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TMI Blog2024 (11) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... der on the ground that the fund raising programme carried out by the assessee trust by way of coupon sales and mega lucky draw were in the nature of business activities which is not identical to carry out the object of the trust and violation of conditions specified in Section 12AB(4) of the Act. Thus CIT(E) denied the registration u/s. 12AB of the Act and also cancelled the provisional registration granted to the assessee trust. 3. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. On facts and circumstances of the case and in law, the order passed by the Ld. CIT(E) is bad in law, Illegal besides being in violation of principle of natural justice & equity as passed without considering the material already placed on record, as such it is liable to be quashed and set aside. 2. On facts and circumstances of the case and in law, the Ld. CIT(E) has grossly erred in rejecting the application filed u/s.12AB of the Act and cancelling the provisional registration, when there is no justification In passing such Impugned order. The said application may kindly be allowed and registration to the trust be restored. 4. Ld. Counsel Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and expenditure account, the trust has raised income by donations through coupon subscription, FD interest and other direct donations from entities, which has been essentially incidental to attainment of its objects. Hence there is no requirement to maintain separate books of accounts. (c) Application of part of its income for private religious purposes not for the benefit of public As may be perused from the table appearing on page 7 of the impugned order, there is no such income having been applied for private religious purpose. (d) Application of part of income for benefit of any particular religion, community or caste. (d) As stated against clause (c) above, there has been not a single rupee of income applied for the benefit of any religion, community or caste. (e) Activity carried out is not genuine or not in accordance with condition attached to registration. (e) There is no finding of the authority that the activity carried out by the appellant is not genuine nor there is any infringement of any condition attached to registration. (f) Non compliance of any other law referred to in section 12AB(l)(b)(i)(B) of the Act. (f) There is no such non compliance of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of trade commerce or business. The Hon'ble High Court confirmed the Coordinate Bench decision of this Tribunal and dismissed the appeal filed by the Revenue by observing as follows: 11. The Appellate Tribunal, while dismissing the appeal of the Revenue held as under: "4. There are thus two issues requiring our adjudication in this appeal first, whether or not the CIT(A) was justified in holding that proviso to Section 2(15) will not have any application on the facts of this case and thus benefit of Section 11 cannot be declined to the assessee; and, second- whether or not the CIT(A) was justified the expenses, like assistance to voluntary agencies, management assistance and training, public education programme, research and publications and expenses for community service, as application of income for the purposes of Section 11 of the Act. 5. To adjudicate on these issues, only a few material facts need to be taken note of. The assessee before us is a society registered as a charitable institution registered under section 12AA of the Act. The assessee filed a return of income on 26.9.2011 showing NIL income. During the course of scrutiny assessment proceedings, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd providing mid meal to poor students. The details of the eye camp and thalassemia screening and detection camp conducted by the assessee were also furnished. The assessee also gave details of how the monies are spent to these ends. As regards the application of proviso to Section 2(15), it was pointed out that only when the institutions are carrying out activities on commercial lines with profit motive, this provision comes into play. It was pointed out that surplus funds are purely incidental and the institution is not run on the commercial lines at all. Elaborate legal submissions were made on the scope of proviso to Section 2(15) and its legislative history and background. A reference was also made to CBDT circular No. 11/2008 dated 29th December 2008 in support of the proposition the proviso to Section 2(15) will not apply in respect of activities involving relief to poor, education or medical relief, even if it incidentally involves the carrying on of commercial activities. It was then pointed out that main object of the trust is to mobilize the resources from local communities and the people having affiliation and concern for India in general, and Gujarat in particular. res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The object of introducing the first proviso is to exclude the organizations which are carrying on regular business from the scope of "charitable purpose". An activity would be considered 'business' if it is undertaken with a profit motive, but in some cases, this may not be determinative. Normally, the profit motive test should be satisfied, but in a given case the activity may be regarded as a business even when the profit motive cannot be established/ proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. 14. In the overall view of the matter, more particularly. having regard to the concurrent findings re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust (2016) 74 taxmann.com 199 (Gujarat) wherein on the issue of denial of grant of registration us 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. 8. In the case of United Way of Baroda (cited supra) the Hon'ble High Court held that sales of tickets for Garba events during Navratri period does not amount to "trade", "commerce" and "business" as occurring in the first Proviso to Section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. Thus the Hon'ble High Court held that denial of exemption u/s. 11 during the assessment proceedings is also held to be not correct on sales of tickets for Garba events. Thus the assessee cannot be denied registration u/s. 12AB of the Act. 9. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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