TMI Blog2018 (4) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... factor for characterising an activity, as one. The generation of the surplus in its hands was merely a by-product of its main object, which had incidentally resulted in the course of furtherance of its dominant object, viz. advancement and development of the Fragrance and Flavors industry in India. We are further of the view that as the international seminar at Bangalore was held by the assessee for the very first time, and the assessee was neither holding such type of seminars by way of a regular and systematic activity, nor for the general public at large, therefore, on the said count also the same can safely be held as not being in the nature of a commercial activity - Decided in favour of assessee. - ITA No. 5453/Mum/2015 - - - Dated:- 8-12-2017 - SHRI RAJENDRA, AM AND SHRI RAVISH SOOD, JM For The Appellant : Shri Anil Sathe, A.R For The Respondent : Ms. Padmaja, D.R ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the assessee is directed against the order passed by the CIT(A)-1, Mumbai, dated 24.09.2015, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Act, 1961 (for short Act ), date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducation. 9. In the alternative and without prejudice to the above grounds. The Learned Commissioner of Income tax (appeals) erred in not allowing the alternative ple of the appellant for benefit of principle of mutuality. 10. The Learned Commissioner of Income tax (Appeals) erred in not appreciating that the decision of Supreme Court in Bangalore Club in Bangalore Club vs. CIT deals only with the interest earned on FDs kept with Members Banks and not with the surplus earned on other mutual activities. 11. The appellant craves leave to add, alter or amend any of the grounds of appeal at any time or at the time of hearing. 2. Briefly stated, the facts of the case are that the assessee is a trust registered with Director of Income-tax (Exemptions), Mumbai under Sec. 12A. The objects of the assessee trust was to promote cooperation and friendly feeling amongst the persons, firms and companies engaged in or connected with the Fragrance and Flavours Trade and Industry in India and to promote and safeguard the interest of the Trade and Industry. The assessee trust had filed its return of income on 29.09.2011 alongwith the Income Expenditure Account, Balance Shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be construed to be charitable on account of the amendment made available to Sec. 2(15). Thus in the backdrop of the aforesaid deliberations the A.O observing that the objects of the assessee were in the nature of advancement of any other object of general public utility and it was involved in certain activities which were prima facie commercial in nature, therefore, called upon the assessee to explain as to why in light of Sec. 13(8) r.w.s 2(15) of the Act [as amended vide Finance Act, 2008] its claim for exemption under Sec. 11 may not be declined. 5. The assessee submitted before the A.O that its activities were directed towards providing knowledge, information, awareness, demonstrations etc. to the Fragrance and Flavours industry, which were essential to understand the development of the industry in India. The assessee submitted before the A.O that as its activities were clearly covered by the definition of general public utility , therefore, the same were clearly covered by the definition of Charitable purpose as defined under Sec. 2(15) of the Act. The assessee submitted that it had in furtherance of its objects, in order to promote unity and fraternity amon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled towards its claim of exemption under Sec. 11. The A.O on the basis of his aforesaid observations denied the claim of exemption under Sec. 11 and assessed the income of the assessee at ₹ 1,01,73,440/-. 6. Aggrieved, the assessee assailed the order of the A.O before the CIT(A). The assessee submitted before the CIT(A) that as its activities were not with the intention to make any profit, but rather, were in the nature of research and for the benefit of the Fragrance and Flavors Industry, therefore, the A.O had erred in characterising the same as commercial activities. It was further stressed by the assessee that as the sponsoring of events at the seminar held at Bangalore was in the nature of an activity which was incidental to the furtherance of its main object of holding of the seminar in the very interest of the Fragrance and Flavors Industry, therefore, it could not be held to have been involved in carrying on of commercial activities. The assessee further averred before the CIT(A) that its intention behind carrying the aforesaid activities was not to earn profit, but to educate the members of the industry. Alternatively, it was submitted by the assessee that even o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... galore for furtherance of its object of development of industry of flavours and fragrance, in the course of which it had displayed the products of the members of the industry who had sponsored the seminar could not be construed and characterised as a commercial activity. The ld. A.R in order to buttress his aforesaid contention relied on the order of the ITAT, Kolkata, in the case of Indian Chamber of Commerce Vs. Income Tax Officer (2015) 167 TTJ 1 (Kolkata). Thus, in the backdrop of the aforesaid contentions it was submitted by the ld. A.R that the lower authorities by wrongly concluding that the assessee was carrying on commercial activities had wrongly divested the assessee of its statutory entitlement of claim of exemption under Sec. 11. Per contra, the ld. Departmental representative (for short D.R ) relied on the orders of the lower authorities. It was submitted by the ld. D.R that both of the lower authorities observing that the assessee was carrying on commercial activities, had thus, keeping in view the post amended definition of the term Charitable purpose as contemplated in Sec. 2(15), as made available on the statute vide the Finance Act, 2008 w.e.f 01.04.2009, ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectory receipts, submitted that the said respective activities were for the furtherance of the general public utility object of the assessee, which by no means could be construed as commercial activities. 10. We have deliberated on the observations of the lower authorities and find that the A.O had concluded that the assessee was carrying on commercial activities, primarily for the reason that it had generated substantial revenue from the seminar held at Bangalore. We have given a thoughtful consideration to the issue before us and have deliberated at length on the contentions of the ld. A.R in the backdrop of the facts of the case. We find that the activities of the assessee trust were directed towards providing knowledge, information, awareness, demonstrations etc. to the members of the Fragrance and Flavours industry. The activities of the assessee were essential to understand the development of the said industry in India. We have deliberated on the nature of activities of the assessee trust and are of the considered view that all of its activities, viz. receipts by way of subscriptions from the members, sale of publications, Fafai Journal, holding of workshops conferences, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss amongst the industrialists of the Fragrance and Flavours industry, and display of the products of the sponsors can safely be concluded to be for furtherance of and in the interest of the members of the trade. We are unable to persuade ourselves to be in agreement with the view of the A.O that as the products of the sponsors were displayed at the seminar held at Bangalore, therefore, on the said stand alone basis the assessee was to be held to have carried on commercial activities. We are of the considered view that on a close analysis of the aforesaid activities of the assessee trust,which if viewed in a broader perspective and pitted against the dominant object of the assessee to hold a seminar for furtherance of and in the interest of the members of the industry, cannot be characterised as a commercial activity We find that the Hon ble Jurisdictional High Court in the case of Director of Income-tax Vs. Womens India Trust (2015) 379 ITR 506 (Bom) had upheld the observations of the Tribunal that where a trust formed to carry out the object of education and development of natural talents of the people having special skills, more particularly the women in the society, had in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety to get better, well-equipped and skilled set of Chartered Accountants for maintaining audit quality, which however could not be construed as a trade or commerce or business. Thus, the High Court observed that the activities of the assessee trust in publishing and selling books of professional interest, which were meant to be used as a reference material even by the general public as well as the professionals in respect of Bank Audit, Tax Audit, etc., could not be construed as a commercial activity. We are of the considered view that in the case of the present assessee before us, the services, viz. receipt of subscriptions from the members, sale of publications, Fafai Journal, holding of workshops conferences, directory receipts etc., were provided for facilitating the dominant object of the assessee trust, viz. providing knowledge, information, awareness, demonstrations etc. to the members of the Fragrance and Flavours industry. We further find that even the display of the products of the sponsors of the seminar at Bangalore, who were primarily the members of the industry, was also in furtherance of the interest of the members of the industry, i.e both by facilitating the ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the main object of the petitioner which as stated earlier cannot be held to be trade, business or commerce. Accordingly, even though fees are charged by the petitioner institute for providing coaching classes and for holding interviews with respect to campus placement, the said activities cannot be stated to be rendering service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which as held earlier are not trade, commerce or business. We are further of the considered view that the proviso to Sec. 2(15) is not aimed at excluding genuine charitable trusts of general public utility, but rather, a trust would not be held to be for Charitable purpose , if it is engaged in any activity in nature of trade, commerce or business or renders any service in relation to trade, commerce or business for a cess, fee and/or any other consideration. We find that our aforesaid view is fortified by the judgment of the Hon ble High Court of Gujarat in the case of DIT (Eexemption) Vs. Sabarmati Ashram Gaushala Trust (2014) 362 ITR 539 (Guj). 12. We thus in the backdrop of our aforesaid ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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