TMI Blog2019 (12) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities where so carried out by the assessee society as so claimed will not necessarily result in any receipts, rather the assessee society has to incur expenses towards carrying out such activities and in order to fund such activities, where the premises and other places are given on rent and receipt arising therefrom will only be reflected in the financial statements and are used for carrying out the main activities, the latter activities will qualify as ancillary and in fulfillment of main activities and not the main and predominant activities. However, we find that the said facts regarding carrying out main activities as so claimed by the assessee society are not emerging from the order of the ld. CIT(E) and thus not borne out of the records before us, though the assessee society has submitted some photographs which would again need verification. Therefore, in the interest of justice and fair play, we deem it appropriate that the matter is set-aside to the file of the ld CIT(E) to decide the matter afresh after providing reasonable opportunity to the assessee-society. Matter is set aside to the file of the ld. CIT(E) and the appeal filed by the assessee is allowed for statis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purpose, the premises are obtained on rent from M/s Brahampuri Refugee Co-operative Society, a registered Co-operative Society to let out the same to needy and down trodden persons to perform social obligations and other functions at affordable rates as evident from the Income and Expenditure A/c of last three years. From these A/cs, it is noted that the Society did not earn any income from hiring of these premises. 4. It was further submitted that the assessee-society had applied for registration u/s 12AA of the I.T. Act vide application dated 15.1.2019. For the purpose, all the required details, documents photographs etc. were produced along with 'Receipt and Expenditure A/c' etc. Having examined such details of receipts and expenditure and other documents, the ld. CIT(E) appeared to be satisfied about the objects of the society being of 'charitable nature of these activities', except the alleged activity of hiring Dharamshalla, Parks Utensils etc. on rent. The ld. CIT (Exemption) was of the view that hiring of Dharmshalla, Parks and Utensils etc. on rent were `commercial activities' in nature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety at 73.80%, 80.15% 74.18% of the receipts and had rejected the application on the basis of incorrect working of income as pointed out above. In the circumstances, the ld CIT (E) was not justified to reject the application for registration by invoking provisions of section 2(15) of the Act on the basis of incorrect working of the 'income' allegedly earned by the Society. II. Again the ld. CIT (E) had misinterpreted the meaning of `Commercial Activities'. For undertaking the commercial activities, `Consideration' is an essential 'ingredient'. In the present case, this ingredient is missing as the Society did not undertake the above activities for any `Consideration' as explained above. In fact, the Society has been undertaking these activities with an object to serve the down trodden persons on no loss and profit basis. The element of profit motive in these activities was missing as evident from the Receipts Expenditure A/c. The meaning of 'commercial activity' has been defined as under: The advancement of any other object of general public utility shall not qualify as a charitable purpose, if the same inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration form a substantial parts of its income which cannot be termed as charitable in nature. It was accordingly submitted that the receipts from these commercial activities constitute 73.80% for F.Y. 2015-16, 80.18 for F.Y. 2016-17 and 74.18 for F.Y. 2017-18 which is clearly hit by the proviso to Section 2(15) of the Act. It was accordingly submitted that the ld. CIT(E) has rightly held that the activities of the assessee society are not charitable in nature as its predominantly carried out activities of providing parks/building, satsang bhawan, utensils on rent/commission. 8. We have heard the rival contentions and perused the material available on record. The assessee society is an existing society registered under the Society registration Act since 01.10.2015 and thereafter it has moved an application before the ld. CIT(E) on 15.01.2019 seeking registration u/s 12AA of the Act. Therefore, being an existing and running society at the time of moving an application, the ld. CIT(E) was well within his jurisdiction to examine not just its objects of the assessee society but also the fact that the activities of the assessee-society are genuine and are in consonance w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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