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TMI Blog2015 (12) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 and 12 of the Act and raising a tax demand on an assessed income of Rs. 2,28,54,196/-, is grossly unjustified, erroneous and unsustainable in law, thus is liable to be quashed. Necessary direction may be given to the ld AO to given appropriate relief in accordance with law." 02. The facts in brief of the case are that the assessee is a society registered under societies Registration Act, 1860 and its income was exempt u/s 10(21) of the Income tax Act and is also registered u/s 12A (a) of The Income Tax Act. It has also been granted recognition u/s 35(1) (ii) of the Income tax Act. The basic aims and objects of the assessee society are to promote, co-ordinate, guide, implement and maintain an accreditation system for laboratories suitable in the country in accordance with the relevant national and international standards and guides. To ensure that all measurements either during calibration or testing by accredited laboratories are related to appropriate national/ international standards maintained by National Physical Laboratory (NPL) and at Bhabha Atomic Research Center (BARC) through an unbroken chain of comparisons. To encourage proficiency Tests inter-laboratory comparisons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some accreditation to various ;laboratories , giving updates on accreditation and desk top surveillance. Therefore it charges fees from such laboratories. Therefore it was submitted that as it is formed by government of India and helps in promoting quality accreditation in India therefore it cannot be said to be that it is carrying on any business. For this appropriation he riled on the decision of Honourable Delhi High court in case of Indian Trade promotion Organization V DGIT ( Exemption) 371 ITR 333 ( Delhi) . It was also submitted that honourable Delhi high court has considered the decision of Institute of Chartered Accountants of India v. Director General of Income-tax (Exemptions) [2012] 347 ITR 99 (Delhi) and Institute of Chartered Accountants of India v. DGIT (Exemptions) [2013] 358 ITR 91 (Delhi) which are relied by the AO. Honourabel Delhi High court has also considered the circular stated by CIT (A) in his order. Therefore he submitted that case of the assessee squarely falls within the provision of section 2 (15) of the Act and is eligible for exemption benefit as provided u/s 11 & 12 of The Act. 04. Ld DR relying up on the orders of lower authorities submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch held that it was evident from the said circular that the new proviso to section 2(15) of the said Act was "applicable to assessees, who are engaged in commercial activities, i.e., carrying on business, trade or commerce, in the garb of "public utilities" to avoid tax liability as it was noticed that the object "general public utility" was sometimes used as a mask or device to hide the true purpose, which was "trade, commerce or business". From this, it is evident that the introduction of the proviso to section 2(15) by virtue of the Finance Act, 2008, was directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb of an activity with the object of a general public utility. It was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions. The attempt was to remove the masks from the entities, which were purely trade, commerce or business entities, and to expose their true identities. The object was not to hurt genuine charitable organisations. And, this was also the assurance given by the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal question, is it business ?" 57. Ultimately, in the context of the factual matrix of that case, this court held that (page 155 of 360 ITR) : "charging a nominal fee to use the coding system and to avail of the advantages and benefits therein is neither reflective of the business aptitude nor indicative of the profit oriented intent". The court further observed (page 155 of 360 ITR) : "Thus, the contention of the Revenue that the petitioner charges fee and, therefore, is carrying on business, has to be rejected. The intention behind the entire activity is philanthropic and not to recoup or reimburse in monetary terms what is given to the beneficiaries. The element of give and take is missing, but decisive element of bequeathing is present. In the absence of 'profit motive' and charity being the primary and sole purpose behind the activities of the petitioner is perspicuously discernible and perceptible." The court also held (page 155 of 360 ITR) : "As observed above, fee charged and quantum of income earned can be indicative of the fact that the person is carrying on business or commerce and not charity, but we must keep in mind that charitable activities require o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a "charitable purpose". On the flip side, where an institution is not driven primarily by a desire or motive to earn profits but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. 06. We are also of the view that amendment made in section 2 (15) of the act with effect from 1.4.2016 by substituting the first proviso and second proviso by a single proviso, which would now exempt the business income, where the activity "is undertaken in the course of actual carrying out of such advancement of any other object of general public utility", so that it recognizes all the activities consistent with the objects, where the objects are not prompted by profit motive, from the purview of liability bringing the law to conform The Constitution which was challenged before Honourabel Delhi High court in above decision. The effect of this provision would bring those trusts and institutions, like assessee, ..... 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