ITO, CHENNAI V. Sri Thyaga Brahma Gana Sabha, CHENNAI

ITA 1677/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8770 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 21-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MEENAKSHISUNDARAM
• Assessee Lawyers: DURAI
• Keywords: Depreciation; Charitable institution; Cancellation of registration
• Section: 143(3); 234B; 80G; 12AA; 2; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.1677/MDS/2015 # % &% / ASSESSMENT YEAR : 2012-2013. INCOME TAX OFFICER, EXEMPTION WARD-4, CHENNAI 600 034. VS. M/S. SRI THYAGA BRAHMA GANA SABHA, NO.103, G.N. CHETTY ROAD, T. NAGAR, CHENNAI 600 017. [PAN AABTS 1159B] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. R. MEENAKSHISUNDARAM, +,'( ) * /RESPONDENT BY : SHRI. DURAI PANDIAN, ADDL. CIT. ! ) - / DATE OF HEARING : 23-06-2016 ./& ) - / DATE OF PRONOUNCEMENT : 05-08-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED A GAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1 7, CHENNAI IN ITA NO.405A/14-15, DATED 24.04.2015 FOR THE ASSESSMENT YEAR 2012-2013 ITA NO.1677/MDS/2015 :- 2 -: PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1 961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 2.1 THE ID CIT(A) ERRED IN HOLDING THAT THE ASSES SEE IS ELIGIBLE FOR EXEMPTION U/S.11 OF THE ACT AND THE OBJECTS QUALIFY AS CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE ACT; 2.2 THE ID CIT(A) FAILED TO APPRECIATE THAT THE SAB HA HAS GENERATED INCOME THROUGH SPONSORSHIP, GATE COLLECTI ON, ORGANISATION OF MUSIC FESTIVALS, ETC., WHICH CONSTI TUTE ACTIVITY IN THE NATURE OF CARRYING ON OF TRADE. 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ID CIT(A) ERRED IN HOLDING THAT SELLING OF DAILY TICKE TS AND SEASON TICKETS ARE INCIDENTAL ACTIVITIES WHICH WERE THE NATURAL OFF SHOOT OF THE DOMINANT ACTIVITIES; 3.2 THE ID CIT(A) ERRED IN LAW AND IN FACTS IN MAKI NG THIS ARTIFICIAL DISTINCTION OF 'SUBSERVIENT ACTIVITIES' AND 'DOMINANT ACTIVITIES' WHEN THE INCOME-TAX ACT DOES NOT RECOGN ISE SUCH DISTINCTION; 4.1 THE ID. CIT (A) ERRED IN HOLDING THAT THERE IS NO PROFIT DERIVED FROM THESE ACTIVITIES; 4.2 THE ID. CIT (A) FAILED TO APPRECIATE THAT THE T RUST LOSES ITS CHARACTER OF 'CHARITABLE PURPOSE', WHEN THE REC EIPT EXCEEDS RS.25 LAKHS; 5. THE ID. CIT (A) OUGHT TO HAVE APPRECIATED THAT CANCELLATION OF REGISTRATION U/S 12AA AND 80G IS NOT A PRE- REQUISITE FOR DENIAL OF EXEMPTION U/S 11 OF THE ACT ; 6. THE ID. CIT (A) FAILED TO APPRECIATE THAT THE A SSESSEE HAS PAID SERVICE TAX; 7. THE ID CIT(A) ERRED IN PLACING RELIANCE ON THE D ECISION OF THE HON'BLE TRIBUNAL IN THE CASE OF M/S.. HAMSADHWANI VS. DIT(E) (ITA NO.494/MDS/2011 DATED 16.01.2012) AND M/S.. MYLAPORE FINE ARTS CLUB, CHENNAI VS. DDLT (E)-I (ITA NO.1706/MDS/2010 DATED 12.09.2011) WHICH ARE DISTINGUISHABLE FROM THE ITA NO.1677/MDS/2015 :- 3 -: CASE ON HAND; 8.1 THE ID. CIT (A) ERRED IN DELETING THE CORPUS DO NATION OF RS.46.87 LAKHS WITHOUT TAKING COGNIZANCE TO THE PROVISIONS OF SECTION 13(8) OF THE ACT; 8.2 THE ID. CIT (A) FAILED TO APPRECIATE THAT THE DONATIONS WERE RECEIVED FROM THE USERS OF THE HALL IN LIEU OF THE RENT; 9. THE ID CIT(A) ERRED IN DELETING THE ADDITION MAD E TOWARDS DEPRECIATION CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS. 7.90 LAKHS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT AND GRANTED REGISTRATION U/S.12A (A) OF THE ACT AS PER PROCEEDI NGS OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS) CHENNAI DATED 27.05.1994. THE ASSESSEE FILED RETURN OF INCOME ON 24.09.2012 ADMITTING NIL INCOME. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICE U/S.143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICE, T HE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND FILED DETAILS. THE LD. ASSESSING OFFICER IS OF THE OPINI ON THAT CONSEQUENT TO AMENDED PROVISIONS OF SEC.2(15) OF THE ACT W.E.F. 0 1.04.2009, THERE IS A RADICAL DEPARTURE U/S.2(15) OF THE ACT EXCLUDING THOSE TRUST AND INSTITUTIONS WITH OBJECT OF GENERAL PUBLIC UNITY HA VING ANY ACTIVITY IN THE NATURE OF TRADE OR COMMERCE OR DOING SERVICE IN REL ATION TO TRADE AND COMMERCE. THE LD. ASSESSING OFFICER IN THE ASSESSM ENT PROCEEDINGS, FOUND THE ACTIVITIES AND OBJECTS OF THE ASSESSEE AS UNDER:- ITA NO.1677/MDS/2015 :- 4 -: A) TO PROMOTE THE ADVANCEMENT OF MUSIC AND OTHER FORM OF FINE ARTS; B) TO PROMOTE ARTISTIC AND CULTURAL EXPRESSION THROUGH DRAMA, DANCE, MUSIC CONFERENCES AND COGNATE ACTIVITIES; C) TO ARRANGE FOR THE EXPOSITION OF ART BY COMPETENT A RTISTES AND TO ENCOURAGE DESERVING TALENT; D) TO CONDUCT SCHOOLS CALLED 'SRI THYAGA BRAMHA GANA SABHA MUSIC AND DANCE SCHOOLS' FOR IMPARTING INSTRUCTIONS IN MUSIC AND DANCE ON PROPER LINES AND THUS AFFORD FACILITIES FOR WIDE SPREAD KNOWLEDGE IN MUSI C AND DANCE; E) TO ORGANIZE SOCIAL GATHERINGS AS WOULD FOSTER COMRADESHIP AMONG MEMBERS; F) TO PROMOTE THE ART OF DRAMATICS AND THE PURPOSE TO ORGANIZE A DRAMATIC WING CALLED 'SRI THYAGA BRAHMA GANA SABA AMATEURERS'; G) TO DO ALL OTHER THINGS AS ARE INCIDENTAL OR CONDUCI VE TO THE ATTAINMENT OF THE ABOVE MENTIONED OBJECTIVES. AND ASSESSEE SOCIETY GENERATING INCOME THROUGH SPO NSORSHIP, GATE COLLECTION, ORGANIZATION OF MUSIC FESTIVALS, SUBSCR IPTIONS, INTEREST INCOME ETC. THE LD. ASSESSING OFFICER ALLEGED THAT ASSESSEE SOCIETY OWNS TWO HALLS WHICH ARE LET OUT ON DAY TO DAY BAS IS TO CORPORATES, INDIVIDUALS AND OTHER PARTIES AND ALSO ASSESSEE PAY ING SERVICE TAX ON RENTAL RECEIPTS FROM HALLS. THE LD. ASSESSING OFF ICER BASED ON THE ACTIVITIES OF THE ASSESSEE IS OF THE OPINION THAT T HE ASSESSEE TRUST WAS SQUARELY CLASSIFIED AS CARRYING OUT OBJECTS OF G ENERAL PUBLIC UTILITY HAVING COLOUR OF TRADE, COMMERCE AND BUSINESS AND INVOKED ITA NO.1677/MDS/2015 :- 5 -: PROVISIONS OF SEC. 2(15) OF THE ACT TO DENY STATUS OF CHARITABLE PURPOSE AND TREAT AS ASSOCIATION OF PERSONS (AOP). THE LD. AUTHORISED REPRESENTATIVE HAS FILED SUBMISSIONS IN ASSESSMENT PROCEEDINGS AND CLARIFIED THROUGH LETTER DATED 29.09.2014 THAT FOR THE ASSESSMENT YEAR 2010-2011, THE LD. COMMISSIONER OF INCOME TAX (APPE ALS)-VII, DATED 14.08.2013 IN ITA NO.294/12-13 OBSERVED THAT THE AS SESSEES SOCIETY FALLS WITHIN THE AMBIT OF RESIDUAL OF SEC. 2(15) OF THE ACT AND ALLOWED APPEAL IN FAVOUR OF THE ASSESSEE AND LD. AUTHORISED REPRESENTATIVE ALSO RELIED ON THE DECISIONS. (I) MYLAPORE FINE ARTS CLUB IN ITA NO.1706/MDS/10, DATED 12.09.2011. (II) HAMSADHWANI IN ITA NO.494/MDS/2011, DATED 16.01.2012. (III) MADRAS HIGH COURT DECISION IN CIT VS. SRI THYAGA BRAHMA GANA SABHA DATED 14.06.1990, IN ASSESSEES OWN CASE. THE LD. ASSESSING OFFICER HAVING NOT SATISFIED WITH THE SUBMISSIONS AND WAS OF THE FIRM OPINION THAT THE ACTIVITIES ARE NOT COVERED UNDER THE MAIN LIMBS OF SEC. 2(15) OF THE ACT BUT COVERED BY THE RESIDUAL CLAUSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLI C UTILITY. FURTHER, ASSESSEE SOCIETY IS IN RECIPIENT OF CORPUS DONATION S DURING THE FINANCIAL YEAR AND CLAIMED EXEMPTION U/S.11(1)(D) OF THE ACT. THIS CORPUS DONATIONS ARE RECEIVED FROM THE USER OF THE HALL IN THE FORM OF COLLECTIONS FOR USAGE OF HALL AND RELIED ON THE PR OVISIONS OF SEC.13(8) ITA NO.1677/MDS/2015 :- 6 -: OF THE ACT AND ASSESSEE HAS CLAIMED ENTIRE COST OF ASSET CLAIMED AS APPLICATION OF INCOME IN EARLIER YEARS AT THE TIME OF PURCHASE. THE LD. ASSESSING OFFICER HAS DISALLOWED DEPRECIATION CLAI MED ON SUCH ASSET DURING THE YEAR AND ALLOWED DEPRECIATION ONLY ON ASSETS PURCHASED DURING THE YEAR AND RELIED ON THE FOLLOWING JUDICIA L DECISIONS:- 1. NECTAR BEVERAGES LIMITED 314 ITR 314 (SC). 2. J.K. SYNTHETICS LIMITED (1992) 65 TAXMAN 420 ( SC). 3. LISSIE MEDICAL INSTITUTIONS VS CIT 2012) TIOL 3030 (KER) 4. DIT VS. M/S. CHARANJIV CHARITABLE TRUST DELHI HIGH COURT IN ITA NO.321 TO 323/2013, DATED 18.03.2014 AND MADE ADDITION OF CORPUS FUND, DEPRECATION AND P ASSED ASSESSMENT ORDER U/S.143(3) OF THE ACT DATED 10.11.2014 TREAT ING ASSESSEE AS AOP. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE ARGUED THE GROUNDS AND E XPLAINED THAT THE ACTION OF THE LD. ASSESSING OFFICER IS BAD IN LAW O N INVOKING PROVISIONS OF SEC. 2(15) AND SEC. 12A(A) OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING THE FINDINGS OF TH E LD. ASSESSING OFFICER, SUBMISSIONS AND JUDICIAL DECISIONS HAS DIS CUSSED ELABORATELY AT PAGE 4, 5 & 6 OF HIS ORDER IS OF THE OPINION THAT T HE APPARENT ACTIVITIES OF THE TRUST ARE DOMINANT ACTIVITIES CONFIRMING TO THE OBJECTS AND ITA NO.1677/MDS/2015 :- 7 -: SECOND SUBSERVIENT ACTIVITIES ARE INCIDENTAL TO THE DOMINANT ACTIVITIES AND DISCUSSED ELABORATELY AND DIRECTE D THE ASSESSING OFFICER TO DELETE THE ADDITIONS BY OBSERVING AT PAR A 4.4 AND 4.5 OF HIS ORDER AS UNDER:- 4.4 EVEN IF IT IS PRESUMED THAT THE AO HAD RIGHTL Y FOUND THE OBJECTS AS NON- CHARITABLE, SHE SHOULD NO T HAVE RESORTED TO TREAT THE ASSESSEE AS AOP AND TREATED THE ENTIRE CORPUS DONATIONS OF RS.46,87,530 /- AS TAXABLE INCOME, WHEN THE SOCIETY CONTINUED TO EN JOY REGISTRATION AND RECOGNITION RESPECTIVELY U/S 12A(A ) AND 80G OF THE IT ACT, 1961. ON THE CONTRARY SHE SHOULD HAVE INITIATED APPROPRIATE ACTION TO CANCEL THE REGISTRATION GRANTED TO THE SOCIETY U/S 12AA AND 80 G OF THE IT ACT, 1961 AS A PRE-REQUISITE BEFORE PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE IT ACT, 1961 ON 10.11.2014, WHEREAS THE AO HAS FAILED TO DO THE SAM E. THE HON'BLE ITAT 'C' BENCH IN ITS ORDER IN 1706 (MDS)/2010 DATED 12.09.2011 IN THE CASE OF M/S. THE MYLAPORE FINE ARTS CLUB, CHENNAI VS DIT(E) - I, CHENNAI DIRECTED TO GRANT APPROVAL U/S 80G OF TH E ACT WHILE DECIDING THE IDENTICAL ISSUE. THE HON'BLE ITA T 'D' BENCH IN ITS ORDER IN ITA NO.494/MDS/2011 DATED 16.01.2012 IN THE CASE OF HAMSADHVENI VS DIT(E), CHENNAI DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING THAT ADVANCEMENT OF MUSIC, CLASSICAL, DANCE, ARTS, ETC. CAN NEVER BE CONSIDERED AS AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OF BUSINE SS. EVEN IF THE ACTIVITY IS OF GENERAL PUBLIC UTILITY, STILL IT IS ENTITLED TO EXEMPTION U/S 11 OF THE ACT IF IT DOES NOT INVOLVE RUNNING OF AN ACTIVITY FOR PROFIT. ITA NO.1677/MDS/2015 :- 8 -: 4.5 PERUSAL OF INCOME AND EXPENDITURE A LC SHOWS NET PROFIT OF 2,91,528/-. THE RECEIPTS INCLUDE INTEREST RECEIPT OF RS.19,81,405/- DURING THE YEAR UNDER CONSIDERATION. IF THE INTEREST RECEIPTS ARE TAKEN O UT, IT WILL RESULT IN A LOSS OF MORE THAN RS.15 LAKHS. PER USAL OF EXPENDITURE INCURRED DURING THE YEAR REVEALS THA T THE ENTIRE ACTIVITIES ARE TOWARDS FULFILLING OBJECT S OF THE TRUST AND THERE IS NO PROFIT DERIVED FROM THESE ACTIVITIES. IN THE CIRCUMSTANCES, THE VIEW OF THE A O THAT THE ACTIVITIES ARE FOR FEES RECEIVED IS UNFOUNDED A ND WITHOUT ANY BASIS WHEN THE ACCOUNTS SHOW LOSS WITHOUT THE INTEREST RECEIPTS. THUS INVOKING FIRST PROVISO TO SEC.2(15) OF THE ACT IS NOT CORRECT AND THE ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 READ WITH SEC.2(15) OF THE ACT. IN VIEW OF ALL THE RATIO DELI NEATED ABOVE THE ASSESSMENT ORDER DATED 10.11.2014 OF THE AO PASSED U/S 143(3) OF THE IT ACT IS NOT VALID, PR OPER, JUST AND MAINTAINABLE. SINCE THE SOCIETY IS ENTITLE D FOR EXEMPTION U/S 11 OF THE ACT AS DISCUSSED ABOVE, THE ADDITIONS ON ACCOUNT OF CORPUS DONATION AND DEPRECIATION GOT DELETED AUTOMATICALLY AND NO SEPARATE ADJUDICATION IS REQUIRED ON THE TWO ISSUES . THE CONTRIBUTION TO THE CM'S RELIEF FUND IS TREATED AS APPLICATION OF INCOME AND HENCE THE ADDITION OF THE SAME IS ALSO DELETED. THEREFORE, UNDER THE CIRCUMSTANCE, I AM INCLINED TO ALLOW THE APPEAL DATED 09.12.2014 OF THE ASSESSEE. ACCORDINGLY, THE AO IS DIRECTED TO DELETE ALL THE ADDITIONS MADE AND ACCEPT THE RETURN FILED. THE LEV Y OF INTEREST U/S 234B OF THE ACT IS ALSO DELETED AS IT IS ONLY ITA NO.1677/MDS/2015 :- 9 -: A CONSEQUENTIAL ACT. AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE REVENUE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARG UED THE GROUNDS AND REITERATED THE SUBMISSIONS AND EXPLAINE D THAT THE LD.CIT(A) ERRED IN DIRECTING THE LD. ASSESSING OFF ICER TO DELETE THE ADDITION IRRESPECTIVE OF THE FACTS THAT THE ACTIVAT ES OF THE TRUST ARE IN THE NATURE OF CARRYING ON TRADE AND ACTIVITIES WITH PROFIT MOTIVE AND THE RECEIPTS ARE MORE THAN F25,00,000/-. THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE APPEAL RELYING ON THE DECISIONS OF JURISDICTIONAL HIGH COURT AND TRIBUNAL IN THE CASE OF M/S. MYLAPORE FINE ARTS CLUB, CHENNAI VS. DDIT(E)-I IN ITA NO.170 6/MDS/2010, DATED 12.09.2011 AND HAMSADHVENI VS. DIT(E) IN ITA NO. 494/MDS/2011, DATED 16.01.2012 HELD THAT THE ADVANCEMENT OF MUSIC, CLASSICAL, DANC E CAN NEVER BE CONSIDERED AS AN ACTIVITY IN THE NATUR E OF TRADE, COMMERCE OF BUSINESS. EVEN IF THE ACTIVITY IS OF G ENERAL PUBLIC UTILITY AND EXEMPTION U/S.11 OF THE ACT DOES NOT INVOLVE AC TIVITIES WITH PROFIT MOTIVE AND PRAYED FOR SET ASIDE THE ORDER OF COMMIS SIONER OF INCOME TAX (APPEALS). ITA NO.1677/MDS/2015 :- 10 -: 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AND VEHEMENTLY OPPOSED TO THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORDS AND JUDICIAL DECISIONS. THE LD. DEPARTMENTA L REPRESENTATIVE CONTENTION THAT SUBSEQUENT TO AMENDMENT ON 01.04.20 09 , THERE IS A RADICAL DEPARTURE ON THE DEFINITION OF SEC. 2(15) O F THE ACT WERE THE OBJECT OF GENERAL PUBLIC UTILITY IS IN THE NATURE O F TRADE, BUSINESS, COMMERCE OR SERVICE DOES NOT QUALIFY FOR DEFINITION UNDER CHARITABLE PURPOSE AND EXEMPTION U/S.11 TO BE DENIED AND ALSO THE ACTIVITIES OF THE SOCIETY WERE THE INCOME IS GENERATED THOUGH SPO NSORSHIP, GATE COLLECTION AND MUSIC FESTIVALS. ON THE OTHER HAND, THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THE OBJECTS AND THE ACTIVI TIES OF THE TRUST WERE MUSIC IS A PREDOMINANT OBJECTIVE AND TO PROMO TE ADVANCEMENT OF MUSIC AND FINE ARTS, THE ASSESSEE TRUST IS COMPL YING THE REQUISITE CONDITIONS FROM THE EARLIER YEARS AND THERE IS NO D ISPUTE AND REVENUE HAS BEEN ACCEPTING THEIR ACCOUNTS, WE FOUND SIMILA R ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. HAMASADHWANI VS. DIT (E) IN ITA NO.494/MD/2011 , DATED 16.01.2012 WHEREIN IT WAS HELD AS UNDER:- ITA NO.1677/MDS/2015 :- 11 -: 5. WE HAVE PERUSED THE ORDER OF LD. DIT(E) AND HEARD THE RIVAL SUBMISSIONS. THERE IS NO DISPUTE THAT ASSESS EE WAS ENGAGED IN THE ADVANCEMENT OF MUSIC AND FINE ARTS, WHICH WAS CULTURALLY IMPORTANT IN THE STATE OF TAMIL NADU. T HE OBJECTS OF THE ASSESSEE AS MENTIONED IN ITS MEMORANDUM OF ASSOCIAT ION PLACED AT PAPER-BOOK PAGE NO.2, READ AS FOLLOWS:- 1. TO PROMOTE THE ADVANCEMENT OF MUSIC AND OTHER FINE ARTS AND TRADITIONAL ARTS. 2. IN PURSUANCE OF THE ABOVE OBJECTS, TO HOLD MUSICAL ENTERTAINMENTS, DISCOURSES, DANCE RECITALS, GROUP SINGING, DRAMAS, EXHIBITIONS, LECTURES, SEMINARS, COMPETITIONS, ETC. 3. TO ARRANGE FOR THE EXPOSITION OF MUSIC AND OTHER ARTS BY COMPETENT ARTISTS AND TO ENCOURAGE DESERVIN G TALENT. 4. TO CONDUCT SCHOOLS FOR IMPARTING INSTRUCTIONS IN TH E ABOVE ARTS ON CORRECT LINES AND THUS AFFORD FACILIT IES FOR THE PROPAGATION AND DEVELOPMENT OF SUCH ARTS. 5. TO DO S UCH OTHER THINGS OR UNDERTAKE ACTIVITIES AS ARE INCIDENTAL AND ARE CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS. AS HELD BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF MYLAPORE FINE ARTS CLUB (SUPRA), THERE CANNOT BE TW O OPINIONS THAT IN THE STATE OF TAMIL NADU, WHICH IS A LAND OF MUSI C, DANCE AND CLASSICAL ACTIVITIES PROMOTING THE ADVANCEMENT OF S UCH ARTS, CAN ONLY BE CONSTRUED AS A CHARITABLE PURPOSE COMING UNDER SECTION 2(15) OF THE ACT. HOWEVER, AS PER LD. DIT(E) , RE CEIPTS OF THE ASSESSEE EXCEEDED ` 10 LAKHS FOR THE YEARS 2007-08 TO 2009-10. SUCH RECEIPTS AS CULLED OUT FROM PARA 6 OF DIT(E) S ORDER IS REPRODUCED HEREUNDER :- ITA NO.1677/MDS/2015 :- 12 -: 2009 - 10 ` 2008 - 09 ` 2007 - 08 ` SPONSORSHIP FEES 8,55,305 7,43,250 9,88,069 SALE OF TICKETS 52,300 91 ,800 76,750 FEES FOR MUSIC COACHING 4,25,900 4,16,350 3,90,850 TOTAL 13,33,505 12,51,400 14,55,669 IF WE HAVE A LOOK AT SECTION 2(15) OF THE ACT WHICH DEFINES CHARITABLE PURPOSE, IT RUNS AS UNDER:- 2 ( 15 ) 55 CHARITABLE PURPOSE 56 INCLUDES RELIEF OF THE POOR, EDUCATION 56 , MEDICAL RELIEF, 57 [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND T HE ADVANCEMENT OF ANY OTHER 56 OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS 56 , FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECT IVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] 58 [ PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS 58A [ TEN LAKH RUPEES ] OR LESS IN THE PREVIOUS YEAR;] NO DOUBT, IT HAS BEEN SPECIFICALLY PROVIDED IN THE FIRST PROVISO THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT INVOLVES ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR RENDERING ANY SERVI CE IN CONNECTION WITH TRADE, FOR A CESS OR FEE OR ANY OTH ER CONSIDERATION. THE THIRD PROVISO EXCLUDES FROM THE RESTRAINTS IMPO SED BY FIRST PROVISO, WHERE SUCH RECEIPTS WERE LESS THAN ` 10 LAKHS. THE QUESTION HERE IS WHETHER SPONSORSHIP FEE, WHICH FOR MS SUBSTANTIAL PART OF THE AMOUNTS LISTED ABOVE, CAN BE CONSIDERED AS RECEIPT FROM ACTIVITY IN THE NATURE OF TRADE, COMMERCE AND BUSINESS. IN OUR OPINION, ADVANCEMENT OF TRADITIONAL MUSICAL CUL TURE OF TAMIL NADU AND CONDUCTING MUSIC PROGRAMMES FOR THAT PURPO SE, WHERE SUCH MUSIC AND DANCE PROGRAMMES WERE SPONSORED BY V ARIOUS ITA NO.1677/MDS/2015 :- 13 -: PERSONS AND SPONSORSHIP FEE SO RECEIVED, DISTRIBUTE D AMONG THE ARTISTS, CAN NEVER BE CONSIDERED AS AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. WHEN A PERSON SPONSOR S A MUSIC PROGRAMME AND SPONSORSHIP FEE IS PAID TO ARTIST CON CERNED, WE CANNOT SAY THAT SPONSORSHIP FEE IS A RECEIPT IN THE HANDS OF THE ASSESSEE WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. SIMILARLY, CONDUCTING MUSIC COACHING FOR THE PURPOS E OF ADVANCEMENT OF VARIOUS TRADITIONAL MUSIC FORMS OF S TATE OF TAMIL NADU, WHICH IS AN INTEGRAL PART OF CULTURAL LIFE OF PEOPLE OF TAMIL NADU, CANNOT ALSO BE CONSIDERED TO BE AN ACTIVITY I N THE NATURE OF TRADE, COMMERCE AND BUSINESS. THIS CAN AT THE BEST BE CONSIDERED AS AN EDUCATIONAL PURSUIT. WHEN THERE A RE COLLEGES RUN FOR COACHING MUSIC, WE CANNOT SAY THAT TRAINING IMPARTED IN MUSIC IS NOT EDUCATION. IN OUR OPINION, THE LD. DI T(E) TOOK A VERY NARROW VIEW IN THIS REGARD AND CAME TO A CONCLUSION THAT THE SPONSORSHIP FEE AND MUSIC COACHING FEE RECEIVED BY THE ASSESSEE WERE FROM THE ACTIVITY IN THE NATURE OF TRADE, COMM ERCE OR BUSINESS. ASSESSEE, IN OUR OPINION, WAS NOT CARRYI NG ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS BUT WAS CARRYING ON ITS AVOWED OBJECT OF ADVANCEMENT OF FIN E ARTS AND TRADITIONAL ART FORMS, WHICH CANNOT BE CONSIDERED A S A COMMERCIAL OR BUSINESS ACTIVITY. THE NATURE OF RECEIPTS OF TH E ASSESSEE, IN OUR OPINION, WILL NOT COME WITHIN THE PURVIEW OF FIRST PROVISO TO SECTION 2(15) OF THE ACT EXCEPT FOR SALE OF TICKETS AND THE RECEIPTS FROM SALE OF TICKETS WERE WELL BELOW A SUM OF ` 10 LAKHS. WE ALSO NOTE THAT THE ASSESSEE HAS BEEN REGISTERED UNDER SECTION 12AA OF THE ACT AND SUCH REGISTRATION IS STILL IN VOGUE. IN OU R OPINION, ASSESSEE WAS ELIGIBLE FOR RENEWAL OF APPROVAL UNDER SECTION 80G OF THE ACT WITHOUT DOUBT. ORDER OF DIT(E) IS QUASHED AND HE IS DIRECTED TO GRANT THE ASSESSEE RENEWAL OF APPROVAL UNDER SECTIO N 80G OF THE ACT . ITA NO.1677/MDS/2015 :- 14 -: THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATI VE THAT THE ACTIVITIES ARE NOT CHARITABLE. BUT DENIAL OF EXEMP TION TREATING AS ASSOCIATION OF PERSON(AOP) IS NOT APPROPRIATE CONS IDERING THE STATUS AND OBJECTS OF THIS SABHA WHICH IS IN EXISTENCE FOR MORETHAN THREE DECADES AND RENDERING SERVICES TO THE SOCIETY WITH MUSIC AND ARTS, WE ARE OF THE OPINION THAT SOCIETY IS NOT BE AFFEC TED BY THE AMENDMENT TO SEC. 2(15) OF THE ACT EFFECTIVE FROM 0 1.04.2009 AND ON THIS ISSUE OF TRADE, BUSINESS AND COMMERCE. WE REL Y ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) & ORS 347 ITR 0099 WHERE IT WAS HELD THAT THE DIRECTOR GENERAL OF IT(EXEMPTIONS) WAS NOT JUSTIFIED IN REFU SING EXEMPTION U/SEC. 10(23C) (IV) TO THE ASSESSEE ICAI BY A CRYP TIC ORDER ON THE GROUND THAT BY IMPARTING EDUCATION FOR FREE, IT WAS ENGAGED IN BUSINESS WITHOUT CONSIDERING WHETHER IT WAS ENG AGED IN TRADE, COMMERCE OR BUSINESS WITHIN THE MEANING OF FIRST PROVISO TO SEC. 2(15) AND FURTHER WITHOUT CONSIDERING THE PLEA OF ASSESSEE THAT IT HAD NOT VIOLATED SEC. 11(5) OR THIRD PROVISO TO SEC. 10 (23C) (IV) OF THE ACT. SO, CONSIDERING THE JUDICIAL ASPECTS AND OBJECTIVES , WE ARE OF THE OPINION THAT THE ACTIVITIES ARE WITHIN THE AMBIT OF CHARITABLE PURPOSE AND WE UPHELD THE ORDER OF COMMISSIONER OF INCOME T AX (APPEALS) ITA NO.1677/MDS/2015 :- 15 -: WHO HAS DEALT ON SUBJECT AND ITS IMPLICATION AND GROUNDS VIZ-A-VIZ EXPLANATIONS OF THE ASSESSEE AND ALLOWED THE ASSESS EE APPEAL AND WE UPHELD THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS) AND DISMISS THE GROUNDS OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DIS MISSED. ORDER PRONOUNCED ON FRIDAY, THE 5TH DAY OF AUGUS T, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 1 / DATED: 05.08.2016 KV 2 ) +#-34 54&- / COPY TO: 1 . '( / APPELLANT 3. ! 6- () / CIT(A) 5. 4 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 6- / CIT 6. :% ; / GF