SCREEN WRITERS ASSOCIATION, MUMBAI V. PR. CIT -25, MUMBAI

ITA 3686/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2903 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHOUHAN
• Keywords: Business income; Revision of order
• Section: 263; 15; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VP & Ms. KAVITHA RAJAGOPAL, JM आयकरअपीलसं./ I.T. A. No. 3686/Mum/ 2019 (निर्धारणवर्ा / Assess ment Year: 2014-15) M/s Screen Writers Association 201, Richa Building, Plot No. B-29, Off New Link Road, Andheri (W), Mumbai-400 053 बिधम/ Vs. Pr. CIT – 25, 4 th floor, FI. R. No. 410, C- 10, Pratyakshkar Bhavan, BKC, Mumbai-400 051 स्थायीलेखासं./जीआइआरसं./PAN N o . AAAAF-3245-P (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) अपीलाथीकीओरसे/ Appellant by : Shri Vipul Joshi & Ms. Priyanshi Desai, Ld. ARs प्रत्यथीकीओरसे/Respondent by : Shri Jasbir Chouhan, Ld. DR सुनवाईकीतारीख/ Date of Hearing : 10.02.2022 घोषणाकीतारीख / Date of Pronouncem ent : 06.05.2022 आदेश / O R D E R Per Kavitha Rajagopal, Judicial Member: This appeal has been filed by the assessee as against the order passed by the Ld. Pr. CIT-25, Mumbai dated 23.03.2019 under section 263 of the Income Tax Act, 1961. The grounds of appeal are as follows:- 2 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association 1. The Pr. Commissioner of Income Tax erred in passing the order u/s 263 of Income Tax Act, 1961. Under the facts & circumstances of the matter she ought not to have passed the said order u/s 263 of I.T. Act, 1961. 2. The Appellant craves leave to add, amend or alter the above grounds of appeal at or before the time of hearing. Additional Grounds 1. Without prejudice to the earlier grounds, it is submitted that in the facts and the circumstances of the case, and in law, even on merits, no such directions were called for. 2. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 2. The brief facts of the case are that the assessee is an AOP and registered union under Trade Union Act, 1926. The assessee being a Trade Union of film and television writers is engaged in the activity of regulating the relations between those who are into film and television productions. The assessee filed its return of income on 19.03.2016 declaring total income at Rs. NIL for AY 2014-15. The assessee‟s case was selected for scrutiny and notice u/s 143(2) dated 28.07.2016 was issued. The AO has assessed the income by allowing the claim of deduction /exemption u/s 10(24) of the Act by accepting the income /receipts of the assessee under the head „Income from other sources‟. The total income for the relevant year was assessed at Rs. NIL. 3 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association 3. Aggrieved by the order, the Ld. PCIT after issuing show cause notice u/s 263 sought for details from the assessee. In response to the said notice, the assessee vide letter dated 25.03.2019 submitted the required documents such as copy of the constitution, copy of ITR for AY 2014-15, Balance Sheet & copy of order of Commissioner Appeals- III, GST & CX, Mumbai. Further to this, as written submission dated 26.03.2019 was produced by the assessee to the Ld. PCIT which stated that assessee is a Trade Union of Film & Television Writers registered under Trade Union Act, 1926 furnishing with a copy of Registration Certificate. The Association (SWA) works for the benefit of members like settling disputes amongst members, for making representation to concerned authorities and associations like IMPPA, WIMPA, etc. The income received from members in the nature of admission fees, subscription, ID card fees, life membership fees, registration fees, etc. are to be exempted u/s 10(24) of I.T. Act, 1961 being a Trade Union. The assessee stated that such receipts were categorical under the head „Income from other sources‟ as it was not carrying out any business for profit. To support its stand, the assessee had also quoted the order of Ld. CIT(Appeals)-III, GST & CX, Mumbai, which has held the assessee to be a Trade Union and not a Business Entity. 4. The contention of the assessee did not find favour and the Ld. PCIT held that from the gross receipts of Rs. 1,44,08,286/- received by the assessee under 20 heads mentioned below except for the last two heads i.e. Interest Income from saving account 4 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association and Fixed Deposit, the other receipts are in the nature of business income and will not attract the exemption claimed u/s 10(24) of the Act. Following tabular column illustrate the Income & Expenditure account of the assessee under various heads:- Sr. No. Head of Receipt Amount (in Rs.) 1. Admission fee (National & Froeign) 82,30,392/- 2. Admission Form Fee 48,820/- 3. ISW Conference 1,10,660/- 4. Confederation Fees 14,008/- 5. Constitution Books Fees 49,495/- 6. Donation Received 18,858/- 7. ID Cards Fee 1,66,760/- 8. Life Membership Fees 7,70,000/- 9. Registration Fees 9,49,528/- 10. Service Charges FWA 8,407/- 11. Miscellaneous Income 9,099/- 12. Advertisement Website 15,000/- 13. Penalty dues 1,88,704/- 14. Postal charges 35,921/- 15. Service Charges-DSC 66,172/- 16. Subscription fees 10,89,398/- 17. Compensation for DSC 15,000/- 18. Sundry Balances W/O 12,018/- 19. Bank Interest (Saving A/c) 50,875/- 20. Bank Deposit (Fixed Deposit) 25,72,811/- Total 1,44,08,286 5. The Ld. PCIT emphasized that these receipts are direct result of the core activity of the assessee which are in the nature of professional /business activity. The Ld. PCIT added the entire amount to the total income excluding the interest received in the last two receipts of the I & E account statement, but not allowing exemption u/s 10(24) for the said receipts. 5 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association 6. Aggrieved by the said order passed by the Ld. PCIT u/s 263, the assessee is in appeal before us. The Ld. AR representing the assessee contended that the Ld. PCIT has not enquired in detail about the nature of activity of the assessee and stated that the Ld. PCIT did not provide sufficient justification for deciding the receipts received by the assessee as business income. The Ld. AR relied on the decision of Hon‟ble Bombay High Court in the case of Mario Raposo Vs. H. M. Bhandarkar and Ors (Writ Petition No. 3425 of 1993). The Ld. DR on the other hand contended that the assessee is not entitled to claim exemption u/s 10(24) and relied on the decision of the Ld. PCIT. 7. We have heard the rival submissions and perused the materials placed on record. It is an admitted fact that the assessee is a registered Trade Union of Film and Television Writers registered under the Trade Union Act, 1926. The assessee holds certificate of registration of Trade Union since 1960 earlier in the name of „Film Writer‟s Association, Bombay‟ subsequently was re-named as „Screen Writer‟s Association‟. The terms of constitution of Association contains various clause which on perusal does not appear to us to have any business activity. It is trite to reproduce the aims and objectives of the association for better understanding of the functions of the association. They are as follows:- i) To foster brotherhood and unity amongst the writers working in the film industry and all other Audio Visual Media by bringing them together under the banner of FILM WRITERS' ASSOCIATION. 6 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association ii) To regulate the relations of its members with the employers. iii) To safeguard the interests, right and privileges of its members in all matters relating to their employment and living conditions. iv) To prevent any reduction in wages and remuneration of its members. v) To promote and maintain high standard of professional conduct and integrity. vi) To settle disputes between the employer and its members. vii) To secure compensation for its members in cases of accidents under the Workmen's Compensation Act, etc. (viii) To provide legal assistance to its members in respect of matters arising out of/or incidental to their employment. ix) To render aid to its members during any lockout strike, provided the same is done with the sanction of the Association. x) To establish and maintain harmony and unity of action among the members of the Association. xi) To build-up and administer funds for the provisions of legal aid, un-employment, disablement, retirement and death benefits, provident funds and other benefits whichever may be deemed necessary from time to time. xii) To secure representation of its members on delegations, commissions, committees, etc., set up by the Central or State Governments or Film Industry or other bodies where representation of non-officials is required. 7 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association xiii) To engage in such other legitimate activities as are incidental and conducive to the attainment of the aforesaid objects. 8. Now considering the contention of the Ld. PCIT that “Any receipt which is a direct consequence of its core activities will always form part of income from business and profession, irrespective of whatever name is lent to the receipt” does not hold good and is according to our considered opinion a mere conjecture and surmises. The receipts of the assessee under various heads are those collected from its members namely Life Member, Regular Member, Associate Member and fellow Member. It is admittedly accepted that such association requires fund for the purpose of carrying out its activities and such funds can be raised by charging its member various fees such as admission fees, admission form fee, confederation fees, constitution book fees, ID card fees, Life membership fee, registration fee, etc. This undoubtedly will not fall under the category of business activity as there are no profit motive in such association. 9. We would like to place reliance on the decision of Hon‟ble Bombay High Court cited by the Ld. AR in the case of “Mario Raposo Vs. H. M. Bhandarkar and Ors (Writ Petition No. 3425 of 1993), wherein the factual background varies from the present case in hand, the intention of trade unions are clearly extracted as below:- It is undoubtedly a speculative activity and such speculative activity bristles against the Industrial 8 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association Jurisprudence and the philosophy behind the Trade Unions Act. The purpose of forming a Union is for the welfare of its members. It provides collective bargaining power to them as against the employer and also infuses in them the sense of security which is a natural concomitant of unity. A union undoubtedly needs money for its activities. The Act provides the mechanism for generating funds and via Section 15 and 16 controls the expenditure thereof. "Profit making can never be an objective of the Union. “Purchase of shares" is clearly an attempt towards profit making and carries with it an odour of "speculation". 10. From the above observations, it is evident that the assessee is not a business entity and does not work for profit. It is an association for the welfare of certain category of persons who writes in the film industry and other audio visual media and its objective is to protect the interest of its members though there is income generated not for profit but for the purpose of the welfare of the association and its members. The Ld. PCIT has failed to establish that it is a business entity and hence the order of the Ld. PCIT is directed to be quashed, thereby allowing the claim of deduction /exemption made by the assessee u/s 10(24) of the Act. 11. In the result, the appeal filed by the assessee is allowed. Orders pronounced in the open court on 06.05.2022. Sd/- Sd/- (Pramod Kumar) (Kavitha Rajagopal) Vice President Judicial Member मुंबई Mumbai;ददनांकDated : 06.05.2022 Sr.PS. Dhananjay 9 I . T . A . N o . 3686/ M u m / 2 0 1 9 M/s Screen Writers Association आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 5. दवभागीयप्रदतदनदध, आयकरअपीलीयअदधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/ BY ORDER, .उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) आयकरअिीिीयअनर्करण, मुंबई/ ITAT, Mumbai