TaxTMI 
TaxTMI 
2018 (9) TMI 1694
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....Assessing Officer and the learned CIT (Appeals) should have reduced the income of the appellant by Rs. 78,85,845/- already taxed in the AY 2009-10. As evident from grounds of appeal, the assessee is primarily aggrieved by denial of exemption u/s 11. The assessment for impugned AY was framed by Ld. Assistant Director of Income Tax (E) -II(2), Mumbai u/s 143(3) of the Income Tax Act,1961 on 28/03/2013 wherein the income of the assessee has been assessed at Rs. 82.34 Lacs after denial of exemption u/s 11 as against 'Nil' return filed by the assessee on 29/09/2010 along with Income & Expenditure Account, Balance Sheet and Audit Report in Form No. 10B. The assessee has been assessed as an Association of person (Trust) and is an entity duly registered u/s 12A with effect from 01/04/1990 vide certificate dated 14/01/2000, a copy of which has been placed on record. 2. The root of denial of deduction u/s 11 lies in the fact that the activities of the assessee trust carried out during impugned AY, in the opinion of, Ld. AO constituted business activity in terms of proviso to section 2(15) and 11(4) of the Income Tax act, 1961. The assessee defended the same vide reply dated 11/03/2013, in....
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....nsideration, the appellant has organized award functions being ABBY Awards, EFFIE Awards, EMVIE awards and Young Achiever Awards. In addition, certain other programmes have also been organized. The appellant was asked to give details of the its activities including the receipt and expenditure. With reference to these details filed regarding EFFIE Awards, it is noted that the total receipts of Rs. 77,14,700/- from this activity include the sponsorship income which includes Rs. 12.50 lakhs from Marico Ltd. Rs. 6 lakhs from Bennett Colman Ltd. and Ps. 25 lakhs from Yahoo India. Against this, the expenditure of Rs. 31.5 lakhs has been made on Event management fees, Rs. 11.19 Lakhs for supply of food and Rs. 7.06 Lakhs for lawn booking. Similarly, in case of ENVIE Awards, the sponsorship income of Rs. 35 lakhs include Rs, 10 lakhs from Ankit Advertising, Rs. 5 lakhs from Rasik Publicity, Rs. 10 lakhs from Mahesh Advertising and Rs. 5 lakhs each from B.Y Padhye Publicity and Concept Communications. Against this, the expenditure incurred includes Rs. 23.24 lakhs for event management, Rs. 19.25 lakhs for ball room booking, dinner etc. Against the receipt of Rs. 21.30 lakhs for organizing Y....
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....racting proviso to section 2(15). The observation of THE HIGH COURT OF KERALA AT ERNAKULAM in WP(C).No. 6899 of 2009(F) in the case of M/S.INFOPARKS, KERALA, KUSUMAGIRI PO is applicable and deciding factor on the issue, which is reproduced for the sake of convenience, as follows- -Yet another, important aspect to be noted in this context is that, after the amendment by incorporating a proviso to Section 2(15), the fourth limb as to the advancement of "any other object of general public utility" will no longer remain as charitable purpose, if it involves carrying on of, (a) any activity in the nature of trade, commerce or business; (b) any activity of rendering any service in relation to any trade, commerce or business for a cess or a fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity. The first limb of exclusion from charitable purpose under clause (a) will be attracted, if the activity pursued by the institution involves any trade, commerce or business. But the situation contemplated under the second limb [clause (b)] stands entirely on a different pedestal, with regard to the service in relation ....
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....d from being charitable also because the charitable activity claimed by it is in the domain of 'advancement of general public utility' only. The profit motive behind such business, commerce or trade activity is not required to be separately examined and proved for applicability of proviso to section 2(15). The specific amendment by way of proviso to section 2(15) wet. A.Y. 2009-10 does not provide for carrying out business trade or commerce per e for applicability of proviso, rather the stipulation in the proviso is 'in relation to' which is to be interpreted and applied in that context - in a wider term and not to be confined to carrying out trade, business and profession as held in the case of Subhram Trust vs. DIT (E) (2009) 317 ITR (AT) (Bang) referred to above. Accordingly, contention of the appellant is not acceptable. iv. The appellant contended that its income from organizing award shows is merely incidental. In this regard it is mentioned that as per the data discussed in the preceding paragraph, its main activity is organizing these shows which is predominant and not ancillary. This is also evident from the fact that the total receipts from award functi....
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.... for AY 1978-79 could not be applied since the assessee, post that decision, obtained registration u/s 12A vide certificate no. INS/31155 dated 14/01/2000 with effect from 01/04/1990, a copy of which has been placed on record. Therefore, the claim of the assessee for the impugned AY was to be examined at the threshold of statutory provisions of Section 11 & 12. Hence, the approach of Ld. AO, to that extent, was erroneous. 5.2 At the same time, the observation of the Ld. CIT(A) that the assessee was operating more like an event management entity where the booking of the shows were being made and sponsorship fees was being received and the event was being managed by outside agencies, also remain unrebutted. Upon perusal of financial statements for impugned AY as placed before us, we concur with this stand of Ld. CIT(A) since the broad break-up of the assessee's gross receipts could be categorized as follows:- No. Nature of Receipts Amount (Rs.) 1. Membership Subscriptions, Entrance Fees, Misc. Incomes 6,25,950/- 2. Interest & Others 17,69,828/- 3. Award Functions 1,57,22,000/- 4. Programs, Seminars & Workshops 36,67,957/- 5. Premises Fund written back 98,....