TaxTMI 
TaxTMI 
2016 (9) TMI 696
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....ch constitute activity in the nature of carrying on of trade. 3.1 On the facts and in the circumstances of the case, the Id CIT(A) erred in holding that selling of daily tickets and season tickets are incidental activities which were the natural off shoot of the dominant activities; 3.2 The Id CIT(A) erred in law and in facts in making this artificial distinction of 'subservient activities' and 'dominant activities' when the Income-tax Act does not recognise such distinction; 4.1 The Id. CIT (A) erred in holding that there is no profit derived from these activities; 4.2 The Id. CIT (A) failed to appreciate that the Trust loses its character of 'charitable purpose', when the receipt exceeds Rs. 25 lakhs; 5. The Id. CIT (A) ought to have appreciated that cancellation of Registration u/s 12AA and 80G is not a prerequisite for denial of exemption u/s 11 of the Act; 6. The Id. CIT (A) failed to appreciate that the assessee has paid service tax; 7. The Id CIT(A) erred in placing reliance on the decision of the Hon'ble Tribunal in the case of M/s.. Hamsadhwani Vs. DIT(E) (ITA No.494/Mds/2011 dated 1....
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....idental or conducive to the attainment of the above mentioned objectives''. and assessee society generating income through sponsorship, gate collection, organization of music festivals, subscriptions, interest income etc. The ld. Assessing Officer alleged that assessee society owns two halls which are let out on day to day basis to corporates, individuals and other parties and also assessee paying service tax on rental receipts from halls. The ld. Assessing Officer based on the activities of the assessee is of the opinion that the assessee trust was squarely classified as carrying out objects of general public utility having colour of trade, commerce and business and invoked provisions of Sec. 2(15) of the Act to deny status of charitable purpose and treat as Association of Persons (AOP). The ld. Authorised Representative has filed submissions in assessment proceedings and clarified through letter dated 29.09.2014 that for the assessment year 2010-2011, the ld. Commissioner of Income Tax (Appeals)-VII, dated 14.08.2013 in ITA No.294/12-13 observed that the assessee's society falls within the ambit of residual of Sec. 2(15) of the Act and allowed appeal in favour of the assessee ....
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....iscussed elaborately and directed the Assessing Officer to delete the additions by observing at para 4.4 and 4.5 of his order as under:- ''4.4 Even if it is presumed that the AO had rightly found the objects as non- charitable, she should not have resorted to treat the assessee as AOP and treated the entire corpus donations of Rs. 46,87,530/- as taxable income, when the society continued to enjoy registration and recognition respectively u/s 12A(a) and 80G of the IT Act, 1961. On the contrary she should have initiated appropriate action to cancel the registration granted to the society u/s 12AA and 80G of the IT Act, 1961 as a pre-requisite before passing the assessment order u/s 143(3) of the IT Act, 1961 on 10.11.2014, whereas the AO has failed to do the same. The Hon'ble ITAT 'C' Bench in its order in 1706 (Mds)/2010 dated 12.09.2011 in the case of M/s. The Mylapore Fine Arts Club, Chennai vs DIT(E)- I, Chennai directed to grant approval u/s 80G of the Act while deciding the identical issue. The Hon'ble ITAT 'D' Bench in its order in ITA No.494/Mds/2011 dated 16.01.2012 in the case of Hamsadhveni vs DIT(E), Chennai decided the issue in favour of ....
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....ceipts are more than F25,00,000/-. The ld. Commissioner of Income Tax (Appeals) has allowed the appeal relying on the decisions of jurisdictional High Court and Tribunal in the case of M/s. Mylapore Fine Arts Club, Chennai vs. DDIT(E)-I in ITA No.1706/Mds/2010, dated 12.09.2011 and Hamsadhveni vs. DIT(E) in ITA No. 494/Mds/2011, dated 16.01.2012 held that the advancement of music, classical, dance can never be considered as an activity in the nature of trade, commerce of business. Even if the activity is of general public utility and exemption u/s.11 of the Act does not involve activities with profit motive and prayed for set aside the order of Commissioner of Income Tax (Appeals). 6. Contra, the ld. Authorised Representative relied on the orders of Commissioner of Income Tax (Appeals) and vehemently opposed to the grounds. 7. We heard the rival submissions, perused the material on records and judicial decisions. The ld. Departmental Representative contention that subsequent to amendment on 01.04.2009 , there is a radical departure on the definition of Sec. 2(15) of the Act were the object of general public utility is in the nature of trade, business, commerce or service does....
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.... 2007-08 Rs. Sponsorship Fees 8,55,305 7,43,250 9,88,069 Sale of Tickets 52,300 91,800 76,750 Fees for Music Coaching 4,25,900 4,16,350 3,90,850 TOTAL 13,33,505 12,51,400 14,55,669 If we have a look at Section 2(15) of the Act which defines "charitable purpose", it runs as under:- 2 (15) 55"charitable purpose"56 includes relief of the poor, education56, medical relief, 57[preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,] and the advancement of any other 56object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business56, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity:] 58[Provided further that th....