TMI Blog2011 (12) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... table institutions engaged in the activity of advancement of any other object of general public utility. Relief of the poor, education and medical relief are outside the purview of the aforesaid Proviso. Therefore, applying the provisions of Proviso to sec. 2(15) of the Act to the present case by the DIT(E) is also totally misplaced. Further, nominal fees are charged from patients and charging of fee from the patients in itself cannot be considered to be a commercial activity. - Decided in favor of assessee. - IT APPEAL NO. 4498 (DELHI) OF 2011 - - - Dated:- 16-12-2011 - G.D. AGRAWAL, C.L. SETHI, JJ. K. Sampath and V. Raja Kumar for the Appellant. Salil Mishra for the Respondent. ORDER C.L. Sethi, Judicial Member The present appeal is filed by the assessee trust against the order dated 16.08.2011 of the learned Director of Income-tax (Exemptions), Delhi, rejecting the assessee's application in Form No. 10G of the Income-tax Act, 1961 (the Act). 2. Various grounds of appeal raised by the assessee revolve around the DIT(E)'s order in denying the exemption under sec. 80G(5)(vi) of the Act. 3. We have heard both the parties and perused the material on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from commercial activity carried out under the garb of medical relief. The learned DIT(E) has also invoked the provisions contained in Proviso to sec. 2(15) of the Act inserted by the Finance Act, 2008 with effect from 1.04.2009 and held that since the assessee trust is engaged in any activity of trade, commerce or business for providing services in respect of trade, commerce or business, the activity of the assessee no longer qualified to be charitable in nature and hence, benefit of exemption would no longer be available to the assessee. 5. At this stage, it is pertinent to note that Proviso to clause (vi) of sec. 80G(5) has been omitted by the Finance Act, 2009 w.e.f. 1st October, 2009. As per clause (vi) of sec. 80G(5) of the Act, institution or fund to which donations are made have to be approved by the Commissioner of Income-tax in accordance with the Rules prescribed in Rule 11AA of the Income-tax Rules, 1962. The Proviso to this clause provided that any approval granted under this clause shall have effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval. This Proviso imposing the limitation of five years has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision to clause (vi) of sec. 80G(5) has been made applicable with effect from 1st October, 2009, and accordingly, existing approvals expiring on or after 1st October, 2009 will be deemed to have been extended in perpetuity unless specifically withdrawn. However, in case of approvals expiring before 1st October, 2009, these will have to be renewed and once renewed these shall continue to be valid in perpetuity, unless specifically withdrawn. In the present case, the approval of exemption granted under sec. 80G of the Act to the assessee vide order dated 2.09.2008 was valid for the period from 1.04.2008 to 31.03.2011. Thus, the existing approval granted vide order dated 2.09.2008, was expiring on 31-03-2011, i.e., after 1st October, 2009. Therefore, the approval granted for the period from 1.04.2008 to 31.03.2011 vide order dated 2.09.2008 shall be deemed to have been extended in perpetuity unless specifically withdrawn. Therefore, in this case, the filing of an application for renewal of exemption after the alleged expiring of the same on 31.03.2011 by the assessee was not required. Once the exemption granted stands extended in perpetuity by operation of law, merely moving an appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner since has moved an application for renewal of the exemption on 31-3-2010, the Commissioner of Income-tax without taking cognizance of the said Circular/amendment, rejected the application as well as renewal, as the petitioner did not turn up after notice being issued. 11. Sri D.D. Chopra says that since the petitioner moved the application on 31-3-2010 i.e., before the Circular was issued on 3-6-2010, therefore, the Commissioner proceeded with the application ignoring the said Circular. 12. The Appellate Tribunal also did not take into account the effect of the Circular aforesaid and remanded the matter for affording opportunity to the petitioner and passing fresh orders by the Commissioner of Income-tax, in accordance with law. 13. May that be at the time of moving the application, Circular aforesaid was not in vogue and in the absence of any such Circular having been issued, the application would have been decided in the manner as required under the Act. But once a Circular was issued, even during the pendency of the application for renewing the exemption already granted which was in force in perpetuity as a consequence of amending the proviso to clause (vi) of sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to have been extended in perpetuity unless specifically withdrawn in view of the amendment made in the Act with effect from 1.10.2009 read with the Board's aforesaid Circular. We therefore, hold that the assessee shall be treated to have been approved for exemption u/s 80G of the Act and the order of the learned DIT(E) dated 16.08.2011 shall stands cancelled. 8. One more reason given by the DIT(E) is that the assessee's activities are hit by Proviso to sec. 2(15) of the Act inserted by the Finance Act, 2008 w.e.f. 1.04.2009. Under this Proviso, it has been provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature, of use or application or retention of the income, from such activity. It makes it clear that this Proviso is applicable in respect of charitable institutions engaged in the activity of advancement of any other object of general public utility i.e. the 4th limb of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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