Indian Chamber Of Commerce Entitled To Claim Exemption In Respect Of Receipts From Seminars And Conferences: ITAT

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Indian Chamber of Commerce (ICC) is entitled to claim exemption in respect of its entire receipts.

The bench of Rajesh Kumar (Accountant Member) has observed that the ICC is not carrying on any activity of holding meetings, seminars, and conferences for business purposes but only to support its main object, and it charges its participants, members, and non-members the amount of the fee, which does not even cover the cost of holding such events.

The assessee, the Indian Chamber of Commerce (ICC), is an association of industrialists, being a company registered under Section 25 of the Companies Act as a non-profit company that does not distribute any dividends to its members. Its entire receipts and revenue are being spent for the fulfilment of its objectives as per its Memorandum and Articles of Association.

The assessee is formed as an association of various industrialists, organisations, and other commercial entities for the development of trade, commerce, and industry. The membership of ICC comprises business houses and corporate houses within the country and abroad.

The AO observed that the activities of the trust are covered by proviso to Section 2(15) read with Section 13(8), and therefore the exemption u/s 11 would not be available to the assessee as the activities of organising meetings, conferences, and various seminars constituted business activity, as well as the fact that the receipt of the assessee from these activities exceeded Rs. 25.00 lakhs in terms of proviso to Section 2(15). The exemption under Section 11 was denied for the activities by the AO by dichotomizing and bifurcating the total receipt into two components, namely business income and charitable receipts/income, and computing the income accordingly.

The AO added Rs. 2,00,75,470 as net business income by apportioning the administrative expenditure proportionately between the business and charitable receipts/income based on the gross quantum of receipts.

The order of the AO was assailed before the CIT (A). The CIT(A) enhanced the income after issuing notice on the ground that the AO has wrongly bifurcated the income into business and charitable segments by rejecting the exemption under Section 11 in respect of charitable income as allowed by the AO.

The CIT(A) held that the ICC was not eligible for exemption under Section 11 because it exceeded the monetary limit as prescribed in the second proviso to Section 2(15) read with Section 13(8), and therefore the provisions of Section 11 are not applicable to the assessee.

The assessee submitted that the main object of the assessee has been to promote and protect trade, commerce, and industries, and the assessee has not provided additional services such as courses meant to skill personnel, providing private rental spaces in fairs or trade shows, consulting services, etc., and therefore, since no such business activity is carried on by the assessee, the proviso to Section 2(15) of the Act is not applicable to the assessee.

The department contended that the activities of the ICC are in the nature of business or commerce, as the ICC has been charging in the form of sponsorships for organising meetings, seminars, and conferences and therefore constitute business activities, especially post-introduction of proviso to Section 2(15).

The tribunal noted that the administrative and other incidental expenses of holding and organising such seminars, conferences, and meetings are met out of other charitable income received from interest on FDRs, rental, and miscellaneous income.

The tribunal held that the ICC is entitled to exemption as the activities of the advancement of the main object are not covered by the proviso to Section 2(15) even after amendments.

Counsel For Appellant: S. K. Tulsiyan

Counsel For Respondent: Abhijit Kundu

Case Title: Indian Chamber of Commerce Versus DCIT

Case No.: I.T.A. Nos. 933 & 934/Kol/2023

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