Recently, in the Fertilizers Association of India v. ITO, the division bench of the Delhi ITAT held that mere charging of fee from members/ non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption under Sections 11 and 12 of the Income Tax Act.
Assessee, Fertilizers Association of India, conducts various training programmes, workshops, seminars etc by charging fee from its members and non-members. The object of the assessee was to discuss the various prevailing issues in the agriculture and fertilizers industry and to educate the participants as to the latest up-dates in their respective fields. As the programmes are very attractive and generate huge benefit to the fertilizers and agriculture sector, many non-members and Associates Organisation also participate in such events.
The AO denied exemptions under sections 11 and 12 of the IT Act to the assessee by holding that the activities of the assessee are in the nature of trade commerce or business since they are charging amount from the members as well as the non-members. assesses contentions that they takes nominal amount from the participants of annual seminar and the assessee is not engaged in any trade, commerce or business, were also rejected.
The Tribunal noticed that a similar issue was concluded by the bench in favour of the assessee in a recent decision wherein it was observed that, “mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso facto lead to denial of exemption. The dominant object of the assessee remains charitable and the aforesaid activities are only incidental to the main activity of the assessee. Also , the activities of the assessee are benefiting the public at large at submitted by the Ld. Counsel for the assessee. Furthermore, it is not the case of the department that any change in objects had taken place in the relevant year so as to take the assessee outside the ambit of section 2(15). The effect of the amendment has been discussed elaborately by the Hon’ble Delhi High Court in ITPO Case (supra) as well as the judgment of Apex Court in Andhra Pradesh Chamber of Commerce(supra) and the test of dominant object has not been altered even after the said amendment.”
Accordingly, the impugned orders were set aside.
Read the full text of the order below.
