The Indian Chamber of Commerce (ICC) is qualified to claim exemption concerning its complete receipts the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) ruled. Rajesh Kumar (Accountant Member) has noted that the Indian Chamber of Commerce (ICC) does not engage in organizing meetings, seminars, and conferences for business purposes. Instead, these activities are conducted solely to further its primary objectives.
Despite charging fees from participants, including members and non-members, the collected amounts are insufficient to cover the expenses associated with hosting these events.
The Indian Chamber of Commerce (ICC), the taxpayer in question, functions as an association of industrialists. It is registered as a non-profit company under Section 25 of the Companies Act, abstaining from distributing dividends to its members.
All the revenue and receipts of the ICC are dedicated to fulfilling its objectives outlined in its Memorandum and Articles of Association.
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Established as an association uniting diverse industrialists, organizations, and commercial entities, the ICC is focused on fostering the development of trade, commerce, and industry. The membership of the ICC encompasses business and corporate entities both within the country and internationally.
The Assessing Officer (AO) noted that the trust’s actions fall under the proviso to Section 2(15) in conjunction with Section 13(8). Consequently, the assessee would not qualify for the exemption under Section 11.
This determination stemmed from the AO’s classification of the trust’s activities—organizing meetings, conferences, and seminars—as business activities. Additionally, the AO pointed out that the assessee’s receipts from these activities exceeded Rs. 25.00 lakhs, as specified in the proviso to Section 2(15).
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To deny the exemption under Section 11, the AO segmented the total receipts into two categories: business income and charitable receipts/income, and subsequently calculated 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 Assessing Officer’s decision was challenged at the level of the Commissioner of Income Tax (Appeals) [CIT (A)]. The CIT (A) increased the income following a notice, asserting that the AO had erroneously divided the income into business and charitable components, thereby rejecting the exemption under Section 11 for the charitable income as approved by the AO.
The Commissioner of Income Tax (Appeals) [CIT(A)] determined that the Indian Chamber of Commerce (ICC) was ineligible for exemption under Section 11 due to surpassing the prescribed monetary limit outlined in the second proviso to Section 2(15) in conjunction with Section 13(8). Consequently, the provisions of Section 11 were deemed not applicable to the assessee.
In response, the assessee argued that its primary objective was to promote and safeguard trade, commerce, and industries. The assessee emphasized that it did not engage in supplementary services such as offering skill development courses, providing private rental spaces at fairs or trade shows, or providing consulting services. Therefore, the assessee contended that the proviso to under Section 2(15) of the Act did not apply.
Contrarily, the department asserted that the ICC’s activities were commercial or business-oriented. They pointed out that the ICC generated revenue through sponsorships for organizing meetings, seminars, and conferences, constituting business activities, especially in light of the introduction of the proviso to Section 2(15).
The tribunal observed that the costs associated with conducting seminars, conferences, and meetings, including administrative and other incidental expenses, are funded through charitable income derived from sources such as interest on Fixed Deposit Receipts (FDRs), rental income, and miscellaneous earnings.
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The tribunal concluded that the Indian Chamber of Commerce (ICC) qualifies for exemption, as its activities aligning with the primary objective are not subject to the proviso to Section 2(15), even following amendments.
| Case Title | ITAT Order for Indian Chamber of Commerce Versus DCIT |
| Case No. | I.T.A. Nos. 933 & 934/Kol/2023 |
| Date | 22.12.2023 |
| Counsel For Appellant | Shri S. K. Tulsiyan, Advocate, Smt. Lata Goyal, A.R |
| Counsel For Respondent | Shri Abhijit Kundu, CIT |
| ITAT Order | Read Order |