9911796707
TMI Blog2015 (12) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant craves leave to add to and/or alter, amend, rescind or modify the grounds here in above before or at the hearing of this appeal." 3. The assessee is an Association duly registered u/s 12A of the Income tax Act, 1961 (Act). It also holds a certificate u/s 80G of the Act. The assessee is carrying on charitable activities since 1988. The Association of the assessee was formed by leather merchants for various activities such as spreading, knowledge among members, regarding the trade to remove hardship of the members, to assist the members in increasing the volume by organizing trade shows, fairs, seminars and publishing of magazines for the sole benefit and advantages of the leather industry. The prime object of the assessee is to promote leather trade. 4. During the previous year the assessee derived income from conducting trade shows, seminars, fairs, SVHC testing, leather goods park booking fees, fashion magazine and entry tickets for various trade shows. The assessee in the past was enjoying the benefit of exemption u/s 11 of the Act as it was considered that the assessee was existing for a charitable purpose within the meaning of the term u/s 2(15) of the Act. With ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, Leather Testing, Foreign Language courses etc. The Assessee submitted that since the motive of the association was to spread knowledge and assist the members in increasing their business whereby development of trade and industry, the contribution received for various activities of the association has been wrongly treated as business activities by the AO. 5.1. The CIT(A) on a consideration of the above submissions of the Assessee was of the view that the main contribution from non-members was stall booking charges in the trade fair organized by the assessee during the previous year. He was of the view that as per First Proviso to Section 2(15), the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on an activity in the nature of trade, commerce or business. The assessee has not carried out any such activity by charging rent from the non-members for the stalls in the trade fair organized by the assessee. The organization of trade fair is one of the declared objects of the assessee on the basis of which it has been registered u/s 12A and the donations to it are eligible for deduction u/s 8OG. He was of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orests and wildlife) and preservation of monuments 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 or application, or retention of the income from such activity". It can be seen from the proviso to Sec.2(15) which came into effect from 01-04-2009 that 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. 8. According to the AO, the Assessee was carrying on any other object of general public utility and therefore the proviso to Sec.2(15) of the Act would apply to the case of the Assessee. The purpose for which the Assessee exists is for the ¡(r)advancement of any other object of general public utility". Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, if, by virtue of a cess¡(r) or fee¡(r) or any other consideration, income is generated by any of the two sets of activities referred to above, the nature of use of such income or application or retention of such income is irrelevant for the purposes of construing the activities as charitable or not. (ii) If an activity in the nature of trade, commerce or business is carried on and it generates income, the fact that such income is applied for charitable purposes, would not make any difference and the activity would nonetheless not be regarded as being carried on for a charitable purpose. If a literal interpretation is to be given to the proviso, then it may be concluded that this fact would have no bearing on determining the nature of the activity carried on by the petitioner. But, in deciding whether any activity is in the nature of trade, commerce or business, it has to be examined whether there is an element of profit making or not. Similarly, while considering whether any activity is one of rendering any service in relation to any trade, commerce or business, the element of profit making is also very important. (iii) The meaning of the expression "charitab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed literally and in absolute terms. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the 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 throu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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