TaxTMI 
TaxTMI 
2018 (3) TMI 479
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....ell as the Respondent­Revenue had preferred applications for Reference to this Court under Section 256(1) of the Act. The Tribunal, in its statement of case has rejected the Revenue's application, as not giving rise to question of law. However, the application raising question of law filed by the Assessee, was allowed to the extent of the question formulated herein above. 4. In the above view, for the purpose of recording the facts leading to the question of law, we refer to the statement of case sent by the Tribunal to the extent it relates to Assessee's application to the Tribunal. The relevant extract of the facts from the statement of case for the question raised for our opinion, are as under:­ "5. Now, let us take up the assessee's references which comprises of three questions, which have been extracted by us in the prior paras. After hearing both the sides, we are of the opinion that a question of law does arise from our decision, but the question of law, according to us, should be only one consolidated question, which is as follows: "Whether, in the facts and circumstances of the case, the assessee had fulfilled all the requirements of sec.11(4A)....
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....its members and also to the non­members on rent payments. In so doing, the assessee earned a surplus to the tune of Rs. 1,72,15,212/­. The A. O. deduced that the assesssee earned a profit of more than Rs. 1.72 Crores by holding a Trade Fair Exhibition. The A. O. also held that this activity of the assessee appeared to be a business activity which is not incidental to the attainment of the objects of the assessee and he asked the assessee to explain as to why the income earned from IMTEX­92 be not considered as business income and taxed accordingly. The assessee vide its letter dt. 27.1.1995 objected to the proposed holding of IMTEX­92 as business activities and submitted that the association conducts the exhibition almost every alternate year. The assessee then explained how it conducts activities, exhibition, tariffs, rate for SSI units, premium for prime location, air­conditioning surcharge, rentals to be charged from foreign firms and organizations, additional charges for having open sides of the stall, for electrical power charges, telephone charges, security deposits and the payment to be made and all these were detailed by the A. O. upto page 8 of his orde....
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....see vide its letter dated 27.1.95 has specifically mentioned that IMTEX­92 is only an integral activity of the assessee, no separate accounts of the same are kept. Therefore, for three reasons set out, viz: (i) holding of a trade fair exhibition­ IMTEX­92 is a business undertaken by the assessee during the year under consideration, (ii) the business is not incidental to the attainment of the objectives of the association and is in fact an 'independent' activity, and (iii) no separate books of account are kept for this business activities, the A. O. held that the assessee is not entitled to exemption u/s. 11. Ultimately, he determined Rs. 1,72,15,212 as taxable income. 6. As already stated, at para 7.1 of his orders, the learned CIT(A) held that the business of holding of exhibition is incidental to the business, i.e. to promote and develop exports of the products of the members of the industry for the purpose of trade and commerce. While discussing whether separate books of accounts are maintained, the CIT(A) held that the A.O. has given a finding that separate books of accounts are not maintained by the assessee. This finding has n....
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....Plast India heaving relied upon by the learned Counsel for the assessee, it cannot be gathered that it was a regular activity of that Association. In fact, the Tribunal has observed in that order that when that assessee decided to hold trade fair for the benefit of the plastic industry and also to publicize and popularize the use of plastics, for which it invited foreign participants, it could not be ascertained whether finally it would result in profit/ surplus or loss. It is not for the first time that the assessee has organized such an exhibition. The surplus which it had got from this exhibition itself, i.e. IMTEX­-92, shows that it had been organized with the past experience, to collect substantial amount of money. This would show that these were not the activities run on 'no profit and no loss basis' or only on the basis of earning marginal profits, which was considered by the Hon'ble Supreme Court in the case of India Chamber of Commerce v/s. CIT (101 ITR 796) (SC). For these reasons and for the detailed reasons given by the A.O. and the learned CIT(A) in their respective orders, the Tribunal held that it was unable to agree with the arguments of the learned ....
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....d not arise for our consideration. However, if, issue (a) is decided in favour of the Assessee i.e. it is not business then issues (b) and (c) would not arise. Otherwise, if issue (a) is decided against the Assessee, then issue(b) already stands settled in its favour. Therefore, we shall first consider issue (a) and only on our answer to it will the occasion to consider the issue raised in (b) & (c) above, would arise. 7. Before dealing with the submissions of the respective parties, it would be beneficial if we reproduce the relevant provisions of the Act as existing during Assessment Year 1992­93 which arise for our consideration. The provisions are as under:­ "2(15):­ "Charitable purpose" includes relief of the poor, education, medical relief and the advancement of any other object of general public utility." "11(4A):­ Sub­section (1) or sub­section (2) or sub­section (3) or sub­section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of ....
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....ed it in by stating that "the words trade, commerce and business" are etymological chamelon and suit their meaning to the context in which they are found". In fact, long ago, the Apex Court in the context of the definition of the word 'business' as found in Section 2(4) of the 1922 Act which is identical to the definition of business in Section 2(13) of the Act, has observed in Narain Swadeshi Weaving Mills v/s. Commissioner of Excess Profit Tax 26 ITR 765 that "the word business connotes some real, substantial and systematic or organized course of activity or conduct with a set purpose." (iv) Now, let us examine the nature of activity carried on by the Assessee while holding the exhibition­ IMTEX-­92. From the statement of case, it is clear that the total receipts from holding the exhibition ­IMTEX­-92 is Rs. 4.76 Crores and the net surplus in Rs. 1.72 Crores. It involves the activity of taking space on hire from Trade Fair Authority of India. Thereafter, it involves setting out the exhibition tariffs (lower rates for SSI Units), premium for prime location, air conditioning surcharge, rentals to be charged from foreign participants, security charges, tel....
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....ic utility, not involving the carrying on of any activity or profit." It was in the above context that the tests of predominant activity test was applied while dealing with the objective of "the general public utility, not involving any activity for profit." All the above decisions were in the context of whether general public utility wold continue to be a charitable purpose even if it involves some activities for profit. The underlined portion herein above from the definition of charitable purpose was omitted w.e.f. 1st April, 1984 and the consequent amendment was brought in by way of amending sub­section (4A) to Section 11 of the Act in its present form. Similarly, the decision referred to (e) above, dealt with charitable purpose defined in Section 4(3) of the Income Tax Act, 1922 (1922 Act) and was similar to one existing prior to 1984. Therefore, the decisions referred to at (a) to (e) are of no relevance for answering the question referred to us for our opinion, bearing in mind that we are concerned for the Assessment Year 1992­93. (vii) So far as decisions at Serial Nos. (f) to (h) above are concerned, they were rendered in the context of the definition of chari....
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....ooks of account, thus satisfying the conditions for exemption under Section 11(4A) of the Act. Therefore, the above two decisions also do not assist the Assessee. (ix) The two decisions which have some bearing on the issue arising for our consideration, are at (h) & (i) above i.e. decisions of the Delhi High Court in PDH Chamber of Commerce and Industry (supra) and GSI India (supra). (x) So far as PHD Chamber of Commerce & Industry (supra) is concerned, the Court came to a finding that the assessee before it was a charitable institution under Section 2(15) of the Act. This on the ground as the secretarial services which were rendered by it to its members and non­members for a fee, was not income arising from business. This is on finding of fact, that there was non­profit motive in rendering services and the fees charged were only to cover its costs. In the context of above finding of fact, it was held that Assessee therein was not carrying on business. Therefore, it held that Section 11(4A) of the Act, will not be applicable in those facts. Its activity was not a business, therefore, no occasion to treat it as business incidental to the objects of the trusts arises. A....
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....of the Assessee, is concluded in favour of the Assessee and accepted by the Revenue. (ii) Therefore, this issue does not require our consideration as it stands answered in the affirmative. 10. Re Issue at (c):­ (i) So far as issue (c) is concerned, we find that it is an accepted position that the holding of the exhibition IMTEX 92 by the Applicant­Assessee in the previous year relevant to the subject assessment year was business incidental to the attainment of the objectives of the Assessee - Institution. However, the benefit of SubSection 4A of Section 11 of the Act is being denied on the ground that the applicants have not maintained separate books of accounts in respect of such business. (ii) Ms. Sathe, learned Counsel appearing for the Applicant­ Assessee in support of the Reference submits that the requirement to maintain separate accounts of the business is only with the objective to enable the Assessing Officer to determine the total receipts, total expenditure and net income earned from such incidental business activity. In this case, admittedly, no separate books of accounts were maintained for the purposes of carrying out the exhibition­IMTEX92....
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....vision which is relevant in interpreting a fiscal statute. Equally, impermissible is an interpretation which does not follow from the plain, unambiguous language of the statute. Words cannot be added or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature." (vi) Therefore, the submission on behalf of the applicant that the substance / object / purpose of the legislation providing for maintenance of separate books of accounts be taken into account, cannot be accepted. To do so is to ignore the clear and unambiguous meaning of the words 'maintained separate books of accounts'. The words used in sub­section (4A) of Section 11 of the Act, obliges an institution which seeks to have the benefit of Section 11 of the Act, if it carries on business incidental to its objects, to maintain separate books of accounts. The obligation cast upon an Applicant seeking the benefit of Section 11 of the Act is clear and unambiguous. Accepting the submission made on behalf of the assessee would mean, ignoring the words 'separate books of accounts'. If the legislature did not want an assessee to maintain separate books of a....