Mahavir Singh, Member (J) -
(1.) BOTH appeals by assessee are arising out of the order of CIT(A) -XIV in appeals Nos. 348, 847/CIT[A)(XIV/Kol/2010 -11/2011 -12, Dt. 7th Sept., 2012 and 9th Aug., 2012. Assessments were framed by ITO (Exemption -I). Kolkata under s. 143(3) of the IT Act, 1961 (hereinafter referred to as 'the Act') vide his orders Dt. 23rd Dec, 2010 and 9th Dec, 2011 for the asst. yrs. 2008 -09 and 2009 -10, respectively.
First ITA No. 1491/Kol/2012 of assessee's appeal for asst yr. 2008 -09
Only issue in this appeal of assessee is against the order of CIT(A) in confirming the action of AO in denial of exemption under s. 11 of the Act. For this assessee has raised following ground Nos. 1 to 7:
"1. That on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in confirming the denial of exemption under s. 11 of the IT Act, 1961 failing to observe that on the same provisions of law and on the same facts such exemption was consistently allowed to the appellant since the asst. yr. 1984 -85.
2.THAT on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in confirming the allegation of the learned AO that the appellant's activities of conducting the environment management centers, meetings, conferences and seminars and the Issuance of certificate of origin were all in the nature of business carried on systematically and continuously with a motive to earn profit from the same.
That on the facts and the circumstances of the case of the appellant and in law, the learned CIT(A) erred in holding that decision of the Hon'ble Delhi High Court, Dt. 19th Sept.. 2011 in the case of Director of IT (Exemptions) v. ICAI and The ICAI & Anr. v. Director of General IT (Exemptions) & Ors. in Writ Petition 1927 of 2010 are not applicable to the case of the appellant inasmuch the facts of the said case are different from the case of the appellant.
3.THAT on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in holding that the appellant's activities of conducting the environment management centers, meetings, conferences and seminars and the issuance of certificate of origin were not incidental to the main object of the appellant which was charitable in nature.
4.THAT on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in holding that the learned AO was right in invoking s. 11(4A) of the Act and in thus denying exemption under s. 11 of the Act. That on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in holding that the reliance placed by the learned AO on the decision of the Hon'ble Supreme Court in the appellant's own case viz. Indian Chamber of Commerce v. CIT : 1975 CTR (SC) 271 : (1975) 101 ITR 796 (SC) was justified as the appellant did not get the said judgment reversed by filing a review petition before the Hon'ble Supreme Court.
5.THAT on the facts and the circumstances of the case of the appellant the learned CIT(A) erred in holding that decision of the Hon'ble Supreme Court vide its Constitutional Bench, in a five -Judges Bench, by a majority of 4 to 1, in Addl. CIT v. Swat Art Silk Cloth Manufacturers Association : (1979) 13 CTR (SC) 378 : (1980)121 ITR 1 (SC) and the majority decision of the Larger Bench in the case of CIT v. Federation of Indian Chambers of Commerce & Industry : (1981) 22 CTR (SC) 124 : (1981) 130 ITR 186 (SC) was not applicable to the case of the appellant in view of the substantial change of law, due to substitution of sub -s. (4A) as it had come into effect w.e.f. 1st April, 1992 and which was thus not considered by the Supreme Court in the said decisions."
(2.) Brief facts relating to the issue are that the assessee association The Indian Chamber of Commerce' (in short ICC) being assessee company is an association of various industrialists formed in the year 1925 for development of trade, industries and commerce. The membership of the chamber comprises several largest corporate groups in the country, with operations all over country and abroad. It is a non -profit company incorporated under s. 25 of the Companies Act, 1956 without share capital and does not distribute any dividends to its members and also its entire receipt being expended for fulfilment of its objects. It was claimed that assessee association being set up for the purpose of promotion and protection of Indian business and industry is registered under s. 12A of the Act as charitable" association. The main objects for which the association came into existence are set out in cl. 3 of the memorandum of Association which reads as under:
"3(a) To promote and protect the trade, commerce and industries and in particular the trade, commerce and industries in or with which Indians are engaged or concerned."
It was further claimed that the objects of advancement of trade and commerce, being objects for "advancement of any other general public utility", the assessee is falling within the ambit of definition of "charitable purpose" as laid out under s. 2(15) of the Act. Accordingly, it claimed exemption from income arising out of its activities under the provisions of s. 11 of the Act.
(3.) The assessee filed its return of income for the year under consideration i.e. asst. yr. 2008 -09 being a charitable institution eligible for exemption under s. 11 of the Act on 13th Oct., 2008 declaring nil total income. During assessment proceedings, AO noted that certain activities of the assessee were clearly in the nature of business activities and thus issued a show -cause notice, as to why the following receipts credited in the income and expenditure account were not to be treated as in the nature of business receipts:
"Environment Management Centre (including sponsorship of Rs. 44,63.456 Rs. 33,37,328)
Meeting, conference & seminars (including sponsorship Rs. 5,95,65,340 Rs. 5,44.59,193)
Fees for certificate of origin Rs. 28,96,925"
According to AO, assessee had violated the provisions of s. 11(4A) of the Act, since the activities were in the nature of trading and business and separate books of accounts were purportedly not maintained. The assessee explained that the above activities were not in the nature of trade or business and same were all conducted for the empowerment, betterment and for creating awareness amongst industrialists in order to bring about development of trade and industries in India. But AO objected to exemption claimed by assessee under s. 11 of the Act and assessed total income by disallowing claim vide assessment order under s. 143(3) of the Act, Dt. 23rd Dec, 2010. The AO stated that the activities incidental to the main object, being reflected above, were all in the nature of business and formed predominant activities, since there was no separation of such business activities inasmuch as no separate books of account were maintained in respect of such business in terms of s. 11(4A) of the Act. The AO held that assessee had thus violated provisions of s. 11(4A) of the Act. The AO relied on the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Indian Chamber of Commerce : (1971) 81 ITR 147 (Cal). and held that the assessee was earning income from business and was not engaged in activities for charitable purposes under s. 11 r/w s. 2(15) of the Act. The AO finally concluded as under:
"Business activities are the predominant activities of the assessee. But there is no separation of business activities. Hence, ss. 11 and 12 of the IT Act. 1961 ceased to operate in assessee's own case. There is no altruism in thought and action, which are against mens legis. On the basis of materials gathered above, the income of the assessee is to be calculated in normal commercial manner."
Accordingly, AO assessed excess of gross receipts over expenses as total income. Aggrieved, assessee preferred appeal before CIT(A).;