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TMI Blog1998 (9) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or in cooperation with others. The assessee is registered u/s 12A of the Income-tax Act. In this background the assessee filed its return of income at Nil. The Assessing Officer noted that out of its total receipts, receipts to the tune of ₹ 4,76,80,230 pertained to a trade fair/exhibition organised by the assessee called IMTEX-92 at Pragati Maidan, New Delhi, in March 1992. He noted that 86.29% of the total receipts of the assessee were from organising this trade fair. He also noted that the net surplus earned by the assessee was ₹ 1,72,15,212 from IMTEX-92. He observed that these were the profits earned by the assessee from the activity which is business activity and not incidental to the attainment of the objects of the assessee association. After taking into account the explanation given by the assessee before him claiming that this income was not taxable, the Assessing Officer discussed in detail the activities of the assessee in organising this trade fair and after taking into account a good number of decided cases of the Hon'ble Supreme Court and the meaning of the word "incidental" occurring in section 11(4A) and after taking into account the expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and hence this is final. Therefore, according to Shri Dastur, the assessee would succeed if it is accepted that the profits/surplus from IMTEX-92 was not profit from business. If this is not accepted, the assessee would still succeed if it proves that it had maintained separate accounts for that business. 4. Regarding its being business, the learned counsel referred to the Memorandum of Association, a copy of which has been filed before us, and pointed out the ancillary objects, which we have already mentioned above, include holding of trade fairs and exhibitions. He submitted that as mentioned in items 12 and 14 of those objectives, the holding of exhibition and trade fairs was to encourage knowledge pertaining to the various manufacturers and traders, etc., for the protection of whose interests the association had been formed. The learned counsel drew our attention to the decision of the Tribunal in the case of Plastindia Foundation v. ADI (IT Exemption) [IT Appeal No. 5523 (Bom.) of 1994 dated 31-5-1993] for the assessment year 1990-91, a copy of which has been filed before us. He explained that although that decision was in respect of the assessment year 1990-91, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He stated that for exhibition, there is a separate ledger account maintained for each and every item. He filed copies of these ledger accounts before us. He referred to the balance sheet of the assessee, copy of which has been filed before us showing that Schedule-10 showed the expenses and Schedule-6 showed the receipts and income. He stated that for each of these items given in the Schedule, there is a separate account in the assessee's books, i.e. regarding rent, sale of passes, telephone expenses, etc. In this way, according to the learned counsel, this would show that in the assessee's accounts there are separate ledger accounts for income and expenses of IMTEX-92. He argued that we have to consider the intendment behind the words in the sub-section, which would mean "separate accounts" and not "separate books of account". He claimed that the Assessing Officer had found no difficulty in determining the profit, which had been determined upto the last Rupee. He argued that the machinery provision should be interpreted to further the main purpose and not to defeat it. In this context he referred to the decision in the case of CIT v. Sitaram Bhagwandas [1976] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintained by such trust or institution in respect of such business". According to the learned DR, it was essential that the assessee must have maintained separate books of account for the IMTEX-92 and not merely that its profits and expenditure could be found out from the common books of account maintained by it. Regarding the arguments of Shri Dastur, he referred to the observations in an English case which have been cited with approval on page 54 of 121 ITR by Their Lordships of the Supreme Court while concluding their decision in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1/[1979] 2 Taxman 501 . It reads :- ". . . in a taxing Act one has to look merely at what is clearly said. There is no room for intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." And again on the same page, while again quoting with approval from another English decision of House of Lords which dealt with the "Harsh consequences of a taxing provision" it was quoted as under :- ". . . If the meaning of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit that is or may be regarded as a part or by itself". Even as a verb, it means to divide, to part, and in this background, when the accounts of IMTEX-92 were kept in the same books, it could not be said that the assessee had kept separate accounts, much less separate books of account. Dealing with the case of Kartar Singh (supra ) cited by the learned counsel for the assessee, he explained that what was considered there was books of an assessee and whether any memorandum was part of the books of the assessee and it was held that it was part of the books, but in the instant case, the question to be considered was whether the assessee has maintained separate books of account for such business. 7. Coming to the first ground, as to whether IMTEX-92 constituted business, he referred to pages 3 to 9 of the assessment order and submitted that the order showed that the assessee had been holding the exhibitions almost every alternate year. In particular, he referred to page 4 of the assessment order where the Assessing Officer had specifically mentioned this fact and this fact had not been disputed by the assessee at any stage. He drew our attention to the details regarding the tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved: "This error is obvious." He emphasised that for this purpose also, it was necessary that the assessee had maintained separate books of account for such business. He submitted that the learned CIT(A) had held that holding IMTEX-92 amounted to business. He also referred to section 2(13) of the Income-tax Act defining "Business" and pointed out that it includes trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. According to him, as per this definition and a large number of decided cases, an assessee carried on business if it carried on an organised activity on a regular basis. He submitted that in the instant case, the assessee's balance sheet showed that whereas the assessee's receipt from membership was only ₹ 4.61 lakhs and from miscellaneous receipts ₹ 71.15 lakhs, from exhibition it was ₹ 4.76 crores. This shows that the major activity of the assessee was organising the exhibitions almost every alternate year with a view to earning profits. Regarding the case of Thanthi Trust (supra), it is stated that the issue in this case was in connection with the provisions of section 13(1)(bb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olate" is taken, he submitted that in the assessee's case, the profits from the exhibition had been isolated and this would mean separate books of account had been maintained. Regarding the case of Prabodhan Prakashan (supra) referred to by the learned DR, he pointed out that in that case the donations were made for the corpus. Moreover, the assessee itself had accepted that it was carrying on business and hence had claimed set-off of earlier losses which the Tribunal had allowed. He submitted that various other case law cited by the learned DR was to determine whether the purpose of those institutions was charitable or not, in the case of the assessee it could not be disputed that its purpose was charitable. 9. We have carefully considered the rival submissions, the material on record and the detailed arguments given by the Assessing Officer and the learned CIT(A) in their respective orders. In our opinion, no useful purpose would be served by reproducing the arguments on the issue as to whether the purpose of the assessee is charitable or not. It cannot be denied that the purpose for which the assessee-association was formed was for the general benefit of various types of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus which it has got from this exhibition itself, i.e., IMTEX -92, shows that it had been organised, with the past experience, to collect substantial amount of money. This would show that these were not the activities run on 'no profit no loss basis' or only on the basis of earning marginal profits, which was considered by the Hon'ble Supreme Court in the case of Indian Chamber of Commerce (supra). For these reasons and for the detailed reasons given by the learned Assessing Officer and the learned CIT(A) in their respective orders, we are unable to agree with the arguments of the learned counsel for the assessee that the surplus/profits and gains from the IMTEX-92 were not profits of business. In our opinion, since it was a well-organised and regular activity for earning surplus almost every alternate year, the profits and gains arising from this have to be held as being profits and gains of business. 10. As rightly pointed out by the learned counsel for the assessee, the learned CIT(A) has held that this business was incidental to the attainment of the objects of the trust and this finding has not been challenged by the revenue. This leads us to decide the issue, and the mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has "maintained separate books of account in respect of such business". In our opinion, if the interpretation of these provisions, as argued by Shri Dastur, was what the Legislature intended them to mean, it could have simply written that the assessee has accounted for such business in its books of account. It was not necessary to use the words "separate books of account" and only the word "accounts" could have been sufficient and then "in respect of such business" should not have been necessary and merely "should have maintained accounts" should have sufficed. Secondly, we find no ambiguity in the expression "and separate books of account are maintained by such trust or institution in respect of such business". In such a situation it becomes unnecessary to try to give a liberal interpretation or an interpretation which is beneficial to the assessee, etc. Since the words and expressions are very clear, they have to be interpreted as such and we cannot go behind the clear words of the statute to find out whether the ordinary or the popular meaning of the words of the statute is reasonable or not, or their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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