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2023 (1) TMI 861 - AT - Income TaxDenial of exemption u/s.11 - assessee is a Trust claimed to be engaged in highlighting life of Chatrapati Shree Shivaji Maharaj - AO observed that the assessee was mainly engaged in organizing drama `Janta Raja’ on commercial basis under the head “Historical Education” and received an income on this count - HELD THAT:- Assessee performed the drama for various institutes/companies earning revenue of Rs.1.96 crore. The costs incurred for performing such activity are only Rs.1.16 crore. This transpires that the profit element in the performance of the drama is more than 40% of the gross receipts. Such profit rate patently falls in the category of `significant mark-up cases’ and hence business activity. No further break-up of the revenue into cost-to-cost basis or nominal mark-up por una parte and significant mark-up por otra parte, has been brought to our notice. This deciphers that the activity of the drama was done in a uniform way on significant margin of 40%. Considering the fact that the assessee earned huge margin on performance of the activity, which is in the nature of business, it ceases to fall within the domain of “charitable purpose”, as the business receipts exceed 20% of the total receipts. We thus hold that the assessee does not satisfy the condition of “advancement of any other object of general public utility” so as to be covered u/s.2(15) and, ex consequenti, becoming eligible for the benefit of exemption u/s.11 of the Act. As a last weapon in arsenal, the ld. AR urged that a review petition has been filed in Ahmedabad Urban Development Authority [2022 (11) TMI 255 - SUPREME COURT] which is still pending and hence the Bench should not get influenced with its ratio and decide the matter as per the other existing law de hors the apex judgment. In our opinion, the contention is devoid of merit because pendency of a review petition does not dilute or alter in any manner the binding force of the judgment in terms of Article 141 of the Constitution of India. We, therefore, approve the ultimate conclusion drawn by the authorities in rejecting the claim of the exemption to this extent. Appeal of assessee dismissed.
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