M/s. Credai Bengal , Kolkata V. ITO (Exemption), Ward - 1(1), Kolkata , Kolkata

ITA 278/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5542 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY
• Assessee Lawyers: S K TULSIYAN
• Keywords: Gift; Business income; Business expenditure; Charitable institution; Source of fund; Tangible material; Set aside
• Section: 142(1); 12A; 12AA; 263; 12; 11; 15

Judgement Text

1 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 278/KOL/2018 ASSESSMENT YEAR: 2012-13 M/S. CREDAI BENGAL (PAN: AABCC2326D) VS. INCOME-TAX OFFICER (EXEMPTION), WARD-1(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 06.03.2019 DATE OF PRONOUNCEMENT 03.06.2019 FOR THE APPELLANT SHRI S. K. TULSIYAN, FCA FOR THE RESPONDENT SHRI RABIN CHOUDHURY, ADDL. CIT , SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) - 25, KOLKATA DATED 27.10.2017 FOR AY 2012-13. 2. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C.I.T.(A) ERRED IN LAW IN DENYING EXEMPTION U/S 11 R.W.S. 13(8) OF THE I. T. ACT,1961 ON THE INCOME OFRS.91,10,026/- ARISING IN THE FORM OF SPONSORSHIP OUT OF THE ACTIV ITY OF HOLDING FAIRS, MEETINGS, CONFERENCES AND SEMINARS ON HIS ALLEGED ASSUMPTION THAT SUCH AC TIVITY WAS NOT CHARITABLE WARRANTING THE BENEFIT OF SEC. 11 & 12 OF THE ACT. 2. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. C.LT.(A) FURTHER ERRED IN LAW IN CONFIRMING THE DISALLOWANCE OF RS. 91,10,026/- H OLDING THE APPELLANT-COMPANY AS ENGAGED IN THE ACTIVITY OF HOLDING FAIRS, MEETINGS, CONFERE NCES AND SEMINARS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FALLING WITHIN THE AMBIT OF SE CTION 2(15) OF THE ACT. 3. THAT, THE LD. C.LT.(A) WHILE UPHOLDING DISALLOWA NCE OF RS.91,10,026/- AND THUS DENYING THE BENEFIT OF SECTION 11 OF THE ACT FURTHER ERRED AND MISDIRECTED HIMSELF IN NOT PROPERLY CONSIDERING THE PRINCIPAL OBJECTIVE OF THE APPELLAN T COMPANY BEHIND HOLDING OF FAIRS, MEETINGS, CONFERENCES AND SEMINARS AND ASSUMING SUC H ACTIVITIES IN LIEU OF SPONSORSHIP AS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS IN SPITE OF THE FACT THERE WAS NO CONTRAVENTION OF THE PROVISIONS OF SEC.L1 IN CLAIMING SUCH LAWFUL CLAIM. 2 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 4. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. C.LT.(A) ERRED AND MISDIRECTED HIMSELF IN TREATING CORPUS DONATION OF RS.17,50,000/-, BEING IN THE FORM OF ADMISSION FEES FROM MEMBERS, AS NOT EXEMPT U/S 11(1 )(D) OF THE ACT. 5. THAT, AS THE ORDER OF LD. CIT(A) SUFFERS FROM IL LEGALITY AND IS DEVOID OF ANY MERIT, THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR.. 3. GROUND NOS. 1, 2 AND 3 ARE AGAINST THE ACTION OF THE LD. CIT(A) IN DENYING EXEMPTION U/S. 11 R.W.S. 13(8) OF THE INCOME-TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) ON THE INCOME OF RS.91,10,026/- ARISING IN THE FORM OF SPO NSORSHIP OUT OF THE ACTIVITY OF HOLDING FAIRS, MEETINGS, CONFERENCES AND SEMINARS. 4. BRIEF FACTS OF THE CASE AS OBSERVED BY THE AO ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2012 FOR THE RELEVANT AY 2012-13 DE CLARING DEFICIT INCOME OF RS. 29,82,888/-. THE CASE WAS SELECTED FOR SCRUTINY TH ROUGH CASS IN AST MODULE. NOTICES U/S. 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTI ONNAIRE WERE ISSUED AND SERVED ON THE ASSESSEE. ACCORDING TO AO, THE ASSESSEE WAS REGIST ERED U/S. 12A OF THE ACT VIDE ORDER NO. DIT(E)/S-37/8E/238/91-92 DATED 10.10.1995 AND HAS C LAIMED EXEMPTION U/S. 11 OF THE ACT. THE ASSESSEE WAS ENGAGED IN THE PROMOTION OF COMMER CE AND INDUSTRY RELATING TO CONSTRUCTION IN GENERAL AND BUILDING CONSTRUCTION I N PARTICULAR. ACCORDING TO AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD RECEIVED RS.3,94,70,967/- FROM DIFFERENT SPONSORS, MOST OF W HOM ARE THE MEMBERS OF THE APPELLANT- ORGANIZATION. THESE SPONSORS GAVE THE MONEY TO THE ASSESSEE FOR THE PURPOSE OF HOLDING FAIRS, MEETING, CONFERENCE AND SEMINARS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE CLAIM O F EXEMPTION U/S. 11 OF THE ACT WOULD NOT BE DENIED BY INVOKING THE PROVISO OF SECTION 2(15) READ WITH SECTION 13(8) OF THE ACT. IN RESPONSE THE ASSESSEE FILED A DETAILED RESPONSE ON 16.03.2015, INTER ALIA, EMPHASIZING ON THE FACT THAT THE ORGANIZING OF TWO FAIRS BY THE ASSESS EE IS A CHARITABLE ACTIVITY AND NOT BUSINESS. ASSESSEE ALSO RELIED ON VARIOUS CASE LAWS IN SUPPOR T OF ITS SUBMISSION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE AO HELD THAT THE AC TIVITY OF THE ASSESSEE OF HOLDING FAIRS, MEETINGS, CONFERENCES AND SEMINARS IN LIEU OF SPONS ORSHIPS RECEIVED TO BE IN THE NATURE OF RENDERING SERVICE IN RELATION TO ANY TRADE, COMMERC E OR BUSINESS. FURTHER, THE AO HELD THAT THE RECEIPTS FROM SUCH SPONSORSHIP OUT OF THE SAID ACTIVITY TO THE TUNE OF 3 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 RS.3,94,70,967/-, EXCEEDED THE PRESCRIBED LIMIT OF RS.25,00,000/- AND THEREFORE THE CASE OF THE APPELLANT STOOD COVERED BY THE PROVISO TO SEC. 2(15) OF THE ACT. THUS THE AO HELD THATTHE ACTIVITIES CARRIED ON BY THE APPELLANT WERE NO LONGER CHARITABLE IN NATURE AS DEFINED U/S. 2(15) OF THE ACT AND CONSEQUENTLY THEREFORE TH E APPELLANT WAS NOT ELIGIBLE TO CLAIM BENEFIT OF SECTION 11 OF THE ACT. THE AO ACCORDINGL Y COMPUTED THE BUSINESS INCOME OF THE ASSESSEE AFTER ALLOCATING THE DIRECT AND INDIRECT E XPENSES ON ACCOUNT OF THE SAID ACTIVITY AS UNDER : TOTAL BUSINESS RECEIPTS RS. 3,94,70,967/- LESS: BUSINESS EXPENSES DIRECT RS. 3,03,60,9 41/- PROFIT FROM BUSINESS RS. 91,10,026/- AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DENIED EXEMPTION U/S. 11 R.W.S. 13(8) OF THE ACT AND HELD THAT THE ASSESS EE IS ENGAGED IN THE ACTIVITY OF HOLDING FAIRS, MEETINGS, CONFERENCES AND SEMINARS WHICH WAS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THEREFORE THE ACTIVITIES OF THE APPELL ANT DID NOT COME WITHIN THE AMBIT OF SECTION 2(15) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSESSEE ISNOW IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE APPELLANT HAS BEEN GRANT ED REGISTRATION U/S 12AA OF THE ACT SINCE 1995 AND ONWARDS. HOLDING TRADE EXHIBITIONS AND CON FERENCES HAS BEEN THE REGULAR FEATURE OF THE ACTIVITIES CARRIED ON BY THE APPELLANT SINCE ITS INCORPORATION. IN THE PAST ASSESSMENTS COMPLETED U/S 143(3), THE AOS NEVER QUESTIONED THE APPELLANTS ELIGIBILITY TO CLAIM BENEFIT OF SECTION 11 OF THE ACT IN RESPECT OF SURPLUS REAL IZED FROM ITS ACTIVITIES OF HOLDINGS FAIRS AND EXHIBITIONS WHERE MEMBERS AS WELL AS NON-MEMBER S PARTICIPATED ON PAYMENT OF FEES / SPONSORSHIP CHARGES. WE FIND THAT EVEN IN THE PRECE DING YEAR I.E. AY 2011-12, THE AO HAD ALLOWED THE APPELLANTS CLAIM FOR NON-TAXABILITY OF THE SPONSORSHIP / PARTICIPATION FEES RECEIVED FROM THE MEMBERS FOR PARTICIPATING IN TRAD E FAIRS, EXHIBITIONS AND CONFERENCES BUT DENIED THE BENEFIT OF SECTION 11 IN RELATION TO THE SPONSORSHIP / PARTICIPATION FEES RECEIVED FROM NON-MEMBERS. THE LD. CIT(E) WAS HOWEVER OF THE OPINION THAT THE APPELLANTS ACTIVITY 4 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 OF HOLDING TRADE FAIRS, EXHIBITIONS AND CONFERENCES DID NOT COME WITHIN THE AMBIT OF SECTION 2(15) WHICH DEFINES THE TERM CHARITABLE PURPOSE A ND THEREFORE HE IN HIS ORDER U/S 263 HELD THAT THE APPELLANT DID NOT CARRY ON THE CHARITABLE ACTIVITIES AND THEREFORE NOT ELIGIBLE TO AVAIL THE BENEFIT OF SECTION 11 OF THE ACT. THE LD. AR OF THE APPELLANT BROUGHT TO OUR ATTENTION THAT THIS TRIBUNAL IN ITS ORDER DATED 30.09.2016 IN ITA NO.381/KOL/2016 DID NOT AGREE WITH THE LD. CIT(E)S FINDING AND HELD THAT THE APPELLAN TS ACTIVITY OF HOLDING TRADE FAIRS, EXHIBITIONS AND CONFERENCES WAS CARRIED OUT IN PURS UIT OF OR INCIDENTAL TO ITS MAIN OBJECTIVE WHICH WAS CONSIDERED TO BE CHARITABLE IN NATURE BY THE LD. CIT(E) AT THE TIME OF GRANTING REGISTRATION U/S 12A OF THE ACT. THE LD. AR THEREFO RE SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED IN APPELLANT S FAVOUR BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ITS OWN CASE F OR AY 2011-12. HE FURTHER BROUGHT TO OUR ATTENTION THAT THIS ISSUE WAS ALSO DECIDED IN ASSES SEES FAVOUR BY THE DECISIONS OF THE HONBLE APEX COURT IN THE CASE OF ADDL. CIT VS SURA T ART SILK CLOTH MANUFACTURERS ASSOCIATION (121 ITR 1) AND THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS INDIAN CHAMBER OF COMMERCE (ITA NOS. 415, 416 & 129 1/KOL/2016). HE THEREFORE SUBMITTED THAT THE LOWER AUTHORITIES WERE UNJUSTIFI ED IN NOT FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL AND DENYING THE B ENEFIT OF SECTION 11 BY WRONGLY INTERPRETING THE PROVISO TO SECTION 2(15) READ WITH SECTION 13(8) AND WRONGLY DISTINGUISHING THE EARLIER DECISION OF THE TRIBUNAL RENDERED IN AP PELLANTS OWN CASE FOR EARLIER YEARS. PER CONTRA THE LD. DR APPEARING ON BEHALF OF THE REVENU E STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSIONS, MATERIAL PLACED ON RECORD AND THE JUDICIAL PRECEDENTS AVAILABLE ON THI S SUBJECT, WE NOTE THAT IN THE APPELLANTS CASE THE LOWER AUTHORITIES REJECTED APPELLANTS CLA IM FOR BENEFIT OF SECTION 11 PRIMARILY ON THE GROUND THAT THE APPELLANT WAS HOLDING TRADE FAI RS, EXHIBITIONS AND CONFERENCES AND IN RESPECT OF THESE ACTIVITIES RECEIVED SUBSTANTIAL SU MS FROM THE PARTICIPANTS WHO WERE BOTH MEMBERS OF THE APPELLANT ORGANIZATION AS WELL AS NO N-MEMBERS. IN THE OPINION OF THE LOWER AUTHORITIES THE APPELLANT ACTIVITY OF HOLDING TRADE FAIRS, EXHIBITIONS AND CONFERENCES WAS IN THE NATURE OF TRADE OR BUSINESS AND THEREFORE IN TE RMS OF THE PROVISO INTRODUCED BY THE 5 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 FINANCE ACT, 2008 IN SECTION 2(15) OF THE ACT, THE SAID ACTIVITY COULD NOT BE REGARDED TO BE CHARITABLE IN NATURE AND CONSEQUENTLY THEREFORE THE BENEFIT OF SECTION 11 WAS NOT AVAILABLE TO THE APPELLANT. WE HOWEVER FIND THAT SINCE INCEPT ION OF THE APPELLANT IT HAS BEEN CONDUCTING THE FOREGOING ACTIVITIES IN FURTHERANCE OF THE OBJECTS OF THE COMPANY AND IN ALL THE PAST ASSESSMENTS SUCH ACTIVITIES WERE CONSIDERE D TO BE CHARITABLE IN NATURE. WE FIND THAT THERE WAS NO MATERIAL CHANGE IN THE FACTUAL MATRIX OF THE APPELLANTS CASE THOUGH THE CHANGE WAS BROUGHT ABOUT IN SECTION 2(15) BY INTRODUCTION OF PROVISO THEREIN. ON CAREFUL PERUSAL OF PROVISO TO SECTION 2(15) IT IS NOTED THAT THE OBJEC T OF ADVANCEMENT OF GENERAL PUBLIC UTILITY IS NOT BE CONSIDERED AS CHARITABLE IN NATURE IF IT INVOLVES CARRYING OF ANY ACTIVITY IN NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR OTHER CO NSIDERATION. FROM THE LANGUAGE EMPLOYED BY THE LEGISLATURE WHILE ENACTING THE SAID PROVISO IT IS APPARENT THAT IT IS ONLY WHEN THE ACTIVITY OF GENERAL PUBLIC UTILITY IN ITSELF INVOLV ES CARRYING ON ANY TRADE, COMMERCE OR BUSINESS ONLY THEN THE PROVISO WILL BE APPLICABLE. IN OTHER WORDS THE ACTIVITY OF THE ORGANIZATION ON ITS OWN SHOULD CONSTITUTE EITHER TR ADE, COMMERCE OR BUSINESS OR ANY ACTIVITY INVOLVING PROVISION OF SERVICEIN RELATION TO TRADE, COMMERCE OR BUSINESS. WE HOWEVER NOTE THAT IN THE PRESENT CASE THE LOWER AUTHORITIES HAVE NOT BROUGHT ON RECORD ANY COGENT OR TANGIBLE MATERIAL WHICH IN ANY MANNER WILL PERSUADE US TO HOLD THAT THE ACTIVITY OF THE APPELLANT OF HOLDING TRADE FAIRS, EXHIBITIONS OR CO NFERENCES WERE IN ITSELF FOR MAKING PROFIT OR IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. 7. WE NOTE THAT AS PER MEMORANDUM OF ASSOCIATION, T HE MAIN OBJECT OF THE ASSESSEE IS TO ENGAGE ITSELF IN ESTABLISHING HARMONY BETWEEN TH E CONSTRUCTION INDUSTRY AND THE GOVERNMENT DEPARTMENTS AT THE CENTRAL AND STATE LEV ELS, LOCAL AND PUBLIC BODIES, FINANCIAL INSTITUTIONS AND PRIVATE BODIES AND INSTITUTIONS FO R PROMOTING HEALTHY GROWTH AND DEVELOPMENT OF THE CONSTRUCTION INDUSTRY. IN ORDER TO PURSUE AND FULFILMENT OF THE SAID MAIN OBJECTIVES, THE APPELLANT-ASSOCIATION ORGANISED CER TAIN INCIDENTAL OR ANCILLARY ACTIVITIES, AS STATED ABOVE, NAMELY, ORGANISING FAIRS, EXHIBITIONS AND SEVERAL OTHER INTER-CONNECTED ACTIVITIES. SUCH FAIRS/EXHIBITIONS ARE ORGANIZED BY THE ASSESSEE AS ANCILLARY IN THE PURSUIT OF ACHIEVING THE MAIN OBJECTIVES OF THE INSTITUTION. T HE PURPOSE OF ORGANIZING FAIRS OR 6 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 EXHIBITIONS ETC. IS TO DISSEMINATE INFORMATION ABOU T AVAILABILITY OF AFFORDABLE HOUSING AMONGST EMERGING URBAN POPULOUS AND TO PROVIDE EFFE CTIVE PLATFORM FOR HOLDING INTERFACE AMONGST VARIOUS STAKEHOLDERS CONNECTED WITH DEVELOP MENT OR URBAN INFRASTRUCTURE WITH GOVT. AGENCIES AND GENERAL PUBLIC FOR THE DEVELOPME NT OF CIVIC INFRASTRUCTURE. WE FURTHER NOTE THAT THE PERSONS TAKING PART IN SUCH FAIRS AND MAKING CONTRIBUTIONS ARE PRIMARILY MEMBERS OF THE APPELLANT-INSTITUTION. IT MAY BE SO THAT SOME OF THE NON-MEMBERS ALSO PARTICIPATE IN THESE FAIRS, EXHIBITIONS & CONFERENC ES. HOWEVER THE NON-MEMBERS PARTICIPATING ARE NOT STRANGERS BUT THEY ARE IMPORT ANT STAKEHOLDERS CLOSELY CONNECTED WITH REAL ESTATE DEVELOPMENT INDUSTRY AND THUS HAVE IMPO RTANT ROLE IN THE DEVELOPMENT OF CIVIC INFRASTRUCTURE FACILITIES. IN THIS FACTUAL BACKGROU ND WE ARE OF THE CONSIDERED VIEW THAT THE ACTIVITIES OF HOLDING FAIRS, EXHIBITIONS AND CONFER ENCES WERE INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS FOR WHICH THE APPELL ANT-INSTITUTION WAS CREATED AND REGISTERED U/S. 12AA OF THE ACT. IN VIEW OF THE FOREGOING FACT S WE ARE OF THE CONSIDERED OPINION THAT THE BENEFIT OF SECTION 11 COULD NOT BE DENIED TO TH E APPELLANT ONLY BECAUSE IT REALIZED NET SURPLUS FROM ACTIVITIES WHICH WERE UNDERTAKEN IN TH E PURSUIT OF ATTAINING MAIN OBJECT OF THE ORGANIZATION WHICH WAS CONSIDERED TO BE CHARITABLE IN NATURE BY THE DEPARTMENT ITSELF AT THE TIME WHEN REGISTRATION U/S 12AA WAS GRANTED AND IN THE PAST ASSESSMENTS THE BENEFIT OF SECTION 11 WAS ALSO EXTENDED IN RESPECT OF THE SELF -SAME ACTIVITIES. 8. IN THIS REGARD WE NOTE THAT THE ISSUE INVOLVED I N THE PRESENT APPEAL IS COVEREDBY THE MAJORITY OPINION OF THE HONBLE SUPREME COURT IN AD DL. CIT VS SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1980) 121 ITR 1. EVEN TH OUGH THE DECISION OF THE HONBLE SUPREME COURT WAS RENDERED IN THE BACKDROP OF PROVI SIONS OF THE IT ACT, 1961 PRIOR TO INTRODUCTION OF THE PROVISO IN SECTION 2(15) OF THE ACT YET IN OUR CONSIDERED OPINION THE JUDICIAL PRINCIPLES LAID DOWN IN THE SAID DECISION CONTINUE TO HOLD FIELD AND THEREFORE STILL APPLICABLE EVEN AFTER INTRODUCTION OF FIRST PROVISO TO SECTION 2(15) OF THE ACT. IN THIS REGARD WE ALSO NOTE THAT THE RATIO LAID DOWN BY THE HONBL E APEX COURT IN THE CASE OF ADDL. CIT VS SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (SUP RA) WAS APPLIED BY THIS TRIBUNAL IN APPELLANT-ASSESSEES OWN CASE FOR A.Y. 2011-12 WHIC H IS PLACED AT PAGE NO. 68 TO 87 OF THE 7 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 PAPER BOOK IN ITA NO. 381/KOL/2016 PASSED ON 30.09. 2016. THE RELEVANT EXTRACTS OF THE DECISION IS REPRODUCED BELOW: 8.1 NOW IN THE LIGHT OF ABOVE WORDS, WE HAVE TO EXA MINE AS TO WHETHER THE ORDER OF THE LD. CIT IS A VA LID ORDER IN THE LIGHT OF THE ABOVE STATED POINTS/PROVI SIONS OF SECTION 263 OF THE ACT. ISSUE NO. 1 VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE ACT 9. WE FIND THAT THE ACTIVITIES OF THE ASSESSEE ARE WITHIN THE OBJECTS AS PER ITS MEMORANDUM OF ASSOCIA TION. THE RELEVANT MAIN OBJECTS AND OBJECTS INCIDENTAL OR ANC ILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS STAND AS UNDER: MAIN OBJECTS:- 3) TO ESTABLISH HARMONY BETWEEN THE CONSTRUCTION I NDUSTRY AND THE GOVERNMENT DEPARTMENTS AT THE CENTR AL AND STATE LEVELS, LOCAL AND PUBLIC BODIES, FINANCIA L INSTITUTIONS AND PRIVATE BODIES AND INSTITUTIONS FOR PROMOTING HEALTHY GROWTH AND DEVELOPMENT OF THE CON STRUCTION INDUSTRY. 4) XXXXXXXXXXX 5) XXXXXXXXXXXX 6) TO ENCOURAGE RESEARCH AND DEVELOPMENT IN THE CON STRUCTION INDUSTRY AND FOR THAT PURPOSE ORGANIZES CONFERENCES, SEMINARS, EXHIBITIONS, FILMS SHOWS ETC ., AND ALSO ESTABLISH LABORATORIES, COLLECT MODELS AND DESIGNS, ETC. OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT O F THE MAIN OBJECTS: 5) TO ORGANIZE CONFERENCES, EXHIBITIONS, FILM SHOW S, SEMINARS, TOURS, DELEGATION, ETC. IN INDIA AND A BROAD AND TO NOMINATE DELEGATES AND ADVISERS AND TO TAKE STEPS WHICH MAY PROMOTE AND SUPPORT THE CONSTRUCTIO N INDUSTRY, TRADE AND PROFESSION. THE ASSESSEE-COMPANY WAS ESTABLISHED WITH THE AFORE SAID OBJECTS AND THE SAME WERE ACCEPTED BY THE REVENUE WHILE GRANTING THE REGISTRATION U/S 12AAOF THE ACT ON 10.10.1995. SINCE THE INCEPTION OF THE ASSESSEE-COMPANY THE OBJECTS AND ACTIVITIES REMAINE D SAME AND WHICH WERE ACCEPTED BY THE REVENUE EVEN UNDER THE ASSESSMENT FRAMED U/S 143(3)/147 OF THE A CT CONSISTENTLY WITHOUT HOLDING THE AFORESAID ACTIV ITIES AS COMMERCIAL IN NATURE. ACCORDINGLY, IN VIEW ABOVE, WE ARE INCLINED TO PROV IDE THE RELIEF TO THE ASSESSEE ON THE BASIS OF CONS ISTENCY AS THERE IS NO CHANGE IN THE OBJECTS AND ACTIVITIES OF THE SOCIETY. IN THIS CONNECTION, WE RELY IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 WHERE THE HONBLE SUPREME COURT HAS HELD AS UNDER:- THERE IS NO DISPUTE THAT THE PROPERTIES OF THE ASS ESSEE ARE ALSO RECORDED IN THE NAME OF THE SABHA (C ENTRAL COUNCIL) AND THERE IS NO PERSONAL INTEREST CLAIMED BY THE SANT SATGURU IN SUCH PROPERTY. OVER THE YEAR S THE SATGURU HAS NEVER CLAIMED ANY TITLE OVER, OR BENEFI CIAL INTEREST IN, THE PROPERTIES AND THEY HAVE ALWA YS BEEN UTILISED FOR THE PURPOSE OF THE RELIGIOUS COMMUNITY . EVEN IF THE TRUST WAS REVOCABLE, THE PROPERTY WAS NOT TO GO BACK TO THE SATGURU ON REVOCATION. THE CONSTITUT ION AND THE BYE-LAWS ON RECORD INDICATE IN CL. 1(B) THAT WHERE THE PROPERTY WAS GIVEN TO THE SANTSATGURU, IT WAS INTENDED FOR THE COMMON PURPOSE OF FURTHERING THE OBJECTS OF THE SANT SATGURU AND THE CENTRAL COUNCIL HAD THE AUTHORITY TO MANAGE THE PROPERTY. CLAUSE 9 OF THE DOCUMENT STIPULATED THAT THE PROPERTIES WOULD V EST IN THE TRUST AND CL. 25 PROVIDED THAT THE TRUST SHALL BE REVOCABLE AT THE DISCRETION OF THE COUNCIL AND THE TRUSTEES SHALL HOLD OFFICE AT ITS PLEASURE. UPON RE VOCATION THE PROPERTY WAS NOT TO GO BACK TO THE SATGURU AND, AT THE MOST, IN PLACE OF TRUST, THE CENTRAL COUNCI L WOULD EXERCISE AUTHORITY. IT IS ON RECORD THAT THERE HAS BEEN NO SATGURU LONG BEFORE THE PERIOD OF ASSESSMEN T UNDER CONSIDERATION. AS A FACT, THEREFORE, THE TRIBUNAL W AS JUSTIFIED IN HOLDING THAT THE PROPERTY WAS SUBJE CT TO A 8 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 LEGAL LIABILITY OF BEING USED FOR THE RELIGIOUS OR CHARITABLE PURPOSE OF THE SATSANG.ALLINDIA SPINNER S' ASSOCN. VS. CIT (1944) 12 ITR 482 (PC) : TC23R.179A PPLIED; THE SECRETARY OF STATE FOR INDIA IN COUNCIL VS. RADHA SWAMI SATSANG (1945) 13 ITR 520 (ALL) IMPLIED LY APPROVED; CIT VS. RADHA SWAMI SATSANG (1980) 19 CTR (ALL) 345 : (1981) 132 ITR 647 (ALL) :TC23R.644 SET ASIDE. PROPERTIES OF ASSESSEE, A RELIGIOUS INSTITUTION, WERE MEANT FOR THE COMMON PURPOSE OF F URTHERING THE OBJECTS OF THE SANT SATGURU AND VESTE D IN ITS CENTRAL COUNCIL AND INCOME WAS ALWAYS UTILISED FOR THAT PURPOSE AND, THEREFORE, ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SS. 11 AND 12. NOW COMING TO THE OBJECTS AND ACTIVITIES OF THE ASS ESSEE COMPANY, WE FIND THAT THE LD. CIT HELD THAT T HE ACTIVITIES ARE COMMERCIAL IN NATURE IN TERMS OF THE PROVISIONS OF SECTION 2(15) OF THE ACT. AT THIS JU NCTURE WE WOULD LIKE TO REPRODUCE THE SAID PROVISION WHICH RE ADS AS UNDER:- 2[(15) CHARTABLE PURPOSE INCLUDES RELIEF OF THE PO OR, EDUCATION, [YOGA]MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATER SHEDS, FORESTS AND WIL DLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY: 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 ACTIVITY IN T HE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY AC TIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY : PROVIDED FURTHER THAT FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF RECEIPTS FROM ACTIVITIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE P REVIOUS YEAR THE LD. CIT PASSED IMPUGNED ORDER U/S 263 OF THE AC T IS TREATING THE ACTIVITIES OF THE ASSESSEE AS COM MERCIAL IN NATURE IN TERMS OF THE CLAUSE OF SECTION2(15) I. E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY. HOWEVER WE FIND THAT AS PER THE PROVISO TO SECTION 15 ALONG WITH THE SPEECH OF THE FINANCE MINISTER AN D CBDT CIRCULAR NUMBER 11 OF THE 2008 DATED 19 TH DECEMBER 2008 MAKE IT CLEAR THAT ONLY THE INSTITUTI ON CARRYING ON COMMERCIAL ACTIVITIES ARE INTENDED TO B E COVERED BY THE PROVISO, NOT THE GENUINE CHARITABL E INSTITUTIONS. THE ACTIVITY WILL BE DEEMED TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ONLY IF T HE SAME IS CARRIED ON WITH THE INTENTION TO EARN PROFIT. THE C OURTS IN THE SERIES OF DECISION HAVE HELD THAT IT I S AN ACTIVITY CARRIED ON IN A SYSTEMATIC MANNER WITH A VIEW TO EA RN PROFIT, WHICH WILL BE TERMED AS BUSINESS. ACCORDINGLY IN ORDER TO HOLD THAT THE ACTIVITY IS I N THE NATURE OF TRADE, COMMERCE OR BUSINESS THERE S HOULD BE PROFIT MOTIVE. IF DURING THE COURSE OF CARRYING OUT ANY ACTIVITY ON NON-COMMERCIAL LINES, SOME PROFIT IS RECEIVED BY THE TRUST, WHICH IS INCIDENTAL TO THE A CTIVITIES OF THE TRUST, THE SAME SHALL NOT BE CONST RUED TO BE ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OF THE ASSESSEE. HOWEVER, THE ASSESSEE RELIED IN THE ORDER OF THECO-ORDINATE C BENCH OF THIS TRIBUNAL IN THE CASE OF INDIAN CHAMBER OF COMMERCE VS. ITO (ITA NOS. 1491 & 1284/KOL/2012 DATED 02.12.2014. BU T THE LD. CIT DISTINGUISHED THE SAID CASE LAW BY HOLDING THAT IN THAT CASE THE ASSESSEES ACTIVITIES WERE INCIDENTAL AND ANCILLARY TO THE MAIN OBJECTS TO THE TRADE, COMMERCE AND INDUSTRY BUT IN THE CASE ON HAN D THE MAIN ACTIVITIES OF THE ASSESSEE ARE COMMERCIA L IN NATURE. HOWEVER, WE DISAGREE WITH THE VIEW TAKEN BY THE LD. CIT AS THE QUESTIONS BEFORE THE HONBLE IT AT WERE AS FOLLOWS:- 2. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE C ASE OF THE APPELLANT THE LD.CIT(A) ERRED IN CONFIRM ING THE ALLEGATION OF THE LD. AO THAT THE APPELLANTS ACTIV ITIES OF CONDUCTING THE ENVIRONMENT MANAGEMENT CENT ERS, MEETINGS, CONFERENCES & SEMINAR AND THE ISSUANCE OF CERTIFICATE OF ORIGIN WERE ALL IN THE NATURE OF BU SINESS CARRIED ON SYSTEMATICALLY AND CONTINUOUSLY WITH A M OTIVE TO EARN PROFIT FROM THE SAME. 9 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 3. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT AND IN LAW, THE LD. CIT(A) ERRE D IN HOLDING THAT DECISION OF THE HON'BLE DELHI HC DATED 19TH SEPTEMBER, 2011, IN THE CASE OF DIT (EXEMPTIO NS) VS. INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND THAT THE CASE OF THE INSTITUTE OF CHARTERED ACCOUN TANT OF INDIA IN WRITE PETITION 1927 OF 2010ARE NOT APPLICA BLE TO THE CASE OF THE APPELLANT INASMUCH THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE CASE OF THE APPELL ANT. 4. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANTS ACTIVITIES OF CONDUCTING THE ENVIRONMEN T MANAGEMENT CENTERS, METTINGS, CONFERENCES & SEMIN ARS AND THE ISSUANCE OF CERTIFICATE OF ORIGIN WERE NOT INCIDENTAL TO THE MAIN OBJECT OF THE APPELLANT WHIC H WAS CHARITABLE IN NATURE. 9. FROM THE ABOVE FACTS, WE FIND THAT THERE WAS NO QUESTION TO DECIDE BEFORE THE THEN HONBLE ITAT WHI CH IS ARISING IN THE INSTANT CASE WHETHER THE ACTIVITIES OF THE INSTANT ASSESSEE ARE INCIDENTAL/ ANCILLARY T O THE MAIN OBJECTS TO THE TRADE, COMMERCE AND INDUSTRY OR MAIN OBJECTS ARE IN THE NATURE OF TRADE, COMMERCE AND INDUSTRY. THEREFORE, IN OUR CONSIDERED VIEW THE FAC TS OF THE CASE ARE SQUARELY APPLICABLE OF CASE OF I NDIAN CHAMBER OF COMMERCE VS. ITO(SUPRA), WHEREIN IT WAS HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARIT ABLE IN NATURE. THE RELEVANT PORTION OF THE ORDER IS REP RODUCED BELOW:- 30. HENCE IN VIEW OF ALL THE ABOVE, CONCLUDING THI S ISSUE WE HOLD THAT THE PURPOSE FOR WHICH THE ASSE SSEE ASSOCIATION, I.E. THE INDIAN CHAMBER OF COMMERCE WA S ESTABLISHED IS A CHARITABLE PURPOSE WITHIN THE MEANING OF S. 2(15) OF THE ACT. THE ASSESSEE IS CAR RYING OUT THE SAID ACTIVITIES WHICH ARE INCIDENTAL TO THE MAIN OBJECT OF THE ASSOCIATION AND WHICH ARE CONDUC TED ONLY FOR THE PURPOSE OF SECURING THE MAIN OBJEC T WHICH IS THE ADVANCEMENT AND DEVELOPMENT OF TRADE A ND COMMERCE AND INDUSTRY IN INDIA. THE ACTIVITIES A RE NOT IN THE NATURE OF BUSINESS AND THERE IS NO MOTIV E TO EARN PROFIT. THE INCOME ARISING TO THE ASSESSE E IS ONLY INCIDENTAL AND ANCILLARY TO THE DOMINANT OBJECT FOR THE WELFARE AND COMMON GOOD OF THE COUNTRYS TRADE , COMMERCE AND INDUSTRY. THE PROFITS EARNED ARE UTILI ZED ONLY FOR THE PURPOSE OF FEEDING ITS DOMINANT OB JECT AND NO PART OF SUCH PROFIT IS DISTRIBUTED AMONGST I TS MEMBERS. PROFIT MAKING IS NOT THE OBJECT OF THE ASSESSEE. PR OFIT IS MERELY A BY PRODUCT WHICH RESULT INCIDENTAL LY IN THE PROCESS OF CARRYING OUT THE CHARITABLE PURPOSE. THU S, THE INCOME OF THE ASSESSEE FOR AY 2008-09 IS EXE MPT FROM TAX U/S. 11 OF THE ACT. ACCORDINGLY, THE APPEA L OF ASSESSEE IS ALLOWED. 35. IN VIEW OF THE ABOVE, WE THUS NOW TURN TO EXAMI NE AND ANALYZE IN FULL DETAILS THE PARTICULAR FACT OF THE PRESENT CASE. THAT THE ASSESSEE ASSOCIATION IS A CH ARITABLE INSTITUTION, DULY REGISTERED AS SUCH US.12 A OF THE ACT, CARRYING IN ITS MAIN OBJECT OF DEVELOPMENT OF TRADE, INDUSTRIES AND COMMERCE. THE MAIN OBJECTS FO R WHICH THE ASSOCIATION CAME INTO EXISTENCE, ARE CLEA RLY SET OUT IN CLAUSE 3 OF THE MEMORANDUM OF ASSOCI ATION WHICH DULY RECORDS AND READS AS UNDER:- 3(A) TO PROMOTE AND PROTECT THE TRADE, COMMERCE AN D INDUSTRIES AND IN PARTICULAR THE TRADE, COMMERCE AND INDUSTRIES IN OR WITH WHICH INDIANS ARE ENGAGED OR CONCERNED THE ACTIVITIES OF CONDUCING ENVIRONMENT MANAGEMENT CENTRE, MEETINGS, CONFERENCES & SEMINAR AND ISSUANCE OF CERTIFICATE OF ORIGIN, BEING THE ACTIVITIES STATED TO BE SERVICES IN RELATION TO TR ADE, COMMERCE OR BUSINESS WERE ALL WELL COVERED BY THE MAIN OBJECT BEING FULLY CONNECTED, INCIDENTAL AND A NCILLARY TO THE MAIN PURPOSE AND WERE CONDUCTED SOL ELY FOR THE EMPOWERMENT, BETTERMENT AND FOR CREATING AW ARENESS AMONGST THE INDUSTRIALISTS IN ORDER TO BRIN G ABOUT THE DEVELOPMENT OF TRADE AND INDUSTRIES IN IN DIA. FURTHER IT IS TO BE NOTICED THAT THE MEMORANDU M HAS ALSO SPECIFICALLY AUTHORIZED THE CHAMBER TO DO ALL OTHER THINGS AS MAY BE CONDUCTIVE TO THE DEVELOPME NT OF TRADE, COMMERCE AND INDUSTRIES, OR INCIDENTAL TO AT TAINMENT OF THE ABOVE OBJECTIVES OR ANY OF THEM.TH US IT WAS ONLY FOR THE PURPOSE OF SECURING ITS PRIMARY AI MS OF PROPER DEVELOPMENT OF BUSINESS IN INDIA THAT THE ASSESSEE WAS TAKING THE SAID ANCILLARY STEPS. THE S AID ACTIVITIES WERE NOT CARRIED OUT INDEPENDENT OF THE MAIN PURPOSE OF THE ASSOCIATION OF THE INSTITUTION BEING THE DEVELOPMENT AND PROTECTION OF TRADE. THERE WAS NO 10 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 INDEPENDENT PROFIT MOTIVE IN ANY OF THE SAID ACTIVI TIES. THE SURPLUS ARISING OUT OF THE SAME WAS MEREL Y INCIDENTAL TO THE MAIN OBJECT TO CHARITY. THE MAJOR ITY OF THE RECEIPTS IN THE SAID ACTIVITIES WERE OUT OF THE SPONSORSHIPS AND DONATIONS. THE EXPENSES INCURRED O N THE SAID ACTIVITIES AS AND WHEN INCURRED WERE ALL SEPARATELY DEBITED TO THE SAID ACCOUNTS AND THE BAL ANCE WAS SHOWN AS SURPLUS OVER RECEIPTS. THUS IN VI EW OF THE ABOVE IT IS CLEAR THAT THE ALLEGED ACTIVITIES W ERE ALL MERELY INCIDENTAL TO THE MAIN OBJECT OF THE ASSESSEE AND THE PREDOMINANT OBJECT OF THE ASSOCIATION BEING THE PROMOTION DEVELOPMENT AND PROTECTION OF TRADE AND COMMERCE WHICH IS AN OBJECT OF GENERAL PUBLIC UTILI TY, IT CAN NEVER BE THE CASE THAT IT IS ENGAGED IN BUSINESS TRADE OR COMMERCE OR IN ANY SERVICE IN RELATION T O BUSINESS, TRADE OR COMMERCE. THE INDIVIDUAL NATUR E AND PURPOSE OF THE SPECIFIC ACTIVITIES, IT IS STATED TH AT THE ACTIVITIES HELD BY AO AND THE (A) TO BE BUSI NESS IN NATURE, WERE AS FOLLOWS:- A) MEETINGS, CONFERENCE & SEMINARS B) ENVIRONMENT MANAGEMENT CENTRE C) FEES FOR CERTIFICATE OF ORIGIN 38. IN VIEW OF THE ABOVE DECISION, WE ARE OF THE CO NSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS , INTERPRETING THE DEFINITION OF CHARITABLE PURPOS E AS LAID OUT IN SEC. 2(15) OF THE ACT AND ALSO THE DEFI NITION OF BUSINESS IN RELATION TO THE SAID SECTIO N AMPLY REVEALS THAT THE THEORY OF DOMINANT PURPOSE HAS ALW AYS, ALL THROUGH THE YEARS, BEEN UPHELD TO BE THE DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUT IONS CHARITABLE IN NATURE OR NOT. WHERE THE MAIN OB JECT OF THE INSTITUTION WAS CHARITABLE IN NATURE, THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF THE SAID, BEING INCIDENTAL OR ANCILLARY TO THE MAIN OBJ ECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIE D OUT WITH NON MEMBERS, WERE ALL HELD TO BE CHARITABLE IN NA TURE. HON'BLE APEX COURT IN THE EARLIEST CASE OF AN DHRA CHAMBER OF COMMERCE (SUPRA) HAD LAID OUT THE PRINCI PLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION W AS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, I T WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL AND ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MA IN PURPOSE, WAS PROFITABLE IN NATURE, IN OUR VIEW T HE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSES REMAINED UNALTERED EVEN ON AMENDMENT IN T HE SEC. 2(15) OF THE ACT W.E.F. 1.4.2009 THOUGH THE R ESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN. ACCO RDINGLY, IN THE GIVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN D ETAIL, THE ASSESSEE ASSOCIATION PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY AN D IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MA IN PURPOSE WAS PROFITABLE IN NATURE. HENCE, ASSESSE E IS NOT HIT BY NEWLY INSERTED PROVISO TO S. 2(15) OF THE AC T. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. BESIDES THE ABOVE, WE ALSO RELY IN THE CASE OF THE CIT VS. FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY (1981) 130 ITR 186 (SC) WHERE THE HONBLE SUPREME COURT HAS HELD AS UNDER : WHATEVER RESERVATIONS ONE MAY HAVE REGARDING THE C ORRECTNESS OF THE INTERPRETATION OF THE EXCLUSIONAR Y CLAUSE IN THE DEFINITION OF CHARITABLE PURPOSE' IN S. 2(15) OF THE ACT, THERE CAN BE NO DOUBT THAT TH E MAJORITY DECISION IN THE ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURES ASSN.(1979) 13 CTR (SC) 378 : (1980) 1 21 ITR 1 (SC) : TC23R.195 IS BINDING ON THE BENCH. UND OUBTEDLY, THE ACTIVITIES OF THE ASSESSEE IN REGARD TO HOLDING OF THE CONFERENCE OF THE AFRO-ASIAN ORGANIS ATION IN THE RELEVANT ACCOUNTING YEAR WERE FOR THE ADVANCEMENT OF THE DOMINANT OBJECT AND PURPOSE OF T HE TRUST, VIZ., PROMOTION, PROTECTION AND DEVELOPME NT OF TRADE, COMMERCE AND INDUSTRY IN INDIA. THE INCOME D ERIVED BY THE ASSESSEE FROM SUCH ACTIVITIES WAS EXE MPT UNDER R/W S.11(1)(A) S. 2(15). THERE IS A DISTINCTI ON BETWEEN THE 'PURPOSE' OF A TRUST AND 'POWERS' CO NFERRED UPON THE TRUSTEES AS INCIDENTAL TO THE CARRYING OUT OF THE PURPOSE. FOR INSTANCE, CL. 3(V) ENABLES THE ESTABLISHMENT AND SUPPORT OF ASSOCIATIONS, INSTITUT IONS, FUNDS, TRUSTS AND CONVENIENCE CALCULATED TO B ENEFIT THE EMPLOYEES AND THEIR DEPENDENTS, FOR MAKING PROV ISION FOR GRANT OF PENSION AND ALLOWANCES, ETC. THE 11 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 FRAMING OF SUCH EMPLOYEE BENEFIT SCHEME IS ESSENTIA L AND NECESSARY FOR THE PROPER FUNCTIONING OF THE ORGANISATION AND IS INCIDENTAL TO THE CARRYING OUT OF THE PURPOSE FOR WHICH IT IS CONSTITUTED. IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTION IS CHARI TABLE, ANY OTHER OBJECT WHICH IS MERELY ANCILLARY O R INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE, WOUL D NOT PREVENT THE TRUST OR THE INSTITUTION FROM BEI NG A VALID CHARITY. LIKEWISE, CL.3(Z1) AND (Z2) WHICH PE RMIT THE ESTABLISHMENT OF A TRUST OR TRUSTS, APPOIN TMENT OF TRUSTEES THEREOF FROM TIME TO TIME AND THE VESTING OF FUNDS OR SURPLUS INCOME OR ANY PROPERTY OF THE A SSESSEE IN THE TRUSTEES, ARE NOTHING BUT POWERS CONFERRED O N THEM FOR THE PROPER FINANCIAL MANAGEMENT OF THE A FFAIRS OF THE TRUST WHICH ARE INCIDENTAL OR ANCILLARY TO T HE MAIN PURPOSE OF THE TRUST.ADDL. CIT VS. SURAT A RT SILK CLOTH MANUFACTURERS ASSOCIATION (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1(SC) : TC23R.195 FOLLOWED. THE MAJORITY DECISION IN SURAT ART SILK MANUFACTURE RS CASE HAS THE EFFECT OF NEUTRALISING THE RADICAL CHANGES BROUGHT ABOUT BY PARLIAMENT IN THE SYSTEM OF TAXATI ON OF INCOME AND PROFITS OF CHARITIES, WITH PARTICU LAR REFERENCE TO 'OBJECTS OF GENERAL PUBLIC UTILITY' TO PREVENT TAX EVASION, BY DIVERSION OF BUSINESS PROF ITS TO CHARITIES. IT IS THE VAGUENESS OF THE FOURTH HEAD O F CHARITY 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILI TY' THAT IMPELLED PARLIAMENT TO INSERT THE RESTRICTIVE WORDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT'. IT WAS CLEARLY INCONSISTENT WITH THE SETTLED PRINCI PLES TO HOLD IN THE AFORESAID CASE THAT IF THE DOMI NANT OR PRIMARY OBJECT OF A TRUST WAS CHARITY' UNDER THE F OURTH HEAD ANY OTHER OBJECT OF GENERAL PUBLIC UTIL ITY', IT WAS PERMISSIBLE FOR SUCH AN OBJECT OF GENERAL PUBLI C UTILITY, TO AUGMENT ITS INCOME BY ENGAGING IN TRA DING OR COMMERCIAL ACTIVITIES. IN RETROSPECT, IT SEEMS THAT IT WOULD HAVE BEEN BETTER FOR PARLIAMENT TO HAVE D ELETED THE FOURTH HEAD OF CHARITY 'ANY OTHER OBJECT OF GEN ERAL PUBLIC UTILITY' FROM THE AMBIT OF THE DEFINITI ON OF CHARITABLE PURPOSE' WHILE ENACTING S. 2(15) RATHER THAN INSERTED THE WORDS 'NOT INVOLVING THE CARRYIN G ON OF ANY OTHER ACTIVITY FOR PROFIT', THEREBY CREATING AL L THIS LEGAL CONUNDRUM'. WHEN THE GOVERNMENT HAD NO T ACCEPTED THE RECOMMENDATION OF THE DIRECT TAX LAWS COMMITTEE IN CHAPTER 2 (INTERIM REPORT, DECEMBER, 1977) FOR THE DELETION OF THE WORDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFITS', BY SU ITABLE LEGISLATION, IT WAS IMPERMISSIBLE FOR THIS COURT BY A PROCESS OF JUDICIAL CONSTRUCTION TO ACHIEVE THE SAME RESULT. IT IS WRONG TO THINK THAT ALL SPRINGS OF CH ARITY IN INDIA WILL DRY UP IF TRUE EFFECT IS GIVEN TO S. 2(15) IN ACCORDANCE WITH THE MINORITY JUDGMENT IN THE SURAT ART SILK CLOTH MANUFACTURERS' ASSOCIATION'S CASE. P EOPLE WHO ARE TRULY CHARITABLE DO NOT THINK OF THE TAX BE NEFITS WHILE MAKING CHARITIES. ONE MUST REALISE THA T EVEN THE POOR WHO DO NOT PAY INCOME TAX CAN BE CHARITABL E AND THEIR CHARITIES MADE AT GREAT PERSONAL INCONVENIENCE ARE COMMENDABLE INDEED. ONE NEED NOT GO IN SEARCH OF CHARITABLE PERSONS AMONGST THE TAXPAYERS ONLY. STILL THE MAJORITY VIEW HAS GOT TO BE FOLLOWED NOW. THE MAIN OBJECT OF ASSESSEE BEING PROMOTION, PROTEC TION AND DEVELOPMENT OF TRADE, COMMERCE, AND INDUST RY IN INDIA, IT WAS AN OBJECT OF GENERAL PUBLIC UTILIT Y AND INCOME DERIVED FROM ACTIVITIES FOR ADVANCING THE DOMINANT OBJECT WAS EXEMPT UNDER S. 11. 9. SINCE THE FACTUAL MATRIX OF THE APPELLANTS CASE FOR THE AY 2012-13 IS IDENTICAL WITH THAT INVOLVED IN AY 2011-12, WE HAVE NO HESITATION IN HOLDING THAT THE RATIO LAID DOWN IN THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUN AL HOLDS GOOD AND APPLIES TO THE YEAR UNDER CONSIDERATION AS WELL. APPLYING THE SAID DECI SION WE HOLD THAT THE APPELLANTS ACTIVITY OF HOLDING TRADE FAIRS, EXHIBITIONS AND CONFERENCES WAS NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THEREFORE THERE WAS NO VIOLATION OF SECTION 2(15) OF THE ACT. ACCORDINGLY WE 12 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 HOLD THAT THE LOWER AUTHORITIES WERE LEGALLY UNJUST IFIED IN NOT GRANTING THE APPELLANT THE BENEFIT OF SECTION 11 OF THE ACT. 10. WE ALSO NOTE THAT DURING THE RELEVANT YEAR THE GROSS RECEIPTS FROM THE ACTIVITIES OF HOLDING TRADE FAIRS, EXHIBITIONS AND CONFERENCES FR OM MEMBERS AND NON-MEMBERS TOGETHER TOTALLED RS.3,94,70,967/-. THERE AGAINST THE EXPEND ITURE INCURRED WAS RS.3,03,60,941/- RESULTING IN SURPLUS OF RS.91,10,026/- WHICH HAS BE EN ASSESSED IN THE IMPUGNED ORDER AS BUSINESS INCOME. IN THE COURSE OF APPELLATE PROCEED INGS THE LD. AR FURNISHED THE BREAK-UP OF SUCH RECEIPTS, EXPENSES AND SURPLUS AS FOLLOWS: PARTICULARS CASH BASIS ACCRUAL BASIS INFLOW FROM FAIRS ETC. MEMBERS NON-MEMBERS (OTHERS) 3,43,28,080 49,96,517 3,44,74,450 49,96,517 TOTAL 3,93,24,597 3,94,70,967 OUTGO ON A/C OF FAIRS ETC MEMBERS PORTION NON-MEMBERS (OTHERS) 2,87,18,963 41,80,099 3,28,99,062 2,65,17,636 38,43,305 3,03,60,941 NET SURPLUS 64,25,534 91,10,026 11. WE NOTE THAT EVEN THOUGH THE APPELLANT REALIZED SURPLUS FROM ORGANIZING FAIRS & EXHIBITIONS YET THERE WAS EXPRESS UNDERSTANDING BET WEEN THE APPELLANT AND THE PARTICIPANTS THAT THE SURPLUS, IF ANY, REMAINING AFTER MEETING T HE COST AND EXPENSES FOR HOLDING THE EVENTS WOULD BE TRANSFERRED TO INFRASTRUCTURE FUND OF THE APPELLANT. A SAMPLE COPY OF THE INVOICE RAISED BY THE APPELLANT ON THE PARTICIPANT FROM WHO M THE CONTRIBUTION WAS RECEIVED WAS FILED FROM WHICH WE NOTE THAT THE FOLLOWING NOTE WAS APPE NDED : CREDAI BENGAL IS A CHARITABLE NON-PROFIT ORGANIZA TION. THE TARIFFS ARE BASED ON THE REIMBURSEMENT OF RECURRING AND NON-RECURRING EXPENS ES BASED ON ESTIMATED EXPENSES FOR THE EXHIBITION. THE SURPLUS, IF ANY, FROM THE EXHIBITIO N SHALL FORM PART OF OWN INFRASTRUCTURE FUND OF THE ASSOCIATION FOR MUTUAL BENEFIT OF MEMBERS BY CREATION OF OWN INFRASTRUCTURE AND FACILITIES AND BY REDUCTION IN COSTS TO THE MEMBERS IN FUTURE. 13 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 12. WE THEREFORE FIND THAT THE SURPLUS GENERATED FR OM HOLDING THE EVENTS WAS AN UN- INTENDED SURPLUS WHICH THE CONTRIBUTOR AT THE OUTSE T HAD AGREED TO APPROPRIATE AS THEIR CONTRIBUTION TO OWN INFRASTRUCTURE FUND OF THE AP PELLANT AND THEREFORE IT WAS CORPUS IN NATURE. VIEWED FROM ANY ANGLE THEREFORE THE SURPLUS OF RS.91,10,026/- WAS NOT BEARING INCOME CHARACTER IN THE HANDS OF THE APPELLANT AND THEREFORE THE LOWER AUTHORITIES WERE UNJUSTIFIED IN ASSESSING THE SAME AS BUSINESS INCOM E OF THE APPELLANT. FOR THE REASONS SET OUT IN THE FOREGOING THEREFORE THE ADDITION OF RS.91,10 ,026/- IS DELETED AND HENCE, GROUND NOS. 1 TO 3 ARE ALLOWED. 13. THE NEXT GROUND OF APPEAL OF THE ASSESSEE IS AG AINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ACTION OF THE A.O. IN TREATING THE C ORPUS DONATION OF RS. 17,50,000/- IN THE FORM OF ADMISSION FEES FROM ITS MEMBERS AS NOT EXEM PT U/S 11(1)(D) OF THE ACT. 14. BRIEF FACTS ARE THAT THE APPELLANT HAD CREATED THE MEMBERSHIP ADMISSION FEES OF RS. 17,50,000/- RECEIVED BY IT AS CORPUS FUNDS TO THE R ESERVE FUND AND CLAIMED EXEMPTION U/S 11(1)(D) OF THE ACT WHEN CONFRONTED BY THE A.O. THE APPELLANT FILED COPIES OF LETTERS OF CORPUS DONATION RECEIVED FROM MEMBER / ENTRANTS AND DETAILS OF ADMISSIONS FEES AND EXPLAINED THAT THE MEMBERSHIP / ADMISSION FEES RECE IVED BY THE APPELLANT INSTITUTION WAS CORPUS DONATION THOUGH IT WAS BROUGHT TO THE NOTICE OF THE A.O. THAT AS PER SECTION 12(1) OF THE ACT, DONATION TOWARDS CORPUS FUNDS OF A CHARITA BLE INSTITUTION SHALL BE EXCLUDED FROM VOLUNTARY CONTRIBUTION AND SUCH CORPUS DONATIONS WO ULD NOT FORM PART OF THE INCOME OF THE CHARITABLE INSTITUTION WAS NOT ACCEPTED BY THE A.O. IT WAS ALSO BROUGHT TO THE NOTICE OF THE A.O. THAT THIS ADMISSION WERE VOLUNTARILY AND TOWAR DS CORPUS FUND EXEMPTION U/S 11(1)(D) IS ALSO AVAILABLE TO THE APPELLANT. HOWEVER, THE A.O. TREATED THE SAID CORPUS DONATION IN REVENUE AND DISALLOWED THE SAME. ON APPEAL, THE LD. CIT(A) CONFIRMING THE ORDER OF THE A.O. AGGRIEVED THE ASSESSEE IS BEFORE US. WE NOTE T HAT THE ASSESSEE IS NO LONGER RES-INTEGRA. WE NOTE THAT THE PRECISE QUESTION AROSE IN THE CASE OF CIT VS DIVINE LIGHT MISSION 146 TAXMAN 653 AS UNDER: 14 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 12. WE NOW TAKE UP THE ONLY REMAINING QUESTION (QUESTI ON NO. 1 IN PARAGRAPH 3) WITH REGARD TO INCOME RECEIVED BY THE ASSESSEE BY WAY OF SUBSCRIPT ION FROM ITS MEMBERS AND, THAT IS WHETHER SUCH INCOME WAS ASSESSABLE TO TAX UNDER THE INCOME-TAX A CT, 1961 OR WAS EXEMPTED UNDER SECTION 11. 13. THE AMOUNT RECEIVED BY WAY OF SUBSCRIPTION AS WELL AS VOLUNTARY CONTRIBUTIONS CAME TO BE CONSIDERED IN THE CASE OF TRUSTEES OF SHRI KOT HIND U STREE MANDAL V. CIT [1994] 209 ITR 396 1 AND IN THE CASE OF CIT V. MADHYA PRADESH ANAJTILHANVYAPARI MAHASANGH [1988] 171 ITR 677 2 . 14. THE CONTRIBUTIONS ARE VOLUNTARY AND ARE MADE WILLI NGLY AND WITHOUT COMPULSION. MONEY IS TO BE GIFTED OR IS GIVEN GRATUITOUSLY WITHOUT CONSID-ERAT ION. THESE TESTS SHOULD BE SATISFIED FOR CONTRIBUTI ON. HOWEVER, WHEN A PERSON PAYS MEMBERSHIP FEE OR SUBSC RIPTION TO A SOCIETY OR A TRUST, HE DOES NOT MAKE A GIFT OF THE MEMBERSHIP FEE OR SUBSCRIPTION AMOUNT TO THE SOCIETY. THE AMOUNT OF SUBSCRIPTION PAID BY A MEMBER TO THE SOCIETY CAN NEVER BE CONSIDERED AS GRATUITOUS PAYMENT MADE BY THE MEMBER TO THE SOCIETY OR AS A PAYMENT WITHOUT CONSIDERATION. 15. IN THE CASE OF TRUSTEES OF SHRI KOT HINDU STREE MA NDAL 'S CASE (SUPRA), HIGH COURT OF BOMBAY EXAMINED A SIMILAR QUESTION. VOLUNTARY CONTRIBU-TIO NS DO NOT MEAN ANNUAL SUBSCRIPTIONS. IT AMOUNTS TO GIFT MADE FROM DISINTERESTED MOTIVES FOR BENEFIT OF OTHERS. IN SOCIETY OF WRITERS TO THE SIGNET V. IRC [1886] 2 TC 257 (C SESS), THE COURT HELD THAT THE E NTRANCE FEES AND SUBSCRIPTIONS PAID BY ENTRANTS TO A SOCIETY OR INSTITUTION AS A CONDITION PRECEDENT T O THEIR MEMBERSHIP AND AS THE PRICE OF ADMISSION TO THE PRIVILEGES AND BENEFITS OF THE SOCIETY OR INSTI TUTION ARE GIVEN UNDER A CONTRACT AND ARE NOT VOLUNTARY. IN VIEW OF THE BOMBAY HIGH COURT, MEMBER SHIP AND SUBSCRIPTION AMOUNTS RECEIVED BY THE ASSESSEE-TRUST/SOCIETY FROM ITS MEMBERS CANNOT BE C HARACTERIZED AS VOLUNTARY CONTRIBUTION WITHIN THE MEANING OF THE EXPRESSION 'FUND' IN SECTION 12 OF T HE INCOME-TAX ACT, 1961. 16. THUS THERE IS A DISTINCTION BETWEEN VOLUNTARY CONT RIBUTION AND SUBSCRIPTION. WHEN A SUM IS PAID IN THE NATURE OF GIFT OR A GRATUITOUS PAYMENT TO THE T RUST WITHOUT ANY CONSIDERATION IT WOULD BE CONSIDER ED AS VOLUNTARY CONTRIBUTION. SUBSCRIPTION IS NOT TO B E TREATED AS VOLUNTARY CONTRIBUTION. 17. VOLUNTARY CONTRIBUTION IS AN ACT NOT COUPLED WITH COMPULSION. ONE MAY CONTRIBUTE OR ONE MAY NOT CONTRIBUTE. THEREFORE, IT IS RIGHTLY SAID THAT IT I S IN THE NATURE OF A GIFT. BUT SO FAR AS SUBSCRIPTI ON IS CONCERNED, IT IS WITH SOME COMPULSION. IF ONE WANTS TO BECOME A MEMBER OF A TRUST AND IF HE IS REQUIRED TO PAY SUBSCRIPTION, AS IN THE INSTANT CAS E, THEN, IT AMOUNTS TO COMPULSION. SOMETIMES IT BECOMES A QUESTION OF PRESTIGE I.E., TO SAY THAT A PERSON IS A MEMBER OF A CHARITABLE INSTITUTION. IF A PERSON HAD MADE VOLUNTARY CONTRIBUTION TO THE SAID TRUST, THEN ON PAYMENT OF SUCH CONTRIBUTION HE DOES NOT BECOME A MEMBER. THE MEMBERSHIP MAY BE COU PLED WITH BENEFITS OR DUTIES AND THAT ALL DEPENDS ON THE NATURE OF THE TRUST AND TERMS AND CO NDITIONS OF THE CONTRACT. 18. SOMETIMES MEMBERS ARE GETTING CERTAIN PRIVILEGES O R RIGHTS. THEREFORE, SUCH SUBSCRIPTION FEE HAS BEEN CONSIDERED AS INCOME OF INSTITUTIONS. 19. COMING TO INCOME DERIVED FROM PROPERTY AND PROPERT Y HELD UNDER TRUST, ONE HAS TO CONSIDER THE MEANING OF THE WORD 'INCOME'. EVEN BY AN ACT (FINAN CE ACT NO. 1972) WITH EFFECT FROM 1-4-1973 VOLUNTARY CONTRIBUTION RECEIVED BY A TRUST HAS BEEN INCLUDED IN THE DEFINITION OF 'INCOME'. THE AMOUNT OF FEE COVERS MEMBERSHIP OR SUBSCRIPTION, WHICH IS NOT INCLUDED IN INCOME. HOWEVER, THE TERM IS VERY WIDE. IT REFERS TO RECEIVING MONEY OR MONETARY BENE FITS, PERQUISITE, ETC. THEREFORE, IT IS CERTAIN THA T IT IS AN INCOME. 20. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT IN VIEW OF ALL INDIA SPINNERS' ASSOCIATION V. CIT [1944] 12 ITR 482 (PC) THE SUBSCRIPTION BE CONSIDERED AS INCOME. 21. IN THE CASE OF CIT V. COTTON TEXTILES EXPORT PROMO TION COUNCIL [1968] 67 ITR 539 , BOMBAY HIGH COURT EXAMINED THE QUESTION. 22. THE COTTON TEXTILES EXPORT PROMOTION COUNCIL WAS E STABLISHED WITH ITS PRINCIPLE OBJECT, AS INDICATED IN THE MEMORANDUM OF ASSOCIATION, TO PROM OTE, SUPPORT, PROTECT, MAINTAIN AND INCREASE THE EXPORT OF CLOTH AND YARN. IT UNDERTOOK MANY OTHER A CTIVITIES WITH THE IDEA, AS ITS NAME IMPLIED, OF 15 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 PROMOTING THE EXPORT IN COTTON TEXTILES FROM THIS C OUNTRY. MARKET STUDIES, COLLECTION OF STATISTICS AN D OTHER INFORMATION REGARDING THE MANUFACTURE OR TRAD E IN CLOTH AND YARN IN VARIOUS COUNTRIES, PROPAGATING INFORMATION USEFUL TO THAT TRADE, LAYIN G DOWN STANDARDS OF QUALITY IN PACKING AND SO ON. WHERE THE ACTIVITIES WITH REGARD TO INCOME AND PROP ERTY, IN THE FORM OF MANDATE FOR APPLICATION OF INCOME AND PROPERTY WAS SOLELY FOR THE PROMOTION OF THE OBJECTS OF THE SOCIETY, AS INDICATED IN THE MEMORANDUM OF ASSOCIATION AND BY WHATEVER METHOD PR OPERTY OR INCOME WAS TO BE UTILIZED BY WAY OF DIVIDENDS, BONUS OR OTHERWISE OR BY WAY OF PROFITS ETC. FOR THIS, THERE WERE TWO SOURCES ABOUT THE FUNDS FOR ITS ACTIVITIES, NAMELY, GRANTS MADE BY TH E GOVERNMENT AND SUBSCRIPTIONS OF ITS MEMBERS. SECTION 4(3)(I) OF THE INCOME-TAX ACT, 1922 WAS FOR GRANT OF EXEMPTION. SECTION 4(3)(I) READS AS UNDER : 'SUBJECT TO THE PROVISIONS OF CLAUSE ( C ) OF SUB-SECTION (1) OF SECTION 16, ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OR OTHER LEG AL OBLIGATIONS WHOLLY FOR RELIGIOUS OR CHARITABLE PURPOSES, IN SO FAR AS SUCH INCOME IS APPLIED OR ACCUMULATED FOR APPLICATION TO SUCH RELIGIOUS OR CHARITABLE PURPOSE S AS RELATE TO ANYTHING DONE WITHIN THE TAXABLE TERRITORIES, AND IN THE CASE OF PROPERT Y SO HELD IN PART ONLY FOR SUCH PURPOSES, THE INCOME APPLIED OR FINALLY SET APART F OR APPLICATION THERETO.' THUS INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OR OTHER LEGAL OBLIGATIONS CAME TO BE CONSIDERED BY THE COURT. IN THE INSTANT CASE, WE ARE NOT REQUI RED TO CONSIDER WHETHER THE ASSESSEE CAN BE SAID TO BE A CHARITABLE TRUST OR NOT AS IT IS ADMITTED POSI TION AND NOT IN QUESTION. BUT THE QUESTION IS ONLY WITH REGARD TO INCOME DERIVED FROM PROPERTY HELD UNDER T RUST IS THERE OR NOT. BY WAY OF SUBSCRIPTION, IF TH E AMOUNT IS RECEIVED, CAN IT BE SAID THAT THAT IS INC OME DERIVED FROM PROPERTY HELD UNDER TRUST. THE BOMBAY HIGH COURT OBSERVED THAT THE QUESTION IS BEY OND CONTROVERSY IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. ANDHRA CHAMBER OF COMMERCE [1965] 55 ITR 722 . UNDER ALMOST IDENTICAL PROVISIONS THE ANDHRA CHAMBER OF COMMERCE WAS CONSTITUTED AND WHEN A SIMILAR ATTEMPT TO TAX THAT CHAMBER WAS MADE, ONE OF THE QUESTIONS WHI CH AROSE WAS WHETHER THE OBJECTS AND PURPOSES OF THE CHAMBERS OF COMMERCE SHOWED THAT IT WAS FOR GEN ERAL PUBLIC UTILITY. CONSIDERING VARIOUS DECISIONS, THE BOMBAY HIGH COURT HELD THAT TRIBUNAL WAS RIGHT IN HOLDING THAT THE PROPERTY HELD BY THE ASSESSEE-COMPANY WAS FOR AN OBJECT OF GENERAL P UBLIC UTILITY AND WAS VOLUNTARY FOR CHARITABLE PURPOSES. THE QUESTION POSED BEFORE THE COURT WAS U PON THE WORDS USED IN SUB-SECTION (3) OF SECTION 4 'ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST' AND ITS INTERPRETATION. ON BEHALF OF THE REVENUE, IT WAS CONTENDED THAT IT IS NOT THE REQUIREMENT OF SUB-SECTION THAT THE INCOME OF THE ASSESSEE SHOULD BE HELD UNDER TRUST BUT THAT THE INCOME SHOULD BE DERI VED FROM 'PROPERTY WHICH HELD UNDER TRUST'. IN THAT CASE, ALL THE COMPANY RECEIPTS IN THE SHAPE OF PROP ERTY WAS THE INCOME WHICH THEY RECEIVED FROM THE GRANTS MADE BY THE CENTRAL GOVERNMENT AND A COMPARA TIVELY SMALL AMOUNT FROM THE SUBSCRIPTIONS FROM ITS MEMBERS. THERE IS NO 'PROPERTY' AS SUCH HE LD IN TRUST. THE OTHER CONTENTION WAS THAT WHATEVER MAY BE SAID OF THE INCOME RECEIVED FROM GOVERNMENT BY WAY OF GRANT, THE SUBSCRIPTION WHICH THIS COMPANY RECEIVES FROM ITS MEMBERS WAS NOT INCOME FO R A CHARITABLE PURPOSE. IT WAS FURTHER SUBMITTED THAT THE PROPERTY HELD UNDER TRUST IN THAT CASE FRO M WHICH THE INCOME OF THIS COMPANY IS BEING DERIVED IS THE BUSINESS OF THE COMPANY ITSELF. THE WORD 'PR OPERTY' INCLUDES THE BUSINESS OF THE COMPANY. ALL THE INCOME WHICH THE COMPANY DERIVED OR RECEIVED IS IN THE SHAPE OF GRANTS AND SUBSCRIPTIONS FROM MEMBERS WHICH CANNOT POSSIBLY HAVE RECEIVED BY THE COMPANY EXCEPT FROM ITS BUSINESS. IT WAS, THEREFORE, SUBMITTED THAT THE ENTIRE INCOME OF THE COMPANY MUST BE HELD TO BE THE INCOME DERIVED FROM ITS BUSINESS, WHICH IS ITS PROPERTY. THE COURT POIN TED OUT THAT THE ENTIRE BUSINESS OR THE ORGANIZATIO N OF THE ASSESSEE COMMENCED WITH THE OBJECT OF PROMOTING THE EXPORT TRADE OF THE COUNTRY. THE OBJECT WAS HELD AS CHARITABLE PURPOSE, AS DEFINED IN THE ACT. THE COURT HELD THAT THE INCOME WHICH THE COMPANY RECEIVED FROM THE TWO ADMITTED SOURCES, NAMELY, GRA NTS FROM GOVERNMENT AND SUBSCRIPTIONS FROM ITS MEMBERS, WAS INCOME WHICH IT COULD NOT HAVE RECEIVE D BUT FOR ITS BUSINESS OR ORGANIZATION AND IT WOULD, THEREFORE, BE INCOME DERIVED FROM SUCH BUSIN ESS OR ORGANIZATION, WHICH AS SHOWN CAN BE HELD TO BE THE PROPERTY OF THE COMPANY. THE DIVISION BEN CH FURTHER POINTED OUT: 'WE HAVE ALREADY HELD THAT THE PROPERTY HELD UNDER TRUST WAS THE BUSINESS OR ORGANIZATION ITSELF AND WHETHER WE CONSIDER EITHER OF THE TWO SOURCES OF INCOME OF 16 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 THIS COMPANY, NAMELY, THE GRANT OR THE SUBSCRIPTION S FROM ITS MEMBERS, BOTH AROSE DIRECTLY AND SUBSTANTIALLY FROM THAT BUSINESS OR OR GANIZATION. IF THE ORGANIZATION HAD NOT EXISTED, THE GRANTS WOULD NOT HAVE BEEN PAI D TO THE COMPANY NOR WOULD THE SUBSCRIPTIONS HAVE BEEN RECEIVED BY THE COMPANY. TH EREFORE, EVEN UPON THE CONSTRUCTION PUT UPON THE WORD 'DERIVED' THE INCOME WOULD BE DERIVED FROM THE BUSINESS OR ORGANIZATION WHICH WE HELD WAS THE PROP ERTY HELD UNDER TRUST IN THIS CASE.' 23. IT IS IN VIEW OF THIS, THAT THE QUESTION WHETHER O N THE FACTS AND CIRCUMS-TANCES OF THE CASE THE ASSESSEE'S INCOME IS EXEMPTED UNDER SECTION 4(3 )(I) OF THE INCOME-TAX ACT OR NOT WAS ANSWERED IN THE AFFIRMATIVE. 24. IN VIEW OF THE DIVISION BENCH JUDGMENT OF THE BOMB AY HIGH COURT, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE TRUST IS A CHARITABL E TRUST FOR WHICH THERE IS NO DOUBT. THE OBJECTS OF THE TRUST WERE PLACED BEFORE THE COURT. WE HAVE PERUSED THE SAME AND IN FACT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT IT IS A CHARITABLE TRUST AND, THEREFORE, WE ARE NOT REQUIRED TO EXAMINE THIS ASPECT AT ALL. 25. IN VIEW OF THE JUDGMENT OF THE DIVISION BENCH OF T HE BOMBAY HIGH COURT IN THE CASE OF COTTON TEXTILES EXPORT PROMOTION COUNCIL (SUPRA), W E ARE OF THE VIEW THAT THE PROPERTY HELD UNDER TRUST WAS THE ORGANIZATION ITSELF AND THE SOU RCE OF MONEY, THAT IS TO SAY, THE SUBSCRIPTIONS FROM ITS MEMBERS AROSE DIRECTLY AND S UBSTANTIALLY FROM THAT OF ORGANIZATION. IN THE ABSENCE OF ORGANIZATION, THERE WOULD HAVE BEEN NO QUESTION OF SUBSCRIPTIONS AND FOLLOWING THE DIVISION BENCH JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF COTTON TEXTILES EXPORT PROMOTION COUNCIL (SUPRA), WE ARE O F THE OPINION THAT THE SUBSCRIPTION IS TO BE CONSIDERED AS INCOME DERIVED FROM PROPERTY HELD UNDER TRUST. 26. HENCE IT IS CLEAR THAT THE SUBSCRIPTION IS TO BE T REATED AS INCOME AND EXEMPTED UNDER SECTION 11 OF THE ACT. THE QUESTION, THEREFORE, IS REQUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF T HE HONBLE DELHI HIGH COURT, WE HOLD THAT THE MEMBERSHIP FEES RECEIVED FROM MEMBERS WERE TOWARDS THE CORPUS AND THEREFORE RIGHTLY CLAIMED EXEMPT U/S 11(1)(D) OF THE ACT. THE AO IS THEREFORE DIRECTED TO DELETE THE ADDITION OF RS.17,50,000/-. GROUND NO. 4 OF THE APP EAL ALSO STANDS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3RD JUNE, 2019 BISWAJITT (SR.P.S.) 17 ITA NO. 278/KOL/2018 M.S. CREDAI BENGAL, AY 2012-13 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. CREDAI BENGAL, JINDAL TOWER, BLOCK- A, 21/1A/3, DARGA ROAD, PARK CIRCUS, KOLKATA-700 017. 2 RESPONDENT ITO(EXEMPTION), WD-1(1), KOLKATA. 3 4 5 CIT(A)-25 , KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY