TMI Blog2015 (1) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ying out the activities on business or commercial principle or outside its objects. Thus on the facts of the present case it cannot be held that assessee’s case is hit by proviso to section 2(15) or the registration granted earlier can be canceled within the ambit of section 12AA(3). - Decided in favour of assessee. - ITA No. 550/Mum/2012 - - - Dated:- 12-1-2015 - SHRI N.K. BILLAIYA AND SHRI AMIT SHUKLA, JJ. For The Appellant : Shri A. H. Dalal For The Respondent : Shri S.J. Singh PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the Assessee, against order dated 08.12.2011, passed by the Director of Income Tax [Exemption] Mumbai, u/s 12AA(3) for withdrawal/cancellation of registration granted u/s 12A, w.e.f. A.Y. 2009-10. 2. Brief facts of the case are that the assessee Builders of Association of India is a pan-India Trade Organization for civil and construction industry. It is registered as an association under Societies Registration Act, 1860, as well as under the Bombay Public Trust Act, 1950. The main objects for which the assessee s society was constituted were as under: (a)To promote and foster feelings of unity, co-operation and mutual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate and assist all such actions to protect and safeguard the profession of construction industry and such other trades connected with building materials. (j) To provide first hand training or skilled training to construction workers. (k) To nominate representatives of Association or Institution having similar or allied objects on the Committee or the Board of or Committee or Governing Body of other Associations and Institutions whenever invited to do so in the interest of the trade or industry. (l) To organize conferences, exhibitions, film shows, seminars, tours, delegations, etc. in India or abroad and to nominate delegates and advisers and to take steps which may promote and support the building trade and industry and profession. (m) To establish or encourage establishment of Banking and/or Insurance Institutions for financing or assisting in any manner the activities of the member s of the Associations or other affiliated organizations. (n) To encourage exports of building and construction industry and services and to help solving the problems relating to export promotion in all possible manners. (o) To held and promote the production and distribution of basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d training Rs.19.30 lakhs (vii) Hospitality charges Rs.3.46 lakhs (viii) Miscellaneous charges Rs.4.12 lakhs In response, the assessee after explaining the background of the activities carried out by the assessee and its objects submitted:- Firstly, regarding membership subscription , association incurs certain expenditure for administrative and establishment cost for its functioning to achieve its objects for which it is formed. Such an expenditure is contributed by its members in the form of annual subscription. It is a national level organization having 93 centers and a head office for which it requires substantial expenses to meet the cost therefore, subscription money is received from the members. Secondly, regarding exhibition and conference , it was submitted that it held exhibitions, conferences and seminars for the benefit of its members, which is one of the main objects of the assessee. Details of such exhibition and conference events and how it is relevant for attaining its objects was explained. To meet out such expenses, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust/institution is hit by proviso, then such an entity is not for charitable purpose and the trust itself become non genuine for the purpose of section 11 and the registration can be cancelled u/s 12AA(3). Accordingly he cancelled the registration w.e.f. A.Y. 2009-10. 5. Before us, learned counsel, Shri A.H. Dalal after referring to the objects of the assessee trust and the activities carried out by it, submitted that none of the activities of the assessee can be said to be in the nature of trade or business. The receipts of the assessee is from the members only and the same has been utilized for the benefit of the members for which assessee trust came into existence. The conditions mentioned in 12AA(3) for cancelling the registration cannot be said to be fulfilled, as it has not been found by the Ld. DIT(E) that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust. In support of his contention he has relied upon catena of Tribunal decisions, the compilation of 30 such cases have been filed before us. Alternatively, he submitted that, if the department is of the view that any particular activity is for any comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated above. Most of the receipts have been received from the members either in the way of subscription or contribution for holding exhibition, conferences, seminars, training and sponsorship programs etc. It is not the case of the Ld. DIT that these activities were carried out for the outsiders and that to be for the commercial purpose solely to earn business receipts. Even the small amount of rental income is mainly to augment the financial resources to meet the cost of the assessee. To be hit by proviso to section 2(15), the dominant object of general public utility should be in the nature of trade, commerce or business. Herein this case, none of the activities like holding conferences, seminars, publishing journals for its member etc. can be held to be in the nature of business trade or commerce. All its activities are for its members only as a part of its objects. 8. The effect of proviso to section 2(15) inserted w.e.f. 01.04.2009 has been subject matter of judicial scrutiny by various Tribunals. The Hon ble Delhi High Court in the case of Institute of Chartered Accountants of India Vs. DGIT (E) reported in (2011) 245 CTR (Del) 541 has discussed and analyzed the effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion will apply. 14. The most material and relevant words in the proviso are 'trade, business or commerce . The activities which are undertaken by the an activity of rendering any service in relation to any trade, commerce or business. Thereafter the Hon'ble High Court referred and analyzed the meaning of trade, business, commerce which have been elaborated by the Constitutional Bench of Hon'ble Supreme Court in the case of Addl. CIT vs. Surat Art and Silk Manufacturers Association 121 ITR 1, and other Supreme Court decisions; Sole Trustee Loka Shikshan Trust 101. ITR 234, State of Punjab vs. Bajaj Electrical Ltd. (1968) 2 see 536, Khodey Distillary Ltd. vs. State of Kerala (1975) 1 see 574 and CST vs. Sai Publication Fund (2002) 4 see 57 and also referred to various other dictionary meaning and commentary and held that: 18. The word business is the broadest term and it encompasses trade, commerce and other activities. Sec. 2(13) of the IT Act defines the term 'business' as under 2 Definition- (13) business' includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving its distinct object, distinct management and distinct assets and liabilities. Section 2(15) defines the term 'charitable purpose ', Therefore, while construing the term 'business' for the said section, the object and purpose of the section has to be kept in mind. We do not think that a very broad and extended definition of the term 'business' is intended for the purpose of interpreting and applying the first proviso to section 2(15) of the Act to include any transaction for a fee or money. An activity would be considered business if it is undertaken with a profit motive, but in some cases this may not be determinative. Normally the profit motive test should be satisfied but in a given case activity may be regarded as business even when profit motive cannot be established/proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles, and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. The test as prescribe in Raipur Mfrs. Co. 's case (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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