DDIT (E)-II(1), MUMBAI V. INDIAN MACHINE TOOLS MANUFACTURERS ASSOCIATION, MUMBAI

ITA 805/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1479 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 08-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR SRIVASTAVA
• Assessee Lawyers: FALE E H BILIMORIA
• Keywords: Business income; Rule of consistency; Question of law
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI A.L. GEHLO T ,(AM) ITA NO.805/MUM/2009 ASSESSMENT YEAR : 2005-06 DY. DIRECTOR OF INCOME TAX(EXEMPTION) RANGE-II(1) 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 012. ..( APPELLANT ) VS. INDIA MACHINE TOOLS MANUFACTURERS ASSOCIATION C/O. KALYANIWALA & MISTRY KALPATARU HERITAGE, 5 TH FLOOR 127, MAHATMA GANDHI ROAD MUMBAI-400 001. ..( RESPONDENT ) P.A. NO. (AAACI 1369 M) C.O. NO.226/MUM/2009 ARISING OUT OF ITA NO.805/MUM/2009 ASSESSMENT YEAR : 2005-06 INDIA MACHINE TOOLS MANUFACTURERS ASSOCIATION MUMBAI-400 001. ..( CROSS OBJECTOR ) VS. DY. DIRECTOR OF INCOME TAX(EXEMPTION) RANGE-II(1) MUMBAI-400 020. ..( APPELLANT IN APPEAL ) REVENUE BY : SHRI A JAY KUMAR SRIVASTAVA ASSESSEE BY : SHRI FALE E H. BILIMORIA ITA NO.805/09 &C.O. 226/09 A.Y:05-06 2 O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 6.11.2008 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06 AGAINST WHICH THE ASSESSEE HAS FILED CROSS OBJE CTION. THE APPEAL AND CROSS OBJECTION ARE DISPOSED OF BY THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY FORMED AND REGISTERED U/S.25 OF THE COMPANIES A CT, 1956 HAVING THE MAIN OBJECT OF PROMOTION AND PROTECTION OF THE MACHINE TOOL TRADE AND INDUSTRY IN INDIA. THE RETURN WAS FIL ED DECLARING TOTAL INCOME AT RS.NIL ALONGWITH AUDITED INCOME AND EXPENDI TURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM NO.10B. THE A SSESSEE ALSO FILED COPY OF REGISTRATION U/S.12A OF THE INCOME TAX A CT, 1961(THE ACT) AND VARIOUS OTHER DETAILS AS ASKED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT DURING THE YEAR THE ASSESSEE HAS HELD THE TOOLTECH EXHIBITION TO PROMOTE THE MACHINE TOOL INDUS TRY IN INDIA. IT WAS STATED THAT SUCH EXHIBITIONS WERE HELD FOR PROVIDIN G A COMMON PLATFORM TO ALL MANUFACTURERS IN THE INDUSTRY, WHETHER LARGE OR SMALL, TO ESTABLISH BUSINESS CONTACTS AND THEY ALSO ACT AS A FORUM F OR MEETING ITA NO.805/09 &C.O. 226/09 A.Y:05-06 3 PROSPECTIVE BUYERS FROM ALL OVER THE COUNTRY AND WERE I NCIDENTAL TO THE ATTAINMENT OF THE MAIN OBJECT OF PROMOTING THE MACHI NE TOOL INDUSTRY IN INDIA. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICE R THAT FOR THE FIRST TIME IN ASSESSMENT YEAR 1992-1993, THE INCOME TAX DEPARTMENT HAD DENIED EXEMPTION U/S.11 ON THE GROUND THAT THE H OLDING OF EXHIBITIONS AMOUNTED TO BUSINESS, IT WAS NOT INCIDENTA L TO THE ATTAINMENT OF THE OBJECTS AND THAT SEPARATE BOOKS OF ACCO UNT WERE NOT MAINTAINED BY THE ASSESSEE IN RESPECT OF SUCH BUSINESS. THE ASSESSEE FILED AN APPEAL AND THE LD. COMMISSIONER OF INCOME TA X (APPEALS) HELD THAT ALTHOUGH SUCH AN ACTIVITY WAS A BUSINESS, IT WAS AN A CTIVITY INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE ASSOCI ATION. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ASPECT WAS ACCEPTED BY THE INCOME TAX DEPARTMENT, AND NO SECOND APPEAL ON THIS ISSUE WAS FILED IN THE TRIBUNAL. THE E XEMPTION WAS, HOWEVER, DENIED SINCE SEPARATE BOOKS OF ACCOUNT WERE NOT MAINTAINED. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS STATED THAT THEY HAVE MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR THE EXHIBITION HELD DURING THE YEAR. SUCH SEPARATE BOOKS OF ACCOUNT IN RESPECT OF THE EXHIBITION ACTIVITIES, WERE PRODUCED DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE CIT(A) HAS ALSO CONSIDERED T HIS ACTIVITY AS INCIDENTAL TO THE ATTAINMENT OF THE OBJECT S OF THE ASSESSEE IN ALL SUBSEQUENT YEARS WHEN EXHIBITIONS HAVE BEEN HEL D. THE ITAT ITA NO.805/09 &C.O. 226/09 A.Y:05-06 4 HAS ALSO HELD IN LATER YEARS THAT THE ACTIVITY OF HOLDI NG EXHIBITIONS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE ASSESSE E. THE CONDITIONS LAID DOWN IN SECTION 11(4A) ARE, THEREFORE, FULFILLED AND HENCE, THE ASSESSEE IS ENTITLED TO THE BENEFITS OF SECTION 11 OF THE I.T. ACT. THE ASSESSEE HAS CITED THE CASE LAW OF THANTHI TRUST 247 ITR 785 (SC). HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE DEPARTMENT HAD FILED REFERENCE APPLICATION U/S.256(1) AGAINST THIS ORDER, WHICH WAS DISMISSED. HOWEVER, THE HONBLE ITAT VID E THEIR ORDER RA.NO.73/MUM/99 (ARISING OUT OF ITA NO.9683/MU M/95 FOR ASSESSMENT YEAR 1992-93 DATED 07.02.2000) HAS REFERRED T HE QUESTION OF LAW TO THE HONBLE HIGH COURT, MUMBAI TO B E ANSWERED IN TERMS OF SECTION 256(1) OF THE I.T. ACT. ACCORDINGLY TH E ASSESSING OFFICER KEEPING IN VIEW THAT THE MATTER IS NOT YET SET TLED, AND THE MATTER IS STILL PENDING BEFORE THE HONBLE HIGH COURT AND IN ORDER TO KEEP THE CONSISTENCY WITH EARLIER YEARS AND THE FACTS BEIN G SIMILAR, TREATED THE INCOME OF THE EXHIBITION AS BUSINESS INCOME A ND THE ACTIVITY OF HOLDING EXHIBITIONS IS NOT INCIDENTAL TO T HE ATTAINMENT OF THE OBJECTS OF THE ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMEN T AT AN INCOME OF RS.46,12,467/- VIDE ORDER DATED 24.12.20 07 PASSED U/S.143(3) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) FOLLOWING THE ORDER OF THE ITAT HELD THAT THE ASSESSEE IS CARRYING OUT A BUSINESS ACTIVITY BY HOLD ING ITA NO.805/09 &C.O. 226/09 A.Y:05-06 5 EXHIBITIONS AND THE SAME IS INCIDENTAL TO THE ATTAINM ENT OF THE OBJECTS OF THE TRUST, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE . 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUND OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN TREATING THE ACTIVITY OF THE ASSESSEE IN HOLDING EXHIBITIONS BEI NG INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST AND DIRECTING THE ASSESSING OFFICER TO ALLOW EXEMPTION U/S.11 OF THE I.T. ACT, 1961 IGNORING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 5. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED T HAT THE IMPUGNED ISSUE IS COVERED AGAINST THE REVENUE AND IN FA VOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE F OR ASSESSMENT YEARS 1998-99, 1995-96, 2001-02, 2003-04 AND 2004-05. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD T HE COPIES OF THE SAID ORDERS OF THE TRIBUNAL. IT WAS THEREFORE SU BMITTED THAT THE ISSUE MAY BE DECIDED ACCORDINGLY. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MER IT THAT THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ADIT(E)-I(1) VS. M/S. IN DIAN MACHINE TOOLS MANUFACTURERS AND VICE VERSA IN ITA NO.58 5/MUM/2002 AND C.O.NO.20/MUM/2003 FOR ASSESSMENT YEAR 1998-99 ORD ER DATED 16.9.2005 HAS HELD VIDE PARA-5 OF ITS ORDER AS UNDER :- ITA NO.805/09 &C.O. 226/09 A.Y:05-06 6 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE F BENCH OF MUMBAI TRIBUNAL HAS HELD IN THE CASE O F ADIT VS. INDIAN ELECTRICAL AND ELECTRONIC MANUFACT URERS ASSOCIATION IN ITA NO.5470/MUM/1999 THAT HOLDING OF EXHIBITION FOR THE PURPOSE OF PROMOTION OF INDUSTRY CONNECTED WITH ELECTRICAL MANUFACTURING OF GOODS AN D EQUIPMENTS IS INCIDENTAL TO THE OBJECTS OF THE ASSE SSEE. IN THIS CASE ALSO THE ASSESSEE IS ENGAGED IN HOLDING EXHIBITIONS FOR THE TRADE AND INDUSTRY OF MACHINE T OOLS IN INDIA AND IN OUR VIEW THE SAID ACTIVITY IS INCIDENT AL TO THE OBJECTS OF THE ASSESSEE . WE ARE IN AGREEMENT WITH THE FINDINGS OF LD. CIT(A) THAT THE CONDITIONS OF SECTI ON 11(4A) ARE FULFILLED BY THE ASSESSEE AS THE ASSESSE E HAS ALSO MAINTAINED SEPARATE BOOKS FOR THE SAID ACTIVIT Y. WE DECLINE TO INTERFERE WITH THE ORDER OF LD. CIT(A) ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER OF THE TRIBUNAL HAS BEEN FOLLOWED CO NSISTENTLY BY THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS AS AFOREMENTIO NED. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RE CORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDERS OF THE TR IBUNAL SUPRA AND KEEPING IN VIEW THE RULE OF CONSISTENCY UPHOLD THE ORDE R PASSED BY THE LD. CIT(A)ON THIS ACCOUNT AND ACCORDINGLY THE GROUNDS T AKEN BY THE REVENUE ARE REJECTED. C.O.NO.226/MUM /2009 (BY ASSESSEE) (A.Y.2005-06) : 7. ALL THE GROUNDS TAKEN BY THE ASSESSEE IN ITS C.O. ARE AGAINST THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ACTIVITY OF THE ASSESSEE IN HOLDING EXHIBITIONS AS A BUSINESS ACTIVITY. ITA NO.805/09 &C.O. 226/09 A.Y:05-06 7 8. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE FAIRLY SUBMITS THAT IN VIEW OF CONSISTENT VIEW OF THE TRIBUNAL ON THIS ISSUE WHICH IS AGAINST THE ASSESSEE, THE GROUNDS TAKEN BY THE ASSESSE E BECOME INFRUCTUOUS AND ACCORDINGLY THE SAME MAY BE REJECT ED WHICH WAS NOT OBJECTED TO BY THE LD. DR. 9. THIS BEING SO AND KEEPING IN VIEW THE FINDING RECOR DED IN REVENUES APPEAL, IN PARA 6 OF THIS ORDER AND THE CONSI STENT VIEW OF THE TRIBUNAL WE REJECT THE GROUNDS TAKEN BY THE ASSESSEE BEI NG INFRUCTUOUS. 10. IN THE RESULT, THE REVENUES APPEAL AND ASSESSEE'S CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.6.2010 SD/- SD/- (A.L. GEHLOT) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.6.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.