M/s Credai Bengal, Kolkata v. CIT, (Exemptions), Kolkata, Kolkata

ITA 381/KOL/2016 | 2011-2012
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 38123514 RSA 2016
Assessee PAN AABCC2526D
Bench Kolkata
Appeal Number ITA 381/KOL/2016
Duration Of Justice 6 month(s) 22 day(s)
Appellant M/s Credai Bengal, Kolkata
Respondent CIT, (Exemptions), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 30-09-2016
Assessment Year 2011-2012
Appeal Filed On 08-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY JUDICIAL MEMBER ITA NO.381/KOL/2016 ASSESSMENT YEARS:2011-12 M/S. CREDAI BENGAL JINDAL TOWER BLOCK-A 21/1A/3 DARGA ROAD PARK CIRCUS KOLKATA- 700017. PAN:AABCC2526D / V/S . COMMISSIONER OF INCOME TAX (EXEMPTION) 10B MIDDLETON ROW KOLKATA- 700071. /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.K.TULSIYAN ADVOCATE /BY RESPONDENT SHRI NIRAJ KUMAR CIT(DR) /DATE OF HEARING 22-08-2016 /DATE OF PRONOUNCEMENT 30-09-2016 /O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER PA SSED BY COMMISSIONER OF INCOME TAX (EXEMPTION) KOLKATA U/S 263 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) DA TED 10.02.2016. ASSESSMENT WAS FRAMED BY JCIT (EXEMPTION) KOLKATA U/S 143(3) /11 OF THE ACT VIDE HIS ORDER DATED 26.10.2013 FOR ASSESSMENT YEAR 2011-12. SHRI S.K.TULSIYAN ADVOCATE APPEARED ON BEHALF OF A SSESSEE AND SHRI NIRAJ KUMAR LD. SR. DEPARTMENTAL REPRESENTATIVE REPRESEN TED ON BEHALF OF REVENUE. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 2 2. THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT LD. CIT U/S 263 OF THE ACT ERRED IN HOLDING THE ORDER OF THE AO PASSED UNDER SECTION 143(3)/11 OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. 3. THE FACTS IN BRIEF AS CULLED OUT FROM THE RECORD S ARE THAT THE ASSESSEE IN THE INSTANT CASE IS A COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT AND IS ENGAGED IN PROMOTING COMMERCE AND INDUSTRY RELATING TO CONSTRUCTION IN GENERAL AND BUILDING CONSTRUCTION IN PARTICULAR FOL LOWING THE CONCEPT OF MUTUALITY. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL CLAIMING EXEMPTION U/S. 11 OF THE ACT AND THEREBY TOTAL INCOME RETURNED WAS NIL. 4. THE LD. C.IT.(EXEMPTION) KOLKATA DATED OBSERVED THAT THE ORDER OF THE AO U/S 143(3)/11 OF THE ACT 1961 DATED 26.10.2013 FOR THE ASSESSMENT YEAR UNDER REFERENCE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT OF THE FOLLOWING TWO ISSUES :- VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE ACT (I) THE ASSESSEE FOR THE YEAR HAS HELD THREE FAIRS OUT WHICH TWO WERE IN INDIA AND ONE IN NORTH AMERICA. THESE THREE FAIR S GENERATED SURPLUS FUND TO THE ASSESSEE FOR AN AMOUNT OF RS. 1.10 CROR ES. AS PER THE LD. CIT OBSERVED THAT SUCH ACTIVITIES ARE COMMERCIAL IN NATURE AND THEREFORE SUCH INCOME IS PURELY FROM A BUSINESS ACT IVITY WITH AN INTENTION TO EARN PROFIT AND HENCE THE PROVISIONS O F SEC. 2(15) OF THE ACT I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC HAVE BEEN VIOLATED. VIOLATION OF PROVISIONS OF SECTION 11(1)(A) OF THE ACT (II) THAT THE INCOME EARNED FROM HOLDING SUCH FAIR IN NORTH AMERICA HAD NOT BEEN APPLIED WITHIN INDIA AND THEREBY THE A SSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 11(1)(A) OF T HE ACT. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 3 IN VIEW OF ABOVE THE LD. CIT U/S 263 OF THE ACT ISS UED SHOW CAUSE NOTICE TO THE ASSESSEE FOR SEEKING THE CLARIFICATION ON THE ABOVE STATED ISSUES. THE REPLY OF THE ASSESSEE STANDS AS UNDER : VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE ACT I. THE ASSESSEE IN COMPLIANCE TO THE NOTICE SUBMITT ED THAT THE ACTIVITIES OF THE ASSESSEE ARE IN PURSUANCE OF ITS MAIN OBJECT AS MENTIONED IN THE MEMORANDUM OF THE COMPANY. THESE A CTIVITIES ARE CONDUCTED ONLY FOR THE PURPOSE OF SECURING ITS OBJECT I.E. ADVANCEMENT AND DEVELOPMENT OF TRADE COMMERCE & IN DUSTRY IN INDIA. AS SUCH ITS ACTIVITIES ARE NOT IN THE NATURE OF BUSINESS AND THERE WAS NO MOTIVE TO EARN PROFIT. THE SURPLUS EAR NED BY THE ASSESSEE IS MERELY A BY-PRODUCT WHICH RESULTED INCI DENTALLY IN THE PROCESS OF CARRYING OUT THE CHARITABLE PURPOSE. THE ASSESSEE IN SUPPORT OF HIS CLAIM HAS RELIED IN THE ORDER OF HON BLE JURISDICTIONAL TRIBUNAL IN THE CASE OF INDIAN CHAMB ER OF COMMERCE VS. ITO IN ITA NO. 1491/KOL/2011 AND ITA N O. 1284/KOL/2011 FOR THE AYS 2008-09 & 2009-10 DATED 2 .12.2014. SO THERE WAS NO VIOLATION OF THE PROVISIONS OF SECT ION 2(15) OF THE ACT. VIOLATION OF PROVISIONS OF SECTION 11(1)(A) OF THE ACT II. AS REGARDS THE VIOLATION OF SECTION 11(1)(A) OF THE ACT WITH REGARD TO THE INCOME APPLIED OUTSIDE INDIA FOR THE FAIR HE LD OUTSIDE INDIA THE ASSESSEE SUBMITTED THAT ALL THE RECEIPTS FROM M EMBERS AND PARTICIPANTS ARE FROM INDIA ONLY. SIMILARLY ALL THE EXPENSES IN CONNECTION WITH THE FAIR IN NORTH AMERICA WERE INCU RRED IN INDIA. THE PURPOSE OF HOLDING THE FAIR IN NORTH AMERICA TO INVITE THE INDIAN RESIDENTS RESIDING THERE TO MAKE INVESTMENT IN REALTY SECTOR IN INDIA. THE ASSESSEE HAS NOT DONE ANY CHAR ITABLE ACTIVITY OUTSIDE INDIA. AS SUCH THERE WAS NO VIOLATION OF TH E PROVISIONS OF SECTION 11(1)(A) OF THE ACT. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 4 HOWEVER THE LD. CIT REJECTED THE PLEA OF THE ASSESS EE BY OBSERVING AS UNDER:- VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE ACT THE FACTS OF THE CASE RELIED BY THE ASSESSEE (INDIAN CHAMBER OF COMMERCE (SUPRA)) ARE DIFFERENT AND THEREFORE THE SAID CASE IS NOT AP PLICABLE TO THE ASSESSEE. IN THAT CASE THE ACTIVITIES OF THE ASSESS EE WERE INCIDENTAL TO THE MAIN OBJECTS BUT IN THE INSTANT CASE BEFORE US THE MAIN ACTIVITIES OF THE ASSESSEE ARE HOLDING FAIRS IN & OUTSIDE INDIA. THER EFORE THE ACTIVITIES ARE AS SUCH COMMERCIAL IN NATURE WITH PROFIT MOTIVE AND TH EREFORE THERE IS VIOLATION OF THE PROVISIONS OF SECTION 2(15) OF THE ACT. VIOLATION OF PROVISIONS OF SECTION 11(1)(A) OF THE ACT THERE IS NO DOUBT THAT THE FAIR WAS HELD OUTSIDE IN DIA AND THEREFORE THE ASSESSEE HAS CLEARLY VIOLATED THE PROVISIONS OF SEC TION 11(1)(A) OF THE ACT TO THE EXTENT MONEY APPLIED IN THE FORM OF EXPENSES OU TSIDE INDIA. BEING AGGRIEVED BY THE IMPUGNED ORDER OF THE LD. CI T U/S 263 OF THE ACT THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GR OUNDS OF APPEAL:- 1. THAT THE LD. CIT (EXEMPTION) UNDER THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE ERRED IN HOLDING THAT TH E ORDER PASSED BY THE LD. AO U/S 143(3)/11 OF THE IT ACT 1961 ON 26.12.2 013 WAS ERRONEOUS INASMUCH AS IT WAS PREJUDICIAL TO THE INTEREST OF R EVENUE. 2. THAT THE APPELLANT BEING ENGAGED IN CHARITABLE A CTIVITIES OF PROMOTING TRADE & COMMERCE AND HAVING BEEN RECOGNIZED U/S. 12 A OF THE ACT THE HOLDING OF FAIRS FOR PROMOTION OF TRADE & COMMERCE ARE ITS REGULAR ACTIVITIES AND THEREFORE THE LD. CIT (EXEMPTION) ERRED IN HOLDING THAT SUCH FAIRS AMOUNT TO CARRYING ON BUSINESS AND HIT B Y THE AMENDED PROVISIONS OF SUB-S.(15) OF SEC.2 OF THE ACT. 3. THAT THE LD. AO HAVING PASSED THE ASSESSMENT ORD ER U/S. 143(3)/11 OF THE ACT AFTER CONSIDERING ALL THE FACTS EMANATIN G AND RELATING TO THE CONCERNED ASSESSMENT YEAR THE LD. CIT (EXEMPTION) ERRED IN HAVING HELD A CONTRARY VIEW BY HOLDING THAT THE ORDER PASS ED BY THE LD. AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 4. THAT WITHOUT DISPUTING THE APPELLANTS CLAIM THA T FOR HOLDING THE FAIR IN NORTH AMERICA ALL RECEIPTS AROSE AND ALL EXPENSES WERE INCURRED IN INDIA THE LD. CIT (EXEMPTION) ERRED IN HOLDING THA T THE INCOME EARNED ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 5 FROM SUCH FAIR HAD NOT BEEN APPLIED WITHIN INDIA AN D THEREBY THE APPELLANT CONTRAVENED THE PROVISIONS OF SEC. 11(1)( A) OF THE ACT. 5. THAT AS THE FULL FACTS RELATING TO HOLDING OF FA IRS IN INDIA AND ABROAD WITH THE PARTICIPATION OF NON-MEMBERS AND A NET SUR PLUS GENERATED FROM SUCH ACTIVITIES WERE IN THE KNOWLEDGE OF THE LD. AO AND S HE HAD ALREADY DEALT WITH SUCH ACTIVITIES IN A PARTICULAR MANNER AS DISCUSSED IN THE ASSESSMENT ORDER FOR A.Y 2011-12 THE LD. CIT ( EXEMPTION) ERRED IN ASSUMING JURISDICTION U/S. 263 OF THE ACT IN ORDER TO IMPOSE HIS OWN VIEWS ON THE LD. A.O. 5. THE LD. AR BEFORE US HAS FILED A PAPER BOOK WHIC H IS RUNNING FROM PAGES 1 TO 176 AND SUBMITTED THAT IN THIS CASE THE ASSESSEE IS NOT CARRYING OUT ANY TRADE COMMERCE OR BUSINESS. THE OBJECT AND ACTIVITIES BEING CARRIED OUT BY THE ASSESSEE ARE ATTRIBUTABLE TO A SECTION O F THE PUBLIC. ITS SOLE MOTTO IS TO PROVIDE ASSISTANCE AND SUPPORT SERVICES TO ENTRE PRENEURS AND INVESTORS IN REAL ESTATE INDUSTRY. THEREFORE ADMITTEDLY THERE IS NO PROFIT ELEMENT IN SUCH ACTIVITIES WHICH ARE RENDERED TO A SECTION OF THE P EOPLE WHO ARE ENTREPRENEURS IN HOUSING INDUSTRY. THE ASSESSEE IS NOT PROVIDING ASSISTANCE/ SUPPORT SERVICES TO ANY SPECIFIED INDIVIDUAL BUT TO A SECTION OF THE PEOPLE I.E. ENTREPRENEURS/ INVESTORS IN REAL ESTATE INDUSTRY. T HEREFORE IN THE CIRCUMSTANCES OF THE CASE THE OBJECT OF THE ASSESS EE IS FOR THE BENEFIT OF A SECTION OF THE COMMUNITY OR A CLASS IDENTIFIABLE BY SOME COMMON QUALITY OF PUBLIC AND IMPERSONAL NATURE AND AS SUCH IT CANNOT DETRACT FROM ITS CHARITABLE CHARACTER. THE ACTIVITIES OF THE ASSESSEE IS THERE FORE CHARITABLE WITHIN THE MEANING OF S. 2(15) OF THE ACT. SIMILARLY THE ALLEGATION OF THE LD. CIT THAT ONCE T HE ASSESSEE HAD HELD THE FAIR OUTSIDE INDIA IT WAS CLEARLY EVIDENT THAT IT HAD A PPLIED THE RECEIPT THEREOF OUTSIDE INDIA AND HENCE THE ASSESSEE HAD VIOLATED S EC. 11(1)(A) OF THE ACT TO SUCH EXTENT WAS ALSO NOT CORRECT. THE LD. CIT FURTH ER HELD THAT CHEQUES ISSUED IN INDIA DID NOT CONFIRM THE FACT THAT APPLICATION HAS BEEN DONE IN INDIA. ACCORDING TO HIM FURTHER EXPENSES INCURRED TO ORG ANIZE FAIR OUTSIDE INDIA HAS BEEN INCURRED FIRST AND SUBSEQUENTLY INCOME HAS ARI SEN OUT OF INDIA. THEREFORE SUCH EXPENSES OUT OF THE INCOME ARISES I N INDIA ARE ' APPLICATION ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 6 OUTSIDE INDIA ' OUT OF RECEIPTS IN INDIA AND HENCE IN VIOLATION O F SEC. 11(1)(A) OF THE ACT. TO THIS IT IS SUBMITTED AT THE COST OF RE PETITION THAT THE FAIR WAS ORGANIZED TO INVITE THE INDIAN RESIDENTS OF NORTH A MERICA TO INVEST IN INDIA IN REALTY SECTOR. SO IT WAS FOR THE ADVANCEMENT OF RE ALTY BUSINESS IN INDIA THAT THE IMPUGNED FAIR WAS ORGANIZED. ALL THE MEMBERS AN D NON-MEMBERS PARTICIPANTS WERE MOSTLY INDIAN CORPORATE BODIES AN D CONTRIBUTIONS FROM THEM WERE RECEIVED IN INDIAN CURRENCY. ALL EXPENSES IN C ONNECTION WITH THE TRADE FAIR AT NORTH AMERICA WERE ALSO INCURRED IN INDIA I N INDIAN CURRENCY. NO CHARITABLE ACTIVITY WAS CARRIED OUT BY THE ASSESSEE AT NORTH AMERICA BANK STATEMENTS BILL/VOUCHERS INVOICES ETC. ALREADY ON RECORD TO PROVE SAID FACT. THEREFORE THE ALLEGATION OF THE LD. CIT THAT RECEI PT ON ACCOUNT OF TRADE FAIR WAS UTILIZED OUTSIDE INDIA IS FACTUALLY INCORRECT A ND BEYOND THE EVIDENCE ON RECORD. UNDER THE CIRCUMSTANCES THE ASSESSEE AS R EQUIRED BY SECTION 11 HAS APPLIED THE RECEIPTS FOR CHARITABLE PURPOSES IN INDIA AND SUCH APPLICATION IS DEDUCTIBLE FROM THE GROSS RECEIPTS OF THE INSTIT UTION. 1. THE LD. AR FURTHER SUBMITTED THAT THE OBJECT AND ACTIVITY OF THE ASSESSEE ORGANIZING FAIR IN ORDER TO ADVANCE THE REALTY SECT OR IS INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECT AND CANNOT BE TAKEN OTHER WISE TO CATEGORIZE AS BUSINESS. IT SHOULD BE NOTED THE ASSESSEE WHILE PURSUING ITS OBJECTS HAS TO CARRY ON THE INCIDENTAL ACTIVITIES FOR THE A TTAINMENT OF THE MAIN OBJECT. SUCH ACTIVITIES MAY GENERATE SURPLUS. BUT G ENERATION OF SURPLUS DOES NOT MAKE THE WORK OF THE INSTITUTION AS THAT O F CARRYING ON BUSINESS. THE ASSESSEE AS REQUIRED BY SEC. 11 OF T HE ACT HAS APPLIED THE RECEIPTS FOR CHARITABLE PURPOSES IN INDIA AND S UCH APPLICATION IS DEDUCTIBLE FROM THE GROSS RECEIPTS OF THE INSTITUTI ON. SECTION 11 OF THE ACT DULY RECOGNIZES AND PERMITS ACCUMULATION OF 15% OUT OF THE GROSS RECEIPTS. FOR THE FURTHERANCE OF OBJECT FURTHER AC CUMULATION IS PERMITTED BY SEC.11 (2) ALSO. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS IT WAS ALSO PLEADED THAT THE AIMS AND ACTIVITY OF THE ASSESSEE RIGHT FROM THE INCEPTI ON TILL NOW REMAINED THE ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 7 SAME. THE ASSESSMENTS FRAMED FOR EARLIER ASSESSMENT YEARS WERE CONSISTENTLY ACCEPTING THE CHARITABLE ACTIVITIES CA RRIED ON BY THE ASSESSEE AND HOLDING THE SAME NOT FOR BUSINESS AND THE GAINS/INC OME DERIVED FROM SUCH ACTIVITIES AND WERE NOT HELD TO BE ARISING FROM BUS INESS. FURTHER THE DEPARTMENT HAS GRANTED REGISTRATION U/S 12AA OF THE ACT SINCE 1995 AND REMAINED IN FORCE THEREBY ACCEPTING THE OBJECTS FO R WHICH THE ASSESSEE IS ESTABLISHED TO BE A CHARITABLE AND A NON-PROFIT MAK ING ORGANIZATION. IN SUCH CIRCUMSTANCES RULE OF CONSISTENCY SHALL APPLY ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE INSTANT CASE. IN VIEW OF OUR A BOVE DETAILED SUBMISSION WITH RELEVANT EVIDENCES IT IS PRAYED BEFORE THE HO NBLE BENCH THAT THE ORDER PASSED U/S 263 OF THE ACT BY THE LD. CIT (EXEMPTION ) MAY KINDLY BE DIRECTED TO BE QUASHED AND ANNULLED AND THE ASSESSEE MAY BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 6. ON THE OTHER HAND LD. DR VEHEMENTLY RELIED ON T HE ORDER OF THE LD. CIT PASSED U/S 263 OF THE ACT. 7. WE HAVE HEARD THE RIVAL PARTIES PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND DULY CONSIDERED THE FACTS OF CASE AND TH E APPLICABLE LEGAL POSITION. FROM THE AFORESAID DISCUSSION WE FIND THAT THE LD. CIT HAS HELD THE ORDER OF THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE MAINLY ON ACCOUNT OF TWO REASONS. FIRSTLY THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND SECONDLY THE INCOME OF ASSESSEE HAS BEEN APPLIED IN FOREIGN COUNTRY WHICH IS THE CONTRAVENTION OF THE PROVISION OF SECTION 11(1)(A) OF THE ACT. NOW THE FOLLOWING QUESTIONS ARISE FOR OUR CONS IDERATION. 1. WHETHER THE ACTIVITIES OF THE SOCIETY ARE COMMER CIAL IN NATURE IN THE LIGHT OF THE ABOVE FACTS & CIRCUMSTANCES. 2. WHETHER THERE IS VIOLATION OF THE PROVISION OF S ECTION 11(1)(A) OF THE ACT WITH REGARD TO THE APPLICATION OF INCOME IN A FOREI GN COUNTRY. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 8 NOW TO ARRIVE AT THE CORRECT CONCLUSION OF THE CASE WE DEEM IT NECESSARY TO REPRODUCE THE RELEVANT PROVISIONS OF SEC. 263 OF TH E ACT. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MA KING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SU CH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. 8. THE SUM AND SUBSTANCE OF THE ABOVE REPRODUCED SE CTION 263(1) CAN BE SUMMARIZED IN THE FOLLOWING POINTS:- 1) THE COMMISSIONER MAY CALL FOR AN EXAMINE THE REC ORD OF ANY PROCEEDING UNDER THE ACT; 2) IF HE CONSIDERS THAT THE ORDER PASSED BY THE AO IS (I) ERRONEOUS; AND (II) IS PREJUDICIAL TO THE INTEREST OF REVENUE; 3) HE HAS TO GIVE AN OPPORTUNITY OF HEARING IN THIS RESPECT TO THE ASSESSEE; AND 4) HE HAS TO MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY; 5) HE MAY PASS SUCH ORDER THEREON AS THE CIRCUMSTAN CES OF THE CASE JUSTIFY INCLUDING (I) AN ORDER ENHANCING OR (II) MODIFYING THE ASSESSMENT OR (III) CANCELLING THE ASSESSMENT AND DIRECTING A FRE SH ASSESSMENT. 8.1 NOW IN THE LIGHT OF ABOVE WORDS WE HAVE TO EXA MINE AS TO WHETHER THE ORDER OF THE LD. CIT IS A VALID ORDER IN THE LIGHT OF THE ABOVE STATED POINTS/ PROVISIONS OF SECTION 263 OF THE ACT. ISSUE NO. 1 VIOLATION OF PROVISIONS OF SECTION 2(15) OF THE ACT ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 9 9. WE FIND THAT THE ACTIVITIES OF THE ASSESSEE ARE WITHIN THE OBJECTS AS PER ITS MEMORANDUM OF ASSOCIATION. THE RELEVANT MAIN OB JECTS AND OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MA IN OBJECTS STAND AS UNDER: MAIN OBJECTS:- 3) TO ESTABLISH HARMONY BETWEEN THE CONSTRUCTION I NDUSTRY AND THE GOVERNMENT DEPARTMENTS AT THE CENTRAL AND STATE LEV ELS LOCAL AD PUBLIC BODIES FINANCIAL INSTITUTIONS AND PRIVATE B ODIES AND INSTITUTIONS FOR PROMOTING HEALTHY GROWTH AND DEVELOPMENT OF THE CON STRUCTION INDUSTRY. 4) XXX XXXX XXXX 5) XXX XXXX XXXXX 6) TO ENCOURAGE RESEARCH AND DEVELOPMENT IN THE CON STRUCTION INDUSTRY AND FOR THAT PURPOSE ORGANIZES CONFERENCES SEMINAR S EXHIBITIONS FILMS SHOWS ETC. AND ALSO ESTABLISH LABORATORIES COLLEC T MODELS AND DESIGNS ETC. OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT O F THE MAIN OBJECTS: 5) TO ORGANIZE CONFERENCES EXHIBITIONS FILM SHOW S SEMINARS TOURS DELEGATION ETC. IN INDIA AND ABROAD AND TO NOMINAT E DELEGATES AND ADVISERS AND TO TAKE STEPS WHICH MAY PROMOTE AND SU PPORT THE CONSTRUCTION INDUSTRY TRADE AND PROFESSION. THE ASSESSEE-COMPANY WAS ESTABLISHED WITH THE AFORE SAID OBJECTS AND THE SAME WERE ACCEPTED BY THE REVENUE WHILE GRANTING TH E REGISTRATION U/S 12AA OF THE ACT ON 10.10.1995. SINCE THE INCEPTION OF TH E ASSESSEE-COMPANY THE OBJECTS AND ACTIVITIES REMAINED SAME AND WHICH WERE ACCEPTED BY THE REVENUE EVEN UNDER THE ASSESSMENT FRAMED U/S 143(3) /147 OF THE ACT CONSISTENTLY WITHOUT HOLDING THE AFORESAID ACTIVITI ES AS COMMERCIAL IN NATURE. ACCORDINGLY IN VIEW ABOVE WE ARE INCLINED TO PROV IDE THE RELIEF TO THE ASSESSEE ON THE BASIS OF CONSISTENCY AS THERE IS NO CHANGE IN THE OBJECTS AND ACTIVITIES OF THE SOCIETY. IN THIS CONNECTION WE R ELY IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 WHERE THE HONBLE SUPREME COURT HAS HELD AS UNDER:- THERE IS NO DISPUTE THAT THE PROPERTIES OF THE ASS ESSEE ARE ALSO RECORDED IN THE NAME OF THE SABHA (CENTRAL COUNCIL) AND THERE IS NO PERSONAL INTEREST CLAIMED BY THE SANT SATGURU IN SU CH PROPERTY. OVER THE YEARS THE SATGURU HAS NEVER CLAIMED ANY TITLE O VER OR BENEFICIAL INTEREST IN THE PROPERTIES AND THEY HAVE ALWAYS BE EN UTILISED FOR THE ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 10 PURPOSE OF THE RELIGIOUS COMMUNITY. EVEN IF THE TRU ST WAS REVOCABLE THE PROPERTY WAS NOT TO GO BACK TO THE SATGURU ON REVOC ATION. THE CONSTITUTION AND THE BYE-LAWS ON RECORD INDICATE IN CL. 1(B) THAT WHERE THE PROPERTY WAS GIVEN TO THE SANT SATGURU IT WAS INTENDED FOR THE COMMON PURPOSE OF FURTHERING THE OBJECTS OF THE SAN T SATGURU AND THE CENTRAL COUNCIL HAD THE AUTHORITY TO MANAGE THE PRO PERTY. CLAUSE 9 OF THE DOCUMENT STIPULATED THAT THE PROPERTIES WOULD V EST IN THE TRUST AND CL. 25 PROVIDED THAT THE TRUST SHALL BE REVOCABLE A T THE DISCRETION OF THE COUNCIL AND THE TRUSTEES SHALL HOLD OFFICE AT ITS P LEASURE. UPON REVOCATION THE PROPERTY WAS NOT TO GO BACK TO THE S ATGURU AND AT THE MOST IN PLACE OF TRUST THE CENTRAL COUNCIL WOULD EXERCISE AUTHORITY. IT IS ON RECORD THAT THERE HAS BEEN NO SATGURU LONG BEFOR E THE PERIOD OF ASSESSMENT UNDER CONSIDERATION. AS A FACT THEREFOR E THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PROPERTY WAS SUBJECT TO A LEGAL LIABILITY OF BEING USED FOR THE RELIGIOUS OR CHARITABLE PURPOSE OF THE SATSANG. ALL INDIA SPINNERS' ASSOCN. VS. CIT (1944) 12 ITR 482 (PC) : TC23R.179 APPLIED; THE SECRETARY OF STATE FOR INDIA IN COUNCIL VS. RAD HA SWAMI SATSANG (1945) 13 ITR 520 (ALL) IMPLIEDLY APPROVED; CIT VS. RADHA SWAMI SATSANG (1980) 19 CTR (ALL) 345 : (1981) 132 ITR 647 (ALL) : TC23R.644 SET ASIDE. PROPERTIES OF ASSESSEE A RELIGIOUS INSTITUTION WERE MEANT FOR THE COMMON PURPOSE OF FURTHERING THE OBJECTS OF THE SANT SATGURU AND VESTED IN ITS CENTRAL COUNCIL AND INCOME WAS ALWAYS UTILISED FOR THAT PURPOSE AND THEREFORE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SS. 11 AND 12. NOW COMING TO THE OBJECTS AND ACTIVITIES OF THE ASS ESSEE COMPANY WE FIND THAT THE LD. CIT HELD THAT THE ACTIVITIES ARE COMME RCIAL IN NATURE IN TERMS OF THE PROVISIONS OF SECTION 2(15) OF THE ACT. AT THIS JUN CTURE WE WOULD LIKE TO REPRODUCE THE SAID PROVISION WHICH READS AS UNDER:- 2[(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE P OOR EDUCATION [YOGA] MEDICAL RELIEF [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST ] AND THE ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BU SINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FRO M SUCH ACTIVITY : PROVIDED FURTHER THAT FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF RECEIPTS FROM ACTIVITIES REFERRED TO THEREIN IS TWENTY-FIVE LAKH RUPEES OR LESS IN THE PREVIOUS YEAR ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 11 THE LD. CIT PASSED IMPUGNED ORDER U/S 263 OF THE AC T IS TREATING THE ACTIVITIES OF THE ASSESSEE AS COMMERCIAL IN NATURE IN TERMS OF THE CLAUSE OF SECTION 2(15) I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY . HOWEVER WE FIND THAT AS PER THE PROVISO TO SECTION 15 ALONG WITH THE SPEECH OF THE FINANCE MINISTER AND CBDT CIRCULAR NUMBER 11 OF THE 2008 DATED 19 TH DECEMBER 2008 MAKE IT CLEAR THAT ONLY THE INSTITUTI ON CARRYING ON COMMERCIAL ACTIVITIES ARE INTENDED TO BE COVERED BY THE PROVIS O NOT THE GENUINE CHARITABLE INSTITUTIONS. THE ACTIVITY WILL BE DEEMED TO BE IN THE NATURE OF TRADE COMMERCE OR BUSINESS ONLY IF THE SAME IS CARRIED ON WITH THE INTENTION TO EARN PROFIT. THE COURTS IN THE SERIES OF DECISION HAVE HELD THAT IT IS AN ACTIVITY CARRIED ON IN A SYSTEMATIC MANNER WITH A VIEW TO EARN PROFIT WHICH WILL BE TERMED AS BUSINESS. ACCORDINGLY IN ORDER TO HOLD THAT THE A CTIVITY IS IN THE NATURE OF TRADE COMMERCE OR BUSINESS THERE SHOULD BE PROFIT MOTIVE. IF DURING THE COURSE OF CARRYING OUT ANY ACTIVITY ON NON-COMMERCI AL LINES SOME PROFIT IS RECEIVED BY THE TRUST WHICH IS INCIDENTAL TO THE A CTIVITIES OF THE TRUST THE SAME SHALL NOT BE CONSTRUED TO BE ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OF THE ASSESSEE. HOWEVER THE ASSESSEE REL IED IN THE ORDER OF THE CO-ORDINATE C BENCH OF THIS TRIBUNAL IN THE CASE OF INDIAN CHAMBER OF COMMERCE VS. ITO ( ITA NOS. 1491 & 1284/KOL/2012 DATED 02.12.2014. BUT THE LD. CIT DISTINGUISHED THE SAID CASE LAW BY HOLD ING THAT IN THAT CASE THE ASSESSEES ACTIVITIES WERE INCIDENTAL AND ANCILLARY TO THE MAIN OBJECTS TO THE TRADE COMMERCE AND INDUSTRY BUT IN THE CASE ON HAN D THE MAIN ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE. HOWEVER WE DISAGREE WITH THE VIEW TAKEN BY THE LD. CIT AS THE QUESTIONS BEFORE THE HO NBLE ITAT WERE AS FOLLOWS:- 2. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE C ASE OF THE APPELLANT THE LD. CIT(A) ERRED IN CONFIRMING THE ALLEGATION O F THE LD. AO THAT THE APPELLANTS ACTIVITIES OF CONDUCTING THE ENVIRONMEN T MANAGEMENT CENTERS MEETINGS CONFERENCES & SEMINAR AND THE IS SUANCE OF CERTIFICATE OF ORIGIN WERE ALL IN THE NATURE OF BUS INESS CARRIED ON SYSTEMATICALLY AND CONTINUOUSLY WITH A MOTIVE TO EA RN PROFIT FROM THE SAME. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 12 3. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT DE CISION OF THE HON'BLE DELHI HC DATED 19TH SEPTEMBER 2011 IN THE CASE OF DIT (EXEMPTIONS) VS. INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND THAT THE CASE OF THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA IN WRITE PETITION 1927 OF 2010 ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT INA SMUCH THE FACTS OF THE SAID CASE ARE DIFFERENT FROM THE CASE OF THE APPELL ANT. 4. THAT ON THE ACTS AND THE CIRCUMSTANCES OF THE CA SE OF THE APPELLANT THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT S ACTIVITIES OF CONDUCTING THE ENVIRONMENT MANAGEMENT CENTERS METT INGS CONFERENCES & SEMINARS AND THE ISSUANCE OF CERTIFIC ATE OF ORIGIN WERE NOT INCIDENTAL TO THE MAIN OBJECT OF THE APPELLANT WHICH WAS CHARITABLE IN NATURE. 9. FROM THE ABOVE FACTS WE FIND THAT THERE WAS NO QUESTION TO DECIDE BEFORE THE THEN HONBLE ITAT WHICH IS ARISING IN TH E INSTANT CASE WHETHER THE ACTIVITIES OF THE INSTANT ASSESSEE ARE INCIDENTAL/ ANCILLARY TO THE MAIN OBJECTS TO THE TRADE COMMERCE AND INDUSTRY OR MAIN OBJECTS AR E IN THE NATURE OF TRADE COMMERCE AND INDUSTRY. THEREFORE IN OUR CONSIDERED VIEW THE FACTS OF THE CASE ARE SQUARELY APPLICABLE OF CASE OF INDIAN CHAMBER OF COMMERCE VS. ITO (SUPRA) W HEREIN IT WAS HELD THAT THE ACTIVITIES OF THE ASSES SEE ARE CHARITABLE IN NATURE. THE RELEVANT PORTION OF THE ORDER IS REP RODUCED BELOW:- 30. HENCE IN VIEW OF ALL THE ABOVE CONCLUDING THI S ISSUE WE HOLD THAT THE PURPOSE FOR WHICH THE ASSESSEE ASSOCIATION I.E . THE INDIAN CHAMBER OF COMMERCE WAS ESTABLISHED IS A CHARITABLE PURPOSE WITHIN THE MEANING OF S. 2(15) OF THE ACT. THE ASSESSEE IS CARRYING OUT THE SAID ACTIVITIES WHICH ARE INCIDENTAL TO THE MAIN OBJECT OF THE ASSOCIATION AND WHICH ARE CONDUCTED ONLY FOR THE PURPOSE OF SECURIN G THE MAIN OBJECT WHICH IS THE ADVANCEMENT AND DEVELOPMENT OF TRADE A ND COMMERCE AND INDUSTRY IN INDIA. THE ACTIVITIES ARE NOT IN TH E NATURE OF BUSINESS AND THERE IS NO MOTIVE TO EARN PROFIT. THE INCOME ARISI NG TO THE ASSESSEE IS ONLY INCIDENTAL AND ANCILLARY TO THE DOMINANT OBJEC T FOR THE WELFARE AND COMMON GOOD OF THE COUNTRYS TRADE COMMERCE AND IN DUSTRY. THE PROFITS EARNED ARE UTILIZED ONLY FOR THE PURPOSE OF FEEDING ITS DOMINANT OBJECT AND NO PART OF SUCH PROFIT IS DISTRIBUTED AM ONGST ITS MEMBERS. PROFIT MAKING IS NOT THE OBJECT OF THE ASSESSEE. PR OFIT IS MERELY A BY- PRODUCT WHICH RESULT INCIDENTALLY IN THE PROCESS OF CARRYING OUT THE CHARITABLE PURPOSE. THUS THE INCOME OF THE ASSESSE E FOR AY 2008-09 IS EXEMPT FROM TAX U/S. 11 OF THE ACT. ACCORDINGLY TH E APPEAL OF ASSESSEE IS ALLOWED. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 13 35. IN VIEW OF THE ABOVE WE THUS NOW TURN TO EXAMI NE AND ANALYZE IN FULL DETAILS THE PARTICULAR FACT OF THE PRESENT CAS E. THAT THE ASSESSEE ASSOCIATION IS A CHARITABLE INSTITUTION DULY REGIS TERED AS SUCH US.12A OF THE ACT CARRYING IN ITS MAIN OBJECT OF DEVELOPMENT OF TRADE INDUSTRIES AND COMMERCE. THE MAIN OBJECTS FOR WHICH THE ASSOCI ATION CAME INTO EXISTENCE ARE CLEARLY SET OUT IN CLAUSE 3 OF THE M EMORANDUM OF ASSOCIATION WHICH DULY RECORDS AND READS AS UNDER:- 3(A) TO PROMOTE AND PROTECT THE TRADE COMMERCE AN D INDUSTRIES AND IN PARTICULAR THE TRADE COMMERCE AND INDUSTRIE S IN OR WITH WHICH INDIANS ARE ENGAGED OR CONCERNED. THE ACTIVITIES OF CONDUCING ENVIRONMENT MANAGEMENT CENTRE MEETINGS CONFERENCES & SEMINAR AND ISSUANCE OF CER TIFICATE OF ORIGIN BEING THE ACTIVITIES STATED TO BE SERVICES IN RELATION TO TRADE COMMERCE OR BUSINESS WERE ALL WELL COVERED BY THE MAIN OBJECT BEING FULLY CONNECTED INCIDENTAL AND ANCILLARY TO THE MA IN PURPOSE AND WERE CONDUCTED SOLELY FOR THE EMPOWERMENT BETTERMENT AN D FOR CREATING AWARENESS AMONGST THE INDUSTRIALISTS IN ORDER TO BR ING ABOUT THE DEVELOPMENT OF TRADE AND INDUSTRIES IN INDIA. FURTH ER IT IS TO BE NOTICED THAT THE MEMORANDUM HAS ALSO SPECIFICALLY AUTHORIZE D THE CHAMBER TO DO ALL OTHER THINGS AS MAY BE CONDUCTIVE TO THE DEV ELOPMENT OF TRADE COMMERCE AND INDUSTRIES OR INCIDENTAL TO AT TAINMENT OF THE ABOVE OBJECTIVES OR ANY OF THEM .THUS IT WAS ONLY FOR THE PURPOSE OF SECURING ITS PRIMARY AIMS OF PROPER DEVELOPMENT OF BUSINESS IN INDIA THAT THE ASSESSEE WAS TAKING THE SAID ANCILLARY STE PS. THE SAID ACTIVITIES WERE NOT CARRIED OUT INDEPENDENT OF THE MAIN PURPOS E OF THE ASSOCIATION OF THE INSTITUTION BEING THE DEVELOPMENT AND PROTEC TION OF TRADE. THERE WAS NO INDEPENDENT PROFIT MOTIVE IN ANY OF THE SAID ACTIVITIES. THE SURPLUS ARISING OUT OF THE SAME WAS MERELY INCIDENT AL TO THE MAIN OBJECT TO CHARITY. THE MAJORITY OF THE RECEIPTS IN THE SAI D ACTIVITIES WERE OUT OF THE SPONSORSHIPS AND DONATIONS. THE EXPENSES INCURR ED ON THE SAID ACTIVITIES AS AND WHEN INCURRED WERE ALL SEPARATELY DEBITED TO THE SAID ACCOUNTS AND THE BALANCE WAS SHOWN AS SURPLUS OVER RECEIPTS. THUS IN VIEW OF THE ABOVE IT IS CLEAR THAT THE ALLEGED ACTI VITIES WERE ALL MERELY INCIDENTAL TO THE MAIN OBJECT OF THE ASSESSEE AND T HE PREDOMINANT OBJECT OF THE ASSOCIATION BEING THE PROMOTION DEVEL OPMENT AND PROTECTION OF TRADE AND COMMERCE WHICH IS AN OBJECT OF GENERAL PUBLIC UTILITY IT CAN NEVER BE THE CASE THAT IT IS ENGAGE D IN BUSINESS TRADE OR COMMERCE OR IN ANY SERVICE IN RELATION TO BUSINESS TRADE OR COMMERCE. THE INDIVIDUAL NATURE AND PURPOSE OF THE SPECIFIC ACTIVITIES IT IS STATED THAT THE ACTIVITIES HELD BY AO AND THE (A ) TO BE BUSINESS IN NATURE WERE AS FOLLOWS:- A) MEETINGS CONFERENCE & SEMINARS B) ENVIRONMENT MANAGEMENT CENTRE C) FEES FOR CERTIFICATE OF ORIGIN ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 14 38. IN VIEW OF THE ABOVE DECISION WE ARE OF THE CO NSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILED READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS INTERPRETING THE DEFINITION OF CHARITABLE PURPOSE AS LAID OUT IN SEC. 2(15) OF THE ACT AND ALSO THE DEFI NITION OF BUSINESS IN RELATION TO THE SAID SECTION AMPLY REVEALS THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS ALL THROUGH THE YEARS BEEN UPH ELD TO BE THE DETERMINING FACTOR LAYING DOWN WHETHER THE INSTITUT IONS CHARITABLE IN NATURE OR NOT. WHERE THE MAIN OBJECT OF THE INSTITU TION WAS CHARITABLE IN NATURE THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF THE SAID BEING INCIDENTAL OR ANCILLARY TO THE MAIN OBJ ECT EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NON MEMBERS WE RE ALL HELD TO BE CHARITABLE IN NATURE. HON'BLE APEX COURT IN THE EARLIEST CAS E OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION WAS ADVANCEME NT OF OBJECTS OF GENERAL PUBLIC UTILITY IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL AND ANCILLARY ACTIVITY OR PURPOSE FOR ACHIEVING THE MA IN PURPOSE WAS PROFITABLE IN NATURE IN OUR VIEW THE BASIC PRINCIP LE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSES REMAINED UNALTERED EVEN ON AMENDMENT IN THE SEC. 2(15) OF THE ACT W.E.F. 1.4.2 009 THOUGH THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN. ACC ORDINGLY IN THE GIVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN DETAIL THE ASSESSEE ASSOCIATION PRIMARY PURPOSE WAS ADVANCEMENT OF OBJECTS OF GENER AL PUBLIC UTILITY AND IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTA L OR ANCILLARY ACTIVITY OR PURPOSE FOR ACHIEVING THE MAIN PURPOSE WAS PROF ITABLE IN NATURE. HENCE ASSESSEE IS NOT HIT BY NEWLY INSERTED PROVIS O TO S. 2(15) OF THE ACT. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. BESIDES THE ABOVE WE ALSO RELY IN THE CASE OF THE CIT VS. FEDERATION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY (1981) 130 I TR 186 (SC) WHERE THE HONBLE SUPREME COURT HAS HELD AS UNDER : WHATEVER RESERVATIONS ONE MAY HAVE REGARDING THE C ORRECTNESS OF THE INTERPRETATION OF THE EXCLUSIONARY CLAUSE IN THE DE FINITION OF CHARITABLE PURPOSE' IN S. 2(15) OF THE ACT THERE CAN BE NO DO UBT THAT THE MAJORITY DECISION IN THE ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURES ASS N. (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) : TC 23R.195 IS BINDING ON THE BENCH. UNDOUBTEDLY THE ACTIVITIES O F THE ASSESSEE IN REGARD TO HOLDING OF THE CONFERENCE OF THE AFRO-ASI AN ORGANISATION IN THE RELEVANT ACCOUNTING YEAR WERE FOR THE ADVANCEME NT OF THE DOMINANT OBJECT AND PURPOSE OF THE TRUST VIZ. PROMOTION P ROTECTION AND DEVELOPMENT OF TRADE COMMERCE AND INDUSTRY IN INDI A. THE INCOME DERIVED BY THE ASSESSEE FROM SUCH ACTIVITIES WAS EX EMPT UNDER R/W S. 11(1)(A) S. 2(15). THERE IS A DISTINCTION BETWEEN T HE ' PURPOSE ' OF A TRUST AND ' POWERS ' CONFERRED UPON THE TRUSTEES AS INCIDENTAL TO THE CARRYING OUT OF THE PURPOSE. FOR INSTANCE CL. 3(V) ENABLES THE ESTABLISHMENT AND SUPPORT OF ASSOCIATIONS INSTITUTIONS FUNDS TRUST S AND CONVENIENCE ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 15 CALCULATED TO BENEFIT THE EMPLOYEES AND THEIR DEPEN DENTS FOR MAKING PROVISION FOR GRANT OF PENSION AND ALLOWANCES ETC. THE FRAMING OF SUCH EMPLOYEE BENEFIT SCHEME IS ESSENTIAL AND NECESSARY FOR THE PROPER FUNCTIONING OF THE ORGANISATION AND IS INCIDENTAL T O THE CARRYING OUT OF THE PURPOSE FOR WHICH IT IS CONSTITUTED. IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTION IS CHARITABLE ANY OTHER OBJ ECT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST OR THE INSTITUTION FROM BEING A V ALID CHARITY. LIKEWISE CL. 3(Z1) AND (Z2) WHICH PERMIT THE ESTABLISHMENT OF A TRUST OR TRUSTS APPOINTMENT OF TRUSTEES THEREOF FROM TIME TO TIME A ND THE VESTING OF FUNDS OR SURPLUS INCOME OR ANY PROPERTY OF THE ASSE SSEE IN THE TRUSTEES ARE NOTHING BUT POWERS CONFERRED ON THEM FOR THE PR OPER FINANCIAL MANAGEMENT OF THE AFFAIRS OF THE TRUST WHICH ARE IN CIDENTAL OR ANCILLARY TO THE MAIN PURPOSE OF THE TRUST. ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) : TC23R.195 FOLLOWED. THE MAJORITY DECISION IN SURAT ART SILK MANUFACTURE RS CASE HAS THE EFFECT OF NEUTRALISING THE RADICAL CHANGES BROUGHT ABOUT BY PARLIAMENT IN THE SYSTEM OF TAXATION OF INCOME AND PROFITS OF CHA RITIES WITH PARTICULAR REFERENCE TO ' OBJECTS OF GENERAL PUBLIC UTILITY ' TO PREVENT TAX EVASION BY DIVERSION OF BUSINESS PROFITS TO CHARITIES. IT I S THE VAGUENESS OF THE FOURTH HEAD OF CHARITY ' ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY ' THAT IMPELLED PARLIAMENT TO INSERT THE RESTRICTIVE WORDS ' NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT '. IT WAS CLEARLY INCONSISTENT WITH THE SETTLED PRINCIPLES TO HOLD IN THE AFORESAID CAS E THAT IF THE DOMINANT OR PRIMARY OBJECT OF A TRUST WAS CHARITY ' UNDER THE FOURTH HEAD ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY ' IT WAS PERMISSIBLE FOR SUCH AN OBJECT OF GENERAL PUBLIC UTILITY TO AUGMENT ITS INCOME BY ENGAGING IN TRADING OR COMMERCIAL ACTIVITIES. IN RETROSPECT IT SEEMS THAT IT WOULD HAVE BEEN BETTER FOR PARLIAMENT TO HAVE DELETED THE FOURTH HE AD OF CHARITY ' ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' FROM THE AMBIT OF THE DEFINITION OF CHARITABLE PURPOSE' WHILE ENACTING S. 2(15) RATHER THAN INSERTED THE WORDS ' NOT INVOLVING THE CARRYING ON OF ANY OTHER ACTIVITY FOR PROFIT ' THEREBY CREATING ALL THIS LEGAL CONUNDRUM'. WHEN THE GOVERNMENT HAD NOT ACCEPTED THE RECOMMENDA TION OF THE DIRECT TAX LAWS COMMITTEE IN CHAPTER 2 (INTERIM REP ORT DECEMBER 1977) FOR THE DELETION OF THE WORDS ' NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFITS' BY SUITABLE LEGISLATION IT WAS IMPERMISSIBLE FOR THIS COURT BY A PROCESS OF JUDICIAL CONSTRUCTION TO ACHIEVE THE SAME RESULT. IT IS WRONG TO THINK THAT ALL SPRINGS OF CH ARITY IN INDIA WILL DRY UP IF TRUE EFFECT IS GIVEN TO S. 2(15) IN ACCORDANCE WITH THE MINORITY JUDGMENT IN THE SURAT ART SILK CLOTH MANUFACTURERS' ASSOCIAT ION'S CASE. PEOPLE WHO ARE TRULY CHARITABLE DO NOT THINK OF THE TAX BE NEFITS WHILE MAKING CHARITIES. ONE MUST REALISE THAT EVEN THE POOR WHO DO NOT PAY INCOME- ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 16 TAX CAN BE CHARITABLE AND THEIR CHARITIES MADE AT G REAT PERSONAL INCONVENIENCE ARE COMMENDABLE INDEED. ONE NEED NOT GO IN SEARCH OF CHARITABLE PERSONS AMONGST THE TAXPAYERS ONLY. STIL L THE MAJORITY VIEW HAS GOT TO BE FOLLOWED NOW. THE MAIN OBJECT OF ASSESSEE BEING PROMOTION PROTEC TION AND DEVELOPMENT OF TRADE COMMERCE AND INDUSTRY IN IND IA IT WAS AN OBJECT OF GENERAL PUBLIC UTILITY AND INCOME DERIVED FROM A CTIVITIES FOR ADVANCING THE DOMINANT OBJECT WAS EXEMPT UNDER S. 11. ISSUE 2 VIOLATION OF PROVISIONS OF SECTION 11(1)(A) OF THE ACT THE LD. CIT HAS ALSO HELD THAT THE INCOME OF THE AS SESSEE HAS BEEN APPLIED IN A FOREIGN COUNTRY AND THE PROVISIONS OF SECTION 11( 1)(A) HAS BEEN VIOLATED. THEREFORE THE ASSESSEE IS NOT ENTITLED FOR EXEMPTIO N U/S 11 OF THE ACT. AT THIS JUNCTURE WE WOULD LIKE TO REPRODUCE THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT WHICH READS AS UNDER:- INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGI OUS PURPOSES. 11(1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 O 63 THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PR EVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME- [(A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EX CESS OF [ FIFTEEN ] PER CENT OF THE INCOME FROM SUCH PROPERTY; 10. FROM THE ABOVE PROVISION WE FIND THAT THERE IS RESTRICTION TO APPLY THE INCOME OUTSIDE INDIA BUT AS PER THE SUBMISSION OF T HE ASSESSEE WE FIND THAT ALL THE EXPENSES WERE INCURRED IN INDIA AND THE LD. DR HAS NOT BROUGHT ANYTHING CONTRARY TO THE ARGUMENT OF THE LD. AR. TH E ARGUMENT OF THE LD. AR IS FORTIFIED FROM THE DETAILS OF EXPENDITURE BANK STA TEMENT RECEIPTS & EXPENDITURE OF FOREIGN FAIR PARTICIPANTS LIST WHIC H ARE PLACED ON RECORD ON PAGES 21 TO 52 OF THE PAPER BOOK. THE LD. DR HAS NO T BROUGHT ANYTHING SUPPORTING TO THE FACT THAT THE INCOME OF THE ASSES SEE HAS APPLIED OUTSIDE INDIA. THE FAIR IN NORTH AMERICA WAS ORGANIZED TO I NVITE THE INDIAN RESIDENTS TO ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 17 INVEST IN INDIA IN REALTY SECTORS. THEREFORE THE OB JECT AND ACTIVITY FOR THE FAIR IN NORTH AMERICA WAS FOR THE ADVANCEMENT OF REALTY BUS INESS IN INDIA. MOSTLY ALL THE PARTICIPANTS WERE INDIAN CORPORATE AND CONTRIBU TIONS WERE RECEIVED IN INDIAN CURRENCY. THERE WAS NO CHARITABLE ACT DONE I N NORTH AMERICA. IN SIMILAR SET OF FACTS THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. SURAT ART SILK CLOTH MANUFACTURING ASSOCIATION (1980) 121 ITR 1 (SC) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW: 17. IF WE APPLY THIS TEST IN THE PRESENT CASE IT IS C LEAR THAT THE ACTIVITY OF OBTAINING LICENCES FOR IMPORT OF FOREIGN YARN AND Q UOTAS FOR PURCHASE OF INDIGENOUS YARN WHICH WAS CARRIED ON BY THE ASSESS EE WAS NOT AN ACTIVITY FOR PROFIT. THE PREDOMINANT OBJECT OF THIS ACTIVITY WAS PROMOTION OF COMMERCE AND TRADE IN ART SILK YARN RAW SILK COTTON YARN ART SILK CLOTH SILK CLOTH AND COTTON CLOTH WHICH WAS CLEARLY AN OBJECT OF GENERA L PUBLIC UTILITY AND PROFIT WAS MERELY A BY-PRODUCT WHICH RESULTED INCIDENTALLY IN THE PROCESS OF CARRYING OUT THE CHARITABLE PURPOSE. IT IS SIGNIFICANT TO NOTE T HAT THE ASSESSEE WAS A COMPANY RECOGNISED BY THE CENTRAL GOVERNMENT UNDER S. 25 OF THE COMPANIES ACT 1956 AND UNDER ITS MEMORANDUM OF AS SOCIATION THE PROFIT ARISING FROM ANY ACTIVITY CARRIED ON BY THE ASSESSE E WAS LIABLE TO BE APPLIED SOLELY AND EXCLUSIVELY FOR THE PROMOTION OF TRADE A ND COMMERCE IN VARIOUS COMMODITIES WHICH WE HAVE MENTIONED ABOVE AND NO PA RT OF SUCH PROFIT COULD BE DISTRIBUTED AMONGST THE MEMBERS IN ANY FORM OR U NDER ANY GUISE. THE PROFIT OF THE ASSESSEE COULD BE UTILISED ONLY FOR T HE PURPOSE OF FEEDING THIS CHARITABLE PURPOSE AND THE DOMINANT AND REAL OBJECT OF THE ACTIVITY OF THE ASSESSEE BEING THE ADVANCEMENT OF THE CHARITABLE PU RPOSE THE MERE FACT THAT THE ACTIVITY YIELDED PROFIT DID NOT ALTER THE CHARI TABLE CHARACTER OF THE ASSESSEE. WE ARE OF THE VIEW THAT THE TRIBUNAL WAS RIGHT IN T AKING THE VIEW THAT THE PURPOSE FOR WHICH THE ASSESSEE WAS ESTABLISHED WAS A CHARITABLE PURPOSE WITHIN THE MEANING OF S. 2 CL. (15) AND THE INCOM E OF THE ASSESSEE WAS EXEMPT FROM TAX UNDER S. 11. THE QUESTION REFERRED TO US IN EACH OF THESE REFERENCES MUST THEREFORE BE ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. WE ALSO RELY IN THE CASE OF THE OF CIT VS. FEDERATI ON OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY 130 ITR 186 WHERE THE HONBLE S UPREME COURT OF INDIA HAS HELD AS UNDER:- WHATEVER RESERVATIONS ONE MAY HAVE REGARDING THE C ORRECTNESS OF THE INTERPRETATION OF THE EXCLUSIONARY CLAUSE IN THE DE FINITION OF CHARITABLE PURPOSE' IN S. 2(15) OF THE ACT THERE CAN BE NO DO UBT THAT THE MAJORITY DECISION IN THE ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURES ASS N. (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) : TC23R.195 IS BINDING ON THE BENCH. UNDOUBTEDLY THE ACTIVITIES OF THE ASSESSEE IN REGARD TO HOLDING OF THE ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 18 CONFERENCE OF THE AFRO-ASIAN ORGANISATION IN THE RE LEVANT ACCOUNTING YEAR WERE FOR THE ADVANCEMENT OF THE DOMINANT OBJECT AND PURPOSE OF THE TRUST VIZ. PROMOTION PROTECTION AND DEVELOPMENT OF TRAD E COMMERCE AND INDUSTRY IN INDIA. THE INCOME DERIVED BY THE ASSESSEE FROM S UCH ACTIVITIES WAS EXEMPT UNDER R/W S. 11(1)(A) S. 2(15). THERE IS A DISTINCT ION BETWEEN THE 'PURPOSE' OF A TRUST AND 'POWERS' CONFERRED UPON THE TRUSTEES AS INCIDENTAL TO THE CARRYING OUT OF THE PURPOSE. FOR INSTANCE CL. 3(V) ENABLES THE ESTABLISHMENT AND SUPPORT OF ASSOCIATIONS INSTITUTIONS FUNDS TRUST S AND CONVENIENCE CALCULATED TO BENEFIT THE EMPLOYEES AND THEIR DEPENDENTS FOR MAKING PROVISION FOR GRANT OF PENSION AND ALLOWANCES ETC. THE FRAMING OF SUCH EMPLOYEE BENEFIT SCHEME IS ESSENTIAL AND NECESSARY FOR THE PROPER FU NCTIONING OF THE ORGANISATION AND IS INCIDENTAL TO THE CARRYING OUT OF THE PURPOSE FOR WHICH IT IS CONSTITUTED. IF THE PRIMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTION IS CHARITABLE ANY OTHER OBJECT WHICH IS MERELY ANCILL ARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE TRUST OR THE INSTITUTION FROM BEING A VALID CHARITY. LIKEWISE CL. 3(Z1) AND (Z2) WHICH PERMIT THE ESTABLISHMENT OF A TRUST OR TRUSTS APPOINTMENT OF TRUSTEES THEREOF FROM TIME TO TIME AND THE VESTING OF FUNDS OR SURPLUS INCOME OR ANY PROPERTY OF THE ASSESSEE IN THE TRUSTEES ARE NOTHING BUT POWERS CO NFERRED ON THEM FOR THE PROPER FINANCIAL MANAGEMENT OF THE AFFAIRS OF THE T RUST WHICH ARE INCIDENTAL OR ANCILLARY TO THE MAIN PURPOSE OF THE TRUST. ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1979) 13 CTR (SC) 378 : (1980) 121 ITR 1 (SC) : TC23R.195 FOLLOWED. THE MAJORITY DECISION IN SURAT ART SILK MANUFACTURE RS CASE HAS THE EFFECT OF NEUTRALISING THE RADICAL CHANGES BROUGHT ABOUT BY P ARLIAMENT IN THE SYSTEM OF TAXATION OF INCOME AND PROFITS OF CHARITIES WITH P ARTICULAR REFERENCE TO 'OBJECTS OF GENERAL PUBLIC UTILITY' TO PREVENT TAX EVASION BY DIVERSION OF BUSINESS PROFITS TO CHARITIES. IT IS THE VAGUENESS OF THE FOURTH HEA D OF CHARITY 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' THAT IMPELLED PARLIAMENT TO INSERT THE RESTRICTIVE WORDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT'. IT WAS CLEARLY INCONSISTENT WITH THE SETTLED PRINCIPLES TO HOLD IN THE AFORESAID CASE THAT IF THE DOMINANT OR PRIMARY OBJECT OF A TRUST WAS CHARITY' UNDER THE FOURTH HEAD ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' IT WAS PER MISSIBLE FOR SUCH AN OBJECT OF GENERAL PUBLIC UTILITY TO AUGMENT ITS INCOME BY EN GAGING IN TRADING OR COMMERCIAL ACTIVITIES. IN RETROSPECT IT SEEMS THAT IT WOULD HAVE BEEN BETTER FOR PARLIAMENT TO HAVE DELETED THE FOURTH HEAD OF CHARI TY 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' FROM THE AMBIT OF THE DEFIN ITION OF CHARITABLE PURPOSE' WHILE ENACTING S. 2(15) RATHER THAN INSERTED THE WO RDS 'NOT INVOLVING THE CARRYING ON OF ANY OTHER ACTIVITY FOR PROFIT' THER EBY CREATING ALL THIS LEGAL CONUNDRUM'. WHEN THE GOVERNMENT HAD NOT ACCEPTED THE RECOMMENDA TION OF THE DIRECT TAX LAWS COMMITTEE IN CHAPTER 2 (INTERIM REPORT DE CEMBER 1977) FOR THE DELETION OF THE WORDS 'NOT INVOLVING THE CARRYING O N OF ANY ACTIVITY FOR PROFITS' BY SUITABLE LEGISLATION IT WAS IMPERMISSIBLE FOR T HIS COURT BY A PROCESS OF JUDICIAL CONSTRUCTION TO ACHIEVE THE SAME RESULT. I T IS WRONG TO THINK THAT ALL SPRINGS OF CHARITY IN INDIA WILL DRY UP IF TRUE EFF ECT IS GIVEN TO S. 2(15) IN ACCORDANCE WITH THE MINORITY JUDGMENT IN THE SURAT ART SILK CLOTH MANUFACTURERS' ASSOCIATION'S CASE. PEOPLE WHO ARE T RULY CHARITABLE DO NOT ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 19 THINK OF THE TAX BENEFITS WHILE MAKING CHARITIES. O NE MUST REALISE THAT EVEN THE POOR WHO DO NOT PAY INCOME-TAX CAN BE CHARITABLE AN D THEIR CHARITIES MADE AT GREAT PERSONAL INCONVENIENCE ARE COMMENDABLE INDEED . ONE NEED NOT GO IN SEARCH OF CHARITABLE PERSONS AMONGST THE TAXPAYERS ONLY. STILL THE MAJORITY VIEW HAS GOT TO BE FOLLOWED NOW. THE MAIN OBJECT OF ASSESSEE BEING PROMOTION PROTEC TION AND DEVELOPMENT OF TRADE COMMERCE AND INDUSTRY IN INDIA IT WAS AN O BJECT OF GENERAL PUBLIC UTILITY AND INCOME DERIVED FROM ACTIVITIES FOR ADVA NCING THE DOMINANT OBJECT WAS EXEMPT UNDER S. 11. 11. WE ALSO FIND THAT THE ACTIVITY OF CONDUCTING TH E TRADE FAIR IN FOREIGN COUNTRY OF THE ASSESSEE IS WITHIN THE OBJECT CLAUSE WHICH WAS PERMITTED WHILE GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT. WE ALSO FIND THAT THE INCOME WHICH HAS ARISEN FROM THE NON-MEMBERS HAS AL READY BEEN TAXED BY THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) OF T HE ACT. IN VIEW OF ABOVE WE HOLD THAT THE ASSESSEE HAS NOT SPENT ANY MONEY I N A COUNTRY OUTSIDE INDIA ALTHOUGH THE FAIR WAS ORGANIZED IN A FOREIGN COUNTR Y. SIMILARLY WE ALSO FIND THAT THE FACTS OF THE CASE NACHIMUTHU INDUSTRIAL ASSOCIA TION VS. CIT 235 ITR 190 AS RELIED BY THE LD. CIT ARE DIFFERENT FROM THE INS TANT CASE BEFORE US. THE FACTS IN THE ABOVE CASE STAND AS UNDER : THE FOLLOWING TWO QUESTIONS WERE RAISED BEFORE THE TRIBUNAL : (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE AMOUNT OF RS . 2 50 000 COULD NOT BE SAID TO HAVE BEEN APPLIED FOR CHARITABLE OR RELI GIOUS PURPOSES IN INDIA WITHIN THE MEANING OF S. 11(1) OF THE IT ACT 1961 IN THE ACCOUNTING PERIOD RELEVANT TO THE ASST. YR. 1965-66 ? (2) IF THE ANSWER TO QUESTION NO. (1) IS IN THE NEG ATIVE WHETHER THE ASSESSEE WAS ENTITLED TO ANY FURTHER EXEMPTION FROM TAX OF ANY PORTION OF ITS INCOME FOR THE ASST. YR. 1965-66 ?' 2. THE AMOUNT OF RS. 2 50 000 WAS SET APART AS PROVIS ION IN THE ACCOUNTS OF THE ASSESSEE. THE FINDING OF FACT IS TH AT THE AMOUNT WAS NOT ACTUALLY APPLIED FOR CHARITABLE OR RELIGIOUS PURPOS ES. IN THAT VIEW OF THE MATTER THE QUESTION WAS ANSWERED AGAINST THE ASSES SEE. 3. WE SEE NO REASON TO INTERFERE WITH THIS ORDER OF T HE HIGH COURT. THE APPEAL IS DISMISSED. THERE WILL BE NO ORDER AS TO C OSTS. ITA NO.381/KOL/2016 A.Y. 2011-12 M/S. CREDAI BENGAL. VS. C.I.T.(EXEMPTI ON) PAGE 20 FROM THE ABOVE WE FIND THAT THE ISSUE IN THE ABOVE CASE WAS ON DIFFERENT GROUNDS AND THE SAME WAS NOT RELEVANT TO THE INSTAN T CASE BEFORE US. THE ISSUE BEFORE US IS WHETHER THE EXPENSE INCURRED IN INDIA IN RELATION TO THE FAIR ORGANIZED OUTSIDE INDIA AMOUNTS TO INCOME APPLIED O UTSIDE INDIA. AS FROM THE FACTS IT IS CLEAR THAT THE EXPENSES ARE NOT INCURRE D BY THE ASSESSEE OUTSIDE INDIA THEREFORE IN OUR CONSIDERED VIEW THERE IS NO VIOLATION TO THE PROVISIONS OF SECTION 11(1)(A) OF THE ACT. ACCORDINGLY WE CONCLUD E THAT THE IMPUGNED ORDER OF THE LD. CIT PASSED U/S 263 OF THE ACT IS NOT SUS TAINABLE IN LAW AND ACCORDINGLY DIRECTED TO BE SET ASIDE. HENCE WE QUA SH THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT BY LD. CIT IS UNSUSTAINAB LE IN LAW AND WE THEREFORE CANCEL THE SAME. THIS GROUND OF ASSESSEE S APPEAL IS ALLOWED. 12. IN THE RESULT ASSESSEES APPEAL ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/09/2016 SD/- SD/- (NARASIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP SR.PS ! - 30/09/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S. CREDAI BENGAL JINDAL TOWER BLOCK-A 21/1/3 DARGA R OAD PARK CIRCUS KOLKATA-700017. 2. /RESPONDENT-COMMISSIONER OF INCOME TAX (EXEMPTION) 10B MIDDLETON ROW K OLKATA-700071. 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# '# / DR ITAT KOLKATA 6. (*+ / GUARD FILE. BY ORDER/ /TRUE COPY/ / '#