2021 (11) TMI 1024 - AT - Income Tax

Tax Tribunal Grants Exemption for Charitable Activities, A.Ys. 2010-15

Bombay Chamber of Commerce and Industry Versus Income-tax Officer (Exemptions) -1 (1), Mumbai

The Tribunal allowed the appeals for A.Ys. 2010-11, 2012-13, and 2014-15, granting exemption under section 11 and holding that the proviso to section ... Denial of exemption u/s.11 - applicability of proviso to section 2(15) - HELD THAT:- This Tribunal for A.Y. 2009-10 in assessee’s own [2021 (10) TMI 224 - ITAT MUMBAI] case had duly addressed the (i) issue of claim of exemption us/.11 of the Act together with its eligibility for the assessee herein; (ii) applicability of proviso to section 2(15) of the Act; (iii) applicability of CBDT Circular No.11/2008 dated 19.12.2008; (iv) applicability of decision of Kolkata Tribunal in the case of Indian Chamber of Commerce vs. ITO [2014 (12) TMI 256 - ITAT KOLKATA], among other decisions; and (v) narrating the objects of the assessee trust, giving a categorical finding that the said objects are indeed charitable in nature and not intended for the purpose of profit. We find from the perusal of the order of the ld. CIT(A),had individually analysed the varied stream of receipts/incomes derived by the assessee and had concluded those receipts to be earned with a profit motive. We find that the very same stream of receipts/incomes were indeed present in A.Y. 2009-10 also for the assessee. The very same stream of incomes/receipts were found to be charitable in nature by this Tribunal in A.Y. 2009-10. There is absolutely no differentiating fact brought on record by the ld. Departmental Representative (ld. DR for short) before us to drive home the point that the decision rendered by this Tribunal for A.Y. 2009-10 is not applicable to the years under consideration. In view of the identical facts prevailing in A.Y. 2009-10 with that of the years under consideration, we hold that the decisions rendered hereinabove by this Tribunal for A.Y. 2009-10 shall apply mutate mutandis for the years under consideration also. Accordingly, ground nos. 1 to 4 raised by the assessee for all the years under consideration are allowed. Issues Involved:1. Denial of exemption under section 11 of the Income Tax Act, 1961.2. Applicability of proviso to section 2(15) of the Income Tax Act, 1961.3. Analysis of varied streams of income and their nature.4. Applicability of CBDT Circular No. 11/2008.5. Consideration of the decision in the case of Indian Chamber of Commerce vs. ITO.6. Determination of the charitable nature of the assessee's activities.7. Chargeability of interest under section 234B of the Income Tax Act, 1961.Detailed Analysis:1. Denial of Exemption under Section 11 of the Income Tax Act, 1961:The assessee challenged the denial of exemption under section 11 of the Act. The Tribunal noted that the assessee's case was covered by the Tribunal's order for A.Y. 2009-10, where exemption under section 11 was granted. The Tribunal reiterated that the assessee's activities were charitable in nature and not intended for profit, thus qualifying for exemption under section 11.2. Applicability of Proviso to Section 2(15) of the Income Tax Act, 1961:The Tribunal addressed the applicability of the proviso to section 2(15), which excludes entities carrying on activities in the nature of trade, commerce, or business from being considered for charitable purposes. The Tribunal referred to the decision in the case of India Trade Promotion Organization v. DGIT(E), where it was held that if the dominant activity is not business, incidental activities would not fall under trade, commerce, or business. The Tribunal concluded that the assessee's activities were not driven by profit motives and thus were not hit by the proviso to section 2(15).3. Analysis of Varied Streams of Income and Their Nature:The Tribunal analyzed the assessee's income streams, including certificate of origin fees, secretarial fees, labor advisory fees, seminar and training programs, conference and exhibition fees, advertisement revenue, and sale of in-house publications. It was noted that these incomes were incidental to the assessee's charitable objectives and not aimed at profit-making. The Tribunal found that these income streams were present in A.Y. 2009-10 and were considered charitable.4. Applicability of CBDT Circular No. 11/2008:The Tribunal considered the CBDT Circular No. 11/2008, which clarifies the legislative intent behind the amendment to section 2(15). The Tribunal noted that the circular aimed to prevent entities operating on commercial lines from claiming exemption under the guise of charitable purposes. The Tribunal concluded that the assessee's activities were genuinely charitable and not commercial.5. Consideration of the Decision in the Case of Indian Chamber of Commerce vs. ITO:The Tribunal referred to the decision in the case of Indian Chamber of Commerce vs. ITO, where it was held that the activities of the Chamber were charitable despite the proviso to section 2(15). The Tribunal found that the decision supported the assessee's case, as the activities were similar and aimed at promoting trade and commerce without profit motives.6. Determination of the Charitable Nature of the Assessee's Activities:The Tribunal emphasized that the assessee's activities, such as promoting trade, commerce, and manufacturers, collecting and circulating information, and organizing seminars, were charitable. The Tribunal noted that the income and property of the assessee were applied solely towards its charitable objectives, and no portion was distributed among members.7. Chargeability of Interest under Section 234B of the Income Tax Act, 1961:The Tribunal noted that the chargeability of interest under section 234B was consequential and did not require specific adjudication. The Tribunal also dismissed certain grounds raised by the assessee as not pressed.Conclusion:The Tribunal allowed the appeals for A.Ys. 2010-11, 2012-13, and 2014-15, granting exemption under section 11 and holding that the proviso to section 2(15) was not applicable. The appeal for A.Y. 2011-12 was partly allowed. The Tribunal's decision was based on the consistency of facts with A.Y. 2009-10 and the charitable nature of the assessee's activities.