TMI Blog2019 (9) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee society, the ex-servicemen earn a decent livelihood by engaging themselves in such jobs without middlemen and exploitation, through the guidance of the assessee society. Activities in the above nature cannot be treated as activities in the nature of trade, commerce or business as contemplated in proviso to section 2(15). CIT(E) has characterized the activities of the assessee trust as commercial in nature without going into the circumstances in which the activities are carried on by the assessee society. See SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (AND OTHER REFERENCES) [ 1979 (11) TMI 1 - SUPREME COURT] Factual matrix of the assessee s case in the year under consideration was same as in the past. If the same set of activities were considered by the Revenue to be charitable in nature then there was no reason for the AO to depart from the view regularly followed in the past. At the time when the AO passed the order u/s 143(3) allowing the assessee benefit of exemption u/s 11 of the Act, it cannot be said that the view followed by him was unsustainable in law so as to constitute the order u/s 143(3) to be erroneous and prejudicial to the interests of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the ld. Pr. CIT services rendered by the appellant society did not qualify as charitable purpose within the meaning of Section 2(15) of the Act. In response the appellant society furnished written explanation wherein it was submitted that the services rendered by the appellant society comprised of the activity of assisting and obtaining employment for the ex-service men by way of placing them as security personnel in different organizations. It was submitted that the said service was provided without any profit motive and the charges received from the organizations was disbursed amongst the ex-service men only and a miniscule sum of ₹ 5000/- per bill from the organizations was retained by the society to meet its administrative and establishment costs and overheads. It was therefore claimed by the appellant that this activity which involved providing financial assistance and employment/placement for the ex-servicemen by getting them jobs post retirement was a charitable act and squarely came within the definition of charitable purpose as set out in Section 2(15) of the Act. The appellant society submitted that this activity by itself was neither in the nature of tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 11 to the appellant society. Per contra the Ld. DR supported the order of the ld. Pr. CIT and does not want us to interfere with the order of Ld CIT(E). 5. After giving a thoughtful consideration to the facts involved in the present case and having regard to the provisions of Section 2(15) of the Act; we agree that the proviso to Section 2(15) as enacted by the Finance Act, 2008 restricted the scope and ambit of the expression charitable purpose . As per the amended provisions, where activities carried on by an assessee registered under Section 12A of the Act involves activities 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, fee or any other consideration, then in such a case it is to be held that the assessee does not exist for charitable purpose and in such an event benefit of exemption provided in Section 11 is not applicable. However in our opinion, in order to fall in the ken of the mischief of proviso to Section 2(15), it is necessary for the authority to demonstrate that the activity was/is in the nature of trade, commerce or business and was/is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in skilled jobs and at the same time required to be financially secured in post retired life; the assessee society acts as an interface for economic up-liftment of ex- servicemen and help them in obtaining employment to meet their cost of livelihood. The activities of the assessee society towards economic up-liftment of such ex-service men in India by assisting in obtaining stable employment are therefore definitely charitable in nature. Such an activity undertaken by the assessee society itself is not in the nature of trade, commerce or business and it would be quiet un-charitable to brand them so, unless facts reveal so. 6. It is commonly understood that the expression trade , commerce or business essentially possess an underlying objective of earning profit by assuming risk. There is also a necessity of introducing capital into business. As far as the present case is concerned, the assessee society helps ex-servicemen who are financially educationally weak to obtain fruitful employment. In this case, neither huge capital investment is required nor any profits and gains are expected to be earned. Since during the tenure in the armed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge o1f a trust or institution to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect unsound principle of management. We, therefore, agree with Beg' J. when he said in Sole Trustee, LokaShikshana Trust's case [1975] 101 ITR 234, 256 (SC) that : 'If the profits must necessarily feed a charitable purpose under the terms of the trust, the mere fact that the activities of the trust yield profit will not alter the charitable character of the trust. The test now is, more clearly that in the past, the genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on charity'. 8. The appellant society cannot be equated to an entity or body corporate which provides manpower services. Its main activity is not supplying manpower to PSUs but to empower financially weak and un-skilled ex-servicemen and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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