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Case Law Details

Case Name : Internet & Mobile Association of India Vs ACIT (ITAT Mumbai)
Appeal Number : I.T.A. No. 6801/Mum/2016
Date of Judgement/Order : 12/03/2021
Related Assessment Year : 2009-10

Internet & Mobile Association of India Vs ACIT (ITAT Mumbai)

we noticed that the assessee trust was established to promote internet and e-commerce. In order to promote and popularize the objects, assessee has to arrange and organize the seminars and other medium of promotion. In that process, assessee has organized some sponsorship and collected fees. The existence of these kind of trust depends upon the systematic programs and organizing seminars in that process, they have to collect fees for that effort. In that process, we would not say profit but surplus in order to survive self-reliant and meet out the administration cost of the trust. In our considered view, the Hon‟ble Bombay High Court adjudicated in the case of Shree Nashik Panchvati (supra) that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Therefore, the activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee‟s activities under mutuality concept. We are aware that in order to claim the mutuality, assessee has to maintain the separate books for the service rendered to members and non­members. Even the assessee has to prove that the identities of the contributors to the common fund must be entitled to participate in the surplus and the participators to the surplus must be the same persons who have contributed to the common fund. Unless these conditions are satisfied, the assessee cannot be treated as mutual organization. In the given case, AO has not verified nor assessee has claimed any benefit under mutuality. We notice that the assessee has not maintained any separate register for the services rendered to members and non-members. Therefore, it cannot be classified under mutuality.

We also noticed that the registration under section 12AA is restored and the Co-ordinate Bench has already adjudicated that mere holding seminars cannot be termed a commercial or business activity. Therefore, the registration granted after evaluating the objects of the trust as charitable and now merely because of organizing seminars itself cannot make the trust non charitable or commercial. In our considered view, the invoking of section 2(15) of the Act merely because of revenue from organizing seminar cannot make the trust looses the character of charity. The AO himself classified the activities under objects of general public utility. Therefore, the activities carried on by the assessee is only incidental to the main object and the ratio laid down in the case of Shree Nashik Panchvati (supra) is applicable to this case. Therefore, we are inclined to accept the plea of the assessee and accordingly, all the grounds raised by the assessee are allowed.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The present appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-1, in short Ld. CIT(A)‟, Mumbai, dated 23.08.2016 for AY 2009-10.

2. The brief facts of the case are, Assessing Officer on verification of Income and Expenditure account for the FY 2008­09 relevant to AY. 2009-10 noted that the assessee has earned income from seminar of Rs. 3,04,88,920/-. It was observed that receipts as shown by the assessee in the Income and Expenditure account from arranging Seminars at Rs, 3,04,88,920/- makes it amply clear that the assessee is doing regular activities which are in the nature of business by way of arranging Seminars, collecting participation fees from the participants. By collecting money in the name of awareness programs through Seminars etc., will not make it in the field of education. The assessee is systematically generating its Income through its activities which is purely as in the field of business and same way be incidental in achievements of its objects but it has no relevance once the proviso to section 2(15) gets attracted, therefore, the assessee trust is directly hit by the proviso to section 2(15) which has been introduced from A.Y; 2009-10. Once a charitable trust/institution hit by aforesaid proviso, then there is deeming provision that such entity shall not be for a charitable purpose. Hence once the assesses Trust /Institution loses its charitable character then obviously there is change in the status of assessee and it can no longer be held to be for charitable purpose.

3. Since these activities of the assessee were organized regular activities the assessee was asked by AO to explain as to why they may not be treated as business activities and income from them may not be treated as Business Income u/s. 2(15) of the I.T. Act. It was also asked to why the exemption u/s. 11(4A). of the I. T. Act may not be denied in respect of this business income because the conditions| mentioned in that subsection are not satisfied by the assessee. Reply of the assessee has been reproduced, in para 6 of assessment order.

4. AO after considering explanation given by the assessee observed that the activities of assessee are in nature of business by way of arranging Seminars, Collective Participation fees from the participants, by collecting money in the name of awareness programs through seminars will to make on field of education private commercial courses which is related to trade and commerce industry and conduct examination and collect fees from student and arrange exhibition. The assessee has also arranged programmes and discourse, lectures and seminars on trade and commerce and charges fees on the same and supply study material also. The assessee trust was holding exhibition, trade, commerce classes and therefore Business and Trade as per the Interpretation place on the word education used in Section 2(15) of the I.T. Act. Reliance was placed on Sole Trustees. Loka Skikshan Trust versus Commissioner income Tax (1975) 101 1TR 234 (SC) and Bihar Institute of mining and mine Surveying versus CIT {1994} 2008 1TR 604 (Patna).

5. AO further observed that the assessee trust was covered under the last limb of charitable purpose ie. advancement of any other object of general public utility. In view of amendment made in section 2(15) of the IT Act w.e.f. 1st April 2009 for the AY. 2009-10 onwards, the assessee trust was not entitled to exemption as it is an institution which conducts activity in nature of business and also charge fee or coordination. It was earning huge profits on a systematic and organized manners and therefore, it was not an Institute existing for Charitable purpose under the last limb of the section 2(15) of the I. T. Act. Also the assessee trust institute has been earning huge income from seminars training and program fees, etc.

6. AO mentioned that to decide the contentions raised by the assessee, it is necessary to examine Section 2(15) after its amendment with effect from 1st April 2009. A scrutiny of Section 2(15) of the Act elucidates that charitable purpose, for the purpose of the Act has been divided into six categories, 1) Relief to the poor, 2) education, 3) medical relief, 4) preservation of environment (including watersheds, forests and wildlife), 5) preservation of monuments or places or objects of artistic or historical importance and 6) advancement of any other object of general public utility. The assessee trust institution will fall under the sixth category i.e advancement of any other object of general public utility. The assessee trust institute cannot be regarded as an educational institutions as the main object is to regulate the profession of the assessee trust institute is not a statutory authority of professional body. The assessee trust cannot award any degree or enroll member as any statutory university. These activities undertaken by the assessee – institute will not fall under the term “education” as defined by the Supreme Court in Sole Trustee, Loka Shikshana Trust. In this regard reference can be made to the decision of Gujarat High Court in Saurashtra Education Foundation versus CIT ( 2005) 273 TTR 139 (Guj). The aforesaid ratio was expounded in the Sole Trustee Loka Shikshana Trust (Supra) has been rightly interpreted by the Gujarat High Court in Gujarat State Co-Operative Union versus CIT (1992) 195 ITR 279 (Guj).

7. The assessing officer observed that assessee Institution is predominantly a mutual association and charitable objects and mutual benefits are contradictory to each other. It must be, appreciated that Exemption u/s. 11 as a charitable trust and principles of mutuality are mutually exclusive of each other. In the mutual association the members subscribe for the primary purpose of benefiting themselves, while in a charitable Institution people subscribe for charitable object without any expectation in return. In the case of the assessee, the members have contributed only for the purpose of their own benefit and for acquiring certain amenities. Therefore, the assessee is treated as mutual association and not as charitable institution.

8. AO further observed that the concept of charity is necessarily altruistic in nature and involved the idea of benefit to others. The essence of charity is that the person(s) doing charity exclude themselves from the benefits of the charity. Non exclusion of contributors to charity‟ fund from the benefits arising out of that is nothing but serving the interest of self in an organized manner. In fact the entire scheme of sec 11 to 13 and particularly see. 13(1)(c) and 13(3) is based on this basic principle or essence of charity‟. Thus in a case of even charitable institution, if benefit is proved to certain categories of people referred to In sec, 13(3) the Exemption u/s. 11, 12 is not admissible. Therefore, the question of granting benefit to any institution or Club, where the objects themselves are not charitable and are for benefit of members and where certain facilities and conveniences are provided to members on payment cannot be considered as charitable objects and activities. The concept of charity and mutuality are mutually exclusive of each other. A charitable Institution is for the benefit of the public and not for the mutual benefit of the contributors to the common fund.

9. As per the above observation of AO, exemption claim u/s. 11 of the I. T. Act was rejected by the AO. Therefore, in view of the above discussion and various court judgment /decision as discussed above the assessee‟s receipts / Income from activities and interest income was treated as Income of the assessee and taxed accordingly. Further AO mentioned that in this case registration under section 12A was cancelled by DIT (exemptions) as assessee has engaged itself in commercial activities.

10. Aggrieved by the above order of AO, assessee preferred appeal before Ld. CIT(A) and before him, assessee submitted as below:-

i) Assessee submitted that prior to the completion of the assessment, the DIT(E) had vide order dated 8th December, 2011 withdrawn the registration u/s 12A granted to the assessee. The A.O. treated the gross receipts of Rs.1,13,89,299/- (Rs. 3,04,88,921 being Gross receipt (-) Rs 1,90,99,690 being Membership fees) as taxable receipts in the hands of the assessee trust. The assessee further submitted that the Hon. Tribunal, Mumbai Bench vide the order dated 28 May, 2014 allowed the appeal of the assessee for A.Y, 2009-10 and restored the registration granted to the assessee. In the said order, the Hon’ble Tribunal observed as under:

“….Holding of seminars cannot be termed a comimercial or business activity in the case under appeal as the trust was established for this specific purpose. DIT(E) has ignored the fact the trust had suffered loss by arranging seminars.

ii) Assessee further submitted that it had received delegate fees in respect of conducting the seminars aggregating to Rs.17,07,548/-. In addition thereto, the assessee had received sponsorship contributions aggregating to Rs.78,50,000/-. As against the aforesaid receipts, the assessee had incurred expenditure of Rs.1,24,18,501/- in conducting the seminars which were much more than the fees collected from the delegates. In other words, 2/3rd of the expenses on conducting seminars were met out of the sponsorship contributions received by the assessee. As the expenditure incurred on the seminars conducted were larger than the sponsorship contributions, there was a deficit of Rs.28,60,952/- from conducting the seminars. In other words, the: assessee had incurred a loss on conducting seminars. Secondly, on perusal of the Income and Expenditure account, it will be seen that interest income is generated by the assessee for meeting its administrative expenses. Thirdly, it is not necessary that every time the assessee gets substantial sponsorship donations to meet its seminar expenses.

iii) Assessee also submitted that it was holding seminars solely for achieving and fulfilling the objects of the trust of parting with information and knowledge in respect of internet and its usage. It is, therefore, submitted that the activity of holding seminar is not in the nature of trade, commerce or business but the seminars are held for attainment of the main objects of the assessee trust. Assessee is not generating income through its activity and therefore, it is not carrying on any activity in the nature of trade, commerce of business or any activity of rendering any services in relation to any trade, commerce or business for a cess or a fee or any other consideration. In support of its contention of assessee relied upon a plethora of judgments.

iv) In view of the aforesaid, it was submitted that the assessee trust is not involved in carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. The Main activity of the assessee trust is to promote the use of internet by different ways and means and therefore, the gross receipt of the assessee for the year ended 31st March, 2009 are exempt and not taxable receipts. In view of submissions, assessee requested that the appeal of the assessee may be allowed.

11. After considering the submission of assessee, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:-

i) In this case the AO has denied exemption u/s. 11 relying upon the Provisions of section 11(4A) and proviso to section 2(15). Also the other ground for denying exemption was that DIT(E) has cancelled its registration u/s. 12A. The assessee submitted that the registration has been restored by the Honble ITAT vide order dated 28.5.2014. Copy of this order has been filed, on perusal of which it is noted that the Hon’ble ITAT have restored the registration u/s.12A. Hence this ground for denying exemption u/s. 11 is no more relevant.

ii) As mentioned above, the AO has also denied exemption relying upon the provisions of section 11(4A) and proviso to section 2(15) as mentioned in paragraph 5 of the assessment orders. The assessee has not made any submission with reference to the applicability of provisions of section 11(4A) either during assessment or during present appellate proceedings.

iii) With regard to the applicability of Proviso to section 2(15) assessee submitted that, Hon’ble ITAT in its own case have observed that holding of seminar is not a commercial or business activity. In this regard, it would be relevant to mention that the assessee has selectively quoted the observations of Honble ITAT. Accordingly complete observations of Hon’ble ITATare reproduced as under : –

In the case of Sarvodays Hakktya Panna (supra) the Hon‟ble Madras High Court took a view that once a registration u/s. 12A of the Act was granted, the same could be cancelled only on satisfaction of two conditions laid down in section 12AA(3) of the Act viz (a)that the activities of the trust or institution are not genuine; and (b) that the activities of the trust or institution are not being carried out in accordance with the objects of the trust or institution. The Hon’ble High Court expressed the view that there must be specific findings with regard to the aforesaid two conditions. We find that the DIT(E) has not given specific finding as required by the Hon’ble Madras High Court. Holding of seminars cannot be termed a commercial or business activity in the case under appeal, as the trust was established for this specific purpose. DIT(E) has ignored the fact the trust had suffered loss by arranging seminars. Circular issued by CBDT on 06.04.2011 clearly mentions that an amendment would be applicable from the Assessment Year 2011-12 and subsequent assessment years. In case of Agra Developmant Authority (supra). In that matter the assesses was granted registration undér Section 12A of the Act w.ef, 01.04.2003 and vide order dated 24.09.2003 said registration was cancelled by CIT by the impugned order dated 04.04.2012 w.e.f, 2009-10. Deciding the appeal tribunal held as under:

……………….

Facts of the case under cansideratian are almost similar to the facts of the matter of Agra Development Authority (supra). Agra Development Authority (supra). In this case registration was granted in 2004 and was withdrawn for the AY 2009-10 before the AY. 2011-12. As the cancellation is against the provisions of law, so same cannot be endorsed. Allowing the appeal of the assessee, effective ground of appeal raised by it is decided in its favour.

From above findings of Hon‟ble ITAT it may be noted that what has been observed is that DIT (E) while cancelling registration u/s. 12A has not given specific finding as required by Honble Madras High Court and also ignored the fact that assessee suffered losses in seminar activity. (As regards to loss from seminar activity it would be relevant to mention that as against the receipt of Rs. 95.57 Lacs from seminar and sponsorship, expenditure is Rs. 73.12 Lacs only and hence this activity has earned profit). Further it is noted that the decision of Hon’ble ITAT is based on the findings of Hon’ble ITAT Agra in the case of Agra Development Authority where it was observed that in absence of power vested with the CIT, registration granted under section 12A cannot be withdrawn or cancelled before 1.6.2010 which was a technical ground. Accordingly reliance by the assessee on the order of Hon’ble ITAT which was for the limited purpose of deciding registration under section 12A and was decided in its favour on technical ground is misplaced since the issue of applicability of proviso to section 2(15) on merit has not been decided therein.

iv) Further in the case of Indian Plastic Institute, Hon’ble ITAT, Mumbai while deciding the same issue on similar facts in A Y 2009-10 vide their order No. ITA NO 308/Mum/2012 dated 21.2.2014 have observed as under :-

“After perusal of the submissions as well objects of the assessee trust and also after going through the documents on record, we may observe that the objects and the activities of the assessee trust does not strictly fall in the definition of “education” being charitable purpose but “for advancement of any other object of general public utility” as also pleaded by the assessee in para (3) of its submissions as reproduced above. The assessee trust is not only offering services in relation to the trade and business of Plastic Industry but is also accepting fees, cess or other consideration for providing such services. The assessee trust is also accumulating the income and as such is also getting a good interest income on it. Apart from that it is also getting income by way of offering space for advertisement on its website. Therefore the Ld. DIT(E) has rightly observed that in the assessee‟s case there have been receipts of huge amount on account of holding international conferences at Rs. 21,19,861/- and Interest on deposits at Rs. 16,14,824/- which have been in the nature of business income and these receipts wherein excess of monitory limit as laid down in the. Proviso to section 1(15) of the Act which has come into effect from A.Y, 2009-10 and further that the assessee has been in receipt of such income regularly over the years. The decision of the co-ordinate bench of the Tribunal in the case of “M/s Bombay Presidency, Golf Club ltd, 149 TTJ 471 (Mum), relied upon by the Ld. AR in this respect, is quite distinguishable on its own facts and circumstances and is not applicable to the facts and circumstances of the case in hand”.

Based on above observations of Hon‟ble ITAT, it is noted that the activities of the assessee do not fall under the definition of education but under “any other, object of general public utility”. “Further the receipts from the activities of the assessee are in the nature of business income. In view of the facts of the case and legal position as discussed above, I have no reason to deviate from the findings given by the AO which are upheld.

12. Now before us, the assessee has preferred the appeal by raising the following grounds of appeal as under:-

A) Denial of exemption u/s. 11

1) The learned Commissioner of Income Tax (Appeals) — 1, Mumbai [CIT(A)] erred on facts and in law in confirming the order passed by the Assistant Director of Income Tax (E)-II(1), Mumbai (AO) rejecting the appellant‟s claim of exemption us. 11.

2) The learned CIT(A) erred on facts and in law in holding that the appellant had not made any submission with reference to the applicability of section 11(4A) either during the assessment proceedings or during the appellate proceedings.

3) The learned CIT(A) erred in holding that the receipts of the appellant do not fall under the definition of education or under any other object of general public utility.

4) The learned CIT(A) erred in holding that the receipts of the appellant were in the nature of business income.

5) The appellant prays that your honour hold that the appellant has fulfilled all the conditions for being eligible for exemption w/s. 11 and denial of the same by AO and by the CIT(A), is not as per law.

B) Not dealing with the issue regarding mutuality.

6) Without prejudice to the above, the learned CIT(A) erred on facts and in law in not dealing with the alternative contention of the appellant that if exemption w/s. 11 is not available to the appellant, the income of the appellant is exempt on the principles of mutuality.

C) General

7) The above Grounds of Appeal are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above Grounds of Appeal.

13. At the outset, Ld. AR brought to our notice findings AO in para no. 3 & 4 of assessment order and submitted that Ld. CIT(E) has cancelled the 12AA registration and subsequently Hon’ble ITAT has restored registration with findings that holding of seminars cannot be termed as business activity. He further brought to our notice page-8 of the Ld. CIT(A)’s order in which Ld. CIT(A) has rejected the plea of the assessee. He further brought to our notice page 101 of the paper book and submitted that the facts of the case of M/s Indian Plastics Institute are similar to the facts of the case of assessee. In that case, assessee was holding international conferences and interest on deposits and the Hon’ble ITAT came to the conclusion in that case with the observation that activity of the assessee’ are a general public utility inasmuch as it helps all those classes of persons connected with the plastics and its application with a useful knowledge and information from time to time. Accordingly, Hon’ble ITAT do not find any merit in the action of the lower authorities for decline of claim of exemption in respect of excess of income over the expenditure which was transferred to the education fund. He further brought to our notice page 108 of the paper book wherein he relied on the decision of Hon’ble Bombay High Court in the case of DIT(E) vrs. Shri Vile Parle Kelavani Mandal (2015) 378 ITR 593 (Bom) wherein the Hon’ble Bombay High Court has accepted the findings of the Tribunal with the following observations:-

5. The Tribunal has held that the Management and Development Program & Consultancy Charges‟ is part and parcel of Narsee Monjee Institute of Management Studies‟ which has been set up by the respondent-assessee. The respondent-assessee is a trust and has set up 30 schools and colleges. The Commissioner as also the Tribunal has found that the element business is missing in conducting management courses. There may be some surplus generated which itself is applied towards the attainment of the object of the educational institute. The separate books of account cannot be insisted upon because once this programme is part and parcel of the activities undertaken and carried out by the Narsee Moonjee Institute of Managemen. Studies, then the condition precedent set out in sub-section (4A) of section 11 of the I.T Act is completely satisfied. Such finding of fact cannot be termed as perverse and it is in consonance with the factual aspect regarding activities of the trust and the object that it is seeking to achieve. Similarly, in regard to income from the hiring of the premises and advertisement rights, the said question is also not substantial question of law. Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular. person, separate books of account are also maintained, then this income cannot be brought to tax. This conclusion is also not perverse and given the facts and circumstances which are undisputed.

14. He further brought to our notice decision of DIT(E) vrs. Shree Nashik Panchvati Panjrapole at page no. 25 of the paper book wherein the Hon‟ble Bombay High Court of Judicature held as under:-

15. As noted above, we find that impugned order of the Tribunal has recorded a finding of fact that the dominant function of the respondent Trust is to provide an asylum to old, maimed, sick and stray cows. Further, only 25% of the cows being looked after yield milk and if the milk is not procured, it would be detrimental to the health of the cows. Therefore, the milk which is obtained and sold by the respondent assessee is an activity incidental to its primary / principal activity of providing asylum to old, maimed, sick and disabled cows. In the present facts, the activity of milking the cows and selling the milk is almost compelled upon the Trust, in the process of giving asylum to the cows. In our view, the activity to be considered in the nature of trade, commerce or business would in most cases have to be carried out on a regular basis with a view to earn the profit. The presence of the profit intent (even if it does not fructify) would normally be a sine qua non for the activity to be considered as trade, commerce or business. Therefore, in the present facts, it is not as though the keeping of the cows and milking them was with a view to carry out activity in the nature of trade, commerce or business to earn profits. The Revenue has not shown how even in the absence of profit motive, the activity of obtaining milk and selling the same would still be an activity of trade, commerce or business. In the alternative, Mr. Malhotra submitted that the proviso to Section 2(15) of the Act would apply even if it is not trade, commerce or business but only in its nature. However, how and why the activity of selling milk obtained incidentally while taking care of the cows, is in the nature of trade, business or commerce is not shown. Admittedly, in the present facts, the dominant activity carried out by the respondent assessee’s Trust for over 130 years is to take care of old, sick and disabled cows. In these circumstances, an incidental activity of selling milk which may result in receipt of money, by itself would not make it trade, commerce or business nor an activity in the nature of trade, commerce or business to be hit by the proviso to Section 2(15) of the Act.

15. He further brought to our notice decision of DIT vrs. Women’s India Trust at page no. 43 of the paper book wherein the Hon’ble Bombay High Court held as under:-

6. A perusal of the same will indicate as to how if the advancement of any other object of general public utility shall not be charitable, if the assessee is involved in carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess, fees or any other consideration. In the present case, the undisputed facts are that the assessee is a trust formed to carry out the object of education and development of natural talents of the people having special skills, more particularly the women in the society. The assessee trains them to earn while learning. It educates them in the field of catering, stitching, toy making, etc. While giving them training, the assessee uses related material which it buys from the open market. This is essential for carrying out the assessee’s object. In the process, some finished product such as pickles, jam, etc. are produced and which the assessee sells through the shops, exhibitions and personal contacts. The motive of the assessee is not the generation of profit but to provide training to the needy women in order to equip or train them in these fields and make them self confident and self reliant. There is nursing training, which is also being managed and administered by the assessee. The details of income and expenditure accounts shows that the assessee had received donation of Rs. 36,88,634/- and nursing school fees of Rs. 4,46,088/-. The assessee pointed out that this nursing training provided at the centre of the assessee at Panvel is free of costs. The charge is levied for the mess but the accommodation and other facilities are free of costs and apart from the community development programmes, which are undertaken to educate the rural women, teach them various skills and make them, aware of how to live honourably. Thus, on these undisputed facts, the Tribunal found that this is not an activity which would fall within the proviso. The Tribunal has rightly referred to the two letters which have been addressed by the trustees of the assessee trust. They clarify that in the past, such activities have been found to be incidental to the object of the trust. Secondly, the donation received during the year has been utilised in the year under consideration for achieving the object of the trust. However, the bank interest received is continued and, then, there is a deficit. It is in these circumstances that the argument was canvassed that the fees collected for training women are only to meet the cost of expenses for providing them food items. Their accommodation and other facilities are free of costs. Once the essential nature of the activities carried on by trust is considered, then, the larger question need not be decided. The Tribunal found that the trust may be set up for advancement of any other object of general public utility, but that will not cease to be charitable purposes in this case, because, the activities in which the trust is involved cannot be termed as carrying on of trade, commerce or business. This is to impress upon the women the need to be self reliant and self supporting and to instill in them the confidence that they can make a livelihood for themselves if they rely on the skills as afore-noted, that the activity has been undertaken. It does not partake the character of trade, commerce or business nor of rendering of any service in relation thereto. It is only to teach or impart skills and to instill confidence that the produced goods or articles are sold. To that extent also deficit has occurred. In the circumstances, the Tribunal took a view that occasional sales or the trust’s own fund generation are for furthering the objects but not indicative of trade, commerce or business. In the circumstances, the proviso does not apply.

16. He further brought to our notice income and expenditure account for the year ending 31st March 2009 and brought to our notice receipt of donation /sponsorship/ subscription/ fees from seminars at Rs. 2,91,68,035/- and corresponding expenditure of Rs. 2,19,19,985/-. He submitted that the observation of Ld. CIT(A) at page no. 6 para no. 5.1(ii) of its order is wrong and we do not know from where, Ld. CIT(A) has observed those figures which is not matching to the actual income and expenditure disclosed by the assessee. He prayed that exemption claimed by the assessee u/s 11 be restored.

17. On the other hand, Ld. DR submitted that education and awareness cannot be equated. He relied on the decision in the case of Indian Machine Tools (supra) and further relied on the findings of Ld. CIT(A) in para 5.2 of the its order. He brought to our notice the findings of Ld. CIT(A) at page 9 of the order in which Ld. CIT(A) clearly observed that assessee has in fact earned business income. Accordingly, he supported the findings of lower authorities.

18. Considered the rival submissions and material placed on record. We notice from the record that the assessee trust is established with the objective to promote the use of public utility, advertising and electronic commerce through internet and other online channels, to promote use of internet as a medium to enable the growth of the electronic commerce, to act as a representative body of internet portals, to promote the emerging medium of internet amongst the members of the association and to represent the association to the government bodies. Based on the above objects, the assessee has organized several seminars to popularize the internet and electronic commerce among the members of the association and general public. In this process of advancing its objectives, assessee has arranged the seminars with the help of sponsorship and charging for the seminars by collecting fees for the same. The AO analyzed the financial statement of the assessee and came to conclusion that the main income of the assessee generated mainly of organizing seminars and collecting fees for the same. Since majority of the receipt is from the seminars, AO invoked the provisions of section 2(15) and came to the conclusion that the trust functions can be classified only under business activities and will not fall under education but can be classified under other objects of general public utility. Further, he observed that assessee operation can only be considered as mutual entity not charitable. Accordingly, AO completed the assessment based on mutuality concept. Ld. CIT(A) also agreed with the findings and observation of the AO.

19. After considering the factual matrix of the operations of the assessee, we noticed that the assessee trust was established to promote internet and e-commerce. In order to promote and popularize the objects, assessee has to arrange and organize the seminars and other medium of promotion. In that process, assessee has organized some sponsorship and collected fees. The existence of these kind of trust depends upon the systematic programs and organizing seminars in that process, they have to collect fees for that effort. In that process, we would not say profit but surplus in order to survive self-reliant and meet out the administration cost of the trust. In our considered view, the Hon‟ble Bombay High Court adjudicated in the case of Shree Nashik Panchvati (supra) that the presence of the trading activity by the respondent assessee is an activity incidental to its primary/ principal activity of providing asylum to old, maimed, sick and disabled cows. The activity is almost compelled upon the trust, in the process of giving asylum to the cows. Similarly in the given case, the activities of organizing seminar is incidental to primary objective of promotion of internet and e-Commerce among the members and public at large. Without these activities of organizing seminars, the existence of the trust is impossible. Therefore, the activities of organizing seminars are integral part of objects of the trust. We notice that even tax authorities agree that the activities of the trust may fall under 4th limb of section 2(15) of the Act i.e. for general public utility. The AO treated the assessee‟s activities under mutuality concept. We are aware that in order to claim the mutuality, assessee has to maintain the separate books for the service rendered to members and non­members. Even the assessee has to prove that the identities of the contributors to the common fund must be entitled to participate in the surplus and the participators to the surplus must be the same persons who have contributed to the common fund. Unless these conditions are satisfied, the assessee cannot be treated as mutual organization. In the given case, AO has not verified nor assessee has claimed any benefit under mutuality. We notice that the assessee has not maintained any separate register for the services rendered to members and non-members. Therefore, it cannot be classified under mutuality.

20. We also noticed that the registration under section 12AA is restored and the Co-ordinate Bench has already adjudicated that mere holding seminars cannot be termed a commercial or business activity. Therefore, the registration granted after evaluating the objects of the trust as charitable and now merely because of organizing seminars itself cannot make the trust non charitable or commercial. In our considered view, the invoking of section 2(15) of the Act merely because of revenue from organizing seminar cannot make the trust looses the character of charity. The AO himself classified the activities under objects of general public utility. Therefore, the activities carried on by the assessee is only incidental to the main object and the ratio laid down in the case of Shree Nashik Panchvati (supra) is applicable to this case. Therefore, we are inclined to accept the plea of the assessee and accordingly, all the grounds raised by the assessee are allowed.

10. In the net result, the appeal filed by the assessee stands allowed.

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