The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that the activity of organizing events or seminars by Trust by charging high amount of fee from the corporates cannot be treated as charitable in nature.
The Assessing Officer noted that the assessee-Trust organizes events/seminars which are open to non-members and are chargeable. Since the amounts being charged are fairly high, the AO concluded that the income of Rs.4,53,50,303/- shown by the trust from the activity of organizing seminars is a commercial, non-charitable activity.
The assessee contended that the activities are charitable in nature. On appeal, the CIT(A) confirmed the assessment order.
On second appeal, the Tribunal noted that good amount of fees is also being charged to non-members. Huge sponsorship money is collected from corporate bodies in lieu of advertisement and other services provided to them.
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The Tribunal said that the nature of the activity of the said seminars and workshop was not at all accepted as an educational activity.
Upholding the orders of the lower authorities, the Tribunal held that “It is settled law that before one submits to the rule of precedence, the fact of the case has to be taken into account. The assessee has contended that none of its activities are carried out with an object or any motive to earn profit or surplus. That the earning of revenue is only incidental to the predominant object of providing education and skill development to the entrepreneurs. However, we find that this submission is quite in contradiction to the fact that the assessee is charging huge amounts for sponsorship fee from corporate against which it provides various types of advertisement services and free passes are also provided. These facts clearly also negate the assessee’s submission that donations obtained by way of advertisements are purely voluntary in nature and therefore, there is no element of quid pro quo. Making slabs for sponsorship fee and specifying the types of service against it are certainly for commercial gains with predominant objective to make profit. Hence, in our considered opinion, there is no infirmity in the orders of the authorities below.”
