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2018 Supreme(Bom) 2370
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. Sanklecha, Riyaz I. Chagla, JJ.
Indian Machine Tools And Manufacturers'' Association - Appellant
Versus
Director Of Income Tax - Respondent
Income Tax Reference No. 104 of 2000
Decided On : 09-03-2018
Ms. Aarti Sathe with Mr. Nirav Barot i/b. Maneksha and Sethna, Advocates, for the Applicant; Mr. A.R. Kotangle with Ms. Pratima Singh i/b. A.K. Saxena, Advocates, for the Respondent
Headnote:
Income Tax Act, 1961 - Section 256(1), 11(4A) – Income Tax Act, 1922 - Section 10(2)(vii) - Seeks our opinion on following question of law: "Whether in the facts and in the circumstance of case assessee had fulfilled all the requirements of section 11(4A) and if so, whether it is entitled to exemption under section 11 and whether the decision of the Tribunal that the assessee has not fulfilled all the requirements of section 11(AA) is correct under law or is liable to be set aside?" – Held, reliance upon the reasoning given in order of Tribunal Charitable Trust, in support to the effect that purpose of maintaining separate books of accounts is only to enable the Assessing Officer to find out the surplus income earned by carrying on business incidental to the objective of the Trust - reasoning of the Tribunal entirely overlooks the fact that the legislature has specifically used the words maintained separate books of accounts and it is not open to any Court to ignore any portion of the provision on the basis of the supposed intent in the absence of any ambiguity therein. Thus, reasoning of the Tribunal in the above case which is adopted by Applicant Assessee, is of no avail - Court hold that the expression separate books of accounts would mean books of accounts different and distinct from books of accounts maintained by the assessee in support of the activity of charitable purposes. In the above view, Court hold Applicant Assessee not having maintained separate books of accounts will not be entitled to the benefit of Section 11 of the Act – Ordered Accordingly
JUDGMENT
M.S. Sanklecha, J. - This Reference by the Income Tax Appellate Tribunal (the Tribunal) under section 256(1) of the Income Tax Act, 1961 (the Act), seeks our opinion on the following question of law:
"Whether in the facts and in the circumstance of the case the assessee had fulfilled all the requirements of section 11(4A) and if so, whether it is entitled to exemption under section 11 and whether the decision of the Tribunal that the assessee has not fulfilled all the requirements of section 11(AA) is correct under law or is liable to be set aside?"
2. This Reference relates to Assessment Year 1992-93.
3. Before the Tribunal, both the Applicant Assessee as well as the Respondent Revenue had preferred applications for Reference to this Court under Section 256(1) of the Act. The Tribunal, in its statement of case has rejected the Revenue''s application, as not giving rise to question of law. However, the application raising question of law filed by the Assessee, was allowed to the extent of the question formulated herein above.
4. In the above view, for the purpose of recording the facts leading to the question of law, we refer to the statement of case sent by the Tribunal to the extent it relates to Assessee''s application to the Tribunal. The relevant extract of the facts from the statement of case for the question raised for our opinion, are as under:-
"5. Now, let us take up the assessee''s references which comprises of three questions, which have been extracted by us in the prior paras. After hearing both the sides, we are of the opinion that a question of law does arise from our decision, but the question of law, according to us, should be only one consolidated question, which is as follows:
" Whether, in the facts and circumstances of the case, the assessee had fulfilled all the requirements of Section 11(4A) and if so, whether it is entitled to exemption under section 11 and whether the decision of the Tribunal that the assessee has not fulfilled all the requirements of Section 11(4A) is correct under law or is liable to be set aside?"
The brief statement of facts of the case is as follows:
For the assessment year 1992-93, for which the previous year ended by 31.3.1992, the assessee first filed a return disclosing nil income on 30.12.1992. It was accompanied by audited accounts and the auditors'' report in Form No. 10B. The assessee is a company registered under section 12A of the Income Tax Act, 1961. It is also registered under section 25 of the Companies Act. In the Memorandum and Articles of Association, the main objects of the assessee are set out and they are extracted in the A.O.''s order. During the year under consideration, the assessee had shown gross receipts of Rs. 5,52,56,585/the break up of which is the following:
| Income from membership fees | Rs. 4,61,000 |
| Income from IMTEX-92 | Rs. 4,76,80,230 |
| Miscellaneous Income | Rs. 71,15,355 |
| Total receipts | Rs. 5,52,56,585 |
The main source of receipts is by way of ''Income from IMTEX92'' which constitutes 86.29% of the total receipts. The A.O. asked the assessee to explain the details of IMTEX92. During the course of hearing, it was explained that IMTEX92 is the name of a Trade Fair Exhibition organized by the assessee at Pragati Maidan, New Delhi, in March, 1992. The total receipt from IMTEX92 has been to the tune of Rs. 4,76,80,230/. The breakup of these receipts is the following:
| Rent (including power and other charges) | Rs. 4,65,78,748 |
| Sale of passes/entry tickets | Rs. 5,03,732 |
| Advertisements in Exhibition catalog | Rs. 5,54,750 |
| Misc. receipts | Rs. 43,000 |
|
| Rs.4,76,80,230 |
The expense were to the tune of Rs. 3,04,65,018/as detailed in Schedule 10 to the "Income & Expenditure Account". Thus, the as
