TMI Blog2023 (1) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the category of `significant mark-up cases and hence business activity. No further break-up of the revenue into cost-to-cost basis or nominal mark-up por una parte and significant mark-up por otra parte , has been brought to our notice. This deciphers that the activity of the drama was done in a uniform way on significant margin of 40%. Considering the fact that the assessee earned huge margin on performance of the activity, which is in the nature of business, it ceases to fall within the domain of charitable purpose , as the business receipts exceed 20% of the total receipts. We thus hold that the assessee does not satisfy the condition of advancement of any other object of general public utility so as to be covered u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act, 1961 (hereinafter also called `the Act ). 4. Succinctly, the facts of the case, are that the assessee is a Trust claimed to be engaged in highlighting life of Chatrapati Shree Shivaji Maharaj. It was registered under section 12A of the Act on 20-06-1974. A return was filed for the year declaring total income at Nil. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee was mainly engaged in organizing drama `Janta Raja on commercial basis under the head Historical Education and received an income of Rs.1,96,70,577/- on this count. Expenditure of Rs.1,16,38,841/- was incurred for earning such income. On being called upon to explain as to how it was entitled to exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession `education , it would be worthwhile to note the actual activity carried on by the assessee. It can be seen from para 7 of the assessment order, which factual position has not been controverted by the assessee either before the ld. CIT(A) or the Tribunal, that it was organizing drama `Janta Raja for different institutes/companies for fee. Such institutes/companies were, in turn, selling tickets and passes etc. on commercial basis. This shows that the assessee was organizing the drama for the payer institutes/companies, who were then exploiting it commercially by selling tickets and earning revenue at their own end. The assessee, as such, is not directly organizing the drama for any education, but for earning profit. This gets fortifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the advancement of any other object of general public activity . He submitted that albeit the authorities below covered the assessee s case within the ambit of this expression, but still failed to grant benefit of the exemption. He focussed on the nature of activity carried on by the assessee with a view to persuade the bench that it was for the the advancement of any other object of general public activity , eligible for the exemption. 8. Section 11 of the Act grants exemption in respect of income from property held for charitable or religious purposes. Section 2(15) defines charitable purpose . This section, inter alia, talks of the advancement of any other object of general public activity . A proviso has been attach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(15) under various categories of assessees, including the authorities established by statute, non-statutory bodies and private trusts. Crux of the interpretation of the relevant part of section 2(15) by the Hon ble Apex Court is to, first, examine if the receipts of the assessee from pursuing such object of general public utility are on cost-to-cost basis or having a minimal profit on one hand or having significant mark-up on costs on the other. Whereas the latter is a business activity but the former is non-business. The object of general public utility will be considered as pursued by the concerned authority/trust for charitable purpose u/s 2(15) of the Act, if the receipts from the above referred business activity are not more th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee earned huge margin on performance of the activity, which is in the nature of business, it ceases to fall within the domain of charitable purpose , as the business receipts exceed 20% of the total receipts. We thus hold that the assessee does not satisfy the condition of advancement of any other object of general public utility so as to be covered u/s.2(15) and, ex consequenti , becoming eligible for the benefit of exemption u/s.11 of the Act. 10. As a last weapon in arsenal, the ld. AR urged that a review petition has been filed in Ahmedabad Urban Development Authority (SC)(supra), which is still pending and hence the Bench should not get influenced with its ratio and decide the matter as per the other existing law de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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