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ACIT (Exemptions) , Jodhpur Versus Mehrangarh Museum Trust and Vica-Verssa

2016 (4) TMI 955 - ITAT JODHPUR

Exemption u/s 11 - Held that:- As decided in assessee's own case the appellant is engaged in preservation of monuments and articles/ things of historic nature, which is the predominant object of the appellant. The aforesaid activities are incidental to the main object only. As has been held in various decisions relied upon charging of fee to meet a part of the cost for rendering charitable services cannot, result in the services being regarded as business activities and, accordingly, the appella .....

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y the Revenue and the Cross Objections filed by the assessee are directed against the consolidated order of Commissioner of Income Tax (Appeals)-1, Jodhpur, dated 03/02/2015. 2. The Revenue has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-l, Jodhpur has erred in directing the allow exemption U/s 11 of the Act of the assessee. 2. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-I Jodhpu .....

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the trust despite the fact that the trust has incurred expenses on the repair and maintenance of the commercial asset. 4. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-l, Jodhpur has erred in holding that the assessee's trust has not incurred expenses beyond the objects of the trust despite the fact that the trust has incurred expenses on Ahichhtragarh fort and Nagaur fort whose ultimate beneficiary is Maharaja Gaj Singh of Jodhpur who is the managing Trus .....

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l beneficiary of the Hotel being run on the property of Hanuwant Trust 6. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-l, Jodhpur has erred in directing to allow capital expenditure as application of Income. 7. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-l, Jodhpur has erred in direction to allow foreign contribution as corpus donation. 8. On the facts and in the circumstances of the case and in law the Ld CIT(Appeals)-l, J .....

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CIT(Appeals)-l, Jodhpur has erred in allowing the assessee's appeal resulting into relief of ₹ 2,99,07,827/-. 3. At the time of hearing, both the parties before us agreed that the issue is covered by the order of this Tribunal passed in the case of assessee itself in ITA No. 51/Jodh/2013 for the Assessment Year 2009-10 order dated 28/06/2013. 4. We find that the Tribunal in the Assessment Year 2009-10, held as under:- 3.2 Ground No. 2 read as under: On the facts and in the circumstance .....

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ith effect from 01.04.2001. The appellant trust was settled on 15.03.1972 by Maharaja Gaj Singhji, with cash and collection of antiquities, with the object of setting up a world class museum in Jodhpur, for the benefit of public at large. It was further stated that in order to meet the object of setting up a Museum, Mehrangarh Fort was given on lease by Maharaja Gaj Singhji to the appellant, vide lease deed dated 19.06.1974, for an indefinite period. Mehrangarh Fort is an ancient and historical .....

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of ₹ 100 p.a was fixed for initial 10 years [refer Clause 1 @Pg 73 of the PB]. Vide letter dated 20.05.1992, annual rent of the Fort continued to remain @Rs. 100 p.a. [refer Pg 75 of the PB]. Thereafter, all expenses on maintenance were agreed to be borne by the appellant. Since 01.04.1972, the appellant set up a museum in the precincts of the Fort for displaying the articles / antiquities settled in the appellant trust. 3.4 Per contra, the ld. D.R. has reiterated all the reasons given in .....

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s items representing the collection of many generations of rulers of Jodhpur and is desirous of settling part of the collection for charitable purposes and in order to secure this object, is desirous of establishing a MUSEUM for the benefit of the public at large. ……. 6. The TRUSTEES shall protect, preserve, enlarge and improve the collections and articles and things to be received by them from time to time and will take all necessary steps to the best of their ability and means to .....

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st, be at liberty to visit the Museum. 8. If any capital endowments or additions to corpus in cash or in kind or any voluntary contributions or donations or subscriptions or legacies shall be made or given for the purposes of the Trust, hereby constituted or otherwise for the purposes of these presents upon or subject to special conditions, it shall be lawful for the Trustees to apply the same not in derogation of the purposes for which the Trust is constituted but otherwise as nearly as possibl .....

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rebuild , alter , improve, develop, and repair any property comprised in the Trust or construct any structure on any land forming the part of TRUST (emphasis supplied) It is on the basis of the aforesaid objectives, that the appellant was granted registration under section 12A of the Act which is in force till date. 3.6 We have found that the appellant has, in accordance with the approved objectives, been consistently pursuing its charitable activities for the past several decades and the appel .....

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11(1)(a) of the Act qua income of ₹ 121,88,056. The remaining income of ₹ 43,23,470/- derived from business carried by the appellant trust was offered to tax. The assessing officer/CIT(A), held that the objects/activities of the appellant trust fell under the fourth limb of the definition of charitable purpose given under section 2(15), i.e. advancement of any other object of general public utility but since the appellant trust carried on commercial activities for consideration, in v .....

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t fell in the residuary category of advancement of any other object of general public utility ; and b) The appellant undertook commercial activities, such as, allowing filming of movies, permitting hoteliers to host dinners at the Fort and allowing craftsmen to give live demonstration of their activities. 3.8 On appeal, the CIT(A) affirmed the order of the AO and held that the case of the appellant was covered within proviso to section 2(15) of the Act, on the following grounds: c) Objects of th .....

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as engaged in advancement of object(s) of general public utility, but at the same time, carried on commercial activities for consideration, the mischief of provisio to section 2(15) was clearly applicable, resulting in exemption under section 11 of the Act not being available to the appellant. i) Further, the CIT(A) distinguished the decision in the case of ACIT vs. Surat Art Silk Cloth Manufacturers Association:121 ITR 1 (SC) stating that in the appellant s case, major part of receipts were fro .....

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poor, education, medical relief, preservation of environment (including watersheds, forests 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: ……….. Proviso inserted thereto by the Finance Act, 2008, with effect from 01.04.2009, reads as under: ………… Provided that the advancement of any other object of general public utility shall not .....

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of the aforesaid proviso in the definition of charitable purpose in section 2(15) of the Act can be gathered from CBDT Circular No. 11 dated 19th December, 2008 reported in 221 CTR (St) 1, wherein scope of the said amendment has been elaborated in the following words: 3.The newly amended section 2(15) will apply only to the entities whose purpose is advancement of any other object of general public utility i.e. the fourth limb of definition of charitable purpose contained in Section 2(15). Hence .....

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s as these are covered under the any other object of public utility . Under the principle of mutuality, if trading takes place between the persons who are associated together and contribute to a common fund for the financing of some venture or object, and in this respect have no dealings or relations with any outside body, then the surplus returned to such persons is not chargeable to tax. Therefore, where industry or trade association claims both to be charitable institutions as well as mutual .....

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the nature of trade, commerce or business or renders any service in connection to trade, commerce or business, it would not be entitled to claim that its object is for charitable purposes. In such a case, the object of general public utility will only be a mask or a device to hide the true purpose which is trade, commerce, or business or rendering of any service in relation to trade, commerce or business. Each case would, therefore, have to be decided on its own facts, and generalizations are no .....

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ment of any other object of general public utility. Further, when clause 15 of section 2 was amended to separately include preservation of monuments or places or objects of artistic or historic nature in the definition of charitable purpose, the intent of the Legislature was that the proviso thereto would not apply to an institution covered under the said limb. Thus, the aforesaid proviso does not apply to a trust/ institution engaged in the charitable object of preservation of monuments or plac .....

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lity of the aforesaid proviso which is applicable to the advancement of any other object of general public utility . 4.3 Applicability - These amendments have been made applicable with effect from 1st April, 2009 and will accordingly apply for assessment year 2009-10 and subsequent years. The aforesaid Circular clarifies that prior to amendment any trust/ institution falling in the last limb was not treated as a charitable if it was involved in commercial activity. After the amendment, preservat .....

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uch service is not in relation to trade, commerce or business. Even otherwise, if the objectives of the appellant trust fall within the last limb of the definition of charitable purpose as defined under section 2(15), it cannot result in the denial of exemption under sections 11/12 of the Act, as the aforesaid activity of establishing museums is clearly in furtherance of the charitable objectives of the appellant trust and is not a business/commercial activity carried on with the motive of earni .....

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deration then, too, the assessee shall not be regarded as carrying on any activity for charitable purpose. The circulars clarify that the proviso to section 2(15) of the Act applies to trust/ institution falling in the last limb of the definition of charitable purpose if such trust/ institution carries on commercial activities in the nature of business, trade or commerce. What is the definition of the term business ? The Hon ble Supreme Court in the case of Distributers Baroda P. Ltd. (83 ITR 37 .....

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the expressions trade and commerce are narrower in scope than the expression business . The expressions trade or commerce signify economic/commercial activity with motive of earning profit. The term trade has not been defined in the Act. Some of the dictionary meanings of trade are as under: - As per Webster's New Twentieth Century Dictionary, (Second edition), is, amongst others, "A means of earning one's living, occupation or work". - In Black's Law Dictionary "trade .....

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anagement of Gymkhana Club, AIR 1968 SC 554, 562; State of Punjab v. Bajaj Electricals Ltd., AIR 1968 SC 739, 741). The term commerce has also not been defined in the Act. According to Webster s Third New International Dictionary, the term commercial means of, in or relating to commerce. The term ''commerce" means "the exchange or buying and selling of commodities especially on a large scale and involving transportation from place to place". According to Chamber's Twen .....

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hem at a profit, it is an ordinary case of trade and if the transactions are on large scale they are called as commerce: Gannon Dunkerley & Co v. State of Madras (1954) 5 STC 216 (Mad.). 3.12 The conjoint reading of the above decisions make it amply clear that the words, trade , commerce and business , connote and indicate a series of organized activities primarily undertaken on commercial lines for profit motive. After the insertion of the proviso to section 2(15) by the Finance Act, 2008, .....

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ied the exemption claimed by the assessee on the ground that activities of the assessee were commercial since it was charging fees. The Court, while upholding the claim of the assessee, held that the activities of the assessee amounted to advancement of an object of general public utility. On the issue of charging of fees for undertaking research projects, the Court held that mere charging of fees would not render the activity as commercial. The Court also dealt with the aforesaid amended defini .....

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pe of business and other trading activities. The relevant portions of the judgment read as follows:- 17. It clearly follows that even these three projects were the research projects which were given to the Petitioner Foundation having regard to its expertise in this field. Therefore, these activities per se would not bring out the Petitioner Foundation out of the ambit of section 2(15) of the Act. It can be said that the activities amounted to "Advancement of an object of general public uti .....

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elevant on this aspect, is the judgment of this Court in the case of Addl. CIT v. Hamdard Dawakhana (WAKF) [1986] 157 ITR 639. In that judgment unamended definition of charitable purpose contained in section 2(15) of the Act was considered. Following discussion contained in the judgment reproduced unamended definition as well, along with its interpretation:- "The main point urged by Mr. Wazir Singh was based on the definition of charitable purpose stated in section 2(15) of the Act. This de .....

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d Dawakhana. It is, therefore, urged that this is not a charitable purpose at all and, hence, no exemption can be granted. It is pointed out that out of the business of this trust, the khandani income is being earned by the mutawallis themselves, so there is no scope for saying that this is a charitable purpose. We find that on a proper construction of the Act, this is not the meaning to be given to the definition. In order to have a charity, you must have a source of income. The income may come .....

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n has to be used for charitable purposes. In our view, the entire point is now covered by the Supreme Court s judgment in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1. The Court pointed out in that case that when the object of a trust was the carrying on of an object of general public utility, it is that object of general public utility which must not involve the carrying on of an activity for profit. It was pointed out that it was immaterial how the money for ach .....

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k with no source of income. So, the makers of the trust in the present case, dedicated a portion of the income of the business for being used for charitable purpose As long as the user of that money is charitable, then the exemption has to be granted." (p. 644) 19. The Madras High Court in CIT v. K.S. Venkatasubbiah Reddiar [1996] 221 ITR 181 had the occasion to discuss in detail as to what would constitute business and profits and gains of business or profession . Taking note of the defini .....

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e sense of an occupation or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business, there must be a course of dealings either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure . It is, therefore, clear that the two essential requirements for an activity to be considered as business are: (i) it must be a continuous course of activity; and (ii) it must be .....

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rojects , which can be termed as ancillary activity only. The circumstances under which the projects were undertaken make it clear that it was at the instance of the Government of India or the State Government for improving the accounting and budgetary systems in these local bodies. The expertise of the Petitioner Foundation in carrying out research in this field was sought to be utilized. Therefore, it cannot constitute business/commercial activity . Merely because some remuneration was taken b .....

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to be distributed to the Members as dividends or profits. It is clear that most of the amount received qua these projects was spent on the project and surplus, if any, is used for advancement of the objectives for which the Petitioner Foundation is established. 21. The amended definition of charitable purpose would not alter this position. No doubt, proviso to this definition clarifies that advancement of any other object of general public utility will not be treated as charitable purpose if it .....

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mmerce or business or activity of rendering any service in relation to trade, commerce or business. (emphasis supplied) 3.13 The Delhi High Court, in the case of Institute of Chartered Accountants of India v. Director General of Income-tax (Exemptions): 245 CTR 541, concurred with the view taken in the above decision and observed as under:- 19. The word "Business" is a word of large and indefinite import. Section 2(13) defines business to include any trade, commerce or manufacture or a .....

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;. … … … 29. It may be, however, pointed out that the term "profit motive" is not only the sole or relevant consideration that has to be kept in mind. It is one of the aspects. Normally intention to earn profit is required. Emphasis, however it does appear, has shifted and the concept and principle of "economic activity" has gained acceptability. The definition of the term "business" may also vary when we are examining taxability under Sales Tax .....

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tion Ltd. v. Revenue & Customs Commissioner, (2006) EWHC 2383 (Ch) and the case law cited therein). It may also be also appropriate here to refer the decision of the House of Lords in Town Investments Ltd. v. Department of the Environment [1977] 1 All ER 813. In this case, a Government department was claiming benefit under a legislation that protected "business tenancies" from increase in rent. The term "business" in the said case by a majority decision was held to includ .....

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ofit) having its distinct object, distinct management and distinct assets and liabilities. … … … … 33. 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 s .....

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ess principles, and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is infact in the nature of business. The test as prescribe in Raipur Mfrs. Co.'s case (supra) and Sai Publications Fund's case (supra) can be applied. The six indicia stipulated in Lord Fisher's case (supra) are also relevant. Each case, therefore, has to be examined on its own facts. 3.14 In the case of Pave v. DIT (Exemptions): IT .....

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it was charging some fee for providing the services. The relevant observations of the Tribunal are as under: "The aims and objects of the trust are charitable. From details, we find that the assessee is constructing toilets for public which is also a charitable work. These public toilets are made out of the grants from Government of Uttar Pradesh and also some petty contribution from the beneficiaries. The contribution from beneficiaries cannot be said a commercial activity. After close per .....

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ri.), the assessee was a Club which had been granted registration u/s 12AA with effect from 01-04-2001. A proposal for cancellation of registration was sent from the ITO(E)I(1), Mumbai to the DIT(E) on the ground that the assessee has been carrying on activities in the nature of trade, commerce, business, etc., and is hit by the proviso to section 2(15) of the Act, applicable from assessment year 2009-10. Accordingly, a show cause notice dated 31-10-2011 was issued to the assessee for cancellati .....

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the newly inserted proviso to section 2(15) of the Act, applicable from assessment year 2009-10 and required the assessee to show cause as to why under the said proviso the assessee's activities should not be treated as in the nature of trade, commerce, business etc. In response, the assessee submitted that it was not hit by proviso since the Club was not carrying out any activities in the nature of trade, commerce, business or any activities of rendering any service in relation to trade, c .....

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ejected the contention of the assessee and after referring to the amended provision of section 2(15) read with proviso and held that the receipts were in the nature of business income. On appeal before the Tribunal, on examining the newly inserted proviso to section 2(15) of the Act and placing heavy reliance on the Delhi High Court judgment in the case of Institute of Chartered Accountants of India vs. DGIT (E) (supra) held that the test of business, trade or commerce has to be viewed from the .....

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to carry on business, trade or commerce on a permanent basis or with a reasonable continuity. If there is some incidental or ancillary receipts during the course of carrying out its promotional activity of game of golf or for maintenance of its club and the facilities, it cannot be held to be in the nature of business, trade or commerce. The Tribunal in this case also observed that where principle of mutuality was applicable, registration cannot be cancelled simply by relying on the proviso to .....

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purpose of business or in the nature of trade or commerce. All its activities are towards promotion of game of golf and other ancillary activities carried are only incidental to the said game only. Any transaction which are incidental or ancillary towards fulfillment of object of other general public utility will not normally amount to business, trade or commerce, unless there is some intention to carry on business, trade or commerce on a permanent basis or with a reasonable continuity. There i .....

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re account, it is seen that there is a operating deficit of 978.96 lakhs i.e. expenditures are far more than the receipts. In such a situation a club or trust does try to generate receipts to cover its expenditure which are only for fulfillment of its objects. However, such receipts should be strictly confined to attainment of its object and not for simply accumulating surplus. Thus, the embargo or rider given in proviso to section 2(15), cannot be the ground for cancellation of registration in .....

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istered under section 12AA and applied for renewal of its approval under section 80G of the Act. The DIT (Exemption) found that receipts of assessee from sponsorship fees, sale of tickets and music coaching was in excess of ₹ 10 lakhs and, thus, held that assessee was hit by second proviso to section 2(15) of the Act. The DIT (Exemption) also held that such receipts were in nature of commercial/trade receipts and, therefore, activities of assessee-society were hit by first proviso to secti .....

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ment of various traditional music forms of State of Tamil Nadu, which was an integral part of cultural life of people of Tamil Nadu, could also not be considered to be an activity in the nature of trade, commerce and business, the Tribunal held. Observing the DIT (E) had taken a very narrow view in this regard, the Tribunal came to the conclusion that the assessee was not carrying on any activity in the nature of trade, commerce or business but was carrying on its avowed object of advancement of .....

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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 retent .....

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on with trade, for a cess or fee or any other consideration. The third proviso excludes from the restraints imposed by first proviso, where such receipts were less than ₹ 10 lakhs. The question here is whether sponsorship fee, which forms substantial part of the amounts listed above, can be considered as receipt from activity in the nature of trade, commerce and business. In our opinion, advancement of traditional musical culture of Tamil Nadu and conducting music programmes for that purpo .....

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of advancement of various traditional music forms of State of Tamil Nadu, which is an integral part of cultural life of people of Tamil Nadu, cannot also be considered to be an activity in the nature of trade, commerce and business. This can at the best be considered as an educational pursuit. When there are colleges run for coaching music, we cannot say that training imparted in music is not education. In our opinion, the ld. DIT(E) took a very narrow view in this regard and came to a conclusio .....

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rst proviso to Section 2(15) of the Act except for sale of tickets and the receipts from sale of tickets were well below a sum of ₹ 10 lakhs. We also note that the assessee has been registered under Section 12AA of the Act and such registration is still in vogue. In our opinion, assessee was eligible for renewal of approval under Section 80G of the Act without doubt. Order of DIT(E) is quashed and he is directed to grant the assessee renewal of approval under Section 80G of the Act. 3.17 T .....

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.)1), the proviso applies only where the object of general public activity is a mask or device to hide the true purpose of trade, business or commerce, or rendering of any service in relation thereto. In other words, the Tribunal held that the proviso does not apply to cases where the services rendered are purely incidental to or subservient to the main objective of general public utility . The relevant observations of the Tribunal read as under: 14. As the above CBDT circular, which is binding .....

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ithin meanings of section 2(15) of the Act. As a corollary to this approach adopted by tax administration, in our considered view, it cannot be open to learned Commissioner to contend that where an object of general public utility is not merely a mask to hide true purpose or rendering of any service in relation thereto, and where such services are being rendered as purely incidental to or as subservient to the main objective of general public utility , the carrying on of bonafide activities in f .....

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rned, it is not even learned Commissioner s case that running a organization, set up under the statute law, for controlling, preventing and abating pollution, is pursuing trade, commerce or business. Obviously, a trade, commerce or business implies an activity with profit motive even though public good may be a secondary benefit from such an activity. That is not the case before us. The legal framework under which the assessee is set up is quite clear and unambiguous and it reflects will of the .....

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ring of service to trade, commerce or business . It is important to bear in mind the fact the expressions rendering of any service to business, trade or commerce are used in conjunction with the words business, trade or commerce and, therefore, following the principles of nosciter o soccis, we must interpret these two expressions in their cognate sense and as if they take colour from each other. Broom s Legal Maxims (10th Edition) observes that it is a rule laid down by Lord Bacon that copulatio .....

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nation to Section 2(15), rendering of service to trade, commerce or business must be such that it has a profit motive. (emphasis supplied) 3.18 Further, the Nagpur Bench of the Tribunal, in the case of SevaGram Ashram Pratisthan Vs. CIT: 129 TTJ 506, has categorically observed that the amended proviso to Sec. 2(15) of the Act is constraint for those assessees who attempt to defraud the Revenue in the garb of charitable purpose, but is not meant for those assessees who are really engaged in activ .....

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ccount of talent exam." 3.19 The assessee challenged the above condition imposed by the DIT (Exemptions) before the Tribunal. The Tribunal vide its order dated 11-2-2011 held that above condition was unwarranted and was imposed by the DIT without backing from the law. The Tribunal, accordingly, expunged the aforesaid condition from the certificate of registration issued by DIT (Exemptions). The Department subsequently filed an appeal before the Delhi High Court. The Hon'ble Delhi High C .....

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he fact that profit is redeployed into the activities. If, however, such trust/ institution does not undertake/ carry on commercial activities, then the trust/ institution would continue to be regarded as charitable and the character of the trust/ institution would not be affected merely because some profit results from the activities or fees/ remuneration is charged for rendering any service. In the light of above discussion, it can reasonably be concluded that the proviso to section 2(15) of t .....

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fit motive in the garb of charitable purpose. It will not, however, affect the case of charitable institutions, which are genuinely carrying on charitable activities. It has been correctly observed in a number of cases that a charitable institution can carry on charitable activity with the donations received as well as with the help of the receipts from rendering services. Charging of fees to meet part of the cost for rendering charitable services cannot, it is submitted, result in rendering of .....

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ld amount to non-charitable activity, resulting in forfeiting exemption available to the Trust. The Hon'ble Supreme Court in this case observed that where an activity was not pervaded by profit motive but was carried on primarily for serving the dominant charitable purposes, it would not be correct to describe the same as an activity for profit; but where an activity was carried on with the predominant object of earning profit, it would be an activity for profit, though it may be carried on .....

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TR 186 (SC) CIT (Addl) vs. Automobile Association of Southern India: 127 ITR 730 (Mad) CIT (Addnl) vs. Madras Jewellers and Diamond Merchants Association: 129 ITR 214 (Mad) CIT vs. Mahendra Mohta Sewa Nidi: 152 ITR 516 (P&H) CIT vs. Arya Vysya Kalyana Nilaya Sangam: 159 ITR 324 (AP) CIT vs. Adarsh Gram Trust: 159 ITR 41 (Raj) CIT vs. JK Charitable Trust: 196 ITR 31 (All) CIT vs. Hyderabad Race Club Charitable Trust 262 ITR 194 (AP) CIT v. Cochin Chamber of Commerce and Industry [1973] 87 ITR .....

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nt falls in the main limb of section 2(15) of the Act, viz., preservation of monuments or places or objects of artistic or historic interest and further none of the objectives and/ or the activities is commercial in nature so as to fall within the mischief of proviso to section 2(15) of the Act. Trust is required to protect, preserve, enlarge and improve collections and articles and things . This activity gets covered in preservation of objects of artistic or historic in nature. The primary miss .....

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covered in preservation of monuments of artistic or historic in nature. It would not be out of place to mention that Mehrangarh Fort and Ahichhatragarh Fort, Nagaur are historic monuments, notified under section 3(4) of the Rajasthan Monuments Archaeological Sites & Antiquities Act, 1961, as stated by the ld. A.R. This Act has been enacted by the Rajasthan State Government to provide for the preservation, protection, upkeep, maintenance, acquisition and regulation of, and control over, anci .....

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rection or monument or any tumulus, tomb or place of interment or any cave, rock-sculpture, rock-painting or sculpture of or on stone, metal, terracotta or other immovable object or any inscription or monolith, which is of historical, archaeological or artistic importance, interest or value, and includes - (a) any remains thereof, (b) the site thereof, (c) the portion of land adjoining such site which may be necessary or required for the preservation, protection, upkeep and maintenance of the sa .....

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oses of this Act - (i) any ancient or historical monument to be a protected monument, or (ii) any archaeological site to be a protected area, or (iii) any antiquity to be a protected antiquity. (2) Before making any such declaration as is referred to in sub-section (1), the State Government shall, by notification in the Official Gazette give two month s notice of its intention to do so and a copy of such notification along with a statement of the reasons for which such declaration is proposed to .....

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laration. (4) On the expiration of the said period of two months the State Government may, after considering the objections, if any, received by it, declare by notification in the Official Gazette - (i) an ancient or historical monument to be a protected monument, or (ii) an archaeological site to be a protected area, or (iii) an antiquity to be a protected antiquity. Section 5 of the said Act, further provides as under: A notification published under sub-section (4) shall, unless and until it i .....

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3(4) of the Rajasthan Monuments Archaeological Sites & Antiquities Act, 1961, this is a protected monument. Whoever destroys, injures, mutilates, alters, removes disperses misuses, imperils or allows to fall it into decay or removes any sculptures, carved image bas-relief inscription or other like objects shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five thousand rupees or both. On perusal of the aforesaid, it will be apprec .....

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led to claim exemption under sections 11/12 of the Act, in view of the purely charitable objects pursued by the applicant in the assessment year under consideration. In this regard, it is respectfully submitted that the appellant was formed for objects of national interest. It does not and cannot undertake any commercial activity in the nature of business. Our attention was invited to the correspondence with Embassy of the Federal Republic of Germany and Lady Helen Hamlyn Trust, sanctioning rele .....

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ceived the following receipts which is considered by the assessing officer as commercial income to deny the benefit of sections 11/12 of the Act: S. No. Particulars Amount 1 License fees 28,45,118 2 Location fees (for film shooting and for allowing hoteliers to host dinner parties) 42,48,150 3 Recoveries of administrative cost 52,03,184 Total 122,96,452 The object of the appellant is to operate a museum and preservation of objects of art and culture having historical importance. To meet such obj .....

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he footfall of tourists. In order to meet such shortfall, the appellant undertakes ancillary activities to enhance its receipts, which is then utilized to maintain the museum and meet other fixed costs. Some of them, which in view of the assessing officer are allegedly commercial in nature, are briefly explained hereunder: a) Licence fee - the appellant permits few craftsmen to give live demonstration of their activities, such as cobbler making Jodhpuri juttis, local painter making paintings, we .....

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