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TMI Blog2014 (2) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... are charitable in nature - Held that:- The assessee society was a member of the World LPG Association to achieve its object of providing an update on the events and development in the field of oil and gas applicable to Government regulators and its members and to conduct studies of public utility - The World LPG Gas Association also became a member of the assessee society - The membership was required for attaining the objects of the assessee society - as regards the payment received by the assessee during World LPG Association, this amount was towards membership fee and did not quality to be a foreign contribution. - Decided in favor of assessee. Violations of the provisions of section 13 - Assessee organized seminar alongwith CA firm, which was devoted to enhancing education on the subject of E&P Accounting in India, a matter of public interest - The seminar was not only for members but for non-members as well including professionals - The rent paid by the assessee to IOC was reasonable as the valuation of the rent was done by a Government approved valuer - The assessee paid charges to IOC for conducting guest lectures which were also at arms length price - The assessee had d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer u/s 144 of the IT Act, in view of the time constraints and non-submission of complete information by the assessee; and that the Ld. CIT (A) has erred in admitting additional evidence which was not filed before the Assessing Officer, even though adequate opportunity was afforded by the Assessing Officer to the assessee. 4. The ld. Counsel for the assessee, on the other hand, has refuted the above objection on behalf of the department, contending that the Ld. CIT (A) has duly taken into consideration the fact that proper and sufficient opportunity was not provided by the Assessing Officer to the assessee for compliance of order sheet noting dated 24.12.2007; that the Assessing Officer had erred in passing the ex parte assessment order; and that the additional evidence was correctly admitted by the Ld. CIT (A) in the absence of proper and adequate opportunity having been provided to the assessee in the assessment proceedings. 5. In this regard, as available from the impugned order, during the assessment proceedings, vide order sheet entry dated 24.12.2007, the Assessing Officer specifically asked the assessee to justify incurrence of certain expenses and also to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within the purview of rule 46A (1) of the Income Tax Rules. A perusal of the reply dated December 31, 2007 and the evidences enclosed therewith show that all these documents and evidences were necessary for the ld. A.O. to adjudicate the issues on which additions to the income of the appellant was made. Hence, to decide the present appeal the additional evidences adduced by the appellant needs to be admitted on account of the reasons that the assessee could not produce these documents before the ld. A.O. for the only reason that the queries were raised by the ld. A.O. vide order sheet dated December 24, 2007 and sufficient time and opportunity was not provided to it to comply with the same, while the assessment order was passed on December 27, 2007. An opportunity was given to the ld. A.O. to comment on the documents as well as on the merits of the addition made in the assessment order. As required, in accordance with the rule 46A of the Income Tax Rules was made, a remand report was received which reiterated the points made in the assessment order. The same has also been considered. In view of the present facts, and the principle of natural justice which requires nobody should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sector; that thus, the objects of, as well as the activities carried on by the assessee society were for the benefit of the society at large and particularly for the oil and gas industry and so, they were in the national interest of policy making on the energy sector; that these activities were not carried out for earning of profit, or for conferring benefit to any member of the assessee society, but were in the nature of advancement of an object of general public utility; that in terms of its objects, the assessee society promotes the interest of the petroleum industry in line with public/national policies and it also helps in resolution of issues and facilitates evolution of hydrocarbon related policies, and regulations and their implementation; that therefore, the activities of the assessee, in relation to seminars and studies conducted during the year, promoted the objects for which the assessee society was created; and that so, the assessee, being an organization involved in charitable purposes, was entitled for exemption u/s 11 read with Section 2 (15) of the Act. 12. Apropos the payments made by the assessee to its members, the Ld. CIT (A) observed that the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities of public importance and utility in the area of use of oil, petroleum and natural gases, as under:- i) It has organized its first overseas delegation to Global Peak Oil Gathering at Koblenz, Germany in October 2004 where the assessee had made a presentation on Energy situation policy of India. ii) It has also organized seminars, conferences, workshops, training programmes and lectures and brought out publications. It has promoted energy conservation, health, safety and environment and helps to optimize resource utilization of members. iii) Besides the above, the assessee has given industry recommendations to Ministry of Petroleum and Natural Gas (MoP NG) on the constitution of Petroleum and Natural Gas Technical Authority, rendered suggestions/comments to MoP NG on the draft policy for development of Natural Gas Pipeline Networks, launched a series of learning and education workshops beginning with one on Indian global emerging practices in Exploration and Production (E P) Accounting. iv) It has undertaken a study on LPG Subsidy Administration and Marketing for presentation to Government in association with Indian Institute of Management, Ahmedabad. v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r member of the assessee society. The assessee society advances an object of general public utility in the petroleum sector by acting as an interface between the Government, the industry and the consumers and by bringing them together to frame policies and to impart learning for advancement in the sector to bring fiscal reform. In this regard, the Ld. CIT (A) has correctly applied the decision in 'CIT vs. Gujarat Maritime Board', 295 ITR 561 (SC). In that case, it was held that it cannot be said that a purpose would cease to be charitable even if public welfare is intended to be served; that if the primary purpose and the predominant object are to promote the welfare of the general public, the purpose would be a charitable purpose; and that when an object is to promote or protect the interest of a particular trade or industry, that object becomes an object of public utility. 16. Apropos the payment made by the assessee to its members, the position is that the assessee made payment of Rs. 36,42,000/- to M/s PriceWater House Coopers for conducting study on oil and gas industry on the issues of 'Fuelling India's Growth' and 'VAT on Petroleum Products'. The Assessing Officer was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the PwC are reasonable on the fact that the work done by the PwC for conducting the studies in relation to Fuelling India Growth and VAT on LPG were large assignments involving time and professional expertise. The A.O. has also not been able to discharge his onus to bring on record that the payments made to the members are unreasonable or in excess. Further, the A.O. has also failed to discharge his onus to prove that the activities done by the society are not for public utility. The studies published are now available in public domain and is not only educative but also a useful publication for policymakers as well as industry. Further, it is available to be used for the academic research in the field of the oil and gas industry. The reasonableness of the payments is also justified inview of the explanation of the appellant that the above payments have ben made after the proper scrutiny of proposal and need of such study approved by the board in accordance with budget sanction in this regard. It is also important to note during the course of appellate proceedings, my predecessor had raised a specific query on the reasonableness of the payments where the appellant had demonstrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations, etc., disseminated in the nature of education and utilized by it for drawing up strategies for Government and statutory bodies for enhancing distribution and marketing of LPG and auto LPG as a utility to the general public. As such, the membership was required for attaining the objects of the assessee society. So far as regards the payment received by the assessee during World LPG Association, this amount was towards membership fee and did not quality to be a foreign contribution. 19. A seminar on E P Accounting was conducted jointly by the assessee and PwC on 05.11.2004 at BPCL Training Centre, Mumbai. This seminar was devoted to enhancing education on the subject of E P Accounting in India, a matter of public interest. The cost was shared by the assessee and PwC. The assessee made payment of Rs. 2,86,328/- to PwC. Another amount of Rs. 89,850/- was paid by the assessee to BPCL towards the cost of facilities, utilities, lunch, tea and snacks. The Assessing Officer observed that there was no justification for the payment so made. The CIT (A) held: "6.10 Similarly, with regard to the payments made to IOC and BPCL for rent and conference charges paid for conducting the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was Rs. 50 per sq. ft. per month. The comparison shows that the payment was reasonable. The assessee had also furnished a copy of lease agreement showing rent in the area of Siri Fort Institutional Area. There, the rent charged was of Rs. 120 per sq. ft. per month. Moreover, IOC is a Public Sector Undertaking, wherein the Government of India has substantial equity and it has not been shown that the rent paid by the assessee to IOC was excessive. 23. Another amount of Rs. 21,000/- was paid by the assessee to IOC for conducting guest lectures. This was questioned by the Assessing Officer and found to be reasonable by the Ld. CIT (A). 24. Here again, the assessee had duly furnished supporting documents before the Ld. CIT (A), showing that the payment was less than the charges of other conference halls like under the Habitat Centre and Scope Complex. A copy of charge list of Scope Complex was filed. There, charges for seminar hall of the Scope Tower varied from Rs. 4,000/- to Rs. 25,000/-. The payment made by the assessee to IOC was, as such, evidently, less. 25. Then, as correctly observed by the Ld. CIT (A), the Assessing Officer had erred in observing that the payments were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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