VIDEO PHOTOGRAPHERS ASSOCIATION OF GUJARAT,,AHMEDABAD vs. THE DY.DIT (EXEMP.),, AHMEDABAD

By way of this appeal, the assessee appellant has challenged correctness of the order dated 3rd September 2014 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2010-11.

Grievance of the assessee, in substance, is that the learned CIT(A) erred in holding that the proviso to Section 2(15) will come into play on the facts of this case, and, consequently, the assessee appellant is to be declined the status of being engaged in a charitable activity.

The assessee appellant is a charitable trust registered under section 12 A of the Income Tax Act. The main objects for which the assessee was formed include, inter alia, “to improve the art of photography and videography, and, for that purpose, to procure and in turn give guidance, directions and information to the Members of the Association”. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that in the relevant previous year, the assessee has organized an exhibition, charged fees for stalls in the exhibition and these stalls were not only given to the Members but also to the commercial organizations. The Assessing Officer was of the view that this activity of holding exhibition cannot be treated as a charitable activity under section 2(15). It was held that since holding an exhibition is in the nature of

I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.

I find that it is immaterial as to whether the activity of holding an exhibition per se is an education activity or not, because, as long as the assessee is pursuing the educational activities by holding workshops and classes- as the assessee is clearly on the facts of this case, even when his pursuing the educational objects involve an activity in the nature of commercial activity, the proviso to Section 2 (15) cannot be invoked. Section 2(15), as it stood prior to the insertion of proviso thereto with effect from 1st April 2009, was a relatively simple section which stated that “charitable purpose includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility” but the proviso to this sub section, inserted with effect from 1st April 2009, states that “provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity”. In plain words, all that this legislative amendment provided for was that in a situation in which, in the course of advancement of any other object of public utility, the activities of an institution involved “carrying on of any activity in the nature of trade, commerce or business” or of “any activity of rendering any service in relationship to any trade, commerce or business for a cess, fee or any other consideration”, then irrespective of what such an institution does to the income, how that income is applied or how that income is retained, the institution, to that extent, will cease to be carrying on charitable activities. All this is, however, relevant only for the residuary clause of definition, i.e. “any other object of general public utility”. In a case in which an assessee is involved in educational activity, the proviso to Section 2(15) does not come into play. As to what could be termed as an

In view of the above discussions, and bearing in mind peculiar facts of this case, I am of the view that the authorities below were in error in invoking proviso to Section 2(15) on the facts of this case. I, therefore, see no reasons to deal with all other peripheral legal issues raised by the assessee and uphold the plea of the assessee for the short reasons set out above.