ITO (E), New Delhi V. Consumer Electronics & Appliances Manufactures Association, Noida

ITA 6784/DEL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6591 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Charitable institution; Benefit of exemption
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEM BER ITA NO.-6784/DEL/2017 ( ASSESSMENT YEAR: 2014-15) ITO (E), NEW DELHI. V S CONSUMER ELECTRONICS & APPLIANCES MANUFACTURERS ASSOCIATION, WAVE-1, F-4/23, 4 TH FLOOR, PLOT NO. D-6, SECTOR-18, NOIDA-201301 REVENUE BY SH. S.L. ANURAGI, SR. DR ASSESSEE BY SH. VED JAIN, ADV. ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 03/08/2017 CITA 40 DE LHI PERTAINING TO 2014 15 ASSESSMENT YEAR ON THE FOLLOWING GROUND :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS NOT ENGAGED I N ANY TRADE, COMMERCE OR BUSINESS DESPITE THE FACT THAT MAJOR RECEIPTS OF TH E ASSESSEE ARE COMMERCIAL IN NATURE. 2. AT THE TIME OF HEARING IT WAS THE SUBMISSION OF THE LD. AR THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY CONSISTENT ORDERS OF THE ITAT IN ASSESSEES OWN CASE. INVITING ATTE NTION TO THE IMPUGNED ORDER IT WAS HIS SUBMISSION THAT IN FACT THE CIT(A ) HAS RELIED UPON THE ORDER PASSED BY HIS PREDECESSOR IN 2012 13 ASSESSMENT YEAR. IT WAS ALSO HIS SUBMISSION THAT THE ISSUE HAS COME UP BEFORE THE ITAT IN THE EARLIER YEARS ALSO. REFERRING TO COPY OF THE ORDER DATED 03/10/2017 AVAILABLE AT PAPER BOOK PAGES 74 TO 81, IT W AS SUBMITTED THAT THE ITAT IN ITA/6588/DEL/2015 DISMISSED IDENTICAL APPEAL OF THE REVENUE ON SIMILAR FACTS. SINCE THE PRESENT APPEAL HAS BE EN FILED BY THE REVENUE, IT WAS DEEMED APPROPRIATE TO FIRST HEAR THE LD. SR. DR. 3. THE LD. SR. DR PLACED RELIANCE UPON THE ASSESSMENT ORD ER. HOWEVER ON GOING THROUGH THE ORDER OF THE ITAT AVAILAB LE IN THE PAPER BOOK IN ASSESSEE'S OWN CASE, NO CONTRARY FACT, CIRCUMSTA NCE OR ARGUMENT WAS RAISED BY HIM TO CANVASS A CONTRARY VIEW. DATE OF HEARING 02.07 .2018 DATE OF PRONOUNCEMENT 27.07. 2018 ITA-6784/DEL/2017 PAGE 2 OF 6 4. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD I FIND ON GOING THROUGH THE SAME THAT THE PO INT AT ISSUE STANDS ADDRESSED BY THE COORDINATE BENCH ON SAME SET OF FACTS AND CIRCUMSTANCES. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO TAKES COGNIZANCE OF THE FACTS NOTING THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860 ACCORDE D REGISTRATION U/S 12A(A) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE AC T) VIDE ORDER DATED 15.01.1996 WITH THE MAIN OBJECT TO; -- TO TAKE OVER THE EXISTING CONSUMER ELECTRONICS AND TV MANUFACTURERS ASSOCIATION, A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATI ON ACT, 1860 (XXI OF 1860) WITH ALL ITS ASSETS AND LIABILITIES. -- TO PROMOTE THE DEVELOPMENT OF THE CONSUMER ELECT RONICS & APPLIANCES INDUSTRY LIKE TELEVISION, VIDEO, AUDIO, GAMES, TOYS, ELECTRO NIC CLOCKS AND WATCHES, MICROWAVE OVENS ETC. AND COMPONENTS USED IN THESE P RODUCTS, THROUGH THE DEVELOPMENT OF A HEALTHY AND PROGRESSIVE ACTIVITY I N RESEARCH AND DEVELOPMENT, MANUFACTURE, TRADE, COMMERCE, SALE AND USE OF THESE ITEMS. -- TO PROMOTE A FEELING OF FRATERNITY AND UNANIMITY AMONG ITS MEMBERS ON ALL SUBJECTS CONNECTED WITH THEIR COMMON GOOD. -- TO PROMOTE FAIR COMPLETION AND HEALTHY PRACTICES AMONG MANUFACTURES, DEALERS AND USERS OF CONSUMER ELECTRONIC ITEMS. 4.1 THE ASSESSING OFFICER TOOK INTO CONSIDERATION THE FACT THAT THE ASSESSEE IS NEITHER IN THE FIELD OF EDUCATION NOR IN THE FIELD OF MEDICAL RELIEF OR RELIEF OF POOR. ACCORDINGLY IT WAS HIS CONSIDERED OPIN ION THAT THE ASSESSEE CAN BE CONSIDERED FOR THE BENEFIT OF EXEMPTION U NDER SECTION 11/12 AFTER VERIFYING THE APPLICABILITY OF THE PROVISO TO SEC TION 2 (15) SINCE ITS ACTIVITIES FELL WITHIN THE SCOPE OF GENERAL PUBLIC UTILIT Y. HOWEVER ON EXAMINATION OF THE RECORD IT WAS NOTICED THAT THE INCOME OF THE ASSESSEE WAS FROM SUBSCRIPTION RECEIVED, ADMISSION FEE RECEIVED, MEETING AND CONFERENCE CONTRIBUTION, CEAMA NEWS RECEIPTS , SPONSORSHIP FEE FOR SEMINAR ETC. RECEIVED FROM DIFFERENT PA RTIES. THE AO WAS OF THE VIEW AS IN THE EARLIER YEAR THAT IT WAS AN ACTIVITY IN THE NATURE OF TRADE AND COMMERCE AND RENDERING SERVICES IN RELATION TO TRADE/COMMERCE/BUSINESS. ACCORDINGLY, AS IN THE EARLIER Y EARS THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUPPORT ITS CLA IM. NOT CONVINCED WITH THE EXPLANATION OFFERED HE WAS OF THE VIEW T HAT NO DOUBT NO PROFIT MOTIVE FOR SEVERAL DECADES HAS BEEN ACCEPTED AS A VALID TEST HOWEVER HE WAS OF THE VIEW THAT PROFIT MOTIVE AND MANNER OF APPLICATION MONEY HAS NO LINKAGE WITH THE CARRYING ON OF THE ACTIVITIE S. IT WAS CONCLUDED THAT ONCE ACTIVITIES CARRIED ON BY THE ASSESSE E ARE IN THE ITA-6784/DEL/2017 PAGE 3 OF 6 NATURE OF TRADE, COMMERCE OR BUSINESS IT IS DUTY OF THE A SSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE SATISFIES ANY OF THE REQU IREMENTS OF SECTION 11, 12, 12 A (P) AND 13 OF THE ACT. CONSIDERING THE LANGUAGE OF THE STATUTORY PROVISION SECTION 2 (15) TO BE AN UNAMBIGUO US IT WAS CONCLUDED THAT THE CONSUMER ELECTRONICS AND APPLIANCES MANUFACTURERS ASSOCIATION IS COVERED BY THE PROVISO TO A MENDED ITS DEFINITION CONTAINED IN SECTION 2 (15) OF THE INCOME TAX ACT SINCE THE PROVISO WAS APPLICABLE WITH EFFECT FROM 2009-10 ASSESSMENT YEAR IT WAS HELD THAT THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF EXEMPTION OF INCOME AS PER PROVISIONS OF SECTION 11 AND 12 OF THE ACT. 5. IT IS SEEN THAT IN APPEAL BEFORE THE FIRST APPELLA TE AUTHORITY RELYING UPON THE VIEWS TAKEN BY HIS PREDECESSOR IN 2010 11 AND 2012 13 ASSESSMENT YEARS CONSIDERING THE OBJECTS OF THE A SSESSEE AND THE DECISION OF THE APEX COURT IN THE CASE OF ACIT VS. ANDHR A CHAMBER OF COMMERCE (1981) 130 ITR 184 THE DELHI HIGH COURT IN THE C ASE OF PHD CHAMBERS OF COMMERCE AND INDUSTRY V DIT(E) (2013) 357 IT R 296/212 TAXMAN 194/(2012) 28 TAXMANN.COM 61. THE CIT(A) PROCEEDE D TO ALLOW RELIEF TO THE ASSESSEE HOLDING AS UNDER:- 4.1.5. IN VIEW OF THE DISCUSSION ABOVE AND RESPEC TFULLY FOLLOWING THE DECISION OF MY LD. PREDECESSOR FOR ASSESSMENT YEARS 2010-11, 20 11-12 AND 2012-13 IN APPELLANTS OWN CASE, IT IS HELD THAT THE ASSESSEE IS NOT INVOLVED ANY TRADE, COMMERCE BUSINESS AND AS SUCH THE PROVISO TO SECTIO N 2(15) IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE. FURTHER, THE CASES RELIED UPO N BY THE APPELLANT ARE ALSO APPLICABLE IN ITS CASE. THE ASSESSING OFFICER IS DI RECTED TO ALLOW EXEMPTION UNDER SECTION 11 WITH ALL CONSEQUENTIAL BENEFITS. GROUNDS OF APPEAL NUMBERS 1 TO 6 ARE ALLOWED. 6. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE THE ITAT. A PERUSAL OF THE ORDER PASSED BY THE COORDINATE BENCH IN SIMILAR SET OF FACTS AND CIRCUMSTANCES SHOW THAT THE DEPARTMENTAL APP EAL WAS DISMISSED RELYING UPON THE POSITION OF LAW AS CONSIDERED IN THE CASE OF INDIAN TRADE PROMOTION ORGANIZATION VS DIRECTOR GENERAL O F INCOME-TAX (EXEMPTIONS) (2015) 371 ITR 333 (DEL.). FOR READY REFERENCE W E EXTRACT THE RELEVANT PORTION : BEFORE PROCEEDING FURTHER, WE WOULD LIKE TO EXTRAC T THE PROVISIONS CONTAINED U/S 2(15) OF THE ACT, PROVISO FOR READY REFERENCE : 2. IN THIS ACT UNLESS THE CONTEXT OTHERWISE REQUIR ES,--- 15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POO R, EDUCATION, [YOGA,] MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILD LIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY: ITA-6784/DEL/2017 PAGE 4 OF 6 [PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIV E OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY; AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTA KING SUCH ACTIVITY OR ACTIVITIES, OF THAT PREVIOUS YEAR;]]' 7. UNDISPUTEDLY, THE ASSESSEE SOCIETY IS REGISTERED U/ S 12A(A) OF THE ACT. PERUSAL OF THE MEMORANDUM OF ASSOCIATIO N OF CONSUMER ELECTRONICS AND APPLIANCES MANUFACTURERS ASSOCIATION, THE ASSESSEE SOCIETY, APPARENTLY SHOWS THAT THE SAME WAS SET UP AS A CHARITABLE INSTITUTION TO WORK FOR DEVELOPMENT OF CONSUMER ELECTRONICS AND APPLIANCES INDUSTRIES LIKE TELEVISION, VIDEO, AUDIO ETC. AND THE ACTIVITY IN RESEARCH AND DEVELOPMENT, MANUFACTURES, TRADE, COMMERCE, SALE, E TC, AND TO PROMOTE A FEELING OF FRATERNITY AND UNANIMITY AMONG ITS MEMBERS OF ALL SUBJECTS CONNECTED WITH THEIR COMMON GOOD. 8. NOW, IN THE BACKDROP OF THE OBJECTS OF THE ASS ESSEE SOCIETY ENSHRINED IN MEMORANDUM OF ASSO CIATION, WHICH HAVE UNDISPUTEDLY NOT BEEN CHANGED, TH E SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE I S :- 'AS TO WHETHER BY VIRTUE OF ITS ACTIVITIES THE ASSE SSEE SOCIETY FALLS WITHIN THE MISCHIEF OF PROVISIONS OF SECTION 2(15) OF THE ACT.' 9. AO PROCEEDED TO INVOKE PROVISO TO SECTION 2(15) OF THE ACT ON THE SOLE GROUND THAT SINCE THE ASSESSEE HAS RECEIVED PAYMENTS ON ACCOUNT OF SUBSCRIPTION RECEIVED, ADMIS SION FEE RECEIVED, MEETING & CONFERENCE CONTRIBUTION, INTERE ST, MISC. INCOME, CEAMA NEWS RECEIPTS, CONTRIBUTION FOR MARKE T STUDY AND CONTRIBUTION FOR ANTI DUMPING CASE FROM D IFFERENT PARTIES, THESE ACTIVITIES ARE IN THE NATURE OF TRAD E, COMMERCE AND RENDERING SERVICES IN RELATION TO THE TRADE, CO MMERCE AND BUSINESS. THE AO HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL IF THE ASSESSEE SOCIETY IS CARRYING OUT AC TIVITIES WHICH ARE NOT ENSHRINED IN THE MEMORANDUM OF ASSOCIATION, A PRIMARY DOCUMENT, TO CONTROL THE ACTIVITIES OF THE ASSESSEE SOCIETY. 10. HON'BLE DELHI HIGH COURT IN CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DIRECTOR GENERAL OF INCO ME-TAX (EXEMPTIONS) - 2015) 371 ITR 333 (DEL.) WHILE DECIDING THE IDENTICAL ISSUE HELD AS UNDER :- 'SECTION 2(15), READ WITH SECTION 10(23C) OF THE IN COME- TAX ACT, 1961 - CHARITABLE PURPOSE - OBJECT OF GENE RAL PUBLIC UTILITY (PROVISO) - WHETHER IN DECIDING WHET HER ANY ACTIVITY IS IN NATURE OF TRADE, COMMERCE OR BUSINES S OR IS ONE FOR RENDERING ANY SERVICE IN RELATION TO ANY TR ADE, COMMERCE OR BUSINESS IT HAS TO BE EXAMINED WHETHER THERE IS AN ELEMENT OF PROFIT MAKING OR NOT -HELD, YES - WHETHER ITA-6784/DEL/2017 PAGE 5 OF 6 EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN SECT ION 2 (15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS AND IT HAS TO TAKE COLOUR AND BE CONSIDERED IN CONTEXT OF SECTION 10(23C)(IV) - HELD, YES - WHETHER CORRECT INTERPRET ATION OF PROVISO TO SECTION 2(15) WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXC EPTION IS LIMITED TO ACTIVITIES IN NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A C ESS OR FEE OR ANY OTHER CONSIDERATION - HELD, YES -WHETHER THUS IF DOMINANT AND PRIME OBJECTIVE OF INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, I S PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN NATU RE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN RENDER ING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM IT S OBJECT TO BE A 'CHARITABLE PURPOSE' - HELD, YES - WHETHER WHERE DRIVING FORCE IS NOT DESIRE TO EARN PROFITS, BUT OB JECT OF PROMOTING TRADE AND COMMERCE NOT FOR ITSELF, BUT FO R NATION, IT IS CLEARLY A CHARITABLE PURPOSE - HELD, YES - WH ETHER CONSTITUTIONAL VALIDITY OF PROVISO TO SECTION 2(15) INTRODUCED BY FINANCE ACT 2008 IS TO BE UPHELD, HOWEVER, IT IS TO BE READ DOWN IN MANNER AS INDICATED ABOVE - HELD, YES - WHETHER OBJECTS OF INDIA TRADE PROMOTION ORGANIZATI ON NAMELY ARE CHARITABLE IN NATURE - HELD, YES [PARAS 43,46,47,58 & 59] [IN FAVOUR OF ASSESSEE]' 11. WHEN WE EXAMINE THE DOMINANT AND PRIMARY OBJECT OF THE ASSESSEE SOCIETY IN THE LIGHT OF THE DECISION RENDE RED BY HON'BLE DELHI HIGH COURT IN CASE CITED AS INDIA TRADE PROMOTION ORGANIZATION (SUPRA), THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS NOR RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS. 12. WHEN WE FURTHER EXAMINE NATURE OF ACT IVITIES BEING EARNED OUT BY THE ASSESSEE SOCIETY DULY EXTRACTED B Y ID. AO IN ASSESSMENT ORDER, THE SAME ARE NOT IN THE NATURE OF TRADE AND COMMERCE BY ANY STRETCH OF IMAGINATION. FOR READY R EFERENCE, NATURE OF ACTIVITIES CARRIED OUT BY THE ASSESSEE SO CIETY ARE REPRODUCED AS UNDER :- SL.NO. HEADS AMOUNT (IN RS.) 1 SUBSCRIPTION RECEIVED 34,49,307 2 ADMISSION FEE RECEIVED 15,000 3 MEETING & CONFERENCE CONTRIBUTION 28,56,479 4 CEAMA NEWS RECEIPTS 16,44,362 5 INTEREST 7,56,480 6 CONTRIBUTION FOR MARKET STUDY 4,00,000 7 CONTRIBUTION FOR ANTI DUMPING CASE 5.00,000 60,470 13. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THERE IS NO ILLEGALITY OR PERVERSITY IN T HE IMPUGNED ORDER PASSED BY THE ID. CIT (A), HENCE PRESENT APPEAL FILED BY T HE REVENUE IS HEREBY DISMISSED. 7. IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTA NCES IN THE ABSENCE OF ANY DISTINCTION EITHER ON FACT OR CIRCUMSTANCE BROUGHT TO MY ITA-6784/DEL/2017 PAGE 6 OF 6 NOTICE BY THE LD. DR I FIND NO GOOD REASON TO VARY THE CONCLUSION ARRIVED AT BEING SATISFIED BY THE REASONING AND CONCLUSION THE DEPARTMENTAL APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27.07.2018. SD/- (DIVA SINGH) JUDICIAL MEMBER VEENA/POONAM(CHD) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI