TMI Blog2005 (12) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer had not considered rule of consistency which is applicable in tax proceedings. It has been judicially held that if facts and circumstances for earlier years are similar, same view should ordinarily be followed in subsequent years. iii. The CIT(A) erred in confirming the order of Assessing Officer denying the exemption of income of the appellant under section 11 on the ground that the appellant was carrying on business under section 2(13) of the Act. The appellant submits that activities which are carried on by the appellant do not constitute activities from business. The CIT(A) upheld the order of the Assessing Officer in rejecting the claim of the appellant without considering the facts and submissions made by the appellant during the appellate proceedings. iv. The appellant submits that all the activities carried out by the appellant like holding seminars, conferences, coaching classes are activities carried out by the appellant to promote the scientific development of marine engineering in all its branches and to further such knowledge. Accordingly income from sponsorship, advertisements, subscription etc. therefrom is not income from business. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g machinery and to publish and communicate information on such objects. iii. To uphold the status of members of the institute by prescribing or holding examination for candidates for election or by requiring standards of knowledge and experience which can be approved. iv. To corporate with Universities, other educational institutions and public educational bodies for the furtherance of education in engineering science." The assessee society, having its head office at Mumbai, is operating through several branches in India and is registered under sections 12A and 80G of the IT Act. The assessee society has claimed exemption under section 11 of the IT Act. The assessee is also registered with Charity Commissioner and files regular accounts. In order to pursue its objects, the assessee society held technical conferences, seminars to educate the members of the institution and for this purpose, received sponsorship income from companies engaged in the marine industries. During the year under consideration, the assessee held a national conference in Mumbai and an international conference in Chennai. The institution also conducts coaching classes, which are in the nature of prepara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the above details, break-up of expenditure under respective heads was filed before the Assessing Officer and the same were scrutinized by the Assessing Officer. 3. As mentioned earlier, the assessee society had held a national conference at Mumbai i.e., Annual Meet [IME(I), Mumbai Branch], wherein in addition to the delegates fees of Rs. 1,55,800, the assessee had received sponsorship income of Rs. 7,02,511 and advertisement income of Rs. 5,75,842, totalling to Rs. 14,34,153. During the sessions of two days, technical sessions were conducted from 9 AM to 5.30 PM, ranging on different topics with different speakers addressing each session. During the course of the session, delegates were provided with Tea, Lunch and Dinner at the end of the session. By holding such technical sessions, the assessee had earned surplus of Rs. 6,94,136, which formed part of the income of the assessee society for the year under consideration. Similarly, an international conference was held at Chennai called as Marine Symposium 2000 IME(I). During the said conference, in addition to the delegate fees of Rs. 2,30,932, the assessee had received sponsorship income of Rs. 12,29,277 and also co-spo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shana Trust v. CIT [1975] 101 ITR 234 , the Assessing Officer held that if the result of the business activity is profit, then there is no provision in the IT Act to exempt such income on the basis of motive of the person . He further observed that there are certain objects of the assessee society which are of charitable nature, but the real test to resolve the issue is as to how the society is carrying on its activities on day-to-day basis. As per the Assessing Officer, the assessee society is carrying on its activities as that of an ordinary business organization and accordingly the Assessing Officer held that the assessee society is engaged in the business as defined under section 2(13) of the IT Act. 6. Regarding the applicability of the provisions of sub-section ( 4a ) to section 11 of the IT Act, wherein exemption of income arising out of business activity is provided, in case such business is incidental to the main objects of the organization, the claim of the assessee was rejected by the Assessing Officer as according to him the income and expenditure disclosed by the assessee society did not have any element of charitable acts. The Assessing Officer was of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute also carries out examination and certification on behalf of the Director General of Shipping. ( c )Every year there is an annual technical and social meet in which are read technical papers pertaining to the Shipping Industry and attended by members from all over the country, Government Officers and various companies which are interested in the Shipping business. During the annual technical meet on 17-2-2001 which was held at Centaur Hotel, Juhu, the following technical papers were presented : i. New Lubricant Technology in the latest marine engines. ii. Fatigue Hull Damage of Single Hull VLCC s from Det Norske Veritas. iii. Common Rail Low-Speed Engines. Information was also given on technical matters like Micro-welding systems, Iron Rich Water, Fireproof Material, Glowing Bacteria, Oxyzen Regenerating Mixture, Double Scrubbed So 2 Protection for Ballast Tanks, Lily for Water Purification. Fresh Use for Sludge and Aqua-saver System. ( d )The various companies connected with the marine business take this opportunity to give advertisements in the brochure taken out for this purpose and some of them also act as sponsors for the function. ( e )Holding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rways and atmosphere, safety of crew and passengers, safe operation of water transport, all of which are of general public utility." 9. The ld. authorized representative further submitted that as per the objects of the assessee society, which are for the purpose of development of marine engineering, examinations are being held for different levels of marine engineering and the assessee society used to prepare the students for the said examinations. In addition, the assessee society also conducts preparatory classes and holds examinations as per the approval and requirements of the Director General of Shipping, Ministry of Surface Transport, Government of India. In addition to the coaching classes, the assessee had held technical meetings, which are fund raising programmes, in addition to upgrading the technical information of the participants. 10. The ld. authorized representative further submitted that after the amendment in 1992, in order in achieve the objects of the institute, business can be carried on to achieve the said objects for which the specific requirement is to maintain separate books of account. He placed reliance on the Hon ble Supreme Court decisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertisement revenue from business groups with the motive of making profits. In view of the said circumstances, the Assessing Officer has held that the assessee is carrying on business as defined under section 2(13) of the IT Act. 14. The moot question for our determination is whether the assessee is pursuing its objects as per the provisions of section 2(15) of the IT Act, i.e., relief for poor, education, medical relief and advancement of any other object of general public utility and is entitled to exemption under section 11 of the IT Act. We have already noted the primary and main objects of the assessee. It is clear from the objects that the promotion of scientific development of marine engineering is the main activity of the assessee. In order to enable the marine engineers, i.e., members of the assessee society, to meet and exchange ideas, annual meetings are held by the assessee in addition to international meet which is held once in four years. In the said meetings, the members interact with each other in addition to technical sessions being held for enlightenment of the subject of marine engineering. In these technical and social meetings, technical papers pertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts members and also amongst persons connected with marine engineering, which is again in furtherance of its objects of carrying on the activity of advancing the object of general public utility. The factum of making profit from such meetings does not mean that the assessee was carrying on business. The Apex Court, in the case of Surat Art Silk Cloth Mfrs. Association ( supra ), have held as under : "The test which has not to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But, where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. If the profits must necessarily feed a charitable purpose under the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of publishing and distribution of these journals was Rs. 6,24,600 against which the assessee had earned income on sale of journals of Rs. 94,150 only. The funds to meet the cost of publishing and distribution of these journals are utilized out of surplus funds available with the assessee. Thus, the cumulative activity carried on by the assessee trust are in furtherance of its objects and are entitled to exemption under section 11 of the IT Act. 17. We further find that the nature of business activities of the assessee are same as carried on from year to year and has been accepted by the Income-tax Department for the preceding years. We also agree with contentions of the authorized representative that if a particular stand has been accepted from year to year by the Assessing Officer, he (Assessing Officer) should find something different in the conduct of the business in order to deviate from the said stand as held by several Courts. Res judicata does not apply to the income-tax proceedings, but if no new facts are brought on record, there should not be any deviation from a particular stand. We have carefully gone through the judicial pronouncements relied upon by the ld. AR. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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