In a major relief to the Indian Chamber of Commerce ( ICC ), the Kolkata Bench of the Income Tax Appellate Tribunal ( ITAT ) granted income tax exemption on receipts from seminars and conferences.
The assessee claimed exemption under Section 11 of the Income Tax Act thereby claiming exemption of income arising out its activities on the ground that trust i.e. the assessee company was not involved in carrying out any activities in the nature of rendering service in relation to trade, commerce and industry for cess or fee or any other consideration.
The AO during the course of assessment proceedings observed that the activities of the trust are hit by proviso to section 2(15) read with Section 13(8) of the Income Tax Act and therefore the exemption under Section 11 of the Income Tax Act would not be available to the assessee as the activities of organizing meetings, conferences and various seminars constituted business activity and also the fact that the receipt of assessee from these activities exceeded Rs. 25 lakhs in terms of proviso to Section 2(15) of the Income Tax Act.
The counsel for the assessee contended that the assessee has only organized meetings, seminars and conferences on particular subject matter which is required to be discussed for awareness amongst the organizations on the topics/subject matter of the meetings, seminars which are MSME amendments, foreign trade policy and others. The A.R submitted that the assessee has not received any rental income or any other consideration for letting out or to advertise the businesses of the organizations participating in the meetings, seminars or conferences.
The A.R submitted while summarizing the arguments that it is evident that the sole object of organizing meetings, seminars and conferences is to promote the trade, commerce and industry and does not involve any activity or services of the nature of business. Therefore, the activities of the assessee in holding meetings, seminars cannot be treated as commercial activity.
The Departmental Representative on the other hand relied heavily on the order of Ld. CIT( A ) and submitted that the activities of the ICC are in the nature of business or commerce as the ICC has been charging in the form of sponsorships for organizing the meetings, seminars and conferences and therefore constitute business activities specially post introduction of proviso to Section 2(15) of the Income Tax Act.
A Two-Member Bench comprising Rajpal Yadav, Vice-President ( KZ ) and Rajesh Kumar, Accountant Member observed that “We are inclined to hold that the ICC is not carrying on any activity of holding meetings, seminars and conferences for business purpose but only in support its main object and it charges from its participants, members and non-members the amount of fee which does not even covers the cost of holding such events. In our opinion, the decision is squarely applicable to the facts of the case and in view of that the ICC is entitled to exemption under Section 11 of the Income Tax Act as the activities of the advancement of main object is not hit by the proviso to Section 2(15) of the Income Tax Act even post amendments.”
“Accordingly we are inclined to hold that the rule of consistency has to be applied. Pertinent to state that revenue authorities have failed to adhere to the principle of judicial discipline in following the decision of the Tribunal while adjudicating the case of the assessee. In our considered view the assessee is eligible and entitled to claim exemption under Section 11 of the Income Tax Act in respect of its entire receipts. Therefore for this reason alone the order of the CIT( A ) has to be and cannot be sustained” the Tribunal noted.
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