INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY, MUMBAI V. ADIT-(E)-II(1), MUMBAI

ITA 386/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4297 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 01-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2013
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Charitable institution; Rule of consistency; Retrospective amendment
• Section: 143(3); 12A; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI BEFORE SHRI R.C. SHARMA, AM AND SHRI MAHAVIR SINGH, JM ITA NO. 386/MUM/2013 (ASSESSMENT YEAR: 2009-10) INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY FRENCH BANK BLDG., 4 TH FLR. 62, HOMJI STREET, FORT, MUMBAI-400001. (PAN: AAATI2658A) VS. ASSISTANT DIRECTOR OF INCOME-TAX, EXEMPTION-11(1), PIRAMAL CHAMBER, MUMBAI-400 012. (APPELLANT) (RESPONDENT) & ITA NO. 1122/MUM/2013 (ASSESSMENT YEAR: 2009-10) ASSISTANT DIRECTOR OF INCOME-TAX, EXEMPTION-11(1), PIRAMAL CHAMBER, MUMBAI-400 012. VS. INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY FRENCH BANK BLDG., 4 TH FLR. 62, HOMJI STREET, FORT, MUMBAI- 400001. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJIV M. SHAH REVENUE BY : SHRI VISHWAS JADHAV, DR DATE OF HEARING: 30.03.2016 DATE OF PRONOUNCEMENT15.04.2016 O R D E R PER MAHAVIR SINGH, JM: BOTH THESE APPEALS BY ASSESSEE AND REVENUE ARE DIRE CTED AGAINST THE ORDER OF CIT(A)-1, MUMBAI IN APPEAL NO. CIT(A)-1/IT-E2(71)/2 011-12 VIDE ORDER DATED 30.11.2012. ASSESSMENT WAS FRAMED BY ASST. DIT(E)- II(1), MUMBAI U/S. 143(3) OF 2 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR AY 2009-10 VIDE HIS ORDER DATED 26.12.2011. 2. FIRST WE TAKE UP ITA NO. 386/MUM/2013 (ASSESSEES A PPEAL). THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORD ER OF THE CIT(A) IN CONFIRMING THE ACTION OF AO IN REJECTING THE CLAIM OF ASSESSEE U/S. 11 OF THE ACT. 3. BRIEFLY STATED FACTS RELATING TO THIS ISSUE ARE THA T THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HELD THAT THE ASSESSEE IN STITUTION IS PREDOMINANTLY A MUTUAL ASSOCIATION AND NON CHARITABLE OBJECTS AND T HE OBJECT OF MUTUAL BENEFITS ARE CONTRADICTORY TO EACH OTHER. ACCORDING TO HIM U /S. 11 OF THE ACT AS A CHARITABLE TRUST AND PRINCIPLES OF MUTUALITY ARE MU TUALLY EXCLUSIVE OF EACH OTHER. IN THE MUTUAL ASSOCIATION THE MEMBERS SUBSCRIBE FOR THE PRIMARY PURPOSE OF BENEFITING THEMSELVES, WHILE IN A CHARITABLE INSTIT UTION PEOPLE SUBSCRIBE FOR CHARITABLE OBJECT WITHOUT ANY EXPECTATION IN RETURN . IN THE CASE OF THE ASSESSEE, THE MEMBERS HAVE CONTRIBUTED ONLY FOR THE PURPOSE O F THEIR OWN BENEFIT AND FOR ACQUIRING CERTAIN AMENITIES. THEREFORE, THE ASSESSE E IS TREATED AS MUTUAL ASSOCIATION AND NOT AS CHARITABLE INSTITUTION. ACC ORDINGLY, HE DENIED EXEMPTION U/S. 11 OF THE ACT IN VIEW OF THE PROVISO TO SECTIO N 2(15) OF THE ACT AS INTRODUCED W.E.F. 01.04.2009 BY THE FINANCE ACT, 2008. AGGRIE VED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HE HELD AS UNDER: 4.6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. I FIND THAT THE APPELLANT TRUST IS BASICALLY ENGAGED IN RUNNING PRIVATE COMMERCIAL CLASSES. THE APPELLANT HAS ALSO ARRANGED EXHIBITIONS AND SEMINARS. I FIND THAT THE PROVISIONS OF AMENDED SECTION 2(15) ARE APPLICABLE TO THE APPELLANT. I AL SO FIND THAT THE ACTIVITIES OF THE APPELLANT TRUST ARE BASED ON CONSIDERATION OF CHARG ING FEES AND THE ACTIVITIES HAVE YIELDED SUBSTANTIAL PROFIT IN A SYSTEMATIC AND ORGANIZED MANNER. IT IS ALSO SEEN THAT THE APPELLANT HAS BEEN DERIVING SUBS TANTIAL INCOME FROM HOLDING SEMINARS, TRAINING PROGRAMME AND COMMERCIAL FEES FR OM TECHNICAL SERVICES. ALL THE ACTIVITIES ARE SYSTEMATIC AND ORGANIZED AND CON TINUOUS. IT IS CLEARLY SEEN THAT THE ELEMENT OF CHARITY IS LACKING. SECTION 2(15) OF THE ACT HAS BEEN AMENDED BY THE FI NANCE ACT, 2008, WITH EFFECT FROM APRIL 1, 2009, AND READS AS UNDER: 3 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 'SECTION 2(15) - 'CHARITABLE PURPOSE' INCLUDES RELI EF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONM ENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC 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 A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY;' 4.7 THE ABOVE PROVISO TO SEC.2(15) IS ADDED W.E.F. 2009-10. SEVERAL ACTIVITIES OF THE APPELLANT HAVE BEEN FOUND TO BE ORGANIZED, S YSTEMATIC ACTIVITIES BEARING THE NATURE OF TRADE AND BUSINESS ACTIVITY. EARNING OF SUBSTANTIAL FEES IN ORGANIZED MANNER CANNOT BE CONSIDERED AS BEING CHAR ITABLE ACTIVITY. HENCE, THE APPELLANT IS COVERED BY THE AMENDMENT TO THE PR OVISO TO SECTION 2(15) OF THE ACT SINCE THESE ACTIVITIES ARE NOTHING BUT AN A DVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY IN THE NATURE OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS, FEE OR ANY OTHER CONSIDERATIONS. 4.8 FURTHER, SECTION 13(8) OF THE ACT, WHICH HAS BE EN INSERTED BY THE FINANCE ACT, 2012, WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2009, READS AS UNDER: 'NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHAL L OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PRE VIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. ' IN VIEW OF THE INCOME OF THE APPELLANT EXCEEDING RS .L0 LACS AS PER THE PROVISO TO SECTION 2(15), THE APPELLANT IS COVERED BY THE QUAN TUM LIMIT OF SECTION 2(15) AND 13(8) OF THE ACT. SINCE THE ACTIVITIES OF THE A PPELLANT HAVE BEEN HELD TO BE BUSINESS THE PROVISIONS OF SECTION 13(8) OF THE ACT WILL ALSO COME INTO PLAY AND THE INCOME OF THE APPELLANT WILL NOT BE ELIGIBLE TO ANY OF THE BENEFITS OF SECTION 11 OR 12 OF THE ACT. ON A COMBINED READING OF BOTH THE AFORESAID SECTIONS, IT IS CLEAR THAT THE APPELLANT IS NOT ELIGIBLE TO THE BEN EFITS OF SECTION 11 OR 12 OF THE ACT. I HOLD THAT THE AO HAS RIGHTLY DENIED THE EXEM PTION U/S 11 AND CONFIRM THE ORDER OF THE ASSESSING OFFICER THAT THE APPELLA NT IS NOT ENTITLED TO THE BENEFITS OF SECTION 11 OF THE ACT. GROUND NO. 1 RAI SED BY THE APPELLANT IS ACCORDINGLY DISMISSED. AGGRIEVED, NOW ASSESSEE IS IN SECOND APPEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED AND ADMI TTED FACTS ARE THAT THE ASSESSEE IS A CHAMBER OF COMMERCE REGISTERED U/S. 12A OF THE ACT. THE ASSESSEE BEING A 4 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 COMPANY INCORPORATED U/S. 25 OF THE COMPANIES ACT, 1956 WITHOUT SHARE CAPITAL AND DOES NOT DISTRIBUTE ANY DIVIDEND TO ITS MEMBERS AND ALSO ITS ENTIRE RECEIPTS ARE EXPENDED FOR FULFILLMENT OF ITS OBJECTS AS IT I S A CHARITABLE ASSOCIATION. THE ASSESSEE IS AN ASSOCIATION OF VARIOUS INSTITUTIONS FORMED IN 1976 FOR DEVELOPMENT OF TRADE, INDUSTRY AND COMMERCE. THE MAIN OBJECTS O F THE TRUST ARE AS UNDER: 1. TO PROMOTE, STUDY, EXTEND AND DEVELOP THE HOME AND FOREIGN TRADE, COMMERCE, AND MANUFACTURES OF THE INDIAN UNION AND THE REPUBLIC OF FRANCE AND THEIR MUTUAL COMMERCIAL RELATIONS, AND TO REPRE SENT AND EXPRESS THE VIEWS OF THE MERCANTILE AND COMMERCIAL COMMUNITIES OF BOTH COUNTRIES ON COMMERCIAL AND INDUSTRIAL QUESTIONS. 2. TO, COLLECT, PUBLISH AND DISSEMINATE, STATISTIC RELATING TO HOME AND FOREIGN TRADE AND COMMERCE AND MANUFACTURES OF THE INDIAN U NION AND THE REPUBLIC OF FRANCE; TO CONSIDER QUESTIONS CONNECTED THEREWIT H, TO MAKE REPRESENTATIONS TO GOVERNMENTS, LEGISLATIVE BODIES, CHAMBER OF COMM ERCE AND OTHER AUTHORITIES THEREON. 3. TO ASSIST IN THE SETTING UP OF JOINT VENTURES IN INDIA AND IN THIRD COUNTRIES IN ASSOCIATION WITH INDIVIDUALS, FIRMS, COMPANIES A ND CORPORATIONS OF INDIAN AND FRENCH NATIONALITY AND DO SUCH THINGS AS MAY BE NECESSARY. 4. TO PROMOTE, STUDY, EXTEND AND ADVANCE THE SPECIA L INTEREST OF INDIAN SUBJECTS CARRYING ON ANY INDUSTRY OR BUSINESS IN OR WITH THE REPUBLIC OF FRANCE AND ALSO THE SPECIAL INTEREST SO FRANCE SUBJ ECTS CARRYING ON ANY INDUSTRY OR BUSINESS IN OR WITH THE INDIAN UNION. 5. THE ASSESSEE EXPLAINED BEFORE US THAT CHAMBER IS NO T ENGAGED IN GIVING RELIEF TO THE POOR, EDUCATION OR MEDICAL RELIEF BUT IS COVERED BY THE LAST LIMB OF DEFINITION OF CHARITABLE PURPOSE AS DEFINED U/S. 2( 15) OF THE ACT I.E. THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED FOR THE DETAI LS AND ASSESSEE FILED ALL THE DETAILS INCLUDING INCOME AND EXPENDITURE MADE BY CH AMBER. THE SOURCE OF INCOME OF THE ASSESSEE HAS BEEN VERIFIED BY THE AO AND NOTED THAT IT IS FROM SUBSCRIPTION OF MEMBERSHIP, ADVERTISEMENT, INTEREST RECEIVED, INTEREST, TRANSLATION FEE, SEMINARS OR WORKSHOPS AND OTHER R ECEIVES INCLUDES EXCHANGE GAINS. THIS TRUST IS GRANTED EXEMPTION SINCE ITS I NCEPTION TILL ASST. YEAR 2008-09. THE EXEMPTION U/S. 11 OF THE ACT WAS WITHDRAWN W.E. F. ASST. YEAR 2009-10 I.E. THE YEAR UNDER CONSIDERATION FOR THE REASON THAT A PROV ISO IS ADDED BY THE FINANCE 5 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 ACT, 2008 W.E.F. 01.04.2009 I.E. FOR AND FROM ASST. YEAR 2009-10 WHEREIN THE DEFINITION OF CHARITABLE PURPOSE WAS AMENDED SO AS TO PROVIDE THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY WOULD NOT BE CHARITABLE PURPOSE IF IT INVOLVES CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OR RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION OF T HE INCOME FROM SUCH ACTIVITY. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REFERRED TO PARA 3.1 AND 3.2 OF CIRCULAR NO. 11 OF 2008 VIDE F. NO. 134/34/2008-TPL DATED 19.12. 2008. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE RECENT DECISION OF COORDINAT E BENCH OF ITAT, CHENNAI IN THE CASE OF JAPANESE CHAMBER OF COMMERCE & INDUSTRY VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) (2014) 99 DTR 145 (TRIBUNAL ORDERS ) WHEREIN IT WAS INTERPRETED THE CIRCULAR VIDE PARA 6, WHICH READS AS UNDER: 6. A PERUSAL OF BOARD CIRCULAR NO. 11 OF 2008 (SUP RA) WOULD CLARIFY THE IMPLICATIONS ARISING FROM THE AMENDMENT. THE RELEVA NT EXTRACT OF THE CIRCULAR IS REPRODUCED HEREINBELOW : 1 . 2 . .. 3. THE NEWLY INSERTED PROVISO TO S. 2(15) WILL APPL Y ONLY TO ENTITIES WHOSE PURPOSE IS 'ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY' I.E. THE FOURTH LIMB OF THE DEFINITION OF 'CHARITABLE PURPOS E' CONTAINED IN S. 2(15). HENCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMP TION UNDER S. 11 OR UNDER S. 10(23C) OF THE ACT IF THEY CARRY ON COMMERCIAL ACTI VITIES. WHETHER SUCH AN ENTITY IS CARRYING ON AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS IS A QUESTION OF FACT WHICH WILL BE DECIDED BASED O N THE NATURE, SCOPE, EXTENT AND FREQUENCY OF THE ACTIVITY. 3.1 THERE ARE INDUSTRY AND TRADE ASSOCIATIONS WHO C LAIM EXEMPTION FROM TAX UNDER S. 11 ON THE GROUND THAT THEIR OBJECTS ARE FO R CHARITABLE PURPOSE AS THESE ARE COVERED UNDER 'ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY'. UNDER THE PRINCIPLE OF MUTUALITY, IF TRADING TAKES PLACE BETW EEN PERSONS WHO ARE ASSOCIATED TOGETHER AND CONTRIBUTE TO A COMMON FUND FOR THE FINANCING OF SOME VENTURE OR OBJECT AND IN THIS RESPECT HAVE NO DEALINGS OR RELATIONS WITH ANY OUTSIDE BODY, THEN ANY SURPLUS RETURNED TO THE PERSONS FORMING SUCH ASSOCIATION IS NOT CHARGEABLE TO TAX. IN SUCH CASES , THERE MUST BE COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND THE PARTICIP ANTS. THEREFORE, WHERE INDUSTRY OR TRADE ASSOCIATIONS CLAIM BOTH TO BE CHA RITABLE INSTITUTIONS AS WELL AS MUTUAL ORGANIZATIONS AND THEIR ACTIVITIES ARE RE STRICTED TO CONTRIBUTIONS 6 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 FROM AND PARTICIPATION OF ONLY THEIR MEMBERS, THESE WOULD NOT FALL UNDER THE PURVIEW OF THE PROVISO TO S. 2(15) OWING TO THE PRI NCIPLE OF MUTUALITY. HOWEVER, IF SUCH ORGANIZATIONS HAVE DEALINGS WITH N ON-MEMBERS, THEIR CLAIM TO BE CHARITABLE ORGANIZATIONS WOULD NOW BE GOVERNE D BY THE ADDITIONAL CONDITIONS STIPULATED IN THE PROVISO TO S. 2(15). 3.2 IN THE FINAL ANALYSIS, HOWEVER, WHETHER THE ASS ESSEE HAS FOR ITS OBJECT 'THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY' IS A QUESTION OF FACT. IF SUCH ASSESSEE IS ENGAGED IN ANY ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERS ANY SERVICE IN RELA TION TO TRADE, COMMERCE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT ITS OBJECT IS CHARITABLE PURPOSE. IN SUCH A CASE, THE OBJECT OF 'GENERAL PUB LIC UTILITY' WILL BE ONLY A MASK OR A. DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE, COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATIO N TO TRADE, COMMERCE OR BUSINESS. EACH CASE WOULD, THEREFORE, BE DECIDED ON ITS OWN FACTS AND NO GENERALIZATION IS POSSIBLE. ASSESSEES, WHO CLAIM TH AT THEIR OBJECT IS 'CHARITABLE PURPOSE' WITHIN THE MEANING OF S. 2(I5) , WOULD BE WELL ADVISED TO ESCHEW ANY ACTIVITY WHICH IS IN THE NATURE OF TRADE , COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRA DE, COMMERCE OR BUSINESS.' A CONJOINT READING OF THE CIRCULAR AND THE OBJECTS OF THE ASSESSEE-SOCIETY WOULD SHOW THAT THE AIMS AND OBJECTS OF THE SOCIETY ARE NOT HIT BY THE NEWLY INTRODUCED PROVISO TO SUB-SO (I5) OF S. 2 OF THE AC T. THE ASSESSEE IS CHARGING ADMISSION FEE AND MONTHLY SUBSCRIPTION FEE FROM ITS MEMBERS. APART FROM THIS, THE ASSESSEE IS ALSO ACCEPTING GRANTS AND SPE CIAL CONTRIBUTIONS, ADMISSION/REGISTRATION FEE FOR SEMINARS/CONFERENCES CONDUCTED BY THE SOCIETY. THE ASSESSEE IS NOT CHARGING ANY FEE FOR T HE SERVICES RENDERED BY IT. THE FEES CHARGED BY WAY OF ADMISSION FEE, MONTHLY S UBSCRIPTION, ADMISSION AND REGISTRATION FEE ETC., ARE UTILIZED ONLY FOR TH E PROMOTION OF THE AIMS AND OBJECTS OF THE SOCIETY. CLAUSE 1 OF THE AIMS AND OB JECTS PUT COMPLETE EMBARGO ON EARNING PROFIT FROM ANY OF THE ACTIVITIE S OF THE SOCIETY. PROFIT IS THE ESSENCE OF TRADE, COMMERCE OR BUSINESS. WHEN SE RVICES ARE RENDERED WITHOUT PROFIT MOTIVE, THE ELEMENT OF TRADE, COMMER CE OR BUSINESS DISAPPEARS FROM SUCH ACTIVITIES. THEREFORE, IT CAN BE SAFELY CONSTRUED THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT HIT BY THE N EWLY ADDED PROVISO TO S. 2(L5} OF THE ACT. SO FAR AS ORGANISING OF SEMINARS AND CONFERENCES IS CONCERNED, THE DELHI BENCH OR THE TRIBUNAL WHILE REFERRING TO OBJECT NO. 5 OF THE ASSESSEE'S COORDINATE BODY'S AIMS AND OBJECTS WHICH IS IDENTIC AL TO OBJECT NO. 5 OF THE ASSESSEE'S AIMS AND OBJECT, HELD: .............. SO FAR AS OBJECT NO. 6 IS CONCERNED , THERE CAN BE NO DOUBT THAT IT IS A CHARITABLE OBJECT SINCE INVITING INTELLECTUALS, I NDUSTRIALISTS, SCHOLARS, TENDS TO ENLIGHTEN THE FACULTIES OF THE MEMBERS WHICH IS TO THEIR ULTIMATE BENEFIT AND MAY HELP THEM IN BECOMING MORE EVOLVED AND BETT ER HUMAN BEINGS. IN FACT, THE RAJASTHAN HIGH COURT IN CIT VS. JODHPUR C HARTERED ACCOUNTANTS SOCIETY (2002) 174 CTR (RAJ) 504 : (2002) 258 ITR 5 48 (RAJ) HAS HELD THAT ORGANIZING SUCH SEMINARS AND CONFERENCES TO EDUCATE PEOPLE IN DIFFERENT 7 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 FIELDS OF KNOWLEDGE IS A CHARITABLE OBJECT OF GENER AL PUBLIC UTILITY WITHOUT ANY PROFIT MOTIVE.' ANOTHER OBJECTION RAISED IN THE-IMPUGNED ORDER IS T HAT THE BENEFIT OF THE SOCIETY WOULD NOT BE AVAILABLE TO GENERAL PUBLIC AN D ARE RESTRICTED TO ITS MEMBERS. THE DELHI BENCH OF THE TRIBUNAL ON THIS IS SUE HAS HELD AS UNDER: '6. THE DIRECTOR OF IT (EXEMPTIONS) IS ALSO NOT RIG HT IN HIS VIEW THAT THE ACTIVITIES OF THE SOCIETY ARE RESTRICTED TO JAPANES E COMPANIES AND JAPANESE GOVERNMENT INSTITUTIONS WHO ALONE CAN BECOME MEMBER S OF THE SOCIETY AND, THEREFORE, THE INDIAN PUBLIC AT LARGE IS NOT BENEFI TED BY THE ACTIVITIES. IT HAS TO BE REMEMBERED THAT THE SOCIETY HAS BEEN FORMED T O PROMOTE DEVELOPMENT OF TRADE AND COMMENCE BETWEEN INDIA AND JAPAN AND F ACILITATE ECONOMIC CO- OPERATION BETWEEN THE TWO COUNTRIES. IT CANNOT BE D ENIED THAT THE INDUSTRIAL ADVANCEMENT OR ADVANCEMENT IN OTHER CONNECTED FIELD S, THE BENEFITS OF WHICH ACCRUE TO THE MEMBERS OF THE SOCIETY WOULD, B Y VIRTUE OF CLOSE INTERACTION BETWEEN THE TWO COUNTRIES, WOULD ALSO P ERCOLATE TO THE PUBLIC OF INDIA. PROMOTION OF TRADE, COMMERCE AND INDUSTRY BE TWEEN INDIA AND JAPAN WILL UNDOUBTEDLY BENEFIT THE INDIAN PUBLIC AT LARGE . THEREFORE, THE DIRECTOR OF IT (EXEMPTIONS) IS NOT JUSTIFIED IN SAYING THAT THE INDIAN PUBLIC OR A SEGMENT THEREOF WILL NOT BE BENEFITED BY THE ACTIVITIES OF THE SOCIETY.' IN VIEW OF THIS CATEGORIC FINDINGS OF THE DELHI BEN CH OF THE TRIBUNAL, WE HOLD THAT THE BENEFITS OF THE ACTIVITIES OF THE TRUST AR E NOT CONFINED TO SELECT SEGMENT BUT WOULD FLOW TO LARGER SECTION OF SOCIETY . 6. FINALLY, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE COORDINATE BENCH DECISION OF ITAT, KOLKATA IN THE CASE OF INDIAN CHAMBER OF C OMMERCE VS. ITO IN ITA NO.1491 & 1284/K/2012 FOR AT 2008-09 & 2009-10 DATE D 02.12.2014, WHEREIN IT HAS BEEN HELD AS UNDER: 33. FROM THE MEMO EXPLAINING THE PROVISIONS OF FINANCE BILL 2008 & CBDT CIRCULAR DATED 19-12-2008, WHAT WILL BE POSITION OF AN ENTITY ENGAGED IN THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, WHETHER THE SAME WILL BE HIT BY COMMERCIAL ACTIVITI ES IN VIEW OF THE NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT OR NOT ? THE PROVISO WAS INTRODUCED WITH THE SOLE AIM OF BRINGING INTO AMBIT OF TAXATIO N SUCH ENTITIES WHICH WERE ENGAGED IN COMMERCIAL ACTIVITIES. HERE, WE NEED TO APPRECIATE THE CONCEPT OF AN ENTITY ENGAGED IN COMMERCIAL ACTIVITIES. IN VERY SIMPLE WORDS, ANY ENTITY WHOSE MAIN OR DOMINANT OBJECT IS COMMERCIAL CAN ONLY BE SAID TO BE A COMMERCIAL ENTITY. AN ENTITY WHOSE MAIN PU RPOSE IS UNDOUBTEDLY CHARITABLE IN NATURE WITHOUT AN IOTA OF COMM ERCIALITY IN IT CANNOT BE SAID TO BE ENGAGED IN COMMERCIAL ACTIVITY. ALSO W E NEED TO NOTE THAT ANOTHER POINT THAT EMERGES FROM THE ABOVE IS THAT WHETH ER AN ENTITY IS CARRYING ON AN ACTIVITY IN THE NATURE OF TRADE, COMMER CE OR BUSINESS ALWAYS REMAINS A QUESTION OF FACT WHICH WILL HAVE TO BE DE TERMINED ON THE BASIS OF THE FACTS OF THE INDIVIDUAL CASE. NO GENERALIZATION FOR SUCH DETERMINATION IS POSSIBLE. IN VIEW OF THE ABOVE, IT IS SEEN T HAT THE PROVISO CAN BE APPLIED 8 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 TO FACT BASED ON THE FACTS AND THE PAST HI STORY OF THE ASSESSEE, WHICH IS DISCUSSED IN DETAIL ABOVE. FROM THE ABOVE FA CTS, WE ARE CLEAR THAT THE ASSESSEE HAS NEVER BEEN DOMINANTLY ENGAGED IN ANY COMMERCIAL ACTIVITIES AND IS A CHARITABLE INSTITUTION REGIS TERED AS SUCH U/S 12A OF THE ACT, SET UP FOR THE PROMOTION AND PROTEC TION OF INDIAN BUSINESS AND INDUSTRY. THE MAIN PURPOSE OF THIS INSTITUTION IS PROMOTION AND PROTECTION OF TRADE AND COMMERCE IN THE COUNTRY AND NOT TO CONDUCT ANY COMMERCIAL ACTIVITIES. FURTHER, IT HAS ALSO NEVER BEEN T HE CONTENTION OF THE REVENUE THAT THE ASSESSEE IS ENGAGED IN COMMERCIAL AC TIVITIES BUT IT IS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT AND THUS WILL BE DEEMED TO BE ENGAGED IN COMMERCIAL ACTIVITIES. WHAT WILL BE THE POSITION TO AN INSTITUTION ENGAGED IN ADVANCEMENT OF ANY OTHER O BJECT OF GENERAL PUBLIC UTILITY, WHICH LAYS DOWN THAT SUCH AN INSTITUTE WIL L BE DEEMED TO BE NOT CHARITABLEIF IT IS INVOLVED IN CARRYING ON ANY A CTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. ACCORDING TO US, PART OF THE PROVISO BEING ANY ACTIVITY OF RENDERING ANY SERVICE IN RE LATION TO ANY TRADE, COMMERCE OR BUSINESS INTENDS TO EXPAND THE SCOPE O F THE PROVISO TO INCLUDE SERVICES, WHICH ARE RENDERED IN RELATION TO A NY TRADE, COMMERCE OR BUSINESS. THE PROVISO FURTHER STIPULATES THAT THE ACTIVITY IN RELATION TO THE TRADE COMMERCE OR BUSINESS MUST BE FOR A CESS OR FE E OR ANY OTHER CONSIDERATION. FROM THE PROVISO, IT IS SEEN THAT TH E MOST MATERIAL AND RELEVANT WORDS IN THE PROVISO ARE TRADE, BUSINESS OR COMMER CE. THE ACTIVITIES WHICH ARE UNDERTAKEN BY THE INSTITUTE SHOULD BE IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS. WE WILL ANALYSE THE TERM BUS INESS FROM THE DEFINITION OF THE TERM BUSINESS AS DEFINED IN SEC TION 2(13) OF THE ACT AND WHETHER ASSESSEES ACTIVITIES FALLS WITHIN THE TERM INOLOGY OF BUSINESS. THE TERM BUSINESS READ AS UNDER:- 2. DEFINITIONS: (13) BUSINESS INCLUDES ANY TRADE, COMMERCE OR MAN UFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMER CE OR MANUFACTURE. THE WORD BUSINESS IS OF LARGE AND INFINITE IMPORT . SECTION 2(13) DEFINES BUSINESS TO INCLUDE ANY TRADE, COMMERCE OR MANUF ACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COM MERCE OR MANUFACTURE. THE INTENTION OF THE LEGISLATURE IS TO MAKE THE DEFINI TION EXTENSIVE AS THE TERM INCLUDES HAS BEEN USED. THE LEGISLATURE HAS D ELIBERATELY DEPARTED FROM GIVING A DEFINITE IMPORT TO THE TERM BUSINES S BUT HAS MADE REFERENCE TO SEVERAL OTHER GENERAL TERMS LIKE TRADE, COM MERCE, MANUFACTURE AND ADVENTURE OR CONCERN IN THE NATURE OF TRADE , COMMERCE AND MANUFACTURE. THE TERM BUSINESS HAS BEEN EXPLAINE D BY VARIOUS JUDICIAL DECISIONS AND THE LANDMARK DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CST V. SAI PUBLICATION FUND [2002] 258 ITR 70 INTERPRETED THE WORD BUSINESS UNDER SECTION 2(5-A) OF THE BOMBAY SALES TAX ACT, 1959 AS FOLLOWS:- 9 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 NO DOUBT, THE DEFINITION OF BUSINESS GIVEN IN S ECTION 2(5-A) OF THE ACT EVEN WITHOUT PROFIT MOTIVE IS WIDE ENOUGH TO INCLUD E ANY TRADE, COMMERCE OR MANUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATU RE OF TRADE COMMERCE OR MANUFACTURE AND ANY TRANSACTION IN CONNECTION WITH OR INCIDENTAL OR ANCILLARY TO THE COMMENCEMENT OR CLOSURE OF SUCH TRADE , COMMERCE, MANUFACTURE, ADVENTURE OR CONCERN. IF THE MAIN ACTIVITY IS NOT B USINESS, THEN ANY TRANSACTION INCIDENTAL OR ANCILLARY WOULD NOT N ORMALLY AMOUNT TO BUSINESS UNLESS AN INDEPENDENT INTENTION TO C ARRY ON BUSINESS IN THE INCIDENTAL OR ANCILLARY ACTIVITY IS ESTABLISHED . IN SUCH CASES, THE ONUS OF PROOF OF AN INDEPENDENT INTENTION TO CARRY ON BUSINESS CONNECTED WITH OR INCIDENTAL OR ANCILLARY SALES WILL REST ON TH E DEPARTMENT. THUS, IF THE MAIN ACTIVITY OF A PERSON IS NOT TRADE, COMMERCE ET C., ORDINARILY INCIDENTAL OR ANCILLARY ACTIVITY MAY NOT COME WITHIN THE MEANIN G OF BUSINESS. TO PUT IT DIFFERENTLY, THE INCLUSION OF INCIDENTAL OR ANCILLARY ACTIVITY IN THE DEFINITION OF BUSINESS PRESUPPOSES THE EXISTENCE OF TRADE, C OMMERCE ETC. THE DEFINITION OF DEALER CONTAINED IN SECTION 2(1 1) OF THE ACT CLEARLY INDICATES THAT IN ORDER TO HOLD A PERSON TO BE A D EALER HE MUST CARRY ON BUSINESS AND THEN ONLY HE MAY ALSO BE DEEMED TO BE CARRYING ON BUSINESS IN RESPECT OF TRANSACTION INCIDENTAL OR ANCILL ARY THERETO. WE HAVE STATED ABOVE THAT THE MAIN AND DOMINANT ACTIVITY OF THE TR UST IN FURTHERANCE OF ITS OBJECT IS TO SPREAD MESSAGE. HENCE, SUCH ACTIV ITY DOES NOT AMOUNT TO BUSINESS. PUBLICATION FOR THE PURPOSE OF SPR EADING MESSAGE IS INCIDENTAL TO THE MAIN ACTIVITY WHICH THE TRUST DOES NOT CARRY ON AS BUSINESS. IN THIS VIEW, THE ACTIVITY OF THE TRUST IN BRINGING OUT PUBLICATIONS AND SELLING THEM AT COST PRICE TO SPREAD MESS AGE OF SAIBABA DOES NOT MAKE IT A DEALER UNDER SECTION 2(11) OF THE ACT. FURTHER HON'BLE SUPREME COURT IN PARA16 ELABORATED THE TERM BUSINESS AS UNDER:- 16. THE WORDS CARRYING ON BUSINESS REQUIRE SOMET HING MORE THAN MERELY SELLING OR BUYING, ETC. WHETHER A PERSON CA RRIES ON A BUSINESS IN A PARTICULAR COMMODITY MUST DEPEND UPON THE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTIONS OF PURCHASE AND SALE IN A CLASS OF GOODS AND THE TRANSACTIONS MUST ORDINARILY BE ENTERED INTO WI TH A PROFIT MOTIVE (BOARD OF REVENUE V. A. M. ANSARI (1976) 38 STC 577 (SUPREME COURT); (1976) SCC 512). SUCH PROFIT MOTIVE MAY, HOWEVER, BE STATUTORILY EXC LUDED FROM THE DEFINITION OF BUSINESS BUT STILL THE PERSON MAY BE CARRYING ON BUSINESS. FURTHER IN PARA 30 OF THE SAME JUDGMENT, IT IS STAT ED THUS: 30. IN OUR VIEW, IF THE MAIN ACTIVITY WAS NOT BUS INESS, THEN THE CONNECTED, INCIDENTAL OR ANCILLARY ACTIVITIES OF SALES W OULD NOT NORMALLY AMOUNT TO BUSINESS UNLESS AN INDEPENDENT INTENTION TO CONDUCT BUSINESS IN THESE CONNECTED, INCIDENTAL OR ANCILLARY ACTIVITIES IS ES TABLISHED BY THE REVENUE. IT WILL THEN BE NECESSARY TO FIND OUT WHETHER THE TRANSACTIONS WHICH ARE CONNECTED, INCIDENTAL OR ANCILLARY ARE ONLY AN INFI NITESIMAL OR SMALL PART OF THE MAIN ACTIVITIES. IN OTHER WORDS, THE PRESUMP TION WILL BE THAT THESE 10 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 CONNECTED, INCIDENTAL OR ANCILLARY ACTIVITIES OF SA LES ARE NOT BUSINESS AND THE ONUS OF PROOF OF AN INDEPENDENT INTENTION TO DO BUSINESS IN THESE CONNECTED, INCIDENTAL AND ANCILLARY SALES WILL REST ON THE DEPARTMENT. IF, FOR EXAMPLE, THESE CONNECTED, INCIDENTAL OR ANCILLARY T RANSACTIONS ARE SO LARGE AS TO RENDER THE MAIN ACTIVITY INFINITESIMAL OR VERY S MALL, THEN OF COURSE THE CASE WOULD FALL UNDER THE FIRST CATEGORY REFERRED TO EARLIER. (EMPHASIS SUPPLIED. FURTHER, HON'BLE SUPREME COURT IN THIS VERY SAME CA SE HELD AS UNDER: THIS DECISION IS DIRECTLY ON THE POINT SUPPORTING THE CASE OF THE RESPONDENT AFTER NOTICING NUMBER OF DECISIONS ON THE POINT INCLUDING THE DECISIONS CITED BY THE LEARNED COUNSEL BEFORE US. I T MAY BE STATED THAT THE QUESTION OF PROFIT MOTIVE OR NO-PROFIT MOTIVE WOULD BE RELEVANT ONLY WHERE A PERSON CARRIES ON TRADE, COMMERCE, MANUFACTURE OR A DVENTURE IN THE NATURE OF TRADE, COMMERCE ETC. ON THE FACTS AND IN THE CIRCUM STANCES OF THE PRESENT CASE IRRESPECTIVE OF THE PROFIT MOTIVE, IT C OULD NOT BE SAID THAT THE TRUST EITHER WAS DEALEROR WAS CARRYING ON TRADE, COMMERCE ETC. THE TRUST IS NOT CARRYING ON TRADE, COMMERCE ETC., N THE SENSE OF OCCUPATION TO BE A DEALER AS ITS MAIN OBJECT IS TO SPREAD M ESSAGE OF SAIBABA OF SHIRDI AS ALREADY NOTICED ABOVE. HAVING REGARD TO ALL ASPE CTS OF THE MATTER, THE HIGH COURT WAS RIGHT IN ANSWERING THE QUESTION REFERRED BY THE TRIBUNAL IN THE AFFIRMATIVE AND IN FAVOUR OF THE RESPONDENT-ASSESSE E. WE MUST HOWEVER ADD HERE THAT WHETHER A PARTICULAR PERSON IS A DEALER AND WHETHER HE CARRIES ON BUSINESS, ARE THE MATTES TO BE DECIDED ON FACTS AND IN THE CIRCUMSTANCES OF EACH CASE. 34. THUS FROM THE ABOVE, THE LOGICAL COROLLA RY WHICH INEXORABLY FLOWS FROM A CAREFUL PERUSAL OF THE ABOVE LAID DECISION IS THAT IN THE CASES OF MANY INSTITUTIONS / ASSOCIATIONS WHOSE MAIN ACTIVITY IS NOT BUSINESS THE CONNECTED INCIDENTAL OR ANCILLARY ACTIVITIES OF S ALES CARRIED OUT IN FURTHERANCE OF AND TO ACCOMPLISH THEIR MAIN OBJECTS WOULD NOT, NORMALLY, AMOUNT TO BUSINESS, UNLESS AN INDEPENDENT INTENTION TO CONDUC T BUSINESS IN THESE CONNECTED, INCIDENTAL OR ANCILLARY ACTIVITIES IS ES TABLISHED BY THE REVENUE. THEREFORE, THE ISSUE WHETHER A PROFESSIONAL INSTITU TION IS OR IS NOT HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT WILL ESSENTIALL Y DEPEND UPON THE INDIVIDUAL FACTS OF THE CASE OF THE INSTITUTIONS WHEREI N DISCUSSING THE NATURE OF THE INDIVIDUAL ACTIVITIES IT WILL HAVE TO BE DECID ED WHETHER THE SAME FORM INCIDENTAL, ANCILLARY AND CONNECTED ACTIVITIES AN D WHETHER THE SAME WERE CARRIED OUT PREDOMINANTLY WITH A PROFIT MOTIVE. THE AO AND CIT(A) IN THEIR ORDERS RELIED UPON THE FOLLOWING JUDICIAL DECISIONS : * BARENDRA PRASAD RAY V. INCOME-TAX OFFICER (129 IT R 295) SC * COMMISSIONER OF INCOME-TAX V. DHARMA REDDY (A) (7 3 ITR 751) SC * SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. COMMISSIONE R OF INCOME-TAX (101 ITR 234 SC) 11 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 WE HAVE ALREADY DISCUSSED THE CASE LAW OF HON'BLE D ELHI HIGH COURT IN THE CASE OF PHD CHAMBER OF COMMERCE & INDUSTRY(SUPRA), WHEREIN VERY CATEGORICALLY HELD THAT ACTIVITIES AND SERVICES PERFORMED FOR A FEE OR AGAINST A PAYMENT, BY A TRADE, PROFESSIONAL O R SIMILAR ASSOCIATION, SUCH AS A CHAMBER OF COMMERCE AND INDUSTRY COULD N OT BE HELD TO BE BUSINESS IN NATURE CARRIED OUT WITH A PROFIT MOTI VE. FROM ALL THE ABOVE WHAT THUS TRANSPIRES IS THAT IT IS THE PRIMARY OR DOMINANT PURPOSE OF THE INSTITUTION, WHICH MUST BE CHARITABLE. WHERE THE MA IN ACTIVITY IS CHARITABLE THEN THE ACTIVITIES WHICH ARE INCIDENTAL OR ANCILLA RY TO THE MAIN ACTIVITY, EVEN IF CARRIED OUT FOR PROFIT, WOULD NOT MITIGATE O R CHANGE THE CHARITABLE CHARACTER OF THE INSTITUTION. THUS IN THE CAS ES OF MANY PROFESSIONAL INSTITUTION WHOSE MAIN ACTIVITY IS NOT BUSINE SS, THE CONNECTED INCIDENTAL OR ANCILLARY ACTIVITIES OF SALES C ARRIED OUT IN FURTHERANCE OF AND TO ACCOMPLISH THEIR MAIN OBJECTS WOULD NOT, NORMALL Y, AMOUNT TO BUSINESS, UNLESS AN INDEPENDENT INTENTION TO CONDUCT BUSIN ESS IN THESE CONNECTED, INCIDENTAL OR ANCILLARY ACTIVITIES IS ESTABLISHED B Y THE REVENUE. THE TEST, THEREFORE, TO BE APPLIED IS WHETHER THE ACTIVITY WH ICH IS PURSUED IS ANCILLARY TO A DOMINANT OBJECT OR IS INDEPENDENT TO THE MAIN OBJ ECT AND FORMS A SEPARATE OBJECT IN ITSELF. THE ISSUE WHETHER A PROFESSIONAL INSTITUTION IS NOT HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT WILL ESSENTIAL LY DEPEND UPON THE INDIVIDUAL FACTS OF THE CASE OF THE INSTITUT IONS WHEREIN DISCUSSING THE NATURE OF THE INDIVIDUAL ACTIVITIES IT WILL HAVE TO BE DECIDED WHETHER THE SAME FORM INCIDENTAL, ANCILLARY AND CONNECTED ACTIV ITIES AND WHETHER THE SAME WERE CARRIED OUT PREDOMINANTLY WITH A PROFIT M OTIVE. 35. IN VIEW OF THE ABOVE, WE THUS NOW TURN TO EXAM INE AND ANALYSE IN FULL DETAILS THE PARTICULAR FACTS OF THE PRESENT CASE. T HAT THE ASSESSEE ASSOCIATION IS A CHARITABLE INSTITUTION, DULY REGISTERED AS SUC H U/S. 12A OF THE ACT, CARRYING ON ITS MAIN OBJECT OF DEVELOPMENT OF TRA DE, INDUSTRIES AND COMMERCE. THE MAIN OBJECTS FOR WHICH THE ASSOC IATION CAME INTO EXISTENCE, ARE CLEARLY SET OUT IN CLAUSE 3 OF THE MEMORANDUM O F ASSOCIATION WHICH DULY RECORDS AND READS AS UNDER: 3(A) TO PROMOTE AND PROTECT THE TRADE, COMM ERCE AND INDUSTRIES AND IN PARTICULAR THE TRADE, COMMERCE AND INDUSTRI ES IN OR WITH WHICH INDIANS ARE ENGAGED OR CONCERNED. THE ACTIVITIES OF CONDUCTING ENVIRONMENT MANAG EMENT CENTRE, MEETINGS, CONFERENCES & SEMINAR AND ISSUANCE OF CERTIFI CATE OF ORIGIN, BEING THE ACTIVITIES STATED TO BE SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINESS WERE ALL WELL COVERED BY THE MAIN OBJEC T BEING FULLY CONNECTED, INCIDENTAL AND ANCILLARY TO THE MAIN PURPOSE AND WE RE CONDUCTED SOLELY FOR THE EMPOWERMENT, BETTERMENT AND FOR CREATING AWAREN ESS AMONGST THE INDUSTRIALISTS IN ORDER TO BRING ABOUT THE DEVELOPM ENT OF TRADE AND INDUSTRIES IN INDIA. FURTHER IT IS TO BE NOTICED THAT THE MEMORANDUM HAS ALSO SPECIFICALLY AUTHORIZED THE CHAMBER TO DO ALL OTHE R THINGS AS MAY BE CONDUCTIVE TO THE DEVELOPMENT OF TRADE, COMMERCE AN D INDUSTRIES, OR 12 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 INCIDENTAL TO ATTAINMENT OF THE ABOVE OBJECTIVES OR ANY OF THEM. THUS 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 SAID ACTIVITIES WERE NOT CARRIED OUT INDEPEN DENT OF THE MAIN PURPOSE OF THE ASSOCIATION OF THE INSTITUTION BEING THE DEVELOPMENT AND PROTECTION OF TRADE. THERE WAS NO INDEPENDENT PROFIT MOTIVE IN ANY OF THE SAID ACTIVITIES. THE SURPLUS ARISING OUT OF THE SAME WAS MERELY INCIDENTAL TO THE MAIN OBJECT TO CHARITY. THE MAJORITY OF THE RECEIPTS IN THE SAID ACTIVITIES WERE OUT OF THE SPONSORSHIP S AND DONATIONS. THE EXPENSES INCURRED ON THE SAID ACTIVITIES AS AND WHE N INCURRED WERE ALL SEPARATELY DEBITED TO THE SAID ACCOUNTS AND THE BAL ANCE WAS SHOWN AS SURPLUS OVER RECEIPTS. THUS IN VIEW OF THE A BOVE IT IS CLEAR THAT THE ALLEGED ACTIVITIES WERE ALL MERELY INCIDENTAL TO THE MAIN OBJECT OF THE ASSESSEE AND THE PREDOMINANT OBJECT OF THE AS SOCIATION BEING THE PROMOTION DEVELOPMENT AND PROTECTION OF TRADE AND COMMERCE WHICH IS AN OBJECT OF GENERAL PUBLIC UTILITY, IT CAN NEVER BE THE CASE THAT IT IS ENGAGED IN BUSINESS, TRADE OR COMMERCE OR IN ANY SE RVICE IN RELATION TO BUSINESS, TRADE OR COMMERCE. THE INDIVIDUAL N ATURE AND PURPOSE OF THE SPECIFIC ACTIVITIES, IT IS STATED THAT THE ACTIVITI ES HELD BY AO AND THE (A) TO BE BUSINESS IN NATURE, WERE AS FOLLOWS: (A) MEETINGS, CONFERENCES & SEMINARS (B) ENVIRONMENT MANAGEMENT CENTRE FEES FOR CERTIFICATE OF ORIGIN FACTS RELATING TO THESE ACTIVITIES ARE DISCUSSED IN DETAIL IN PARA 23 TO 25 OF THIS ORDER ABOVE, WHICH NEED NOT BE REPEATED. 36. FROM FACTS IN ENTIRETY, NOW THE QUESTION ARISES IS WHETHER PRINCIPLE OF CONSISTENCY WILL APPLY OR NOT? FROM AY 1985-86 T O 2007-08 EXEMPTION U/S 11 OF THE ACT WAS ALLOWED. NOW, HAVING EXTENSIVELY WITH THE NEWLY AMENDED SECTION 2(15) OF THE ACT AND ITS ABSOLUTE INAPPLICA BILITY TO THE CASE OF ASSESSEE SUPPORTED BY VARIOUS JUDICIAL DECISIONS, WE WILL DISCUSS THIS ISSUE. WE FIND THAT CIT(A) WITHOUT APPRECIATING THAT THE B ASIS PRINCIPLE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSE REMAINED UNALTE RED, AND ON AMENDMENT IN THE SECTION 2(15) OF THE ACT W.E.F. 01/04 /2009, WHEREBY THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN , LOWER AUTHORITIES HELD THAT THE SAME SUBSTANTIALLY CHANGED THE POSITION OF LAW AND THUS THE PRINCIPLE OF CONSISTENCY DID NOT APPLY. BUT WE ARE OF THE VIEW T HAT A DETAILED READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YE ARS, INTERPRETING THE DEFINITION OF CHARITABLE PURPOSEAS LAID OUT IN S ECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF BUSINESS IN RELATION TO THE SAID SECTION AMPLY REVELS THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS, ALL THROUGH THE YEARS, BEEN UPHELD TO BE THE DETERMINING FACTOR LAY ING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHER E THE MAIN OBJECT OF THE INSTITUTION WAS CHARITABLE IN NATURE, THEN TH E ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF THE SAID, BEING INCIDENT AL OR ANCILLARY TO THE MAIN 13 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 OBJECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CAR RIED OUT WITH NON MEMBERS, WERE ALL HELD TO BE CHARITABLE IN NATURE. HON'BLE APEX COURT IN THE EARLIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEA RLY LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE OF AN INSTITU TION WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATURE. IT WAS LAID OUT BY THE COURT THAT, THAT IF THE PRIMARY PURPOSE BE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL ENTRY INTO THE POLITICAL DOMAIN FOR ACHIEVING THAT PURPOSE, E .G. PROMOTION OF OR OPPOSITION TO LEGISLATION CONCERNING THAT PURPOSE, WAS CONTEMPLATED. IT WAS ONLY FOR THE PURPOSE OF SECURING ITS PRIMAR Y AIMS THAT IT WAS MENTIONED IN THE MEMORANDUM OF ASSOCIATION THAT THE CHAMBER MIGHT TAKE STEPS TO URGE OR OPPOSE LEGISLATIVE OR OTHER MEASURES AFFECTING TRADE, COMMERCE OR MANUFACTURES. SUCH AN OBJEC T OUGHT TO BE REGARDED AS PURELY ANCILLARY OR SUBSIDIARY AND NOT TH E PRIMARY OBJECT. IN CONNECTION TO THE ABOVE CASE IT IS LAID OUT THE SAID CASE DEALT WITH THE ASSESSMENT OF THE ASSESSEE IN THE A.YS 1948-49 TO WHEREIN RELEVANT TO THE SAID AYS 1948-49 TO 1952-53, BY THE LAST PARAGRAPH OF SUB-SECTION (3) OF THE IT ACT, 1922, CHARITABLE PURPOSES WAS DEFINED AS .. IN THIS SUB-SECTION CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY, BUT NOTHING CONTAINED IN CLAUSE (I) OR CLAUSE (II) SHALL OPERATE TO EXEMPT FROM THE PROVISIONS OF THIS ACT PART OF THE INCOME FROM PROPERTY HELD UNDER A TRUST OR OTHER LEGAL OBLIGATION FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENSURE FOR THE BENEFIT OF THE PUBLIC . THE ADDING OF THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT: WAS INTRODUCED BY THE INCOME TAX ACT, 1961. HON'BLE APEX COURT IN THE EARLIEST DECISION IN THE CASE OF SURAT ART SILK CLO TH MANUFACTURERS ASSOCIATION (SUPRA) HELD THE THEORY OF DOMINANT OR PRIMARY OBJE CT OF THE TRUST TO BE THE DETERMINING FACTOR SO AS TO TAKE THE CARRYING ON OF THE BUSINESS ACTIVITY MERELY ANCILLARY OR INCIDENTAL TO THE MAIN OB JECT. IT WAS HELD AS FOLLOWS:- (I) THAT THE DOMINANT OR PRIMARY PURPOSE OF THE ASSESSE E WAS TO PROMOTE COMMERCE AND TRADE IN ART SILK YARN, RAW SILK, COTT ON YARN, ART SILK CLOTH, SILK CLOTH AND COTTON CLOTH A SET OUT IN CLAUSE (A) AND THE OBJECTS SPECIFIED IN CLAUSES (B) TO (E) WERE MERELY POWERS INCIDENTAL TO THE CARRYING OUT OF THAT DOMINANT A ND PRIMARY PURPOSE; (II) THAT THE DOMINANT OR PRIMARY PURPOSE OF THE PROMOTION OF COMMERCE AND TRADE IN ART SILK, ETC., WAS AN OBJECT OF PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFI T WITHIN THE MEANING OF S.2(15) AND THAT THE ASSESSEE WAS ENTITLED TO EXEMP TION UNDER S 11(1)(A). 14 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 AGAIN THE HON'BLE APEX COURT IN THE CASE OF FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY (SUPRA) HELD THAT THAT THE DOMINANT OBJECT WITH WHICH THE FEDERATION WAS CONSTITUTED BEING A CHARITABLE PURPOSE VIZ. PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRY, THERE BEING NO MOTIVE TO EAR N PROFITS, THE RESPONDENT WAS NOT ENGAGED IN ANY ACTIVITY IN THE NATURE OF BU SINESS OR TRADE, AND, IF ANY INCOME AROSE FROM SUCH ACTIVITY, IT WAS ON LY INCIDENTAL OR ANCILLARY TO THE DOMINANT OBJECT FOR THE WELFARE AND C OMMON GOOD OF THE COUNTRYS TRADE, COMMERCE AND INDUSTRY, AND ITS IN COME WAS, THEREFORE, EXEMPT FROM TAX UNDER S.11 OF THE IT ACT, 1961. AGAIN REITERATING THE DOMINANT PURPOSE THEORY, THE HON'BLE SC IN THE CASE OF SAI PUBLICATION FUND (SUPRA) LAID OUT AS FOLLOWS: IF THE MAIN ACTIVITY IS NOT BUSINESS, THE N ANY TRANSACTION INCIDENTAL OR ANCILLARY WOULD NOT NORMALLY AMOUNT TO BUS INESS UNLESS AN INDEPENDENT INTENTION TO CARRY ON BUSINESS IN THE INCIDENTAL OR ANCILLARY ACTIVITY IS ESTABLISHED. IN SUCH CASES, THE ON US OF PROOF OF AN INDEPENDENT INTENTION TO CARRY ON BUSINESS: CONNECTED WITH O R INCIDENTAL OR ANCILLARY SALES WILL REST ON THE DEPARTMENT. THUS, IF THE MAIN ACTIVITY OF A PERSON IS NOT TRADE , COMMERCE ETC., ORDINARILY INCIDENTAL OR ANCILLARY ACTIVITY MAY NOT COME WITHIN THE MEANING OF BUSINESS. IN THE RECENT DECISION WHICH DEALS SPECIFICALLY WIT H THE NEWLY AMENDED SECTION 2(15) OF THE ACT, IN THE CASE OF INS TITUTE OF CHARTERED ACCOUNTANTS OF INDIA V. DIRECTOR GENERAL OF INC OME-TAX (EXEMPTIONS) [2012] 347 ITR 0099 DEL HC, LAYING DOWN THE VERY SAME PRIN CIPLE IT WAS AGAIN LAID: THAT THE FUNDAMENTAL OR DOMINANT FUNCTION OF THE INSTITUTE WAS TO EXERCISE OVERALL CONTROL AND REGULATE THE ACTIVITIE S OF THE MEMBERS/ENROLLED CHARTERED ACCOUNTANTS. A VERY NARROW VIEW HAD BEEN TAKEN THAT THE INSTITUTE WAS HOLDING COACHING CLASSES AND THAT THIS AMOUNTED TO BUSINESS. AGAIN, HON'BLE BOMBAY HIGI COURT IN THE WP OF BAUN FOUNDATION TRUST (WRIT PETITION NO. 1206 OF 2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY 27 MARCH 2012) IT WAS HELD THAT 4IT IS A WELL SETTLED POSITION IN LAW THAT THE DO MINANT NATURE OF THE PURPOSE FOR WHICH THE TRUST EXISTS HAS TO BE CONSIDERED. TH E CHIEF COMMISSIONER HAS NOT DOUBTED THE GENUINENESS OF THE TRUST OR THE FAC T THAT IT IS CONDUCTING A HOSPITAL. THUS FROM ALL THE ABOVE IT IS SEEN THAT THOUGH THE DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) HAS UNDERGONE CHAN GES, THE PRINCIPLE UNDERLYING THE SAME HAS REMAINED THE SAME. IN CONTEXT OF THE ABOVE, WITH REGARD TO THE PRINCIPLE OF CONSISTENCY IT WOULD BE OF RELEVANCE HERE TO QUOTE THE DECISION OF THE APEX COURT IN THE CASE OF RADHASOAMI SATSANG V. COMMISSIONER OF INCOME-TAX (193 ITR 321 SC) WHEREIN IT WAS HELD THAT: 15 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 . (II) THAT, IN THE ABSENCE OF ANY MATERIAL CHANG E JUSTIFYING THE DEPARTMENT TO TAKE A DIFFERENT VIEW FROM THAT TAKEN IN EARLIER PROCEEDINGS, THE QUESTION OF THE EXEMPTION OF THE ASSESSEE APPELLANT SHOULD NOT HAVE BEEN REOPENED. STRICTLY SPEAKING, RES JUDICATA DOES NOT APPL Y TO INCOME-TAX PROCEEDINGS. THOUGH, EACH ASSESSMENT YEAR BEING A UNIT, W HAT WAS DECIDED IN ONE YEAR MIGHT NOT APPLY IN THE FOLLOWING YEAR; WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDERED, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 37. . 38. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF T HE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS, INTERPRETING THE DEFINITION OF CHARITABLE PURPOSEAS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINI TION OF BUSINESSIN RELATION TO THE SAID SECTION AMPLY REVELS THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS, ALL THROUGH THE YEARS, BEEN UPHELD TO BE TH E DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATUR E OR NOT. WHERE THE MAIN OBJECT OF THE INSTITUTION WAS CHARITABLE IN NATUR E, THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF THE SAID, BEI NG INCIDENTAL OR ANCILLARY TO THE MAIN OBJECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NON MEMBERS, WERE ALL HELD TO BE CHARITABLEIN NATURE. HON'BLE APEX COURT IN THE EARLIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEARLY LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE OF A N INSTITUTION WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATUR E. IN OUR VIEW THE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSE REMAINED UNALTERED EVEN ON AMENDMENT IN THE SECTION 2(1 5) OF THE ACT W.E.F. 01/04/2009, THOUGH THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN. ACCORDINGLY, IN THE GIVEN FACTS OF THE CASE A S DISCUSSED ABOVE IN DETAIL, THE ASSESSEE ASSOCIATIONS PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY AND IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, F OR ACHIEVING THE MAIN PURPOSE WAS PROFITABLE IN NATURE. HENCE, ASSESSEE IS NOT HI T BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. 7. ON THE OTHER HAND, WHEN THESE WERE CONFRONTED TO LD . SR. DR I.E. THE COORDINATE BENCH DECISION OF ITAT, KOLKATA IN THE C ASE OF INDIAN CHAMBER OF COMMERCE AND ITAT CHENNAI BENCH DECISION IN THE CAS E OF JAPANESE CHAMBER OF COMMERCE & INDUSTRY, SUPRA, HE COULD NOT BRING ANY CONTRARY DECISION BEFORE US AND AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE. 16 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSE E TRUST IS REGISTERED WITH THE DIT(E), MUMBAI U/S. 12A OF THE ACT AS CHARITABLE IN STITUTION. THE ASSESSEE FALLS UNDER THE DEFINITION OF CHARITABLE PURPOSES UNDER T HE LAST LIMB OF DEFINITION TO CHARITABLE PURPOSES U/S. 2(15) OF THE ACT I.E. THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. WE FIND THAT THE CASE O F ASSESSEE IS COVERED BY THE ORDERS OF COORDINATE BENCHES OF THE ITAT IN THE CAS E OF JAPANESE CHAMBER OF COMMERCE & INDUSTRY OF CHENNAI BENCH AND INDIAN CHA MBER OF COMMERCE OF KOLKATA BENCH, SUPRA. IN VIEW OF THE ABOVE, WE ALLO W THIS GROUND OF APPEAL OF THE ASSESSEE. 9. THE ASSESSEE HAS ALSO RAISED OTHER GROUNDS IN RESPE CT TO THE CLAIM OF BENEFIT OF MUTUALITY. SINCE WE HAVE ADJUDICATED TH E MAIN ISSUE IN ITS FAVOUR, WE NEED NOT TO GO INTO THE OTHER ASPECTS. 10. AS REGARDS TO REVENUES APPEAL IN ITA NO. 1122/MUM/ 2013, THE REVENUE HAS RAISED THE GROUNDS AGAINST THE ORDER OF CIT(A) ALLOWING CARRIED FORWARD AND SET OFF OF INCOME OF CURRENT YEAR. SINCE THE MAIN ISSUE IN THE ASSESSEES APPEAL IS ALLOWED, THIS HAS BECOME ACADEMIC IN NATURE. ACCOR DINGLY, REVENUES APPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND TH AT OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH APRIL, 2016. SD/- SD/- (R.C. SHARMA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 15TH APRIL, 2016 JD. SR. P.S. 17 ITA NO. 386-1122/MUM/2013 INDO FRENCH CHAMBER OF COMMERCE & INDUSTRY ASST. YEAR 2009-10 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) -1, MUMBAI 4. CIT- , MUMBAI 5. DR, B BENCH ITAT, MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (ASSTT. REGISTRAR) ITAT, MUMBAI