Asst. DIT(Exemptions)-I, Hyderabad V. Andhra Pradesh Plastics Manufactures Association, Hyderabad

ITA 1590/HYD/2011

• Counselvise Citation: 159022514 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 09-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1590/HYD/2011 ASSESSMENT YEAR: 2008-09 ASST. DIRECTOR OF INCOME TAX, (EXEMPTIONS)-I, HYDERABAD VS ANDHRA PRADESH PLASTICS MANUFACTURES ASSOCIATION, HYDERABAD [PAN: AAAAA1048H] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI R AJAT MITRA, DR FOR ASSESSEE : S HRI A. SRINIVAS, A R DATE OF HEARING : 09 - 0 7 - 201 5 DATE OF PRONOUNCEMENT : 1 5 - 0 7 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS REVENUE'S APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDERABAD DATED 30-06-2011 . REVENUE IS AGGRIEVED IN GRANTING EXEMPTION U/S. 11 OF THE INCO ME TAX ACT [ACT] TO ASSESSEE BY CIT(A), HOLDING THAT THE ACTIVITIES ARE CHARITABLE IN NATURE. ASSESSEE ALSO PREFERRED A CROSS APPEAL ON THE VERY SAME ORDER AND ITAT IN ITA NO. 1422/HYD/2011 FOR THE SAME ASSESSMENT YE AR DT. 14-10-2011 HAS UPHOLD THE ORDER OF THE CIT(A) BRING TO TAX SUR PLUS AMOUNT OF RS. 36,73,166/-. CROSS APPEAL WAS ALREADY DISPOSED OFF AS NEITHER PARTY INFORMED THE EXISTENCE OF THIS APPEAL. I.T.A. NO. 1590/HYD/2011 ANDHRA PRADESH PLASTICS MANUFACTURES ASSOCIATION :- 2 -: 2. BRIEFLY STATED, ASSESSEE IS A TRUST AND FILED NI L INCOME CLAIMING EXEMPTION U/S. 11 OF THE ACT. ASSESSEE-TRUST WAS R EGISTERED U/S. 12A OF THE ACT. HOWEVER, ASSESSING OFFICER (AO) WHILE COMP LETING THE ASSESSMENT U/S. 143(3), CONSIDERED THAT ASSESSEE'S MAIN RECEIPTS ARE FROM CONDUCTING EXHIBITIONS AND SO THE ACTIVITY CAN NOT BE CONSIDERED AS CHARITABLE IN NATURE. HE TAXED THE RECEIPTS OF ASS ESSEE WHICH ARE NOT SPENT DURING THE YEAR AT RS. 36,76,166/-. LD.CIT(A ) WHILE OBSERVING THAT ASSESSEE'S ACTIVITIES ARE CHARITABLE IN NATURE, HOW EVER, UPHELD THE ACTION OF THE AO IN BRINGING TO TAX THE ENTIRE SURPLUS OF RS. 36,73,166/-. ON THAT, ASSESSEE PREFERRED APPEAL WHICH WAS DISMISSED BY THE ITAT IN THE ABOVE REFERRED APPEAL. REVENUE IS AGGRIEVED ON CON SIDERING THE ASSESSEE'S ACTIVITIES AS CHARITABLE IN NATURE. 3. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT ASSESS MENT WAS REOPENED BY THE AO AND BROUGHT TO TAX FURTHER AMOUN T AND ASSESSEE HAS ACCEPTED THE SAME AND PAID THE TAXES. IT WAS FURTH ER SUBMITTED THAT ASSESSEE WAS ALLOWED EXEMPTION IN LATER YEARS. IT WAS SUBMITTED THAT PRESENT APPEAL IS ACADEMIC IN NATURE. 4. BE THAT AS IT MAY, WE NOTICE THAT LD.CIT(A) HAS RIGHTLY CONSIDERED THAT ASSESSEE'S ACTIVITIES ARE CHARITABLE IN NATURE . HIS ORDER IN PARA 6 IS AS UNDER: '6. I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE OBJECT CLAUSE (P) OF THE APPELLANT ASSOCIATION INDEED CONSISTS OF THE O BJECT OF ORGANIZING SEMINAR, WORKSHOP, EXHIBITION ETC. FOR PLASTIC MAN UFACTURES AND OTHER INDUSTRIES FOR BUSINESS PROMOTION AND INCREA SING AWARENESS ABOUT ADVANCEMENT OF TECHNOLOGIES, EFFLUENT TREATM ENT AND ENVIRONMENT PROTECTION. IT ALSO CANNOT BE DISPUTED THAT AFTER CONSIDERING ALL SUCH OBJECTS, THE APPELLANT HAS BE EN GRANTED REGISTRATION UNDER SEC. 12A OF THE I T ACT. FURTHE R, EVEN IF THE EXHIBITION CONDUCTED BY THE APPELLANT RESULTED IN GENERATION OF CERTAIN INCOME, IT CANNOT BE DENIED THAT EVEN SUCH ACTIVITY WAS ONLY I.T.A. NO. 1590/HYD/2011 ANDHRA PRADESH PLASTICS MANUFACTURES ASSOCIATION :- 3 -: INCIDENTAL TO VERY OBJECT OF THE APPELLANT'S ORGAN ISATION. IN FACT EVEN IF CONDUCTING OF EXHIBITION IS CONSIDERED IN THE N ATURE OF A BUSINESS ACTIVITY, IT IS CLEAR THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. THANTHI TRUS T (247 ITR 785), THE SCOPE OF SEC. 11(4A) IS WIDE ENOUGH TO INCLUDE SUCH BUSINESS ACTIVITY, PROVIDED THE ENTIRE INCOME IS UTILISED F OR THE PURPOSE OF ACHIEVING THE OBJECTS OF THE TRUST. IT IS CLEAR TH AT THE INCIDENTALITY OF BUSINESS ACTIVITY IS TO BE NECESSARILY JUDGED BY L OOKING INTO THE PRIMARY PURPOSE OF THE ORGANIZATION AND NOT THE SO URCE OF INCOME. THE HON'BLE SUPREME COURT HAVE EVEN HELD THAT ONCE THE PURPOSE OF THE ORGANISATION IS ESSENTIALLY CHARITABLE, THEN I T IS NOT NECESSARY TO RIGOROUSLY EXCLUDE ANY ACTIVITY OF PROFIT AND THER EFORE, IF ANY ACTIVITY IN ITSELF IS RELEVANT TO THE ATTAINMENT OF THE OBJ ECTIVES OF THE ORGANISATION, THEN THE PROFIT CAN BE CONSIDERED AS INCIDENTAL AND EXEMPTION CANNOT BE DENIED. LOOKING TO THE OBJECTS OF THE PRESENT APPELLANT, IT CANNOT BE DENIED THAT EXHIBITIONS OF THIS NATURE MUST HAVE BEEN HELPFUL IN THE ATTAINMENT OF ITS AIMS AN D OBJECTS. ACCORDINGLY, I AM NOT IN AGREEMENT WITH THE ASSESS ING OFFICER THAT MERELY BECAUSE CERTAIN PROFIT WAS EARNED BY THE AS SOCIATION FROM SUCH EXHIBITION, THE VERY ACTIVITY OF ORGANISING T HE EXHIBITION CANNOT BE CONSIDERED AS CHARITABLE. THEREFORE, GROUND NO . 3 IS DECIDED IN FAVOUR OF THE APPELLANT. 5. DECISION OF THE LD CIT(A) IS CONSISTENT WITH THE LA W ON THE SUBJECT. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY REASON TO D EFER FROM THE ORDER OF THE CIT(A). MOREOVER, ASSESSEE-TRUST IS ALSO REGIS TERED U/S. 12A OF THE ACT. THEREFORE, WE FIND NO MERIT IN REVENUE'S APPE AL. 6. IN THE RESULT, REVENUE'S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2015. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED 15 TH JULY, 2015 TNMM I.T.A. NO. 1590/HYD/2011 ANDHRA PRADESH PLASTICS MANUFACTURES ASSOCIATION :- 4 -: COPY TO : 1. ASST. DIRECTOR OF INCOME TAX (EXEMPTIONS)-I, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. ANDHRA PRADESH PLASTICS MANUFACTURES ASSOCIATION , ROOM NO.4, RAGHAVA RATNA TOWERS, CHIRAG ALI LANE, HYDERA BAD. 3. CIT(APPEALS)-IV, HYDERABAD. 4. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.