TMI Blog2019 (4) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, NEIA’s activity cannot and should not be considered to be in nature of trade, commerce or business. Since the dominant and prime object of the assessee is not to earn the profit in relation to trade, commerce and business, therefore, the exemption u/s.11 & 12 is not liable to be declined. Accordingly, we set aside the finding of the CIT(A) in this issue and allowed the claim of the assessee. Corpus donations - disallowance in sum of ₹ 190 crores received during the year from Central Government of India accounted as Corpus Contribution - HELD THAT:- Relying on decision in CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES VERSUS ITO-1 (1) , (EXEMPTIONS) , MUMBAI [2018 (2) TMI 1875 - ITAT MUMBAI] mere action of charging fee for services, by itself, would not justify invoking of the proviso to section 2(15) unless it is established that the purpose and object is profit motive. Considering the entirety of circumstances we are unable to find any credible reasoning taken by the Revenue to say that the purpose and object of the assessee Trust falls within the meaning of expression ‘trade, commerce or business’ used in the proviso to section 2(15) - the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 11 of the Act in assessing the Income for the year 2. Applicability of Section 11 of the Act: The Ld. C.I.T. (Appeals) ought to have held that the Ld. A.O. erred in not accepting the contention of the appellant that as it is holding registration under Section 12AA of the Act, the provisions of Section 11 of the Act have to be applied in assessment of its income. 3. Re. ₹ 190 Crores received during the year from the Central Government of India accounted as Corpus Contribution: The Learned C.I.T. (Appeals) in the facts and circumstances of the case of the appellant and in law ought to have held that the Learned AO erred in - (a) Assessing ₹ 190 Crores, received from the Central Government of India as Income. Without prejudice to the above and in alternate the following grounds: (b) Assessing receipt of ₹ 190 crores from the Central Government as Income by resorting to the definition of income as contained in Section 2(24)(iia) of the Act (wrongly mentioned in Order of Assessment as Section 24(iia) of the Act) notwithstanding the fact that in assessing the Income the objects of the Trust are not considered as Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d below:- (i) To implement the NEIA Scheme through ECGC (Export Credit Guarantee Corporation of India) for the benefit of medium and long term exporters (b) To implement such other schemes and programmes for the benefit of medium and long term exporters as the Government of India mainframe from time to time and direct the trust implement. 5. The assessee trust received policy premium payments from the following parties (i) Apar Industries Ltd. ₹ 1,86,12,015/- (ii) ONGC Videsh Ltd ₹ 2,06,32,870/- (iii) Hindustan Aeronautics Ltd. Bangalore ₹ 17,34,159/- total to the tune of ₹ 4,09,79,044/-. The assessee also paid the claim of various exporters under the scheme in sum of ₹ 32,12,724/- during the year. The claim of the assessee was declined in view of the exception of provision u/s 2(15) of the Act specifically on the grounds of that the object of the assessee is in nature of business, trade and commerce. No doubt, the said provision was introduced. The assessee trust was formed with a view to facilitate Immediate and long term exports and to consider the limitations of export credit guarantee corporation in providing adequate cover on its own and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the national interest. The Trust is sponsored by Govt. of India with the objective to promote exports, improve competitiveness of Indian exports and to implement schemes formulated by the Govt. of India for the benefits of medium and long term exporters in national interest. Certainly, none of the above objectives are tainted with motive of trade, commerce or business as Govt. of India is not into business of providing Credit Insurance. Wherever, it has intended to do so, it has been done through Corporate structure e.g. ECGC of India Ltd. (Export Credit Guarantee Corporation) which does the credit insurance activity on commercial basis with Govt. of India as the sole shareholder with a premium and other income of ₹ 1020 crores (appx) and a net surplus of ₹ 171 (approx) for FY 2012-13. On the basis of the above, NEIA s activity cannot and should not be considered to be in nature of trade, commerce or business. 7. The Trust scope of activity is primarily to implement schemes formulated by Govt of India. Ministry of Commerce, Govt. of India, is the settler of the Trust and the Trust is not empowered to carry out any other activity. 8. Further, even the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been established for charitable purpose, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a charitable purpose. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. 9. The facts of the present case is quite similar to the facts of the case titled as India Trade Promotion Orgaization (supra). Therefore finding of the said cases is quite applicable to the facts of the present case. Since the dominant and prime object of the assessee is not to earn the profit in relation to trade, commerce and business, therefore, the exemption u/s.11 12 is not liable to be declined. Accordingly, we set aside the finding of the CIT(A) in this issue and allowed the claim of the assessee. ISSUE NO. 2 10. Under this issue the assessee has challenged the confirmation of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises by ensuring that they get ability to obtain loans from lending institutions. No doubt, there is an element of fee or charges levied by the assessee Trust, but the point is, is there a profit motive which would enable such activity to be characterized as a trade, commerce or business. In the orders of the authorities below as well as before us, there is no charge made by the Revenue that the quantum or object of fee charged by the assessee Trust betrays any profit motive. In fact, the income-tax authorities do not dispute the fact that the purpose and object behind the assessee Trust is not to carry on trade, commerce or business, but the only point made is that certain fee/charges have been levied for activities rendered to the beneficiaries, and therefore, it should be seen as trade, commerce or business . As we have seen earlier, mere action of charging fee for services, by itself, would not justify invoking of the proviso to section 2(15) of the Act unless it is established that the purpose and object is profit motive. Considering the entirety of circumstances we are unable to find any credible reasoning taken by the Revenue to say that the purpose and object of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
