ITO (Exemptions), Ward-1,, Ahmedabad v. Gujarat State Plastic Manufacturer's Association,, Ahmedabad

ITA 2323/AHD/2017 | 2010-2011
Pronouncement Date: 21-11-2019 | Result: Dismissed

Appeal Details

RSA Number 232320514 RSA 2017
Assessee PAN AAATG3563A
Bench Ahmedabad
Appeal Number ITA 2323/AHD/2017
Duration Of Justice 2 year(s) 1 month(s) 5 day(s)
Appellant ITO (Exemptions), Ward-1,, Ahmedabad
Respondent Gujarat State Plastic Manufacturer's Association,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 21-11-2019
Last Hearing Date 13-11-2019
First Hearing Date 13-11-2019
Assessment Year 2010-2011
Appeal Filed On 16-10-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD JUDICIAL MEMBER) ITA. NO: 2323/AHD/2017 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER (EXEMPTIONS) WARD-1 AHMEDABAD V/S GUJARAT STATE PLASTIC MANUFACTURERS ASSOCIATION 7 TH FLOOR SPAN TRADE CENTRE OPP: KOCHRAB ASHRAM NR. PALDI CHAR RASTA ELLISBRIDGE AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAATG3563A APPELLANT BY : SHRI L. P. JAIN SR. D.R. RESPONDENT BY : SHRI DHVANI MEHTA ( )/ ORDER DATE OF HEARING : 13 -11-201 9 DATE OF PRONOUNCEMENT : 21-11-2019 PER MAHAVIR PRASAD JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-9 AHMEDABAD DATED 06.07.2017 PERTAINING TO A.Y. 2010-11. IN ITS APPEAL ASSESSEE HAS TAKEN FOLLOWING GROUNDS: ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 2 I.THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE PENALTY OF RS.53 58 585/-LEVIED U/S. 271 (1 )(C) OF THE ACT. II. THE LD. CIT(A) FAILED TO APPRECIATE THAT T HE DENIAL OF EXEMPTION U/S.11 OF THE ACT HAS BEEN CONFIRMED IN QUANTUM APPEAL. III. THE LD. CIT(A) FAILED TO APPRECIATE THE FA CT THAT THE CLAIM OF EXEMPTION U/S.11 BY THE ASSESSEE TRUST WITHOUT THIS ACTIVITIE S BEING CARRIED OUT IN TERMS OF OBJECT OF THE TRUST IS SURELY COVERED UNDER' FURNIS HING IN ACCURATE PARTICULARS OF INCOME' AS PER PROVISIONS OF SECTION 271 (1) (C ) OF THE ACT. IV. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. V. IT IS THEREFORE PRAYED THAT THE ORDER OF T HE LD. COMMISSIONER OF INCOME-TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 2. THE ASSESSEE IS A TRUST AND PROVIDING ADVISORY GUI DANCE AND RESEARCH SERVICES TO THE PLASTIC MANUFACTURERS IN GUJARAT. 3. AT THE TIME OF HEARING LD. A.R. SUBMITTED THAT IN QUANTUM PROCEEDING ITAT HAS ALLOWED THE APPEAL OF THE ASSESSEE AND SUBMITTE D THAT NOTHING REMAINED FOR CONFIRMING THE PENALTY AGAINST THE ASSESSEE AND FIL ED COPY OF THE ITAT ORDER IN FAVOUR OF THE ASSESSEE AND IN ITA NO. 2840/AHD/2014 FOR A.Y. 2010-11 DATED 22.10.2019 WHEREIN ITAT HAS ALLOWED THE APPEAL OF T HE ASSESSEE WITH FOLLOWING OBSERVATION: 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. THE TRUST IS REGISTERED U/S. 12AA OF THE I.T. ACT DATED 10.07 .1998 SINCE THEN TRUST IS CARRYING OUT ITS ACTIVITIES WITHOUT ANY HINDRANCE AND PRIOR TO ASSESSMENT YEAR 2010-11. ACTIVITIES OF THE TRUST WERE GOING ON WITHOUT ANY H INDRANCE AND RETURNS OF THE TRUST WERE DULY ACCEPTED BY THE DEPARTMENT. ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 3 7. AT THE OUTSET LD. A.R. CITED AN ORDER OF OUR OW N BENCH IN THE CASE OF ITO VS. INDIAN STAINLESS STEEL DEVELOPMENT ORGANISATION S ITA NO. 2441/AHD/2015 DATED 14.05.2018 WHEREIN IN SIMILAR FACTS AND CIRCU MSTANCES RELIEF WAS GRANTED TO THE ASSESSEE AND APPEAL OF THE REVENUE WAS DISMI SSED AND OPERATIVE PARA OF THE SAID ORDER IS REPRODUCED HEREIN: 7. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMPUGNED ORDER IN SUPPORT OF ITS CONTENTION. LD. D.R. STATED THAT LD. CIT(A) HAS WRONGLY GIVEN THE RELIEF TO THE ASSESSEE AND STATED THAT THE FUND WAS RAISED BY WAY OF EXHIBITION SPACE CHARGES AND ADVERTISEMENT INCOME AND TDS WAS ALSO DEDUCTED. THE OBJECTS AND ACTIVITY OF THE ASSESSEE HAS TO SEEN IN THE LIGHT OF THE PROVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT. CHARITABLE OBJ ECTS DEFINED IN THE SECTION 2(15) OF THE ACT ARE: * RELIEF OF THE POOR * EDUCATION * MEDICAL RELIEF *PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST AND * THE ADVANCEMENT OF ANY OTHER OBJECTION OF GENERAL PUBLIC UTILITY. 8. ON THE OTHER HAND LD. A.R. STATED THAT IT IS VE RY CLEAR FROM THE OBJECTS OF THE TRUST AS MENTIONED IN ITS ARTICLE OF MEMORANDUM THE MAIN OBJECTS ARE TO PROMOTE TRADING DEALING AND MANUFACTURING STAINLES S STEEL AND TO PROTECT THE INTEREST OF MEMBERS .THE ASSESSEE TRUST HAD ORGANIZ ED STAINLESS STEEL FAIR CALLED 'INDIANOX-2010' AT AHMEDABAD DURING 16TH TO 19TH JANU ARY 2010 FROM ITS BROCHURE IT IS NOTICED FROM THERE WERE 800 DOMESTIC EXHIBITORS AND 30 INTERNATIONAL EXHIBITORS. THE ACTIVITY OF THE ASSES SEE WAS ON THE CHARGING BASIC. THE ASSESSEE CHARGE ENTRANCE FEES EARN THROUGH THE SELLING OF EXHIBITION SPACE AND ALSO FROM THE EXHIBITION ADVERTISEMENT CHARGES. THEREFORE THE ASSESSEE ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 4 CLEARLY FALLS UNDER THE CATEGORY 'ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THE ASSESSEE EARNED THROUGH THE SEL LING OF EXHIBITION SPACE AMOUNTS TO RS. 37108743/-. ON THE TDS CERTIFICATE I SSUED BY DEDUCTING PERSON SHOWS THE NATURE OF PAYMENT AS CONTRACTOR RENT AND FEES AND IN SUPPORT OF ITS CONTENTION. LD. A.R. CITED AN ORDER OF ITAT KOLKATA BENCH IN ITA NO. 1491/KOL/2012 & ITA NO. 1284/KOL/2012 FOR ASSESSMEN T YEARS 2008-09 & 2009- 10 TITLED AS INDIAN CHAMBER OF COMMERCE VS. ITO WHE REIN IN SIMILAR CIRCUMSTANCES ITAT KOLKATA BENCH GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATION:- 38. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF THE VARIOUS JUD ICIAL DECISIONS THROUGH THE YEARS INTERPRETING THE DEFINITION OF 'CHARITABLE PU RPOSE' AS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF 'BUSINES S' IN RELATION TO THE SAID SECTION AMPLY REVELS THAT THE THEORY OF DOMINANT PU RPOSE HAS ALWAYS ALL THROUGH THE YEARS BEEN UPHELD TO BE THE DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHERE T HE MAIN OBJECT OF THE INSTITUTION WAS 'CHARITABLE' IN NATURE THEN THE ACTIVITIES CARRI ED OUT TOWARDS THE ACHIEVEMENT OF THE SAID BEING INCIDENTAL OR ANCILL ARY TO THE MAIN OBJECT EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NO N MEMBERS WERE ALL HELD TO BE 'CHARITABLE' IN NATURE. HON'BLE APEX COURT IN THE EAR LIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEARLY LAID OUT THE PRINCI PLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION WAS ADVANCEMENT OF OBJECTS OF GEN ERAL PUBLIC UTILITY IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLAR Y ACTIVITY OR PURPOSE FOR ACHIEVING THE MAIN PURPOSE WAS PROFITABLE IN NATUR E. IN OUR VIEW THE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF 'CHARITABLE P URPOSE' REMAINED UNALTERED EVEN ON AMENDMENT IN THE SECTION 2(15) OF THE ACT W .E.F. 01/04/2009 THOUGH THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN. ACC ORDINGLY IN THE GIVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN DETAIL THE ASSESSEE ASS OCIATION'S PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY AN D IT WOULD REMAIN CHARITABLE ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 5 EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURP OSE FOR ACHIEVING THE MAIN PURPOSES PROFITABLE IN NATURE. HENCE ASSESSEE IS N OT HIT BY NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT. THIS ISSUE OF ASSESSED APPEAL IS ALLOWED. 39. IN THE RESULT BOTH APPEALS OF ASSESSEE ARE ALLOWED. 9. ASSESSEE ALSO CITED AN ORDER OF ITAT KOLKATA BEN CH IN ITA NO. 735/KOL/2013 TITLED AS ITO VS. INDIAN LEATHER PRODU CTS ASSOCIATION WHEREIN IN SIMILAR CIRCUMSTANCES RELIEF WAS GRANTED TO THE ASS ESSEE WITH FOLLOWING OBSERVATION:- CHARITABLE TRUSTINCOME OF CHARITABLE TRUSTS-BENEFI T U/S. 11ASSESSEE WAS ASSOCIATION DULY REGISTERED U/S 12AASSESSEE ALSO H ELD CERTIFICATE U/S 80G ASSESSEE WAS CARRYING ON CHARITABLE ACTIVITIES SINC E 1988ASSOCIATION OF ASSESSEE WAS FORMED BY LEATHER MERCHANTS FOR VARIOU S ACTIVITIES SUCH AS SPREADING KNOWLEDGE AMONG MEMBERS REGARDING THE T RADE TO REMOVE HARDSHIP OF MEMBERS TO ASSIST MEMBERS IN INCREASING VOLUME BY ORGANIZING TRADE SHOWS FAIRS SEMINARS AND PUBLISHING OF MAGAZINES FOR SOL E BENEFIT AND ADVANTAGES OF LEATHER INDUSTRYPRIME OBJECT OF ASSESSEE WAS TO PR OMOTE LEATHER TRADE DURING PREVIOUS YEAR ASSESSEE DERIVED INCOME FROM CONDUCTING TRADE SHOWS SEMINARS FAIRS SVHC TESTING LEATHER GOODS PARK B OOKING FEES FASHION MAGAZINE AND ENTRY TICKETS FOR VARIOUS TRADE SHOWSAO WAS OF VIEW THAT ASSESSEE WAS ALLOWING OUTSIDERS ALSO TO PARTICIPATE BY KEEPING T HEIR STALL IN TRADE FAIR ORGANIZED BY ASSESSEEAO WAS THEREFORE OF VIEW THAT ASSESSEE WAS HAVING DEALINGS OR RELATIONS WITH OUTSIDE BODY AND GENERATING INCOMEA O THEREFORE CONCLUDED THAT ASSESSEE WAS DERIVING INCOME BY CARRYING ON A CTIVITY IN NATURE OF TRADE COMMERCE OR BUSINESSAO ACCORDINGLY DENIED BENEFIT OF EXEMPTION U/S 11 OF THE ACT TO ASSESSEEAO BROUGHT TO TAX GROSS RECEIPTS AS PER INCOME AND EXPENDITURE ACCOUNT AFTER DEDUCTING EXPENDITURE INCURRED TO TAX BEFORE CIT(A) ASSESSEE EXPLAINED CHARITABLE NATURE OF ASSESSEE AND SUBMITT ED THAT IT WAS EXISTING FOR CHARITABLE PURPOSECIT(A) WAS OF VIEW THAT MAIN CO NTRIBUTION FROM NON- ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 6 MEMBERS WAS STALL BOOKING CHARGES IN TRADE FAIR ORG ANIZED BY ASSESSEE DURING PREVIOUS YEAR-HE WAS OF VIEW THAT AS PER FIRST PRO VISO TO S. 2(15) ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHOUL D NOT BE CHARITABLE PURPOSE IF IT INVOLVED CARRYING ON ACTIVITY IN NATURE OF TRADE C OMMERCE OR BUSINESSASSESSEE HAD NOT CARRIED OUT ANY SUCH ACTIVITY BY CHARGING R ENT FROM NON-MEMBERS FOR STALLS IN TRADE FAIR ORGANIZED BY ASSESSEECIT(A) A CCORDINGLY DIRECTED AO TO COMPUTE INCOME OF ASSESSEE WITHOUT INVOKING FIRST P ROVISO TO SECTION 2(15) HELD IT COULD BE SEEN FROM BYE-LAWS OF ASSESSEE TH AT DOMINANT AND PRIME OBJECTIVE OF ASSESSEE WAS NOT PROFIT MAKINGPRIOR T O INTRODUCTION OF THE PROVISO TO S 2(15) THERE WAS NO DISPUTE THAT ASSESSEE WAS ESTABLISHED FOR CHARITABLE PURPOSESCONTRIBUTION ASSESSEE RECEIVED FROM NON-ME MBERS IN CONDUCTING TRADE FAIR WAS RS.15 64 556 TOTAL RECEIPTS OF ASSE SSEE DURING PREVIOUS YEAR WAS SUM OF RS.L 30 26 506IT COULD NOT BE SAID THAT REC EIPTS FROM NON-MEMBERS CONSTITUTED MAJOR RECEIPTS OF ASSESSEEEXPENSES INC URRED IN CONNECTION WITH TRADE FAIRS AND PROMOTION EVENTS WAS RS.29 03 411I T COULD NOT THUS BE SAID THAT ACTIVITY OF ORGANIZING TRADE FAIRS AND EXHIBI TIONS AND THE ACT OF COLLECTING CONTRIBUTION FROM NON-MEMBERS RENDERED ASSESSEE AS ORGANIZATION EXISTING FOR PROFIT OR WAS DOING BUSINESS OR TRADEFACTUAL ASPEC TS AND OBJECTS OFASSESSEE WOULD CLEARLY SHOW THAT ASSESSEE DID NOT DRIVEN PR IMARILY BY DESIRE OR MOTIVE TO EARN PROFITS BUT TO DO CHARITY THROUGH ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITYTHIS WAS SUBSTANTIATED BY ACTUAL INCOME REC EIVED ON OPERATIONS OF ASSESSEE AND EXPENDITURE INCURRED SET OUT IN EARLIE R PARAGRAPHS OF THIS ORDER PROVISO TO S.2(15) WAS THEREFORE NOT APPLICABLE TO CASE OF ASSESSEEASSESSEE WAS ENTITLED TO BENEFITS OF S.L1AO HAD NOT DISPUTE D CONDITIONS NECESSARY FOR ALLOWING EXEMPTION U/S.11 EXCEPT APPLICABILITY OF PROVISO TO S.2(15)SAID PROVISO WAS NOT APPLICABLE TO CASE OF ASSESSEEORDE R OF CIT(A) UPHELD ASSESSEE'S INCOME WAS NOT INCLUDIBLE IN TOTAL INCOM EAPPEAL BY REVENUE WAS DISMISSED. ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 7 10. AS WE CAN SEE THE ASSESSEE IS IN FACT CARRYING OUT ACTIVITIES FOR CHARITABLE PURPOSES AND THERE IS AN EXCESS OF EXPENDITURE OVER INCOME YEAR AFTER YEAR AND IN SIMILAR CIRCUMSTANCES RELIEF HAVE BEEN GRANTED BY T HE ITAT KOLKATA BENCHES AND IN OUR CONSIDERED OPINION THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S. 11 & 12 OF INCOME TAX ACT. AFTER CONSIDERING THE ABOVE F ACTS WE OBSERVE THAT THE AIMS AND OBJECT OF THE ASSESSEE TRUST WERE CHARITABLE IN NATURE. THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/S. 12AA OF THE ACT AND SINCE ITS 1ST YEAR THE ASSESSEE TRUST HAS CARRIED OUT ACTIVITIES FOR CHARITABLE PURPOSES. ON PERUSAL OF THE AUDITED ANNUAL ACCOUNTS FOR A.Y. 2011-12 TO 2013-14 SHOW TH AT THE ASSESSEE TRUST HAS SPENT MORE AMOUNTS ON THE OBJECT OF THE TRUST THAN THE TOTAL RECEIPTS AS MENTIONED BELOW:- A.Y. AMOUNT SPENT FOR OBJECT OF TRUST TOTAL 2011-12 34 53 361/- 5 41 889/- 2012-13 12 57 968/- 4 62 409/- 2013-14 10 76 392/- 33 240/- 11. IT IS CLEAR THAT THERE IS AN EXCESS OF EXPENDIT URE OVER INCOME YEAR AFTER YEAR AND THE ASSESSEE TRUST HAS BEEN CARRYING OUT A CTIVITIES FOR CHARITABLE PURPOSES. WE CONSIDER THAT THE MAIN OBJECT OF THE A SSESSEE TRUST WAS THE PROMOTION PROTECTION AND DEVELOPMENT OF TRADE COMM ERCE AND INDUSTRY THEREFORE ITS INCOME GENERATED FROM TRADE FAIR ETC. WOULD BE EXEMPTED FROM TAX U/S. 11 R.W.S. 2(15) OF THE ACT. IN VIEW OF THE ABO VE FACTS AND FINDINGS WE ARE INCLINED WITH THE DECISION OF LD. CIT(A). THEREFORE THE APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ITA NO. 2323 /AHD/2017 . A.Y. 2010-1 1 8 8. ON THE OTHER HAND LD. D.R. VEHEMENTLY RELIED ON THE ORDER OF THE LD. CIT(A). BUT WE ARE NOT AGREE WITH THE CONTENTION OF THE LD. D.R. SINCE MATTER IS FAIRLY COVERED IN FAVOUR OF THE ASSESSEE. 9. THUS IN PARITY WITH OUR OWN ORDER IN SIMILAR FAC TS AND CIRCUMSTANCES WE ALLOW THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. 4. SINCE ITAT HAS ALREADY GRANTED RELIEF TO THE ASSESS EE IN QUANTUM PROCEEDING NOW NOTHING REMAIN AGAINST THE ASSESSEE. THUS APPE AL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 21 - 11- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 21/11/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHME DABAD