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2013 (1) TMI 63 - HC - Income TaxApproval u/s 10(23)(C) - rejection of application as the activities of the agency were not in the nature of advancement of any objects of general public utility - do not indicate any charitable activity - Held that:- The petitioner was registered under the Andhra Pradesh (Telangana Area) Public Societies Registration Act, 1350 Fasli by Food and Agriculture (EP-II) Department dated 01-06- 1977, the State Government approved the proposal of the Director of Agriculture and directed that the petitioner shall carry on the functions of the certification agency under the Seeds Act, 1966 in the Andhra Pradesh State with effect from 01-06-1977. The objects of the petitioner have already been set out. The petitioner thus certifies the Seeds which meet the minimum seeds certification standards as per Indian Minimum Seed Certification Standards, 1988. Seed growers enter into contract with a society/agent, who approaches the petitioner for certification of the seeds and after securing certification, they sell the certified seeds to the farmers at a market price determined by them. The petitioner collects a fee for providing certification as the process of certification involves technical and scientific evaluation of the seeds although the fee collected by it would be enough to enable it to sustain its activities and may not result in much profit. The term "advancement of any other object of general public utility" used in Section 2 (15) includes all objects to promote the welfare of the public particularly when the object is to promote or protect the interest of a particular trade or industry. The activity of the petitioner which facilitates sale of certified seeds to farmers therefore falls within "advancement of any other object of general public utility" included in the definition of the term "charitable purpose" as defined in Section 2 (15) of the Act but in view of the fact that certification of seeds by the petitioner facilitates trade, commerce or business in the certified seeds by the client of the petitioner, the proviso to the said section would come into operation. Thus the petitioner's activity assists the sale of certified seeds and is "in relation to any trade, commerce or business" and therefore its activity cannot be held to be a "charitable purpose". In this view of the matter the 1st respondent rightly rejected the application of the petitioner for approval under Section 10 (23C) (iv) - the petitioner has not rendered its services directly to the farmers but is rendering its services directly to its clients/agents who are engaged in trading of the certified seeds with profit motive and therefore its activities are not for the "advancement of any other object of general public utility" and hence not for "charitable purpose" in view of second limb of the first proviso to Section 2 (15) - aginst assessee.
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