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TMI Blog2015 (5) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently the order of cancellation passed under section 12AA(3) is bad in law. 5. The learned Commissioner of Income-tax has transgressed the powers granted by the provisions of Section 12AA(3) while cancelling the Registration of the appellant under section 12A of the Act 6. The Learned commissioner of Income-tax has acted beyond the provisions of the Income-tax Act by cancelling the Registration retrospectively and hence the order is bad in law. 7. The Learned Commissioner of Income-tax erred in holding that the activities of the trust is not a charitable activity. Registration cannot be cancelled on an erroneous ground that the activities of the assessee in commercial in nature. The activities of the trust are being carried out in accordance with the objects of the trust. And hence it cannot be said that the said activities are in the nature of trade, commerce or business. 8. The Learned Commissioner of Income-tax ought to have followed the decided judicial Pronouncements where the collection of fee or cess to subsidise the cost of the activity is not business. Therefore the activities carried out to support of the main objectives of the trust or institution does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table in nature and they are for the benefit of the public at large, the registration u/s. 12A and exemption u/s. 80G may be granted." 3. Based on the above noting, the Ld. CIT-I, Visakhapatnam in the impugned order, came to a conclusion that the assessee trust was granted registration, by classifying it under the last limb of the definition 'charitable purpose' u/s. 2(15) of the Act, being "the advancement of any other object of general public utility." The Ld. CIT-I, Visakhapatnam also records that for all the subsequent Assessment Years (AYs) i.e. from the AY 1994-95 onwards the assessee has been claiming that its income was exempt u/s. 11 of the Act and the Revenue has been considering this claim as within the ambit of "advancement of any other object of general public utility". 4. The Ld. CIT-I, Visakhapatnam at page 2 of his order observed as follows. "However, the successive Assessing Officers of the Department had been maintaining that despite the grant of registration u/s. 12A. the assessee trust was manifestly engaged in business activity of supplying labour to various stevedores and clearing and forwarding agents at Visakhapatnam Port and earning surplus year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act, 2010 w.e.f. 1.4.2009, applicable for the AY 2009-10 are as follows: "(a) 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 if the aggregate value of the receipts from such activity is more than Rs. 10 lakhs up to the AY 2012-13, more than Rs. 25 lakhs for the AY 2013-14 onwards. (b) This amendment introduced in the Act, would clearly divest any charitable attribute to any entity which earns income from any such activity, with the consequential effect of its income being liable to taxation. (c) When an entity, prior to the amendment had enjoyed the benefit of exemption from such activity, and supported by grant of registration u/s. 12A of the Act, the preliminary step of denial of exemption from the AY 2009-10 onwards, would be to initiate steps for withdrawal of registration u/s. 12AA(3) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will continue to be eligible for exemption even if they incidentally carry on an commercial activity, subject, however, to the conditions stipulated u/s. 11(4A) or the seventh proviso to section 10(23C). 4.2 It is wrong to hold that the trust has been created primarily and essentially to provide services of dock workers in an assured, regular and uninterrupted manner and at a' relatively cheaper rate to the business needs of the stevedores and clearing and forwarding agents at Visakhapatnam Port for the reason that the stevedores and clearing and forwarding agents and the shipping companies do have to pay higher labour charges to the trust as compared to those charged by the Visakhapatnam Port Trust, which really does not relatively benefit their business interests. 4.3 Apart from the above, the statutory provisions of section 12AA(3) do not permit the Commissioner to seek cancellation of registration already granted earlier merely on the ground that an entity whose activities had been reckoned to have been falling under the object of advancement of any other object of general public utility and whose gross total receipts exceed the prescribed monetary limit, without fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. Hqrs. No. III/41/94-95 dt. 02.03.2001, with retrospective effect, from 1.4.2009 relevant to the AY 2009-10 vide his order dt. 6.2.2013 for the following reasons. "(i) The assessee had earlier pleaded before the Ld. CIT-I, Visakhapatnam in its appeal for the AY 1999-2000 that the assessee's activity constitutes "advancement of general public utility in terms of S. 2(15) of the Act." Having made such pleadings before the First Appellate Authority as well as before the ITAT, the assessee makes a complete turnaround to plead, at the proposed stage of cancellation of registration, that its objects and activity pertain to, the specified 'charitable purpose' definition of 'relief of the poor' and is making a desperate attempt by claiming that it is engaged in relief of the poor, which remains unsubstantiated. (ii) Such attempt has been made by the assessee, for the first time, as it realised that it is hit by the two Proviso to S. 2(15) of the Act, due to commercial nature of its activities. (iii) Reference is made for the expression "poor", to the study made by the Planning Commission of India, to an affidavit submitted by the Planning Commission before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust, the employees are entitled to receive wages even on those days when there is no loading and unloading work for them." 6.1. Thereafter the Ld. CIT-I, Visakhapatnam concludes that the stand of the assessee that it is engaged in relief of the poor, stands completely demolished. He refers to Board Circular No. 11/2008 (F. No. 134/34/2008-TPL) dated 19.12.2008 for the meaning of the term 'poor' and after referring to the order of the ITAT in the assessee's own case for the earlier AY, records that the assessee Trust can be said to be engaged in the activity of rendering of any service in relation to any trade, commerce or business, for cess or fee and hence it is not entitled to claim its objects as charitable purposes relating to the relief of the poor. 6.2. On the objection of the assessee that the Trust has fulfilled both conditions stipulated u/s. 12AA(3) of the Act he held that: "(a) The activities carried out by the Trust are in accordance of its objects and that the activities are genuine and not bogus, the Ld. CIT-I, Visakhapatnam held that S. 12AA(3) of the Act needs to be construed in the holistic manner, keeping in view the effect to the legislation wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the ITAT in ITA Nos. 272 to 274/Vizag/2005, ITA 296 & 297/Vizag/2006 and ITA 342/Vizag/2008 for the AYs 1999-2000 to 2004-05 in the assessee's own case held that the assessee is a charitable organization and that the objects of the assessee are predominantly charitable in nature and that there is no change in objects as well as activities of the assessee till date and hence the issue is no more res-integra. (c) and submitted that the Hon'ble Delhi High Court has read down the provision so as to uphold the constitutional validity of the Proviso and had laid down the manner of interpretation of the Provisos to S. 2(15). (d) He also relied on the judgement of the Hon'ble Madras High Court in the case of CIT v. Sarvodaya Ilakkiya Pannai reported in 343 ITR 300 (Madras) (2012) and certain other decisions which we would be referring to, during the course of our order. (e) On the finding of the Ld. Commissioner that the assessee had violated the provisions of S. 13, he submitted that: (i) The wages and the levy to be charged on the users of the labour force are fixed by Visakhapatnam Dock Labour Port (ii) When the dock labour board finds that the levy is exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable institutions, by virtue of first Proviso first limb, (clause (a)) itself and there is no necessity to consider stipulations laid down in Clause (b) containing the words "or any activity of rendering any service in relation to any trade, commerce or business". He submitted that interpretation has been placed by the Hon'ble Kerala High Court in the case of Info Park v. Dy. CIT, reported in 329 ITR 404, on this section and it was explained how this section should be read and understood. He further relied on the order of Amritsar Bench of the Tribunal in the case of Sukhmani Society for Citizen Services v. CIT 024 ITR (Trib.) 0438 and submitted that when a fee is charged for services rendered, then mere mentioning of charitable activity in the Memorandum of Association would not qualify assessee for exemption as a charitable organization. He took us through the order of Ld. CIT, Visakhapatnam and supported each and every finding therein. He tried to distinguish the case laws relied upon by the assessee. On a query from the Bench he could not factually controvert the submissions of the assessee that M/s. South India Corporation Ltd. was not a Trustee of the assessee trust, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dispute that the assessee is carrying on the very same activity since its inception. The surplus earned on carrying on the said activity are not to be distributed between the trustees, but to be retained by the assessee trust for the purpose of carrying on the objects of the trust. Hence in the absence of the profit motive attached to the activities carried on by the Trust, in our opinion, the activities carried on by the Trust cannot be treated as a business activity. Further the assessee trust was formed only for the purpose of the regulating the operations of the private workers in the Dock yard and said object have been approved as "Charitable purpose" by the Ld. err. Further as pointed out by ld. AR, as per Sec. 42 of the Major Port Trust Act 1963, the Performance of service by Board or other person include receiving, removing, shifting, transporting, storing or delivering goods brought within the board premises. Hence the activities of the assessee trust falls in the category of one of the services as defined in the Major Port Trust Act, 1963. Since the activities carried on without any profit motive and only for the purpose of the welfare of the workers, in our opinion, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in order to satisfy himself about the genuineness of activities of the trust or institution. The section further empowers the Commissioner to make such enquiry as he deems necessary in this regard. Once the Commissioner is satisfied himself about the objects of the trust or institution and the genuineness of the activities of the trust, he has to pass an order in writing registering the trust or institution; if he is not so satisfied, he has to pass an order in writing refusing to register the trust or institution. 30. Section 12AA(3) of the Act inserted with effect from October 1, 2004, under the Finance (No. 2) Act, 2004, and the amendment inserted by the Finance Act, 2010, with effect from June 1, 2010, therein empowering the Commissioner to cancel the registration granted under the stated circumstances, reads as under: Provision inserted under the Finance Act, 2004: "12AA. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 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 institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particular year of registration. As rightly pointed out by the assessee, Revenue does not allege anything against the genuineness of the objects of the assessee or its activities. It rests its order only on the ground of the assessee receiving income from holding of matches which according to the assessee were not held by it. Thus, as regards the question as to whether the particular income qualified under Section 11 of the Act or not is not the same as activity being genuine or not In the circumstances, we do not agree with the view of the Income Tax Appellate Tribunal that the order passed by the Director of Income Tax (Exemptions) was in accordance with the provisions of the Income Tax Act, 1961. He viewed that the conduct of test matches and ODI are in the nature of commerce or business. Though the assessee claimed their activities for promotion of sports, he held that the dominant feature is evident from the huge profits received and hence the amount received from BCCI as subsidy are commercial. As regards conducting of IPL Matches, he pointed out that though no services are rendered by the assessee for conducting the matches, the ground where the matches are played are gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally it accepted the case of the assesses that the physical aspect of the game was one in accordance with the objects, the quantum of receipt apparently led the Income Tax Appellate Tribunal and the Revenue to come to the conclusion that the activities are commercial and hence by Section 2(15) proviso to the Act, the receipt from BCCI could not be called as subsidy. As for the observation of the Income Tax Appellate Tribunal that the twin conditions stood satisfied is concerned, it is not denied by the Revenue that at the time of granting registration, the Commissioner had satisfied himself about the objects of the trust and the genuineness of the activities as falling within the meaning of charitable purpose, as it stood in 2003, The Revenue does not deny as a matter of fact that the objects remain as it was in 2003 and there is no change in its content to call the assessee's object as not genuine. There are no materials to indicate that the grant of registration was not based on materials indicating objects of general public utility. 56. The assessee is a member of Board of Control for Cricket in India (BCCI), which in turn is a member of ICC (International Cricket Council) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard. In the above said circumstances, we set aside the order of the Income Tax Appellate Tribunal. 58. In the result, the Tax Case (Appeal) stands allowed. No costs. Consequently, connected MP is closed. (emphasis ours). 10.6. Similarly the Hon'ble Madras High Court in the case of CIT-I v. Sarvodaya Ilakkiya Pannai reported in (2012) 343 ITR 300 held as follows. "6. In order to apply the above provision, there must be a specific finding by the Commissioner that the activities of the trust or institution are not genuine or not being carried out in accordance with the objects of the trust or institution as the case may be. The question is, whether the order of the Commissioner of Income Tax could fall under the powers conferred on him under section 12AA(3) of the Act. The only reason given by the Commissioner of Income Tax to cancel the registration is that the activities of the trust were not charitable and therefore, the trust is not entitled to exemption under section 11 and consequently, cancelled the registration granted under section 12AA. 7. It is not as if that the registration was granted without considering the objects of the trust in question, namely, (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reason to interfere with the order of the Tribunal and accordingly, both the questions require no further consideration. The tax case appeal is dismissed as devoid of merits." (emphasis ours). 10.7. In the case on hand the Ld. CIT clearly gives a finding that the assessee is carrying on its activities in accordance with the objects. There is no finding arrived at by the Ld. CIT, that the activities of the assessee Trust are not genuine. Hence on facts there is no dispute that the activities of the Institution are genuine and that the assessee trust is carrying on its activities in accordance with its objects. In the absence of contrary findings, we have to hold that the Ld. CIT was wrong in invoking the provisions u/s. 12AA(3) of the Act. As the conditions specified under the section 12AA(3) have not been satisfied, the cancellation of registration is bad in law. The finding of the Ld. CIT that the provisions of S. 12AA(3) need to be construed in a holistic manner, with a view to give effect to the object which the legislation intends to achieve and to derecognize the objects of the assessee, on the ground that they are not charitable under certain circumstances prescribed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The object of this provision is not clarificatory or explanatory. So prior to that date, the authorities granting registration had no inherent power to withdraw or revoke the registration already granted. (Emphasis ours). 9. In the above decision, the Hon'ble High Court has clearly held that s. 12AA(3) has no retrospective effect as it is neither explanatory nor clarificatory in nature and the CIT has no power to rescind the order passed by the CIT prior to 1st Oct. 2004. Now there is an amendment to s. 12AA(3) by the Finance Act, 2010, which has inserted the phrase "or has obtained registration at any time u/s. 12A" after the words "sub-s. (1)" as appearing in s. 12AA(3). This amendment has been made applicable and effective from 1st June, 2010. Keeping in view the ratio laid down by the Hon'ble High Court in the case of Oxford Academy for Career Development (supra) and also the amendment of s. 12AA(3) by the Finance Act, 2010 w.e.f 1st June, 2010, it is amply clear that s. 12AA(3) is prospective in nature and if any trust/institution has been registered prior to 1st Oct. 2004 either u/s. 12A or 12AA, the CIT has no power to cancel the registration u/s. 12AA(3). In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st July, 2007 for cancellation of the registration granted to the petitioner for the assessment year 1999-2000 on the ground that the petitioner is charging capitation fee and donations in respect of admissions and diverting them in respect of personal gain of trustees. The proceedings were initiated and order was passed cancelling the registration. The said order was challenged before the Tribunal. The Tribunal allowed the appeal of assessee on the ground that the registration was granted under section 12A, which cannot be invoked by section 12AA(3), which were brought on the statute book w.e.f 1st October, 2004. The appeal against the order of Tribunal is admitted and pending for final disposal before the High Court. Section 12AA(3) has been amended by the Finance Act of 2010 w.e.f. June 2010 giving the power to cancel the registration under section 12A. The Commissioner issued fresh show cause notice on 11th March 2011 for cancellation of registration for reasons mentioned in his order dated 9th October, 2007. The assessee challenged the constitutional validity of provision of Sub-section (3) of the section 12AA as amended by the Finance Act of 2010 w.e.f. 1st June 2010 to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Courts on the interpretation of the two Provisos to Sec. 2(15) of the Act. 13.2. The Hon'ble Delhi High Court in the case of GSI India v. DIT reported in 360 ITR 138 held that: "Section 2(15) of the Income-tax Act, 1961, was amended by the Finance Act, 2008, with effect from April 1, 2009, and a proviso was added to it. A second proviso was inserted to section 2(15) by the Finance Act, 2010, with retrospective effect from April 1, 2009. There are four main factors that need to be taken into consideration before classifying the activity of the assessee as "charitable" under the residuary category, i.e.," advancement of any other object of general public utility" under section 2(15) of the Act. The four factors are (i) the activity should be for advancement of general public utility; (ii) the activity should not involve any activity in the nature of trade, commerce and business; (iii) the activity should not involve rendering any service in relation to any trade, commerce, or business; and (iv) the activities in clauses (ii) and (iii) should not be for fee, cess or other consideration and if for fee, cess or consideration the aggregate value of the receipts from the activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 culled out the propositions in the following manner. "(a) For the cancellation of registration u/s. 12AA(3), the Commissioner should record a satisfaction that the activities of the Trust or Institution are not genuine or that the activities are not being carried on in accordance with the objects of the Trust. In the absence of such a finding registration granted u/s. 12A or u/s. 12AA cannot be cancelled. Cancellation of registration of a charitable Trust, in a given case, is permissible, only under the circumstances stated u/s. 12AA(3) of the Act. (b) For an assessee to be classified as charitable under the residuary category i.e. "advancement of any other object of general public utility" u/s. 2(15) of the Act, the following four factors have to be satisfied. i. Activity should be for advancement of general public utility. ii. Activity should not involve any activity in the nature of trade, commerce and business. iii. Activity should not involve rendering of services in relation to any trade, commerce or business. iv. Activities in Clauses b and c above, should not be for a fees, cess or other consideration, the aggregate value of which should not exceed the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty", but, simultaneously record the said activity as business. (k) There is no statutory mandate that a charitable Institution falling under the residuary Clauses, should be wholly, substantially or in part be funded by voluntary contributions. (l) A pragmatic view is required when we examine the data, which should be analysed objectively. A narrow and coloured view will be counter productive and contrary to S. 2(15) of the Act. (m) Accumulation of money/funds over a period of two to three years may not be relevant in determining the nature and character of activity and whether the same should be treated indicative of profit motive i.e. desire or intention to carry on business or commerce. (n) The so called business activities, when intrinsically woven into and is part of the charitable activity undertaken, the business activity is not feeding charitable activities, as they are integral to the charity/charitable activity. (o) What has to be seen is, as to what is the core/main activity of the assessee. The predominant activity shall be the basis of decision making." 13.4. In the case of "Indian Trade Promotion Organization and others" (supra) the Hon'ble Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gibility for granting approval to an institution for the purposes of exemption stipulated in Section 10(23C)(iv). We have noted that prior to the introduction of the proviso to Section 2(15) of the said Act, the DGIT(E) had, in fact, granted such an exemption on 01.05.2008. But, subsequently, from assessment year 2009-10 onwards, by virtue of the order dated 23.02.2012, the exemption earlier granted was withdrawn. The said withdrawal of exemption was confirmed by the impugned order dated 23.01.2013 passed under Section 154 of the said Act by the respondent. 43. From this, it is clear that prior to the introduction of the proviso to Section 2(15) of the said Act, there was no dispute that the petitioner was established for charitable purposes and, therefore, its income was not to be included in the total income and was, therefore, granted the benefit of exemption. We have already noted above, while discussing the facts of the case that the income received by the petitioner is from the letting out of space, sale of publications, sale of tickets and leasing out food and beverages outlets in Pragati Maidan. The dominant and main object of the petitioner is to organise trade fairs/exh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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. We have seen that by virtue of Section 25 of the Act, the petitioner is enjoined to plough back its income in furtherance of its object and the declaration of dividends is prohibited. 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 we feel that 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." 6.1. Specific attention was invited to para 48 to 58:-- 48. "With this as to what is meant by the expressions "trade", "commerce" or "business". The word "trade" was considered by the Supreme Court in its decision in the case of Kh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he BIS Act, these statutory bodies (including BIS) are empowered to frame rules or regulations, exercise coercive powers, including inspection, raids; they possess search and seizure powers and are invariably Subjected to Parliamentary or legislative oversight. The primary object for setting up such regulatory bodies would be to ensure general public utility, The prescribing of standards, and enforcing those standards, through accreditation and continuing supervision through inspection etc. cannot be considered as trade, business or commercial activity, merely because the testing procedures, or accreditation involves charging of such fees. It cannot be said that the public utility activity of evolving, prescribing and enforcing standards, "involves" the carrying on of trade or commercial activity." 50. In ICAI(II) (supra), while considering whether the activities of ICAI fell within the proviso to Section 2(15) as introduced with effect from 0104.2009. this court, after considering the Supreme Court decision in the case of Commissioner of Sales Tax v. Sai Publication Fund' (2002) 258 ITR 70(SC) held:" "Thus, if the dominant activity of the assessee was not business, then an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the expressions" business", "trade" or "commerce"." 52. With regard to the Surat Art Silk case (supra), this court, in ICAI (11) (supra) observed as under:" "69. In the case of Addl. Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 (SC), the Supreme Court 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 any out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely be cause some profit arises from the activity. 70. Although in that case the statutory provisions being considered by the Supreme Court were different and the utilisation of income earned is, now, not a relevant consideration in view of the express words of the first proviso to section 2(15) of the Act, nonetheless th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving force is not the desire to earn profits but, the object of promoting trade and commerce not for itself, but for the nation " both within India and outside India. Clearly, this is a charitable purpose, which has as its motive the advancement of an object of general public utility to which the exception carved out in the first proviso to Section 2(15) of the said Act would not apply. We say so, because, if a literal interpretation were to be given to the said proviso, then it would risk being hit by Article 14 (the equality clause enshrined in Article 14 of the Constitution). It is well-settled that the courts should always endeavour to uphold the Constitutional validity of a provision and, in doing so, the provision in question may have to be read down, as pointed out above, in Arun Kumar (supra). 54. It would be pertinent to reiterate that Section 2(15) is only a definition clause. Section 2 begins with the words, "in this Act, unless the context otherwise requires". The expression "charitable purpose" appearing in Section 2(15) of the said Act has to be seen in the context of Section 10(23C)(iv). When the expression "charitable purpose", as defined in Section 2(15) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court asked the question - can it be said that the petitioner is engaged in activities which constitute business, commerce or trade? While answering the said question, the court held as under;" "21..... As observed above, legal terms, "trade", "commerce" or "business" in Section 2(15), mean activity undertaken with a view to make or earn profit. Profit motive is determinative and a critical factor to discern whether an activity is business, trade or commerce." The court further held:-- "22. Business activity has an important pervading element of self "interest, though fair dealing should and can be present, whilst Charity or charitable activity is and 'thesis of activity undertaken with profit motive or activity undertaken on sound or recognized business principles. Charity is driven by altruism and desire to serve others, though element of self" preservation may be present. For charity, benevolence should be omnipresent and demonstrable but it is not equivalent to self sacrifice and abnegation. The antiquated definition of charity, which entails giving and receiving nothing in return is outdated A mandatory feature would be; charitable activity should be devoid of selfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and a narrow and Coloured view will be counter productive and contrary to the language of Section 2(15) of the Act. 58. In conclusion, we may say that the expression "charitable purpose", as defined in Section 2(15)' cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is towards payment for the workers and for their welfare. The prime object of the assessee is not to do trade, commerce or business or rendering of any activity or services in relation to trade, commerce or business etc. The assessee has no profit motto. Hence the Proviso to S. 2(15) does not apply to the case of the assessee. Thus the cancellation of registration granted u/s. 12A(a) of the Act is bad in law." 14. The last question is whether the assessee has violated the provisions of S. 13(3)(g) r.w.s. 13(cc) of the Act. At the outset the violation has to be looked into at the time of the assessment and not for applying the provisions of S. 12AA(3) of the Act. Sec. 12AA(3) does not permit the CIT to examine violation u/s. 13 etc. 14.1. Be it as it may, on facts we find that the Representative of M/s. South India Corporation Ltd. was not a trustee of the assessee trust, during the period when excess fee collected was refunded. This factual position, as already stated, was not controverted by the Ld. CIT, D.R. Thus prima facie, invocation of S. 13(2)(g) of the Act rws 13(3)(cc) is bad in law. 14.2. Even otherwise, the fee to be charged by the assessee trust is fixed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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