TMI Blog2017 (9) TMI 1892X X X X Extracts X X X X X X X X Extracts X X X X ..... es undertaken by the assessee seen with reference to the dominant activity of the Trust shows that it has been carried out for the advancement of the dominant object of the Trust and the fees generation is only incidental to the activities carried out by the assessee and are not hit at all by the proviso to Sec.2(15) of the Act. Before us, Revenue has not placed any material on record to controvert the findings of Ld.CIT(A). Inview of the aforesaid facts, we find no reason to interfere with the order of Ld.CIT(A) and thus the grounds of Revenue are dismissed. - ITA Nos.939 and 940/PUN/2015 - - - Dated:- 8-9-2017 - Shri Anil Chaturvedi, AM And Shri Vikas Awasthy, JM Appellant by: Shri Ajay Modi Respondent by: Shri Nikhil Pathak ORDER Anil Chaturvedi, AM : These two appeals of the Revenue are emanating out of the common order of Commissioner of Income Tax (A) Pune 10 dated 22.03.2015 for the assessment years 2010-11 and 2011-12. 2. Before us, at the outset, Ld.DR submitted that though the appeals filed by the Revenue are for different assessment years but the facts and issues involved in both the appeals are identical except for the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egating to ₹ 5.56 crores (rounded off) comprising of subscription (₹ 2.01 crores), other income (₹ 62,10,361/-), receipts from chamber activities ₹ 2.94 crores (rounded off), membership fee etc. AO was of the view that the nature of aforesaid receipts were hit by the amended provisions of Sec.2(15) of the Act and that the nature of receipts from activities showed that assessee was involved in carrying on the activities in the nature of trade, commerce or business. He therefore issued show-cause notice to the assessee to explain as to why exemption u/s 11 of the Act not be disallowed by treating the activities as not being charitable. Assessee made detailed submissions which were noted by the AO in the assessment order. The submissions of the assessee were however not found acceptable to AO as he was of the view that the activities carried out by the assessee were run in a commercial manner and the revenues earned from trade exhibitions, program fees, publication revenue, revenue from use of facilities, advertisement on website video cassettes hiring charges etc. fell under clause a, b and c of proviso of Sec.2(15) of the Income Tax Act, as amended by the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity. 19. Now, in the light of the above amendment, the activities generating surplus to the appellant needs to be examined as to whether these activities are independent profit making activity or are carried out for advancement of dominant objective of the Trust i.e. advancement of trade, commerce, industry etc. If the activities are examined with reference to dominant objective of the Trust, it can be seen that the same have been carried out for the advancement of the dominant object of the Trust and surplus generated out of the above, though substantial ins only incidental to such activities. Therefore, I am of the view that the appellant is not hit by provisions of Sec.2(15) of Income-tax Act and the Assessing Officer has been carried away by huge surplus generated over the years which is in any case incidental to the main objective of the Trust which is advancement of trade, commerce and industry etc. and the above mentioned activities are merely a tool to achie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Association and submitted that the income derived by it has to be solely applied for the promotion of its objects and no portion of income or profit can be paid or transferred directly or indirectly by way of dividend or bonus. He submitted that assessee organizes various work-shops, seminars etc., for the benefit of its members and business community in general and for continuing such programmes, charges nominal fee from the persons attending to those programmes. He submitted that even the facilities in the form of website advertisement or hiring of cassettes are for the benefit of members and a very nominal income is generated from such activities. He submitted that the revenue earned out of such activities cannot be said to be on account of trade and commerce. He further relied on the decision of Delhi High Court in the case of India Trade Promotion Organization Vs. Director General of Income-Tax (Exemptions) reported in (2015) 53 taxmann.com 404 (Del) and the decision of Hon'ble Gujarat High Court in the case of Sabarmati Ashram (2014) 362 ITR 0539 (Guj). He also relied on the decision of Madras Tribunal in the case of Japanese Chamber of Commerce and Industries Vs. Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, which has as its motive the advancement of an object of general public utility to which the exception carved out in the first proviso to Section 2(15) of the said Act would not apply. We say so, because, if a literal interpretation were to be given to the said proviso, then it would risk being hit by Article 14 (the equality clause enshrined in Article 14 of the Constitution). It is well-settled that the courts should always endeavour to uphold the Constitutional validity of a provision and, in doing so, the provision in question may have to be read down, as pointed out above, in Arun Kumar case (supra). We further find that the Hon'ble Gujarat High Court in the case of Sabarmati Ashram Gaushala Trust (supra) has held as under : Important elements of application of proviso to Section 2(15) are that entity should be involved in carrying on activities of any trade, commerce or business or any activities of rendering service in relation to any trade, commerce or business, for a cess or fee or any other consideration. Activity of a trust would be excluded from term charitable purpose if it is engaged in any activity in nature of trade, commerce or business or renders a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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