The Synthetic & Art Silk Mills Research ... vs Cit (Exem), Mumbai on 19 December, 2023
19. As per the provisions of section 10(21) any income of a research
association approved for the purpose of clause (ii) or clause (iii) of sub-section
(1) of section 35, is exempt provided it applies its income, or accumulates it for
application, wholly and exclusively to the objects for which it is established. The
third proviso to section 10(21) provides that nothing contained in this clause shall
apply in relation to any income of the research association, being profits and
gains of business, unless the business is incidental to the attainment of its
objectives and separate books of account are maintained by it in respect of such
business. The claim of the assessee is that the income derived from Auditorium
Hire charges, hoarding site & service charges and rent are incidental to the
attainment of the objectives of the assessee trust and the reason for excise of
revisionary power under section 263 is that the said income is not incidental to
the objectives. During the course of hearing the ld. AR relied on the decision of
the Chennai Bench of the Tribunal in the case of Association of Surgeons of
India (supra) wherein it was held that the income earned from letting out of
Auditorium was eligible for exemption under section 11 when the income was
applied to the objects of the Trust. Therefore there is merit in the contention that
whether the impugned income is incidental to the objects of the assessee trust is a
debatable issue and that the AO while allowing the exemption in the order passed
under section 144 r.w.s.263 has taken a possible view upon verifying the details
available on record.