2010 (6) TMI 789 - AT - Income Tax

Summary

Issues Involved: Appeal against order denying exemption u/s.11 for holding exhibitions, whether activity is incidental to the objects of the Trust.

Issue 1: Denial of Exemption u/s.11 for Holding Exhibitions

The appeal was filed by the revenue against the order of the ld. CIT(A) for the Assessment Year 2005-06, where the assessee, a company registered u/s.25 of the Companies Act, 1956, organized Tooltech Exhibition to promote the machine tool industry in India. The Assessing Officer observed that the Income Tax Department had previously denied exemption u/s.11 for similar activities. The Assessing Officer, despite the assessee maintaining separate books of accounts for the exhibition, treated the income as business income, stating that the activity was not incidental to the Trust's objects. On appeal, the ld. CIT(A) held that holding exhibitions was a business activity incidental to the Trust's objects, in line with previous ITAT orders. The revenue challenged this decision, but both parties agreed that the issue was covered in favor of the assessee by previous Tribunal orders for different assessment years.

Issue 2: Activity of Holding Exhibitions as Incidental to Trust's Objects

The Tribunal, in the assessee's own case for Assessment Year 1998-99, had previously held that holding exhibitions for the trade and industry of machine tools in India was incidental to the Trust's objects. Citing consistency with previous Tribunal orders, the Tribunal upheld the ld. CIT(A)'s decision, emphasizing that the conditions of Section 11(4A) were fulfilled as separate books were maintained for the exhibition activity. The Tribunal dismissed the revenue's appeal, stating that the activity was indeed incidental to the Trust's objects. The assessee's cross objections were also rejected based on the consistent view of the Tribunal on this issue.

Conclusion

The Tribunal, based on past precedents and the consistent view on the issue, upheld the ld. CIT(A)'s decision that holding exhibitions was a business activity incidental to the Trust's objects, entitling the assessee to exemption u/s.11 of the Income Tax Act, 1961. Both the revenue's appeal and the assessee's cross objection were dismissed, affirming the decision in favor of the assessee.