The ITO, (Exemptions), Ward-1, Ahmedabad V. Indian Stainless Steel Development Organisation, Ahmedabad

ITA 2441/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8287 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Business income; Charitable institution; Benefit of exemption; Capital expenditure
• Section: 80G; 12A; 12AA; 12; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 2441/AHD/2015 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER (EXEMPTIONS), WARD-1, AHMEDABAD V/S INDIAN STAINLESS STEEL DEVELOPMENT ORGANISATION, 26, MANGAL MURTI COMPLEX, ASHRAM ROAD, AHMEDABAD-380009 (APPELLANT) (RESPONDENT) PAN: AAAAI2964C APPELLANT BY : SHRI PRASOON KABRA, SR. D .R. RESPONDENT BY : SHRI S. N. DIVETIA, (ADV.) ( )/ ORDER DATE OF HEARING : 02 -05-201 8 DATE OF PRONOUNCEMENT : 14-05-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 28.05.2015 PERTAINING TO A.Y. 2010- 11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 2 (I) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF THE CLAIM OF EXEMPTIONS U/S 11(L)(A) OF THE I.T. ACT OF RS.72,62,624/- AND U/S 11(2) OF THE I.T. ACT OF RS. 77,00,000/- MADE BY THE A.O. AS A.O HAS DISALLOWED EXEMPTIONS CLAIMED U/S 11 & 12 OF THE ACT UNDER SECTION 13(8) SINCE TH E ASSESSEE IS COVERED BY 1ST PROVISO TO SECTION 2(15). (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD . COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE SET ASIDE AND THAT OF T HE ASSESSING OFFICER BE RESTORED. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST, DURING THE YEAR UNDER CONSIDERATION HAS CARRIED ON VARIOUS ACTIVITIES IN LINE WITH ITS OBJECTS SUCH AS, TO ORGANIZE ARRANGEMENT IN THE INTEREST OF STAINLES S STEEL INDUSTRY. THE TRUST IS REGISTERED U/S 12AA OF THE I.T. ACT. VIDE ORDER NO. DIT(E)/12AA/554/2009- 10 DATED 01.07.2009. THE TRUST IS APPROVED U/S 80G( 5) OF THE IT. ACT, 1961 VIDE F.NO. DIT(E)/80G(5)/970/2008-09 DATED 16.07.20 09. 3. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR THE YEAR UNDER ASSESSMENT, THE ASSESSEE WAS ASKED VIDE LETTER DATED 13.02.2013 THA T THE CONDUCTING THE FAIR/EXHIBITION OF THE TRUST IS FALLS UNDER THE LIM B OF THE ADVANCEMENT TO GENERAL PUBLIC UTILITY AND WHY THE PROVISO 1 AND 2 DOES NOT APPLICABLE TO THE TRUST .WHICH IS REPRODUCED AS UNDER: 'AS PER SUB-SECTION 15 OF SECTION 2 OF THE I T ACT, 1961, THE DEFINITION OF THE ABOVEPURPOSE READS AS UNDER: 'CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, ED UCATION, MEDICAL RELIEF (PRESERVATION OF ENVIRONMENT (INCLUDING WATER SHEDS, FOREST AND W ILD LIFE) AND PRESERVATION OF ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 3 MOVEMENTS OR PLACES OR OBJECTS OR ARTICLE OR HISTOR IC INTEREST) 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 CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF INCOME FROM SUCH ACTIVITY. AS PER THE ABOVE MENTIONED SECTION YOUR ACTIVITY FA LLS UNDER ADVANCEMENT TO GENERAL PUBLIC UTILITY THEN THE PROVISO - I, SHALL BE APPLICABLE, YOUR ACTIVITY & CONDUCTING FAIR/EXHIBITION DOES NOT TENTAMOUNT TO BE CHARITABLE ACTIVITY WHICH WAS CLAIMED BY YOU AND GETTING BENEFIT OF SECTION 11. 4. IN THE LIGHT OF ABOVE, REPLY OF YOURS SHALL NOT BE CONSIDERED. THEREFORE, YOU ARE REQUIRED TO SHOW CAUSE AS TO WHY THE DEDUCTION U/S 11 OF THE ACT CLA IMED BY YOU BE NOT DENIED AND THE INCOME OF THE TRUST BE COMPUTED AS PER NORMAL PROVISIONS O F THE ACT. YOU ARE HEREBY REQUESTED TO PREPARE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET A S PER NORMAL COMMERCIAL PARLANCE AND FURNISH THE SAME BEFORE THE UNDERSIGNED AT THE TIME OF NEXT HEARING.' 4.2.1 IN RESPONSE TO THE NOTICE THE ASSESSEE SU BMITTED VIDE 25.02.2013. '1. IT IS PROPOSED BY YOU THAT THE ACTIVITY OF COND UCTION FAIR/EXHIBITION CARRIES OUT BY THE ASSESSEE-TRUST FALLS UNDER THE ADVANCEMENT OF GENER AL PUBLIC UTILITY SO THAT THE FIRST PROVISO WAS APPLICABLE AND AS SUCH THE DEDUCTION U/S.11 WAS NOT ADMISSIBLE AND INCOME HAD TO BE COMPUTED AS PER NORMAL PROVISIONS IN AS COMMERCIAL MANNER. 2. WE MAY STATE THAT SIMPLY BECAUSE THE ACTIVITY OF EXHIBITION/FAIR - INDIANOX-2010 ARRANGED BY US HAD RESULTED INTO SURPLUS IT DID NOT DISQUALIFY, FROM EXEMPTION U/S.LL. IT IS NOT AS IF THE CHARITABLE INSTITUTION CANNOT GENERATE AN Y SURPLUS. THE SURPLUS IS TO BE UNDERSTOOD IN ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 4 CONTRA DISTINCTION TO GENERATION OF INCOME WITH THE SOLE MOTIVE OF THE PROFIT IT ONE HAS TO UNDERSTAND THE LEGISLATIVE INTENT OF THIS PROVISO ( REFER TO MAA SARASWATI EDUCATIONAL TRUST (236 CTR 400) (HP). YOU WILL APPRECIATE THAT THE AS SESSEE TRUST WAS NOT ESTABLISH WITH THE SOLE OF INTENTION TO CARRY OUT THE ACTIVITY WITH TH E OBJECT TO EARN INCOME. THE SOLE INTENTION BEHIND ARRANGING THE FAIR/ EXHIBITION WAS TO ACQUAI NT PROMOTE AND CREATE AWARENESS AMONGST THE MEMBERS AND GENERAL PUBLIC BOTH WITH THE STAINL ESS STEEL INDUSTRY. THE NUMBER OF PEOPLE WHO PARTICIPATED IN THE FAIR/EXHIBITION THAT ITSELF PROVES THAT THE INTENTION WAS NOT TO EARN OUT OF IT. IT HAD PROVIDED SOURCE OF INFORMATION TO THE PARTICIPANTS ABOUT THE PRESENT POSITION OF STAINLESS STEEL INDUSTRY. THE SAID ACTIVITY WAS CON SONANCE WITH THE CLAUSE (A) AND (C) OF MEMORANDUM OF ASSOCIATION. YOU WILL APPRECIATE THAT 'THE VERY FACT THAT IT IS NOT A DISABLING FACTOR BUT THERE MAY BE SURPLUS ARISING F ROM THE ACTIVITIES OF THE TRUST AND IT CAN ACCUMULATE FOR SPENDING ON ITS OBJECTS IN FUTURE BY OPTING FOR ACCUMULATION. ONE CAN DRAW ANALOGY FROM THE PROFIT EARNED BY THE EDUCATIONAL I NSTITUTION. THE COPY OF EARLIER SHOW CAUSE SUBMISSION U/S.2(15) DATED 29/01/2013 IS ALSO ENCLOSED FOR YOUR READY REFERENCE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE IT IS SUBMITTED THAT THE PROPOSED ACTION TO DISQUALIFY THE ASSESSEE TRUST FROM EXEMPTION U/S .LL SOLELY ON THE GROUND OF SURPLUS FROM THE ACTIVITY AFFAIR/EXHIBITION IS WHOLLY UNTENABLE AND IT MAY BE DROPPED. ' 4.2.2 REPLY OF THE ASSESSEE DATED 29TH OF JANUA RY, 2013 IN RESPONSE TO THE QUESTIONNAIRE DATED 02-11-2012 A.Y.2010-11 WHICH IS ALSO REPRODUCED :- WITH REFERENCE TO THE ABOVE AND FURTHER TO THE REPL IES/ DETAILS/DOCUMENTS ETC. FURNISHED EARLIER FROM TIME TO TIME, WE BEG TO FURNISH OUR REPLY WITH REGARD TO POINT NO. 22 OF THE ABOVE SAID QUESTIONNAIRE AS UNDER: ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 5 1. AT THE OUTSET WE MAY POINT OUT- THAT OURS IS AN ORGANIZATIONS SET UP BY THE DEALERS, TRADER AND MANUFACTURERS OR OTHERWISE CONNECTED WITH THE S TAINLESS STEEL INDUSTRY. IT IS BODY REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860 A T GUJ/15054/AHD. IT IS ALSO REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 AT N O. F/4763/AHD DATED 27/11/2009. IT IS ALSO REGISTERED UNDER SECTION 12A A OF THE IT ACT FROM 1-7-2009 VIDE ORDER DATED 15-7-2010. IT IS GOVERNED BY THE MEMORA NDUM AND,ARTICLES REGISTERED WITH REGISTRAR OF SOCIETIES ON 27-11-2009. THE RELEVANT DOCUMENTS HAVE ALREADY BEEN PROVIDED TO YOU ALONG WITH THE EARLIER REPLIES. 2. THE ASSESSEE TRUST HAD ORGANIZED WORLD'S FIRST S TAINLESS STEEL FAIR CALLED 'INDLANOX- 201G' AT AHMEDABAD DURING 16TH TO 19TH JANUARY, 201 0 WHICH WAS INAUGURATED BY HON'BLE CHIEF MINISTER OFGUJARAT, SHRI NARENDRA MOD I AND GUEST OF HONOUR WAS MS. MAMTA BENERJI UNION CABINET MINISTER FOR RAILWAY AN D CHIEF GUEST WAS SHRI VEERBHADRA SINGH, UNION CABINET FOR STEEL. AS IT WOULD BE NOTI CED FROM THE BROCHURE AND OTHER MATERIAL PRODUCED HEREWITH THERE WERE 800 DOMESTIC EXHIBITOR S, 30 INTERNATIONAL EXHIBITORS*45 EXHIBITIONS OVER 2 LACS FOOTBALLS. IT DISPLAYED EVE RYTHING IN STAINLESS STEEL SUCH AS HOUSE WARE, HARDWARE, FURNITURE, MACHINERY, PATTA-PATTI, SANITA RY EQUIPMENT ETC. IT WAS GIVEN INTERNATIONAL MEDIA COVERAGE BEING FIRST OF ITS KIN D IN THE WORLD AND EVEN CHINA HAD NOT ARRANGED SUCH A MEGA EVENT. IT HAD RAISED FUNDS BY. WAY OF EXHIBITION SPACE CHARGES AND ADVERTISEMENT INCOME. ON THE OTHER HAND IT HAD INCU RRED EXPENSES SUCH AS PUBLICITY, DECORATION, MEDIA, STALL FABRICATION & DESIGN SALAR Y, TRANSPORTATION ETC. THE DETAILS ARE EVIDENT FROM SCH-9 OF THE AUDITED ANNUAL ACCOUNTS F OR F.Y. 2009-10 FURNISHED TO YOU. AGAINST THE BACKDROP OF THE AFORESAID FACTS OF THE CASE, THE ISSUE ARISES WHETHER IT INVOLVES THE ACTIVITY FOR PROFIT AS PER SEC. 2(15). 3. IT WILL BE APPRECIATED THAT RUNNING A CHAMBER OF COMMERCE TRADE OR PROFESSIONAL ORGANIZATION FOR THE PURPOSES OF RENDERING THE SERV ICES TO THE MEMBERS OF SUCH ORGANIZATION BY WAY OF TRADE INFORMATION, ARBITRATION OF DISPUTES, REPRESENTATION TO GOVERNMENT, ARRANGING THE PROGRAMS FOR PROMOTION OR DEVELOPMENT OF SKILL, KNO WLEDGE ETC. SUCH AS SEMINARS, CONFERENCES ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 6 OR TRADE FAIR AMOUNTS TO THE OBJECTS OF GENERAL PUB LIC UTILITY AND IT WOULD FALL IN THE FOURTH HEAD OF CHARITY. HOWEVER TO THIS A RIDER HAS BEEN A DDED THAT THE OBJECT SHOULD 'NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT'. THEREFORE, IF IT CONTAINS AS ONE OF ITS INGREDIENTS THE CARRYING OH OF A COMMERCIAL OF TRADING OPERATIONS I T WOULD CEASE TO BE FOR A CHARITABLE PURPOSE. 4. NOW THE ACTIVITY OF ARRANGING A TRADE FAIR BY TH E TRADE ORGANIZATION DOES NOT AMOUNT TO THE ACTIVITY FOR VARIOUS REASONS SUCH AS: (I) THE PERUSAL OF THE OBJECT CLAUSE OF THE ASSESSE E ORGANIZATION ITSELF SHOWS THAT IT WAS FORMED AS ONE OF THE OBJECT TO ORGANIZE ARRANGEMENT IN THE INTEREST OF STAINLESS STEEL INDUSTRY. THE RELEVANT CLAUSE NO (A) AND (C) OF MEMORANDUM OF ASS OCIATION ARE REPRODUCED HEREUNDER FOR READY REFERENCE: (A) TO PROMOTE TRADING, DEALING AND MANUFACTURING S TAINLESS STEEL AND TO PROTECT THE INTEREST OF MEMBERS AND TO ORGANIZE ARRANGEMENT INTEREST OF MEMBERS AND ORGANIZE ARRANGEMENT INTEREST OF STAINLESS STEEL INDUSTRIES CONFINED TO THE INDIA AND INTERNATIONAL MARKET. (C) TO ORGANIZE EXHIBITIONS, EXPO AND FAIRS FOR PRO MOTION OF THE STAINLESS STEEL PRODUCT NATIONALLY AND INTERNATIONAL. THUS THE ARRANGEMENT OF SAID FAIR WAS IN THE COURSE OF EXERCISE OF ITS OBJECTS. IT WAS INTENDED TO PROMOTE THE AWARENESS AND SPREAD KNOWLEDGE ABOUT THE STAINLESS STEEL INDUSTRY AMONGST THE MERCHANTS OF THE SAID INDUSTRY AND GENERAL PUBLIC. THE EVENT WAS ATTENDED BY ABOUT 2,00,000 PEOPLE FROM ALL OVER THE COUNTRY. IT WILL BE APPREC IATED THAT IT IS QUITE NORMAL NOW DAYS IN ANY LINE OF BUSINESS, TRADE OR PROFESSIONAL ORGANIZATIO N TO ARRANGE SUCH TRADE FAIR, EXHIBITIONS AND CONFERENCE AND SEMINARS AT REGULAR INTERVALS. E.G. ANNUAL CONFERENCE HELD BY PROFESSIONALS LIKE DOCTORS, CHARTERED ACCOUNTANTS, ARCHITECTS ETC. IT PROVIDES A SOURCE OF INFORMATION S TO THE, TECHNOLOGICAL DEVELOPMENTS, MODERN METHOD OF MFG. I NNOVATIONS ETC TAKING PLACE IN THE INDUSTRY BOTH IN THE COUNTRY AND ABROAD. THE MEMBERS OF THE ORGANIZATION KEEP THEMSELVES UP-TO-DATE AS TO SUCH RAPID CHANGES TAKING PLACE IN THE INDUST RY AND ITS FUTURE. UNLESS SUCH FAIRS, ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 7 CONFERENCES ETC ARE NOT ARRANGED BY THE ASSOCIATION NEITHER ITS MEMBERS NOR SUCH ORGANIZATION COULD KEEP PACE WITH THE FAST CHANGING WORLD OR REN DER USEFUL SERVICE TO ITS MEMBERS. (II) SECONDARY IT WILL BE APPRECIATED THAT IN THIS FAIR ARRANGED BY THE ASSESSEE, THERE WAS NOTHING BUT DISPLAY AND THERE WAS NO TRADING ACTIVI TIES. WHEN THE ACTIVITY AT ANY STAGE INVOLVES BUYING AND SELLING OF GOODS OR OF SERVICES WITH A VIEW OF EARNING GAIN, THE ENTIRE ACTIVITY MAY BECOME NON-CHARITABLE. BUT IN THE PRESENT CASE THIS ELEMENT IS TOTALLY ABSENT. THE ONLY INTENTION BEHIND ARRANGING THIS FAIR WAS TO PROMOTE THE INTEREST OF THE MEMBERS AND KEEP INFORMED OF THE LATEST IN THE INDUSTRY. THERE WAS N O COMMERCIAL ELEMENT BEHIND.ANY ACTIVITY IN THIS FAIR. THE ENTIRE NATURE OF RECEIPTS AND EXPENS ES AS PER AUDITED P & L A/C PROVES THIS ASPECT. RELIANCE IS PLACED ON THE DECISION OF SURAT ART SILK MANUFACTURERS ASSN. [121 ITR 1](SC) WHEREIN IT WAS HELD AS UNDER; THE PRICING OF THE MONTHLY JOURNAL WOULD UNDOUBTEDL Y BE MADE IN SUCH A MANNER THAT IT LEAVE SOME PROFITS FOR THE GANDHI PEACE FOUNDATION AS IND EED WOULD BE DONE BY ANY PRUDENT AND WISE MANAGEMENT BUT THAT CANNOT HAVE THE EFFECT OF THE ACTIVITY OF PUBLICATION WOULD BE TO CARRY OUT THE CHARITABLE PURPOSE BY PROPAGATING GANDHIAN THOUGHTS AND PHILOSOPHY AND NOT TO MAKE PROFIT OR IN OTHER WORDS PROFIT MAKING WOULD N OT BE THE DRIVING THIS ACTIVITY. APPLYING THIS DECISION, IT WAS HELD IN CASE ,OF CIT V. AUTOMOBILE ASSOCIATION OF SOUTHERN INDIA (127 ITR 730) (MAD.) THAT THE ACTIVITIES OF A N AUTOMOBILE ASSOCIATION DO NOT HAVE THE OBJECT OF MAKING PROFIT BUT ONLY TO SUB SERVE AN OB JECT TO GENERAL PUBLIC UTILITY. THUS, WHEN AN ACTIVITY IS CARRIED OUT FOR THE PURPOSE OF ACHIEVIN G THE OBJECT OF GENERAL PUBLIC BENEFIT, IT CANNOT BE SAID TO MEAN THAT THERE WAS ANY PROFIT MAKING OB JECT OF THE TRUST IN CARRYING ON BUSINESS ACTIVITIES. ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 8 WE HAVE TO SUBMIT THAT THE FACTS OF OUR CASE ARE ID ENTICAL TO THE CASE OF.SURAT ART SILK (SUPRA) WHICH WAS ALSO AN ASSOCIATION ESTABLISHED T O PROMOTE TRADE AND COMMERCE IN THE COMMODITIES LIKE AFT SILK, COTTON YAM, COTTON DOTH AND IT DERIVED INCOME PRIMARILY FROM TWO SOURCES, I.E., ANNUAL SUBSCRIPTION FROM THE MEMBERS AND COMMISSION FROM ITS MEMBERS ON THE VALUE OF LICENSES. IT WAS HELD AMONGST OTHER THAT I N THE PROFIT FROM THE BUSINESS FEED CHARITABLE OBJECTS IT IS NOT AN ACTIVITY FOR PROFIT SO THAT TH E EXEMPTION HEED NOT TO BE LOST. IT WAS HELD IN THE CASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUS T (327 ITR 73) [PH] THAT A SURPLUS BY ITS-ELF CANNOT BE FAULTED IN VIEW OF THE NEED TO GE NERATE FUNDS. WHEN THE OBJECTS ARE GENUINE, THE SURPLUS CANNOT BE TREATED AS A SIN. PROFITABLE ACTIVITY DOES NOT NECESSARY MEAN THAT THERE IS PROFIT MOTIVE. IN VIEW OF THE AFORE-MENTIONED POSITION IN LAW AND FACTS OF OUR CASE, IT WILL BE APPRECIATED THAT THE ASSESSEE-TRUST WAS NOT ESTABLISHED WITH THE OBJ ECT OF PROFIT MAKING BUT IT HAD CARRIED ON THE ACTIVITY OF ORGANIZING INTERNATIONAL TRADE FAIR SO AS TO ACHIEVE ITS PREDOMINANT OBJECT OF PROMOTION OF STAINLESS STEEL INDUSTRY AND ITS MERCH ANTS. ' 4.3 THE SUBMISSION MADE BY THE ASSESSEE HAS BEEN CA REFULLY CONSIDERED. THE OBJECT OF THE ASSESSEE IS TO PROMOTE THE OBJECTS OF THE TRUST TO PROMOTE TRADING, DEALING AND MANUFACTURING STAINLESS STEEL AND TO PROTECT THE IN TEREST OF MEMBERS AND TO ORGANIZE ARRANGEMENT INTEREST OF MEMBERS AND ORGANIZE ARRANG EMENT INTEREST OF STAINLESS STEEL INDUSTRIES CONFINED TO THE INDIA AND INTERNATIONAL MARKET AND TO ORGANIZE EXHIBITIONS, EXPO AND FAIRS FOR PROMOTION OF THE ST AINLESS STEEL PRODUCT NATIONALLY AND INTERNATIONAL, .THERE ARE MANY ARTICLES WERE DI SPLAYED WHICH MADE FROM STAINLESS STEEL SUCH AS HOUSE WARE, HARDWARE, FURNITURE, MAC HINERY, PATTA-PATTI, SANITARY EQUIPMENT ETC. IT WAS GIVEN INTERNATIONAL MEDIA COV ERAGE BEING FIRST OF ITS KIND IN THE WORLD AND EVEN CHINA HAD NOT ARRANGED SUCH A MEGA E VENT. THE FUND WAS RAISED BY WAY OF EXHIBITION SPACE CHARGES AND ADVERTISEMENT I NCOME. THE OBJECTS AND ACTIVITY OF ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 9 THE ASSESSEE HAS TO SEEN IN THE LIGHT OF THE PROVIS IONS OF SEC. 2(15) OF THE I.T ACT. CHARITABLE OBJECTS DEFINED IN THE SECTION 2(15) OF THE ACT ARE: RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS , FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IT IS VERY CLEAR FROM THE OBJECTS OF THE TRUST AS M ENTIONED IN ITS ARTICLE OF MEMORANDUM THE MAIN OBJECTS ARE TO PROMOTE TRADING, DEALING AND MA NUFACTUREING STAINLESS STEEL AND TO PROTECT THE INTEREST OF MEMBERS .THE ASSESSEE TRUST HAD ORG ANIZED STAINLESS STEEL FAIR CALLED 'INDIANOX-2010' AT AHMEDABAD DURING 16TH TO 19TH JA NUARY, 2010 FROM ITS BROCHURE IT IS NOTICED FROM THERE WERE 800 DOMESTIC EXHIBITORS AND 30 INTERNATIONAL EXHIBITORS. . THE ACTIVITY OF THE ASSESSEE WAS ON T HE CHARGING BASIC. THE ASSESSEE CHARGE ENTRANCE FEES, EARN THROUGH THE SELLING OF EXHIBITI ON SPACE AND ALSO FROM THE EXHIBITION ADVERTISEMENT CHARGES. THEREFORE THE ASSESSEE CLEAR LY FALLS UNDER THE CATEGORY 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY '. 4.4 DURING THE COURSE OF ASSESSMENT FOR THE YEAR UNDER CONSIDERATION IT IS SEEN THAT THE ASSESSEE CHARGES ENTRANCE FEE FOR VISITING EXHIBITI ON. THE ASSESSEE EARN THROUGH THE SELLING OF EXHIBITION SPACE AMOUNTS TO RS.3,71,08,743/-. ON TH E TDS CERTIFICATE ISSUED BY DEDUCTING PERSON SHOWS THE NATURE OF PAYMENT AS CONTRACTOR, R ENT AND FEES. SO IT IS CLEAR THAT THE ASSESSEE RECEIVES THE INCOME BY SELLING THE EXHIBITION SPACE AND RECEIVED THIS INCOME. THE SAID ACTIVITY OF THE ASSESSEE CAN BY NO STRETCH OF IMAGINATION BE TR EATED AS CHARITABLE ACTIVITY. THE NATURE OF THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE CLEARLY SH OWS THAT THE ASSESSEE IS CARRYING ON AN ACTIVITY ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 10 WHICH FALLS UNDER THE LAST LIMB OF THE DEFINITION T O 'CHARITABLE ACTIVITY' U/S 2(15) OF THE ACT I.E 'THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY'. 4.5 THE ASSESSEE EARNED RS. 5,80,43,320/- IN WHICH DIRECT INCOME OF RS. 5,76,40,205/- AND OTHER INCOME OF RS. 4,03,115/-, THE ASSESSEE AP PLIED THIS INCOME TO THE TUNE OF RS. 50780696/- (EVEN RELATED EXPENSES RS. 4,98,39,249/- AND OTHER EXPENSES RS. 7,49,085/- ) FOR MEETING OUT THE EXPENSES IN WHICH ASSESSEE PA ID. THE FOLLOWING ARE THE MAJOR EXPENSES INCURRED BY THE ASSESSEE: 1. ADVERTISEMENT EXPENDITURE RS. 97,30,706/- 2. CONSULTING EXPENDITURE RS. 13,83,000/- 3. COURIER EXPENDITURE RS. 5,11,118/- 4. DECORATION EXPENSES RS. 92,94,801/- 5. MANAGEMENT EXPENSES RS. 1,01,41,777/- 4.6 THE ASSESSES HELD THIS FAIR/EXHIBITION TO PROMO TE THEIR BUSINESS. THE HOLDING OF FAIR OF THE STEEL INDUSTRIALIST WAS NOT OF CHARITABLE NATURE AS THE INCOME TO THE TUNE OF RS. 5,76,40,205 /-ARE FROM THE COMMERCIAL ORGANIZATIONS. THESE RECE IPTS ARE IN FACT COMMERCIAL RECEIPTS, AFTER DEDUCTING TDS BY THE DEDUCTOR. IN THE CASE OF DONAT ION, THE DONOR WILL NOT DEDUCT THE TDS. THEREFORE, THIS IS A COMMERCIAL RECEIPT. THE FAIR W AS WIDELY ADVERTISED AND REPORTED BY THE NEWS PAPERS. THIS ORGANIZATION DOES NOT HAVE ANY PA ST HISTORY TO CONDUCT THIS KIND OF CONFERENCE. THIS CONFERENCE DOES NOT PROVIDE ANY HE LP TO THE MASSES. THE ACTIVITY OF THE TRUST IS NOTHING BUT DEVISE BY EMINENT INDUSTRIALIST TO PROM OTE THEIR OWN BRAND/PROFILE. THIS WILL LEADS TO INCREASE BUSINESS OF THE PARTICIPANT INDUS TRIES WHICH CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY. THE INDUSTRIALIST INSTEAD OF SPENDING FRO M THEIR POCKETS FOR ENHANCING THEIR BRAND VALUE HAVE DONE BY HOLDING THIS EXHIBITION. THUS IT AMOUNTS TO CREATE COMMERCIAL ORGANIZATION IN THE NAME OF TRUST. THE ASSESSEE CHARGES ENTRANCE FEES FROM THE PARTICIPANTS WHICH CLEARLY VIOLATION OF SECTION 2(15) OF THE I T ACT. THEREFOR E IT WILL BE HIT BY THE PROVISO 1 & 2 OF THE ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 11 SECTION 2(15). THUS, THE SUBMISSION OF THE ASSESSEE IS NOT ACCEPTABLE THAT SINCE IT IS CLEARLY EVIDENT THAT THE ASSESSEE IS ENGAGED IN THE ACTIVIT Y OF EARNING PROFIT BY SELLING EXHIBITION SPACE AND RECEIVING EXHIBITION ADVERTISEMENT CHARGE AND E NTRANCE FEES FROM THE INDUSTRIALIST AND VISITORS. THE SUBMISSION OF THE ASSESSEE IS NOT REL EVANT SINCE THE INCOME EARNED IS BUSINESS INCOME AND THE APPLICATION OF THE SAID INCOME IS IR RELEVANT IN VIEW OF THE FIRST PROVISO TO SECTION 2(15) OF THE I. T. ACT WHICH IS AS UNDER :- 'PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FRO M SUCH ACTIVITY: ' THEREFORE, AS DISCUSSED IN PRECEDING PARAS, THE ASS ESSEE IS NOT CARRYING OUT ANY CHARITABLE ACTIVITY AND IS SQUARELY COVERED BY THE PROVISO 1 & 2 OF THE SECTION 2(15) OF THE IT. ACT. 5. WITH THE INTRODUCTION OF SEC 13(8) OF THE ACT, W .E.F 1/04/2009 (FINANCE ACT 2012), IT IS CLEARLY EVIDENT THAT THE ASSESSEE WHOS E CASE IS SQUARELY COVERED BY THE PROVISO TO SEC 2(15) SHALL FORFEIT ALL THE EXEMPTIONS THAT ARE OTHERWISE AVAILABLE U/S 11 AND 12 OF THE ACT. THE RELEVANT PROVISIONS ARE AS UNDER: '(8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF S ECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. ' THE NEW SUB-SECTION (8) PROVIDES THAT THE EXEMPTION UNDER SECTION 11 & 12 WILL NOT BE AVAILABLE TO A TRUST, IN A PREVIOUS YEAR, IN WHI CH THE FIRST PROVISO TO SECTION 2(1 5) BECOMES APPLICABLE, FOR THAT PREVIOUS YEAR. 6. THEREFORE, IN THE LIGHT OF THE PROVISIONS OF SEC 13(8) OF THE ACT, THE ASSESSEE LOSES ALL THE EXEMPTIONS CLAIMED U/S 11 & 12 OF THE ACT. IT I S CLEAR FROM THE PLAIN READING OF THE SAID PROVISION THAT ONCE PROVISO TO SEC 2(15) BECOMES AP PLICABLE TO THE FACTS OF THE CASE, ALL THE ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 12 EXEMPTIONS OTHERWISE ALLOWABLE U/S 11 AND 12 ARE NO T AVAILABLE TO THE ASSESSEE IN THAT PREVIOUS YEAR. THEREFORE, THE ASSESSEE IS NOT ELIGI BLE TO ANY OF THE EXEMPTION CLAIMED U/S. 11 AND 12 OF THE ACT AND THE DEDUCTIONS AS SECTION 11 ARE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THEREFORE, THE PROFIT OF THE ACTIVITY COMES TO RS. 72,62,624/-, (INCOME RS. 58043320- EXPENSE RS. 50780696/-) AFTER ALLOWING THE EXPENSE INCURRED BY THE ASSESSEE. 6.1 THE ASSESSEES CLAIM OF DEDUCTION U/S. 11(1)(A ) TO SET A PART OF THE GROSS RECEIPTS I.E. RS. 58043320/- OF THE TRUST WORTH RS. 72,62,624/- IS DI SALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 6.2 THE ASSESSEE'S RECEIVED RS.77,00,000/- AS MEMBE RSHIP FEES, THIS MEMBERSHIP ARE NOT ALLOWED AS THE ASSESSEE IS NOT GRANTING THE BENEFIT S OF SECTION 11 OF THE I.T. ACT. CLAIM OF DEDUCTION U/S 11(2) WORTH RS. 77,00,000/- IS DISALL OWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 6.3 THE CAPITAL EXPENDITURE INCURRED BY THE ASSESSE E ARE NOT ALLOWED AS THE ASSESSEE IS DENIED THE BENEFIT OF THE SECTION 11 & 12.. THE ASSESSEE H AS CLAIMED CAPITAL EXPENDITURE CONSIDERING ITSELF TO BE A TRUST GOVERNED U/S 11, 12 AND 13 OF THE ACT. CONSIDERING THE FACT THAT THE DEDUCTION U/S 11 OF THE ACT HAS BEEN DISALLOWED AND THE TRUST NOW BEING TREATED AS AN AOP, THE INCOME OF THE ASSESSEE HAS TO BE ASSESSED AS PE R NORMAL PROVISIONS OF THE ACT, UNDER WHICH THE CAPITAL EXPENDITURE IS NOT ALLOWABLE AS AN EXPE NSE. THE CAPITAL EXPENDITURE WORTH RS.14,03,554/- CLAIMED BY THE ASSESSEE IN ITS STATE MENT OF INCOME IS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 5. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) WHO GRANTED THE RELIEF TO THE ASSESSEE. 6. NOW DEPARTMENT IS BEFORE US IN APPEAL. ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 13 7. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMP UGNED ORDER IN SUPPORT OF ITS CONTENTION. LD. D.R. STATED THAT LD. CIT(A) HAS WRONGLY GIVEN THE RELIEF TO THE ASSESSEE AND STATED THAT THE FUND WAS RAISED BY WAY OF EXHIBITION SPACE CHARGES AND ADVERTISEMENT INCOME AND TDS WAS ALSO D EDUCTED. THE OBJECTS AND ACTIVITY OF THE ASSESSEE HAS TO SEEN IN THE LIG HT OF THE PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT. CHARITABLE OBJECTS DEF INED IN THE SECTION 2(15) OF THE ACT ARE: * RELIEF OF THE POOR, * EDUCATION, * MEDICAL RELIEF, *PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST, AND * THE ADVANCEMENT OF ANY OTHER OBJECTION OF GENERAL PUBLIC UTILITY. 8. ON THE OTHER HAND, LD. A.R. STATED THAT IT IS VERY CLEAR FROM THE OBJECTS OF THE TRUST AS MENTIONED IN ITS ARTICLE OF MEMORANDUM THE MAIN OBJECTS ARE TO PROMOTE TRADING, DEALING AND MANUFACTURING STAINLES S STEEL AND TO PROTECT THE INTEREST OF MEMBERS .THE ASSESSEE TRUST HAD ORGANIZ ED STAINLESS STEEL FAIR CALLED 'INDIANOX-2010' AT AHMEDABAD DURING 16TH TO 19TH JA NUARY, 2010 FROM ITS BROCHURE IT IS NOTICED FROM THERE WERE 800 DOMESTIC EXHIBITORS AND 30 INTERNATIONAL EXHIBITORS. THE ACTIVITY OF THE ASSES SEE WAS ON THE CHARGING BASIC. THE ASSESSEE CHARGE ENTRANCE FEES, EARN THROUGH THE SELLING OF EXHIBITION SPACE AND ALSO FROM THE EXHIBITION ADVERTISEMENT CHARGES. THEREFORE THE ASSESSEE CLEARLY FALLS UNDER THE CATEGORY 'ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THE ASSESSEE EARNED THROUGH THE SE LLING OF EXHIBITION SPACE AMOUNTS TO RS. 37108743/-. ON THE TDS CERTIFICATE I SSUED BY DEDUCTING ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 14 PERSON SHOWS THE NATURE OF PAYMENT AS CONTRACTOR, R ENT AND FEES AND IN SUPPORT OF ITS CONTENTION. LD. A.R. CITED AN ORDER OF ITAT KOLKATA BENCH IN ITA NO. 1491/KOL/2012 & ITA NO. 1284/KOL/2012 FOR ASSESSMEN T YEARS 2008-09 & 2009-10 TITLED AS INDIAN CHAMBER OF COMMERCE VS. IT O WHEREIN IN SIMILAR CIRCUMSTANCES ITAT KOLKATA BENCH GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATION:- 38. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF THE VARIOUS JUD ICIAL DECISIONS THROUGH THE YEARS, INTERPRETING THE DEFINITION OF 'CHARITABLE PU RPOSE' AS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF 'BUSINES S' IN RELATION TO THE SAID SECTION AMPLY REVELS THAT THE THEORY OF DOMINANT PU RPOSE HAS ALWAYS, ALL THROUGH THE YEARS, BEEN UPHELD TO BE THE DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHERE T HE MAIN OBJECT OF THE INSTITUTION WAS 'CHARITABLE' IN NATURE, THEN THE ACTIVITIES CARRI ED OUT TOWARDS THE ACHIEVEMENT OF THE SAID, BEING INCIDENTAL OR ANCILL ARY TO THE MAIN OBJECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NO N MEMBERS, WERE ALL HELD TO BE 'CHARITABLE' IN NATURE. HON'BLE APEX COURT IN THE EAR LIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEARLY LAID OUT THE PRINCI PLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION WAS ADVANCEMENT OF OBJECTS OF GEN ERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLAR Y ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATUR E. IN OUR VIEW THE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF 'CHARITABLE P URPOSE' REMAINED UNALTERED EVEN ON AMENDMENT IN THE SECTION 2(15) OF THE ACT W .E.F. 01/04/2009, THOUGH THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN. ACC ORDINGLY, IN THE GIVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN DETAIL, THE ASSESSEE ASS OCIATION'S PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY AN D IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURP OSE, FOR ACHIEVING THE MAIN PURPOSES PROFITABLE IN NATURE. HENCE, ASSESSEE IS N OT HIT BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. THIS ISSUE OF ASSESSED APPEAL IS ALLOWED. 39. IN THE RESULT, BOTH APPEALS OF ASSESSEE ARE ALLOWED. 9. ASSESSEE ALSO CITED AN ORDER OF ITAT KOLKATA BENCH IN ITA NO. 735/KOL/2013 TITLED AS ITO VS. INDIAN LEATHER PRODU CTS ASSOCIATION WHEREIN ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 15 IN SIMILAR CIRCUMSTANCES RELIEF WAS GRANTED TO THE ASSESSEE WITH FOLLOWING OBSERVATION:- CHARITABLE TRUSTINCOME OF CHARITABLE TRUSTS-BENEFI T U/S. 11ASSESSEE WAS ASSOCIATION DULY REGISTERED U/S 12AASSESSEE ALSO H ELD CERTIFICATE U/S 80G ASSESSEE WAS CARRYING ON CHARITABLE ACTIVITIES SINC E 1988ASSOCIATION OF ASSESSEE WAS FORMED BY LEATHER MERCHANTS FOR VARIOU S ACTIVITIES SUCH AS SPREADING, KNOWLEDGE AMONG MEMBERS, REGARDING THE T RADE TO REMOVE HARDSHIP OF MEMBERS, TO ASSIST MEMBERS IN INCREASIN G VOLUME BY ORGANIZING TRADE SHOWS, FAIRS, SEMINARS AND PUBLISHING OF MAGA ZINES FOR SOLE BENEFIT AND ADVANTAGES OF LEATHER INDUSTRYPRIME OBJECT OF ASSE SSEE WAS TO PROMOTE LEATHER TRADEDURING PREVIOUS YEAR, ASSESSEE DERIVE D INCOME FROM CONDUCTING TRADE SHOWS, SEMINARS, FAIRS, SVHC TESTING, LEATHER GOODS PARK BOOKING FEES, FASHION MAGAZINE AND ENTRY TICKETS FOR VARIOUS TRAD E SHOWSAO WAS OF VIEW THAT, ASSESSEE WAS ALLOWING OUTSIDERS ALSO TO PARTI CIPATE BY KEEPING THEIR STALL IN TRADE FAIR ORGANIZED BY ASSESSEEAO WAS THEREFOR E OF VIEW THAT, ASSESSEE WAS HAVING DEALINGS OR RELATIONS WITH OUTSIDE BODY AND GENERATING INCOME AO THEREFORE CONCLUDED THAT, ASSESSEE WAS DERIVING INCOME BY CARRYING ON ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESSA O ACCORDINGLY DENIED BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO ASSESSEE AO BROUGHT TO TAX GROSS RECEIPTS AS PER INCOME AND EXPENDITURE ACCOUNT AFTE R DEDUCTING EXPENDITURE INCURRED TO TAXBEFORE CIT(A) ASSESSEE EXPLAINED CH ARITABLE NATURE OF ASSESSEE AND SUBMITTED THAT, IT WAS EXISTING FOR CH ARITABLE PURPOSECIT(A) WAS OF VIEW THAT, MAIN CONTRIBUTION FROM NON-MEMBER S WAS STALL BOOKING CHARGES IN TRADE FAIR ORGANIZED BY ASSESSEE DURING PREVIOUS YEAR-HE WAS OF VIEW THAT, AS PER FIRST PROVISO TO S. 2(15), ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHOULD NOT BE CHARITABLE PUR POSE, IF IT INVOLVED CARRYING ON ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESSA SSESSEE HAD NOT CARRIED OUT ANY SUCH ACTIVITY BY CHARGING RENT FROM NON-MEMBERS FOR STALLS IN TRADE FAIR ORGANIZED BY ASSESSEECIT(A) ACCORDINGLY DIRECTED A O TO COMPUTE INCOME OF ASSESSEE WITHOUT INVOKING FIRST PROVISO TO SECTION 2(15)HELD, IT COULD BE SEEN FROM BYE-LAWS OF ASSESSEE THAT, DOMINANT AND PRIME OBJECTIVE OF ASSESSEE WAS NOT PROFIT MAKINGPRIOR TO INTRODUCTION OF THE PROV ISO TO S 2(15), THERE WAS NO DISPUTE THAT, ASSESSEE WAS ESTABLISHED FOR CHARITAB LE PURPOSESCONTRIBUTION ASSESSEE RECEIVED FROM NON-MEMBERS IN CONDUCTING TR ADE FAIR WAS RS.15,64,556 TOTAL RECEIPTS OF ASSESSEE DURING PRE VIOUS YEAR WAS SUM OF RS.L,30,26,506IT COULD NOT BE SAID THAT RECEIPTS F ROM NON-MEMBERS CONSTITUTED MAJOR RECEIPTS OF ASSESSEEEXPENSES INC URRED IN CONNECTION WITH ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 16 TRADE FAIRS AND PROMOTION EVENTS WAS RS.29,03,411I T COULD NOT THUS BE SAID THAT, ACTIVITY OF ORGANIZING TRADE FAIRS AND EXHIBI TIONS AND THE ACT OF COLLECTING CONTRIBUTION FROM NON-MEMBERS RENDERED ASSESSEE AS ORGANIZATION EXISTING FOR PROFIT OR WAS DOING BUSINESS OR TRADEFACTUAL ASPEC TS AND OBJECTS OFASSESSEE WOULD CLEARLY SHOW THAT, ASSESSEE DID NOT DRIVEN PR IMARILY BY DESIRE OR MOTIVE TO EARN PROFITS BUT TO DO CHARITY THROUGH ADVANCEME NT OF OBJECT OF GENERAL PUBLIC UTILITYTHIS WAS SUBSTANTIATED BY ACTUAL INC OME RECEIVED ON OPERATIONS OF ASSESSEE AND EXPENDITURE INCURRED SET OUT IN EAR LIER PARAGRAPHS OF THIS ORDERPROVISO TO S.2(15) WAS THEREFORE NOT APPLICAB LE TO CASE OF ASSESSEE ASSESSEE WAS ENTITLED TO BENEFITS OF S.L1AO HAD NO T DISPUTED CONDITIONS NECESSARY FOR ALLOWING EXEMPTION U/S.11, EXCEPT APP LICABILITY OF PROVISO TO S.2(15)SAID PROVISO WAS NOT APPLICABLE TO CASE OF ASSESSEEORDER OF CIT(A), UPHELDASSESSEE'S INCOME WAS NOT INCLUDIBLE IN TOTA L INCOMEAPPEAL BY REVENUE WAS DISMISSED. 10. AS WE CAN SEE, THE ASSESSEE IS IN FACT CARRYING OUT ACTIVITIES FOR CHARITABLE PURPOSES AND THERE IS AN EXCESS OF EXPENDITURE OVER INCOME YEAR AFTER YEAR AND IN SIMILAR CIRCUMSTANCES RELIEF HAVE BEEN GRANTED B Y THE ITAT KOLKATA BENCHES AND IN OUR CONSIDERED OPINION, THE ASSESSEE IS ENTI TLED FOR CLAIM OF DEDUCTION U/S. 11 & 12 OF INCOME TAX ACT. AFTER CONSIDERING T HE ABOVE FACTS, WE OBSERVE THAT THE AIMS AND OBJECT OF THE ASSESSEE TRUST WERE CHARITABLE IN NATURE. THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S. 12AA OF THE ACT AND SINCE ITS 1 ST YEAR THE ASSESSEE TRUST HAS CARRIED OUT ACTIVITIES FOR CHARITABLE PURPOSES. ON PERUSAL OF THE AUDITED ANNUAL ACCOUNTS FOR A.Y. 201 1-12 TO 2013-14 SHOW THAT THE ASSESSEE TRUST HAS SPENT MORE AMOUNTS ON THE OB JECT OF THE TRUST THAN THE TOTAL RECEIPTS AS MENTIONED BELOW:- A. Y. AMOUNT SPENT FOR OBJECT OF TRUST TOTAL 2011-12 34,53,361/- 5,41,889/- 2012-13 12,57,968/- 4,62,409/- 2013-14 10,76,392/- 33,240/- ITA NO. 2441 /AHD/2015 . A.Y. 2010-11 17 11. IT IS CLEAR THAT THERE IS AN EXCESS OF EXPENDITURE OVER INCOME YEAR AFTER YEAR AND THE ASSESSEE TRUST HAS BEEN CARRYING OUT ACTIVITIES FOR CHARITABLE PURPOSES. WE CONSIDER THAT THE MAIN OBJECT OF THE ASSESSEE TRUST WAS THE PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE COMMERCE AND IN DUSTRY, THEREFORE ITS INCOME GENERATED FROM TRADE FAIR ETC. WOULD BE EXEM PTED FROM TAX U/S. 11 R.W.S. 2(15) OF THE ACT. IN VIEW OF THE ABOVE FACTS AND FINDINGS, WE ARE INCLINED WITH THE DECISION OF LD. CIT(A). THEREFORE, THE APP EAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT I S DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 05- 2018 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 14/05/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD