TMI Blog2022 (7) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... ity which is otherwise a charitable trust advancing work of general public utility and certainly not hit by the first proviso to Section 2(15) of the Act. Since the Assessing Officer has denied the benefit of sections 11 and 12 which has been upheld by the Ld. CIT(Appeals) also on the ground that the assessee did not fall within the scope of charitable purposes defined in section 2(15) of the Act because of carrying on or rendering of any services in business, trade and commerce and this in our considered opinion is not a correct interpretation of the provision. We, therefore, set aside the order of the Ld. CIT(Appeal) and direct the Assessing Officer to grant benefit of exemption u/s. 11 and 12 of the Act to the assessee. It is therefore, clear that there is hardly any need for us to proceed any further so far as both the parties' respective substantive grounds pleaded in the instant set of two cross appeals each are concerned. We adopt judicial consistency therefor and restore the instant issue of assessee's section 11 exemption back to the Assessing Officer to be decided in light of co-ordinate foregoing detailed discussion. CIT(A)'s identical lower appellate orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adjudicated in both these appeals (i) whether the assessee trust is entitled to get benefit of exemption u/s. 11 or 12 of the Income Tax Act, 1961 (hereinafter referred to as the Act) in terms with Section 2(15) of the Act; (ii) Whether the assessee is charitable trust. After recording the submissions of the parties herein, we take up ITA No. 2338/PUN/2016 for the assessment year 2011-12 as lead case for adjudication. ITA NO. 2338/PUN/2016 A.Y. 2011-12 5. The brief facts in this case are that the assessee is a registered trust engaged in the activity of promoting and fostering feelings of unity and cooperation and mutual help and to eliminate unhealthy competition and unfair trade practices among the Promoters and Builders Association of Pune and such other objects as spelt out in Clause-3 of the Memorandum of Association. During the year under consideration the trust has total gross receipts of Rs. 1,24,63,562/- which includes surplus from exhibition activity of Rs. 11,18,546/-. The remaining receipts are in the form of subscription from members, interest from the bank and sale of membership form etc. 5.1 The assessee is a public trust registered under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d none of the activities carried on by the assessee is of commercial nature. It was also submitted before the Assessing Officer that the activities of conducting exhibition are incidental to its objects and the same are not even remotely activities in the nature of trade, commerce or business. The Assessing Officer, however, held that during the year under consideration i.e. A.Y. 2011-12, there is surplus from activity of conducting exhibition i.e. Rs. 11,18,546/-. The Assessing Officer also concluded that there are subscription charges from participants in the exhibition which are fixed by the assessee and therefore, it cannot be said that it is non-profit organization. The activity of the assessee in conducting exhibition was nothing but the annual feature of one of its activities for earning surplus which cannot be said to be a charitable as contemplated in section 2(15) of the Act as amended by the Finance Act, 2008 and Finance Act 2010. 5.4 The Assessing Officer at Para 5.11 of his order, therefore, held that the case of the assessee is clearly hit by the first proviso to section 2(15) of the Act inserted with effect from 01.04.2009 and the assessee is not entitled to exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n establishing funds for scholarships, grants, rewards and other beneficiations. 7.1 The Ld. AR also submitted that the assessee trust by holding exhibition provides guest lectures on various topics such as plantation, city development, pollution control, vastushastra, investment proposition, legal help to the prospective buyers etc. and these are organized for the public at large without any subscription . The Ld. AR, thereafter, vehemently opposed the observation of the Assessing Officer at Para 5.6 of his order wherein, the Assessing Officer held that the subscription for participating in exhibition are fixed by the assessee at much above cost price and it cannot be said to be on the basis of no profit or loss and the only motive behind such activity is to maximize the profits. This observation also being upheld by the Ld. CIT(Appeal) is factually incorrect since the Revenue has not brought on record any evidence through enquiry or verification that the assessee used to actually charge any subscription for participating in such exhibition. On the contrary, no such subscriptions were charged by the assessee and the entire exhibition was organized for the public at large. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et group so that there is no unfair trade practice and monopoly and fair market environment is provided to all the businessmen and the customers which is also benefiting the public at large. 7.4 The Ld. AR of the assessee has placed reliance on the following decisions: (i) Society of Indian Automobile Manufacturers Vs. Income Tax Officer, reported at (2016) 71 taxmann.com 138 (Delhi-Trib.) (ii) Assistant Commissioner of Income Tax Vs. Mahratta Chamber of Commerce Industries and Agriculture in ITA No. 939 940/PUN/2013, order dated 08.09.2017. 8. Per contra, the Ld. DR has strongly supported the orders of the subordinate Authorities and referring to Para 6 onwards of the Ld. CIT(Appeals)'s order, placed strong reliance therein. 9. We have heard the rival contentions and perused the documents on record and analyzed the facts and circumstances in this case. We have also given considerable thought to the judicial pronouncements placed before us. The facts demonstrate that the assessee trust for both the assessment years under consideration i.e. A.Ys. 2011-12 2012-13, exemptions u/s. 11 and 12 of the Act have been denied by Assessing Officer being hit by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in nature. On the other hand, the trust is actively endeavouring to keep the balance between the businessmen and customers of the society by providing healthy trade environment and to prevent ill practice of business like extreme competition and monopoly etc. which is one of the crucial and pertinent object of the assessee trust. In the exhibition conducted by the assessee trust, apart from business topics, various awareness, lectures are given to the people attending this exhibition like city development, pollution control, investment proposition and legal assistance to prospective buyers etc. These facts were not refuted by the Department. 10. Further, on identical facts, in the decision of the Delhi Bench of the Tribunal in the case of Society of Indian Automobile Manufacturers Vs. Income Tax Officer (supra.), the facts were that the assessee society was set up with object of promoting growth of automobile industry in India and also to improve and protect environment and was registered u/s. 12A of the Act. During the relevant assessment year there was income from seminars and conferences, providing statistical information and Auto Expo. The Assessing Officer denied benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade, business or commerce. The next item is interest received amounting to Rs. 1.60 lac, which has been earned from banks, bonds, etc. This receipt also cannot be considered as arising from carrying on of any trade, commerce or business. The next important receipt is Rs. 1 crore from Auto Expo 2008. The AO has also accentuated on this amount to hold that the assessee was carrying out business. The assessee is annually organizing Auto Expo, which is a trade fair confined to automobile industry. The automobile manufacturers give advertisements of their products which is the major source of receipts from Auto Expo apart from sale of tickets. Since all the manufacturers of automobiles are the members of the assessee society and the Auto Fair is organized displaying various products of automobiles, being the object for which the assessee was set up, it cannot be described as carrying on business, trade or commerce. The next major item is Seminars and conferences against which receipt of Rs. 1.85 crore has been shown. The assessee held four seminars/conferences, namely, SI AM Annual Session, Technical seminar, AOTS - Kaizen/MTP Programme and WHTC-August, 2009. Total receipts from thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard the rival submissions and perused the material on record. The issue in the present case is with respect to denial of claim of deduction u/s. 11 of the Act. It is an undisputed fact that assessee is a company registered u/s. 25 of the Companies Act, 1956 and is not for profit organization and it is engaged as service organization for the development and promotion of trade, commerce and agriculture. We find that as per the Memorandum of Association, the income/profit of the assessee are to be applied solely for the promotion of the objects set forth in its Memorandum and no portion of income of the property can be paid or transferred directly or indirectly by way of dividend, bonus or otherwise by way of profit to any person. Before us, no material has been placed by Revenue to demonstrate that the assessee has in any way distributed or paid bonus or dividends. Further, before us, no material has been placed on record by Revenue to show that the dominant activity of the assessee was trade, business or commerce and the driving force was to earn profit. On the issue where the assessee had earned fee or some other consideration and still the assessee was eligible for deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommerce or business which are marked as charitable purpose . If activities in nature of trade, commerce or business which are masked as charitable purpose . If there is any surplus generated at end of year, that by itself would not be sole consideration for judging whether any activity is trade, commerce or business, particularly if generating surplus's is wholly incidental to principal activities of trust; which is otherwise for general public activity, and therefore, of charitable nature. 8. We find that Ld. CIT(A) while deciding the issue has given a finding that the activities 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). In view 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. 12. Reverting to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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