TMI Blog2007 (7) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... rence has been made under section 256(1) of the Income-tax Act, 1961 (for brevity, "the Act"), by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for brevity, "the Tribunal"). The Tribunal has referred the following questions of law, which are stated to have emerged out of its order dated January 31, 1994, passed in ITA. No. 1192/ Chd/1988, in respect of the assessment year 1984-85 : "1. Whether, on the facts and circumstances of the case, the Tribunal is right to hold that the Regional Computer Centre is not a charitable institute of general public utility, entitled to exemption after the assessment year 1983-84, consequent upon simultaneous amendment of sections 11 and 2(15) of the Income-tax Act, 1961 ? 2. Whether, on the facts and circumstances of the case, the activities and object of teaching and imparting training in computer science with no profit motive as per the memorandum of association, do not qualify for exemption under section 10(22) as 'educational institute' ?" 2. The facts in brief may first be noticed. The assessee RCC is a society registered under the Societies Registration Act, 1860. The assessee RCC had filed its return on August 28, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the speech the mover of the Bill and by the plain reading of section 11(4A), it is clear to us that the purpose of the insertion of section 11(4A) was to bring business income of the trusts to tax. Certain exceptions were, however, carved out. The first exception was in respect of public religious trusts engaged in the business of printing and/or publication of books. This obviously does not cover the case of the assessee because the assessee is neither a public religious trust nor is it engaged in the business of printing and/or publication of books. The second limb of section 11(4A) is regarding institutions wholly for charitable purposes where the work in connection with the business is mainly carried on by the beneficiaries of the institution. While the purpose of the assessee is no doubt charitable in nature, the work in connection with the business is not mainly carried on by the beneficiaries of the institution. We, therefore, hold that whatever may be the position for the earlier years, the position for the assessment year 1984-85 has to be deter-mined in the light of the amendment of section 2(15) and the insertion of section 11(4A) of the Act. We, therefore, up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Electronics, New Delhi, Joint Secretary, Department of Electronics, New Delhi, Officiating Director (Regional Computer Centre) and Joint Director (Computers), Department of Electronics, New Delhi, Additional Secretary, University Grants Commission, New Delhi, Vice-Chancellor, Punjab University, Chandigarh, Principal, Punjab Engineering College, Chandigarh, Financial Commissioner and Secretary, Irrigation and Power, Government of Punjab, Chandigarh, Deputy Secretary (Finance), Chandigarh Administration, U. T. Chandigarh, Managing Director, Punjab State Industrial Development Corporation Ltd., Chandigarh and three representatives from the State of Haryana were to be nominated. On the basis of the aforementioned constitution of the executive council, it has been urged that the assessee RCC is a body which enjoys public character structurally. He has then referred to various purposes by drawing our attention to the objects in the memorandum of association, which provides that the assessee RCC is to encourage and promote the development and progress of electronic data processing towards achieving self-reliance in the field of computer sciences and technology and to advance interdisci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen drawn our attention to the order dated February 27, 1987, passed by the Assessing Officer (at page 16 of the paper book). It has been observed that in order to obtain benefit under section 10(22) of the Act, the institution must be carrying on one sole activity, i.e., promotion of education, whereas the assessee RCC indulged in many other activities. The computer training classes is only one of its small activity. It has been recorded that out of total receipts of Rs. 65,66,76,563, income by way of training programme at Rs. 3,69,954 is a negligible fraction, which goes to show that education is not a major object what to say of sole activity. The assessee RCC has itself admitted in the written submissions before the Assessing Officer that consultancy was its major activity. The Assessing Officer also referred to the profit and loss account to show that the asses-see RCC had earned income from various sources like income from project and CPU hours purchased, F.D.Rs. and data entry, etc. 9. Learned counsel has then argued that the assessee RCC has been enjoying exemption till the assessment year 1983-84 but by virtue of amendment carried in sections 2(15) and 11(4A) with effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blication of books or publication of books or is of a kind notified by the Central Government in this behalf in the Official Gazette ; or (b) the business is carried on by an institution wholly for charitable purposes and the work in connection with the business is mainly carried on by the beneficiaries of the institution, and separate books of account are maintained by the trust or institution in respect of such business." The provisions of sections 11(4) and 11(4A) of the Act fell for consideration of the hon'ble Supreme Court in the case of CIT (Asst.) v. Thanthi Trust [2001] 247 ITR 785 ; [2001] 2 SCC 707. Dealing with the controversy relating to the assessment years 1984-85 to 1991-92 and applying the provisions as it existed at that time, which is relevant to the case in hand, their Lordships' observed as under (page 795 of 247 ITR and page 716 of [2001] 2 SCC) : "22. Sub-section (4) of section 11 remains on the statute book, and it defines property held under trust for the purposes of that section to include a business so held. It then states how such income is to be determined. In other words, if such income is not to be included in the income of the trust, its qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
