TMI Blog2020 (3) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices on noncommercial principles to State Road Transport Undertakings and other concern members for a fee or charges. first proviso to section 2(15) of the Act would have been to be read down and interpreted in the context of section 10 (23C) (iv) of the Act as the context requires such interpretation where assessee is not driving primarily by desired or motive to earn profit but to pursue activities in furtherance of its objects of general public utility then it must be recognized as an institution established for charitable purposes. The Hon'ble Delhi High Court in the case of Institute of Chartered Accountant of India vs. DGI [2011 (9) TMI 77 - DELHI HIGH COURT] held that the object of the first proviso to section 2(15) of the Act is to include any transaction for a fee or money and the activity would be business if it is undertaken with the profit motive but in some cases this fact must be determinative and the profit motive test should be specified and viewed in the context of section 10 (23C) (iv) of the Act - Decided in favour of assessee. - ITA. No.643/DEL/2017 (Assessment Year 2012-13) - - - Dated:- 25-2-2020 - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12A which was also notified u/s.10(23C)(vi) for the Assessment Year 2007-08 onwards. The receipt and payment includes revenue from test laboratory and consultancy receipts. The ld. Assessing Officer held that various sources of receipts which has been incorporated in the assessment order is derived from commercial activities and held that in view of the amended proviso to Section 2(15), applicable from 01.04.2009, assessee s activities fall in the nature of trade, commerce or business. Accordingly, he has disallowed the excess income as declared in the income and expenditure account of ₹ 4,46,74,925/-. 4. Ld. CIT (A) following the ITAT order for the Assessment Year 2009-10 has allowed the assessee s appeal, wherein the Tribunal following the ratio and principle laid down by the Hon ble Delhi High Court in the case of Indian Trade Promotion Organization vs. DIT (E), [2015-TIOL-227-HCDEL- IT] and in the case of Institute of Chartered Accountants of India vs. DGIT, 347 ITR 99 (Del), held that assessee s activities are not in the nature of trade, commerce or business and assessee society is eligible for benefit of section 11. 5. Ld. DR on the other hand, relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to exclude organizations which are carrying on regular business from the scope of charitable purpose . The purpose of introducing the proviso to section 2(15) of the Act can be understood from the Budget Speech of the Finance Minister while introducing the Finance Bill, 2008. The relevant extract to the Speech is as under (see [2008] 298 ITR (St.) 33, 65) : ... 'Charitable purpose' includes reli8ef of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes have sought to claim that their purposes would also fall under 'charitable purpose' obviously, this was not the intention of Parliament and, hence, I propose to amend the law to exclude the aforesaid cases. Genuine charitable organizations will not in any way be affected. The expressions business , trade or commerce as used in the first proviso must, thus, be interpreted restrictively and where the dominant object of an organization is charitable any incidental a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana High Court (Supra) is not available for the revenue as the facts of the present case are clearly distinguishable from that case. 28. Turning to the facts of the present case, we note that the assessee association is an association of Apex Governing Body of State Road Transport Undertakings (STU) registered as a society under the Society's Registration Act which is wholly patronized by the Central Government for working under the Ministry of Road Transport and Highways and the Secretary to the Government of India, Ministry of Road Transport and Highways is the ex-officio president of the assessee association and the governing body of the assessee association includes representatives from all the State Road Transport Undertakings. 29. We also note that the assessee association was established with the main object of improving public transport system in the country and its objects as per memorandum of association as reproduced hereinabove in para 9 of this order clearly reveals that the objects of the assessee association are dedicated towards improving road safety standards and to promote facilities for advancing the skill of employees of State Transport Undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of the present case at the outset we note that the activity laboratory testing and consultancy is certainly bringing revenue for the assessee association but the CIT has not controverted or demolition this fact that the main object for which assessee association was created by Government of India is to impart services to the State Road Transport Undertakings and from careful reading of the objects of the assessee association as reproduced hereinabove clearly mandates its charitable objects and purpose. The contention of the assessee association also support from this fact that the assessee association have not revised its laboratory test charges since 2001 and the services are provided on the similar line by charging reasonable fees without any profit earning object. 33. After going through the objects and activities of the assessee association it is clear that the assessee association did not carry on any business , trade or commerce with the main object of earning profit. The activity of imparting support services to State Road Transport Undertakings without any profit motive are being conducted in furtherance of the object for which assessee ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble Delhi High Court in the case of Indian Trade Promotion Organisation vs. DGIT (Supra) wherein it was held that thus, first proviso to section 2(15) of the Act would have been to be read down and interpreted in the context of section 10 (23C) (iv) of the Act as the context requires such interpretation where assessee is not driving primarily by desired or motive to earn profit but to pursue activities in furtherance of its objects of general public utility then it must be recognized as an institution established for charitable purposes. The Hon'ble Delhi High Court in the case of Institute of Chartered Accountant of India vs. DGI 347 ITR 99 (Delhi) held that the object of the first proviso to section 2(15) of the Act is to include any transaction for a fee or money and the activity would be business if it is undertaken with the profit motive but in some cases this fact must be determinative and the profit motive test should be specified and viewed in the context of section 10 (23C) (iv) of the Act. 7. Thus, respectfully following the earlier year precedent which is applicable mutatis mutandis for this year also, the appeal of the Revenue is dismissed. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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