TMI Blog2015 (6) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... gave only evasive reply and we are not satisfied with the same as assessee trust is a large organisation employing lot of qualified people including chartered accountants and is being advised by the best of advocates, then how can it make such a slip of filing the return under fringe benefits tax on the one hand and claiming exemption under section 10(23C) on the other hand ? This order has been passed though the Assessing Officer himself was in doubt about the exemption. It seems that the Assessing Officer was not aware of the last proviso to section 10(23C) that notification itself will not grant exemption. Therefore, it is a not factual position. It is a legal issue as we have seen in the abovenoted paras, the law is very clear and the assessee is not entitled for exemption, therefore, the principle of consistency cannot be followed. - Decided in favour of revenue. - ITA No. 1273/Chd/2012 - - - Dated:- 26-11-2014 - SHRI BHAVNESH SAINI AND SHRI T.R. SOOD, JJ. For the Appellant : Smt . Jyoti Kumari , CIT DR For the Respondent : Shri Rohit Jain ORDER T. R. Sood (Accountant Member).- The appeal filed by the Revenue is directed against the order dated S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 dated February 28, 2007 which is applicable for the assessment years 2007-08 onwards. In view of the newly inserted proviso under section 2(15) by the Finance Act, 2008, with effect from April 1, 2009 the assessee, to err on the said of caution, is hereby revising its return of income for the assessment year 2009-10, without claiming exemption under section 10(23C)(iv) of the Act and payment of tax accordingly, although the assessee believes that it is still eligible for exemption under that section. It is, therefore, respectfully prayed that the assessee may continue to be allowed exemption under section 10(23C)(iv) of the Act, which reads as under : 10(23C) any income received by any person on behalf of- '(iv) any other fund or institution established for charitable pur poses which may be approved by the prescribed authority, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States ; ' Thereafter the Assessing Officer referred to the amendment made in section 2(15) of the Act and observed that after the amendment if a trust is engaged in advancement of general public u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to believe that its income was still exempt under section 10(23C)(iv) of the Act. Despite such a clear and categorical stand of the appellant, the Assessing Officer, in gross violation of principles of natural justice and without even examining the claim of the appellant on merits, simply proceeded to deny exemption under section 10(23C)(iv) of the Act. 5. The Commissioner of Income-tax (Appeals) after considering the above submissions found merit in the same. He observed that this institute has been approved by the prescribed authority and definition of charitable purpose in section 2(15) has no reference to the exemption provided under section 10. This means that exemption was not subject to any restriction. In other words, the learned Commissioner of Income-tax (Appeals) allowed the exemption on the basis of notification issued by the Central Board of Direct Taxes approving the assessee for exemption under section 10(23C)(iv) of the Act. 6. Before us, the learned Departmental representative carried us through contents of assessment order as well as relevant portion of the impugned order. In this background she submitted that the assessee has itself revised its return a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in the case of Yogiraj Charity Trust v. CIT [1976] 103 ITR 777 (SC). 8. On the other hand, learned counsel for the assessee submitted that assessee has technically revised the return but still claimed the exemption under section 10(23C)(iv) of the Act and in this regard he invited our attention to the notes in the revised return which has been reproduced by the Assessing Officer at paragraph 2.3. He also submitted that there is no force in the contention that because of clause (c) of the notification the exemption is not available because that clause was applicable to exempt income which are covered by section 11 and not to exemption of income under section 10(23C). However, on query by the Bench he clearly admitted that despite the notification the exemption can still be denied because of the last proviso to section 10(23C). 9. Learned counsel for the assessee emphasised that activity of the assessee- trust were held to be charitable in nature by Privy Council in the assessee's own case and notification has been issued on the basis of that decision. He submitted that the assessee is still carrying on the same activity and in fact was not earning any profit. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case the assessee institute is a statutory authority constituted by Government of India under the Chartered Accountants Act, 1949 and was basically engaged in regulating the profession of Chartered Accountants. The activity of conducing coaching classes was only an ancillary activity. Whereas in the case of the assessee the main purpose is printing and publishing of newspapers and publishing advertisements. At best it can be said that the assessee is providing a service but a fee is being charged for the same, therefore, it would be hit by the proviso to section 2(15). Similarly, the other decisions quoted by learned counsel for the assessee are distinguishable on facts. 11. We have considered the rival submissions carefully. Admittedly the assessee-trust is doing only one activity of printing and publishing of newspaper. This activity was held to be of charitable in nature by the Privy Council in the Trustees of the Tribune, In re [1939] 7 ITR 415 (PC). In this decision it was observed that though the assessee cannot be termed as an educational institute but it was held to be a trust providing service in the nature of general public utility. The issue why the assessee can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility : Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity 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 or fee or any other consideration, irrespective of the nature of use of application, or retention, of the income from such activity. 12. From the above, it becomes clear that a restrictive clause has been added in respect of the advancement of any other object of general public utility, i.e., if the same involves carrying on of any activity in the nature of trade, commerce or business then such activity would not be of charitable nature. 13. Originally, in the old Act, 1922 definition of charitable purpose reads as under : 'Charitable purpose' includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. The expression not involving the carrying of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner holds classes and provides coaching facilities for candidates/articled and audit clerks who want to appear in the examinations and want to get enrolled as chartered accountants and as well as for members of the petitioner-Institute who want to update their knowledge and develop and sharpen their professional skills, but this is not the sole or primary activity. The petitioner-institute may hold classes and give diploma/degrees to the members of their institute in various subjects but this activity is only an ancillary part of the activities or functions performed by the petitioner-institute. This one or part activity by itself, does not mean that the petitioner is an educational institute or is predominantly or exclusively engaged in the activity of education. The petitioner-institute is engaged in multifarious activities of diverse nature, but the primary and the dominant activity is to regulate the profession of chartered accountancy. For this purpose it holds entrance examination and enrolls members. It regulates the conduct of its members, prescribes and fixes accountancy standards, etc. Therefore, the above case cannot be taken as a precedent for deciding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding, stocks of paper and other miscellaneous things. The total value of the assets was ₹ 2,97,558, out of which the value of the building sites and the buildings was ₹ 47,500. As against that, the liabilities of the trust amounted to ₹ 1,24,086. The net value of the assets of the trust rose in 1947 to a figure of ₹ 1,73,571-14-4. For the assessment year 1962-63, which is the year under appeal, the total receipts of the trust were of the amount of ₹ 22,55,077. The main sources of these receipts were sales of newspapers and magazines through agents, receipts on account of advertisement, receipts for job printing bills besides some other minor items. As against the receipts, the major items of expenditure were the purchase of newsprint, paper, printing types, printing and other material, the salaries and allowances of the staff, remuneration to news agencies and railway freight. There can, therefore, be no doubt that the trust has been carrying on the business of publishing newspaper and weekly and monthly magazines. The profits from the aforesaid business would also apparently account for the manifold increase in the value of the assets of the trust. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In the case of CIT v. Lahore Electric Supply Co. Ltd. [1966] 60 ITR 1 (SC), Sarkar J., speaking for the majority, observed that business as contemplated by section 10 of the Indian Income-tax Act, 1922, is an activity capable of producing a profit which can be taxed. In the case of the appellant-trust the activity of the trust, as already observed earlier, has in fact been yielding profits and that apparently accounts for the increase in the value of its assets. We are not impressed by the submission of the learned counsel for the appellant that profit under section 2(15) of the Act means private profit. The word used in the definition given in the above provision is profit and not private profit and it would not be permissible to read in the above definition the word 'private' as qualifying profit even though such word is not there. There is also no apparent justification or cogent reason for placing such a construction on the word 'prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to trusts and institutions whose object is a genuine charitable purpose has been achieved by amending the definition in clause 2(15). The definition of charitable purpose in that clause is at present so widely worded that it can be taken advantage of even by commercial concerns which, while ostensibly serving a public purpose, get fully paid for the benefits provided by them, namely, the newspaper industry, which while running its concern on commercial lines can claim that by circulating newspapers it was improving the general knowledge of the public. In order to prevent the misuse of this definition in such cases, the Select Committee felt that the words not involving the carrying on of any activity for profit should be added to the definition.' (page 3074) 18. In respect of reliance placed on the speech of the Finance Minister, some details arguments were made and the concept is dealt at pages 252 to 253 and ultimately the court relied on the decision of Privy Council (supra) in the following paras : (a) Jerold Lord Strickland v. Camelo Mifsud Bonnici AIR 1935 PC 34. (b) Englishman Ltd. v Lajpat Rai [1910] ILR 37 Cal 760. (c) Anandji Haridas and Co. Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was obvious that, unless such a limitation was introduced, the fourth and last category would become too wide to prevent its abuse. Wide words so used could have been limited in scope by judicial interpretations ejusdem generis so as to confine the last category to objects similar to those in the previous categories and also subject to a dominant concept of charity which must govern all the four categories. But the declaration of law by the Privy Council in the Tribune case [1939] 7 ITR 415 (PC) had barred this method of limiting an obviously wide category of profitable activities of general public utility found entitled to exemption. Hence, the only other way of cutting down the wide sweep of objects of 'general public utility' entitled to exemption was by legislation. This, therefore, was the method Parliament adopted as is clear from the speech of the Finance Minister who introduced the amendment in Parliament. The above clearly shows that according to the hon'ble Supreme Court the decision of Privy Council in the Trustees of the Tribune, In re [1939] 7 ITR 415 (PC) is not more a good law because of the amendment made in the Act itself. Ultimately, some othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernet all the search engines including Google or Yahoo and social medias like facebook are free of cost and the whole of revenue is collected through advertisements. 23. In the above background in the case of the assessee it was found from the income and expenditure account that the assessee has collected only a sum of ₹ 17.49 crores from sale of newspaper and in addition to ₹ 3.07 crores from subscription of such dailies and ₹ 2.39 crores from sale of clippings. Against this revenue of approx ₹ 21 crores, the assessee has earned advertisement revenue of ₹ 124.87 crores. This itself shows that the assessee is earning profits though figures for original corpus at the time of established of trust are not available before us because it is a very old trust but as on March 31, 2009 the balance in corpus account is ₹ 120.71 crores and we are very sure that at the time of establishment of trust, the value of corpus must have been only in lakhs of rupees, therefore, it makes it absolutely clear that as observed by the hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC) the assessee has definitely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, respectfully prayed that the assessee may continue to be allowed exemption under section 10(23C)(iv) of the Act, which reads as under : '10(23C) any income received by any person on behalf of- (iv) any other fund or institution established for charitable pur poses which may be approved by the prescribed authority, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States ;' 25. Again the assessee has admittedly filed the return under fringe benefits tax (FBT) as per the provisions of section 115WA. As pointed out by the learned Departmental representative the expression employer has been defined under section 115W which reads as under : (a) 'employer' means,- (i) a company ; (ii) a firm ; (iii) an association of persons or a body of individuals, whether incorporated or not, but excluding any fund or trust or institution eligible for exemption under clause (23C) of section 10 or registered under section 12AA ; (iv) a local authority ; and (v) every artificial juridical person, not falling within any of the preceding sub-clauses ; Provided that any pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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