TaxTMI 
TaxTMI 
2020 (3) TMI 233
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....53,97,808/-. The Assessing Officer came to the conclusion that the assesee had received total income of Rs. 5,48,04,054/- which included Rs. 4,37,61,637/- as income received from organizing the event of Garba during the Navratri festival. According to the Assessing Officer, the assessee sold passes and gave food stalls on rent etc. which constitutes 79.85% of its total income. The assessee, during the year, had declared the gross receipts of Rs. 5,27,40,432/- and showed surplus of Rs. 26,27,243/-. The assessee thereby claimed Rs. 4,42,59,665/- as the income for charitable purpose. The Assessing Officer held that the activities of the assessee as per the amended provision of Section 2(15) of the Act could not be said to be advancement of any other object of general public utility and, therefore, the assessee was not liable to claim the benefit under Sections 11 and 12 respectively of the Act, more particularly, in view of Section 13(8) of the Act. The Assessing Officer, having regard to the gross receipts of Rs. 5,48,04,054/- made addition of Rs. 58,90,500/- on account of the interest on FSF fund and Rs. 1,67,90,118/- on account of anonymous donation. 2.2 The assessee, being d....
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....ereby rendering the decision, which is perverse? (F) Whether on the facts and circumstances of the case and in law, the findings of the Hon'ble ITAT are contrary to the evidence on record, thereby rendering the decision, which is perverse.?" 3. Ms. Bhatt, the learned standing counsel appearing for the Revenue vehemently submitted that the CIT (A) as well as the Appellate Tribunal committed a serious error in holding that the activities of the assessee fall within Section 2(15) read with Section 13(8) of the Act. Ms. Bhatt laid much emphasis on the fact that although the assessee is a charitable trust registered under Section 12A of the Act, yet that by itself is not sufficient to bring the case within the ambit of Section 2(15) of the Act. According to Ms. Bhatt, for the relevant year, the actual activities of the assessee should be taken into consideration. Ms. Bhatt laid much emphasis on the fact that from one particular event, i.e,. Garba a huge income has been derived by the assessee. According to Ms. Bhatt, the case on hand squarely falls within the proviso to Section 2(15) of the Act. It is argued that once the activity of the assessee falls within the ambit of tr....
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.... from the said garba events. Thus, out of total income, 79.85% partakes from garba event only. As mentioned in foregoing para, the assessee is organizing Garba event on the eve of Navratri. Amongst therefore, it is beyond the pale of doubt that the, assessee's prime objective of garba organization. The activities of the assessee are aimed at earning profit as it is carrying on activity in the nature of trade, commerce or business. Further profit making by the assessee is not mere incidental. Section 13(8) of the Act states that section 11 and 12 benefits will not be available to the assessee if first proviso of section 2(15) is applicable. The relevant portion of the section 13(8) of the Act is reproduced as sunder: "(8) Nothing contained in section 11 or section 12 shall operate so as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year." 4.7 The sources of income of assessee clearly depict its commercial nature. The income of assessee consists of selling of passes to boys/g....
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.... read with section 12AA of the Act are not to be confused with the assessment proceedings wherein the provisions of section 11, 12 and 13 of the Act are applicable. Now let us examine whether garba activity by appellant involves carrying on of any activity in nature of trade, commerce, or business. It has been held by honorable ITAT Amritsar Bench in the case of "Jhalandar Development Authority" 124 TFJ 598, that the words used in the proviso "any activity in the nature of trade, commerce, or business are of wider import THEN activity of trade, commerce or business. It has been held in the case of Entertainment Society of Goa Vs. CIT 34, Taxman. Com 210 (Panji-Tribunal) that activity being conducted by the assessee need not be a trade, commerce, or business activity. It is sufficient that it is similar to trade, commerce, or business activity." 10. The CIT (A), while allowing the appeal preferred by the Assessee held as under; "5.2 I have carefully considered the rival contention as well as the observation of the A.O. It is observed from the remand report that the appellant has itself admitted to have received the amount of Rs. 1,67,90,118/- as anonymous donati....
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....cts of this case and thus benefit of Section 11 cannot be declined to the assessee; and, second- whether or not the CIT(A) was justified the expenses, like assistance to voluntary agencies, management assistance and training, public education programme, research and publications and expenses for community service, as application of income for the purposes of Section 11 of the Act. 5. To adjudicate on these issues, only a few material facts need to be taken note of. The assessee before us is a society registered as a charitable institution registered under section 12AA of the Act. The assessee filed a return of income on 26.9.2011 showing NIL income. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has shown gross receipts of Rs. 3,81,01,051, and a surplus of Rs. 39,94,650. In the computation of income, the assessee had claimed application of funds for charitable purposes to the extent of Rs. 3,81,16,559 and claimed exemption under section 11 of the Act. When the Assessing Officer probed the matter further, he found that out of total receipts of Rs. 3,81,01,051, a sum of Rs. 2,73,26,591 (i.e. 71.72% of revenues) is in res....
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....urplus funds are purely incidental and the institution is not run on the commercial lines at all. Elaborate legal submissions were made on the scope of proviso to Section 2(15) and its legislative history and background. A reference was also made to CBDT circular No. 11/2008 dated 29th December 2008 in support of the proposition the proviso to Section 2(15) will not apply in respect of activities involving relief to poor, education or medical relief, even if it incidentally involves the carrying on of commercial activities. It was then pointed out that main object of the trust is to mobilize the resources from local communities and the people having affiliation and concern for India in general, and Gujarat in particular, residing in India or abroad, and to apply them for strengthening the services in education, health and human care and the other social sectors of the underprivileged. It was thus contended that the proviso to Section 2(15) will have no application in this case. The assessee also made elaborate submissions on the connotations of expressions business activities and made out a case as to how the activities of the assessee, even with respect to holding the garba event,....
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.... performs some activities, which can be alleged to be on commercial lines, are performed, the charitable nature of the objects will not be vitiated as proviso to Section 2(15) comes into play only in respect of any other object of general public utility and is not covered by the specific objects pointed out earlier- including relief to poor, education and medical relief. Nothing, therefore, really turns on the garba event being organized on the basis of, what can be termed as, commercial principles. That aspect of the matter is not relevant in the present case. As we have noted earlier, one of the major object of the assessee society is mobilizing resources from the local communities and the people having affiliation and concern for India in general, and Gujarat in particular, residing in India or abroad and to apply them for strengthening the services in education, health and human care and other social sectors existing in Baroda and State of Gujarat, and there is also no dispute that considerable work in this area has been carried out in this area as evident from the material produced before the Assessing Officer, copies of which have been filed before us as well. The ge....
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....ranted the benefit of exemption. The income received by the assessee is from organizing the event of Garba by sale of tickets and also leasing out food and beverages outlets at the venue of the event. However, the dominant and main object of the assessee cannot be said to be organizing the event of Garba. The charitable activities which the assessee has been undertaking has been discussed by the Appellate Tribunal. We take notice of the fact that the assessee has been supporting 120 non-government organizations. The assessee is into health and human services for the purpose of improving the quality of life in the society. The objectives of the Society includes mobilizing resources from the local communities. It organizes medical camps for thalassemia affected children. It also provides vocational training to the disabled orphans, undertakes various program for empowering women including providing midday meal to the poor students. The activities like organizing the event of Garba including the sale of tickets and issue of passes etc. cannot be termed as business. The two authorities have taken the view that the profit making is not the driving force or the objective of the assessee.....