TaxTMI 
TaxTMI 
2023 (7) TMI 77
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....enefit of exemption u/s 11 of the I.T. Act to the assessee, after treating the activities of the assessee to be falling under the limb of 'Advancement of any other object of general public utility' of Section 2(15) of the I.T. Act, though the proviso to Section 2(15) of the Act debars this benefit when such receipts exceed Rs. 25 lakhs, as is in the assessee's case. 3. On facts and circumstance of the case, the Ld. CIT(A) erred in over-looking the Hon'ble CBDT New Delhi's explanatory Circular No. 11 of 2008 dated 19.12.2008, which stated that if the charitable organization has transactions / dealings with non members then their claim to be charitable organization will be governed by the provisions of Section 2(15) of the I.T. Act. 4. The appellant craves leave to add, alter, amend or omit any or all the grounds of appeal." Brief Facts of the Case : 2. The assessee is a Company registered under section 25 of the Companies Act 1956.It filed return of Income on 29/09/2016 for A.Y. 2016-17 declaring total income at NIL. The case of the assessee was selected for scrutiny. The Assessing Officer(AO) passed the assessment order under section 143(3) after giving oppo....
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....f income is hereby denied for AY under consideration." 3. Aggrieved by the order of the AO, the assessee filed appeal before the Commissioner of Income Tax(Appeal). The Ld.CIT(A) allowed the appeal of the assessee following decision of ITAT Pune in the case of the assessee for earlier years. 4. Aggrieved by the order of the Ld.CIT(A) the Revenue has filed appeal before this Tribunal. Departmental Representative's (DR) Submission : 5. Ld.DR explained that the assessee is engaged in carrying out business activities. Ld.DR, Mr.Murkunde took us through the assessment order, P&L Account to demonstrate that assessee is earning income from Renting out hall, from leasing its property. The assessee is charging substantial amount for renting the hall. The assessee has also earned income from other activities like issuing certificate, seminars, conferences. The receipts of the assessee are from members as well as non-members. Assessee has not provided break up of receipts from members and Non-members to AO. The activities of renting out Hall, Leasing out property, Charging for Seminar are nothing but activities in the nature of Trade Commerce. Therefore, it is not eligible for exe....
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.... consideration. The inclusion of the term "in the nature of" was by design, to clarify beyond doubt, that not only business, trade or commerce, but all activities in the nature of, or resembling them, were proscribed. Likewise, service in relation to such activities, i.e., services relating, or pertaining to, such proscribed activities, too were forbidden. 151. The reference to fee or cess, is in the opinion of the court, only to emphasize that even a statutory consideration, for a service to business, trade or commerce, would take the activity outside the definition of a GPU charity. The sense in which the expressions "cess, fee or other consideration" are used, is that if any amount, is received for trading, or business or commercial activity, or any services to such activity, then, notwithstanding their nomenclature (as fee or cess, i.e. that they are fixed under a law) the GPU charity cannot claim tax exempt status. To bring home this even more pointedly- and underline a break from the past, the application of such amounts (received in the course of trade, commerce, or business, or towards services in relation thereto) would be irrelevant, as evidenced by the term "irr....
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.... GPU objective and, secondly - and the equally important consideration is the imposition of a quantitative standard - i.e., income (fees, cess or other consideration) derived from activity in the nature of trade, business or commerce or service in relation to these three activities, should not exceed the quantitative limit of Rs. 10,00,000 (w.e.f. 1-4-2009), Rs. 25,00,000 (w.e.f. 1-4-2012), and 20% (w.e.f. 1-4-2016) of the total receipts. Lastly, the "ploughing" back of business income to "feed" charity is an irrelevant factor - again emphasizing the prohibition from engaging in trade, commerce or business. 168. If one understands the definition in the light of the above enunciation, the sequitur is that the reference to "income being profits and gains of business" with a further reference to its being incidental to the objects of the Trust, cannot and does not mean proceeds of activities incidental to the main object, incidental objects or income derived from incidental activities. The proper way of reading reference to the term "incidental" in section 11(4A) is to interpret it in the light of the sub-clause (i) of proviso to section 2(15), i.e., that the activity in the ....
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....total receipts, of the trust or institution undertaking such activity or activities, of that previous year;] 11. Now applying the said proposition of law as explained by the Hon'ble Supreme Court(supra) to the present case under consideration, it is observed that the activities of Renting Hall, Leasing Property, Charging Fees for Certifications, Charging fees for Programs etc. is nothing but activity in the nature of Trade, Commerce, Business or providing services in relation to Trade, Commerce, Business by charging fee, cess. However, the basic fact in this case is that the quantum of receipt from such activities is more than 20% of the total receipt. For Example, the Leasing Income is Rs.2,23,17,651/- out of total income of Rs.10,60,58,855/- which is 21% of the total receipts. In addition to the leasing income there are other receipts like hall charges, programme fees etc. However, we are sure that these receipts are in the nature of trade, business or commerce or providing services in relation to Trade, Commerce, Business for fee. Thus, the receipts from these activities which is in the nature of trade business, or commerce is definitely more than 20% of the total receipts, h....