TMI Blog2019 (6) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb of an activity in the object of a general public utility but was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions.- Decided in favour of assessee. - ITA No. 1806/Del/2016 - - - Dated:- 19-6-2019 - Sh. H. S. Sidhu, Judicial Member And Sh. R. K. Panda, Accountant Member For the Assessee : Sh. Rajan Malik, Adv. For the Revenue : Sh. Surendra Pal, Sr. DR ORDER PER R. K. PANDA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is directed against the order dated 12.01.2016 of ld. Commissioner of Income Tax (Appeals), New Delhi relating to assessment year 2011-12. 2. The only effective ground raised by the Revenue reads as under: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that the activities of the assessee does not fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from Gallery Maintenance 5,11,400/- d. Misc. Income 3,01,587/- Total 6,98,58,248/- 5. Relying on various decisions, the Assessing Officer denied the benefit of exemption u/s 11 of the Act and determined the total income of the assessee at ₹ 4,73,15,960/-. While computing income so determined, he further disallowed the depreciation claimed by the assessee on the ground that the cost of assets had already been treated as application of income while assessing the income of the assessee u/s 11 12 of the Act. Therefore, the depreciation cannot be allowed again which will amount to double deduction of the same. 6. In appeal, the ld. Commissioner of Income Tax (Appeals) allowed the claim of benefit u/s 11 of the Act. So far as the amount of ₹ 8,12,987/- being the income from galleries and miscellaneous income is concerned, he held the same to be the activities of the assessee trust b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years, the rental income have always been taken as income from the property held under the society and allowed application of rent therefrom to the objects of the society. Referring to the copy of the memorandum of the assessee society, he submitted that the society is authorized to let out the property and doing all lawful activities for the furtherance of the object of the society. He submitted that the Revenue in the past has never considered such rental income as business income. Referring to the order of the Tribunal in assessee s own case for assessment years 2009-10 and 2010-11, he submitted that under identical circumstances the exemption denied by the Assessing Officer and upheld by the ld. Commissioner of Income Tax (Appeals) was allowed by the Tribunal. He accordingly submitted that this being a covered matter in favour of the assessee, the ground raised by the Revenue should be dismissed. 10. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We have also perused the paper book filed on behalf of the assessee. We find the Assessing Officer applying the amended provision to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Authorised Representative that the assessee s case is favourably covered for the assessee by the ratio of the judgment of the Hon ble Delhi High Court in the case of India Trade Promotion Organisation vs. DGIT (E) (supra), wherein vide judgment dated 22.01.2015, the Hon ble Delhi High Court, while upholding the constitutional validity of proviso to Section 2(15) of the Act, has laid down the strict and literal interpretation of the proviso to Section 2(15) of the Act. The Hon ble Delhi High Court has held that mere receipt of fee or charge will not mean that the assessee is involved in any trade, commerce or business. In the case of India Trade Promotion Organisation, the Ld. DGIT (E) had passed an order stating that though the assessee was engaged in the advancement of any other object of general public utility , as per s. 2(15) of the Act, its object could not be regarded as charitable purposes due to the new proviso to s. 2(15) and further that it was not eligible for exemption u/s 10(23C)(iv). It was held by the Ld. DGIT (E) that as the assessee had huge surpluses in banks, it had given its space for rent during Trade Fairs and Exhibitions, it had received income by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(15) is only a definition clause. The expression charitable purpose appearing in Section 2 (15) of the said Act has to be seen in the context of Section 10(23C)(iv). When the expression Charitable Purpose , as defined in Section 2(15) of the Act, is read in the context of Section 10(23C)(iv) of the said Act, we would have to give up the strict and literal interpretation sought to be given to the expression charitable purpose by the revenue. In conclusion, we may say that the expression charitable purpose , as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibitions and societies in India and abroad; (iv) acting as Central Organization of Arts and Crafts in India etc. It is also undisputed that the assessee society has carried out activities in the form of annual art exhibitions, camps for senior and junior artists, providing maintenance to aged artists etc. It is also not the department s case that any part of surplus was diverted from the society and applied for any personal benefit of any member or office bearer of the society. Therefore, it can be safely concluded that the dominant activity of the assessee society is not business, trade or commerce and, accordingly, any incidental or ancillary activity like hiring out of art gallery or selling paintings would not also fall within the categories of trade, commerce or business. 5.2 We also note that the Hon ble Delhi High Court in the case of India Trade Promotion Organisation vs. DGIT (Exemption) (supra) has also duly considered Circular No. 11 of 2008 issued by the CBDT and has observed that the proviso to Section 2(15) of the Act, which was inserted by Finance Act, 2008, was directed to prevent the unholy practice of pure trade, commerce and business entities f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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