TMI Blog2020 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ndicative of the fact that any income generated by the assessee from events like Garba does not find its way into the pockets of any individual or entities. It is to be utilized fully for the purposes of the objects of the assessee. As held in many pronouncements, the expression trade , commerce and business as occurring in the first Proviso to Section 2(15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of charitable purpose . An activity would be considered business if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, more particularly, in view of Section 13(8) of the Act. The Assessing Officer, having regard to the gross receipts of ₹ 5,48,04,054/- made addition of ₹ 58,90,500/- on account of the interest on FSF fund and ₹ 1,67,90,118/- on account of anonymous donation. 2.2 The assessee, being dissatisfied with the assessment order, went in appeal before the CIT (A). The CIT (A), vide its order dated 15th September, 2017 allowed the appeal of the assessee taking the view that the activities of the assessee could be termed as charitable in nature and the assessee would be eligible for the benefit under Sections 11 and 12 respectively of the Act, 1961. 2.3 The Revenue, being dissatisfied with the order passed by the CIT (A), went in appeal before the Appellate Tribunal. The Tribunal, while dismissing the appeal of the Revenue, concurred with the findings recorded by the CIT (A). In such circumstances, referred to above, the Revenue is here before this Court with the present appeal. 2.4 The Revenue has proposed the following questions of law for the consideration of this Court; (A) Whether, on the facts and in the circumstances of the case, the Hon ble ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the fact that from one particular event, i.e,. Garba a huge income has been derived by the assessee. According to Ms. Bhatt, the case on hand squarely falls within the proviso to Section 2(15) of the Act. It is argued that once the activity of the assessee falls within the ambit of trade, commerce or business, then it no longer remains a charitable activity and the assessee is not entitled to claim any exemption under Sections 11 and 12 respectively of the Act. Ms. Bhatt submitted that no income has been generated for the year under consideration from the activities which are said to be charitable in nature. 4. Ms. Bhatt seeks to rely on a decision of this Court in the case of N.N. Desai Charitable Trust vs Commissioner of Income Tax, 2000 246 ITR 452 Guj. 5. Ms. Bhatt also pointed out that the decision of the Delhi High Court in the case of India Trade Promotion Organization vs. The DGIT,. 371 ITR 333 (D) may support the case of the assessee, or in other words, may fortify the findings recorded by the CIT (A) and the Appellate Tribunal, but at the same time, the said decision is now under consideration before the Supreme Court. Ms. Bhatt pointed out that leave ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year. 4.7 The sources of income of assessee clearly depict its commercial nature. The income of assessee consists of selling of passes to boys/girls and leasing of stalls etc. Further, in the compact oxford English dictionary (South Asia Edition), the business is meant as a person s regular occupation or trade, Commercial Activity . The word commerce is meant as the activity of buying and selling especially on a large scale . The trade is defined as buying and selling of goods or services . Thus, on the entirety of the facts and circumstances, the assessee s case falls within all the yardsticks in the amended provisions of the legislature. In the case, it is construed that the assessee s garba activity is commercial and do not partakes characteristics of Charitable Purpose within the meaning of amended provisions of section 2(15) of the Act. 4.8 Further, the assessee had relied upon the CBDT s circular No.11/2008 dated 19.12.2008. It is to mention here that the said circular No.11/2008 is superseded by Circular No. 02/2012 [F.No.142/01/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld as under; 5.2 I have carefully considered the rival contention as well as the observation of the A.O. It is observed from the remand report that the appellant has itself admitted to have received the amount of ₹ 1,67,90,118/- as anonymous donations u/s. 115BBC at Schedule-VC of the return of income filed by the appellant. As it is a voluntary declaration made by the appellant in its return of income, there was no reason why the AO should have asked any further question during the assessment proceedings. However, during the appellate proceedings the appellant has submitted that the said amount was received as corpus donation in the form of foreign inward remittances from Stitching Fusion Study Foundation. It was by error and a clerical mistake in the return of income so filed was reflected under Schedule VC of ITR-7 as anonymous donations It also further submitted that the said amount as a corpus donation has not been declared as the income of the appellant from the property held by the trust in its computation of income. On the contrary the said amount is shown as a corpus donation in the balance sheet of the appellant trust. I have seen the computation of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses to the extent of ₹ 3,81,16,559 and claimed exemption under section 11 of the Act. When the Assessing Officer probed the matter further, he found that out of total receipts of ₹ 3,81,01,051, a sum of ₹ 2,73,26,591 (i.e. 71.72% of revenues) is in respect of garba event only. The Assessing Officer also noted that the assessee organizes one of the most popular and prestigious garba event in Baroda in a highly professional manner, that the assessee charges entry fees from the participants as also the stall owners, and that it is in the nature of a business activity. It was in this backdrop that the assessee required the assessee to justify the eligibility for exemption of income under section 11, in the light of the provisions of Section 13(8) read with proviso to Section 2(15). In response to this requisition, the assessee explained at length about the activities of the United Way of Baroda, which includes supporting 120 NGOs and volunteer driven activities that link, support and deliver health and human services to improve the quality of life in the society. Its mission was said to be to improve and make Baroda a better place to live in and its vision was state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to Section 2(15) will have no application in this case. The assessee also made elaborate submissions on the connotations of expressions business activities and made out a case as to how the activities of the assessee, even with respect to holding the garba event, do not constitute business activities. 7. The Assessing Officer was of the view that how the income is applied is one thing, but what is much more important is, what he termed as, gravity of generation of income. He referred to the provisions of Section 2(15), as amended with effect from 1st April 2009, and observed that after the insertion of the above proviso, the advancement of any other object of public utility shall not be a charitable purpose, if it involves carrying on of (i) any activity in the nature of trade, commerce or business; (ii) any activity of rendering any services in relation to any trade, commerce or business, for cess or fee or any other consideration, irrespective of the nature of use or application or retention of income from such activity. He then referred to the monetary threshold limits brought about by the Finance Act, 2010, with respect to revenues generated by such activities. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. As we have noted earlier, one of the major object of the assessee society is mobilizing resources from the local communities and the people having affiliation and concern for India in general, and Gujarat in particular, residing in India or abroad and to apply them for strengthening the services in education, health and human care and other social sectors existing in Baroda and State of Gujarat, and there is also no dispute that considerable work in this area has been carried out in this area as evident from the material produced before the Assessing Officer, copies of which have been filed before us as well. The genuineness of this object, and furtherance of this object, cannot even be doubted. We are satisfied that the activities carried out by the assessee are in the nature of education, medical relief and help to poor which are specifically covered by section 2(15) and not by its residuary segment. The proviso to Section 2(15) thus indeed has no application in the matter. As for the denial of deduction in respect of expenses like assistance to voluntary agencies, management assistance and training, public education programme, research and publications and expenses for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f improving the quality of life in the society. The objectives of the Society includes mobilizing resources from the local communities. It organizes medical camps for thalassemia affected children. It also provides vocational training to the disabled orphans, undertakes various program for empowering women including providing midday meal to the poor students. The activities like organizing the event of Garba including the sale of tickets and issue of passes etc. cannot be termed as business. The two authorities have taken the view that the profit making is not the driving force or the objective of the assessee. This is indicative of the fact that any income generated by the assessee from events like Garba does not find its way into the pockets of any individual or entities. It is to be utilized fully for the purposes of the objects of the assessee. As held in many pronouncements, the expression trade , commerce and business as occurring in the first Proviso to Section 2(15) of the Act must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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