TMI Blog2017 (2) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s 11 of the Act. Further, the CIT (A) had also called for a remand report from the AO about the application of income and has observed that it has complied with the provisions of section 11(4a) of the Act. Therefore, we see no reason to interfere with the order of the CIT (A) for all the A.Ys. - Decided against revenue - ITA Nos.1637 to 1640/Hyd/2013 - - - Dated:- 8-2-2017 - Smt. P. Madhavi Devi, Judicial Member AND Shri B. Ramakotaiah, Accountant Member For The Revenue : Shri P. Chandra Sekhar, DR For The Assessee : Shri B.Satyanarayana Murty ORDER Per Smt. P. Madhavi Devi, J.M. All are Revenue s appeals for the A.Ys 2005-06 to 2007-08 and 2010-11. In all these appeals, Revenue is aggrieved by the orders of the CIT (A)-VI, Hyderabad, dated 20.09.2013. 2. For all the above A.Ys, the common grievance of the Revenue is that the CIT (A) has erred in holding that the assessee is entitled for exemption u/s 11 of the Act. The Revenue has raised the following grounds of appeal for A.Y 2005-06 which are similar to grounds raised in the other appeals: 1. The order of the Ld.CIT (Appeals) is erroneous both on facts and in law. 2. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r admitted high net profit margin of 6.36% of its turnover, as evident from Col. No.32(b) of the audit report in Form No.3CD filed along with the return of income, the Ld. CIT(Appeals) erred in holding that the activity of the assessee falls within the purview of 'relief of poor', and thus was not justified in holding that the assessee is eligible for exemption ujs.11 of the I.T Act, 1961. 10. Any other ground that may be urged at the time of hearing . 3. Brief facts leading to the above disputes are as under:- The assessee is a society registered u/s 12AA of the I.T. Act. The assessee society is directed by the Department of Women Child Welfare of the Govt. of A.P for supply of nutritious food to undernourished children, pregnant women and lactating mothers of below poverty line. The assessee was granted registration u/s 12AA of the Act w.e.f. 23.3.1989 and has been filing the return of income claiming exemption u/s 11 of the I.T. Act since then. The assessee was granted exemption u/s 11 for all the A.Ys up to A.Y 2004-05. 4. The assessee filed its return of income for the A.Y 2005-06 declaring total income of ₹ 4,37,42,619 after claiming exemption u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally or specifically in connection with study of the causes, mode of spread and prevention of diseases due to mal-nutrition; vi. to exchange information knowledge and personnel with other institutions, associations and societies either in India or elsewhere interested in the same subjects; vii. to prepare and publish any papers or periodicals in furtherance of the objects of the council and contribute to any such periodicals; viii. to put to use any available excess pre- processing and processing capacity in the plants of the factory for assisting other Government units-Central and State and also for introducing the products of the Factory into adjacent states for their programmes of nutrition it shall be possible also the factory to utilize any portion of its capacity not actually used in implementation of Government programmes of nutrition, for marketing of its products; ix. to affiliate, coordinate, regulate and develop the working of Food and Nutrition Projects in Andhra Pradesh; x. to coordinate with the Government of Andhra Pradesh, Government of India, International Agencies such as UNICEF, CARE and voluntary agencies to ensure regular supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is only a Contractor supplying food to various Departments of Govt. of A.P to implement its flagship programmes and that the govt. is reimbursing the assessee which is resulting in excess of income over expenditure. Another ground on which the exemption is disallowed is that the assessee is carrying on activity for profit and is also paying other taxes such as sales tax, VAT and service tax and therefore it should also pay the income tax. For coming to this conclusion, the AO has also relied upon the decision of the Hon'ble Supreme Court in the case of Indian Chamber of Commerce vs. CIT reported in 101 ITR 796. The CIT (A), on the other hand, has considered the objectives of the assessee and has held that the assessee is not carrying on the activities for the benefit of any general public entity but is carrying on relief for the poor and therefore it falls under the first limb of the definition of charitable purpose and even if it is carrying on any business activity, it does not lose its character of a charitable purpose and thus cannot be denied exemption u/s 11 of the Act. 8. We find that the DIT (E) had cancelled the registration granted to the assessee w.e.f. 1.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the objectives of general public utility . It is further held that to bring himself within section 2(15), the onus is on the assessee to show that his objects are of general public utility and thus the advancement of these objects there is no involvement of activities for profit. In the case before us, the assessee has clearly proved that it is not involved in the activity of advancement of any other objects for general public utility but that it is involved in activity for relief of the poor albeit by the Govt. of A.P. The fact that the assessee only manufactures and supplies the food items to the Govt. of A.P. itself, proves that the assessee is rendering the services through the Govt. of A.P. The price of the goods is not fixed by the assessee at the time of its supply but it is fixed by the Govt. of A.P. depending on the expenditure incurred by the assessee and also its overhead which is also evident from the fact that the assessee suffered losses in certain years while it has excess of income over expenditure in certain other years. The excess of income over expenditure alone cannot be a determining factor as to the nature of the assessee s activities. The exemption u/s 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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