THE ITO, (EXEMPTIONS), WARD-1, AHMEDABAD vs. INDIAN STAINLESS STEEL DEVELOPMENT ORGANISATION, AHMEDABAD

This appeal by the Revenue is directed against the order of the Ld. CIT(A)-9, Ahmedabad dated 28.05.2015 pertaining to A.Y. 2010-11 and following grounds have been taken: 2 . A.Y. 2010-11 (i) The Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in deleting the disallowance of the claim of exemptions u/s 11(l)(a) of the I.T. Act of Rs.72,62,624/- and u/s 11(2) of the I.T. Act of Rs. 77,00,000/- made by the A.O. as A.O has disallowed exemptions claimed u/s 11 & 12 of the Act under section 13(8) since the assessee is covered by 1st proviso to Section 2(15). (ii) On the facts and circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals) ought to have upheld the order of the Assessing Officer. (iii) It is, therefore, prayed that the order of the Ld. Commissioner of Income-Tax (Appeals) may be set aside and that of the Assessing Officer be restored.

The facts of the case are that the assessee trust, during the year under consideration has carried on various activities in line with its objects such as, to organize arrangement in the interest of stainless steel industry. The trust is registered u/s 12AA of the I.T. Act. vide Order No.DIT(E)/12AA/554/2009- 10 dated 01.07.2009. The trust is approved u/s 80G(5) of the IT. Act, 1961 vide F.No. DIT(E)/80G(5)/970/2008-09 dated 16.07.2009. 3. During the course of assessment proceeding for the year under assessment, the assessee was asked vide letter dated 13.02.2013 that the conducting the fair/exhibition of the trust is falls under the limb of the advancement to general public utility and why the proviso 1 and 2 does not applicable to the trust .which is reproduced as under: "As per sub-section 15 of section 2 of the I T Act, 1961, the definition of the abovepurpose reads as under:

1 In response to the notice the assessee submitted vide 25.02.2013. "

We may state that simply because the activity of exhibition/fair - INDIANOX-2010 arranged by us had resulted into surplus it did not disqualify, from exemption u/s.ll. It is not as if the charitable institution cannot generate any surplus. The surplus is to be understood in 4 . A.Y. 2010-11 contra distinction to generation of income with the sole motive of the profit it one has to understand the legislative intent of this proviso (Refer to MAA Saraswati Educational Trust (236 CTR 400) (HP). You will appreciate that the assessee trust was not establish with the sole of intention to carry out the Activity with the object to earn income. The sole intention behind arranging the fair/ exhibition was to acquaint promote and create awareness amongst the members and general public both with the stainless Steel industry. The number of people who participated in the fair/exhibition that itself proves that the intention was not to earn out of it. It had provided source of information to the participants about the present position of stainless Steel industry. The said activity was consonance with the Clause (a) and (c) of Memorandum of Association. You will Appreciate that 'the very fact that it is not a disabling factor but there may be surplus arising from the activities of the trust and it can accumulate for spending on its objects in future by opting for accumulation. One can draw analogy from the profit earned by the educational institution. The copy of earlier show cause submission u/s.2(15) dated 29/01/2013 is also enclosed for your ready reference.