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TMI Blog2024 (12) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... l. 3. At the outset, Ld. AR of the assessee have placed his contentions along with written submission, comprises therein the list of various judicial pronouncement relied upon, the same are extracted as under: Chhattisgarh Steel Re-Rollers Association ITA No. 467/RPR/2024 (Assessee) Submission of assessee 1. By-laws: - i) Bye Laws of Society is at PN 35 to 44 of PB. ii) Objects at PN 36 of PB. 2. Reason given for rejecting application is: - i) No charitable activity is carried out and association not established for general public. ii) It exists to facilitate steel manufacturers and other stake holders, small group of members relating to steel manufacturers. iii) All India Steel Conclave organized at Hotel Mayfair, Raipur, aimed to create awareness in steel manufacturers, iron ore minors etc. for promoting business needs of steel manufacturers. Majority expenses incurred on transportation, boarding and lodging. 4. Association established to safeguard the interest of its members being steel manufacturers, address various issues arising in the course of business etc. 5. Such associations fall in the definition of "charitable purpose" in the limb of "advancement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was for general public utility. Summary of judicial pronouncement Shri Sarafa Association vs CIT (2007) 294 ITR 262 (MP) Application for registration u/s 12A was rejected against which writ petition was filed by the assessee. Vide para 5, Hon'ble High Court considered the ratio of decision in CIT vs Bar Council of Maharashtra (1981) 22 CTR (SC) 106 wherein it was held that trading bodies like Andhra Chamber of Commerce, Surat Art Silk Manufacturer Association have been held to be constituted with a view to advance an object of general public utility because their primary or dominant purpose was to promote and protect industry, trade and commerce, even though some benefit through some of their activities did accrue to their members and it was held in the case of Andhra Chamber of Commerce that income derived from diverse sources was exempt from tax liability u/s 11. Vide para 6, it noted the ratio in CIT vs Andhra Chamber of Commerce AIR 1965 SC 1281 wherein it was held that in the promotion of trade, commerce and industries, public is vitally interested. "Charitable purpose" is inclusive and not exhaustive. Even if the object or purpose may not be regarded as charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the objects of the association and observed that for attainment of its objects, the assessee had to carry out certain activities say holding conventions, exhibitions, meetings etc. and it was unable to comprehend as to how simply carrying on the same for the furtherance of the objects on a standalone basis would take the colour of trade, commerce or business. iii) Vide para 10, it observed that in the conventions, eminent personalities from various fields would be roped in for delivering lectures on issues having a material bearing on the real estate sector for which on an average fee/ charge was worked out of Rs. 30,000/- to 32,000/- which would include boarding and lodging facilities. It also considered the argument that displaying the advertisements during the conventions would again be a step towards furtherance of the objects of the assessee trust as it would benefit the members who would become aware of the services rendered by such sponsors. iv) Vide para 11, it observed that the convention held by the assessee was only once in a year and the activities conducted therein like arranging lectures of eminent personalities were for the benefit of its members by augment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out the activities as per its objects only and most of the receipts were received from the members. It is not the case of the Department that the activities were carried out for outsiders and for commercial purpose solely to earn business receipts. To be hit to proviso to sec. 2(15), the dominant object of general public utility should be in the nature of trade, commerce and industry. ii) Vide para 8, it considered the ratio laid down by Hon'ble High Court in Institute of Chartered Accountants of India vs DGIT (2011) 245 CTR (Del.) 541 and held that none of the receipts can be said to be arising from the activities which can be said to be for the purpose of business, trade, commerce. All the activities were carried out in accordance with the objects. iii) Vide para 9, it further held that if any transaction is incidental or ancillary towards fulfillment of the object, it will not amount to business/ trade/ commerce unless there is some intention to trade/ commerce on a permanent basis for a reasonable continuity. 4. Based on aforesaid submissions, it was the prayer that the order of Ld. CIT(E) was not justified in rejecting the application filed by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the General Public but has been established to facilitate steel manufacturers & other stockholders and it acts as a networking flatform for them. 4- As per the objects mentioned in the Memorandum of Association, the assessee has undertaken various activities. Most of the objects prescribe activities targeting only a small group of members which is restricted by profession related to steel manufacturers & other related stockholders. Even the activities are not related to charitable in nature rather these activities focus on business growth of the members. The core aim of the Association is to bring together all the stakeholders related to steel manufacturing for mutually benefit in their business activities. The objects mentioned above becomes more clear on examination of activities undertaken by the association which is discussed in later paras. 5- Vide this office letter dated: 02.08.2024, clarification on some activities undertaken by the assessee in F.Y. 2022-23, was sought which have been replied to by the assessee as under: ---Query by this office: As per Income & Expenditure Account for the period 01.04.2022 to 31.03.2023, it is found that expenditure of Rs. 2,80,28, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Travel Expenses 1693098 17 Other Misclleneous expenses 79111 28028260.8 --From above expense details, it is found that no expense is related to any charitable activity. All the expenses are incurred on arranging the event and for making arrangements for transportation, boarding and lodging of the attendees of the event. Some expenses are incurred on arranging gifts, momento, artefacts, photo, music, motivational speakers etc. which are all in non-charitable nature. 6-Further, during F.Y.2024-25 the association has spent only Rs. 3,02,261/- under Charity and Donation A/c which is less than 1% of the total receipt of the assessee. Thus, the predominant nature of the assessee is facilitating Steel Manufacturers in their business activities and networking and Charitable Activities are undertaken at a minimal scale and hence, the activities of the assessee cannot be categorized under 'Charitable Activities' which is pre-requisite for registration u/s 12AB. 7-0n perusal of the various objects and activities, it is observed that the purpose of the assessee is to protect interest of its members who are engaged in business of Steel Manufacturing and to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with matters having common interest of the trade. Now the question before us is, whether such objects shall be treated as trade, commerce and business and not the activities in the nature of charity. On this aspect, we find force in the contentions raised by the Ld. AR that there was no benefit derived by specified individual. As per law, the benefit is being given to a section of people. We may herein refer to the order of Hon'ble Apex Court in the case of CIT vs Bar Council of Maharashtra referred to (supra), wherein it was held that trading bodies have been held to be constituted with a view to advance an object of general public utility because their primary or predominant purpose was to promote and protect industry, trade and commerce and are eligible for exemption u/s 11. In another case CIT vs Andhra Chamber of Commerce (supra), Hon'ble Apex Court has held that in the promotion of trade, commerce and industries, public is vitally interested, therefore the same is to be considered as for the benefit of a section of public, its object as for general public utility. Further, it is held in the case of Confederation of Real Estate Developers Association of India vs ACIT, ITAT Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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