TMI Blog2023 (7) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... on, nor the taxing authorities from denying exemption, in the future, if the receipts of the relevant year exceed the quantitative limit. The assessing authorities must on a yearly basis, scrutinize the record to discern whether the nature of the assessee's activities amount to trade, commerce or business based on its receipts and income (i.e., whether the amounts charged are on cost basis, or significantly higher). If it is found that they are in the nature of trade, commerce or business , then it must be examined whether the quantified limit (as amended from time to time) in proviso to section 2(15), has been breached, thus disentitling them to exemption. Therefore, the case of the assessee has to be analyzed at the threshold of above adjudication of Hon ble Supreme Court. For the said purpose, we set aside the impugned order and restore the assessment back to the file of Ld. AO for adjudication de novo in the light of above judgment. The assessee is directed to substantiate its stand. The appeal stand allowed for statistical purposes. - ITA No. 682/Chny/2022 And ITA No. 683/Chny/2022 - - - Dated:- 7-7-2023 - Hon ble Shri Mahavir Singh, VP And Hon ble Shri Manoj Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other general public utility. We concur with the rival submissions that the cited case law of Supreme Court which has been rendered subsequently would have material bearing to the case of the assessee. The summary of conclusion, in the cited judgment, was as under: - IV. Summation of conclusions 253. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of charitable purpose (w.e.f. 1-4-2009), as well as the later amendments, and other related provisions of the IT Act. A. General test under section 2(15) A.1. It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration ( cess, or fee, or any other consideration ); A.2. However, in the course of achieving the object of general public utility, the concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) the activities of trade, commerce or business are connected ( actual carrying out inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince their objects are essential for advancement of public purposes/functions (and are accordingly restrained by way of statutory provisions), such receipts are prima facie to be excluded from the mischief of business or commercial receipts. This is in line with the larger bench judgments of this court in Ramtanu Cooperative Housing Society and NDMC (supra). B.2. However, at the same time, in every case, the assessing authorities would have to apply their minds and scrutinize the records, to determine if, and to what extent, the consideration or amounts charged are significantly higher than the cost and a nominal mark-up. If such is the case, then the receipts would indicate that the activities are in fact in the nature of trade, commerce or business and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to section 2(15) of the IT Act. B.3. In clause (b) of section 10(46) of the IT Act, commercial has the same meaning as trade, commerce, business in section 2(15) of the IT Act. Therefore, sums charged by such notified body, authority, Board, Trust or Commission (by whatever name called) will require similar consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity. However, if such organisations provide additional services such as courses meant to skill personnel, providing private rental spaces in fairs or trade shows, consulting services, etc. then income or receipts from such activities, would be business or commercial in nature. In that event, the claim for tax exemption would have to be again subjected to the rigors of the proviso to section 2(15) of the IT Act. E. Non-statutory bodies E.1. In the present batch of cases, non-statutory bodies performing public functions, such as ERNET and NIXI are engaged in important public purposes. The materials on record show that fees or consideration charged by them for the purposes provided are nominal. In the circumstances, it is held that the said two assessees are driven by charitable purposes. However, the claims of such non-statutory organisations performing public functions, will have to be ascertained on a yearly basis, and the tax authorities must discern from the records, whether the fees charged are nominally above the cost, or have been increased to much higher levels. E.2. It is held that though GS1 India is in fact, involved in advancement of general public utility, its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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