TMI Blog2021 (12) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... n activity by itself does not advance any other object of general public utility. The general public utility from such construction is derived as fact with the facilities constructed by the assessee are put to utility. The activity undertaken by the assessee on one hand and on another hand with the ultimate purpose or user of buildings constructed by the Government shall not be mistaken with one another. The assessee is interpreting proviso by excluding one of the important limbs, viz. involves the carrying on of any activity in the nature of trade, commerce or business. The decision of the authorities are independently considered and by taking note of CBDT Circular and above reasoning, we are of the view that the substantial question raised could be answered in favour of the revenue and against the assessee. - THE HONOURABLE MR.JUSTICE S.V.BHATTI AND THE HONOURABLE MR.JUSTICE VIJU ABRAHAM FOR THE APPELLANT : ADVS. ANIL D. NAIR, SRI.SREEJITH R.NAIR, SMT. ARYA ANIL, SRI.ACHYUT K PADMARAJ AND SHRI.GOKULRAJ L. FOR THE RESPONDENT : SC CHRISTOPHER ABRAHAM JUDGMENT S.V.Bhatti, J. Heard the learned Advocates Mr.Anil D.Nair and Mr.Christopher Abraham for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee was brought under the first limb of section 2(15) of the Act. Under the principle of mutuality, the surplus returned to the persons forming such association is not chargeable to tax. The Assessing Officer, upon examination of the byelaws, books of account and the objects of the society rejected the claim of assessee as rendering charitable purpose and exempt from payment of income tax. The Assessing Officer clearly noted that the fact that a few Government officers are associated with the assessee/society even assumed to be correct, such society as such would not become a Government organisation. The assessee's identity is traceable to registration obtained under Travancore Cochin Literary Scientific and Charitable Societies Act. One of the objects of the assessee is to take up construction work of any nature to establish a chain of retail outlets. In the subject financial year, the assessee has completed 34 building projects amounting to ₹ 2,17,64,238/-, advance amount against work-in-progress for and on behalf of various Government projects. Incidentally, the assessee has sold RCC doors and windows amounting to ₹ 4,98,128/-. The assessee has to fulf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, irrespective of the application of money. Therefore, we find that the case of the assessee is hit by the proviso to section 2(15) of the I.T.Act and the assessee is not entitled for the benefit of section 11 of the Act on the income generated from such activities ..... By any stretch of imagination, it is not possible to hold that the business carried on by the assessee is incidental to the objects mentioned in the Memorandum of Association. On the other hand, it is a pre-dominant activity carried on by the assessee. In other words, incidental is an offshoot of the main activities , inherent bye-prodct of the predominant activities. The activities complementing the main activities are not in the nature of incidental to the business. It is incidental if it is supporting the activities to the main activities. In the present case, the activities carried on by the assessee is itself principal activities and not incidental activities. Hence, it is not possible to hold that the construction activities carried out by the assessee is not protected by the provisions of section 11(4A) of the Act. In view of this, we do not find any merit in the argument of the Ld.AR. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Promotion Organization v Director General of Income-tax (Exemptions) [2015] 371 ITR 333 (Delhi), Ahmedabad Urban Development Authority v Assistant Commissioner of Income-Tax (Exemptions) [2017] 396 ITR 323(Guj.) and Commissioner of Income-Tax-I, Jodhpur v Jodhpur Development Authority [2017] 79 taxmann.com 361 (Rajasthan). He relies on Circular No.11/2008 dated 19.12.2008 issued by CBDT. 8. Mr.Christopher Abraham in reply argues that the circumstances stated by the assessee are objectively considered by all the three authorities, and have as a matter of fact, found that the assessee acts as a middle man or agency between the Government/M.P.'s, MLA's on one hand and on another hand acts as Principal to the contractor for getting the Government works executed from the funds allotted by the Government in this behalf. Basically what the assessee undertakes is preparation of estimates, providing services to the execution of Government works by 3rd party agency/contractors. The said activity is provided by the assessee on receipt of 2.5% fee by way of Commission on the total cost of project. This is a pure and simple business activity, amount is received from the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... participation of only their members, these would not fall under the purview of the proviso to section 2(15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be charitable organizations would now be governed by the additional conditions stipulated in the proviso to section 2(15). 3.2. In the final analysis, however, whether the assessee has for its object 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce of business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is 'charitable purpose' within the meaning of Section 2(15), would be well a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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