Indus Entrepreneurs Vs DCIT (ITAT Hyderabad)
AO Misread 2(15): GPU Activities Permissible If Event Income ≤ 20% & Membership Fees ≠ Business: Tribunal Reverses AO & CIT(A), Grants Full Sec.11 Relief
Assessee, a 12A-registered society promoting entrepreneurship through mentoring, networking & educational events, filed NIL income claiming exemption u/s 11. AO held that Assessee was a commercial body engaged in trade, commerce & business; 48% of receipts were allegedly commercial & profit ratio was 22%. Exemption u/s 11 was denied & ₹33,80,537 assessed as business income. CIT(A) upheld denial, but on new ground—that Form-10 for accumulation was not filed.
Before Tribunal, AR argued that TIE’s objects fall under “Education”; alternatively, under GPU but within the 20% threshold in proviso to s.2(15), since event receipts were only ₹20,60,655 out of total ₹1,53,69,214 (≈ 13%). Membership fees are not commercial activity. Form-10 was in fact filed with ROI on 05.10.2018.
Tribunal rejected Assessee’s claim that activities fall under “Education”, holding that objects relate to advancement of entrepreneurship, which is GPU. ITAT relied on Supreme Court in Ahmedabad Urban Development Authority (449 ITR 389) & New Noble Educational Society (448 ITR 594) to hold that GPU entities may conduct business-linked activities if receipts from such activities ≤ 20% of total receipts & if they are incidental to the charitable objective.
