INCOME TAX ACT, 1961

Section 2(15), Proviso Section 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Predominant objective to make profit

Assessee was organizing annual functions wherein certain workshops were carried out. It submitted that said activities fall within the meaning of education or alternatively under advancement of any other object of general public utility and accordingly, assessee was eligible for exemption under section 11. AO noticed that assessee had received meeting income and sponsorship income. Also, assessee has conducted seminars, etc., for which a charge had been levied. The various sponsors being corporate houses paid different amount ranging from Rs. 20 lakhs to Rs. 25 lakhs for sponsoring their annual function and in turn, assessee provided them services of branding on all sponsor panels, social media, website and emailer branding, venue video ads (in workshop classroom), in auditorium, etc. The assessee also provided them 30/50/100 passes for TiE Summit depending upon their contribution. Accordingly, AO held assessee's activities to be in the nature of trade, commerce or business and accordingly, denied exemption under section 11. Assessee contended that it was a non-profit entity and received funds to meet its operative cost without any motive to earn profit.Held: Details of programmes carried on by the assessee showed that majority of so-called programmes were said to be 'informal and interactive huddle session' over morning breakfast. Some of such huddles were over evening snacks and tea. A good number of them involved only for interaction with senior entrepreneurs. Then there were events for idea validating for budding and early stage entrepreneurs and interactive sessions with senior entrepreneurs. Then there were programmes for presenting holistic view for funding options for entrepreneurs. This made it abundantly clear that assessee was not engaged in education activity leave alone systematic imparting of education. As regards assessee's alternative submission the nature of expenditure incurred by assessee which included event management expenses, summit expenses, expenditure on food and beverages, videography, etc., to the tune of Rs. 3 crores also supported the case that assessee was in the business of rendering services for a fee like any other business commercial activity carried out by any business/entity in the market and making slabs for sponsorship fee and specifying types of service against it were certainly for commercial gains with predominant objective to make profit. Therefore, exemption under section 11 had been rightly denied by AO.

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