TMI Blog2017 (5) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... (Accountant Member) 1. In this appeal filed by the assessee, it is aggrieved on denial of exemption claimed under section 11 of the Income-tax Act, 1961 (in short the Act ). One other grievance raised by the assessee is on rejection of its claim for exemption from tax on subscription and delegates fees collected from members, based on the principle of mutuality. 2. The facts apropos are that the assessee a trust registered under section12A(a) of the Act had filed the return of income for the impugned assessment year claiming exemption under section 11A of the Act. From the details submitted by the assessee during the course of assessment proceedings, it was noted by the learned Assessing Officer that its main object was to consider all questions concerning the relations between the employers and employees in Southern India in order to protect the interest of employers engaged in trade, commerce, manufacture and industry of Southern India . As per the learned Assessing Officer apart from collecting annual subscription from members, the assessee had also collected delegate fees for seminars conducted by it, raised income through advertisements placed in a souvenir brought o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits, fee from advertisement, surplus from seminar and miscellaneous income which involved non-members also. The learned Commissioner of Income-tax (Appeals) observed that the facts in the case of Chelmsford Club (supra) of the apex court and that of J. K. Organisation Ltd. (supra) decided by the Allahabad High Court were not applicable, since in those cases, the concerned parties were not catering to any outsiders. Thus he upheld the order of the learned Assessing Officer. 5. Now before me, the learned authorised representative strongly assailing the orders of the lower authorities submitted that the assessee was not carrying on any activity in the nature of trade, commerce or business. As per the learned authorised representative it was not rendering any service in relation to any trade, commerce or business for consideration. As per the learned authorised representative advertisement income earned by the assessee from its souvenir and delegate fees from seminars were incidental to the main object of the assessee-trust. The contention of the learned authorised representative was that object of the assessee-trust did not involve carrying on any such activity which could be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aracter of the assessee which was governed by the principle of mutuality. Thus, according to him the exemption claimed under section 11 of the Act was unfairly denied and the principle of mutuality not applied though the assessee was a mutual benefit association. 6. Per contra, the learned Departmental representative strongly supported the orders of the authorities below. 7. I have considered the rival contentions and perused the orders of the authorities below. Income and expenditure of the assessee for the relevant previous year and also the immediate preceding previous year makes interesting reading. This is reproduced hereunder : Schedule No. Year ended 31st March 2010 Year ended 31st March 2009 Income Subscriptions 17,22,744 17,03,028 Other income 6 15,73,822 20,13,213 32,96,566 37,16,241 Less : E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21,700 Annual general meeting/meeting expenses 1,63,708 92,164 Travelling and conveyance expenses 99,149 91,370 Telephone charges 77,953 74,495 Bank charges 4,256 9,309 Sundry expenses 34,108 25,237 Professional charges For audit fees 13,236 13,236 For tax representation 11,030 11,663 For expenses 3,596 24,266 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the settlement of disputes arising out of matters affecting the relationship of employers and employees, between parties agreeing to abide by the judgment of the Federation ; (viii) to negotiate on behalf of employers with trade unions and/or other employees' organisations ; (ix) to communicate with Chambers of Commerce, Employers Federations, Trade Unions and other employees' organisations, mercantile and public bodies throughout the world, and concert and promote measures connected with these objects or any of them ; (x) to promote, examine and offer suggestions to legislative or other measures affecting the terms and conditions of service, welfare, health, education and regulations and control of employees, and to make representations to local, State, Central, Commonwealth, International and other authorities on matters connected with these objects or any of them ; (xi) to promote management and technical education including training and in furtherance to set up either by itself or in collaboration with any other body, training institutes etc. ; (xii) to assist members in improving employee and industrial relations by- (a) organising where n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture with the objects. However, chapter 4 of its annual report which gives the gist of the activities speaks predominantly of conferences like labour law implications in the changed scenario conducted on September 12, 2009, employment laws-managements perspective conducted on February 6, 2010, building organisations and human capabilities in challenging times held on April 9, 2009 and innovative wage settlements-sharing of experiences held on January 28, 2010, of which at least two were in collaboration with the Bangalore Chamber of Industry and Commerce. It is not being disputed by the learned authorised representative that these conferences and seminars were open to persons other than members of assessee-trust and fees were collected from such non- members also. The major activity of the assessee-trust, as per its annual report was conducting such seminars and therefore in our opinion the claim of the assessee that conducting of seminars, publication of souvenirs etc., seminars were incidental to its main object cannot be accepted. This is also clear from the income and expenditure account which clearly shows that it had other income of ₹ 15,73,822 against the subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as for issuing certificates of origin and for arbitration. The finding of the Tribunal was that such fees were incidental to the main activities of the Madras Chamber of Commerce and Industry (supra). The Tribunal had relied on the judgment of the Hon ble jurisdictional High Court in the case of Madras Chamber of Commerce and Industry (supra). Their Lordships in the said case had held at paragraphs 3 and 4 of the judgment as under : 3. It was common ground before the Tribunal, as stated in paragraph 4 of the Tribunal's order, that the assessee, which was a society registered under the Societies Registration Act, was founded for the promotion and protection of trade and commerce and that, therefore, the objects of the assessee were of general public utility within the meaning of section 2(15) of the Act. The decision of the Calcutta High Court, which was followed by the Appellate Assistant Commissioner, and the decision of the Kerala High Court, which was followed by the Tribunal, were all considered by the Supreme Court in the Indian Chamber of Commerce v. CIT. The Kerala decision was reversed and the Calcutta decision was affirmed. Subsequently the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was welfare and common good of the country's trade, commerce and industry. No doubt the Hon ble Delhi High Court did hold that the basic principle underlying the definition of charitable purpose remained unaltered even after the amendment in section 2(15) of the Act through the Finance Act, 2010 with effect from April 1, 2009 through which the second proviso was inserted. All the other case law relied on by the assessee were on Chambers of Commerce or association of like nature and not a federation of employers. In the case before us, facts clearly bring out that conducting conference/seminar was not done as an incidental activity but during the relevant previous year it was the pre-dominant activity. In our opinion, it may not be appropriate to give an interpretation to section 2(15) of the Act which is not in consonance with the words used by the legislation, where the predominant activity carried on was akin to a business or trade or service in connection thereto. Section 2(15) of the Act along with the relevant provisos as it stood at the relevant point of time is reproduced hereunder : 'charitable purpose' includes relief of the poor, education, medical re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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