ITO (Exception) Ward-1(1), New Delhi V. All India Fine Arts & Crafts Society, New Delhi

ITA 1647/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3542 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Deemed to accrue or arise in india; Question of law; Assessment record; Benefit of exemption; Set aside
• Section: 274; 13; 11

Judgement Text

FIT FOR PUBLICATION SD/- SD/- AM JM IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A NOS. 1647 & 1648/DEL/2018 (ASSESSMENT YEARS: 2013-14 & 2014-15) ITO (EXCEPTION) WARD 1(1) NEW DELHI. VS. ALL INDIA FINE ARTS & CRAFTS SOCIETY, 1-RAFI MARG, NEW DELHI. PAN NO. AABAA3719N (APPELLANT) (RESPONDENT) & I.T.A NOS. 1630 & 1631/DEL/2018 (ASSESSMENT YEARS: 2013 -14 & 2014-15) ALL INDIA FINE ARTS & CRAFTS SOCIETY, 1-RAFI MARG, NEW DELHI. PAN NO. AABAA3719N VS. ITO (EXCEPTION) WARD 1(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. SATPAL GULATI, CIT (DR) DATE OF HEARING 16.09.2021 DATE OF PRONOUNCEMENT 14.10.2021 HEARING CONDUCTED VIA WEBEX ORDER PER DIVA SINGH, J.M. BY THESE CROSS APPEALS FILED BY THE REVENUE AND TH E ASSESSEE FOR 2013- 14 AND 2014-15 ASSESSMENT YEARS, THE PARTIES ASSAIL THE CORRECTNESS OF THE SEPARATE ORDERS DATED 18.12.2017 PASSED BY THE CIT(APPEALS)-40, DELHI ON NEAR IDENTICAL GROUNDS IN THE TWO YEARS. ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 2 OF 17 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE. HOWEVER, AFTER HEARING THE LD. CIT (DR) SHRI SATPAL GULATI AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD IT WAS DEEMED APPROPRIATE TO PROCEED WITH THE PRESENT APPEALS EX-PARTE QUA THE A SSESSEE ON MERITS. 3. IN BOTH THE DEPARTMENTAL APPEALS I.E. ITA NOS. 1 647 & 1648/DEL/2018 THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL. ACCORDINGLY, FOR THE SAKE OF CONVENIENCE THE DEPART MENTS GROUND FROM ITA 1647/DEL/2018 ARE BEING REPRODUCED HEREUNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ACTIVITIES CAR RIED OUT BY THE ASSESSEE ARE IN THE FIELD OF CHARITABLE PURPOSE AS DEFINED UNDER SECTION 2(15) OF THE I.T. ACT, 1961 AND ARE CLEARLY HIT BY PROVISO TO SECTION 2(15 ) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ACTIVITIES CAR RIED OUT BY THE ASSESSEE ARE NOT IN NATURE OF TRADE BUSINESS OR COMMERCE. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 4. ADDRESSING THE ISSUES RAISED IN THE TWO APPEALS FILED BY THE ASSESSEE IN BOTH THE YEARS IT IS SEEN THAT THE GROUNDS RAISED ARE IDENTICAL EXCEPT FOR THE DIFFERENCE IN T HE AMOUNTS IN THE TWO YEARS. ACCORDINGLY, GROUNDS FROM ITA NO. 1630/DEL/2018 ARE REPRODUCED HEREUNDER FOR COMPLETE NESS: 1. THAT THE LD. CIT(A) HAS ERRED IN PASSING THE ORDER BOTH IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(APPEALS) HAS ERRED IN GIVING DIRECTIONS IN ITS APPELLATE ORDER TO INCLUDE A SUM OF RS. 2,02,28,490/- (RS. 2,43,32, 550/-) AS INCOME TO BE TAXED U/S 11(3) OF THE INCOME TAX ACT, 1961 WITHOUT GIVING ANY OPPORTUNITY OF SHOWING CAUSE AGAINST ENH ANCEMENT OF INCOME U/S 251(2) OF THE INCOME TAX ACT, 1961. 3. WITHOUT PREJUDICED TO GROUND NO. 2 ABOVE, ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A PPEALS) HAS ERRED IN REACHING TO A CONCLUSION AND CONSEQUENTLY HOLDING THAT THE UNSPENT AMOUNT OF RS. 2,02,28,490/- (RS. 2,43,3 2,550/-) CONSIDERED AS DEEMED INCOME U/S 11(3) OF THE INCOME TAX ACT, 1961, IS TO BE TAXED U/S 11(3) AND IS NOT SUBJECTED TO ANY EXEMPTION/BENEFIT OR FOR ACCUMULATION THEREFORE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(APPEALS) HAS ERRED IN DENYING THE SET OFF OF UN SPENT AMOUNT OF RS. 2,02,28,490/- (RS. 2,43,32,550/-) DEEMED TO BE INCOME U/S 11(3) ON ACCOUNT OF NON UTILIZATION OF THE ACCUMULA TED AMOUNT U/S ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 3 OF 17 11(2), AGAINST THE EXCESS OF APPLICATION OVER INCOM E FOR THE ASSESSMENT YEAR 2013-14. 5. THAT THE APPELLANT CRAVES YOUR HONORS LEAVE TO ADD , ALTER, MODIFY, CHANGE, SUBSTITUTE, WITHDRAW ANY OF THE GRO UNDS OF APPEAL AT ANY STAGE OF APPELLANT PROCEEDINGS. 5. TAKING UP THE DEPARTMENTAL APPEALS FIRST THE LD. CIT (DR) ADDRESSING THE DEPARTMENTS GROUNDS RELIED UPO N THE ASSESSMENT ORDER. HOWEVER, NO CONTRARY FACT WAS RE FERRED TO. THE FINDINGS ARRIVED AT IN THE IMPUGNED ORDER BY TH E CIT(A) IN PARA 4.1.2 TO 4.1.3 WERE NOT SHOWN TO BE INCORRECT ON FACTS. THE REASON POSSIBLY WAS ON ACCOUNT OF THE GLARING F ACT ON RECORD THAT CONSISTENTLY SIMILAR APPEALS OF THE REV ENUE STOOD DISMISSED BY THE ITAT ON SIMILAR FACTS IN THE EARLI ER YEARS. 6. WE HAVE SEEN THAT THE FINDING ARRIVED AT BY THE LD. CIT(A) IN THE AFORESAID PARA. IT IS SEEN THAT HE HAS RELI ED UPON THE ORDER OF HIS PREDECESSOR FOR 2011-12 AND 2012-13 AS SESSMENT YEARS. WE HAVE SEEN THAT THESE TWO ORDERS OF THE C IT(A) HAVE ALSO BEEN UPHELD BY THE ITAT. (ORDER DATED 19.06.2019 IN ITA 1806/DEL/2016) AND (ORDER DATED 26.02.2020 IN ITA 5293/DEL/2016) . IT IS ALSO WORTH TAKING NOTE OF THE FACT THAT SIMILAR DECISIONS OF THE ITAT WERE CONSIDERED BY TH E HON'BLE HIGH COURT IN 2009-10 ASSESSMENT YEAR WHEREIN THE H ON'BLE HIGH COURT VIDE ITA 754/DEL/2019 DISMISSED THE APPE AL OF THE REVENUE. THUS, WE FIND THAT AS FAR AS THE REVENUE S APPEALS ARE CONCERNED, THERE IS NO MERIT. CONSCIOUS OF THIS FACT THE LD. SR. DR IN ALL SINCERITY COULD AT BEST PLACE RELIANC E UPON THE ASSESSMENT ORDER AND DID NOT BELABOR THE ISSUE ANY FURTHER. 7. FOR THE SAKE OF COMPLETENESS, WE HAVE TAKEN NOTE OF THE FACTS AS EMANATING ON A PERUSAL OF THE RECORD THAT THE ASSESSEE SOCIETY IS CLAIMED TO BE A LEADING SOCIETY ENGAGED IN THE ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 4 OF 17 PROMOTION AND DEVELOPMENT OF FINE ARTS AND CRAFTS I N INDIA. IT HAS BEEN IN EXISTENCE SINCE 1938 AND IS STATED TO H AVE CONTRIBUTED IN THE FIELD OF DEVELOPMENT OF ARTS AND SCULPTURES IN INDIA HAVING EMINENT PAINTERS, SCULPTORS ETC. ON ITS GOVERNING BODY. THE SOCIETY IS STATED TO BE CATERI NG TO THE NEEDS OF THE UPCOMING AND NOT SO ESTABLISHED ARTIST S THUS ENABLING THEM TO DISPLAY THEIR SKILLS ETC. TO PROM OTE THESE AIMS IT IS STATED TO HOLD EXHIBITIONS, ORGANIZES AR T CAMPS, ETC. IT HAS ALSO BEEN STATED THAT IT GIVES FINANCIAL ASS ISTANCE TO OLD AND NEEDY ARTISTS; HAS BEEN PUBLISHING NEWS LETTER IN THE FIELD OF ARTS AND SCULPTURE DURING THE LAST FEW DECADES. WE FIND THAT AS IN THE EARLIER YEARS IN THE YEAR UNDER CONSIDERA TION ALSO THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE IS RENTING OUT GALLERIES TO THE ARTISTS FOR DISPLAYING THEIR WORK AND HAS THUS CONCLUDED THAT THE ASSESSEE IS ENGAGED IN A BUSINES S ACTIVITY AND HELD TO BE IN VIOLATION OF THE STATUTORY REMIT IN VIEW OF THE AMENDMENT IN SECTION 2(15) OF THE ACT BY FINANCE AC T, 2009 WHERE THE ACTIVITIES INVOLVED IN THE CARRYING ON OF ANY TRADE, COMMERCE AND BUSINESS OR ANY SERVICES RENDERED IN R ELATION TO THE TRADE, COMMERCE OR BUSINESS AGAINST ANY CESS, F EE OR CONSIDERATION HAS BEEN CONSIDERED TO BE NOT AMENABL E TO THE BENEFITS CARVED OUT IN THIS SECTION. THE CONCLUSIO N ON FACTS IS ASSAILED BY THE ASSESSEE BEFORE THE CIT(A) ON THE G ROUNDS OF BEING ILL FOUNDED ON FACTS. THE ASSESSEE BEFORE TH E LD. CIT(A) IS SEEN TO HAVE CANVASSED THAT THE ASSESSEE SOCIETY RENTS OUT THE GALLERIES TO THE ARTISTS FOR VERY NOMINAL CHAR GES SO AS TO ENABLE THEM TO DISPLAY THEIR WORK SO THAT THEIR WOR K MAY BE RECOGNIZED BY THE VISITING PUBLIC AND PROVIDE THEM WITH AN OPPORTUNITY TO SHOW-CASE THEIR TALENT. IT HAS BEEN ARGUED ON FACTS THAT THE EXPENDITURE COST TO THE SOCIETY FOR ENABLING THIS ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 5 OF 17 FACILITY IS MUCH HIGHER AS COMPARED TO THE CHARGES RECEIVED FROM THE PERSONS TAKING THE GALLERY ON HIRE. IT HAS BEEN CANVASSED BY THE ASSESSEE BEFORE THE CIT(A) THAT TH E EXPENDITURE INCURRED BY THE SOCIETY ON THESE GALLER IES CONSISTS OF BOTH THE DIRECT AS WELL AS INDIRECT EXPENSES AND THESE ARE MUCH HIGHER WHEN COMPARED TO THE RECEIPTS RECEIVED FROM THIS ACTIVITY OF RENTING ETC. IT HAS BEEN STATED THAT A LL THESE FACTS WERE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER ALSO. 7.1 IT IS ALSO NOTICED THAT QUA THE CRITICAL OBS ERVATIONS OF THE AO ALLEGING REGULAR RECEIPT OF MONEY FROM THE S ALE OF PAINTINGS, IT IS SEEN THAT IT HAS BEEN ARGUED THAT THIS IS NOT A REGULAR ACTIVITY OF THE APPELLANT. ON BEHALF OF THE ASSESSEE, IT HAS BEEN SUBMITTED THAT IT IS NOT ENGAGED IN THE PU RCHASE AND SALE OF PAINTINGS. THE PAINTINGS SOLD ARE THOSE PAI NTINGS WHICH HAVE ACCUMULATED WITH THE SOCIETY OVER THE YEARS. THESE ARE THOSE PAINTINGS WHICH HAVE BEEN LEFT BY THE ARTISTS IN THE ART- CAMPS ORGANIZED BY THE SOCIETY. 7.2 IT HAS BEEN CLARIFIED REFERRING TO THE BOOKS OF ACCOUNT AND THE RECORDS THAT THE AO IS ALSO INCORRECT IN AL LEGING THAT THE ASSESSEE SOCIETY MAKES A DEDUCTION OF 15% OUT O F THE SALE PROCEEDS OF ART WORK WHICH GETS SOLD IN THE ANNUAL EXHIBITION, FOR RENDERING OF SERVICES OF EXHIBITING THE ARTISTS WORKS. 7.3 IT HAS BEEN CLARIFIED THAT NO CHARGES ARE RECO VERED FROM THE ARTISTS PARTICIPATING IN THE ANNUAL EXHIBITIONS . IT HAS BEEN ARGUED THAT ON THE CONTRARY, FREE ART MATERIALS ARE SUPPLIED TO THE ARTISTS TO PAINT GIVING LIVE PERFORMANCES DURIN G THE HOLDING OF ART EVENTS HELD ON THE CAMPUS OF THE ASSESSEE SO CIETY. APART FROM THIS, IT HAS BEEN ARGUED THAT FOR THE AR TISTS WHO ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 6 OF 17 COME FROM OUT OF STATION FREE BOARDING AND LODGING IS ALSO PROVIDED IN ADDITION TO BEARING THEIR TO AND FRO TR AVEL COSTS FOR VISITING THESE EVENTS. SUBSTANTIAL EXPENSES ARE ST ATED TO BE INCURRED BY THE SOCIETY FOR CONDUCTING THESE ART EV ENTS. THESE CLAIMS ARE FOUND TO BE DEMONSTRATED ON FACTS. 7.4 IT HAS BEEN EXPLAINED BEFORE THE TAX AUTHORITIE S THAT THE PAINTINGS WHICH ARE MADE BY THESE ARTISTS DURING TH E ART EVENT/ANNUAL EXHIBITIONS ARE LEFT WITH THE SOCIETY AS THESE HAVE BEEN MADE FROM THE MATERIALS SUPPLIED BY THE A SSESSEE SOCIETY AND THIS IS REFERRED TO AS THE PROPERTY OF THE SOCIETY. THE PRIMARY REASON FOR HAVING THESE PAINTINGS WITH THE ASSESSEE SOCIETY, IT HAS BEEN EXPLAINED, IS TO ADJU DGE THE WINNERS AMONGST THE PARTICIPANTS AND HENCE THESE PA INTINGS ARE KEPT ASIDE. IT HAS BEEN EXPLAINED THAT THESE P AINTINGS ACCUMULATE OVER THE YEARS, AND AS AND WHEN THERE IS A SHORTAGE OF SPACE FOR STORAGE OF THE SAME AND/OR ON NOTICING DETERIORATIONS ETC. IN THE PAINTINGS WITH THE EFFLU X OF TIME, THESE ARE SOLD IN LOTS AT VERY REASONABLE PRICES. I T HAS BEEN ARGUED THAT THE INTENTION HERE IS NOT TO MAKE ANY P ROFIT BUT TO UTILIZE THE POSSIBLE WASTE OF THESE PAINTINGS PILIN G UP AND UTILIZE THESE FOR AUGMENTING THE RESOURCES TO SERVE THE PRIME OBJECTIVE OF PROMOTION OF ART FOR WHICH IT HAS BEEN ESTABLISHED. 7.5 IT HAS SIMULTANEOUSLY BEEN ALSO ARGUED THAT THE AOS ALLEGATION THAT THE SOCIETY CHARGES 15% ON SALES MA DE DURING THE HOLDING OF THESE EVENTS IS FACTUALLY INCORRECT. THE ASSESSEE SOCIETY, IT HAS BEEN ARGUED IN FACT DEDUCTS 20% OUT OF THE SALE PROCEEDS OF PAINTINGS SOLD DURING THE DISPLAY OF TH E SAME BY THE ARTISTS WHO HIRE THE GALLERY FOR SHOWCASING THE IR WORKS. THIS DEDUCTION, IT HAS BEEN SUBMITTED REPRESENTS TH E ARTISTS CONTRIBUTION FOR THE WELFARE OF FELLOW ARTISTS AND ACCORDINGLY ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 7 OF 17 CREDITED TO THE ARTIST WELFARE FUND TO BE UTILIZED FOR NEEDY POOR AND AGED ARTISTS. IT HAS BEEN SUBMITTED THAT THIS AMOUNT IS VERY MINIMUM SO MUCH SO THAT DURING THE LAST FEW YEARS THE RECEIPTS FROM THESE SALES HAVE BEEN STATED TO BE AS UNDER: - A.Y. AMOUNT (IN RS.) 2010-11 NIL 2011-12 7,000/- 2012-13 18,400/- 2013-14 27,000/- 7.6 ON THE BASIS OF THESE FACTS, IT HAS BEEN SUBMIT TED BEFORE THE CIT(A) AS IS EVIDENT FROM THE REPRODUCTION OF T HE SUBMISSIONS MADE IN THE ORDER ITSELF THAT IN THE AC TIVITIES OF THE SOCIETY, THERE IS NO PROFIT MOTIVE AND THEY ARE UNDERTAKEN ONLY TOWARDS THE FULFILLMENT OF THE SOCIETYS OBJEC TS WHICH ARE TO PROMOTE ART AND CULTURE. THESE ACTIVITIES, IT H AS BEEN ARGUED DO NOT GENERATE ENOUGH FUNDS LET ALONE ANY S URPLUS, TO MEET THE OVERALL EXPENDITURE INCURRED BY THE SOCIET Y ON YEAR TO YEAR BASIS TOWARDS ITS OBJECTS. 7.7 BASED ON THESE MANIFOLD ARGUMENTS SUPPORTED BY FACTS IT HAS BEEN STATED THAT THE ACTIVITIES OF THE SOCIETY ARE NOT DRIVEN BY PROFIT-MOTIVE. RELIANCE HAS BEEN PLACED ON THE FOLLOWING FIGURES OF THE OVERALL EXPENDITURE INCURRED BY THE SOCIETY DURING THE LAST 3 YEARS. ON THE BASIS OF THESE FAC TS, IT HAS BEEN ARGUED THAT IT CAN BE SEEN THAT FROM THE SALE OF PAINTINGS AND RENTAL ETC. THE RECEIPTS ARE NO MATCH TO COVER THE KIND OF EXPENDITURE THE SOCIETY HAS TO INCUR EVERY YEAR FOR THE PROMOTION OF ART AND SCULPTURE. THE FOLLOWING TABL E HAS BEEN REFERRED TO: A.Y RECEIPT FROM GALLERY RENT/SALE OF PAINTING (IN RS.) EXPENSES INCURRED (AMOUNT IN RS.) 2013-14 25,49,582/- 2,00,43,106/- 2012-13 38,41,025/- 1,71,81,315/- 2011-12 5,20,400/- 1,78,26,000/- ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 8 OF 17 2010-11 9,75,071/- 1,45,47,697/- 7.8 WE FIND THAT THESE SUBMISSIONS ON FACTS REMAIN UN- ASSAILED IN THE PRESENT PROCEEDING. 7.9 REVERTING BACK TO THE ORDER WE NOTE THAT IN THE SAID FACTUAL BACKGROUND RELIANCE WAS PLACED ON THE DECIS IONS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DIT (EXEMPTION) & OTHERS WRIT PETI TION (C) 1872/2013 (JUDGMENT DELIVERED ON 22.01.2015) (P. NO . 31-55), INDIA INTERNATIONAL CENTRE VS. ASSISTANT DIRECTOR OF INCO ME TAX BY THE HONBLE ITAT DELHI C BENCH (ITA NO. 3124/DELHI/ 2014 AND DY. DIRECTOR OF INCOME TAX (EXEMPTION) DELHI VS. ALL IN DIA FOOTBALL FEDERATION (2015) 62 TAXMAN.COM 362 (DELHI TRIBUNAL ) . TAKING STRENGTH FROM THE RATIO DECIDENDI OF THESE DECISION S IT HAS BEEN CANVASSED THAT IF SOME INCIDENTAL ACTIVITIES ARE CA RRIED OUT BY A CHARITABLE ORGANIZATION WHOSE DOMINANT AND PRIME OB JECTIVE IS NOT A PROFIT MOTIVE, THE ORGANIZATION CANNOT BE DEE MED TO BE PURSUING NON CHARITABLE OBJECTS AND HENCE BE CONSID ERED TO BE EXISTING FOR NON-CHARITABLE PURPOSES. 7.10 CONSIDERING THE FACTS AS ELABORATED HEREINABOV E, WE FIND NO INFIRMITY IN THE FOLLOWING FINDING OF THE CIT(A) ON FACTS WHICH IS CHALLENGED BY THE REVENUE IN THE PRESENT P ROCEEDINGS BEFORE US: 4.1.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND T HE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO REFERRED TO THE ORDERS OF M Y LD. PREDECESSOR FOR ASSESSMENT YEARS 2011-12 AND 2012-13 IN APPELLANTS OWN CASE IN APPEAL NOS. 195/2014-15 AND 129/2015-16 RESPECTIVELY. THE RELE VANT PORTIONS OF THE ORDER OF MY LD. PREDECESSOR WHILE DECIDING APPEAL FOR ASS ESSMENT YEAR 2012-13 ARE REPRODUCED BELOW: THE ARGUMENT OF THE APPELLANT IS THAT IT IS A SOCIE TY EXISTING FOR THE PROMOTION OF ART, CRAFT AND CULTURE AND IT HAS NO M OTIVE TO DERIVE ANY PROFIT FROM THE RENTING OF GALLERIES AND FOR THAT M ATTER SALE OF PAINTINGS ALSO, WHICH IS NOT A REGULAR FEATURE, BUT ARE SOLD AFTER A LAPSE OF CERTAIN YEARS SO THAT THE PROCEEDS FETCHABLE AGAINST THE SA ME MAY ALSO BE UTILIZED FOR THE PURPOSES OF THE OBJECT OF THE SOCI ETY. IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE APPELLANT IS NO T EXISTING FOR A PROFIT MOTIVE AND ACTUALLY INCURRING LOSSES VIS--VIS RENT ING OF GALLERIES. IT HAS ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 9 OF 17 BEEN EXPLAINED THAT THE PURPOSES OF GIVING GALLERIE S ON A NOMINAL RENT TO THE ARTISTS IS TO HELP THEM TO SHOW CASE THEIR TALE NT, ESPECIALLY TO THE NEW ARTISTS WHO WANTS TO DISPLAY THEIR PAINTINGS FO R PUBLIC EXHIBITION. IT HAS BEEN ALSO STATED THAT THE SOCIETY IS CHARGING V ERY REASONABLE AMOUNTS AND THAT TOO IS NOT SUFFICIENT TO COVER UP THE DIRECT AND INDIRECT EXPENSES IN RELATION TO THE RENTING OF THESE GALLER IES. FURTHER IT HAS ALSO BEEN STATED THAT EVEN THE AMOUNT CHARGED BY THEM IS ALSO LOWER AS COMPARED TO THE AMOUNT BEING CHARGED BY OTHER ART G ALLERIES IN DELHI. WITH REGARD TO SALE OF PAINTINGS IT HAS BEEN SUBMIT TED THAT SALE OF PAINTINGS IS NOT A REGULAR FEATURE OR ACTIVITY UNDE RTAKEN BY THE SOCIETY. THE SOCIETY ORGANIZES ANNUAL ART COMPETITION TO WHI CH NEW AS WELL AS VETERAN ARTISTS ARE INVITED AND THE COMPETITION IS HELD AMONGST THOSE ARTISTS AND THE BEST PAINTINGS MADE BY THEM AT THE SPOT DURING THE COURSE OF THIS ANNUAL CONTEST, ARE GIVEN AWARDS. T HIS WAY THE ARTISTS ARE ENCOURAGED TO PERFORM BETTER. ALL THE PAINTING MATERIALS ARE SUPPLIED BY THE SOCIETY TOTALLY FREE OF COST. NOT ONLY THIS, THE ARTIST WHO COME FROM OUTSIDE DELHI ARE PROVIDED FREE BOARDING AND LODGING IN ADDITION TO REIMBURSEMENT OF TRAVELLING EXPENSES IN CURRED BY THEM FOR VISIT TO THE ANNUAL EVENT HELD BY THE SOCIETY. AFT ER THE COMPETITION IS HELD THE PAINTINGS MADE BY THESE VARIOUS ARTISTS AR E KEPT WITH THE SOCIETY AMONGST WHICH THE BEST PAINTINGS ARE GIVEN AWARDS BY THE JURY COMPRISING GROUP OF ARTISTS. THESE PAINTINGS ARE K EPT AND REMAIN WITH THE ASSESSEE FOR A VERY LONG TIME. WHEN THERE IS A DEARTH OF FURTHER STORAGE BECAUSE OF REGULAR ANNUAL EVENTS HELD FOR S UCH CONTESTS, THE OLD PAINTINGS ARE SOLD IN LOTS TO CLEAR SPACE FOR FURTH ER STORAGE FOR PAINTINGS ETC. RECEIVED OUT OF WHICH THE AWARD WINNING PAINTI NGS ARE SELECTED. THE PAINTINGS KEPT BY THE SOCIETY ARE ALSO DETERIOR ATED DUE TO EFFLUX OF TIME AND, THUS, ARE SOLD IN LOTS AT A VERY REASONAB LE PRICE. THE ARGUMENT OF THE APPELLANTS COUNSEL IS THAT PAINTIN GS ARE NOT DISPOSED OFF AS A BUSINESS BUT IS ONLY UNDERTAKEN TO PREVENT WASTAGE OF PROBABLE RESOURCES. THE APPELLANT HAS SUPPLIED THE FIGURES FOR THE LAST THREE YEARS SHOWING THE REVENUE FROM THE LETTING OUT OF GALLERIES AS WE LL AS SALE OF PAINTING VIS--VIS THE TOTAL EXPENSES INCURRED BY IT FOR THE PROMOTION OF OBJECTS OF THE SOCIETY I.E. ADVANCEMENT OF THE OBJECT OF ART, CULTURE AND CRAFT. THESE FIGURES HAVE BEEN GIVEN AT PAGE 12 OF THE WRI TTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE COURSE OF THE HEA RING OF THE APPEAL WHICH ARE AS UNDER: - A.YR. RECEIPT FROM GALLERY RENT/SALE OF PAINTING (IN RS.) EXPENSES INCURRED (AMOUNT IN RS.) 2012-13 38,41,025/- 1,71,81,315/- 2011-12 5,20,400/- 1,78,26,000/- 2010-11 9,75,071/- 1,45,47,697/- THESE FIGURES ITSELF SHOWS THAT THE RECEIPTS FROM T HESE TWO ACTIVITIES IS ON A VERY LOWER SIDE AS COMPARED TO THE OVER-ALL EXPENDI TURE INCURRED BY THE SOCIETY. . IT HAS BEEN FURTHER ARGUED BY THE APPELLANTS COUNS EL THAT THE LD. AO IS NOT CORRECT IN HOLDING THAT THE MOTIVE OF MAKING PROFIT OR NOT IS NOT NECESSARY TO DETERMINE WHETHER ANY ACTIVITIES IN THE NATURE OF B USINESS, TRADE OR COMMERCE IS CARRIED OUT BY THE CHARITABLE SOCIETY. THE APPELLA NT HAS STATED THAT EACH AND EVERY CASE HAS TO BE SEEN IN LIGHT OF THE FACTS PRE SENT THEREIN AND AS A GENERAL RULE THE FIRST PROVISO TO SECTION 2(15) CANNOT BE A PPLIED WITHOUT CONSIDERING THE PECULIAR FACTS OF THE CASE AT HAND AND, THUS ONLY O N RECEIPT OF SOME INCIDENTAL INCOMES, THE ORGANIZATION CANNOT BE TERMED AS NON-C HARITABLE ENTITY. THE APPELLANT HAS RELIED ON LEGAL AUTHORITIES, NAME LY, ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 10 OF 17 1. INDIA TRADE PROMOTION ORGANISATION VS. DIT (EXEMPTI ON) & OTHERS WRIT PETITION I 1872/2013 BY THE HONBLE DELHI HIGH COUR T (JUDGMENT DELIVERED ON 22.01.2015) 2. INDIA INTERNATIONAL CENTRE VS. ASSISTANT DIRECTOR O F INCOME TAX BY THE HONBLE ITAT DELHI C BENCH (ITA NO. 3124/DEL/20 14) 3. DY. DIRECTOR OF INCOME TAX (EXEMPTION) DELHI VS. AL L INDIA FOOTBALL FEDERATION (2015) 62 TAXMAN.COM 362 (DELHI TRIBUNAL ) THE COUNSEL HAS IMPRESSED UPON THE POINT THAT IF TH E CHARITABLE ORGANIZATION IS CARRYING OUT AN OBJECT OF GENERAL PUBLIC UTILITY NO T DRIVEN PRIMARILY BY PROFIT MOTIVE, THEN IT IS NOT HIT BY THE FIRST PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, OR IF ANY INCIDENTAL INCOME OR RECEIPTS ARE MA DE BY SUCH ORGANIZATION WHOSE PRIME MOTIVE IS NOT TO DRIVE PROFIT, THEY CAN NOT BE SAID TO BE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS AND, THUS, SHOULD NOT BE DEPRIVED OF EXEMPTION U/S 11/12 OF THE INCOME TA X ACT. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2011-12 I HAVE ACCEPTED IN PRINCIPL E THE CONTENTION OF THE APPELLANT THAT IT IS NOT DRIVEN BY PROFIT MOTIVE AN D, THUS, IS ENTITLED TO EXEMPTION U/S 11 & 12, THOUGH IN THAT CASE BARRING RENTAL INC OME OF RS. 4,80,00,000/- FROM G.E. GROUPS OF COMPANIES, THE RECEIPTS FROM RE NTING OF GALLERIES AND SALE OF PAINTINGS WERE LESS THAN RS. 10 LACS, THE THRESHOLD LIMIT RELEVANT FOR THAT ASSESSMENT YEAR UNDER THE SECOND PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT. HOWEVER, IT IS EMPHASIZED THAT REGARDLESS OF THE RECEIPT DURING ASSESSMENT YEAR 2011-12, CONCURRENCE ON PRINCIPLE H AS BEEN GIVEN WITH REGARD TO THE FACT THAT THE OVERALL OBJECTIVE/DOMINANT PUR POSE OF THE ASSESSEE-SOCIETY IS NOT TO DO BUSINESS OR EARN INCOME. CONSIDERING OF THE ABOVE SAID FACTS, ARGUMENTS ADVA NCED BY THE APPELLANT AND THE CASE LAWS RELIED UPON BY ITS COUN SELS, I AM INCLINED TO ACCEPT THEIR CONTENTION. I HOLD THAT THE APPELLANT SHOULD NOT BE TERMED AS A NON- CHARITABLE ORGANIZATION UNDER THE FIRST PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT AS IT IS NOT PRIMARILY DRIVEN BY PROFIT MOTIVE, KEEPING IN VIEW THE FACTS OF THE CASE DISCUSSED ABOVE. THEREFORE, THE APPELLANT SHA LL BE ENTITLED TO EXEMPTION U/S 11/12 OF THE INCOME TAX ACT. THE RELIEF OF 15% STATUTORY EXEMPTION AS WELL AS A PPLICATION OF INCOME IS CONSEQUENTIAL BECAUSE OF MY FINDING THAT THE APPELL ANT IS A CHARITABLE ORGANIZATION. THE LD. AO IS DIRECTED TO ALLOW 15% STATUTORY EXEMPTION OF RS. 1,29,02,516/- ON GROSS INCOME AS WELL AS APPLICATIO N OF INCOME OF RS. 3,2895,740/- CLAIMED BY THE APPELLANT, AFTER VERIFY ING THE SAME FROM THE ASSESSMENT RECORDS AND NECESSARY DETAILS WITH REGAR D TO THE CLAIM. .. 4.1.3 SINCE THE FACTS ARE SIMILAR FOR THOSE FOR ASS ESSMENT YEARS 2011-12 AND 2012-13, RESPECTFULLY FOLLOWING THE DECISION OF MY LD. PREDECESSOR FOR THESE YEARS AND IN ACCORDANCE WITH THE PRINCIPLE OF CONSI STENCY IN FOLLOWING THE EARLIER ORDERS OF CIT(A), IT IS HELD THAT THE APPELLANT IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 WITH ALL CONSEQUENTIAL BENEFITS INCLUDIN G 15% STATUTORY EXEMPTION AND APPLICATION OF INCOME AS PER LAW. 7.11 AS NOTED BY US IN THE EARLIER PART OF THIS ORDER IT IS SEEN THAT THESE ISSUES HAVE BEEN CONSIDERED BY THE ITAT IN THE EARLIER YEARS. IT IS SEEN THAT IN ASSESSMENT YEAR 2011-12, BEFORE THE CO-ORDINATE BENCH AN IDENTICAL GRIEVANCE WAS AGITATED BY THE REVENUE WHICH IS EXTRACTED HEREUNDE R: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 11 OF 17 ACTIVITIES OF THE ASSESSEE DOES NOT FALL UNDER THE DEFINITION OF CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF T HE INCOME TAX ACT, 1961. 7.11.1 THE FOLLOWING BACKGROUND FACTS OF THE ASSES SEE SOCIETY WERE SET OUT FOR CONSIDERATION BY THE CO-OR DINATE BENCH: 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A SOCIETY AND FILED ITS RETURN OF INCOME ON 28.09.2011 DECLAR ING TOTAL INCOME OF RS.1,30,00,000/-. THE ASSESSEE IS REGISTE RED UNDER THE SOCIETIES REGISTRATION ACT, 1860. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY ARE AS UND ER: (A) TO FOSTER AND DEVELOP FINE AND APPLIED ARTS IN INDIA AND TO PROMOTE APPRECIATION BY MEANS OF PUBLICATIONS, LECT URES, CONFERENCES, DEMONSTRATION, EXHIBITION; (B) TO ORGANIZE AND ESTABLISH A NATIONAL ART GALLER Y IN NEW DELHI; (C) TO ORGANIZE ART EXHIBITIONS AND SOCIETIES IN IN DIA AND ABROAD; (D) TO ACT AS THE CENTRAL ORGANIZATIONS OF ARTS AND CRAFTS IN INDIA; (E) TO DO ALL SUCH LAW FULL THINGS AS ARE INCIDENTA L OR CONDUCIVE TO THE ATTAINMENT OF ABOVE OBJECTS AND ANY OTHER OB JECTS OF ARTS AND LITERATURE NOT MENTIONED ABOVE. 4. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPL AIN AS TO WHY THE BENEFIT U/S 11 & 12 OF THE ACT IN RESPECT O F THE INCOME SHOULD BE ALLOWED IN VIEW OF THE AMENDED SECTION 2( 15) OF THE ACT INTRODUCED W.E.F. 01.04.2009 I.E. RELEVANT TO A SSESSMENT YEAR 2011-12 UNDER CONSIDERATION, SINCE ITS ACTIVIT IES FALL IN THE CATEGORY OF ADVANCEMENT OF OBJECT OF GENERAL PUBLI C UTILITY AND ITS INCOME INCLUDING RENTAL INCOME IS IN THE NATURE OF BUSINESS, TRADE OR COMMERCE AND THE SAME INCOME EXCEEDS RS.10 ,00,000/- . REJECTING THE VARIOUS EXPLANATION GIVEN BY THE AS SESSEE AND RELYING ON THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT AND CBDT CIRCULAR NO. 11/2008 DATED 19.12.2008, THE ASSESSING OFFICER HELD THAT THE ACTIVITIES OF THE A SSESSEE SOCIETY IS NOT FOR CHARITABLE PURPOSE AND THEREFORE, THE IN COME OF THE ASSESSEE IS TAXABLE. HE NOTED THAT THE ASSESSEE DUR ING THE YEAR UNDER CONSIDERATION HAS DERIVED INCOME UNDER THE FO LLOWING HEADS: A. RENTAL INCOME 4,80,00,000/- B. INTEREST INCOME 2,10,45,261/- C. INCOME FROM GALLERY MAINTENANCE 5,11,400/- D. MISC. INCOME 3,01,587/- TOTAL 6,98,58,248/- 7.11.2 THE RELEVANT AND APPLICABLE AIMS AND OBJECT S OF THE ASSESSEE SOCIETY FROM ITS MEMORANDUM OF ASSOCIATION WERE ENCAPSULED AS UNDER: ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 12 OF 17 (J) TO PURCHASE OR ACQUIRE ON LEASE, OR IN EXCHAN GE, OR ON HIRE, OR OTHERWISE, ANY REAL OR PERSONAL PROPERTY, AND ANY RIGHTS OR PRIVILEGES NECESSARY OR CONVENIENT FOR TH E PURPOSES OF THE SOCIETY. (L) TO SELL, IMPROVE, MANAGE AND DEVELOP ALL OR ANY PART OF THE PROPERTY OF THE SOCIETY. (M) TO DO ALL SUCH LAWFUL THINGS AS ARE INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS AND ANY OTHE R OBJECTS OF ARTS AND LITERATURE NOT MENTIONED ABOVE. 7.11.3 RELYING ON THE PAST HISTORY OF THE ASSES SEE AND THE DECISION OF THE DELHI HIGH COURT IN INDIA TRADE PRO MOTION ORGANIZATION VS. DGIT (E) (SUPRA), WHEREIN VIDE JUD GMENT DATED 22.01.2015, THE HONBLE DELHI HIGH COURT, UPHOLDING THE CONSTITUTIONAL VALIDITY OF PROVISO TO SECTION 2(15) OF THE ACT, HAD HELD THAT MERE RECEIPT OF FEE OR CHARGE WILL NO T MEAN THAT THE ASSESSEE IS INVOLVED IN ANY TRADE, COMMERCE OR BUSINESS. THE CO-ORDINATE BENCH FURTHER TAKING NOTE OF THE PA ST ORDERS OF THE ITAT IN ASSESSEES CASE ON SAME SET OF FACTS AN D CIRCUMSTANCES DREW STRENGTH FROM THE PRINCIPLE AS H ELD IN INDIA TRADE PROMOTION ORGANIZATION, THE LD. DGIT (E ) WHEREIN CONSIDERING THE FACT THAT DESPITE HUGE SURPLUSES IN BANKS, THE RECEIPT OF RENTALS FROM SPACE DURING TRADE FAIRS AN D EXHIBITIONS, AND RECEIPT OF INCOME BY WAY OF SALE O F TICKETS AND INCOME FROM FOOD AND BEVERAGE OUTLETS IN PRAGATI MA IDAN, ETC. THE COURT IN CATEGORIC TERMS HELD AS UNDER: (I) IT IS APPARENT THAT MERELY BECAUSE A FEE OR SO ME OTHER CONSIDERATION IS COLLECTED OR RECEIVED BY AN INSTIT UTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTABLISHED F OR A CHARITABLE PURPOSE. IT IS ALSO IMPORTANT TO NOTE AS TO WHAT IS THE DOMINANT ACTIVITY OF THE INSTITUTION IN QUESTION. IF THE DOM INANT ACTIVITY OF THE INSTITUTION WAS NOT BUSINESS, TRADE OR COMMERCE , THEN ANY SUCH INCIDENTAL OR ANCILLARY ACTIVITY WOULD ALSO NO T FALL WITHIN THE CATEGORIES OF TRADE, COMMERCE OR BUSINESS. IT I S CLEAR FROM THE FACTS OF THE PRESENT CASE THAT THE DRIVING FORC E IS NOT THE DESIRE TO EARN PROFITS BUT, THE OBJECT OF PROMOTING TRADE AND COMMERCE NOT FOR ITSELF, BUT FOR THE NATION BOTH WITHIN INDIA AND OUTSIDE INDIA. CLEARLY, THIS IS A CHARITABLE PU RPOSE, WHICH HAS AS ITS MOTIVE THE ADVANCEMENT OF AN OBJECT OF G ENERAL PUBLIC UTILITY TO WHICH THE EXCEPTION CARVED OUT IN THE FI RST PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD NOT APPLY; ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 13 OF 17 (II) IF A LITERAL INTERPRETATION WERE TO BE GIVEN T O THE SAID PROVISO, THEN IT WOULD RISK BEING HIT BY ARTICLE 14 (THE EQU ALITY CLAUSE ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION). IT IS WELL SETTLED THAT THE COURTS SHOULD ALWAYS ENDEAVOUR TO UPHOLD T HE CONSTITUTIONAL VALIDITY OF A PROVISION, AND IN DOIN G SO, THE PROVISION IN QUESTION MAY HAVE TO BE READ DOWN; (III) SECTION 2(15) IS ONLY A DEFINITION CLAUSE. TH E EXPRESSION CHARITABLE PURPOSE APPEARING IN SECTION 2 (15) OF THE SAID ACT HAS TO BE SEEN IN THE CONTEXT OF SECTION 10(23C)(IV ). WHEN THE EXPRESSION CHARITABLE PURPOSE, AS DEFINED IN SECT ION 2(15) OF THE ACT, IS READ IN THE CONTEXT OF SECTION 10(23C)( IV) OF THE SAID ACT, WE WOULD HAVE TO GIVE UP THE STRICT AND LITERA L INTERPRETATION SOUGHT TO BE GIVEN TO THE EXPRESSION CHARITABLE PURPOSE BY THE REVENUE. IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION 'CHA RITABLE PURPOSE', AS DEFINED IN SECTION 2(15) CANNOT BE CON STRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOUR AND BE CONSIDERED IN THE CONT EXT OF SECTION 10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLEAR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION 2 (15) OF THE SAID ACT, THEN THE PROVISO WOULD BE AT RISK OF RUNNING F OWL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ARTICLE 14 OF TH E CONSTITUTION INDIA. IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SECTION 10(23C)(IV) BECAUSE, IN OUR VIEW , THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECT INTERP RETATION OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE T HAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADV ANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, COMME RCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATIO N TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, IN THE NATUR E OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DO MINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, IS PROFIT MAKI NG, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERING OF ANY SERV ICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD N OT BE ENTITLED TO CLAIM ITS OBJECT TO BE A 'CHARITABLE PU RPOSE'. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMA RILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUG H THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARI TABLE PURPOSES. 7.11.4 THE CO-ORDINATE BENCH NOTED THAT THE HON' BLE DELHI HIGH COURT TOOK COGNIZANCE OF CIRCULAR NO. 11 OF 20 08 ISSUED BY THE CBDT AND HAD OBSERVED THAT THE PROVISO TO SE CTION ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 14 OF 17 2(15) OF THE ACT, WHICH WAS INSERTED BY FINANCE ACT , 2008, WAS DIRECTED TO PREVENT THE UNHOLY PRACTICE OF PURE TRA DE, COMMERCE AND BUSINESS ENTITIES FROM MASKING THEIR ACTIVITIES AND PORTRAYING THEM IN THE GARB OF AN ACTIVITY IN T HE OBJECT OF A GENERAL PUBLIC UTILITY BUT WAS NOT DESIGNED TO HIT AT THOSE INSTITUTIONS, WHICH HAD THE ADVANCEMENT OF THE OBJ ECTS OF GENERAL PUBLIC UTILITY AT THEIR HEARTS AND WERE CH ARITY INSTITUTIONS. 8. ACCORDINGLY CONSIDERING THE LEGAL POSITION AS FO UND SETTLED WITH RESPECT TO INTERPRETATION OF PROVISO O F SECTION 2(15) OF THE ACT IN THE CASE OF INDIA TRADE PROMOTION ORG ANISATION VS. DGIT (EXEMPTION) (SUPRA) THE COORDINATE BENCH H ELD THAT THE BENEFIT OF EXEMPTION U/S 11 & 12 OF THE ACT COU LD NOT BE DENIED. WE FIND THAT SIMILAR VIEW HAS BEEN FOLLOWED RIGHT FROM 2009-10 ASSESSMENT YEAR TILL DATE. THE DECISION OF THE ITAT IN 2009-10 ASSESSMENT YEAR BEFORE THE HONBLE HIGH COU RT WHEREIN THE REVENUE FAILED IN ITS APPEAL FILED. IN ITA NO. 754/DEL/2019 IN ITS ORDER DATED 19 TH AUGUST, 2019 THE JURISDICTIONAL COURT DISMISSED THE APPEAL FILED BY THE REVENUE HOLDING AS UNDER: 1. THE REVENUE IS IN APPEAL AGAINST AN ORDER DATE D 14 TH FEBRUARY, 2019 PASSED BY THE ITAT IN ITA NO. 1449/D EL/2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE QUESTION SOUGHT TO BE URGED BY THE REVENUE IS WHETHER THE ITAT ERRED IN ALLOWING RELIEF TO THE ASSESSEE, FOLL OWING THE DECISION OF THIS COURT IN INDIA TRADE PROMOTION ORG ANISATION VS. DGIT(E)(2015) 371 ITR 333 (DEL) AND HOLDING THAT ME RELY BECAUSE A SMALL PERCENTAGE OF THE INCOME OF THE ASSESSEE IS FROM LETTING OUT OF ITS PREMISES AND SALE OF PAINTINGS, THE ESSE NTIAL ACTIVITY OF THE ASSESSEE WOULD NOT CEASE TO BE CHARITABLE FOR T HE PURPOSES OF SECTIONS 11 AND 12 OF THE INCOME TAX ACT, 1961. 3. HAVING HEARD LD. COUNSEL FOR THE REVENUE, AND HA VING EXAMINED THE IMPUGNED ORDER OF THE ITAT, THIS COURT IS OF THE VIEW THAT THE ITAT HAS COMMITTED NO LEGAL ERROR IN APPLY ING THE LAW EXPLAINED BY THIS COURT IN THE AFOREMENTIONED DECIS ION. NO SUBSTANTIAL QUESTION OF LAW ARISES. ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 15 OF 17 9. WE HAVE SEEN THAT AGAIN THE ORDER OF THE ITAT IN AY 2011-12 WAS UPHELD BY THE HONBLE HIGH COURT AND HE NCE THE ISSUE HAS ATTAINED FINALITY WHEREIN THE COURT DISMI SSING THE REVENUES APPEAL HELD AS UNDER: AT THE OUTSET, LD. COUNSEL FOR THE APPELLANT HAS F AIRLY DRAWN OUR ATTENTION TO THE ORDER DATED 19.08.2019 PASSED IN I TA NO. 754/2019, WHEREBY THE REVENUES APPEAL FROM THE ORD ER DATED 14.02.2019 PASSED IN ITA NO. 1449/DEL/2013 IN RELAT ION TO THE RESPONDENT ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 WAS DISMISSED BY THIS COURT. THE IMPUGNED ORDER PASSED BY THE TRIBUNAL RELIES ON THE SAID EARLIER ORDER DATED 14. 02.2019 IN RELATION TO THE ASSESSMENT YEAR 2009-10. SINCE THI S COURT HAS ALREADY HELD THAT NO SUBSTANTIAL QUESTION ARISES FO R OUR CONSIDERATION, WE FIND NO MERIT IN THIS APPEAL AND THE SAME IS DISMISSED. 10. THUS, WE FIND ON THE BASIS OF ELABORATE DISCUSS ION HEREINABOVE WHEREIN CONSIDERING THE FACTS ON RECORD IN THE RESPECTIVE YEARS WE HOLD THAT THE APPEALS FILED BY THE REVENUE HAVE TO BE DISMISSED IN VIEW OF THE CONSISTENT ORDE RS AVAILABLE ON RECORD QUA THE ISSUE ORDERED ACCORDINGLY. 11. ADDRESSING THE ASSESSEE'S APPEALS, IT IS SEEN T HAT LACK OF OPPORTUNITY IS PLEADED BY THE ASSESSEE ASSAILING TH AT IT HAS RESULTED IN AN ENHANCEMENT. LD. SR. DR SHRI SATPAL GULATI SUBMITTED THAT THE DECISION CHALLENGED BY THE ASSES SEE IS A CONSEQUENTIAL DECISION AND NO SPECIFIC HEARING HENC E IS REQUIRED TO BE GIVEN. HOWEVER, THE FACT REMAINS TH AT THE CONCLUSION DRAWN ON THE UNSPENT AMOUNT NEEDED NECES SARILY TO BE SPECIFICALLY CONFRONTED TO THE ASSESSEE WHICH HA S NOT BEEN DONE. NO DOUBT THE STATUTORY PROVISIONS APPLICABLE ON FACTS WILL RESULT, HOWEVER THE FACT REMAINS THAT CONFRONTING T HE FACTS TO THE ASSESSEE BEFORE APPLYING THE STATUTORY PROVISIO NS IN NO WAY CAN BE SAID TO CAUSE ANY INCONVENIENCE TO THE REVEN UE AND ON THE OTHER HAND ADVANCES THE CAUSE OF JUSTICE HAVING PREVAILED. ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 16 OF 17 ONCE AN ORDER IS PASSED AFTER GIVING DUE OPPORTUNIT Y TO THE ASSESSEE NO GRIEVANCE CAN THEN BE SAID TO SUBSIST. ON A READING OF THE IMPUGNED ORDER, IT IS EVIDENT THAT W ITHOUT HEARING THE ASSESSEE THE LD. COMMISSIONER HAS DECID ED THE ISSUE ON THE BASIS OF THE DECISION OF THE POSITION OF LAW AS CONSIDERED IN DIRECTOR OF INCOME TAX (EXEMPTION) VS. GIRDHARILAL SHEWNARAIN TANTIA TRUST [(1993) 199 ITR 215 (CAL.) AND IN THE CASE OF B.N. GAMADIA PARSI HUNNARSHALA VS. ASSTT. DIT (EXEM PTION) [(2002) 77 TTJ 274 (MUM.) , HOWEVER, WITHOUT HEARING THE ASSESSEE. ACCORDINGLY, WITHOUT COMMENTING UPON THE CORRECTNES S, OF THE CONCLUSIONS DRAWN ADDRESSING THE PROCEDURAL SHORTCO MING ONLY, WE DEEM IT TO APPROPRIATE TO SET ASIDE THE OR DERS OF THE LD. FIRST APPELLATE AUTHORITY TO THIS EXTENT AND RE STORE THE ISSUE BACK TO THE FILE OF THE CIT(A) WITH A DIRECTI ON TO GIVE A SPECIFIC OPPORTUNITY TO THE ASSESSEE TO MAKE ITS SU BMISSION BEFORE THE PASSING OF THE ORDER. NO DOUBT TECHNICA LLY THE RESULTANT ADDITION MAY NOT BE CAPABLE OF BEING DESR IBED AS AN ENHANCEMENT, HOWEVER, THE FACT REMAINS THAT WHEN TH E ADMINISTRATIVE AUTHORITIES PROCEED TO PASS AN ORDER ADVERSE TO A PARTY THEN DUE NOTICE OF THIS FACT NECESSARILY IN ALL FAIRNESS NEEDS TO BE GIVEN TO THE ASSESSEE. IN THE FACTS OF THE PRESENT CASE, IT IS EVIDENT THAT THE ASSESSEE WAS NOT HEARD . THE LAW IS WELL SETTLED THAT IT CANNOT BE INFERRED/PRESUMED TH AT THE ASSESSEE EVEN IF GIVEN AN OPPORTUNITY WOULD HAVE NO THING FURTHER TO STATE ON FACTS OR LAW. THE PRINCIPLES O F NATURAL JUSTICE MANDATE THAT A REASONABLE AND EFFECTIVE OPP ORTUNITY OF BEING HEARD NEEDS TO BE GRANTED SPECIFICALLY WHERE AN ADMINISTRATIVE AUTHORITY PROCEEDS TO TAKE AN ADVERS E VIEW. ACCORDINGLY, IN THE INTERESTS OF JUSTICE, IT IS DEE MED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER BACK TO THE FILE OF ITA NOS.1647, 1648, 1630 & 1631/D EL/2018 ALL INDIA FINE ART S & CRAFTS SOCIETY PAGE 17 OF 17 THE LD. CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REA SONABLE OPPORTUNITY OF BEING HEARD. 12. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 13. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED AND APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 14/10/2021 SD/- SD/- (O.P. KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICI AL MEMBER (*POONAM, SPS/CHD.) *KAVITA ARORA, SPS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI