Exhibitions as Business Activities Taxable as Profits, Denial of Exemption under Section 11(4A)

The Tribunal held that the exhibitions organized by the assessee constituted a business activity as they were conducted regularly and generated substantial profits. The income derived from these activities was deemed taxable as business profits. The Tribunal also ruled that the assessee did not maintain separate books of account as required by law, leading to the denial of exemption under section 11(4A). The appeal filed by the assessee was dismissed, affirming the CIT(A)'s decision.

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Issues Involved:
1. Whether the holding of exhibitions by the assessee amounted to business.
2. Whether separate books of account had been maintained for such business.

Summary:

1. Whether the holding of exhibitions by the assessee amounted to business:
The assessee, a company registered u/s 25 of the Indian Companies Act, 1956, filed its return of income at Nil. The Assessing Officer noted that 86.29% of the total receipts were from organising a trade fair called IMTEX-92, resulting in a net surplus of Rs. 1,72,15,212. He concluded that these were profits from a business activity and not incidental to the attainment of the assessee's objectives, thus making the income taxable. The CIT(A) upheld that the activities amounted to carrying on of business but were incidental to the attainment of the objectives. The Tribunal, agreeing with the CIT(A), held that since the exhibitions were organised regularly and generated substantial profits, they constituted a business activity.

2. Whether separate books of account had been maintained for such business:
The CIT(A) denied the benefit of exemption u/s 11(4A) due to the lack of separate books of account. The Tribunal examined whether the assessee maintained separate accounts for IMTEX-92. The assessee argued that separate ledger accounts were maintained, which should suffice as separate books of account. The Tribunal, however, held that the statutory requirement was clear and unambiguous, necessitating separate books of account. The Tribunal concluded that the assessee did not comply with this requirement, thus upholding the CIT(A)'s decision and dismissing the appeal filed by the assessee.

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