TMI Blog2000 (12) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertakings. It was formed with the object of promoting, inter alia, research studies in transport economics, engineering and related matters. The governing body of the Association was formed by representatives of all State Transport Undertakings in the country. The association is a registered society under the Registration of Society Act and the Secretary to the Government of India, Ministry of Transport is ex-officio President of the Association. The Deputy Secretary in the Union Ministry dealing with the road transport is co-opted as exofficio member of the Association. The aims and objects of the assessee are to render common services to the members and assist them in such matters as standardization of equipment, purchase of materials for their own use at economical prices, promotion of efficiency of road transport services and reduction in the operational costs of the members. Article (v) of the Memorandum and Articles of Association prescribe that the income and property of the Association howsoever derived shall be used towards the promotion of the objects set forth in its Memorandum of Association. The Rules of the society may be amended by the Government of India from time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee was carrying on activity for profit. However, an application under section 254(2) was moved before the Third Member by relying on the decision of the Supreme Court in the case of Addl CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 and then the Third Member rectified its order by holding that where profits derived were to be utilised for the purposes of the object of general public utility exclusively, it cannot be held that the object of the said association of general public utility, involved any activity for profit. The reliance was placed by the Third Member on the observations of the Supreme Court that what is necessary to be considered is whether having regard to all the facts and circumstances of the case, the dominant object of the activity is profit making or to carry out a charitable purpose, It was further observed that if it were the former, the purpose would not be a charitable purpose, but, if it were the latter, the charitable character of the purpose would not be lost. The issue before Supreme Court was that whether promotion of commerce and trade in art, silk yarn, raw silk, cotton yam etc. which was clearly an object of general publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1989-90. Therefore, the exemption was denied for all these four years under appeal here before us. CIT(A) confirmed the order of the Assessing Officer for all the four years. 7. Now, assessee is in appeal here before us for all these four years against the order of the CIT(A). 8. Learned Counsel of the assessee placed reliance on the written submissions filed on27-7-2000. In reply, theLd. DRheavily placed reliance on the order of the authorities below. It was further submitted by him that the main source of the assessee's income from commission which is incidental to objects of the society. Accordingly, the separate books of account were supposed to be maintained which assessee faded to do so. Accordingly, the lower authorities were right in rejecting the claim of the assessee. It was further stated that no doubt to attain the object, some income is needed that may be income from business or for charitable activity. The separate set of books of account has to be maintained with effect from1-4-1989as the relevant sections were amended for this purpose only. It was also stated that there is a specific condition laid down by section 10(23C)(iv) that when the business is incident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were agreed on the proposition that the income earned by assessee was used only for the purpose of charitable. Activities, as already stated while noting brief facts, were held to be activities for charitable purposes. This contention is not in dispute. The assessee is assessed to tax since long and from 1965-66 to 1988-89, the Department has allowed the exemption to the assessee by holding that assessee's activities are for charitable purpose. The dispute arisen from assessment year 1989-90 when section 10(23C)(iv) was injected and one of the condition was that if the business is incidental to the main aims and objects of the assessee then separate set of books of account are to be maintained. In this regard, the CBDT had issued a circular, by which it was notified that assessee is entitled for deduction under section 10(23C)(iv) for assessment years 1989-90 and 1990-91. The conditions laid down by the circular were as under: (i) the assessee will apply its income or accumulate for application, wholly and exclusively to the objects for which it is established. (ii) the assessee will not invest or deposit its 'funds (Other than voluntary contributions received and maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness and, in the present case, the assessee is not doing any other business. All the details of commission, which were received by the assessee, are incorporated in the books of account and a profit and loss account was prepared, and then if there is any profit earned by it, the same was used for attaining the aims and objects of the society which was undisputedly charitable in nature. Therefore, in our considered view, on the facts of the present case, no separate books of account are required. 12. Further, we noted that while deciding the appeal for assessment years 1965-66 to 1969-70, the Tribunal has held that activity of the assessee was not for the purpose of profit as the profit earned by it was used for the purpose of charitable only. Therefore, we do not feel that the detailed observations observed by the Tribunal should be repeated here. TheLd. DRhas also fairly admitted that the commission earned by the assessee was used for attaining the aims and objects of the assessee. However, it was stated that the assessee was required to maintain a separate books of account. As we have already stated above that the assessee's only income is from commission and the same was us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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