The assessee is\u00a0 an association of various industrialists, organisations and other commercial entities for the development of trade, commerce and industry, was set up with the sole purpose of promotion and protection of Indian business and industry and was duly registered under section\u00a012A\u00a0of the Act as a charitable association with the main objects to promote and protect the trade, commerce and industries in or with which Indians were engaged or concerned. The membership of the assessee was comprised of business houses, corporate houses within the country and abroad. The assessee derived income from organising meetings, conferences and seminars for members and non-members on cost-to-cost basis and by way of membership fees from members besides earning or accruing interest on fixed deposit receipts, rental income and miscellaneous income from the properties held by the assessee. For the assessment year 2013-14, the assessee claimed exemption under section\u00a011\u00a0of the Act. The Assessing Officer treated the activities of organising conferences, meetings and seminars as business activities by invoking the proviso to section\u00a02(15)\u00a0read with section\u00a013(8)\u00a0on the ground that the assessee was charging consideration in the form of sponsorships, that the receipts from these activities exceeded Rs. 25 lakhs in terms of the proviso to section\u00a02(15)\u00a0and denied the exemption claimed under section\u00a011\u00a0by bifurcating the total receipts into two components, namely, business income and charitable income under section\u00a011\u00a0and computed the income accordingly and brought to tax the business income whereas the deduction was allowed in respect of charitable income. Accordingly, he added Rs. 2,00,75,470 as net business income by apportioning the administrative expenditure proportionately between the business and charitable receipts or income based on the gross quantum of receipts under these heads. The exemption was allowed to the assessee only in respect of interest, rental and miscellaneous income. On appeal, the Commissioner (Appeals), after issuing show-cause notice under section\u00a0251(2)\u00a0of the Act, enhanced the income treating the entire receipts as business receipts and taxed it at the rate applicable to companies. On appeal the Tribunal held that \u00a0\u00a0the assessee, in order to protect and promote trade, commerce and industry had been organising the activities of seminars, meetings and conferences in order to disseminate knowledge on specialised issues to members and non-members on the subject with specialised knowledge. During the events experts on the subjects were invited to speak on the occasion and also participative discussion and interactions were held and members and non-members were invited to such activities of the assessee. It was not organising any trading programs to impart skill development courses by specialist and skilled knowledge and certified courses but general meetings, conferences and seminars were organised to discuss and debate issues in current topics, amendments of the Income-tax Act, Micro, Small and Medium Enterprises Development Act, foreign trade policy and other issues concerning trade, commerce and industries. During the year, the receipts from the activities of holding and organising meetings, seminars and conferences were Rs.\u20029,48,14,435 and the profits as computed by the Assessing Officer constituted only 2 per cent. of such receipts. Thus, the consideration charged by the assessee was just a cost basis and nominally above the cost. However, if the administrative expenses were allocated on a rational and scientific basis between the activities of holding meetings, seminars and conferences on the one hand and other charitable receipts such as interest, rental and miscellaneous income on the other hand, then there would be a huge loss from these activities meaning thereby that the assessee had not been even charging from these sponsors, participants, members or non-members sums enough to cover the cost of the assessee and therefore it could be reasonably presumed that the assessee had provided these activities below the cost. In the subsequent assessment year 2014-15, the Assessing Officer had computed loss of Rs. 77,87,698. Therefore, the assessee was not carrying on any activity of holding meetings, seminars and conferences for business purpose but only in support of its main object and it charged from its participants, members and non-members the amount of fee which did not even covers the cost of holding such events. That the administrative and other incidental expenses of holding and organising seminars, conferences and meetings were met out of other charitable income received from interest on fixed deposit receipts, rental and miscellaneous income. Hence, the assessee was entitled to exemption under section\u00a011\u00a0as the activities of the advancement of main object was not hit by the proviso to section\u00a02(15)\u00a0of the Act even post-amendments. Tribunal directed the AO\u00a0\u00a0 to allow depreciation as application of income. As regards\u00a0\u00a0 capital gains\u00a0 in respect of sale of old motor car and purchase of new car, there is\u00a0 no opening written down value for year. Even if entire cost claimed as application of\u00a0 income, assessee\u00a0 is entitled to claim deduction of\u00a0 written down value from sale consideration for calculating capital gain. The accumulation of income is to be computed on gross receipts and not net receipts.(AY. 2013-14, 2014-15)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 11 : Property held for charitable purposes-Object of general public utility-Business-Income from organising meetings, conferences and seminars, membership fee from members, interest on deposits and rentals from properties-Disseminate knowledge on specialised issues to members and non-members-Not business purposes-Subscription fee from existing members on annual basis as well as admission fee from new members is not income by virtue of principle of mutuality-Advancement of main object is not hit by proviso to Section 2(15) even post-amendments-Invested in terms of section-Entitled to exemption in respect of entire receipts-Depreciation-Directed to allow depreciation as application of income-Capital Gains-Sale of old motor car and purchase of new car-No opening written down value for year-Even if entire cost claimed as application of income, assessee is entitled to claim deduction of written down value from sale consideration for calculating capital gain-Accumulation of income-Accumulation is to be computed on gross receipts and not net receipts [S. 2(13), 2(15), 10(23C),(11(1)(a), 11(2), 11(5)(iii),12A, 13(8), 32,251(2)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-49957","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-cZL","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=49957"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49957\/revisions"}],"predecessor-version":[{"id":49958,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/49957\/revisions\/49958"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=49957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=49957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=49957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}