TMI Blog2021 (4) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... Y HIGH COURT] held that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of Internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee s activities under mutuality concept. We are aware that in order to claim the mutuality, assessee has to maintain the separate books for the service rendered to members and non-members. Even the assessee has to prove that the identities of the contributors to the common fund must be entitled to participate in the surplus and the participators to the surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... programs through Seminars etc., will not make it in the field of education. The assessee is systematically generating its Income through its activities which is purely as in the field of business and same way be incidental in achievements of its objects but it has no relevance once the proviso to section 2(15) gets attracted, therefore, the assessee trust is directly hit by the proviso to section 2(15) which has been introduced from A.Y; 2009-10. Once a charitable trust/institution hit by aforesaid proviso, then there is deeming provision that such entity shall not be for a charitable purpose. Hence once the assesses Trust /Institution loses its charitable character then obviously there is change in the status of assessee and it can no longer be held to be for charitable purpose. 3. Since these activities of the assessee were organized regular activities the assessee was asked by AO to explain as to why they may not be treated as business activities and income from them may not be treated as Business Income u/s. 2(15) of the I.T. Act. It was also asked to why the exemption u/s. 11(4A). of the I. T. Act may not be denied in respect of this business income because the conditions| ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic or historical importance and 6) advancement of any other object of general public utility. The assessee trust institution will fall under the sixth category i.e advancement of any other object of general public utility. The assessee trust institute cannot be regarded as an educational institutions as the main object is to regulate the profession of the assessee trust institute is not a statutory authority of professional body. The assessee trust cannot award any degree or enroll member as any statutory university. These activities undertaken by the assessee - institute will not fall under the term education as defined by the Supreme Court in Sole Trustee, Loka Shikshana Trust. In this regard reference can be made to the decision of Gujarat High Court in Saurashtra Education Foundation versus CIT ( 2005) 273 TTR 139 (Guj). The aforesaid ratio was expounded in the Sole Trustee Loka Shikshana Trust (Supra) has been rightly interpreted by the Gujarat High Court in Gujarat State Co-Operative Union versus CIT (1992) 195 ITR 279 (Guj). 7. The assessing officer observed that assessee Institution is predominantly a mutual association and charitable objects and mutual benefits ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re him, assessee submitted as below:- i) Assessee submitted that prior to the completion of the assessment, the DIT(E) had vide order dated 8th December, 2011 withdrawn the registration u/s 12A granted to the assessee. The A.O. treated the gross receipts of ₹ 1,13,89,299/- (₹ 3,04,88,921 being Gross receipt (-) ₹ 1,90,99,690 being Membership fees) as taxable receipts in the hands of the assessee trust. The assessee further submitted that the Hon. Tribunal, Mumbai Bench vide the order dated 28 May, 2014 allowed the appeal of the assessee for A.Y, 2009- 10 and restored the registration granted to the assessee. In the said order, the Hon'ble Tribunal observed as under: .Holding of seminars cannot be termed a comimercial or business activity in the case under appeal as the trust was established for this specific purpose. DIT(E) has ignored the fact the trust had suffered loss by arranging seminars. ii) Assessee further submitted that it had received delegate fees in respect of conducting the seminars aggregating to ₹ 17,07,548/-. In addition thereto, the assessee had received sponsorship contributions aggregating to ₹ 78,50,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the AO has denied exemption u/s. 11 relying upon the Provisions of section 11(4A) and proviso to section 2(15). Also the other ground for denying exemption was that DIT(E) has cancelled its registration u/s. 12A. The assessee submitted that the registration has been restored by the Hon ble ITAT vide order dated 28.5.2014. Copy of this order has been filed, on perusal of which it is noted that the Hon'ble ITAT have restored the registration u/s.12A. Hence this ground for denying exemption u/s. 11 is no more relevant. ii) As mentioned above, the AO has also denied exemption relying upon the provisions of section 11(4A) and proviso to section 2(15) as mentioned in paragraph 5 of the assessment orders. The assessee has not made any submission with reference to the applicability of provisions of section 11(4A) either during assessment or during present appellate proceedings. iii) With regard to the applicability of Proviso to section 2(15) assessee submitted that, Hon'ble ITAT in its own case have observed that holding of seminar is not a commercial or business activity. In this regard, it would be relevant to mention that the assessee has selectively quoted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95.57 Lacs from seminar and sponsorship, expenditure is ₹ 73.12 Lacs only and hence this activity has earned profit). Further it is noted that the decision of Hon'ble ITAT is based on the findings of Hon'ble ITAT Agra in the case of Agra Development Authority where it was observed that in absence of power vested with the CIT, registration granted under section 12A cannot be withdrawn or cancelled before 1.6.2010 which was a technical ground. Accordingly reliance by the assessee on the order of Hon'ble ITAT which was for the limited purpose of deciding registration under section 12A and was decided in its favour on technical ground is misplaced since the issue of applicability of proviso to section 2(15) on merit has not been decided therein. iv) Further in the case of Indian Plastic Institute, Hon'ble ITAT, Mumbai while deciding the same issue on similar facts in A Y 2009-10 vide their order No. ITA NO 308/Mum/2012 dated 21.2.2014 have observed as under :- After perusal of the submissions as well objects of the assessee trust and also after going through the documents on record, we may observe that the objects and the activities of the assessee tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had not made any submission with reference to the applicability of section 11(4A) either during the assessment proceedings or during the appellate proceedings. 3) The learned CIT(A) erred in holding that the receipts of the appellant do not fall under the definition of education or under any other object of general public utility. 4) The learned CIT(A) erred in holding that the receipts of the appellant were in the nature of business income. 5) The appellant prays that your honour hold that the appellant has fulfilled all the conditions for being eligible for exemption w/s. 11 and denial of the same by AO and by the CIT(A), is not as per law. B) Not dealing with the issue regarding mutuality. 6) Without prejudice to the above, the learned CIT(A) erred on facts and in law in not dealing with the alternative contention of the appellant that if exemption w/s. 11 is not available to the appellant, the income of the appellant is exempt on the principles of mutuality. C) General 7) The above Grounds of Appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above Grounds of Appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact cannot be termed as perverse and it is in consonance with the factual aspect regarding activities of the trust and the object that it is seeking to achieve. Similarly, in regard to income from the hiring of the premises and advertisement rights, the said question is also not substantial question of law. Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular. person, separate books of account are also maintained, then this income cannot be brought to tax. This conclusion is also not perverse and given the facts and circumstances which are undisputed. 14. He further brought to our notice decision of DIT(E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of DIT vrs. Women s India Trust at page no. 43 of the paper book wherein the Hon ble Bombay High Court held as under:- 6. A perusal of the same will indicate as to how if the advancement of any other object of general public utility shall not be charitable, if the assessee is involved in carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess, fees or any other consideration. In the present case, the undisputed facts are that the assessee is 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. The assessee trains them to earn while learning. It educates them in the field of catering, stitching, toy making, etc. While giving them training, the assessee uses related material which it buys from the open market. This is essential for carrying out the assessee's object. In the process, some finished product such as pickles, jam, etc. are produced and which the assessee sells through the shops, exhibitions and personal contacts. The motive of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. It is only to teach or impart skills and to instill confidence that the produced goods or articles are sold. To that extent also deficit has occurred. In the circumstances, the Tribunal took a view that occasional sales or the trust's own fund generation are for furthering the objects but not indicative of trade, commerce or business. In the circumstances, the proviso does not apply. 16. He further brought to our notice income and expenditure account for the year ending 31st March 2009 and brought to our notice receipt of donation /sponsorship/ subscription/ fees from seminars at ₹ 2,91,68,035/- and corresponding expenditure of ₹ 2,19,19,985/-. He submitted that the observation of Ld. CIT(A) at page no. 6 para no. 5.1(ii) of its order is wrong and we do not know from where, Ld. CIT(A) has observed those figures which is not matching to the actual income and expenditure disclosed by the assessee. He prayed that exemption claimed by the assessee u/s 11 be restored. 17. On the other hand, Ld. DR submitted that education and awareness cannot be equated. He relied on the decision in the case of Indian Machine Tools (supra) and further relied on the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llect fees for that effort. In that process, we would not say profit but surplus in order to survive self-reliant and meet out the administration cost of the trust. In our considered view, the Hon ble Bombay High Court adjudicated in the case of Shree Nashik Panchvati (supra) that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Therefore, the activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee s activities under mutuality concept. We are aware that in order to claim the mutuali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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