TaxTMI 
TaxTMI 
2024 (7) TMI 1083
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....hich are more than Rs. 25 lakhs, hence the proviso to section 2(15) of the I.T. Act is applicable and the assessee is not entitled to exemption u/s 11 of the Act in view of the provisions of section 13(8) of the I.T. Act, 1961?". 2. Whether, on the facts and in the circumstances of the case and in law the Ld. CIT(A) is right in allowing the exemption u/s 11 of the Act to the assessee whose case squarely falls under the under the proviso (i) to section 2(15) of the Act with respect to the advancement of any other object of general utility, as the act of conducting exhibitions being in the nature of trade and commerce. When such activities have been held as trade or commerce in the APEC case judgement of the Supreme Court ? 3. Whether, on the facts and in the circumstances of the case and in law the Ld.CIT(A) is right in allowing exemption u/s 11 of the Act to the assessee, on the basis of the manner in which the funds generated from commercial activities are utilized even though provisions of proviso to section 2(15) clearly do not provide for any such exception on account of nature of use or application or retention of income from commercial activities? 4. Whether on the fact....
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....on and has earned income to the tune of Rs. 148,02,92,120/- as reported in the audited financial statement reproduced at page no. 3 of the assessment order. The assessing officer was of the view that assessee was engaged in various commercial activities which prima-facie were in the nature business and the purpose of the assessee trust was not education, medical relief, relief to poor, preservation of environment and preservation monument or places or objects of artistic or historic interest but at the most of the advancement of any other object of general public utility. The AO opined that the object of the assessee falls under the category of "advancement of any other object of general public utility", the assessee is engaged in any commercial activity for a fees or cess either direct or indirect and also the receipts from such commercial activity is more than Rs. 25,00,000/-, the provision of proviso to Sec. 2(15) of the Act are attracted. On query, the assessee explained as under: "1. Gem & Jewellery Promotion Council (GJEPC) is a company incorporated under the provisions of Section 25 of the Companies Act, 1956 sponsored by the Ministry of commerce, Government of India. Th....
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....ficer had not agreed with the submission of the assessee and he was of the view that assessee was engaged in commercial activity and there was profit motive in the object and activity of the assessee. He further stated that the assessee was having huge surplus which was invested in term deposit to the tune of Rs. 95,13,75,646/- which showed that there was profit motive on the part of the assessee. 5. Apart of the above the AO also observed that assessee has not applied the surplus earned for the charitable purposes as per Sec. 11 of the Act. 6. The AO also stated that assessee has earned Rs. 11,12,76,400/- as interest on deposit which was nothing but return of surplus on earlier years. 7. In view of the above the AO stated that assessee cannot be considered as charitable entity u/s 2(15) as the following condition in the case of the assessee trust are fulfilled: "a The object or activity of the assessee must fall under the category of "advancement of any other object of general public utility" and b. The assessee is engaged in any commercial activity for a fees or cess either direct or indirect and also c. The receipts from such commercial activity is more than Rs. 25 lakh....
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....annual report of Gems & Jewellery Export Promotion Council showing activities of the assessee in promotion of Gems & Jewellery and also mentioned that in the exhibition no sale or purchase of jewellery are made and same are used only for the purpose of display in the exhibition organized for promotion and development as provided in the object of the assessee entity. 14. Regarding the claim of accumulation u/s 11(2) of the Act the ld. Counsel submitted that assessee has accumulated the surplus during the year for the object of the assessee trust as per form no.10 filed. The ld. Counsel also filed the copy of resolution of the board dated 18.08.2015 specifying the purpose for which surplus accumulated to be utilized as per the provision of Sec. 11(2) of the Act. 15. Heard both the sides and perused the material on record. The assessee M/s Gems & Jewellery Export Promotion council is a company incorporated u/s 25 of the Company Act 1956. It is a charitable organization registered u/s 12A of the Act since 1976. The assessing officer has not allowed exemption u/s 11 of the Act holding that proviso to Sec.2(15) of the Act is attracted in the case of the assessee. However, we have perus....
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....of the phrase "general public utility (GPU) in the definition of "charitable purposes primarily on the grounds that the institutions were carrying on trade, commerce or business for consideration, which does not qualify as GPU under the provisions of the Act as amended by Finance Act (FA), 2008 read with subsequent amendments 5.13 Before the Hon'ble Supreme Court(Supra), in the cases of most of the entities, there is no dispute as to the activities involved in the appeal qualified as GPU's within the meaning of the term "charitable purposes", but the dispute was in respect of the meaning of "lee, cess or other consideration" and its impact on construing whether the activity falls under to the description of "trade, commerce or business" 5.14 The Hon'ble Supreme Court held that where "fee, cess or other consideration' is statutorily fixed or where it represents recoupment of cost or cost with nominal mark up, the activity may not be construed as "trade, commerce or business' and will be excluded from the mischief of commercial activity under the amended provision. II. however, "fee, cess or other consideration' charged is substantially higher over cost, i....
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....ple of 'Gandhi Peace Foundation that where in the process of dissemination of Philosophy of Mahatma Gandhi through museum and exhibition for a nominal cost is ipso facto not a business. Similarly, the Hon'ble Supreme Court has held that services of low-cost hostel, providing of marriage halls or supply of blood bank for nominal markup is not in the nature of business 5.18 When we examine the facts of the instant case before us, we find that the Ld. AO and the Ld. CIT(A) has disputed the activities of conducting exhibitions and trade fair by the assessee, which according to the Assessing Officer are in the nature of trade, commerce or business or activity of rendering service in relation to trade, commerce or business as covered by the provisions to section 2(15) of the Act. 5.19 We find that in the year under consideration, the assessee has declared expenditure of Rs. 83,77,48,288/ on the exhibitions within and outside India. The detail of said expenditure is provided in the notes to the financial statement for the year ended 31/03/2012, which is available on paperbook page 124 to 126 As against this expenditure on exhibitions, revenue (income) of Rs. 83,95,30,850/- fro....
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...., commerce and business or activity of rendering services in relation to trade, commerce or business. Further the ITAT has held that assessee is not hit by the proviso to section 2(15) of the Act as far as activity of conducting or participating in exhibitions within India or overseas. Respectfully following the decision of the respective jurisdictional ITAT the A.O is directed to grant benefit of section 11 and 12 as per provisions of law. Grounds of appeal are allowed in favour of the assessee." Since, the issue in appeal is squarely covered by the decision of ITAT as discussed supra, therefore, we don't find any reason to interfere in the decision of ld. CIT(A), accordingly, ground no. 1 to 5 of the appeal of the revenue stand dismissed. Ground No. 6: 16. During the course of assessment the assessing officer has made alternative disallowance u/s 11(2) of the Act holding that specific detail of objects for which the surplus was accumulated is not specified in the form no. 10 filed by the assessee, therefore, AO has denied the accumulation u/s 11(2) of the Act. 17. However, the ld. CIT(A) has deleted the said disallowance made by the assessing officer. The relevant extract of ....
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....ITR 591 wherein it is held that lack of declaration in the form no. 10 regarding specific purpose for which funds were be accumulated by the assessee trust would not be fatal to the exemption claimed u/s 11(2) of the Act. Further the Hon'ble Supreme Court has dismissed the SLP filed against the aforesaid decision of the Hon'ble High Court. We have also perused the copy of Board Resolution dated 18.08.2015 filed at the appellate proceedings as per which the surplus is accumulated for the specified purposes in accordance with the provision of Sec. 11 sub-section (2) of the Act. In the light of the above facts and circumstances we don't find any infirmity in the decision of ld. CIT(A), therefore, this ground of appeal of the revenue is also dismissed. Ground No. 7: Claim of prior period of expenditure of Rs. 8,40,895/-: 19. During the course of assessment the AO has disallowed prior period expenses of Rs. 8,40,895/-. 20. However, the ld. CIT(A) held that assessee is entitled to the benefit of Sec.11 of the Act and all the expenditure were incurred by the assessee towards the object of trust. The AO has not brought any contrary material to demonstrate that assessee has not incurred....