TaxTMI 
TaxTMI 
2005 (12) TMI 513
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing Officer had not considered rule of consistency which is applicable in tax proceedings. It has been judicially held that if facts and circumstances for earlier years are similar, same view should ordinarily be followed in subsequent years. iii.The CIT(A) erred in confirming the order of Assessing Officer denying the exemption of income of the appellant under section 11 on the ground that the appellant was carrying on business under section 2(13) of the Act. The appellant submits that activities which are carried on by the appellant do not constitute activities from business. The CIT(A) upheld the order of the Assessing Officer in rejecting the claim of the appellant without considering the facts and submissions made by the appellant during the appellate proceedings. iv.The appellant submits that all the activities carried out by the appellant like holding seminars, conferences, coaching classes are activities carried out by the appellant to promote the scientific development of marine engineering in all its branches and to further such knowledge. Accordingly income from sponsorship, advertisements, subscription etc. therefrom is not income from business. v. With regard to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstitute by prescribing or holding examination for candidates for election or by requiring standards of knowledge and experience which can be approved. iv.To corporate with Universities, other educational institutions and public educational bodies for the furtherance of education in engineering science." The assessee society, having its head office at Mumbai, is operating through several branches in India and is registered under sections 12A and 80G of the IT Act. The assessee society has claimed exemption under section 11 of the IT Act. The assessee is also registered with Charity Commissioner and files regular accounts. In order to pursue its objects, the assessee society held technical conferences, seminars to educate the members of the institution and for this purpose, received sponsorship income from companies engaged in the marine industries. During the year under consideration, the assessee held a national conference in Mumbai and an international conference in Chennai. The institution also conducts coaching classes, which are in the nature of preparatory course approved by the Director General of Shipping, Ministry of Surface Transport, Government of India. In addition en....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ducted from 9 AM to 5.30 PM, ranging on different topics with different speakers addressing each session. During the course of the session, delegates were provided with Tea, Lunch and Dinner at the end of the session. By holding such technical sessions, the assessee had earned surplus of Rs. 6,94,136, which formed part of the income of the assessee society for the year under consideration. Similarly, an international conference was held at Chennai called as Marine Symposium 2000 IME(I). During the said conference, in addition to the delegate fees of Rs. 2,30,932, the assessee had received sponsorship income of Rs. 12,29,277 and also co-sponsorship income of Rs. 6,83,590 and advertisement income of Rs. 94,943 on account of ads in the brochure published during the event along with stall fees of Rs. 3,36,793, totalling Rs. 34,79,423. The assessee had incurred total expenditure of Rs. 12,12,575 on delegates, seminar and exhibitions, hotel expenditure and mementoes issued on the occasion. The assessee society had earned surplus of Rs. 22,88,517 on account of the funds raising activity conducted by the assessee society. Both the conferences were on account of technical meetings and semin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....organization and accordingly the Assessing Officer held that the assessee society is engaged in the business as defined under section 2(13) of the IT Act. 6. Regarding the applicability of the provisions of sub-section (4a) to section 11 of the IT Act, wherein exemption of income arising out of business activity is provided, in case such business is incidental to the main objects of the organization, the claim of the assessee was rejected by the Assessing Officer as according to him the income and expenditure disclosed by the assessee society did not have any element of charitable acts. The Assessing Officer was of the view that the assessee had not functioned in any manner to achieve any charitable objects and the organization of events for raising funds/surplus cannot be treated to be incidental to any charitable objects and therefore, exemption claimed under section 11 was denied to the assessee. In addition, the expenditure of capital nature and receipts to be in the form of capital receipts were also brought to the charge of tax. 7. The CIT(A) relying on the order of the Assessing Officer, agreed with the conclusion of the Assessing Officer that expenditure incurred was not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ull Damage of Single Hull VLCC's from Det Norske Veritas. iii. Common Rail Low-Speed Engines. Information was also given on technical matters like Micro-welding systems, Iron Rich Water, Fireproof Material, Glowing Bacteria, Oxyzen Regenerating Mixture, Double Scrubbed So2 Protection for Ballast Tanks, Lily for Water Purification. Fresh Use for Sludge and Aqua-saver System. (d)The various companies connected with the marine business take this opportunity to give advertisements in the brochure taken out for this purpose and some of them also act as sponsors for the function. (e )Holding of seminars both Indian and International is for updating technical information of the participants. During the assessment year 2001-02 an international seminar was held in Chennai which was attended by people from marine industries all over the world. A special broachers was taken out for the seminar in which the organizers connected with marine engineering had given advertisements as well as sponsorships. (f )The Institute also publishes its monthly journal MER(I) which is circulated not only to members free of cost but also to various educational institutions at no cost. The point to be noted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shipping, Ministry of Surface Transport, Government of India. In addition to the coaching classes, the assessee had held technical meetings, which are fund raising programmes, in addition to upgrading the technical information of the participants. 10. The ld. authorized representative further submitted that after the amendment in 1992, in order in achieve the objects of the institute, business can be carried on to achieve the said objects for which the specific requirement is to maintain separate books of account. He placed reliance on the Hon'ble Supreme Court decisions in the cases of Radhasoami Satsang v. CIT [1992] 193 ITR 321 and Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 for the proposition that if a particular stand has been accepted from year to year by the Assessing Officer, he (Assessing Officer) should find something different in the conduct of the business in order to deviate from the said stand as held by several Courts. 11. The ld. Departmental Representative placed strong reliance on the orders of the Assessing Officer and the CIT(A) and supported the observations of the Assessing Officer and the CIT(A) in not allowing the claim of e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar from the objects that the promotion of scientific development of marine engineering is the main activity of the assessee. In order to enable the marine engineers, i.e., members of the assessee society, to meet and exchange ideas, annual meetings are held by the assessee in addition to international meet which is held once in four years. In the said meetings, the members interact with each other in addition to technical sessions being held for enlightenment of the subject of marine engineering. In these technical and social meetings, technical papers pertaining to the Shipping Industries are presented, which are attended by members from all over the country, Government officers and representative from various companies interested in the shipping business. During the year under consideration two Meetings/Seminars were held, one at Mumbai and another international seminar in Chennai, which was attended by people from marine industries all over the world. Brochures were takes out for the said Meeting/Seminars in which the companies engaged with marine industries had given advertisements as well as sponsorships. The surplus received as a result of these international and national con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....edominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But, where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. 'If the profits must necessarily feed a charitable purpose under the terms of the trust, the mere fact that the activities of the trust yield profit will not alter the charitable character of the trust. The test now is, more clearly than not in the past, the genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on charity'. The restrictive condition that the purpose should not involve the carrying on of any activity for profit would be satisfied if profit making is not the real object." From the facts and circumstances of the case, it is clear that the assessee had not carried on 'business' as per the provisions of section 2(13) of the IT Act. In any c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o agree with contentions of the authorized representative that if a particular stand has been accepted from year to year by the Assessing Officer, he (Assessing Officer) should find something different in the conduct of the business in order to deviate from the said stand as held by several Courts. Res judicata does not apply to the income-tax proceedings, but if no new facts are brought on record, there should not be any deviation from a particular stand. We have carefully gone through the judicial pronouncements relied upon by the ld. AR. We find that although the Supreme Court, in the case of Radhasoami Satsang ( supra) had given a note that the decision is confined to the facts of the present case, but the law is settled on this point as held by the Delhi High Court in the case of CIT v. A.R.J. Security Printers [2003] 264 ITR 276 . 18. Considering the facts of the case in totality, we are of the considered view that the activities carried on by the assessee society are with a view to serve its members, for which sufficient funds were required and money was collected by way of sponsorship and advertisement in order to promote the activities of the assessee-trust and the same i....