Case Law Details
Gem & Jewellery Export Promotion Council Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that conducting or participating in exhibitions within India or overseas for promotion of Gem and Jewellery Industry couldn’t be regarded as commercial activity for the purpose of proviso to section 2(15) of the Income Tax Act.
Facts- Briefly stated facts of the case are that the assessee is a company registered u/s. 25 of the Companies Act, 1956 with the main object to support, protect, maintain, increase and promote the export of gems and jewellery etc. ROI filed by the assessee was selected for scrutiny assessment and the statutory notices under the Income-tax Act, 1961 were issued and complied with.
In the scrutiny proceedings, AO observed receipts from membership, subscription fees, grants from Government of India, income from publication, exhibitions, award functions etc. Regarding the activity of conducting exhibitions, AO was of the view that it was a commercial activity, which prima-facie falls in the nature of trade or business, in view of expression “ Business” having wide meaning in fiscal statues. He also inferred profit motive to the assessee based on the fact that term deposits placed with the banks at the end of the year was of ₹33,20,71,475/- giving rise to interest of ₹6,13,47,543/-. According to AO, the assessee was generating huge profit year after year from its activities. AO referred to amendment to the definition of charitable purpose to section 2(15) of Act with effect from 01/04/2009, wherein it is prescribed that advancement of any other object of the General Public Utility (GPU) shall not be a charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce or business, irrespective of the nature of use or application of the income from such activity.
AO added the excess of income over expenditure to the total income of the assessee. The deficit claimed by the assessee was accordingly rejected.
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