Employers Federation of Southern India, CHENNAI V. ADIT, CHENNAI

ITA 1854/CHNY/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7830 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHUSH TRIPATHI IRS
• Assessee Lawyers: V S MANOJ
• Keywords: Depreciation; Charitable institution
• Section: 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH : CHENNAI . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER ./I.T.A. NO. 1854/MDS/2014 / ASSESSMENT YEARS : 2009-2010. M/S. EMPLOYERS FEDERATION OF SOUTHERN INDIA, NO.33, HINDI PRACHER STREET, T. NAGAR, CHENNAI 600 017. VS. THE ASSISTANT DIRECOTOR OF INCOME TAX, EXEMPTION III, CHENNAI. [PAN AAAAT 0118M] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. V.S. MANOJ, ADVOCATE /RESPONDENT BY : SHRI. ASHUSH TRIPATHI, IRS, JCIT. ! '# /DATE OF HEARING : 11-01-2017 $% '# /DATE OF PRONOUNCEMENT : 31-01-2017 / O R D E R IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRI EVED ON DENIAL OF EXEMPTION CLAIMED U/S.11 OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT). ONE OTHER GRIEVANCE RAISED BY THE ASSESSEE IS ON REJECTION OF ITS CLAIM FOR EXEMPTION FROM TAX ON SUBSCRIPTION AND DELEGATES FEES COLLECTED FROM MEMBERS, BASED ON THE PRINCIPLES OF MUTUALITY. ITA NO.1854/MDS/14. :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE A TRUST REGISTERED U/S.12A(A) OF THE ACT HAD FILED RETURN OF INCOME FOR THE IMPU GNED ASSESSMENT YEAR CLAIMING EXEMPTION U/S.11A OF THE ACT. FROM T HE DETAILS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, IT WAS NOTED BY THE LD. ASSESSING OFFI CER THAT ITS MAIN OBJECT WAS TO CONSIDER ALL QUESTIONS CONCERNING T HE RELATIONS BETWEEN THE EMPLOYERS AND EMPLOYEES IN SOUTHERN INDIA IN OR DER TO PROTECT THE INTEREST OF EMPLOYERS ENGAGED IN TRADE, COMMERCE, M ANUFACTURE AND INDUSTRY OF SOUTHERN INDIA. AS PER LD. ASSESSING OFFICER APART FROM COLLECTING ANNUAL SUBSCRIPTION FROM MEMBERS, ASSESS EE HAD ALSO COLLECTED DELEGATE FEES FOR SEMINARS CONDUCTED BY IT, RAISED INCOME THROUGH ADVERTISEMENTS PLACED IN A SOUVENIR BROUGHT OUT BY IT AND ALSO HAD OTHER MISCELLANEOUS INCOME. LD. ASSESSING OFFI CER WAS OF THE OPINION THAT ASSESSEE, THOUGH IT WAS CARRYING ON AN OBJECT OF GENERAL PUBLIC UTILITY ACTIVITY, HAD AGGREGATE RECEIPTS IN THE NATURE OF FEES WHICH EXCEEDED B10,00,000/-. LD. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE WAS HIT BY SECOND PROVISO OF SEC.2(15) OF THE ACT. HE DENIED EXEMPTION CLAIMED BY THE ASSESSEE U/S.11 OF THE ACT. HE TREATED THE INCOME, EARNED OVER THE EXPENDITURE INCURRED, FALLING UNDER THE HEADS BUILDING FUND AND GENERAL FUND, AS ITS TOTAL INCOME AFTER ALLOWING THE CLAIM OF DEPRECIATION. ITA NO.1854/MDS/14. :- 3 -: 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENTS T AKEN BY THE ASSESSEE BEFORE LD. COMMISSIONER OF INCOME TAX (APP EALS) ARE SUMMARIZED HEREUNDER:- (I) RECEIPTS OF SUBSCRIPTION AND DELEGATES FEES DID NOT MEAN THAT IT WAS CARRYING ON TRADE OR COMMERCE OR ANY AC TIVITY OF RENDERING SERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS. (II) PRINCIPLES OF MUTUALITY AS CLASSIFIED BY CIRCULAR NO.11/2008, DATED 19.12.2008 OF CBDT WAS NOT CONSIDERED NOR WERE THE JUDGMENTS OF APEX COURT IN THE CASE OF CHELMSFORD CLUB VS. CIT 243 ITR 89 AND THAT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. JK ORGANIZATION LIMITED 279 ITR 503 CONSIDERED. (III) ALL MONEY COLLECTED THROUGH SUBSCRIPTION WERE CRED ITED TO GENERAL FUND. AS PER GOVERNING RULES, SURPLUS CO ULD NOT BE DISTRIBUTED TO MEMBERS. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) W AS NOT IMPRESSED BY THE ABOVE ARGUMENTS. ACCORDING TO HIM, OBJECT OF THE ASSESSEE WAS ADVANCEMENT OF OBJECT OF GENERAL UTILI TY AND NOT RELIEF OF POOR, EDUCATION OR MEDICAL RELIEF. ACCORDING TO HIM , SINCE ITS RECEIPTS ITA NO.1854/MDS/14. :- 4 -: EXCEEDED B10,00,000/- PROVISO TO SE. 2(15) OF THE ACT STOOD CLEARLY ATTRACTED. 4. COMING TO THE CLAIM ON EXEMPTION BASED ON THE PRIN CIPLES OF MUTUALITY, AS PER LD. COMMISSIONER OF INCOME TA X (APPEALS), FOR APPLYING SUCH PRINCIPLE, ACTIVITIES OF THE ASSESSE E SHOULD HAVE BEEN RESTRICTED TO CONTRIBUTION FROM AND PARTICIPATION O F ITS. MEMBERS. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSES SEE HAD RECEIPTS FROM INTEREST ON FIXED DEPOSITS, FEE FROM ADVERT ISEMENT, SURPLUS FROM SEMINAR AND MISCELLANEOUS INCOME WHICH INVOLVED NON MEMBERS ALSO. LD. CIT(A) OBSERVED THAT FACTS IN THE CASE OF CHELMSFORD CLUB (SUPRA ) OF APEX COURT AND THAT OF JK ORGANIZATION LIMITED (SUPRA) DECIDED BY ALLAHABAD HIGH COURT WERE NOT APPLICABLE, SINCE IN THOSE CASES, CONCERNED PARTIES WERE NOT CATERING TO ANY OUTSIDER S. THUS HE UPHELD THE ORDER OF THE LD. ASSESSING OFFICER. 5. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE ORDERS OF THE LOWER AUTHORITIES SUBMI TTED THAT ASSESSEE WAS NOT CARRYING ON ANY ACTIVITY IN THE NATURE OF T RADE, COMMERCE OR BUSINESS. AS PER LD. AUTHORISED REPRESENTATIVE IT WAS NOT RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS FOR CONSIDERATION. AS PER LD. AUTHORISED REPRESENTATIV E ADVERTISEMENT INCOME EARNED BY THE ASSESSEE FROM ITS SOUVENIR AND DELEGATE FEES ITA NO.1854/MDS/14. :- 5 -: FROM SEMINARS WERE INCIDENTAL TO THE MAIN OBJECT OF THE ASSESSEE TRUST. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT OBJECT OF THE ASSESSEE TRUST DID NOT INVOLVE CARRYING ON ANY SUC H ACTIVITY WHICH COULD BE CONSIDERED AS TRADE, COMMERCE OR BUSINESS OR ANY SERVICES RELATED THERETO. AS PER LD. AUTHORISED REPRESENTAT IVE CONDUCTING SEMINARS AND BRINGING OUT SOUVENIRS WERE ALL ACTIV ITIES WHICH WERE INCIDENTAL TO THE MAIN OBJECT OF THE TRUST, WHICH WAS MAINTAINING RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYEES IN SOU THERN INDIA AND PROMOTING GOOD FEELING BETWEEN THEM. SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT SEMINARS CONDUC TED AND SOUVENIRS ISSUED AND ACTIVITIES AKIN TO THEM WERE ALL INCIDEN TAL TO THE MAIN OBJECT AND WAS NEVER THE PRIMARY OBJECT OF THE ASSESSEE TR UST. RELIANCE WAS PLACED BY THE LD. AUTHORISED REPRESENTATIVE ON THE DECISION OF THE CO- ORDINATE BENCH IN THE CASE MADRAS CHAMBER OF COMMERCE AND INDUSTRY VS. VS. ACIT (2016) 46 CCH 681. DRAWING PARALLEL WITH THE SAID CASE, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT MADRAS CHAMBER OF COMMERCE AND INDUSTRY (SUPRA) WAS RECEIVING FEES FOR ISSUING CERTIFICATES OF ORIGIN. AS PER LD. AUTHORIS ED REPRESENTATIVE THESE WERE CONSIDERED BY THE LOWER AUTHORIZES AS COMMERC IAL ACTIVITY. LD. AUTHORISED REPRESENTATIVE POINTED OUT THAT TRIBUNAL HAD HELD SUCH SERVICES TO BE INCIDENTAL TO THE MAIN ACTIVITY OF T HE SAID ASSESSEE. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL ITA NO.1854/MDS/14. :- 6 -: HIGH COURT IN THE CASE OF CIT VS. MADRAS CHAMBER OF COMMERCE AND INDUSTRY (1980) 16 CTR 228, ON THE DECISIONS OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. INDIAN CHAMBER OF COMMERCE (2016) 47 CCH 549 AND INDIAN CHAMBER OF COMMERCE VS. ITO ( 2015) 67 SOT 176 AND THAT OF CO-ORDINATE BENCH IN THE CASE OF TH E SOUTHERN INDIA CHAMBER OF COMMERCE AND INDUSTRIES VS. JCIT (ITA NO .2733 & 2734/MDS/2014, DATED 17.04.2015) AND DDIT VS M/S. C OUNCIL FOR LEATHER EXPORTS (ITA NO.1192/MDS/2014, DATED 26.06. 2015). IN ANY CASE, AS PER LD. AUTHORISED REPRESENTATIVE, PRINCIP LES OF MUTUALITY WAS NOT PROPERLY CONSIDERED SINCE ANNUAL SUBSCRIPTION C OLLECTED BY THE ASSESSEE WERE FROM ITS MEMBERS. CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT JUST BECAUSE ADVERTISEMENT INCOME FROM SOUVENIR AND PARTICIPATION FEES FROM CONFERENCE IN VOLVED SOME OUTSIDE PARTIES WOULD NOT CHANGE THE CHARACTER OF THE ASSES SEE WHICH WAS GOVERNED BY THE PRINCIPLES OF MUTUALITY. THUS, ACCO RDING TO HIM EXEMPTION CLAIMED U/S.11 OF THE ACT WAS UNFAIRLY DE NIED AND PRINCIPLES OF MUTUALITY NOT APPLIED THOUGH ASSESSEE WAS A MUTU AL BENEFIT ASSOCIATION. 6. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.1854/MDS/14. :- 7 -: 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. INCOME AND EXPENDI TURE OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR AND ALSO TH E IMMEDIATE PRECEDING PREVIOUS YEAR MAKES INTERESTING READING. THIS IS REPRODUCED HEREUNDER:- SCHEDULE NO. YEAR ENDED 31 ST MARCH 2010 YEAR ENDED 31 ST MARCH, 2009 INCOME SUBSCRIPTIONS 1722744 1703028 OTHER INCOME 6 1573822 2013213 3296566 -------------- 3716241 ---------------- LESS: EXPENDITURE 7 2472100 2529681 DEPRECIATION 3 246146 239846 EXCESS OF INCOME OVER EXPENDITURE 578320 946714 TRANSFERRED TO: BUILDING FUND 225000 700000 GENERAL FUND 353320 246714 578320 946714 THE EXPENDITURE INCURRED BY THE ASSESSEE WHICH IS G IVEN IN SCHEDULE 7 ALSO IS RELEVANT AND DETAILS THEREOF AS APPEARING I N SCHEDULE 7 OF ITS AUDITED ACCOUNTS IS REPRODUCED HEREUNDER:- ITA NO.1854/MDS/14. :- 8 -: YEAR ENDED 31 ST MARCH 2010 YEAR ENDED 31 ST MARCH 2009 EXPENDITURE ELECTRICITY CHARGES 41942 43444 AFFILIATION CHARGES TO EMPLOYERS FEDERATION OF INDIA 17000 16000 SUBSCRIPTION TO THE ASSOCIATION 6000 6000 ESTABLISHMENT CHARGES 1302693 1322408 REPAIRS AND RENEWALS AND MAINTENANCE 56992 49392 RENT 112200 112200 RATES AND TAXES 21000 24500 PRINTING AND STATIONERY 207383 271611 POSTAGE AND COURIER CHARGES 196082 262682 BOOKS AND PERIODICALS 20464 21700 ANNUAL GENERAL MEETING / MEETING EXPENSES 163708 92164 TRAVELLING & CONVEYANCE EXPENSES 99149 91370 TELEPHONE CHARGES 77953 74495 BANK CHARGES 4256 9309 SUNDRY EXPENSES 34108 25237 PROFESSIONAL CHARGES FOR AUDIT FEES FOR TAX REPRESENTATION FOR EXPENSES 13236 11030 -- ---------- 24266 13236 11663 3596 28495 COMPUTER MAINTENANCE 34830 26600 PROPORTIONATE COST OF INVESTMENT IN EXCESS OF FACE VALUE WRITTEN OFF 2074 2074 SERVICE CHARGES RELATING TO KARNATAKA BRANCH 50000 50000 2472100 2529681 ITA NO.1854/MDS/14. :- 9 -: 8. NOW THE FIRST QUESTION WE HAVE TO ANSWER IS WHE THER ASSESSEE WAS CARRYING ON ANY ACTIVITY WHICH CAME WI THIN THE AMBIT OF ITS PRIMARY OBJECT. THIS IS FOR THE REASON THAT CLA IM OF THE ASSESSEE WITH REGARD TO ITS CONFERENCE FEES, ADVERTISEMENT I NCOME, DELEGATES FEES ETC IS THAT THESE WERE INCIDENTAL TO THE MAIN OBJECT AND WERE NOT ANYWAY CONNECTED WITH TRADE, COMMERCE AND BUSINESS. OBJECTS OF THE ASSESSEE AS IT APPEAR IN ITS CLAUSE (3) OF ITS RULE S IS REPRODUCED HEREUNDER:- (I) TO CONSIDER ALL QUESTIONS CONCERNING THE RELATIONS BETWEEN EMPLOYERS AND EMPLOYEES IN SOUTHERN INDIA, AND TO COLLECT, CLASSIFY, CIRCULATE AND PUBL ISH STATISTICS AND OTHER INFORMATION RELATING THERETO; (II) TO ENCOURAGE AND SECURE, WHENEVER POSSIBLE, U NITED OR CONCERTED ACTION AMONG EMPLOYERS ON ALL SUBJECTS INVOLVING THE INTERESTS OF MEMBERS; (III) TO ENCOURAGE AND PROMOTE GOOD FEELING AND TO ESTABLISH JUST AND EQUITABLE PRINCIPLES IN DEALINGS BETWEEN EMPLOYERS AND EMPLOYEES IN SOUTHERN INDIA, AND TO PROMOTE AND SUPPORT ALL APPROPRIATE SCHEMES FOR THE GENERAL IMPROVEMENT OF EMPLOYER-EMPLOYEE RELATIONS; (IV) TO PROMOTE AND PROTECT THE INTERESTS OF EMPLOY ERS ENGAGED IN TRADE, COMMERCE, MANUFACTURE AND INDUSTRIES OF SOUTHERN INDIA IN THE AREAS OF INDUST RIAL RELATIONS; (V) TO ADVISE EMPLOYERS ON MATTERS, RELATING TO EM PLOYER- EMPLOYEE RELATIONS, TO ASSIST THEM IN THE SETTLEMEN T OF DISPUTES AND TO REPRESENT OR ARRANGE FOR THE REPRESENTATION OF EMPLOYERS IN ANY PROCEEDINGS B EFOR E CONCILIATION OFFICERS; CONCILIATION BOARDS, COURTS OF ENQUIRY, INDUSTRIAL TRIBUNALS, LABOUR COURT OR ANY COURT OR OTHER JUDICIAL OR QUASI-JUDICIAL BODY AND ANY TR IPARTITE BODIES OR OTHER STATUTORY BODIES. (VI)TO RECONCILE CONTROVERSIES, IF ANY, BETWEEN MEM BERS OF ITA NO.1854/MDS/14. :- 10 -: THE FEDERATION. (VII) TO ARBITRATE IN THE SETTLEMENT OF DISPUTES AR ISING OUT OF MATTERS AFFECTING THE RELATIONSHIP OF EMPLOYERS AND EMPLOYEES, BETWEEN PARTIES AGREEING TO ABIDE BY THE JUDGEMENT OF THE FEDERATION. (VIII) TO NEGOTIATE ON BEHALF OF EMPLOYERS WITH TRA DE UNIONS AND / OR OTHER EMPLOYEES' ORGANISATIONS; (IX) TO COMMUNICATE WITH CHAMBERS OF COMMERCE, EMPLOYERS' FEDERATIONS, TRADE UNIONS AND OTHER EMPLOYEES' ORGANISATIONS, MERCANTILE AND PUBLIC BOD IES THROUGHOUT THE WORLD, AND CONCERT AND PROMOTE MEASURES CONNECTED WITH THESE OBJECTS OR ANY OF THE M; (X) TO PROMOTE, EXAMINE AND OFFER SUGGESTIONS TO LEGISLATIVE OR OTHER MEASURES AFFECTING THE TERMS A ND CONDITIONS OF SERVICE, WELFARE, HEALTH, EDUCATION A ND REGULATIONS AND CONTROL OF EMPLOYEES, AND TO MAKE REPRESENTATIONS TO LOCAL, STATE, CENTRAL, COMMONWEA LTH, INTERNATIONAL AND OTHER AUTHORITIES ON MATTERS CONN ECTED WITH THESE OBJECTS OR ANY OF THEM; (XI) TO PROMOTE MANAGEMENT AND TECHNICAL EDUCATION INCLUDING TRAINING AND IN FURTHERANCE TO SET UP EIT HER BY ITSELF OR IN COLLABORATION WITH ANY OTHER BODY, TRA INING INSTITUTES ETC. (XII) TO ASSIST MEMBERS IN IMPROVING EMPLOYEE AND I NDUSTRIAL RELATIONS BY (A) ORGANISING WHERE NECESSARY IN ASSOCIATION WITH OTHER INSTITUTIONS, PROGRAMMES/COU RSES ON PERSONNEL MANAGEMENT AND INDUSTRIAL RELATIONS ON PERSONNEL MANAGEMENT AND INDUSTRIAL RELATIONS (B) MAINTAINING READING ROOMS, LIBRARY AND ANY INFO RMATION CENTRE; (C) OPENING REGIONAL/BRANCH OFFICES AND (D) CREATING ENDOWMENTS FOR FURTHERING THE FEDERATION'S OBJECTIV ES AND RECEIVING CONTRIBUTIONS FOR SUCH PURPOSES; (XIII) TO ACQUIRE AND DISPOSE OFF ANY PROPERTY, MOV ABLE AND IMMOVABLE, WHICH THE FEDERATION FOR THE PURPOSES THEREOF, MAY FROM TIME TO TIME THINK PROPER TO ACQU IRE; (XIV) TO INVEST THE MONIES OF THE FEDERATION IN ACC ORDANCE WITH THE PROVISIONS OF SECTION 13(1) (D) READ WITH SECTION 11 (5) OF THE INCOME TAX ACT. (XV) TO BORROW OR RAISE ANY MONIES REQUIRED FOR THE PURPOSES OF THE FEDERATION, AND UPON SUCH TERMS, AS MAY SEEM ITA NO.1854/MDS/14. :- 11 -: EXPEDIENT; (XVI) TO SUBSCRIBE, TO AFFILIATE WITH AND I OR BECOME A MEMBER 0:1 AND COOPERATE WITH ANY OTHER ASSOCIATION , NATIONAL OR INTERNATIONAL, WHETHER INCORPORATED OR NOT, WHOSE OBJECTS ARE ALTOGETHER OR IN PART SIMILAR TO THOSE OF THIS FEDERATION, AND TO PROCURE FROM AND COMMUNICAT E TO ANY SUCH ASSOCIATION SUCH INFORMATION AS MAY BE LIK ELY TO FORWARD THE OBJECTS OF THE FEDERATION; (XVII)TO DO SUCH OTHER LAWFUL THINGS IN BUSINESS AS MAY BE INCIDENTAL OR CONDUCTIVE TO THE ATTAINMENT OF THE A BOVE OBJECTS OR ANY OF THEM WITH NO INTENTION OF EARNING PROFIT UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE SOCIETY. (XVIII) TO NEGOTIATE, GIVING OR RECEIVING OF GRANT OR CONTRIBUTION FROM ANY NATIONAL OR INTERNATIONAL AGE NCY EITHER BY WAY OF FINANCIAL OR OTHER ASSISTANCE, EQUIPMENT, BOOKS ETC., SUBJECT TO ANY STATUTORY PROVISIONS; (XIX) TO UNDERTAKE, COLLABORATE WITH OR ASSIST OTHE RS, MEASURES FOR THE PROMOTION OF FAMILY PLANNING AND WELFARE, HEALTH AND HYGIENE AND MEASURES FOR POLLUTION CONTROL AND ENVIRONMENTAL IMPROVEMENT BY WAY OF EDUCATION, PROPAGANDA, HOLDING MEETINGS, SEMINARS ETC., INCLUDING SETTING UP OF CENTRES IN FURTHERANC E OF THE ABOVE. (XX) TO DO ALL THE ABOVE ACTIVITIES IN SUCH A MANNE R THAT THE BENEFITS WILL BE AVAILABLE TO ALL PERSONS IRRES PECTIVE OF CASTE, CREED, RELIGION, SEX ETC. IN MY OPINION, NONE OF THE EXPENDITURE LISTED BY ME AT PARA 7 ABOVE COULD BE CONSIDERED AS INCURRED IN FURTHERANCE TO A NY OBJECTS MENTIONED (SUPRA). THERE MIGHT BE SOME INDIRECT NE XUS OF A FEW HEADS OF EXPENDITURE WITH THE OBJECTS. HOWEVER, CHA PTER 4 OF ITS ANNUAL REPORT WHICH GIVES THE GIST OF THE ACTIVITIE S SPEAKS ITA NO.1854/MDS/14. :- 12 -: PREDOMINANTLY OF CONFERENCES LIKE LABOUR LAW IMP LICATIONS IN THE CHANGED SCENARIO CONDUCTED ON 12 TH SEPTEMBER, 2009, EMPLOYMENT LAWS-MANAGEMENTS PERSPECTIVE CONDUCTED ON 6 TH FEBRUARY, 2010, BUILDING ORGANIZATIONS AND HUMAN CAPABILITIES IN CHALLENGING TIMES HELD ON 9 TH APRIL, 2009 AND INNOVATIVE WAGE SETTLEMENTS- SHA RING OF EXPERIENCES HELD ON 28 TH JANUARY, 2010, OF WHICH ATLEAST TWO WERE IN COLLABORATION WITH BANGALORE CHAMBER OF INDUSTRY A ND COMMERCE. IT IS NOT BEING DISPUTED BY THE LD. AUTHORISED REPRESE NTATIVE THAT THESE CONFERENCES AND SEMINARS WERE OPEN TO PERSONS OTHER THAN MEMBERS OF ASSESSEE TRUST AND FEES WERE COLLECTED FROM SUCH NON MEMBERS ALSO. MAJOR ACTIVITY OF THE ASSESSEE TRUST, AS PE R ITS ANNUAL REPORT WAS CONDUCTING SUCH SEMINARS AND THEREFORE IN OUR OPIN ION CLAIM OF THE ASSESSEE THAT CONDUCTING OF SEMINARS, PUBLICATION O F SOUVENIRS ETC SEMINARS WERE INCIDENTAL TO ITS MAIN OBJECT CANNOT BE ACCEPTED. THIS IS ALSO CLEAR FROM INCOME AND EXPENDITURE ACCOUNT W HICH CLEARLY SHOWS THAT IT HAD OTHER INCOME OF B15,73,822/- AG AINST SUBSCRIPTION INCOME OF B17,22,744/-. DETAILS OF THE OTHER INC OME AS IT APPEARS IN SCHEDULE 6 OF ITS AUDITED FINAL ACCOUNTS IS REPROD UCED HEREUNDER:- ITA NO.1854/MDS/14. :- 13 -: YEAR ENDED 31 ST MARCH 2010 YEAR ENDED 31 ST MARCH 2009 OTHER IN CO ME INTEREST ON INVESTMENT & FIXED DEPOSITS (TAX DEDUCTED AT SOURCE -4087 PREVIOUS YEAR B NIL) 775282 702934 OTHERS 10173 19066 FEES FOR EXTRA COPIES OF CIRCULAR 12500 10500 ADVERTISEMENT 57500 81000 SURPLUS FROM SEMINARS DELEGATE FEE COLLECTED LESS: EXPENSES 1018132 493697 524435 1715728 770519 945209 MISCELLANEOUS INCOME 193932 193455 PROVISION M A DE FOR SHORTFALL IN MARKET VALUE OF INVESTMENT NO LONGER REQUIRED WRITTEN BACK 0 61049 1573822 2013213 THERE CANNOT BE A IOTA OF DOUBT THAT ASSESSEE WAS E ARNING SUBSTANTIAL INCOME FROM SEMINARS, INTEREST ON INVESTMENTS AND MISCELLANEOUS ITA NO.1854/MDS/14. :- 14 -: ITEMS. ASSESSEE IN MY OPINION ASSESSEE CANNOT CLA IM THAT ITS EARNING WERE ONLY INCIDENTAL TO ITS MAIN OBJECTS NOR CAN I T SAY THAT ITS INCOME WAS EXEMPT ON PRINCIPLES OF MUTUALITY, SINCE ADMITT EDLY THE ITEMS COMPRISED IN OTHER INCOME WERE NOT EXCLUSIVELY EARN ED FROM ITS MEMBERS. 9. NOW COMING TO THE RELIANCE PLACED BY THE ASSESSE E ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF MADRAS CHAMBER OF COMMERCE AND INDUSTRY (SUPRA), FEES RECEIVED BY THE SAID CHAMBER WAS FOR ISSUING CERTIFICATES OF ORIGIN AND FOR ARBI TRATION. FINDING OF THE TRIBUNAL WAS THAT SUCH FEES WERE INCIDENTAL TO THE MAIN ACTIVITIES OF THE MADRAS CHAMBER OF COMMERCE AND INDUSTRY (SUPRA) . THE TRIBUNAL HAD RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF MADRAS CHAMBER OF COMMERCE AND INDUSTRY (SU PRA). THEIR LORDSHIP IN THE SAID CASE HAD HELD AT PARA 3 & 4 OF THE JUDGMENT AS UNDER:- 3. IT WAS COMMON GROUND BEFORE THE TRIBUNAL, AS STATED IN PARAGRAPH 4 OF THE TRIBUNAL'S ORDER, THAT THE ASSESSEE, WHICH WAS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, WAS FOUNDED FOR THE PROMOTION AND PROTECTION OF TRADE AND COMMERCE AND THAT, THEREFORE, THE OBJECTS OF THE ASSESSEE WERE O F GENERAL PUBLIC UTILITY WITHIN THE MEANING OF S. 2(1 5) OF THE ACT. THE DECISION OF THE CALCUTTA HIGH COURT , WHICH WAS FOLLOWED BY THE AAC, AND THE DECISION OF THE KERALA HIGH COURT, WHICH WAS FOLLOWED BY THE TRIBUNAL, WERE ALL CONSIDERED BY THE SUPREME COURT IN THE INDIAN CHAMBER OF COMMERCE VS. CIT, BENGAL. ITA NO.1854/MDS/14. :- 15 -: THE KERALA DECISION WAS REVERSED AND THE CALCUTTA DECISION WAS AFFIRMED. SUBSEQUENTLY THE SUPREME COURT IN THE CASE OF THE ADD. CIT, GUJARAT, AHMEDABAD VS. SURAT ART SILK CLOTH MANUFACTURES ASSOCIATION, SURAT HAS DISSENTED FROM THE JUDGMENT IN THE INDIAN CHAMBER OF COMMERCE VS. CIT, WEST BENGAL-II. THE LATEST DECISION OF THE SUPREME COURT HAS BEEN CONSIDERED BY US IN T. C. NO. 352 OF 1974 AND APPLIED IN THE JUDGMENT PRONOUNCED TODAY. 4. THE FIRST POINT TO BE CONSIDERED IN THE PRESENT CASE IS WHETHER THE ASSESSEE IS PURSUING AN OBJECT OF GENERAL PUBLIC UTILITY. IN THE LIGHT OF THE JUDGMEN T OF THE SUPREME COURT IN THE CIT VS. ANDHRA CHAMBER OF COMMERCE IT HAS TO BE HELD THAT THE ASSESSEE'S OBJECTS ARE SUCH AS TO SUBSERVE THE GENERAL PUBLIC. THEREFORE, THE ASSESSEE WOULD FALL WITHIN THE MAIN PART OF DEFINITION OF S. 2(15). THE ONLY FURTHER QUESTION THAT WOULD REQUIRE CONSIDERATION WOULD BE WHETHER THE ASSOCIATION IS CARRYING ON ANY ACTIVITY FOR PROFIT, SO AS TO FALL WITH THE WORD 'EXCLUSION' IN S. 2(15). THERE IS NOTHING TO SHOW THAT THE ASSESSEE, IN GIVING ASSISTANCE BY WAY OF ARBITRATION OR ISSUING CERTIFICATES OF ORIGIN IN RESPECT OF GOODS, WAS CAR RYING ON ANY ACTIVITY FOR PROFIT. THE DOMINANT PURPOSE OF THE ASSESSEE CHAMBER IS ONLY TO PURSUE AN OBJECT OF GENERAL PUBLIC UTILITY. THE FACTUAL SCENARIO IN THE CASE BEFORE US IS ENTIR ELY DIFFERENT. ASSESSEE HAD NOT RECEIVED ANY INCOME ON ACCOUNT OF ANY ARBITRATION OR ISSUE OF CERTIFICATES OF ORIGIN BUT SUBSTANTI AL PART OF ITS EARNING WERE FROM ADVERTISEMENT IN SOUVENIRS, FEES FROM SE MINAR /CONFERENCE, INTEREST ETC. THESE TYPE OF INCOME IN MY OPINION COULD NEVER BE COMPARED WITH INCOME LIKE FEES RECEIVED FOR ISSUING CERTIFICATES OF ORIGIN AND ARBITRATION FEES RECEIVED BY A CHAMBER OF COMMERCE. ITA NO.1854/MDS/14. :- 16 -: 10. NOW COMING TO THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF M/S. COUNCIL FOR LEATHER EXPORTS (SUPRA) WHICH I N TURN RELIED ON A DECISION OF SAME BENCH IN THE CASE OF THE SOUTHERN INDIA CHAMBER OF COMMERCE & INDUSTRY (SUPR A), IN THE LATTER CASE THE CO-ORDINATE BENCH HAD CONSIDERED THE JUDGM ENT OF HONBLE DELHI COURT IN THE CASE OF INDIAN TRADE PROMOTION ORGANIZATION VS. D CIT (2015) 374 ITR 333, (2015) 114 DTR 329, WHILE HOLDING THAT IF THE DOMINANT OBJECT OF A FEDERATION WAS PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRY WITHOUT ANY MOTIVE TO EARN PROFITS, ANY INCOME FROM SUCH ACTIVITY COULD B E CONSIDERED AS INCIDENTAL OR ANCILLARY TO THE DOMINANT OBJECT WHIC H WAS WELFARE AND COMMON GOOD OF THE COUNTRYS TRADE, COMMERCE AND IN DUSTRY. NO DOUBT HONBLE DELHI HIGH COURT DID HOLD THAT BASI C PRINCIPLE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSE REM AINED UNALTERED EVEN AFTER AMENDMENT IN SEC. 2(15) OF THE ACT THROU GH FINANCE ACT, 2010 WITH EFFECT FROM 01.04.2009, THROUGH WHICH SEC OND PROVISO WAS INSERTED. ALL THE OTHER CASE LAWS RELIED ON BY THE ASSESSEE WERE ON CHAMBERS OF COMMERCE OR ASSOCIATION OF LIKE NATURE AND NOT A FEDERATION OF EMPLOYERS. IN THE CASE BEFORE US, FAC TS CLEARLY BRING OUT THAT CONDUCTING CONFERENCE/SEMINAR WAS NOT DONE AS AN INCIDENTAL ACTIVITY BUT DURING THE RELEVANT PREVIOUS YEAR IT W AS THE PRE-DOMINANT ACTIVITY. IN OUR OPINION, IT MAY NOT BE APPROPRIATE TO GIVE AN ITA NO.1854/MDS/14. :- 17 -: INTERPRETATION TO SEC. 2(15) OF THE ACT WHICH IS N OT IN CONSONANCE WITH THE WORDS USED BY THE LEGISLATION, WHERE THE PREDOM INANT ACTIVITY CARRIED ON WAS AKIN TO A BUSINESS OR TRADE OR SERVI CE IN CONNECTION THERETO. SECTION 2(15) OF THE ACT ALONGWITH THE REL EVANT PROVISOS AS IT STOOD AT THE RELEVANT POINT OF TIME IS REPRODUCED HEREUNDER:- 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY : PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTI VITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR A NY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SU CH ACTIVITY ; PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT A PPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TEN LAKH RUPEES O R LESS IN THE PREVIOUS YEAR ; ADMITTEDLY RECEIPT OF THE ASSESSEE CLASSIFIED BY IT AS OTHER INCOME, COMPRISED IN IT SEMINARS / DELEGATES FEES, ADVERTIS EMENT AND MISCELLANEOUS INCOME WHICH FAR EXCEEDED LIMITS LAI D DOWN IN THE SECOND PROVISO. THUS, IN OUR OPINION ASSESSEE COUL D NEITHER BE CONSIDERED PERFORMING CHARITABLE ACTIVITIES WITHIN THE MEANING OF SEC. ITA NO.1854/MDS/14. :- 18 -: 2(15) OF THE ACT DURING THE RELEVANT PREVIOUS YEAR NOR IT COULD BE CONSIDERED AS EXEMPT ON THE PRINCIPLES OF MUTUALI TY. WE THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 31 ST DAY OF JANUARY, 2017 AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) $ % / ACCOUNTANT MEMBER &'! / CHENNAI ( / DATED:31 JANUARY, 2017. KV ) '+, -,' / COPY TO: 1. / APPELLANT 3. .' () / CIT(A) 5. ,12 '3 / DR 2. / RESPONDENT 4. .' / CIT 6. 24 5! / GF