instant case, there being no markup on consideration charged from the exporter, therefore, in the broad principles laid down by the Hon’ble Supreme Court, the activity is beyond the purview of either trade, commerce and business or activity of rendering services in relation to trade, commerce or business. Counsel also referred to the annual report for the year under consideration having discussion regarding promoting ‘brand India’ by way of holding of exhibitions and participation in exhibitions held by overseas trade promotion bodies. We are of the opinion that assessee is not hit by the proviso to section 2(15) of the Act as far as activity of conducting or participating in exhibitions within India or overseas and therefore the disallowance of exemption claimed by the assessee made by the Assessing Officer and the finding of the Ld. CIT(A) on the issue in dispute are set aside and matter restore back to grant benefit of section 11 and 12 as per provisions of law. The ground No. 1 to 4 of the appeal of the assessee are accordingly allowed for statistical purposes. Also as the claim of exemption under section 11 has been allowed to the assessee by us, therefore, the Assessing Officer is directed to allow the claim of the assessee of carryforward of the deficit.
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