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TMI Blog2024 (7) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... at specific detail of objects for which the surplus was accumulated is not specified in the form no. 10 filed by the assessee - CIT(A) held that assessee trust has accumulated the surplus for the purpose specified in the trust deed. In this regard, CIT(A) has also discussed Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [ 2018 (10) TMI 995 - GUJARAT HIGH COURT ] wherein it is held that lack of declaration in the form no. 10 regarding specific purpose for which funds were be accumulated by the assessee trust would not be fatal to the exemption claimed u/s 11(2). Further the Hon ble Supreme Court has dismissed the SLP filed against the aforesaid decision of the Hon ble High Court [ 2019 (4) TMI 843 - SC ORDER ] We have also perused the copy of Board Resolution dated 18.08.2015 filed at the appellate proceedings as per which the surplus is accumulated for the specified purposes in accordance with the provision of Sec. 11 sub-section (2) of the Act. Claim of prior period of expenditure - CIT(A) held that assessee is entitled to the benefit of Sec.11 and all the expenditure were incurred by the assessee towards the object of trust. AO has not brought any contrary material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the assessee trust is not liable to pay taxes on the surplus generated from its commercial activities, akin to any other entity engaged in such commercial activity? 5. Whether on the facts and circumstances of the case and in law and in light of the law laid down by Hon'ble Supreme Court in Civil Appeal No. 21762 of 2017 in various batch of appeal and SLP's [lead case ACIT (Exemptions) Vs. Ahmedabad Urban Development Authority [2022] 143 taxmnn.com 278(SC)], the Ld.CIT (A) erred in not appreciating that even if the activities of the assessee are held to be covered under residuary part of section 2(15) as advancement of any other object of general public utility even then it is not entitled to exemption u/s 11 because it is hit by the proviso to section 2(15) as the income of the assessee consists of activities which are in the nature of trade, commerce or business? 6. Whether, on the facts and in the circumstances of the case and in law the Ld. CIT(A) is right in allowing the accumulation of Income u/s 11(2) of the Act without appreciating the fact that the purpose for which the income is being accumulated should not be vague and ambiguous and should be spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintain, increase and promote the export of gem and jewellery including pearls, coloured gemstones, diamonds, synthetic stones, costume (fashion) jewellery, gold and other precious metal jewellery and articles thereof by such methods as may be necessary or expedient. One manner of achieving such object is to conduct trade fairs where predominantly members of GJEPC participate. GJEPC is a charitable organization registered under section 12A of the Income Tax Act, 1961 since 1976 and has carried out its activities strictly in conformity with its objects. GJEPC is carrying on its activities in accordance with the directives from Ministry of Commerce, Government of India, which include organizing trade, Fairs, training, certification, Publication etc. All these activities of GJEPC have been and are in furtherance of/incidental to its charitable objects. Further, no part of the surplus is distributed as profit to any member of GJEPC and the entire surplus is utilized for the furtherance of its objects. The Exhibitions and seminars are organized in accordance with the objects of GJEPC for the benefit of trade and commerce without intention to earn profits. The surplus/deficit arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment to Sec. 2(15) of the Act, therefore, it is not entitled to exemption u/s 11 of the Act and the entire income of the assessee of Rs. 26,60,40,201/- is treated as income of the assessee and not entitled for any deduction on account of application u/s 11 of the Act. 9. Without prejudice to the above the AO further stated that the assessee has filled in form 10 an amount of Rs. 147,59,65,358/- mentioning for the purpose for the object of the trust which was general in nature. The AO also stated that section (2) of Sec. 11 of the Act specified the following conditions: o Application is made in Form No. 10 stating purpose, period of accumulation o Purpose should not be vague and ambiguous and should be specific o Money so accumulated need to be invested deposited in modes specified in section 11 (5) o Application is required to be filed before due date of filing return of income under section 139 (1) The assessee has not specified the need of accumulation of un-utilised amount, therefore, the claim of accumulation u/s 11(2) was disallowed. 10. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has allowed the claim of the assessee after following the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred by the ld. Counsel wherein vide ITA No. 752/Mum/2017 and ITA No. 989/Mum/2019 and ITA No. 2250/Mum/2019 for AY 2012-13 to 2014-15, the similar issue on identical fact has been decided in favour of the assessee. The relevant extract of the decision of the ITAT as incorporated in the finding of the ld. CIT(A) is reproduced as under: Ground No.1, 2 and 3:- All the above three grounds are related to the denial of exemption u/s 11 of the IT Act and addition of Rs. 26,60,40,200/-. This issue was in appeal during earlier Assessment Years also. The assessee claimed its activity to be charitable and claimed benefit of section 11 of the IT Act. The Assessing Officer referred to the amendment to the definition of charitable purpose to section 2(15) of the IT Act with effect from 01.04.2009 where in it is prescribed that advancement of any other object of general public utility shall not be a charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce or business irrespective of the nature of use or application of income from such activity. The Assessing Officer after considering the submissions and facts on record held that the assessee has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titative limit prescribed by the amended provision. The relevant paragraphs of the order of the Hon'ble Supreme Court (supra) are reproduced as under for ready reference. 170. Classically, the idea of charity was tied up with eleemosynary. However, charitable purpose and charity as defined in the Act have a wider meaning where it is the object of the institution which is in focus Thus, the idea of providing services or goods at no consideration, cost or nominal consideration is not confined to the provision of services or goods without charging anything or charging a token or nominal amount. This is spelt out in Indian Chamber of Commerce (supra) where this Court held that certain GPUs can render services to the public with the condition that they would not charge more than is actually needed for the rendering of the services, - may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables, may be a little surplus is left over at the end of the year - the broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit. 171 Therefore, pure charity in the sense that the performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further claimed expenditure on advertisement for exhibition amounting to Rs. 1,78,37,641/- Thus, we find that in the year under consideration there is net loss of Rs. 1,60,55,079/- from the activity of exhibitions conducted by the assessee within and outside India. In the immediately proceeding assessment year the expenses on exhibitions were of Rs. 77,09,23,044/- as compared to revenue or income of Rs. 70,79,56,744/-. The assessee has further incurred expenditure on advertisement for exhibitions and thus there was a net loss from the consideration charged by the assessee for conducting said exhibitions or trade fair. Details of exhibition revenue and expenses submitted by the assessee for assessment year 2011-12 to 2015-16 is reproduced as under. 5.20 Thus, in the instant case it is evident that assessee has charged fee or consideration for conducting exhibitions or trade fair is slightly below the cost. The Hon'ble Supreme Court in the case of AEPC has held that activity of renting space to individual exhibitors or exporters in the exhibition or trade fair is a service in relation to trade commerce or business, but in the instant case, there being no markup on considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of income u/s 11(2) of the IT act. The AO concluded in his order that furnishing form-10 is not a formality but require precise details of the proposed projects and should not be reduce to a formality by merely reproducing the objects and denied the accumulation of u/s 11(2) of the IT Act. Against such conclusion of the AO, the assessee submitted that accumulated income u/s 11(2) for specified purpose and the same has been spent in subsequent financial years for the purpose for which said funds has been accumulated i.e towards the objects of the Trust It was further submitted that once the assessee has accumulated income with a specific purpose and such purpose is specified in the main objects of the trust, then the Assessing Officer cannot deny such accumulation of income merely for the reason that purpose specified in Form 10 is vague and general in nature. As long as objects of the Trust provide for such purpose, then the assessee can accumulate funds for the purpose which is specified in trust deed. Further the assessee submitted that this view is fortified by the decision of Hon'ble Gujrat High Court in the case of CIT (Exemption) v. Bochasanwasi Shri Akshar Purshottam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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