ACIT (E) Vs. India ITME Society (ITAT Mumbai) – The assessee has not disputed this fact that the assessee has charged more than 50% margin in providing the facilities to the participants of the exhibition. Thus, it is clear that the assessee is charging a different rate of tariff from the participants in respect of power, telephone, compressor hire charges. The nature of these facilities itself shows that the assessee is charging separately for each and every facilities made available to the participants in the exhibition by adding its own margin in the tariff rate charged by the service provider.
It is not the case that for holding the exhibition, the assessee is charging for its service for organizing the exhibition; but apart from the space rentals, the assessee is charging for all other facilities and services like electricity, telephone in a manner as to earn the profit. Thus, when the assessee is not charging lump sum amount from the participants for the services for organizing; but adding the margin of more than 50% on each and every services, which shows that the assessee is not working under ‘no profit no loss basis’ but having a definite target of earning the profit from the activity. No doubt about this activity of providing other facilities/ services to the participants of the exhibition are connected with the main object of organizing the exhibition but some of these activities are clearly having the element of profit motive and not charitable in nature. Therefore, the condition as stipulated in the notification issued u/s 10(23C)(iv) the assessee is required to maintain separate books of account for the activities which are in the nature of business, though connected with the main object of the assessee.
Since the assessee has not maintained separate books of account for these activities of providing other services and charging with a margin, the notification issued u/s 10(23C)(iv) will not applicable in respect of such income from other activities and therefore, the exemption u/s 10(23C)(iv) is not available in respect of the income earned by the assessee from the activity of providing power installation, electricity, telephone facilities, compressed air hire etc. etc. Accordingly, the Assessing Officer is directed to allow exemption with respect to the receipt and accumulations from the holding and organizing the exhibition and hence, the income from other activities in providing other services by charging huge profit has to be taxed as income of the assessee. Accordingly, the appeal filed by the revenue is partly allowed.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA No. 7189/Mum/2005 (Asst.Year 1997- 98)
ITA No. 4168/Mum/2006 (Asst Year 2001- 02)
CROSS OBJECTION Nos. 146 & 147/Mum/2011
The Asst Director of Income Tax (E) II (I)
Vs
India ITME Society
Date of pronouncement: 12th Dec 2011
