THE GEM & JEWELLERY EXPORT PROMOTION COUNCIL,MUMBAI vs. ASST CIT (E) RG 2(1), MUMBAI

PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM

These three appeals by These three appeals by the assessee are directed against three directed against three separate orders dated separate orders dated 11/11/2016 ; 23/01/2019 and 26/02/2019 11/11/2016 ; 23/01/2019 and 26/02/2019 passed by the Ld. Commissioner of Income . Commissioner of Income-tax (Appeals) tax (Appeals)-1, Mumbai [in short ‘the Ld. CIT(Appeals) CIT(Appeals)’] for assessment year 2012 or assessment year 2012-13, 2013- 14 and 2014-15 respectively. As common ground 15 respectively. As common grounds are involved in these appeals, same were heard together and disposed off by way of these appeals, same were heard together and disposed off by way of these appeals, same were heard together and disposed off by way of this common order for convenience. on order for convenience.

The Appellant appeals against the impugned order dated The Appellant appeals against the impugned order dated The Appellant appeals against the impugned order dated 11.11.2016 passed by 11.11.2016 passed by the Commissioner of Income the Commissioner of Income-tax (Appeals)-1, Mumbai (the CIT(A)) (received by it on 1, Mumbai (the CIT(A)) (received by it on 1, Mumbai (the CIT(A)) (received by it on 12.12.2016), under section 253 of the Income 12.12.2016), under section 253 of the Income-tax Act (the tax Act (the Act), on the following amongst other grounds each of Act), on the following amongst other grounds each of Act), on the following amongst other grounds each of which is in the alternative and without prejudice to any which is in the alternative and without prejudice to any which is in the alternative and without prejudice to any others: 1. Whether the CIT(A) erred in upholding the Whether the CIT(A) erred in upholding the action of the learned Assessing Officer (AO) in action of the learned Assessing Officer (AO) in action of the learned Assessing Officer (AO) in denying the Appellant's claim for exemption under denying the Appellant's claim for exemption under denying the Appellant's claim for exemption under section 11 of the Act and thereby assessing it on a section 11 of the Act and thereby assessing it on a section 11 of the Act and thereby assessing it on a total income of Rs.21,78,74,270/ total income of Rs.21,78,74,270/-. 2

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assessee based on the fact that term deposits placed with the banks assessee based on the fact that term deposits placed wi assessee based on the fact that term deposits placed wi at the end of the year was of ₹33,20,71,475/- giving rise to interest at the end of the year was of giving rise to interest of ₹6,13,47,543/-. According to the Assessing Officer, the assessee . According to the Assessing Officer, the assessee . According to the Assessing Officer, the assessee was generating huge profit year after year from its activities. The was generating huge profit year after year from its activities was generating huge profit year after year from its activities learned Assessing Officer referred to amendment to the definition of Assessing Officer referred to amendment to the definition of Assessing Officer referred to amendment to the definition of charitable purpose to section 2(15) of charitable purpose to section 2(15) of Act with effect from with effect from 01/04/2009, wherein it is prescribed that advancement of any wherein it is prescribed that advancement of any wherein it is prescribed that advancement of any other object of the other object of the General Public Utility (GPU) (GPU) shall not be a charitable purpose if it involves the carrying on of any activity in the e purpose if it involves the carrying on of any activity in the e purpose if it involves the carrying on of any activity in the nature of trade, commerce or business, irrespective of the nature of nature of trade, commerce or business, irrespective of the nature of nature of trade, commerce or business, irrespective of the nature of use or application of the income from such activity. application of the income from such activity.

3.1 The Assessing Officer The Assessing Officer after considering submissions of the after considering submissions of the assessee, held that the assessee has been registered for the held that the assessee has been registered for the held that the assessee has been registered for the charitable purpose of advancement of any other object of general charitable purpose of advancement of any other object of general charitable purpose of advancement of any other object of general utility for promotion of utility for promotion of export of gems and Jewellery, therefore Jewellery, therefore, the activity of conducting exhibitions being in the nature of trade, activity of conducting exhibitions being in the nature of tr activity of conducting exhibitions being in the nature of tr commerce or business, the assessee is not entitled for exemption business, the assessee is not entitled for exemption business, the assessee is not entitled for exemption under section 11 of the under section 11 of the Act in view of section 13(8) of the 13(8) of the Act, which prescribe for such denial of benefit of exemption u/s 11 and 12 in prescribe for such denial of benefit of exemption u/s 11 and 12 in prescribe for such denial of benefit of exemption u/s 11 and 12 in case of assessee(s) hit by proviso to section 2( case of assessee(s) hit by proviso to section 2(15) of the Act. 15) of the Act. Accordingly, in the assessment order passed under section 143(3) of Accordingly, in the assessment order passed under section 143(3) of Accordingly, in the assessment order passed under section 143(3) of the Act on 28/03/2015, the Assessing Officer added the ct on 28/03/2015, the Assessing Officer added the ct on 28/03/2015, the Assessing Officer added the excess of income over expenditure amounting to income over expenditure amounting to ₹ 21, 78, 74, 270/ 21, 78, 74, 270/-to the

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total income of the assessee. The deficit c total income of the assessee. The deficit claimed by the assessee laimed by the assessee was accordingly rejected. was accordingly rejected.

3.2 The assessee preferred further appeal before the Ld. CIT(A) The assessee preferred further appeal before the Ld. CIT(A) The assessee preferred further appeal before the Ld. CIT(A) and filed detailed submissions, which have been summarised by the and filed detailed submissions, which have been summarised by the and filed detailed submissions, which have been summarised by the Ld. CIT(A) in the impugned order. After considering the submission Ld. CIT(A) in the impugned order. After considering the submission Ld. CIT(A) in the impugned order. After considering the submission of the assessee, the Ld. CIT(A) rejected those submissions and sessee, the Ld. CIT(A) rejected those submissions and sessee, the Ld. CIT(A) rejected those submissions and upheld the finding of the Assessing Officer in view of reasonings, upheld the finding of the Assessing Officer in view of reasonings upheld the finding of the Assessing Officer in view of reasonings firstly: revenue from operation of revenue from operation of conducting exhibition etc is of conducting exhibition etc is of ₹109.8 crore, which which constitute more than 77% of the constitute more than 77% of the total revenue during the year under consideration during the year under consideration, which is the reason of surplus , which is the reason of surplus as against claim that surplus was on account of membership fee, as against claim that surplus was on account of me as against claim that surplus was on account of me subscription etc., secondly secondly :Provisions of section 11 are applicable Provisions of section 11 are applicable to all companies including those registered under section 25 of the to all companies including those registered under sect to all companies including those registered under sect Companies Act including the organiz t including the organizations promoted by the ations promoted by the Government of India. overnment of India. The Ld. CIT(A) referred to the decision of the The Ld. CIT(A) referred to the decision of the Tribunal in the case of Indian Machines Tools Indian Machines Tools coordinate bench of T Manufacturers Association Manufacturers Association (supra)to conclude that to conclude that holding of an exhibition and generation of profit thereof would be regarded as a exhibition and generation of profit thereof would be regarded as a exhibition and generation of profit thereof would be regarded as a business activity in the case of a trade association. He further business activity in the case of a trade association. He further business activity in the case of a trade association. He further referred to the decision of the to the decision of the Tribunal in the case of ribunal in the case of Entertainment Society of Goa Vs CIT (2013) 23 ITR(Trib) 635 . Entertainment Society of Goa Vs CIT (2013) 23 ITR(Trib Entertainment Society of Goa Vs CIT (2013) 23 ITR(Trib He further held that t He further held that the registration under section 12 he registration under section 12A of the Act would not ipso facto ipso facto entitle the assessee for claim of exemption assessee for claim of exemption

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under section 11 of that unless conditions stipulated therein and under section 11 of that unless conditions stipulated therein and under section 11 of that unless conditions stipulated therein and other relevant provisions in this behalf are other relevant provisions in this behalf are fulfilled by the assessee. fulfilled by the assessee. The reliance placed by the assessee on the order of first appellate The reliance placed by the assessee on the order of first The reliance placed by the assessee on the order of first authority and the Tribunal for assessment year 2009 ribunal for assessment year 2009 ribunal for assessment year 2009-10 and 2010- 11 was not found to be relevant by him in view of the proviso to 11 was not found to be relevant by him in view of the proviso to 11 was not found to be relevant by him in view of the proviso to section 2(15) of the Act section 2(15) of the Act and rejected the plea of the assessee of of the assessee of application of rule of consistency. rule of consistency. The Ld. CIT(A) finally upheld the The Ld. CIT(A) finally upheld the action of the Assessing Officer for: action of the Assessing Officer for:

(i) disallowance of benefit under section 11 of the Act in disallowance of benefit under section 11 disallowance of benefit under section 11 respect of the income respect of the income including income from exhibition, income from exhibition, in view of express provision of section 13(8) of the act. view of express provision of section 13(8) of the act. view of express provision of section 13(8) of the act. (ii) denial of carryforward of deficitby in the year under denial of carryforward of deficitby in the year under denial of carryforward of deficitby in the year under consideration, holding that facts of the assessment year consideration, holding that facts of the assessment year consideration, holding that facts of the assessment year 2004-05, where the ITAT allowed such carryforward 05, where the ITAT allowed such carryforward 05, where the ITAT allowed such carryforward, are different

3.3 Aggrieved with denial of benefit of provisions of section 11 and Aggrieved with denial of benefit of provisions of section 11 and Aggrieved with denial of benefit of provisions of section 11 and carryforward of deficit, the assessee is before the carryforward of deficit, the assessee is before the Tribunal Tribunal by way of raising grounds as reproduced above. reproduced above.

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civil appeal No. 21762 of 2017 civil appeal No. 21762 of 2017. According to the ld . According to the ld. counsel of the assessee, firstly after the insertion of the proviso to section 2(15) of after the insertion of the proviso to section 2(15) of after the insertion of the proviso to section 2(15) of the Act, in assessment year 2009 ct, in assessment year 2009-10 and 2010-11 11 the Ld. CIT(A) allowed the benefit of exemption under section 11 and against allowed the benefit of exemption under section 11 and against allowed the benefit of exemption under section 11 and against which no appeal was preferred by the which no appeal was preferred by the Revenue and thus following evenue and thus following the rule of consistency, the the rule of consistency, the Revenue should be prohibited from evenue should be prohibited from raising the very same issue raising the very same issue in subsequent assessment subsequent assessment proceedings. Secondly, there is deficit in the activity of conducting exhibitions, deficit in the activity of conducting exhibitions, deficit in the activity of conducting exhibitions, thus, there being no profit motive there being no profit motive, it was not in the nature of trade, it was not in the nature of trade, commerce or business or commerce or business or activity of rendering services in relation to activity of rendering services in relation to trade, commerce or business and trade, commerce or business and thus the proviso to section 2(15) thus the proviso to section 2(15) of the Act is not attracted attracted in the case of the assessee. According to in the case of the assessee. According to learned Departmental Representative (DR), Departmental Representative (DR), however the case of the however the case of the assessee being identical to the assessee being identical to the facts of Apparel Export Promotion Apparel Export Promotion Council, (AEPC) before the Hon’ble Supreme Court in the batch of ore the Hon’ble Supreme Court in the batch of ore the Hon’ble Supreme Court in the batch of cases decided alongwith the Ahmedabad Urba cases decided alongwith the Ahmedabad Urban Development n Development authority (supra), the ratio of the finding of the Hon’ble Supreme the ratio of the finding of the Hon’ble Supreme the ratio of the finding of the Hon’ble Supreme Court is squarely applicable Court is squarely applicable over the facts of the instant case. the facts of the instant case.

4.1 The grounds raised by the assessee relate mainly to two The grounds raised by the assessee relate mainly to two The grounds raised by the assessee relate mainly to two issues. The first issue is denial of benefit under section 11 and 12 issues. The first issue is denial of benefit under section 11 and 12 issues. The first issue is denial of benefit under section 11 and 12 of the Act. The second issue relates to denial ct. The second issue relates to denial of carryforward of deficit.

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5.1. In this regard, the ld In this regard, the ld. consul of the assessee has brought our consul of the assessee has brought our attention to the historical background leading to establishing of the attention to the historical background leading to establishing attention to the historical background leading to establishing assessee organisation. Prior to the assessee came into existence, the assessee organisation. Prior to the assessee came into existence assessee organisation. Prior to the assessee came into existence role of promotion of the export of gems and jewellery products was role of promotion of the export of gems and jewellery products role of promotion of the export of gems and jewellery products with the Director General of Foreign with the Director General of Foreign Trade ( Trade (DGFT) i.e. an organisation under the control of Ministry of organisation under the control of Ministry of C Commerce and Industry, Government of India. As a part of export promotion, the overnment of India. As a part of export promotion, the overnment of India. As a part of export promotion, the trade exhibitions used to be conducted by the DGFT and said trade exhibitions used to be conducted by the DGFT and said trade exhibitions used to be conducted by the DGFT and said conducting of exhibitions by DGFT continued till the assessee came conducting of exhibitions by DGFT continued till the assessee came conducting of exhibitions by DGFT continued till the assessee came into existence in the year 1966. into existence in the year 1966.

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5.2 Further, the ld. d. counsel of assessee referred to copy of referred to copy of certificate of incorporation (PB certificate of incorporation (PB-13), according to which the company according to which the company i.e. the Gem and Jewellery ewellery Export Promotion Council (GJEPC) has romotion Council (GJEPC) has been incorporated under section 25 of the Companies Act, 1956 on been incorporated under section 25 of the Companies been incorporated under section 25 of the Companies 27/04/1966 as company limited by guarantee. In the memorandum 27/04/1966 as company limited by guarantee. In the memorandum 27/04/1966 as company limited by guarantee. In the memorandum of association (PB: 15 of association (PB: 15 -22) main objects (clause 3a (clause 3a); ancillary objects (clause 3b) and other objects (clause 3b) and other objects (clause 3c) have been mentioned. As per clause 3(a) mentioned. As per clause 3(a) of memorandum of association, main of memorandum of association, main objects of the assessee company include support, protect, maintain, objects of the assessee company include support, protect, maintain, objects of the assessee company include support, protect, maintain, increase and promote the expor increase and promote the exports of Gem and jewellery including ts of Gem and jewellery including pearls, pearls, pearls, coloured coloured coloured gemstone, gemstone, gemstone, diamonds, diamonds, diamonds, synthetic synthetic synthetic stone, stone, stone, costume(fashion) jewelry, gold and other precious metal jewelry and costume(fashion) jewelry, gold and other precious metal jewelry and costume(fashion) jewelry, gold and other precious metal jewelry and articles thereof by such methods as may be necessary or expedient. articles thereof by such methods as may be necessary or expedient. articles thereof by such methods as may be necessary or expedient. The clause 3b which contains anci The clause 3b which contains ancillary object include sending out llary object include sending out trade missions to foreign countries, to conduct propaganda trade missions to foreign countries, to conduct propaganda trade missions to foreign countries, to conduct propaganda regularly and continuously for bringing the advantage of trade and regularly and continuously for bringing the advantage of trade and regularly and continuously for bringing the advantage of trade and commerce with India in gems and jewellery to the notice of the commerce with India in gems and jewellery to the notice of the commerce with India in gems and jewellery to the notice of the dealers and the public in foreign dealers and the public in foreign countries. The clause 3c under the countries. The clause 3c under the other objects include purchase, hire or otherwise acquire and other objects include purchase, hire or otherwise acquire and other objects include purchase, hire or otherwise acquire and maintain suitable buildings, apartment, furniture and other fittings maintain suitable buildings, apartment, furniture and other fittings maintain suitable buildings, apartment, furniture and other fittings in any country for the establishment of showroom, Emporia or the in any country for the establishment of showroom, Emporia or the in any country for the establishment of showroom, Emporia or the agencies for publicity in agencies for publicity in regard to gems and jewellery for the regard to gems and jewellery for the purpose of achieving objects of the company; to convene purpose of achieving objects of the company; to convene purpose of achieving objects of the company; to convene conferences, seminars, workshops or other kinds of meeting at such conferences, seminars, workshops or other kinds of meeting at such conferences, seminars, workshops or other kinds of meeting at such

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place and such time time as considered desirable for furtherance of the s considered desirable for furtherance of the object of the company object of the company and to provide, set up, establish and manage provide, set up, establish and manage such infrastructural, institutional and administrative framework as such infrastructural, institutional and administrative framework as such infrastructural, institutional and administrative framework as may be necessary for achieving the objective the company. Clause 6 may be necessary for achieving the objective the company. Clause 6 may be necessary for achieving the objective the company. Clause 6 of the memorandum of association mandates that the income and of the memorandum of association mandates that the income and of the memorandum of association mandates that the income and property of the assessee shall be applied solely for the promotion of ssee shall be applied solely for the promotion of ssee shall be applied solely for the promotion of its objects and set forth therein, with a bar on distribution thereof its objects and set forth therein, with a bar on distribution thereof its objects and set forth therein, with a bar on distribution thereof by way of dividends, bonus or otherwise by way of profit. Lastly, by way of dividends, bonus or otherwise by way of profit. Lastly, by way of dividends, bonus or otherwise by way of profit. Lastly, clause 7 (seven) of the said memorandum of association mention of the said memorandum of association mention of the said memorandum of association mention that upon winding up or that upon winding up or dissolution of the assessee, assessee, there remains, after the satisfaction of all after the satisfaction of all debts and liabilities, any property and liabilities, any property whatsoever, the same shall not be distributed amongst its members whatsoever, the same shall not be distributed amongst its members whatsoever, the same shall not be distributed amongst its members but shall be transferred to such other company having objects be transferred to such other company having objects be transferred to such other company having objects similar to that of the assessee. similar to that of the assessee.

5.3 The Ld. Counsel of the assessee, he Ld. Counsel of the assessee, in the light of objects in the light of objects mentioned above brought to our attention that the activity brought to our attention that the activity of brought to our attention that the activity organising exhibitions and organising exhibitions and trade fairs is very much a part much a part of the general public utility (GPU) general public utility (GPU) activity of the assessee for which the activity of the assessee for which the assessee has been registered as charitable egistered as charitable institution institution. He referred to an annual feature of the EP(G &J) division in the Department of to an annual feature of the EP(G &J) division in the Department of to an annual feature of the EP(G &J) division in the Department of commerce, Ministry of commerce an commerce, Ministry of commerce and industry, government of d industry, government of India, which issues calendars for each year, wherein it approves the India, which issues calendars for each year, wherein it approves the India, which issues calendars for each year, wherein it approves the exhibitions for gems and jewellery product. The Ld. Counsel exhibitions for gems and jewellery product. The Ld. Counsel exhibitions for gems and jewellery product. The Ld. Counsel

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referred to copy of such approval for overseas exhibitions and referred to copy of such approval for overseas exhibitions and referred to copy of such approval for overseas exhibitions and domestic exhibitions placed at paperbo domestic exhibitions placed at paperbook pages 182 to 186 and 187 ok pages 182 to 186 and 187 to 203 respectively. A copy of such approval to 203 respectively. A copy of such approval of international of international exhibition and domestic exhibition available exhibition and domestic exhibition available on pages 185 to 186 on pages 185 to 186 and 187 is reproduced as under : and 187 is reproduced as under : International Exhibition International Exhibition : “F.No. 12/32/2011-EP(G&J) Government of India Ministry of Commerce & Industry Department of Commerce EP(G&J) Division

New Delhi, 13th December, 2011. New Delhi, 13 To 1. Shri Raiv Jain Chairman, Gem & Jewellery Export Promotion Council Gem & Jewellery Export Promotion Council Mumbai 2. Chairman-cum-Managing Director Managing Director MMTC Limited, New Delhi 3. Shri Nirmal Sinha Nirmal Sinha Chairman, HHEC of India Limited HHEC of India Limited NOIDA Subject: Calendar of Overseas Exhibitions for the year 2012. Subject: Calendar of Overseas Exhibitions for the year 2012. Sir, I am directed to inform that the following Calendar exhibitions in Gem & I am directed to inform that the following Calendar exhibitions in Gem & I am directed to inform that the following Calendar exhibitions in Gem & Jewellery Products has been approved by the Department of Commerce for the Jewellery Products has been approved by the Department of Jewellery Products has been approved by the Department of calendar year 2012: calendar year 2012:

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Month GJEPC MMTC HHEC January Vicenzaoro First 2012 Vicenzaoro First 2012 January 14 January 14-19, 2012, Vicenza Italy Vicenza Italy February 49 49th Bangkok Gems & Jewelry Fair 2012 Jewelry Fair 2012 February 9 February 9-13, 2012, Bangkok, Thailand Bangkok, Thailand Hong Hong Kong Kong Intl Intl Jewellery Show 2012 Jewellery Show 2012 February February 16-20, 16 2012, Hong Kong 2012, Hong Kong March Basel World 2012 Basel World 2012 March March 8-15, 8 2012, Basel, Switzerland Basel, Switzerland April April April 2012 2012 April 2012 Kuwait May Vicenzaoro Vicenzaoro Chanti Chanti Durban/Johannesburg, Durban/Johannesburg, 2012 2012 May May 19-23, 19 2012, Vicenza, 2012, Vicenza, Italy April/May April/May 2012 2012 Jeddah/Riyadh, Jeddah/Riyadh, Saudi Saudi Arabia June JCK Show Las Vegas JCK Show Las Vegas 2012 June 1 2012 June 1-4, 2012 Las Vegas, USA Las Vegas, USA July JA Show, New York JA Show, New York 2012 2012 29 29-31 July, 2012 New York, USA 2012 New York, USA August August/September Kuwait/Bahrain September 50 50th Bangkok Gems & Jewelry Show 2012 Jewelry Show 2012 September, September, 2012 2012 Bangkok, Thailand Bangkok, Thailand Vicenzaoro Vicenzaoro Choice Choice 2012 2012 September September 8-12, 8 2012, Vicenza Italy 2012, Vicenza Italy Hong Kong Jewellery Hong Kong Jewellery & & Gem Gem Fair Fair 2012 2012 September September 2012 2012 AWE/HKCEC, AWE/HKCEC, Hong Hong Kong Kong October October 2012 Singapore/Malaysia Novermber/ Jewellery Jewellery Arabia Arabia December 2012 2012 November, November, 2012, 2012, Manama, Manama, Bahrain 6 6th Indo China

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Diamond Buyer Seller Diamond Buyer Seller Meet 2012 Meet 2012 Nov/Dec Nov/Dec 2012 2012 (Tentative), (Tentative), Shenzhen/Shanghai Shenzhen/Shanghai China China Indo China Jewellery Indo China Jewellery buyer buyer Seller Seller Meet Meet 2012 2012 Nov/Dec Nov/Dec (Tentative), (Tentative), Beijing/Shanghai Beijing/Shanghai 2. Further assistance for grant under any scheme of Further assistance for grant under any scheme of Further assistance for grant under any scheme of Department of Commerce for participation in the above mentioned events is to be obtained Commerce for participation in the above mentioned events is to be obtained Commerce for participation in the above mentioned events is to be obtained separately as per the guidelines of such scheme. separately as per the guidelines of such scheme.” Domestic exhibition Domestic exhibition : “ F.No.12/10/2011-EP(G&J) Government of India Ministry of Commerce & Industry Department of Commerce EP(G&J) Division) Udyog Bhavan, New Delhi Udyog Bhavan, New Delhi Dated;17 March, 2011 Dated;17 March, 2011 To Director General, Directorate General of Inspection, Customs and Central Excise, Directorate General of Inspection, Customs and Central Excise, Directorate General of Inspection, Customs and Central Excise, Delhi Subject: India International Jewellery Show (IIJS) 2011, Mumbai (4-8 India International Jewellery Show (IIJS) 2011, Mumbai (4 India International Jewellery Show (IIJS) 2011, Mumbai (4 August, 2011) Sir, I am directed to state that Department of Commerce has approved the proposal of directed to state that Department of Commerce has approved the proposal of directed to state that Department of Commerce has approved the proposal of Gem & Jewellery Export Promotion Council (GJEPC) for organizing "India Show Gem & Jewellery Export Promotion Council (GJEPC) for organizing "India Show Gem & Jewellery Export Promotion Council (GJEPC) for organizing "India Show coinciding with the "India international Jewellery Show (IJS) 2011° from 4-8 coinciding with the "India international Jewellery Show (IJS) 2011° from 4 coinciding with the "India international Jewellery Show (IJS) 2011° from 4 August, 2011 at NSE August, 2011 at NSE Complex, Goregaon (East), Mumbai Goregaon (East), Mumbai

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5.5 It has been further submitted that i t has been further submitted that in the past, the assessee n the past, the assessee has been allowed claim for exemption under section 11 of the Act has been allowed claim for exemption under section 11 of has been allowed claim for exemption under section 11 of upto assessment year 2011 assessment year 2011-12 either by the ld. Assessing Officer or Assessing Officer or

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by the Ld. CIT(A) or by the by the Ld. CIT(A) or by the Tribunal as the case may be. ribunal as the case may be. After insertion of the provis insertion of the proviso below section 2(15) of the o below section 2(15) of the Act, for assessment year 2009 assessment year 2009-10 and 2010-11 the claim of the exemption 11 the claim of the exemption was denied by the ld. d. Assessing Officer, but it has been upheld by it has been upheld by the Ld. CIT(A) and no appeal has been preferred no appeal has been preferred by the Revenue by the Revenue to the Tribunal, Therefore, following the rule of consistency, the action , Therefore, following the rule of consistency, the action , Therefore, following the rule of consistency, the action of the assessing officer should be deleted. of the assessing officer should be deleted. For assessme For assessment year 2011-12, the return of income filed by the assessee was not selected 12, the return of income filed by the assessee was not selected 12, the return of income filed by the assessee was not selected for the scrutiny and thus claim of exemption under section has for the scrutiny and thus claim of exemption under section has for the scrutiny and thus claim of exemption under section has been accepted by the Department. been accepted by the Department.

5.6 We find that in AYs 2009 We find that in AYs 2009-10 and 2010-11, the Ld CIT(A) 11, the Ld CIT(A) allowed the claim of th allowed the claim of the assessee for exemption u/s 11 of the Act e assessee for exemption u/s 11 of the Act observing as under:

“4.2 I have carefully considered the facts of the case and I have carefully considered the facts of the case and I have carefully considered the facts of the case and submissions made by the appellant. I have also gone through submissions made by the appellant. I have also gone through submissions made by the appellant. I have also gone through the decisions relied on by the A.R. Respectfully" following the the decisions relied on by the A.R. Respectfully" following the the decisions relied on by the A.R. Respectfully" following the decisions of IT.A.T.; Bombay, in assessee's own case for A.Y. of IT.A.T.; Bombay, in assessee's own case for A.Y. of IT.A.T.; Bombay, in assessee's own case for A.Y. 2004-05to A.Y. 2008 05to A.Y. 2008-09 and the order of the Hon'ble High 09 and the order of the Hon'ble High Court in ITA (LOD) 1113 of 2010 dated 15 Court in ITA (LOD) 1113 of 2010 dated 15-2-2011,it is held that 2011,it is held that denying exemption us. 11 of the Act to the appellant denying exemption us. 11 of the Act to the appellant denying exemption us. 11 of the Act to the appellant is not justified. The AO, is a justified. The AO, is accordingly, directed to allow exemption to ccordingly, directed to allow exemption to the appellant u/s 11 of the Act. This ground of appeal is the appellant u/s 11 of the Act. This ground of appeal is the appellant u/s 11 of the Act. This ground of appeal is allowed.” 5.7 Against the order of the Ld CIT(A) Against the order of the Ld CIT(A) for AY 2009 for AY 2009-10 and 2010- 11, the Revenue did not , the Revenue did not prefer appeal before the ITAT on ground of appeal before the ITAT on ground of exemption allowed by the ld CIT(A), which is evident from the ed by the ld CIT(A), which is evident from the ed by the ld CIT(A), which is evident from the following grounds of appeal raised by the Revenue for appeal filed following grounds of appeal raised by the Revenue for appeal filed following grounds of appeal raised by the Revenue for appeal filed 16

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before the ITAT in ITA no. 5757/Mum/2015 for AY 2009 ITA no. 5757/Mum/2015 for AY 2009-10 and ITA no. 5757/Mum/2015 for AY 2009 ITA No. 5756/Mum/2015 ITA No. 5756/Mum/2015 for AY 2010-11:

“Grounds of appeal before ITAT by revenue in ITA No. of appeal before ITAT by revenue in ITA No. of appeal before ITAT by revenue in ITA No. 5757/Mum/2015 5757/Mum/2015 for AY 2009-10:

"Whether on the facts of the case and in law the ldCITCA) "Whether on the facts of the case and in law the ldCITCA) "Whether on the facts of the case and in law the ldCITCA) erred in allowing the appeal of the assessee on account of erred in allowing the appeal of the assessee on account of erred in allowing the appeal of the assessee on account of disallowing depreciation on fixed assets of Rs. 53,50,582/ disallowing depreciation on fixed assets of Rs. 53,50,582/ disallowing depreciation on fixed assets of Rs. 53,50,582/- in contravention of the decision of Escorts Ltd. Vs. UOI 199 ontravention of the decision of Escorts Ltd. Vs. UOI 199 ontravention of the decision of Escorts Ltd. Vs. UOI 199 ITR 43 wherein it was held that since section 11 of the ITR 43 wherein it was held that since section 11 of the ITR 43 wherein it was held that since section 11 of the Income Tax Act provides for deduction capital expenditure Income Tax Act provides for deduction capital expenditure Income Tax Act provides for deduction capital expenditure incurred on assets acquired for the objects of the trust as incurred on assets acquired for the objects of the trust as incurred on assets acquired for the objects of the trust as application and does not application and does not specifically & expressly provide specifically & expressly provide for double deduction on account of depreciation on the same for double deduction on account of depreciation on the same for double deduction on account of depreciation on the same very assets acquired from such capital expenditure, no very assets acquired from such capital expenditure, no very assets acquired from such capital expenditure, no deduction shall be allowed us.32 for the same or any other deduction shall be allowed us.32 for the same or any other deduction shall be allowed us.32 for the same or any other previous year in respect of that asset as it amou previous year in respect of that asset as it amou previous year in respect of that asset as it amounts to claiming a double deduction. claiming a double deduction. 2 Whether, on the facts and in the circumstances of the 2 Whether, on the facts and in the circumstances of the 2 Whether, on the facts and in the circumstances of the case case case and and and in in in law law law theldCIT(A)erred theldCIT(A)erred theldCIT(A)erred in in in allowing allowing allowing the the the depreciation, when the Delhi High Court in the case of depreciation, when the Delhi High Court in the case of depreciation, when the Delhi High Court in the case of Charanjiv Charitable Trust and Kerala High Court in the Charanjiv Charitable Trust and Kerala High Court in the Charanjiv Charitable Trust and Kerala High Court in the case of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 has decided the issue in the favour of the department after has decided the issue in the favour of the department after has decided the issue in the favour of the department after considering the decision of Hon'ble Supreme Court in the considering the decision of Hon'ble Supreme Court in the considering the decision of Hon'ble Supreme Court in the case of Escorts Ltd (199 ITR 43). case of Escorts Ltd (199 ITR 43). 3. The Appellant prays that, to the extent of abo The Appellant prays that, to the extent of above grounds, ve grounds, the order of the Commissioner of Income Tax (Appeal) the order of the Commissioner of Income Tax (Appeal) the order of the Commissioner of Income Tax (Appeal)-7, Mumbai be set aside and that of the Assessing Officer be Mumbai be set aside and that of the Assessing Officer be Mumbai be set aside and that of the Assessing Officer be restored. 4. The Appellant craves leave to amend or alter any ground The Appellant craves leave to amend or alter any ground The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." or add a new ground which may be necessary." 5.7.21 Grounds of Grounds of appeal before ITAT by Revenue in ITA No. evenue in ITA No. 5756/Mum/2015 for AY 2010 for AY 2010-11 are reproduced as under: 11 are reproduced as under: 17

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“GROUNDS OF APPEAL: GROUNDS OF APPEAL: 1 Whether on the facts of the case and in law the la CITCA) 1 Whether on the facts of the case and in law the la CITCA) 1 Whether on the facts of the case and in law the la CITCA) erred in allowing the appeal of the assessee on account of erred in allowing the appeal of the assessee on account of erred in allowing the appeal of the assessee on account of disallowing depreciation on fixed assets of Rs. 45,00,115/ depreciation on fixed assets of Rs. 45,00,115/ depreciation on fixed assets of Rs. 45,00,115/- in contravention of the decision of Escorts Led. Vs. WOl 199 in contravention of the decision of Escorts Led. Vs. WOl 199 in contravention of the decision of Escorts Led. Vs. WOl 199 ITR 43 wherein it was held that since section 11 of the ITR 43 wherein it was held that since section 11 of the ITR 43 wherein it was held that since section 11 of the income Tax Act provides for deduction capital expenditure income Tax Act provides for deduction capital expenditure income Tax Act provides for deduction capital expenditure incurred on assets acquired for t incurred on assets acquired for the obiects of the trust as he obiects of the trust as application and does not specifically & expressly provide application and does not specifically & expressly provide application and does not specifically & expressly provide for double deduction on account of depreciation on the same for double deduction on account of depreciation on the same for double deduction on account of depreciation on the same very assets acquired from such capital expenditure, no very assets acquired from such capital expenditure, no very assets acquired from such capital expenditure, no deduction shall be allowed w/s.32 for the same or any deduction shall be allowed w/s.32 for the same or any deduction shall be allowed w/s.32 for the same or any other previous year in respect of that asset as it amounts to her previous year in respect of that asset as it amounts to her previous year in respect of that asset as it amounts to claiming a double deduction. claiming a double deduction. 2 Whether, on the facts and in the circumstances of the 2 Whether, on the facts and in the circumstances of the 2 Whether, on the facts and in the circumstances of the case and in law the case and in law the ld CIT(A)erred in allowing the CIT(A)erred in allowing the depreciation, when the Delhi High Court in the case of depreciation, when the Delhi High Court in the case of depreciation, when the Delhi High Court in the case of Charanjiv Charitable Trust and Kerala High Court in the Charanjiv Charitable Trust and Kerala High Court in the Charanjiv Charitable Trust and Kerala High Court in the case of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 case of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 case of Lissie Medical Institutions vs CIT 76 DTR (Ker) 372 has decided the issue in the favour of the department after has decided the issue in the favour of the department after has decided the issue in the favour of the department after considering the decision of Hon'ble Supreme Court in the considering the decision of Hon'ble Supreme Court in the considering the decision of Hon'ble Supreme Court in the case of Escorts Led (19 case of Escorts Led (199 ITR 43). 3 The Appellant prays that, to the extent of above grounds, 3 The Appellant prays that, to the extent of above grounds, 3 The Appellant prays that, to the extent of above grounds, the order of the Commissioner of Income Tax (Appeal) the order of the Commissioner of Income Tax (Appeal) the order of the Commissioner of Income Tax (Appeal)-7, Mumbai be set aside and that of the Assessing Officer be Mumbai be set aside and that of the Assessing Officer be Mumbai be set aside and that of the Assessing Officer be restored. 4The Appellant craves leave to amend or alter any ground 4The Appellant craves leave to amend or alter any ground 4The Appellant craves leave to amend or alter any ground or add a new ground which may be necessary." d a new ground which may be necessary." 5.8 We note that ld. . CIT(A) while adjudicating the issue of benefit CIT(A) while adjudicating the issue of benefit u/s 11 of the Act in the appeals for AY 2009 u/s 11 of the Act in the appeals for AY 2009-10 and AY 2010 10 and AY 2010-11, relied on the decision of Hon’ble jurisdiction High Court in ITA No. relied on the decision of Hon’ble jurisdiction High Court in ITA No. relied on the decision of Hon’ble jurisdiction High Court in ITA No. 1113 of 2010. The relevant finding of the Hon’ble High Court is he relevant finding of the Hon’ble High Court is he relevant finding of the Hon’ble High Court is reproduced as under: reproduced as under:

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“1.The office objections are overruled. Basically two 1.The office objections are overruled. Basically two 1.The office objections are overruled. Basically two questionsare raised by the revenue in this appeal, which questionsare raised by the revenue in this appeal, which questionsare raised by the revenue in this appeal, which read as under read as under- (1) Whether on the facts and circumstances of the case and Whether on the facts and circumstances of the case and Whether on the facts and circumstances of the case and in law the Tribunal was right in holding that the assessee n law the Tribunal was right in holding that the assessee n law the Tribunal was right in holding that the assessee has fulfilled" the conditions as laid down has fulfilled" the conditions as laid down -u/s.11(4A) of the u/s.11(4A) of the IT Act 1961 and is" therefore entitled for exemption us. 11 IT Act 1961 and is" therefore entitled for exemption us. 11 IT Act 1961 and is" therefore entitled for exemption us. 11 of the I.T.. Act, 1961?.. of the I.T.. Act, 1961?.. (2) Whether on the facts and circumstances of the Whether on the facts and circumstances of the Whether on the facts and circumstances of the case and in law the Tribunal was right in directing the AO to set off in law the Tribunal was right in directing the AO to set off in law the Tribunal was right in directing the AO to set off the deficit of earlier years to the surplus of this year and the deficit of earlier years to the surplus of this year and the deficit of earlier years to the surplus of this year and consider such adjustment as application of income for consider such adjustment as application of income for consider such adjustment as application of income for charitable purpose?" charitable purpose?" 2. As regards, the first question raised by the re As regards, the first question raised by the revenue is As regards, the first question raised by the re concerned, the Tribunal has recorded the finding as concerned, the Tribunal has recorded the finding as concerned, the Tribunal has recorded the finding as follows:- "We have heard the rival submissions, perused the "We have heard the rival submissions, perused the "We have heard the rival submissions, perused the orders of the lower authorities and the materials orders of the lower authorities and the materials orders of the lower authorities and the materials available on record. The assessee is a council available on record. The assessee is a council available on record. The assessee is a council approved by the Govt. as "jem and jewe approved by the Govt. as "jem and jewellery export llery export promotion council. From the name itself it is seen that promotion council. From the name itself it is seen that promotion council. From the name itself it is seen that the assessee's objects are to promote the export of the assessee's objects are to promote the export of the assessee's objects are to promote the export of jewellery jewellery jewellery for for for India India India For For For this this this purpose, purpose, purpose, various various various exhibitions have been held by the assessee in various exhibitions have been held by the assessee in various exhibitions have been held by the assessee in various countries. For this purpose, necess countries. For this purpose, necessary approval has ary approval has been obtained from the Govt. of India." Copy of such been obtained from the Govt. of India." Copy of such been obtained from the Govt. of India." Copy of such approval is placed at Pages 17 to 20 of the paper approval is placed at Pages 17 to 20 of the paper approval is placed at Pages 17 to 20 of the paper book. We have also seen the copy of the notes on book. We have also seen the copy of the notes on book. We have also seen the copy of the notes on objects of the council which are placed at pages 1 to objects of the council which are placed at pages 1 to objects of the council which are placed at pages 1 to 7 and also the extract of export 7 and also the extract of export and import policy, and import policy, copy of which is placed at pages 8 and 9. Minutes of copy of which is placed at pages 8 and 9. Minutes of copy of which is placed at pages 8 and 9. Minutes of the grant of approval organizing exhibition, etc. is the grant of approval organizing exhibition, etc. is the grant of approval organizing exhibition, etc. is placed at pages 11 to 16 and approval from Govt. of placed at pages 11 to 16 and approval from Govt. of placed at pages 11 to 16 and approval from Govt. of India is placed at Pages 17 to 20. The assessee is India is placed at Pages 17 to 20. The assessee is India is placed at Pages 17 to 20. The assessee is also maintaining separate bo also maintaining separate books of account. Copy of oks of account. Copy of annual account is also placed at pages 21 to 25 from annual account is also placed at pages 21 to 25 from annual account is also placed at pages 21 to 25 from which it is clearly seen that there is no surplus funds which it is clearly seen that there is no surplus funds which it is clearly seen that there is no surplus funds with the assessee. " with the assessee. "

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Similar facts are involved in the present case as Similar facts are involved in the present case as Similar facts are involved in the present case as object of the assessee is to promote the export of jem object of the assessee is to promote the export of j object of the assessee is to promote the export of j and jewellery for India. We have also considered and jewellery for India. We have also considered and jewellery for India. We have also considered various decisions and found that they are in favour of various decisions and found that they are in favour of various decisions and found that they are in favour of assessee's case.In the case of Indian Machine assessee's case.In the case of Indian Machine assessee's case.In the case of Indian Machine Tools,decided in IT No.585/Mum/2002, the Tribunal Tools,decided in IT No.585/Mum/2002, the Tribunal Tools,decided in IT No.585/Mum/2002, the Tribunal following the decision in the case of Indian...Electrical following the decision in the case of Indian...Electr following the decision in the case of Indian...Electr and "Electronic Manufacturers Association (supra) and "Electronic Manufacturers Association (supra) and "Electronic Manufacturers Association (supra) held that the activity of the assessee is incidental to held that the activity of the assessee is incidental to held that the activity of the assessee is incidental to the object of the assessee, therefore, the assessee is the object of the assessee, therefore, the assessee is the object of the assessee, therefore, the assessee is entitled to exemption us.11. Taking into consideration entitled to exemption us.11. Taking into consideration entitled to exemption us.11. Taking into consideration all. the facts and circumstances an all. the facts and circumstances and the ratio of d the ratio of various decisions of the Tribunal cited supra, we hold various decisions of the Tribunal cited supra, we hold various decisions of the Tribunal cited supra, we hold that the assessee's activities are incidental to the that the assessee's activities are incidental to the that the assessee's activities are incidental to the object of the assessee and thus, 'the assessee is object of the assessee and thus, 'the assessee is object of the assessee and thus, 'the assessee is entitled toexemption entitled toexemption u/s 11 of the Act. The Ld. CIT(A) of the Act. The Ld. CIT(A) has also given his finding i has also given his finding in Para-6.2 wherein it is 6.2 wherein it is held that assessee's activities are incidental to the held that assessee's activities are incidental to the held that assessee's activities are incidental to the main main main obiect obiect obiect of of of the the the assessee.The assessee.The assessee.The Ld. Ld. Ld. CIT(A)categorically CIT(A)categorically CIT(A)categorically held held held that that that the the the assessee assessee assessee is is is maintaining cash book, ledger, joumal, etc., for the maintaining cash book, ledger, joumal, etc., for the maintaining cash book, ledger, joumal, etc., for the exhibition activity and, accordingly, it w exhibition activity and, accordingly, it was held by as held by him that the assessee is eligible for exemption u/s.11 him that the assessee is eligible for exemption u/s.11 him that the assessee is eligible for exemption u/s.11 of the Act, therefore, we see no infirmity in this of the Act, therefore, we see no infirmity in of the Act, therefore, we see no infirmity in finding of the Ld. CIT(A). finding of the Ld. CIT(A). Accordingly, we confirm the Accordingly, we confirm the order of the Ld. CIT(A) in this respect." order of the Ld. CIT(A) in this respect." 3. From the above finding of fact a From the above finding of fact and in the light of the nd in the light of the judgment of the Apex Court in the case of Assistant of the Apex Court in the case of Assistant of the Apex Court in the case of Assistant Commissioner of Income. TaxVis. Thanthi Trust reported in Commissioner of Income. TaxVis. Thanthi Trust reported in Commissioner of Income. TaxVis. Thanthi Trust reported in 247 I.T.R. 785, the decision of the Tribunal holding that the 247 I.T.R. 785, the decision of the Tribunal holding that the 247 I.T.R. 785, the decision of the Tribunal holding that the assessee has fulfilled all the conditions of Section 11(4A) assessee has fulfilled all the conditions of Section 11(4A) assessee has fulfilled all the conditions of Section 11(4A) ofthe Income Tax Act cannot be faulted. Moreover, the fthe Income Tax Act cannot be faulted. Moreover, the fthe Income Tax Act cannot be faulted. Moreover, the Tribunal has recorded finding of fact that the assessee has Tribunal has recorded finding of fact that the assessee has Tribunal has recorded finding of fact that the assessee has maintained separate books of account in respect of maintained separate books of account in respect of maintained separate books of account in respect of exhibition activity. In this view of the matter, the first exhibition activity. In this view of the matter, the first exhibition activity. In this view of the matter, the first questionraised by the revenue can questionraised by the revenue cannot be entertained. not be entertained.” 5.9 We find that the Hon’ble High Court has noted the facts We find that the Hon’ble High Court has noted the facts We find that the Hon’ble High Court has noted the facts recorded by the ITAT regarding recorded by the ITAT regarding of objects of the assessee and of objects of the assessee and

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conducting of exhibition for achieving that object, necessary conducting of exhibition for achieving that object, conducting of exhibition for achieving that object, approval obtained for conducting those exhibitions form Govt. of approval obtained for conducting those exhibitions approval obtained for conducting those exhibitions India in the back ground of import /export policy of Govt. of India. India in the back ground of import /export policy of Govt India in the back ground of import /export policy of Govt In the light of those facts, the Hon’ble High Court declined the In the light of those facts, the Hon’ble High Court declined the In the light of those facts, the Hon’ble High Court declined the question of law raised challenging eligibility of exemption u/s 11 of question of law raised challenging eligibility of exemption u/s 11 of question of law raised challenging eligibility of exemption u/s 11 of the Act.

5.10. In the instant year a In the instant year are also, the fact of main object of the the fact of main object of the assessee of promoting the export of gems and jewellary remained assessee of promoting the export of gems and jewellary remained assessee of promoting the export of gems and jewellary remained the same. In the year under consideration, the assessee has n the year under consideration, the assessee has n the year under consideration, the assessee has claimed the organising and participating in exhibitions and trade claimed the organising and participating in exhibitions and trade claimed the organising and participating in exhibitions and trade fair as the core activity s the core activity of the assessee and sine que non sine que non for promotion of Indian products of gems, jewellary promotion of Indian products of gems, jewellaryand diamond and diamond etc. to overseas market buyers buyers. The ld. Counsel has also pointed out that Counsel has also pointed out that in these exhibitions, an exporter can only showcase their products can only showcase their products to overseas buyer and prohibited from purchase or sale of products. and prohibited from purchase or sale of products. and prohibited from purchase or sale of products. The exhibitions are meeting point of overseas buyers and Indian The exhibitions are meeting point of overseas buyers and Indian The exhibitions are meeting point of overseas buyers and Indian exporter and during the period of exhibition, the exporters are also exporter and during the period of exhibition, the exporters are also exporter and during the period of exhibition, the exporters are also made aware about various policies of made aware about various policies of Govt.of India for bringing of India for bringing foreign exchange to the country through seminars and conference exchange to the country through seminars and conference exchange to the country through seminars and conference organized alongwith exhibitions where exporter across the India organized alongwith exhibitions where exporter across the India organized alongwith exhibitions where exporter across the India participate.

5.11 Thus, we find that there is no we find that there is no change in facts and change in facts and circumstances in the year under consideration as compared to AY circumstances in the year under consideration as compared to AY circumstances in the year under consideration as compared to AY

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2010-11, therefore following the rule of 11, therefore following the rule of consistency, consistency, the Revenue should have allowed the exemption u/s 11 of the Act to the should have allowed the exemption u/s 11 of the Act to the should have allowed the exemption u/s 11 of the Act to the assessee in the year under consideration as same issue has been assessee in the year under consideration as same issue has been assessee in the year under consideration as same issue has been conceded by the Revenue in AY 2010 conceded by the Revenue in AY 2010-11.But,there is a new there is a new development in relation to the in relation to the appeal for year under consideration year under consideration is the judgment of of Hon’ble Supreme Court in its order dated Hon’ble Supreme Court in its order dated 19/10/2022 in the case of 19/10/2022 in the case of Ahmedabad Urban development n development authority (supra), wh , where applicability of the proviso to section 2(15) o to section 2(15) of the Act in case of entities engaged in charitable activity in the case of entities engaged in charitable activity in the case of entities engaged in charitable activity in the nature of general public utility (GPU) nature of general public utility (GPU)has been thoroughly examined thoroughly examined and analyzed, therefore, n and analyzed, therefore, now the issue, arises before us ow the issue, arises before us is whether in the light of the recent decision of the Hon’ble Supreme Court in in the light of the recent decision of the Hon’ble Supreme Court i in the light of the recent decision of the Hon’ble Supreme Court i its order dated 19/10/2022 in the case of Ahmedabad Urban its order dated 19/10/2022 in the case of Ahmedabad Urban its order dated 19/10/2022 in the case of Ahmedabad Urban development authority development authority (supra), the proviso to section 2(15) will , the proviso to section 2(15) will apply in the case of the assessee or not. apply in the case of the assessee or not. For ready reference, said For ready reference, said section 2(15) and section 13(8) and section 13(8) [i.e. directing consequent with directing consequent withdrawal of exemption under section 11 of exemption under section 11]are reproduced as under: as under:

“Section 2(15)

(15) "charitable purpose? includes relief of the poor, "education, (15) "charitable purpose? includes relief of the poor, "education, (15) "charitable purpose? includes relief of the poor, "education, "yoga,) medical relief, "(preservation of environment" (including "yoga,) medical relief, "(preservation of environment" (including "yoga,) medical relief, "(preservation of environment" (including water-sheds, sheds, forests forests and and wildlife wildlife and and preservation preservation of of monuments or places or objects of artistic or historic interest,] monuments or places or objects of artistic or historic interest,] monuments or places or objects of artistic or historic interest,] and the advancement of any other "object of general public and the advancement of any other "object of general public and the advancement of any other "object of general public utility: [Provided that the advancement of any other object of general [Provided that the advancement of any other object of general [Provided that the advancement of any other object of general public utility" shall not be a charitable pu public utility" shall not be a charitable purpose, if it involves the rpose, if it involves the 22

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carrying on of any activity in the nature of trade, commerce or carrying on of any activity in the nature of trade, commerce or carrying on of any activity in the nature of trade, commerce or business", or any activity of rendering any service in relation to business", or any activity of rendering any service in relation to business", or any activity of rendering any service in relation to any trade, commerce or business", for a any trade, commerce or business", for a cess or fee or any other cess or fee or any other consideration, irrespective of the deration, irrespective of the nature of use or application, or nature of use or application, or retention, of the income from such activity, unless retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out (i) such activity is undertaken in the course of actual carrying out (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public of such advancement of any other object of general public of such advancement of any other object of general public utility?5; and (ii) the aggregate receipts ) the aggregate receipts from such activity or activities during from such activity or activities during the previous year, do not exceed twenty per cent of the total the previous year, do not exceed twenty per cent of the total the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or receipts, of the trust or institution undertaking such activity or receipts, of the trust or institution undertaking such activity or activities, of that previous year;]] activities, of that previous year;]] Section 13(8)

(8) Nothing contained in section 1 (8) Nothing contained in section 11 or section 12 shall operate so 1 or section 12 shall operate so as to exclude any income from the total income of the previous as to exclude any income from the total income of the previous as to exclude any income from the total income of the previous year of the person in receipt thereof if the provisions of the first year of the person in receipt thereof if the provisions of the first year of the person in receipt thereof if the provisions of the first proviso to clause (15) of section 2 become applicable in the case proviso to clause (15) of section 2 become applicable in the case proviso to clause (15) of section 2 become applicable in the case of such person in the sai of such person in the said previous year.] 5.12 The proviso to section 2(15) is attracted in case charitable o to section 2(15) is attracted in case charitable o to section 2(15) is attracted in case charitable activity in the nature of ‘general public utility’. The issues activity in the nature of ‘general public utility’. activity in the nature of ‘general public utility’. adjudicated by the adjudicated by the Hon’ble Supreme Court are related to are related to determining the scope of the phrase “general public utility” (GPU) in determining the scope of the phrase “general public utility” (GPU) in determining the scope of the phrase “general public utility” (GPU) in the definition of “charitable purposes” primarily on the grounds that the definition of “charitable purposes” primarily on the grounds that the definition of “charitable purposes” primarily on the grounds that the institutions were carrying on trade, commerce or business for the institutions were carrying on trade, commerce or business for the institutions were carrying on trade, commerce or business for consideration, which does not quali consideration, which does not qualify as GPU under the provisions fy as GPU under the provisions of the Act as amended by Finance Act (FA), 2008 read with as amended by Finance Act (FA), 2008 read with as amended by Finance Act (FA), 2008 read with subsequent amendments. subsequent amendments.

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5.13 Before the Hon’ble supreme court Before the Hon’ble supreme court (supra), in the case , in the cases of most of the entities, there is no dispute as to the , there is no dispute as to the activities involved in the activities involved in the appeal qualified as GPUs within the meaning of the term “charitable ppeal qualified as GPUs within the meaning of the term “charitable ppeal qualified as GPUs within the meaning of the term “charitable purposes”, but the dispute was in respect of but the dispute was in respect of the meaning of “fee the meaning of “fee, cess or other consideration” and its impact on construing whether cess or other consideration” and its impact on construing whether cess or other consideration” and its impact on construing whether the activity falls under falls under to the description of “trade, co to the description of “trade, commerce or business”.

5.14 The Hon’ble Supreme Court Hon’ble Supreme Court held that where “fee, cess or other held that where “fee, cess or other consideration” is statutorily fixed or where it represents recoupment consideration” is statutorily fixed or where it represents recoupment consideration” is statutorily fixed or where it represents recoupment of cost or cost with nominal mark up, the activity may not be of cost or cost with nominal mark up, the activity may not be of cost or cost with nominal mark up, the activity may not be construed as “trade, commerce or bu construed as “trade, commerce or business” and will be excluded siness” and will be excluded from the mischief of commercial activity under the amended from the mischief of commercial activity under the amended from the mischief of commercial activity under the amended provision. If, however, “fee, cess or other consideration” charged is provision. If, however, “fee, cess or other consideration” charged is provision. If, however, “fee, cess or other consideration” charged is substantially higher over cost, it is tainted with “trade, commerce or substantially higher over cost, it is tainted with “trade, commerce or substantially higher over cost, it is tainted with “trade, commerce or business” and will qualify business” and will qualify for tax exemption only if receipts are for tax exemption only if receipts are within the quantitative limit prescribed by the amended provision. within the quantitative limit prescribed by the amended provision. within the quantitative limit prescribed by the amended provision. The relevant paragraphs of the order of the Hon’ble Supreme Court The relevant paragraphs of the order of the Hon’ble Supreme Court The relevant paragraphs of the order of the Hon’ble Supreme Court (supra) are reproduced as under for ready reference: (supra) are reproduced as under for ready reference: “170. Classically, the idea of charity was tied up with 170. Classically, the idea of charity was tied up with 170. Classically, the idea of charity was tied up with eleemosynary143. However, “charitable purpose” eleemosynary143. However, “charitable purpose” eleemosynary143. However, “charitable purpose” – and charity as defined in the Act have a wider meaning where charity as defined in the Act have a wider meaning where charity as defined in the Act have a wider meaning where it is the object of the institution which is in focus. Thus, the it is the object of the institution which is in focus. Thus, the it is the object of the institution which is in focus. Thus, the idea of providing services idea of providing services or goods at no consideration, or goods at no consideration, cost or nominal consideration is not confined to the cost or nominal consideration is not confined to the cost or nominal consideration is not confined to the provision of services or goods without charging anything or provision of services or goods without charging anything or provision of services or goods without charging anything or charging a token or nominal amount. This is spelt out in charging a token or nominal amount. This is spelt out in charging a token or nominal amount. This is spelt out in

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Indian Chamber of Commerce (supra) where this Court Indian Chamber of Commerce (supra) where this Court Indian Chamber of Commerce (supra) where this Court held that certain GPUs can render services to the public d that certain GPUs can render services to the public d that certain GPUs can render services to the public with the condition that they would not charge “more than with the condition that they would not charge “more than with the condition that they would not charge “more than is actually needed for the rendering of the services, is actually needed for the rendering of the services, is actually needed for the rendering of the services, - may be it may not be an exact equivalent, such mathematical be it may not be an exact equivalent, such mathematical be it may not be an exact equivalent, such mathematical precision being impossible in precision being impossible in the case of variables, the case of variables, - may be a little surplus is left over at the end of the year be a little surplus is left over at the end of the year be a little surplus is left over at the end of the year – the broad inhibition against making profit is a good guarantee broad inhibition against making profit is a good guarantee broad inhibition against making profit is a good guarantee that the carrying on of the activity is not for profit”. that the carrying on of the activity is not for profit”. that the carrying on of the activity is not for profit”. 171. Therefore, pure charity in the sense that 171. Therefore, pure charity in the sense that 171. Therefore, pure charity in the sense that the performance of an activity without any consideration is not performance of an activity without any consideration is not performance of an activity without any consideration is not envisioned under the Act. If one keeps this in mind, what envisioned under the Act. If one keeps this in mind, what envisioned under the Act. If one keeps this in mind, what Section 2(15) emphasizes is that so long as a GPU’s Section 2(15) emphasizes is that so long as a GPU’s Section 2(15) emphasizes is that so long as a GPU’s charity’s object involves activities which also generates charity’s object involves activities which also generates charity’s object involves activities which also generates profits (incidental, or profits (incidental, or in other words, while actually in other words, while actually carrying out the objectives of GPU, if some profit is carrying out the objectives of GPU, if some profit is carrying out the objectives of GPU, if some profit is generated), it can be granted exemption provided the generated), it can be granted exemption provided the generated), it can be granted exemption provided the quantitative limit (of not exceeding 20%) under second quantitative limit (of not exceeding 20%) under second quantitative limit (of not exceeding 20%) under second proviso to Section 2(15) for receipts from such profits, is proviso to Section 2(15) for receipts from such profits, is proviso to Section 2(15) for receipts from such profits, is adhered to. 172. Yet another manner of looking at the definition 172. Yet another manner of looking at the definition 172. Yet another manner of looking at the definition together with Sections 10(23) and 11 is that for achieving together with Sections 10(23) and 11 is that for achieving together with Sections 10(23) and 11 is that for achieving a general public utility object, if the charity involves itself a general public utility object, if the charity involves itself a general public utility object, if the charity involves itself in activities, that entail charging amounts only at cost or in activities, that entail charging amounts only at cost or in activities, that entail charging amounts only at cost or marginal mark up over cost, and also derive some profit, ark up over cost, and also derive some profit, ark up over cost, and also derive some profit, the prohibition against carrying on business or service the prohibition against carrying on business or service the prohibition against carrying on business or service relating to business is not attracted relating to business is not attracted - if the quantum of if the quantum of such profits do not exceed 20% of its overall receipts. such profits do not exceed 20% of its overall receipts. such profits do not exceed 20% of its overall receipts. 173. It may be useful to conclude this 173. It may be useful to conclude this section on section on interpretation with some illustrations. The example of interpretation with some illustrations. The example of interpretation with some illustrations. The example of Gandhi Gandhi Gandhi Peace Peace Peace Foundation Foundation Foundation disseminating disseminating disseminating Mahatma Mahatma Mahatma Gandhi’s philosophy (in Surat Art Silk) through museums Gandhi’s philosophy (in Surat Art Silk) through museums Gandhi’s philosophy (in Surat Art Silk) through museums and exhibitions and publishing his works, for nominal and exhibitions and publishing his works, for nominal and exhibitions and publishing his works, for nominal cost, ipso facto is not business. cost, ipso facto is not business. Likewise, providing access Likewise, providing access to low-cost hostels to weaker segments of society, where cost hostels to weaker segments of society, where cost hostels to weaker segments of society, where the fee or charges recovered cover the costs (including the fee or charges recovered cover the costs (including the fee or charges recovered cover the costs (including administrative expenditure) plus nominal mark up; or administrative expenditure) plus nominal mark up; or administrative expenditure) plus nominal mark up; or

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renting marriage halls for low amounts, again with a fee renting marriage halls for low amounts, again with a fee renting marriage halls for low amounts, again with a fee meant to cover costs; or blood bank services, again with to cover costs; or blood bank services, again with to cover costs; or blood bank services, again with fee to cover costs, are not activities in the nature of fee to cover costs, are not activities in the nature of fee to cover costs, are not activities in the nature of business. Yet, when the entity concerned charges business. Yet, when the entity concerned charges business. Yet, when the entity concerned charges substantial amounts substantial amounts- over and above the cost it incurs for over and above the cost it incurs for doing the same work, or work which is pa doing the same work, or work which is part of its object rt of its object (i.e., publishing an expensive coffee table book on Gandhi, (i.e., publishing an expensive coffee table book on Gandhi, (i.e., publishing an expensive coffee table book on Gandhi, or in the case of the marriage hall, charging significant or in the case of the marriage hall, charging significant or in the case of the marriage hall, charging significant amounts from those who can afford to pay, by providing amounts from those who can afford to pay, by providing amounts from those who can afford to pay, by providing extra services, far above the cost extra services, far above the cost-plus nominal markup) plus nominal markup) such activities are in the nature of trade, commerce, ities are in the nature of trade, commerce, ities are in the nature of trade, commerce, business or service in relation to them. In such case, the business or service in relation to them. In such case, the business or service in relation to them. In such case, the receipts from such latter kind of activities where higher receipts from such latter kind of activities where higher receipts from such latter kind of activities where higher amounts are charged, should not exceed the limit amounts are charged, should not exceed the limit amounts are charged, should not exceed the limit indicated by proviso (ii) to Section 2(15). indicated by proviso (ii) to Section 2(15). 174. The insertion of Section 13(8)144 , the seventeenth 74. The insertion of Section 13(8)144 , the seventeenth 74. The insertion of Section 13(8)144 , the seventeenth proviso to Section 10(23C) and third proviso to Section proviso to Section 10(23C) and third proviso to Section proviso to Section 10(23C) and third proviso to Section 143(3) (all of which were inserted by Finance Act, 2012, 143(3) (all of which were inserted by Finance Act, 2012, 143(3) (all of which were inserted by Finance Act, 2012, but but but w.r.e.f. w.r.e.f. w.r.e.f. 01.04.2009), 01.04.2009), 01.04.2009), further further further reinforces reinforces reinforces the the the interpretation of this Court, of “char interpretation of this Court, of “charitable purpose”. These itable purpose”. These provisions, form the machinery to control the conditions provisions, form the machinery to control the conditions provisions, form the machinery to control the conditions under which income is exempt. The effect of the under which income is exempt. The effect of the under which income is exempt. The effect of the seventeenth proviso to Section 10(23C) is to impose the seventeenth proviso to Section 10(23C) is to impose the seventeenth proviso to Section 10(23C) is to impose the same condition i.e., that that the trade, commerce or same condition i.e., that that the trade, commerce or same condition i.e., that that the trade, commerce or business activity business activity or service relating to trade, business or or service relating to trade, business or commerce, should be part of the GPU’s activities, to commerce, should be part of the GPU’s activities, to commerce, should be part of the GPU’s activities, to achieve its object of advancing general public utility. The achieve its object of advancing general public utility. The achieve its object of advancing general public utility. The other condition other condition– which is drawn in as part of the which is drawn in as part of the exemption condition, is that if such trading or com exemption condition, is that if such trading or com exemption condition, is that if such trading or commercial activity takes place the receipts should be confined to a activity takes place the receipts should be confined to a activity takes place the receipts should be confined to a prescribed percentage of the overall receipts. Section 13(8) prescribed percentage of the overall receipts. Section 13(8) prescribed percentage of the overall receipts. Section 13(8) too reinforces the same condition. too reinforces the same condition. 175. In the opinion of this court, the change intended by 175. In the opinion of this court, the change intended by 175. In the opinion of this court, the change intended by Parliament through the amendment of Section 2(15) was Parliament through the amendment of Section 2(15) was Parliament through the amendment of Section 2(15) was sought to be emphasised and clarified by the amendment sought to be emphasised and clarified by the amendment sought to be emphasised and clarified by the amendment of Section 10(23C) and the insertion of Section 13(8). This of Section 10(23C) and the insertion of Section 13(8). This of Section 10(23C) and the insertion of Section 13(8). This was Parliaments’ emphatic way was Parliaments’ emphatic way of saying that generally of saying that generally no commercial or business or trading activity ought to be no commercial or business or trading activity ought to be no commercial or business or trading activity ought to be 26

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engaged by GPU charities but that in the course of their engaged by GPU charities but that in the course of their engaged by GPU charities but that in the course of their functioning of carrying out activities of general public functioning of carrying out activities of general public functioning of carrying out activities of general public utility, they can in a limited manner do so, provided the utility, they can in a limited manner do so, provided the utility, they can in a limited manner do so, provided the receipts are within the limit spelt out in Clause (ii) of the receipts are within the limit spelt out in Clause (ii) of the receipts are within the limit spelt out in Clause (ii) of the proviso to Section 2(15). proviso to Section 2(15).” 5.15 Thus, the Hon’ble Supreme Court has laid down Thus, the Hon’ble Supreme Court has laid down Thus, the Hon’ble Supreme Court has laid down principle giving the example of giving the example of ‘Gandhi Peace Foundation’ that where in the that where in the process of dissemination of Philoshopy process of dissemination of Philoshopy of Mahatama Gandhi of Mahatama Gandhi through museum and exhibition for a nominal cost is ipso facto not through museum and exhibition for a nominal cost is through museum and exhibition for a nominal cost is a business. Similarly, the Hon’ble Supreme Court has held that a business. Similarly, the Hon’ble Supreme Court has held that a business. Similarly, the Hon’ble Supreme Court has held that services of low-cost hostel, providing of marriage halls or supply of cost hostel, providing of marriage halls or supply of cost hostel, providing of marriage halls or supply of blood bank for nominal markup is not in the nature of business. nominal markup is not in the nature of business. nominal markup is not in the nature of business.

5.16.In the light of above principles, the Hon’ble Supreme Court has In the light of above principles, the Hon’ble Supreme Court has In the light of above principles, the Hon’ble Supreme Court has given specific finding in respect of the trade promotion bodies, nding in respect of the trade promotion bodies, nding in respect of the trade promotion bodies, Councils etc, while dealing the facts of the Apparel Export , while dealing the facts of the Apparel Export , while dealing the facts of the Apparel Export Promotion Council (AEPC). ouncil (AEPC). The relevant finding of the Hon’ble The relevant finding of the Hon’ble Supreme Court (supra) is reproduced as under: Supreme Court (supra) is reproduced as under: “D. What kinds of income or receipts may not be D. What kinds of income or receipts may not be D. What kinds of income or receipts may not be characterized as derived from trade, commerce, business characterized as derived from trade, commerce, business characterized as derived from trade, commerce, business or in relation to such activities, for a consideration or in relation to such activities, for a consideration or in relation to such activities, for a consideration (i) Statutory corporations, authorities or bodies (i) Statutory corporations, authorities or bodies 176. It would be essential now to deal with certain kinds 176. It would be essential now to deal with certain kinds 176. It would be essential now to deal with certain kinds of receipts which GPU charities, typically statutory housing of receipts which GPU charities, typically statutory housing of receipts which GPU charities, typically statutory housing boards, regulatory authorities and corporations may be boards, regulatory authorities and corporations may be boards, regulatory authorities and corporations may be entitled to, if mandated to c entitled to, if mandated to collect or receive. During the ollect or receive. During the course of hearing, learned counsels highlighted that course of hearing, learned counsels highlighted that course of hearing, learned counsels highlighted that statutory boards, and corporations have to recover the cost statutory boards, and corporations have to recover the cost statutory boards, and corporations have to recover the cost of providing essential goods and services in public interest, of providing essential goods and services in public interest, of providing essential goods and services in public interest,

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and also fund large scale development and maintain and also fund large scale development and maintain and also fund large scale development and maintain public property. These would entail recovering charges or public property. These would entail recovering charges or public property. These would entail recovering charges or fees, interest and also receiving interest for holding fees, interest and also receiving interest for holding fees, interest and also receiving interest for holding deposits. It was further pointed out that in some cases, deposits. It was further pointed out that in some cases, deposits. It was further pointed out that in some cases, income in the form of rents income in the form of rents – having regard to the nature of having regard to the nature of the schemes which the con the schemes which the concerned board, trust or cerned board, trust or corporation may be mandated or permitted to carry on, corporation may be mandated or permitted to carry on, corporation may be mandated or permitted to carry on, has to be received. For instance, in some situations, for has to be received. For instance, in some situations, for has to be received. For instance, in some situations, for certain kinds of properties, the boards may be permitted certain kinds of properties, the boards may be permitted certain kinds of properties, the boards may be permitted only to lease out their assets and receive rents only to lease out their assets and receive rents”. Para 176 to 1 Para 176 to 190 --------------------------------- (ii)Statutory regulatory bodies/authorities (ii)Statutory regulatory bodies/authorities Para 191 to 199 Para 191 to 199------------------------- (iii) Trade Promotion bodies, councils, associations or (iii) Trade Promotion bodies, councils, associations or (iii) Trade Promotion bodies, councils, associations or organizations organizations 200. Surat Art Silk (supra) and other decisions, had ruled 200. Surat Art Silk (supra) and other decisions, had ruled 200. Surat Art Silk (supra) and other decisions, had ruled that as long as the objects of trade promotion bodies were that as long as the objects of trade promotion bodies were that as long as the objects of trade promotion bodies were for general public utility for general public utility - wherein ‘trade promotion’ in wherein ‘trade promotion’ in itself, was held to be a GPU itself, was held to be a GPU - the fact that incidentally the fact that incidentally these bodies carried o these bodies carried on some commercial activity, leading n some commercial activity, leading to profit, did not preclude them from claiming to be driven to profit, did not preclude them from claiming to be driven to profit, did not preclude them from claiming to be driven by charitable purpose. As observed earlier, the enunciation by charitable purpose. As observed earlier, the enunciation by charitable purpose. As observed earlier, the enunciation of those principles were in the context of the unamended of those principles were in the context of the unamended of those principles were in the context of the unamended Section 2(15). Section 2(15). 201. The question that aris 201. The question that arises is whether the change in es is whether the change in definition impacts the claims of trade promotion bodies, definition impacts the claims of trade promotion bodies, definition impacts the claims of trade promotion bodies, federations of commerce, or such organizations, that they federations of commerce, or such organizations, that they federations of commerce, or such organizations, that they are GPU charities. The judgment in Surat Art Silk (supra) are GPU charities. The judgment in Surat Art Silk (supra) are GPU charities. The judgment in Surat Art Silk (supra) proceeded on the assumption that trade promotion was proceeded on the assumption that trade promotion was proceeded on the assumption that trade promotion was the pre-dominant object of the GPU charity before the dominant object of the GPU charity before the dominant object of the GPU charity before the court, and that other objects court, and that other objects – including procuring licences, including procuring licences, trade etc. were incidental. The assessee in Surat Silk had trade etc. were incidental. The assessee in Surat Silk had trade etc. were incidental. The assessee in Surat Silk had clear trading objects: clear trading objects: “(b) To carry on all and any of the business of Art Silk “(b) To carry on all and any of the business of Art Silk “(b) To carry on all and any of the business of Art Silk Yarn, Raw Silk, Cotton Yarn as well as Art Silk f loth, Silk rn, Raw Silk, Cotton Yarn as well as Art Silk f loth, Silk rn, Raw Silk, Cotton Yarn as well as Art Silk f loth, Silk

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Cloth and Cotton Cloth belonging to and on behalf of the Cloth and Cotton Cloth belonging to and on behalf of the Cloth and Cotton Cloth belonging to and on behalf of the members. ********* ********** (e) To buy and sell and deal in all kinds of cloth and other (e) To buy and sell and deal in all kinds of cloth and other (e) To buy and sell and deal in all kinds of cloth and other goods and fabrics belonging to and on behalf o goods and fabrics belonging to and on behalf o goods and fabrics belonging to and on behalf of the Members.” This court, nevertheless, held that since the Members.” This court, nevertheless, held that since the Members.” This court, nevertheless, held that since the predominant object of the assessee was trade promotion, predominant object of the assessee was trade promotion, predominant object of the assessee was trade promotion, while furthering it, the fact that some trading occurred, while furthering it, the fact that some trading occurred, while furthering it, the fact that some trading occurred, leading to income, did not preclude the assessee from leading to income, did not preclude the assessee from leading to income, did not preclude the assessee from claiming tax exemption. claiming tax exemption. 202. In the opinion of this court, the change in definition in 02. In the opinion of this court, the change in definition in 02. In the opinion of this court, the change in definition in Section 2(15) and the negative phraseology Section 2(15) and the negative phraseology - excluding excluding from consideration, trusts or institutions which provide from consideration, trusts or institutions which provide from consideration, trusts or institutions which provide services in relation to trade, commerce or business, for fee services in relation to trade, commerce or business, for fee services in relation to trade, commerce or business, for fee or other consideratio or other consideration - has made a difference. Organizing has made a difference. Organizing meetings, disseminating information through publications, meetings, disseminating information through publications, meetings, disseminating information through publications, holding awareness camps and events, would be broadly holding awareness camps and events, would be broadly holding awareness camps and events, would be broadly covered by trade promotion. However, when a trade covered by trade promotion. However, when a trade covered by trade promotion. However, when a trade promotion body provides individualized or specialized promotion body provides individualized or specialized promotion body provides individualized or specialized services - such as conducting paid workshops, training such as conducting paid workshops, training such as conducting paid workshops, training courses, skill development courses certified by it, and courses, skill development courses certified by it, and courses, skill development courses certified by it, and hires venues which are then let out to industrial, trading or hires venues which are then let out to industrial, trading or hires venues which are then let out to industrial, trading or business organizations, to promote and advertise their business organizations, to promote and advertise their business organizations, to promote and advertise their respective businesses, the clai respective businesses, the claim for GPU status needs to m for GPU status needs to be scrutinised more closely. Such activities are in the be scrutinised more closely. Such activities are in the be scrutinised more closely. Such activities are in the nature of services “in relation to” trade, commerce or nature of services “in relation to” trade, commerce or nature of services “in relation to” trade, commerce or business. These activities, and the facility of consultation, business. These activities, and the facility of consultation, business. These activities, and the facility of consultation, or skill development courses, are meant to improve or skill development courses, are meant to improve or skill development courses, are meant to improve business activities, and make them more efficient. The ss activities, and make them more efficient. The ss activities, and make them more efficient. The receipts from such activities clearly are ‘fee or other receipts from such activities clearly are ‘fee or other receipts from such activities clearly are ‘fee or other consideration’ for providing service “in relation to” trade, consideration’ for providing service “in relation to” trade, consideration’ for providing service “in relation to” trade, commerce or business. commerce or business. 203. The revenue has appealed to this court, in respect of 203. The revenue has appealed to this court, in respect of 203. The revenue has appealed to this court, in respect of two assessment years, in the case of Apparel Export ssment years, in the case of Apparel Export ssment years, in the case of Apparel Export Promotion Council (AEPC). The objects of AEPC, which was Promotion Council (AEPC). The objects of AEPC, which was Promotion Council (AEPC). The objects of AEPC, which was set up in 1978 set up in 1978 – include promotion of ready-made garment made garment export. To achieve that end, its objects include providing export. To achieve that end, its objects include providing export. To achieve that end, its objects include providing 29

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training to instil skills in the workfo training to instil skills in the workforce, to improve skillsin rce, to improve skillsin the industry; guide in sourcing machinery; to serve as a the industry; guide in sourcing machinery; to serve as a the industry; guide in sourcing machinery; to serve as a body advising, providing information on market or body advising, providing information on market or body advising, providing information on market or technical intelligence; assisting the concerned industry in technical intelligence; assisting the concerned industry in technical intelligence; assisting the concerned industry in obtaining import licenses; showcase the best capabilities obtaining import licenses; showcase the best capabilities obtaining import licenses; showcase the best capabilities of Indian garment exports through the prestigious “India ian garment exports through the prestigious “India ian garment exports through the prestigious “India International Garment Fair” organised twice a year by International Garment Fair” organised twice a year by International Garment Fair” organised twice a year by AEPC, etc. These fairs host over 350 participants who AEPC, etc. These fairs host over 350 participants who AEPC, etc. These fairs host over 350 participants who exhibit their garment designs and patterns. Other exhibit their garment designs and patterns. Other exhibit their garment designs and patterns. Other functions are to provide information, and to pr functions are to provide information, and to provide market ovide market research. AEPC also assists in developing new design research. AEPC also assists in developing new design research. AEPC also assists in developing new design patterns and garments and to perform promotional patterns and garments and to perform promotional patterns and garments and to perform promotional activities in individual foreign markets. Further, AEPC activities in individual foreign markets. Further, AEPC activities in individual foreign markets. Further, AEPC sends missions and trade delegations abroad, who sends missions and trade delegations abroad, who sends missions and trade delegations abroad, who participate in international fairs; participate in international fairs; and conducts surveys to and conducts surveys to gather information on potential export of ready gather information on potential export of ready gather information on potential export of ready-made garments. 204. As part of its functioning, it also books bulk space, 204. As part of its functioning, it also books bulk space, 204. As part of its functioning, it also books bulk space, which is then rented out to individual Indian exporters, which is then rented out to individual Indian exporters, which is then rented out to individual Indian exporters, who showcase their products and services, and ultimat who showcase their products and services, and ultimat who showcase their products and services, and ultimately secure export orders. Towards these services, i.e., booking secure export orders. Towards these services, i.e., booking secure export orders. Towards these services, i.e., booking and providing space, AEPC charges rentals. Now, these and providing space, AEPC charges rentals. Now, these and providing space, AEPC charges rentals. Now, these rents are not towards fixed assets owned by it. They are rents are not towards fixed assets owned by it. They are rents are not towards fixed assets owned by it. They are in fact charges, or fees, towards services in relation to in fact charges, or fees, towards services in relation to in fact charges, or fees, towards services in relation to business; likewise, the business; likewise, the skill development and diploma skill development and diploma courses conducted by it, for which fees are charged, are to courses conducted by it, for which fees are charged, are to courses conducted by it, for which fees are charged, are to improve business functioning of garment exporters. improve business functioning of garment exporters. improve business functioning of garment exporters. Furthermore, market surveys and market intelligence, Furthermore, market surveys and market intelligence, Furthermore, market surveys and market intelligence, especially country specific activities, aimed at catering to especially country specific activities, aimed at catering to especially country specific activities, aimed at catering to specified exporters, or specified class of exporters, is also specified exporters, or specified class of exporters, is also specified exporters, or specified class of exporters, is also service in relation to trade, commerce or business. service in relation to trade, commerce or business. service in relation to trade, commerce or business. 205. In the circumstances, it cannot be said that AEPC’s 205. In the circumstances, it cannot be said that AEPC’s 205. In the circumstances, it cannot be said that AEPC’s functioning does not involve any element of trade, functioning does not involve any element of trade, functioning does not involve any element of trade, commerce or business, or service commerce or business, or service in relation thereto. in relation thereto. Though in some instances, the recipient may be an Though in some instances, the recipient may be an Though in some instances, the recipient may be an individual business house or exporter, there is no doubt individual business house or exporter, there is no doubt individual business house or exporter, there is no doubt that these activities, performed by a trade body continue that these activities, performed by a trade body continue that these activities, performed by a trade body continue to be trade promotion. Therefore, they are in the “actual to be trade promotion. Therefore, they are in the “actual to be trade promotion. Therefore, they are in the “actual 30

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course of carrying on” the GPU activity. In such a case, for rrying on” the GPU activity. In such a case, for rrying on” the GPU activity. In such a case, for each year, the question would be whether the quantum each year, the question would be whether the quantum each year, the question would be whether the quantum from these receipts, and other such receipts are within the from these receipts, and other such receipts are within the from these receipts, and other such receipts are within the limit prescribed by the sub limit prescribed by the sub-clause (ii) to proviso to Section clause (ii) to proviso to Section 2(15). If they are within the li 2(15). If they are within the limits, AEPC would be mits, AEPC would be – for that year, entitled to claim benefit as a GPU charity. that year, entitled to claim benefit as a GPU charity. that year, entitled to claim benefit as a GPU charity. (iv) Non-statutory bodies statutory bodies - ERNET, NIXI and GS1 India ERNET, NIXI and GS1 India 206. ERNET is a not 206. ERNET is a not-for profit society, set up under the for profit society, set up under the aegis of the Union Government. At one time, government aegis of the Union Government. At one time, government aegis of the Union Government. At one time, government functionaries, including the late President, APJ Abdul functionaries, including the late President, APJ Abdul functionaries, including the late President, APJ Abdul Kalam, were members, on account of their ex officio Kalam, were members, on account of their ex officio Kalam, were members, on account of their ex officio capacity. The objects of this assesse capacity. The objects of this assessee are to “3.1.1 To advance the cause of computer communication in “3.1.1 To advance the cause of computer communication in “3.1.1 To advance the cause of computer communication in the country in all its aspects and dimensions with a view the country in all its aspects and dimensions with a view the country in all its aspects and dimensions with a view to provide rapid nationwide development of the sector and to provide rapid nationwide development of the sector and to provide rapid nationwide development of the sector and technological and economic growth of the county. 3.1.2 To technological and economic growth of the county. 3.1.2 To technological and economic growth of the county. 3.1.2 To develop, design develop, design, setup and operate nationwide state of the , setup and operate nationwide state of the art art art computer computer computer communication communication communication infrastructure infrastructure infrastructure with with with international connectivity directed towards research and international connectivity directed towards research and international connectivity directed towards research and development, advancement of high quality education, development, advancement of high quality education, development, advancement of high quality education, create and host content, express creative and academic create and host content, express creative and academic create and host content, express creative and academic potential via intranet and intranet peer to peer connectivity otential via intranet and intranet peer to peer connectivity otential via intranet and intranet peer to peer connectivity among educational and research institutions in the among educational and research institutions in the among educational and research institutions in the country country country and and and the the the world world world and and and make make make available available available the the the communication infrastructure to users in academic, communication infrastructure to users in academic, communication infrastructure to users in academic, research and development institutions, Govt orga research and development institutions, Govt orga research and development institutions, Govt organizations in line with national priorities.” in line with national priorities.” 207. ERNET’s networks are a mix of terrestrial and 207. ERNET’s networks are a mix of terrestrial and 207. ERNET’s networks are a mix of terrestrial and satellite-based wide based wide-area network. It provides services area network. It provides services through its 15 Points of Presence (PoPs) located across the through its 15 Points of Presence (PoPs) located across the through its 15 Points of Presence (PoPs) located across the country. All those are equipped to provide country. All those are equipped to provide access to access to Intranet, Internet and Digital Library through trial leased Intranet, Internet and Digital Library through trial leased Intranet, Internet and Digital Library through trial leased circuits and radio links to the user institutions. The PoP at circuits and radio links to the user institutions. The PoP at circuits and radio links to the user institutions. The PoP at STPI Bengaluru provides Intranet and Internet access STPI Bengaluru provides Intranet and Internet access STPI Bengaluru provides Intranet and Internet access through Satellite. ERNET provides, services, namely, through Satellite. ERNET provides, services, namely, through Satellite. ERNET provides, services, namely, Network Access Ser Network Access Services, Network Applications Services, vices, Network Applications Services, Hosting Services, Operations Support Services und Domain Hosting Services, Operations Support Services und Domain Hosting Services, Operations Support Services und Domain 31

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Registration Services under srnet.in, ac.in, edu.in & res.in Registration Services under srnet.in, ac.in, edu.in & res.in Registration Services under srnet.in, ac.in, edu.in & res.in domains. Funded through government grants, its projects domains. Funded through government grants, its projects domains. Funded through government grants, its projects support educational networks and development support educational networks and development of internet of internet infrastructure in numerous other segments of society. infrastructure in numerous other segments of society. infrastructure in numerous other segments of society. 208. Having regard to the nature of ERNET’s activities, it 208. Having regard to the nature of ERNET’s activities, it 208. Having regard to the nature of ERNET’s activities, it cannot be said that they are in the nature of trade, cannot be said that they are in the nature of trade, cannot be said that they are in the nature of trade, commerce commerce commerce or or or business, business, business, or or or service, service, service, towards towards towards trade, trade, trade, commerce or business. It ha commerce or business. It has to receive fees, to reimburse s to receive fees, to reimburse its costs. The materials on record nowhere suggest that its its costs. The materials on record nowhere suggest that its its costs. The materials on record nowhere suggest that its receipts (in the nature of membership fee, connectivity receipts (in the nature of membership fee, connectivity receipts (in the nature of membership fee, connectivity charges, charges, charges, data data data transfer transfer transfer differential differential differential charges, charges, charges, and and and registration charges) are of such nature as to be called as registration charges) are of such nature as to be called as registration charges) are of such nature as to be called as fees fees fees or or or consideration consideration consideration towards towards towards business, business, business, trade trade trade or or or commerce, or service in relation to it. The functions ERNET commerce, or service in relation to it. The functions ERNET commerce, or service in relation to it. The functions ERNET performs are vital to the development of online educational performs are vital to the development of online educational performs are vital to the development of online educational and research platforms. For these reasons, it is held that and research platforms. For these reasons, it is held that and research platforms. For these reasons, it is held that the impugned judgment, whic the impugned judgment, which upheld the ITAT’s order, h upheld the ITAT’s order, does not call for interference does not call for interference 209. The Revenue has appealed the decision of Delhi High 209. The Revenue has appealed the decision of Delhi High 209. The Revenue has appealed the decision of Delhi High Court in which the National Internet Exchange of India Court in which the National Internet Exchange of India Court in which the National Internet Exchange of India (NIXI) was held to be a GPU category charity. The (NIXI) was held to be a GPU category charity. The (NIXI) was held to be a GPU category charity. The materials on record show that NIXI w materials on record show that NIXI was established in as established in 2003 under the aegis of the Ministry of Information 2003 under the aegis of the Ministry of Information 2003 under the aegis of the Ministry of Information Technology of the Union Government for the promotion and Technology of the Union Government for the promotion and Technology of the Union Government for the promotion and growth of internet services in India, to regulate the internet growth of internet services in India, to regulate the internet growth of internet services in India, to regulate the internet traffic, act as an internet exchange, and undertake “.in” traffic, act as an internet exchange, and undertake “.in” traffic, act as an internet exchange, and undertake “.in” domain name registration. Concededly, NIXI, is a not for ame registration. Concededly, NIXI, is a not for ame registration. Concededly, NIXI, is a not for profit, and is barred from undertaking any commercial or profit, and is barred from undertaking any commercial or profit, and is barred from undertaking any commercial or business activity. Its object is to promote the interests of business activity. Its object is to promote the interests of business activity. Its object is to promote the interests of internet service providers and internet consumers in India, internet service providers and internet consumers in India, internet service providers and internet consumers in India, improve quality of internet s improve quality of internet service, save foreign exchange, ervice, save foreign exchange, and carry on domain name operations. It is bound by and carry on domain name operations. It is bound by and carry on domain name operations. It is bound by licensing conditions licensing conditions – which include the prohibition from which include the prohibition from altering its memorandum, without the prior consent of the altering its memorandum, without the prior consent of the altering its memorandum, without the prior consent of the Union Government. According to the submissions made on Union Government. According to the submissions made on Union Government. According to the submissions made on NIXI’s behalf, it charges annual membership fee of XI’s behalf, it charges annual membership fee of XI’s behalf, it charges annual membership fee of ₹1000/- and registration of second and third level domain and registration of second and third level domain and registration of second and third level domain names at ₹500/ 500/- and ₹250/-. The finding of the ITAT and . The finding of the ITAT and 32

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the High Court are that NIXI’s objects and functioning are the High Court are that NIXI’s objects and functioning are the High Court are that NIXI’s objects and functioning are by way of general public utility a by way of general public utility and thus it is a GPU nd thus it is a GPU category charity. category charity. 210. Having regard to the findings on record and the 210. Having regard to the findings on record and the 210. Having regard to the findings on record and the materials placed by the parties, it is evident that NIXI materials placed by the parties, it is evident that NIXI materials placed by the parties, it is evident that NIXI carries on the essential carries on the essential – crucial purpose of promoting crucial purpose of promoting internet services and more importantly, regulating internet services and more importantly, regulating internet services and more importantly, regulating domain name registration which is extremely essential for internet name registration which is extremely essential for internet name registration which is extremely essential for internet users in India. A country’s need to have a domestic users in India. A country’s need to have a domestic users in India. A country’s need to have a domestic internet exchange, rather than depend on an international internet exchange, rather than depend on an international internet exchange, rather than depend on an international one, cannot be overemphasized. The Union Government’s one, cannot be overemphasized. The Union Government’s one, cannot be overemphasized. The Union Government’s object of setting up of i object of setting up of internet exchange is part of its nternet exchange is part of its essential function as a government to regulate certain essential function as a government to regulate certain essential function as a government to regulate certain segment of the communication networks. In the absence of segment of the communication networks. In the absence of segment of the communication networks. In the absence of a single entity authorized to register “.in” domain names, a single entity authorized to register “.in” domain names, a single entity authorized to register “.in” domain names, there is bound to be chaos or confusion. there is bound to be chaos or confusion. 211. In view 211. In view of the foregoing discussion, this Court is of of the foregoing discussion, this Court is of the opinion that the revenue’s contention that NIXI does the opinion that the revenue’s contention that NIXI does the opinion that the revenue’s contention that NIXI does not merely carry not merely carry-on public purpose of regulatory activity on public purpose of regulatory activity but is involved in trade, commerce, or business or in but is involved in trade, commerce, or business or in but is involved in trade, commerce, or business or in providing service in relation thereto, c providing service in relation thereto, cannot be accepted. annot be accepted.” 5.17 Further Hon’ble Supreme Court, on Miscellaneous application Further Hon’ble Supreme Court, on Miscellaneous application Further Hon’ble Supreme Court, on Miscellaneous application No. 1849 of 2022 in Civil Appeal No. 21762 of 2017]filed by the No. 1849 of 2022 in Civil Appeal No. 21762 of 2017] No. 1849 of 2022 in Civil Appeal No. 21762 of 2017] Revenue for clarification of application of the judgement for evenue for clarification of application of the judgement for evenue for clarification of application of the judgement for earlier on subsequent assessment years, held as under: on subsequent assessment years, held as under:

“1. By this application, the revenue seeks a clarification of the 1. By this application, the revenue seeks a clarification of the 1. By this application, the revenue seeks a clarification of the judgment dated 19.10.2022, delivered by this court, in CA judgment dated 19.10.2022, delivered by this court, in CA judgment dated 19.10.2022, delivered by this court, in CA 21762/2017 and connected appeals. The clarification sought is 21762/2017 and connected appeals. The clarification sought is 21762/2017 and connected appeals. The clarification sought is that para 254 of the that para 254 of the judgment should be such as to "enable the judgment should be such as to "enable the Revenue to redo the assessments in accordance with the above Revenue to redo the assessments in accordance with the above Revenue to redo the assessments in accordance with the above judgments for the past and examine the eligibility on a yearly judgments for the past and examine the eligibility on a yearly judgments for the past and examine the eligibility on a yearly basis for the future and thus render justice." basis for the future and thus render justice."

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appeals were decided against the revenue, they are to be appeals were decided against the revenue, they are to be appeals were decided against the revenue, they are to be However, However, the the reference reference to to future future treated as final. application has to be understood in this context, which application has to be understood in this context, which application has to be understood in this context, which is that for the assessment years which this court was not is that for the assessment years which this court was not is that for the assessment years which this court was not called upon to decide, the concerned authorities will called upon to decide, the concerned authorities will called upon to decide, the concerned authorities will apply the law declared in the judgment, having apply the law declared in the judgment, having apply the law declared in the judgment, having regard to the facts of each such assessment year. the facts of each such assessment year. In view of this In view of this discussion, no further clarification is necessary or called for. discussion, no further clarification is necessary or called for. discussion, no further clarification is necessary or called for. 6. The application M.A. No. 1849 of 2022 is disposed of in the 6. The application M.A. No. 1849 of 2022 is disposed of in the 6. The application M.A. No. 1849 of 2022 is disposed of in the above terms. above terms. (emphasis supplied externally) emphasis supplied externally) 5.18 Thus, the he Hon’ble Supreme Court has clarified that Hon’ble Supreme Court has clarified that law declared in the judgment have to be applied having regard to the declared in the judgment have to be applied having regard to the declared in the judgment have to be applied having regard to the facts of each assessment year. When we examine the facts of the assessment year. When we examine the facts of the assessment year. When we examine the facts of the instant case before us, we find that instant case before us, we find that the ld. AO and the Ld. CIT(A) AO and the Ld. CIT(A) has disputed the activities of conducting exhibitions and trade fair e activities of conducting exhibitions and trade fair e activities of conducting exhibitions and trade fair by the assessee, which according to the Assessing Officer are in the which according to the Assessing Officer are in the which according to the Assessing Officer are in the nature of trade, commerce or business or nature of trade, commerce or business or activity of rendering activity of rendering service in relation to relation to trade, commerce or businessas covered by the as covered by the provisions to section 2(15) of the Act. rovisions to section 2(15) of the Act.

5.19 We find that in the year under consideration, the assessee has We find that in the year under consideration, the assessee has We find that in the year under consideration, the assessee has declared expenditure of declared expenditure of ₹ 83,77,48,288/- on the exhibitions within on the exhibitions within and outside India. The detail of and outside India. The detail of said expenditure is provided expenditure is provided in the notes to the financial statement for the year ended 31/03/2012, notes to the financial statement for the year ended 31/03/2012, notes to the financial statement for the year ended 31/03/2012, which is available on paperbook page 124 to 126. As against this which is available on paperbook page 124 to 126. which is available on paperbook page 124 to 126. expenditure on exhibitions, revenue (income) of expenditure on exhibitions, revenue (income) of ₹ ₹83,95,30,850/-

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from exhibitions within and outside India has been shown in the from exhibitions within and outside India has been shown in from exhibitions within and outside India has been shown in notes to financial statement notes to financial statement, which are available on paperbook page which are available on paperbook page 119. The The The assessee assessee assessee has has has further further further claimed claimed claimed expenditure expenditure expenditure on on on advertisement for exhibition amounting to advertisement for exhibition amounting to ₹1,78,37,641 641/-. Thus, we find that in the year under consideration there is net loss of find that in the year under consideration there is find that in the year under consideration there is ₹1,60,55,079/- from the activity of exhibitions conducted by the from the activity of exhibitions conducted by the from the activity of exhibitions conducted by the assessee within and outside India. In the immediately preceding assessee within and outside India. In the immediately preceding assessee within and outside India. In the immediately preceding assessment assessment assessment year year year the the the expenses expenses expenses on on on exhibitions exhibitions exhibitions were were were of of of ₹77,09,23,044/-as as as compared compared compared to to to revenue revenue revenue or or or income income income of of of ₹70,79,56,744/-. The ass e assessee has further incurred expenditure on further incurred expenditure on advertisement for exhibitions advertisement for exhibitions and thus there was a net loss from and thus there was a net loss from the consideration charged by the assessee for conducting said the consideration charged by the assessee for conducting said the consideration charged by the assessee for conducting said exhibitions or trade fair. exhibitions or trade fair. Details of exhibition revenue and expenses Details of exhibition revenue and expenses submitted by the assessee for assessment year 2011 assessee for assessment year 2011-12 to 2015-16 assessee for assessment year 2011 is reproduced as under: is reproduced as under: The Gem & Jewellery Export Promotion Council The Gem & Jewellery Export Promotion Council (A Company Limited by Guarantee and not having share capital) (A Company Limited by Guarantee and not having share capital) (A Company Limited by Guarantee and not having share capital) Summary of Income and expenditure from exhibitions activities Summary of Income and expenditure from exhibitions activities Summary of Income and expenditure from exhibitions activities Particulars FY 2010-11 FY 2011-12 FY 2012-13 FY 2013- -14 FY 2014-15 AY 2011-12 AY 2012-13 AY 2013-14 AY 2014- -15 AY 2015-16 Gross Receipts 1,00,57,19,583 1,00,57,19,583 1,16,02,21,024 1,31,73,17,085 1,54,62,33,886 1,54,62,33,886 1,48,02,92,120 Exhibitions 70,79,56,834 83,95,30,850 96,11,10,912 1,15,98,98,840 1,15,98,98,840 1,04,02,56,135 Revenue Less: 77,09,23,044 83,77,48,288 93,65,55,637 1,13,74,94,250 1,13,74,94,250 99,43,90,461 Expenditure on Exhibitions Less 2,12,45,443 1,78,37,641 2,79,26,801 2,35,58,718 2,35,58,718 5,44,94,173 Expenditure on Advertisement for Exhibitions Net Deficit (8,42,11,653) (1,60,55,079) (33,71,526) (11,54,128) (11,54,128) (86,28,499) from 36

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Exhibitions activities 5.20 Thus, in the instant case in the instant case it is evident that assessee has is evident that assessee has charged fee or consideration for conducting exhibitions or trade fair charged fee or consideration for conducting exhibition charged fee or consideration for conducting exhibition is slightly below the cost. The Hon’ble Supreme Court in the case of slightly below the cost. The Hon’ble Supreme Court in the case of slightly below the cost. The Hon’ble Supreme Court in the case of AEPC has held that activity of renting space to individual exhibitors AEPC has held that activity of renting space to individual exhibitors AEPC has held that activity of renting space to individual exhibitors or exporters in the exhibition or exhibition or trade fair is a service in relation to service in relation to trade commerce or business, bu business, but in the instant case, t in the instant case, there being no markup on consideration consideration charged from the exporter, from the exporter, therefore, in the broad principles laid down by the Hon’ble Supreme Court, the laid down by the Hon’ble Supreme Court, the activity is beyond the purview of either trade, commerce and activity is beyond the purview of either trade, commerce and activity is beyond the purview of either trade, commerce and business or activity of re activity of rendering services in relation ndering services in relation to trade, commerce or business. commerce or business.

5.21. The Ld. Counsel also referred to the annual report for the year The Ld. Counsel also referred to the annual report for the year The Ld. Counsel also referred to the annual report for the year under consideration (PB under consideration (PB-79 to 89) having discussion regarding 79 to 89) having discussion regarding promoting ‘brand India’ by way of holding of exhibitions and promoting ‘brand India’ by way of holding of exhibitions and promoting ‘brand India’ by way of holding of exhibitions and participation in exhibitions held by overseas trade promotion articipation in exhibitions held by overseas trade promotion articipation in exhibitions held by overseas trade promotion bodies. The relevant part of the annual report, focusing on the bodies. The relevant part of the annual report, focusing on the bodies. The relevant part of the annual report, focusing on the exhibition and trade fair conducted /participated is reproduced for exhibition and trade fair conducted /participated is reproduced for exhibition and trade fair conducted /participated is reproduced for ready reference:

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5.22. It is the contention of the ld. It is the contention of the ld. counsel that object and purpose that object and purpose behind this activity is behind this activity is not to provide any individualiz not to provide any individualized services to particular entity but to promote the Indian brand and the focus is particular entity but to promote the Indian brand and the focus is particular entity but to promote the Indian brand and the focus is on the display of the ability of the Indian gems and jewellery on the display of the ability of the Indian gems and jewellery on the display of the ability of the Indian gems and jewellery industry before the glob industry before the global stakeholders and the participation in al stakeholders and the participation in such exhibition only enables display of the product and not such exhibition only enables display of the product and not such exhibition only enables display of the product and not purchase and sale thereof. purchase and sale thereof. The DR could controvert above factual The DR could controvert above factual aspects of the conducting affairs of the assessee. aspects of the conducting affairs of the assessee.

5.23. In view of above above discussion, we are of the opinion that are of the opinion that assessee is not hit by the provis sessee is not hit by the proviso to section 2(15) of the o to section 2(15) of the Act as far as activity of conducting or participating in exhibitions within India as activity of conducting or participating in exhibitions within India as activity of conducting or participating in exhibitions within India or overseas and therefore the disallowance of exemption claimed by or overseas and therefore the disallowance of exemption claimed by or overseas and therefore the disallowance of exemption claimed by the assessee made by the Assessing Officer the assessee made by the Assessing Officer and the finding of the he finding of the Ld. CIT(A) on the issue in dispute Ld. CIT(A) on the issue in dispute are set aside and matter restore and matter restore back to grant benefit of section 11 and 12 as per provisions of law. back to grant benefit of section 11 and 12 as per provisions of law. back to grant benefit of section 11 and 12 as per provisions of law. The ground No. 1 to 4 of the appeal of the assessee No. 1 to 4 of the appeal of the assessee No. 1 to 4 of the appeal of the assessee are accordingly allowed for statistical purposes for statistical purposes.

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8.1 We find that issue of claim of carryforward of deficit of earlier We find that issue of claim of carryforward of deficit of earlier We find that issue of claim of carryforward of deficit of earlier years has been allowed to the assessee by the Hon’ble Bombay High years has been allowed to the assessee by the Hon’ble years has been allowed to the assessee by the Hon’ble Court in ITA No. 1113 of 2010. Following question of law was raised Court in ITA No. 1113 of 2010. Following question of law was raised Court in ITA No. 1113 of 2010. Following question of law was raised by the Revenue before the Hon’ble High Court: evenue before the Hon’ble High Court:

“(2) Wheth Whether on the facts and circumstances of the case and er on the facts and circumstances of the case and in law the Tribunal was right in directing the AO to set off the in law the Tribunal was right in directing the AO to set off the in law the Tribunal was right in directing the AO to set off the deficit of earlier years to the surplus of this year and consider deficit of earlier years to the surplus of this year and consider deficit of earlier years to the surplus of this year and consider such adjustment as application of income for charitable such adjustment as application of income for charitable such adjustment as application of income for charitable purpose?” 8.2 The Hon’ble High Court, on the second question of law on’ble High Court, on the second question of law on’ble High Court, on the second question of law dismissed the appeal of the dismissed the appeal of the Revenue observing as under: evenue observing as under:

“4. As regards second question is concerned, counsel on both As regards second question is concerned, counsel on both As regards second question is concerned, counsel on both sides agree that the said question is covered against the sides agree that the said question is covered against the sides agree that the said question is covered against the revenue by the decision of this revenue by the decision of this Court in the case of Court in the case of Commissioner of Income Tax V/s. Institute of Banking reported Commissioner of Income Tax V/s. Institute of Banking reported Commissioner of Income Tax V/s. Institute of Banking reported in [2003] 264 IT.R. 110. In this view of the matter, we see no in [2003] 264 IT.R. 110. In this view of the matter, we see no in [2003] 264 IT.R. 110. In this view of the matter, we see no merit in the appeal and the same is dismissed with no order as merit in the appeal and the same is dismissed with no order as merit in the appeal and the same is dismissed with no order as to costs.”

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8.3 We find that following find that following above finding of the Hon’ble High Court ding of the Hon’ble High Court, the Ld. CIT(A) in assessment year 2009 Ld. CIT(A) in assessment year 2009-10 and 2010 10 and 2010-11 has allowed the appeal of the assessee observing as under: allowed the appeal of the assessee observing as under: allowed the appeal of the assessee observing as under:

“7. In the next ground, the appellant is aggrieved by action of 7. In the next ground, the appellant is aggrieved by action of 7. In the next ground, the appellant is aggrieved by action of the AO in not allowing the deficit of the year the AO in not allowing the deficit of the year to be carried to be carried forward. AO held that there is no provision under the Act forward. AO held that there is no provision under the Act forward. AO held that there is no provision under the Act which allows determination of loss while computing income which allows determination of loss while computing income which allows determination of loss while computing income under section 11 of the Act. He has further stated that under section 11 of the Act. He has further stated that under section 11 of the Act. He has further stated that department has filed SLP department has filed SLP against the order of the Hon'ble High against the order of the Hon'ble High Court. 7.1. In submissions, the Ld. AR has pointed out that the 7.1. In submissions, the Ld. AR has pointed out that the 7.1. In submissions, the Ld. AR has pointed out that the Hon'ble Mumbai High Court vide order No.1113/2010 dated Hon'ble Mumbai High Court vide order No.1113/2010 dated Hon'ble Mumbai High Court vide order No.1113/2010 dated 15-2-2011 (supra) has allowed the set off of 2011 (supra) has allowed the set off of 2011 (supra) has allowed the set off of deficit in assessee's own case for A.Y. 2004 assessee's own case for A.Y. 2004-06. Thus there is no reason 06. Thus there is no reason for A0 todeny the same. for A0 todeny the same. 7.2 I have considered the facts of the case and the .2 I have considered the facts of the case and the .2 I have considered the facts of the case and the submissions made by the appellant. Respectfully following the submissions made by the appellant. Respectfully following the submissions made by the appellant. Respectfully following the jurisdictional High Court decision stated above, jurisdictional High Court decision stated above, I direct the AD I direct the AD to and allow the deficit to be carried forward. This ground of to and allow the deficit to be carried forward. This ground of to and allow the deficit to be carried forward. This ground of appeal is allow is allowed.” 8.4 In the year under consideration, ld CIT(A) has noted that since the year under consideration, ld CIT(A) has noted that since the year under consideration, ld CIT(A) has noted that since exemptions under section 11 had been denied to the assessee by exemptions under section 11 had been denied to the assessee by exemptions under section 11 had been denied to the assessee by the AO therefore, the action of the AO therefore, the action of AO in denying carryforward of the denying carryforward of the deficit was upheld by the ld CIT(A). deficit was upheld by the ld CIT(A).

8.5 However, the claim of exemption under section 11 has been claim of exemption under section 11 has been claim of exemption under section 11 has been allowed to the assessee by us, allowed to the assessee by us, therefore, the Assessing Officer is the Assessing Officer is directed to allow the claim of the assessee of carryforward of the directed to allow the claim of the assessee of carryforward of the directed to allow the claim of the assessee of carryforward of the deficit following the finding of the Hon’ble jurisdiction High Court deficit following the finding of the Hon’ble jurisdiction High Court deficit following the finding of the Hon’ble jurisdiction High Court

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(supra). The ground No. 9 and 10 of the appeal of the assessee of the appeal of the assessee are allowed for statistical purposes. allowed for statistical purposes.

Order pronounced in the open Court/under Rule 34(4) of ronounced in the open Court/under Rule 34(4) of ronounced in the open Court/under Rule 34(4) of the ITAT Rules, 1963 on the ITAT Rules, 1963 on 31/01/2023. Sd/- Sd/ /- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/01/2023 Dragon Legal /Rahul Sharma, Sr. P.S. Copy of the Order forwarded Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai