TaxTMI 
TaxTMI 
2019 (6) TMI 991
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....istration Act, 1860. The Assessing Officer during the course of assessment proceedings observed that the aims and objects of the assessee society are as under: "(a) To foster and Develop fine and applied arts in India and to promote appreciation by means of publications, lectures, conferences, demonstration, exhibition; (b) To organize and establish a national art gallery in New Delhi; (c) To organize art exhibitions and societies in India and abroad; (d) To act as the Central Organizations of Arts and Crafts in India; (e) To do all such law full things as are incidental or conducive to the attainment of above objects and any other objects of arts and literature not mentioned above." 4. The Assessing Officer asked the assessee to explain as to why the benefit u/s 11 & 12 of the Act in respect of the income should be allowed in view of the amended Section 2(15) of the Act introduced w.e.f. 01.04.2009 i.e. relevant to assessment year 2011-12 under consideration, since its activities fall in the category of "advancement of object of general public utility" and its income including rental income is in the nature of business, trade or comm....
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....rce or business, I hold that the appellant cannot be considered to be a non-charitable organisation/society because of the saving provided under second proviso to section 2(15) of the Income Tax Act. Therefore, the AO is directed to consider only Rs. 8,12,987/- towards its activities though I am of the considered view that even this amount should not be construed as receipts involving any activity in the nature of trade, commerce or business due to the overall objective of the society not to earn income or to do business." 7. So far as the rental income of Rs. 4,80,00,000/- is concerned, the ld. Commissioner of Income Tax (Appeals) directed the Assessing Officer to allow benefit of Sections 11 & 12 of the Act as claimed by the assessee. The ld. Commissioner of Income Tax (Appeals) further held that the case of the assessee falls under the second proviso to Section 2(15) of the Act i.e. total receipts being less than Rs. 10,00,000/-, the assessee is fully entitled to all the benefits u/s 11 & 12 of the Act. 8. Aggrieved with such order of the ld. Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal. 8.1 The ld. Departmental Representative heavi....
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.... from property held under society and allowed application of rent therefrom to the objects of the society. A perusal of the memorandum of association of the society inter alia shows the following objects: "(j) To purchase or acquire on lease, or in exchange, or on hire, or otherwise, any real or personal property, and any rights or privileges necessary or convenient for the purposes of the Society. (l) To sell, improve, manage and develop all or any part of the property of the Society. (m) To do all such lawful things as are incidental or conducive to the attainment of the above objects and any other objects of Arts and literature not mentioned above." 11. We further find the Revenue has always accepted the rental income from the property held under society and never considered the same as business income. 12. We find identical issue had come up before the Tribunal in assessee's own case for assessment years 2009-10 and 2010-11. We find the Tribunal vide ITA Nos. 1448/Del/2015 & 1449/Del/2013, order dated 14.02.2019 while allowing the benefit of exemption u/s 11 & 12 of the Act to the assessee society has observed as under: "5.0 We have hea....
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....ceived by an institution, it would not lose its character of having been established for a charitable purpose. It is also important to note as to what is the dominant activity of the institution in question. If the dominant activity of the institution was not business, trade or commerce, then any such incidental or ancillary activity would also not fall within the categories of trade, commerce or business. It is clear from the facts of the present case that the driving force is not the desire to earn profits but, the object of promoting trade and commerce not for itself, but for the nation - both within India and outside India. Clearly, this is a charitable purpose, which has as its motive the advancement of an object of general public utility to which the exception carved out in the first proviso to Section 2(15) of the said Act would not apply; (ii) If a literal interpretation were to be given to the said proviso, then it would risk being hit by Article 14 (the equality clause enshrined in Article 14 of the Constitution). It is well settled that the courts should always endeavour to uphold the Constitutional validity of a provision, and in doing so, the provisio....
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....y through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. Thus, while we uphold the Constitutional validity of the proviso to Section 2(15) of the said Act, it has to be read down in the manner indicated by us." 5.1 Thus, the Hon'ble Delhi High Court has held that merely because a fee or some other consideration is collected or received by an institution, it would not loose its character of having been established for a charitable purpose. Undisputedly, in the present case the dominant activity of the assessee society is not business trade or commerce but its activities are for the promotion of art, craft and culture for the Indian artists in India. The Assessing Officer has himself reproduced the main objectives of the assessee society as per the Memorandum of Association in his assessment order and they are: (i) fostering and developing fine and applied arts in India to promote appreciation by means of publications, lectures, Conferences, Demonstration, Exhibition etc.;(ii) organizing and establishing a national art gallery in New Delhi; (iii) organizing art exhibit....