2013 (3) TMI 559 - HC - Income Tax

Renewal of its approval under section 80G - Application in Form 10G - Section 2(15) - Charitable purpose - whether the publication of books of professional interest to be used as a reference material by the general including the professionals in respect of bank audit, tax audit, etc., would be construed to be a charitable purpose. - Held that - In our opinion, such activities of the assessee-trust cannot be construed to be one of trade or commerce or business and it would only be a charitable in nature. Therefore, it cannot be held that the activities of the assessee-trust in publishing and selling books of professional interest, which are meant to be used as a reference material even by the general public as well as the professionals in respect of bank audit, tax audit, etc., cannot be construed to be one of commerce in nature. The finding of the Tribunal in this regard requires no interference. In the given case, there is nothing to doubt about the genuineness of the activities of the assessee-trust in question - Dismissed the appeal of Revenue.

Summary

Issues:
1. Interpretation of section 2(15) of the Income-tax Act regarding charitable purpose.
2. Whether the activities of the assessee-trust in publishing and selling books of professional interest qualify as charitable.

Analysis:
The case involved a tax appeal by the Revenue questioning the Tribunal's decision to grant renewal of approval under section 80G of the Income-tax Act to an assessee-trust named "The Chartered Accountants Study Circle." The main issue was whether the activities of the trust, particularly publishing and selling books of professional interest, aligned with the definition of charitable purpose under section 2(15) of the Act. The Revenue argued that since the trust's activities could be seen as commercial, it should not be considered charitable under the Act.

Upon review, the Tribunal found that the trust's activities, including conducting courses and seminars and publishing professional books, were aimed at enhancing the education of chartered accountants, thus contributing to the betterment of the profession. The Tribunal concluded that these activities were in line with charitable purposes and granted approval under section 80G to the assessee.

The Court analyzed section 2(15) of the Act, which defines charitable purpose and includes relief of the poor, education, medical relief, and more. The provision also states that activities involving trade, commerce, or business may not be considered charitable unless the receipts are below a specified threshold. The Court assessed whether the trust's publication and sale of professional books constituted charitable activities, emphasizing that the primary purpose was educational and aimed at improving the skills of chartered accountants, rather than commercial gain.

Ultimately, the Court upheld the Tribunal's decision, noting that the trust's activities did not amount to trade or commerce but were charitable in nature. The Court highlighted that there was no doubt about the genuineness of the trust's activities, as required under section 12AA of the Act. Consequently, the appeal by the Revenue was dismissed, and no costs were awarded.