9911796707
TMI Blog2020 (6) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... to utilize within prescribed time as per law. 3. the appellant craves leave to add, to alter or amend any ground of appeal raised above at the time of hearing." 3. Facts of the case, in brief, are that the assessee is a society and filed its return of income on 13th September, 2012 declaring the total income at Rs. 2,25,00,000/-. The assessee is registered under the Societies Registration Act, 1860. The AO, during the course of assessment proceedings, observed that the aims and objects of the assessee are as under:- (a) To foster and develop fine and applied arts in India and to promote appreciation by means of publications, lectures, conferences, demonstration, exhibition; (b)To organize and establish a national art gallery in New Delhi; (c) To organize art exhibitions and societies in India and abroad; (d)To act as the Central Organizations of Arts and Crafts in India (e) To do all such lawful things as are incidental or conductive to the attainment of above objects and any other objects of arts and literature not mentioned above. 4. He asked the assessee to explain as to why the benefit u/s 11 and 12 of the Act in respect of the income should be allowed in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,97,625/- ii. Sale of paintings : Rs. 21,43,000/- iii. Rental Income : Rs. 4,80,00,000/- 8. He submitted that the assessee, during the year has earned substantial rental income of Rs. 4,80,00,000/- from GE group of companies, a big corporate entity engaged in purely commercial activities which has nothing to do with the aims and objects of the assessee trust and, therefore, cannot, by any stretch of imagination be a charitable activity u/s 2(15) of the Act eligible for deduction u/s 11 and 12 of the Act. He accordingly submitted that the decision relied on by the ld. Counsel for the assessee in assessee's own case for the preceding assessment years will not be applicable to the facts of the present case. He also relied on the decision of the Chennai Bench of the Tribunal in the case reported in 158 ITD 676. 9. The ld. Counsel for the assessee, on the other hand, submitted that the Tribunal consistently has dismissed the appeal filed by the Revenue by upholding the order of the CIT(A) allowing the claim of exemption u/s 11 and 12 of the Act. He submitted that the order for A.Y. 2009-10 was challenged by the Revenue and the Hon'ble High Court, vide ITA No.754/2019 has dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of Fine Art & Crafts or rendering any services. According to the Assessing Officer, the rent being received by the society is subject to TDS is a pure rent. Further, the rent from the property has never been considered or linked with the main activities of the assessee i.e. promotion of Fine Arts & Crafts under the first proviso to Section 2(15) of the Act. We find that the ld. Commissioner of Income Tax (Appeals) allowed the claim of exemption u/s 11 & 12 of the Act for which the Revenue is in appeal before the Tribunal. We find for the past assessment years, the rental income was always taken as income from property held under society and allowed application of rent therefrom to the objects of the society. A perusal of the memorandum of association of the society inter alia shows the following objects: "(j) To purchase or acquire on lease, or in exchange, or on hire, or otherwise, any real or personal property, and any rights or privileges necessary or convenient for the purposes of the Society. (l) To sell, improve, manage and develop all or any part of the property of the Society. (m) To do all such lawful things as are incidental or conducive to the attainmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns fell within the ambit of any activity of rendering any service in relation to trade, commerce or business. The assessee filed a writ petition before the Hon'ble Delhi High Court claiming that the First Proviso to section 2(15), as amended by the Finance Act, 2008, was arbitrary and unreasonable and violative of Article 14 of the Constitution of India. The Hon'ble Delhi High Court held in the favour of the assessee. The relevant observations of the Hon'ble High Court are as under: (i) It is apparent that merely because a fee or some other consideration is collected or received by an institution, it would not lose its character of having been established for a charitable purpose. It is also important to note as to what is the dominant activity of the institution in question. If the dominant activity of the institution was not business, trade or commerce, then any such incidental or ancillary activity would also not fall within the categories of trade, commerce or business. It is clear from the facts of the present case that the driving force is not the desire to earn profits but, the object of promoting trade and commerce not for itself, but for the nation - both within India an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. Thus, while we uphold the Constitutional validity of the proviso to Section 2(15) of the said Act, it has to be read down in the manner indicated by us." 5.1 Thus, the Hon'ble Delhi High Court has held that merely because a fee or some other consideration is collected or received by an institution, it would not loose its character of having been established for a charitable purpose. Undisputedly, in the present case the dominant activity of the assessee society is not business trade or commerce but its activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and while setting aside the orders of the Ld. CIT (Appeals), we direct the AO to allow the assessee the benefit of exemption u/s 11 & 12 of the Act for assessment year 2009-10. 6.0 Since the issue in assessment year 2010-11 is identical, therefore, for the same reasoning as given by us in assessee's appeal for assessment year 2009-10 while allowing the assessee's appeal, we allow assessee's appeal for assessment year 2010-11 also. In this year also the order of the Ld. CIT (Appeals) is set aside and the AO is directed to allow the assessee the benefit of exemption u/s 11 & 12 of the Act to the assessee." 13. In view of the decision of the Tribunal in assessee's own case cited (supra), we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals) allowing the claim of exemption u/s 11 & 12 of the Act of the assessee. We accordingly uphold the same. The ground raised by the Revenue is accordingly dismissed." 12. We find the decision of the Tribunal for A.Y. 2009-10 was challenged by the Revenue and the Hon'ble High Court vide ITA No.754/2019, order dated 19th August, 2019, has dismissed the appeal filed by the Revenue by observing as under:- "1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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