TMI Blog2014 (7) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee no more remains charitable as per the amended definition of Sec. 2(15), he may pass an order u/s 154 rectifying his order withdrawing the registration of the Assessee in case he grants registration to the Assessee w.e.f. 1.4.2009 by passing a specaking order. - Decided in favour of assessee for statistical purposes. - ITA NO. 334/CTK/2011 - - - Dated:- 4-7-2014 - P.K. BANSAL, AND SHRI D.T. GARASIA ORDER PER P.K. BANSAL : 1. This appeal has been filed by the Assessee against the order of CIT dt. 22.3.2010 by which the CIT has rejected the application of the Assessee for registration under Sec. 12AA of the Income Tax Act. The Assessee has taken the following effective grounds of appeal : 1. That, the order of the learned Commissioner of Income-tax, Cuttack is illegal, arbitrary, without jurisdiction and for that matter the order of the learned Commissioner of Income- tax is liable to be quashed and/or annulled. 2. That, the learned Commissioner of Income-tax has exceeded in his jurisdiction by examining the accounts of the appellant for the financial year 2001-02 to 2008-09 and coming to an irrelevant and absurd conclusion in refusing to grant the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rror by not considering that the appellant s activity includes education of sports and for that matter the activities of the appellant is coming within the restricted meaning of education u/s 2 (15) of the Act and not with wider meaning i.e. advancement of any other object of general public utility. 9. That, the learned Commissioner of Income-tax has committed serious error both in law as well as in facts by applying the provision of section 13(1)(c)(ii) of the Act for refusing to grant the registration u/s 12AA of the Act and for that matter the order of refusal by the learned Commissioner of Income-tax is liable to be quashed and/or annulled. 10. That, the learned Commissioner of Income-tax has committed serious error by giving an opinion regarding the charitable activities for last 63 years on the basis of surmise, conjecture and whisper and for that matter conclusion based on such past 63 years is fallacious, non- application of mind, preconceived notion and motivated one which is liable to be quashed and/or annulled. 11. That, the learned Commissioner of Income-tax has committed serious error by mentioning the agreement between the appellant with the Incon Associat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed by the Assessee u/s 12A. In consequence thereof, the CIT asked certain clarification vide letter dt. 6.1.2010. The Assessee submitted its written submission on 27.1.2010. Ultimately, CIT rejected the application filed u/s 12A by holding that the Assessee was not engaged in charitable activities in the following manner : PARA 44 In any case as it has been proved in the records for all past assessment years from the 2001-2002 to 2008-2009 that the activities of letting out certain immovable and movable property to various tenants by the Orissa Olympic Association involved no activities of genuine public charity but clearly comprised of commercial exploitation of its property for business gain. PARA 45 Similarly it has been proved in the records that the Orissa Olympic Association had virtually not fulfilled any of the objects stated in its Memorandum of Association comprising of promotion of various games and sports in the last 63 years. Even the small amounts payable by the Orissa Olympic Association to affiliated games and sports association are found not to have been fully disbursed but have been shown as unpaid liability in the books of the association year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of registration. At the time of the registration CIT has only to see whether the Assessee has been created for charitable purposes or not, whether the Assessee has carried out its activities genuinely or not. CIT has considered events which have occurred after the filing of the application for registration. The Assessee has not done any commercial exploitation of its immoveable properties. The properties have been utilized for the purpose of promotion of games and all the expenditure has been incurred as a kind of grant to various sports association, athletics association, amateur athletic association. Whatever lease rent has been received by the Assessee, same has been utilized for the purpose of promotion of sports. Merely that the grants could not be disbursed in a particular year will not mean that the Assessee is not engaged in charitable activities. CIT was not correct in law in taking the amendment to Sec. 2(15) to be clarificatory in nature and its applicability retrospectively. Our attention was drawn towards the Profit Loss account and the report of the Hon. General Secretary as prepared and published in the annual accounts, copy of which was filed before us i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the CIT has committed serious error by invoking the amended sec.2(15), of the Act which was not in existence in the year under consideration in which the assessee has filed the application for grant of registration u/s 12AA of the Act in From No-10A read with 17A of the Rules. The rationale behind amendment to Sec 2(15) by the Finance Act, 2008 as could be seen from the memorandum explaining the provisions in the Finance Bill 2008 reported in 298 ITR(St) 200-201 which read as It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income either u/s 10 (23C) or Sec-11 of the Act on the ground that they are Charitable Institutions. This is based on the argument that they are engaged in the advancement of an object of general public utility as included in the fourth limb of the current definition of Charitable purpose . Such a claim when made in respect of an activity carried out on commercial lines is contrary to the intention of the provision. With a view to limiting the scope of the phrase advancement of any other object of general public utility , it is proposed to amend section 2( 15 ) so as to provide that the adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the IT Act 1961 can as well be considered applicable to all past financial years in so far as the activities of the association remain unchanged. This is clear from the decisions of the Hon ble Madras High Court in the case of CIT Vs Soft Beverages Pvt. Ltd 1993, 272 ITR 270 and the decision of the Hon ble Kolkata High Court in the case of CIT Vs Ananda Marga Pracharak Sangha 218 ITR 254 wherein it was held that when a provision is capable of interpreting without any clarification the amendment would only clarify the same. In such cases the amendment may be deemed to be retrospective in its application. Therefore invoking of the amended section 2(15) of the Act which was not existing in the year in which the assessee filed the application for grant of registration u/s 12AA is very much in order. 4. The fourth ground of appeal is that, the Ld. Commissioner of Income-tax has committed serious error by citing the activities conducted by Orissa Cricket Association which has nothing to do with the activities of the appellant and for that matter the refusal to grant registration u/s 12A of the Act is a case of nonapplication of mind and is based on preconceived notion and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhakti Vedanta Swamy Charitable Trust Vs. ACIT and another 2006(11) OLR -75 w.p.(C) No. 12437 of 2005 does not say that matters subsequent to filing of the application can not be examined. Therefore, CIT, Cuttack committed no error in examining the matters subsequent to filing of application for registration U/s 12AA of the Act. 6. The sixth ground of appeal is that, the Ld. Commissioner of Income-tax has used the materials behind the back of the appellant without giving an opportunity of being heard and for that matter the order of refusal to grant the registration u/s 12A of the Act by the Commissioner of Income-tax is illegal, arbitrary and contrary to the principles of natural justice and is liable to be quashed and/or annulled. It is submitted that, the CIT Cuttack gave ample opportunity to the assessee to explain its case, as could be seen from Para 11 of the order u/s 12AA which reads as follows: After assumption of jurisdiction over the petition originally filed in April 1997 a fresh hearing was given to the association and clarifications have been called for from the association by the competent Income-tax Authorities vide letter dated 10.08.2009 on various issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spelt out in the statute, this Court cannot hold that the said time limit is mandatory in nature nor the period of six months has been couched in negative words. Most of the time negative words indicate a mandatory intent. This Court is also of the opinion that when public duty is to be performed by the public authorities, the time limit which is granted by the Statute is normally not mandatory but is directory in the absence of any clear statutory intent to the contrary. (kindly refer Montreal Street Railway Company v. Normandin, AIR 1917 Privy Council 142 at page 144). Here there is no such express statutory intent, nor does it follow from necessary implication. For this reason we cannot accept the contention of the learned counsel for the petitioner on the interpretation of Section 12AA(2). Therefore in view of the decision of jurisdictional High Court as above, as no order was passed by the CIT Cuttack granting or refusing registration on the application of appellant for registration u/s 12A, though filed on in April 1997 till March 2010, the CIT, Cuttack had passed an order u/s I2AA, in the case of the appellant on 22.03.2010 dismissing the application in para 47 as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad made substantial contribution in financial terms to the institution or to the relatives of the founders of the institution or to the manager of the institution by whatever names they may be called or to any relative of the founder member or manager of the institution or to any concern in which the founder or member or the relative of the founder of the institution has substantial interest. The CIT Cuttack in his order u/s 12AA from Paras 32 to 34 held as under: From examination of the statements of affairs and audited accounts of Orissa Olympic Association for the financial year 2006-2007 to 2008-2009 as well as all past financial years it is evident that during the last 63 years the Orissa Olympic Association has come to possess certain immovable assets comprising of Barabati Stadium, shop complexes No. 1 2, Bank building complex, ticket counters, self constructed building, Barabati Palace, Barabati guest House, over head tank and moveable assets in the form of furniture fixtures and plant machinery, sports materials etc. The value of land inside the Barabati Stadium and adjoining areas is reflected to be ₹ 84,54,46,875.00 as on 31.03.2009. The value of Barabati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-2008 91,01,011 16,84,648 2008-2009 1,07,51,250 23,76,816 PARA-34. An analysis of the current liabilities for the financial year 200 12002 onwards would reveal that the so called grant to sports organization had actually not been disbursed and the liabilities have been carried forward year after year in the names of the district level sports association as summarized below: Financial Year Outstanding unpaid grants to sports association claimed as expenses (Rs.) 2001-2002 9,54,793 2002-2003 12,91,280 2003-2004 15,53,080 2004-2005 20,3 7,080 2005-2006 25,87,144 2006-2007 30,37,024 2007-2008 34,64,524 2008-2009 31,56,404 From the above analysis it would be appear that year after year the so called g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore to conclude that the Commissioner had given his opinion on the basis of surmise, conjecture is baseless. So also is the contention that the Commissioner had not -applied his mind, had preconceived notion and motivated is baseless in view of the above. 11. The eleventh ground of appeal is that, the Ld. Commissioner of Income-tax has committed serious error by mentioning the agreement between the appellant with the Incon Associates which is very much beneficial to the appellant and there is nothing adverse brought into record for which it can be concluded that substantial financial gain has been provided to the author, founder of the trust or the persons interested within the meaning of said section and for that matter the conclusion based on such irrelevant appreciation of facts and law is liable to be quashed. The Commissioner of Income Tax, Cuttack in para 36 to 41 of his order stated as under: PARA-38 From examination of the impounded documents found the survey operation on 28.03.2008 in the office premises of the Orissa Olympic Association it appears that the Honorary Secretary of the Orissa Olympic Association is also the Honorary Secretary of Orissa Cricket Assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Orissa Olympic Association have been administered and supervised in a manner to facilitate substantial financial gains to the family members of the Honorary Secretary of the Orissa Olympic Association rather than for general public utility. The findings in impounded documents on 28.03.2006 would equally be applicable to the facts in the financial year 2008-2009. For such reason it may be stated that the Association members specifically the Honorary Secretary continues to derive substantial financial gain to his family members from the transfer of property rights of Orissa Olympic Association comprising of 10,000 sq.ft. space of land in the Barabati Stadium premises and also comprising of Barabati Guest House and Mahatab Hall. Such activities of the Orissa Olympic Association only indicate that no genuine public charitable activities had been carried out in all these last 63 years. PARA-41 Even if for the shake of arguments it may be held that the construction and the maintenance of the Barabati Stadium in which the Orissa Cricket Association has been putting up substantial civil construction and other infrastructure can lead indirectly to the promotion of the game of cric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, the Ld. Commissioner of Income-tax has not considered the CBDT instruction and 10(23) (C) application wherein the appellant s activity has been considered and accepted as genuine one and for that matter the denial of registration by the Ld. Commissioner of Income-tax is a case of non-application of mind and is liable to be allowed. The Commissioner of Income Tax, Cuttack in paras 42 to 43 of his order stated as under: PARA-42 In the written submission, it has been argued on behalf of the Orissa Olympic Association that notification under section 10(23) was issued by the CBDT allowing exemption u/s 10(23) from 01.04.1974. In the views of the Ld. Counsel for such reason the application filed on April, 1997 u/s 12A of the Income Tax Act, 1961 should be allowed. Such a reason has no relevance. Substantive changes have been made in the statutory provisions of the section 2(15) of the Income Tax Act, 1961 under which any advancement of object of general public utility which involves any commercial activities in true sense would not be activities for charitable purpose. PARA-43 The Ld. Counsel had made reference to the CBDT circular No. 395 dated 24.09.1984 in which prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f about the genuineness of the activities of the trust or institution. In order to satisfy himself, the Commissioner may also make such enquiry as he may deem necessary in that behalf. In the event the Commissioner satisfies himself that the trust is entitled to registration keeping in mind the objects, shall grant registration in writing in terms of section I2AA(1)(b)(i) of the Income-Tax Act, 1961. In the event the Commissioner is not satisfied, he shall refuse such registration in terms of section 12AA(1)(b)(ii) of the Incometax Act, 1961 . Further in the case of Hiralal Bhagwati v. CIT [2000] 246 ITR 188 the Hon ble Gujrat High court held in the context of section 12AA registration that registration of the charitable trust under section 12AA of the Act is not an idle or empty formality; the Commissioner of Income-tax has to examine the objects of the trust as well as an empirical study of the past activities of the applicant; the Commissioner of Income-tax has to examine that it is really a charitable trust or institution eligible for registration. For the reasons stated above it is requested that the order of the CIT Cuttack is a well reasoned and speaking order which ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order passed u/s 12A from the date when the assessee no more remains to be charitable institution as is held by us in the preceding para. In our opinion, a legal mistake has occurred in the order of the CIT dtd. 13.04.2006 from the date when the proviso under section 2(15) has been inserted as the institution no more remains to have been created/established for charitable purposes or religious purposes. It is not the case of the assessee institution that it has been created or established for religious purposes. If the registration will remain continued, the purpose of amendment made in section 2(15) will be defeated and injustice will be caused to those institutions having the similar objects as the assessee has but created or established after the amendment in section 2(15) of the Income-tax Act. We cannot read the proviso in this manner. (copy of the order is enclosed) Similar view was also taken by the Hon ble ITAT, Mumbai Bench B in the case of Mumbai Cricket Association Vs. DIT (Exemption), Mumbai reported in [2012] 24 taxmann.com 99(Mum) wherein DIT (Exemp.) has cancelled the registration u/s 12A of the Act and the Hon ble Tribunal, Mumbai B Bench upheld his order (co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the state of Orissa and in such capacity have the control, supervision, regulation or encourage in India the games and sports as mentioned hereunder: (i) Hockey, (ii) Volley Ball, (iii) Basket Ball, (iv) Football, (v) Cricket, (vi) Tennis, (vii) Table Tennis, (viii) Badminton, (ix) Swimming, (x) Athletics, (xi) Wrestling, (xii) Kabbadi, (xiii) Weight Lifting, (xiv) Gymnastics, (xv) Boxing, (xvi) Cycling, (xvii) Kho Kho, (xviii) Judo, (xix) Rifle Shooting, (xx) Archery and (xxi) Hand Ball. d) To have full and complete jurisdiction over all matters pertaining to the participation of Orissa in the national and any other games, held under the Indian Olympic Association and by other all India federations which are named and notified by Government of India vide notification no. F197/7/70-IT (AI) dt. 20.1.1973 or on foreign tours relating to the games and sports referred in article 3(c); e) To diffuse useful knowledge of the sports and games named in the article 3(c) and particularly of those which come within the Olympic programme. f) To foster and develop knowledge of the sports and health; g) To establish library and reading rooms where one can read books, journals an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar to it; e) Accept or procure subscriptions, donations or other contributions on such terms as it may consider reasonable; f) Procure, collect and accept gifts and endowments on such terms as it may consider reasonable; g) Borrow or raise money for the purpose of the association including the issue of or upon bonds, debentures, bills of exchange, promissory notes or other obligations or securities of the association; h) Acquire moveable or immoveable properties on behalf of the association and sell, lease, exchange, dispose off or otherwise deal with all or any part of such properties; i) Organize coaching schemes for the benefit of all players, sportsman and athletes of the state of Orissa and to give training in various games and sports and to impart physical education; j) To do all other things including the building up of a Stadia for games and sports mentioned in article 3(c) within Orissa as may be necessary or expedient to promote the development of amateur sports and games in Orissa and for the conduct of its business, and generally to do all such things as may be necessary or expedient, lawful, incidental or conducive to the attainment of the foregoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution is registered under section 12AA] : Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution, - (i) From the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) From the first day of the financial year in which the application is made, if the Chief Commissioner or Commissioner is not so satisfied; Provided further that the provisions of this clause shall not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.] [(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny previous year. Such Trust or institution was bound to furnish such audit report in the prescribed form duly signed and verified by such accountant. Explanation to section 288 (2) defines accountant to mean a Chartered Accountant and who is competent to act as an auditor u/s 226 (2) of the Company‟s Act. 5.3 The provisions of section 11 are applicable only to the persons deriving income from property held under Trust for charitable or religious purposes. They are not applicable if the person is not in receipt of the income derived from property held for charitable or religious purposes. Section 12 AA lays down the procedure for the registration of such Trust or institution. Rule 17A of the IT Act lays down how an application for registration of charitable or religious Trust is to be made. It also prescribes form No. 10A and also requires that the application for registration can be made only by a charitable or religious Trust or institution. This rule also prescribes the various documents which are to be enclosed along with the application. The copy of the instrument by which the trust is created or institution is established has to be filed. If the Trust or institut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60,87,277 14,67,951 2004-2005 62,37,630 14,10,230 2005-2006 60,92,606 18,00,683 2006-2007 87,58,063 19,94,145 2007-2008 91,01,011 16,84,648 2008-2009 1,07,51,250 23,76,816 CIT also made analysis of the current liabilities for the financial year 2001-02 onwards and was of the view that the so-called grants to the sports association had actually not been disbursed and the liabilities have been carried forward year after year in the name of district level sports association. The cumulative liabilities were summarized as under : Financial Year Outstanding unpaid grants to sports association claimed as expenses (Rs.) 2001-2002 9,54,793 2002-2003 12,91,280 2003-2004 15,53,080 2004-2005 20,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision can be regarded to be clarificatory when there is an ambiguity in the interpretation of the provision. Sec. 2(15), as it stood prior to the insertion of the proviso, did not have any ambiguity. The section defines charitable purpose by giving an inclusive definition mentioning therein charitable purpose includes relief to the poor, education, medical relief and advancement of any other object of general public utility. We have gone through the decision of the Hon'ble Madras High Court in the case of CIT vs. Soft Beverages P. Ltd., 272 ITR 270. We are of the view that this decision will not assist the DR because in this case, we noted, that the Eleventh Schedule to the Income Tax Act contains a list of articles and things for the manufacture or production of which machinery is installed which would not be eligible for grant of Investment Allowance. Item no. 5 in that Eleventh Schedule reads as under Aerated waters in the manufacture of which blended flavouring concentrates in any form are used. The explanation was added therein by the Finance Act, 1987, which came into force from April 1, 1988. This explanation reads as under : Blended flavouring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to exclude from advancement of any other object of general public utility (i) Any activity in the nature of trade, commerce or business or, (ii) Any activity of rendering any service in relation to any trade, commerce or business, for a fee or cess or any other consideration irrespective of the nature of use, application or retention of the income from such activity. In the proposal it is clearly mentioned that the amendment will take effect from 1.4.2009 and will accordingly apply in relation to A.Y 2009-10 and subsequent assessment years. The memorandum explaining the provision in the Finance Bill, 2008 explains that the amendment has been proposed in the following manner : Section 2(15) of the Act defines charitable purpose to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income either under section 10(23C) or section 11 of the Act on the ground that they are charitable institutions. This is based on the argument that they are engaged in the advancement of an object of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the proviso to Sec. 2(15). 5.5 Subsequently, as there has been amendment in the definition of charitable purpose, CIT is within its power to rectify its order passed u/s 12A invoking the provisions of Sec. 154 as that will tantamount to be a mistake of law. The proviso to Sec. 2(15) puts an embargo and is applicable, in our opinion, w.e.f. 1.4.2009 and not prior to that. In fact, this proviso puts an embargo on the institution that in case the institution falls within the proviso, it will no longer be regarded to have been engaged for charitable purpose even if it is engaged in the advancement of any other object of general public utility. The embargo states that if the institution is engaged in carrying on of any activity in the nature of trade, commerce or business or any activity or rendering any service in relation to any trade, commerce or business for cess or fee or any other consideration, the institution shall not be regarded to have been involved in carrying on charitable purpose. This proviso in the last sentence further states that nature of use or application or retention of the income by the institution from such activity will not be a relevant consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturers Association 121 ITR 1 (supra) is not applicable in the case of the assessee at all as it relates to the interpretation of Sec. 2(15) prior to its amendment by the Finance Act, 1983 when the words not involving any activity for profit‟ were there under Section 2(15) after the words advancement of any other objects of general public utility‟. In this decision, the Hon‟ble Supreme Court approving the finding of Justice Beg in the case of Sole Trustee, Loka Sikhshana Trust‟s case [1975] 101 ITR 234, 256 (SC) held as under : The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit making is the predominant object of the activity, the purpose, though an object of general public utility would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one for or irrespective of profit is gathered on a footing of facts. What is the real nature of the activity? One which is ordinarily carried on by ordinary people for gain? Is there a built-in prescription in the Constitution against making a profit? Has there been, in practice, profit from this venture? Although the last is a weak test, the mere fact that a service is rendered is no answer to chargeability because all income is often derived by rendering some service or other. A pragmatic condition, written or unwritten, proved by a prescription of profits or by long years of invariable practice or spelt from strong surrounding circumstances indicative of anti-profit motivation-such a condition will qualify for charitable purpose and legitimately get round the fiscal hook. Short of it, the tax tackle holds you fast. A word about the burden of proof is necessary here. Income, ordinarily chargeable, can be free from exigibility only if the assessee discharges the onus of bringing himself within Section 2 (15). In so doing, he has to attract and repel-attract the condition that his objects are of general public utility and repel the charge that he is advancing these objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly imposed a new qualification on public utilities entitled to exemption for it was obvious that unless such a limitation was introduced, the fourth and last category would become too wide to prevent its abuse. This decision does not define the words carrying on of any activity in the nature of trade, commerce or business or any activity or rendering any services in relation to any trade, commerce or business‟. 5.8 The words not involving carrying on of any activity for profit appearing at the end were omitted by the Finance Act, 1983 w.e.f. 1.4.1984. The scope of amendment has been explained by the CBDT Circular no. 372 dt. 8.12.1983, 146 ITR (St.) 9B as under : Under section 2(15) of the Income-tax Act, charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity for profit. Section 3(a) of the Finance Act has omitted the words not involving the carrying on of any activity for profit from the definition. This amendment is consequential to the amendment made in section 11 of the Income-tax Act by section 6(b) of the Finance Act, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for exemption u/s 11 or whether there is default of Sec. 13 has to be looked into at the time of framing assessment. The CIT, for satisfying himself about the genuineness of the activities of the trust/institution can make such inquiry as he may deem fit and can also ask for the evidence as he desires. In view of this, we do not agree with the plea of the ld. AR that the CIT has exceeded his jurisdiction by examining the accounts of the Assessee for F.Ys 2002-03 to 2008-09. The genuineness of the activities of the trust/institution has to be ascertained on the basis of the evidence placed by the Assessee. The Assessee, in our opinion, is duty bound to comply with and submit the necessary documents and papers as are required. No doubt, applicability of the provisions of Sec. 13(1)(c) cannot be looked into at the time of registration but CIT is bound to look into whether the objects of the trust/institution are charitable/religious or not. We do not find any irregularity or infirmity so far as jurisdiction of CIT is concerned in ascertaining the purpose of the object for which the institution has been established. We have also examined the submission of the ld. AR that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to supply the people with an organ of educated public opinion, should be considered to be one for education or for any other object of general public utility. Their Lordships in Tribune s case had unequivocally expressed the view that they were not prepared to hold that the property in question was held for the purpose of education in the sense that word was used in Section 4 of the Indian Income-tax Act, 1922. It is not the case of the Assessee that it is running a normal schooling for sports. Therefore, we hold that the Assessee‟s activities do not fall within the term education . 5.11 We have also examined the arguments of the Assessee that in case the application for registration is not disposed off by the CIT within a period of 6 months it will be deemed as if the registration has been granted u/s 12A. We noted that this issue is duly covered in favour of the Revenue by the order of the jurisdiction High Court in the case of M/s Srikhetra, A.C. Bhakti-Vedanta Vs. ACIT and another [2006 (II) OLR-75 w.p.(c) No. 12437 of 2005] where in the Hon‟ble jurisdictional High Court answering the contention of the Learned Counsel for the petitioner that once the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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