Itxa/610/2011 Of The Director Of Income Tax (Exemption ) v. Gem And Jewellery Export Promotion Council

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.1113 OF 2010 The Director of Income Tax (Exemption) ..Appellant. V/s. M/s. Gem & Jewellery Exports Promotion Council ..Respondent. Mr. Suresh Kumar for appellant. Mr. P.J. Pardiwala, senior Advocate i/b. Wadia Gandhi for respondent. CORAM : J.P. DEVADHAR AND MRS. MRIDULA BHATKAR, JJ.DATED : 15TH FEBRUARY, 2011 P.C. :- 1.The office objections are overruled. Basically two questions are raised by the revenue in this appeal, which read as under:- (1)Whether on the facts and circumstances of the case and in law the Tribunal was right in holding that the assessee has fulfilled the conditions as laid down u/s.11(4A) of the I.T. Act, 1961 and is therefore entitled for exemption u/s.11 of the I.T.. Act, 1961?Tribunal was right in holding that the assessee has fulfilled the conditions as laid down u/s.11(4A) of the I.T. Act, 1961 and is therefore entitled for exemption u/s.11 of the I.T.. Act, 1961? (2)Whether on the facts and circumstances of the case and 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 such adjustment as application of income for charitable purpose ? Tribunal was right in directing the AO to set off the deficit of earlier years to the surplus of this year and consider such adjustment as application of income for charitable purpose ? concerned, the Tribunal has recorded the finding as follows:- " We have heard the rival submissions, perused the orders of the lower authorities and the materials available on record. The assessee is a council approved by the Govt. as "jem and jewellery export promotion council". From the name itself it is seen that the assessee's objects are to promote the export of jewellery for India. For this purpose, various exhibitions have been held by the assessee in various countries. For this purpose, necessary approval has been obtained from the Govt. of India. Copy of such approval is placed at Pages 17 to 20 of the paper book. We have also seen the copy of the notes on objects of the council which are placed at pages 1 to 7 and also the extract of export and import policy, copy of which is placed at pages 8 and 9. Minutes of the grant of approval organizing exhibition, etc. is placed at pages 11 to 16 and approval from Govt. of India is placed at Pages 17 to 20. The assessee is also maintaining separate books of account. Copy of annual account is also placed at pages 21 to 25 from which it is clearly seen that there is no surplus funds with the assessee. " " Similar facts are involved in the present case as object of the assessee is to promote the export of jem and jewellery for India. We have also considered various decisions and found that they are in favour of assessee's case. In the case of Indian Machine Tools, decided in ITA No.585/Mum/2002, the Tribunal following the decision in the case of Indian Electrical and Electronic Manufacturers Association (supra) held that the activity of the assessee is incidental to the object of the assessee, therefore, the assessee is entitled to exemption u/s.11. Taking into consideration all the facts and circumstances and the ratio of various decisions of the Tribunal cited supra, we hold that the assessee's activities are incidental to the object of the assessee and thus, the assessee is entitled to exemption u/s.11 of the Act. The Ld. CIT(A) has also given his finding in Para-6.2 wherein it is held that assessee's activities are incidental to the main object of the assessee. The Ld. CIT(A) categorically held that the assessee is maintaining cash book, ledger, journal, etc., for the exhibition activity and, accordingly, it was held by him that the assessee is eligible for exemption u/s.11 of the Act, therefore, we see no infirmity in this finding of the Ld. CIT(A). Accordingly, we confirm the order of the Ld. CIT(A) in this respect. " 3.From the above finding of fact and in the light of the judgment of the Apex Court in the case of Assistant Commissioner of Income Tax V/s. Thanthi Trust reported in 247 I.T.R. 785, the decision of the Tribunal holding that the assessee has fulfilled all the conditions of Section 11(4A) of the Income Tax Act cannot be faulted. Moreover, the Tribunal has recorded finding of fact that the assessee has maintained separate books of account in respect of exhibition activity. In this view of the matter, the first question raised by the revenue cannot be entertained. 4.As regards second question is concerned, counsel on both sides agree that the said question is covered against the revenue by the decision of this Court in the case of Commissioner of Income Tax V/s. Institute of Banking reported in [2003] 264 I.T.R. 110. In this view of the matter, we see no merit in the appeal and the same is dismissed with no order as to costs. (MRS. MRIDULA BHATKAR, J.) (J.P. DEVADHAR, J.)