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TMI Blog1986 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The action of the learned Commissioner in computing the business income at Rs. 1,08,973 is also challenged in the alternative, and denial of depreciation amounting to Rs. 17,398 is further contested. 2. In the assessment order dated23-3-1983framed under section 143(3) of the Act by the ITO, Trust Circle V,New Delhithe facts stated are that the assessee-society was formed and registered under the Societies Registration Act, 1860 at registration No. S/7466 of 1975 on21-1-1975by the Registrar of Societies,Delhi. It was registered (under section 12A of the Act), registration given being DLI (C) i-539 by the Commissioner Delhi-II, New Delhi vide his office No. CIT/II/TE (82)/75/8062 dated19-9-1975. Exemption in respect of grants and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 263(1) intimating that he intended to withdraw exemption under section 11. The assessee resisted invoking of the provision under section 263 by filing a reply dated4-7-1984, along with which a detailed note of 22 pages was submitted. The learned Commissioner, however, passed the impugned order by which he withdrew the exemption and computed taxable income at Rs. 1,08,973 by holding as follows : (a) that the objects of the foundation did not conform to the requirements of the definition of charitable purpose in section 2(15), as such objects were not of general public utility; and (b) that the foundation was involved in activity of profit and the services were being rendered and fee being charged from various entrepreneurs for renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 32B of the Industrial Finance Corporation Act, 1948; (ii) Loans and grants made available by the IFCI out of interest differential funds arising out of lines of credit in D.M. to the IFCI from the Kreditanstalt fur Wiederaufbau of West Germany and allocated to the IFCI by the Government of India; (iii) All fees, service charges, interest and other charges received by the foundation; and (iv) All donations, gifts and other monies received by the foundation in any other manner or from any other source. 8. The foundation income and property is statutorily stipulated to be applied solely towards the promotion of its objects and no portion thereof can be paid or transferred directly or indirectly by way of dividend, gift, divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period advances by way of risk capital to the entrepreneurs amounted to Rs. 349.57 lakhs. The total recovery on account of all charges over the said period has been Rs. 18.66 lakhs only. The administrative cost of the foundation for the said period Rs. 36.36 lakhs. The deficit has been made partly out of the grants received from the IFCI and partly from investing the non-refundable grants and interest-free loans in short-term deposits until disbursement. The other heads of receipts and expenditure, which I like to notice, are as follows : 1. Recpts form borrower on account of SC CSC etc. Rs. 14,17 lakhs 2. Recpts on a/c of Appl. fees and legal charges Rs. 4.49 lakhs 3. Misc. income (Int. on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which come within the ambit of section 2(15) and such was not the situation in the said case. 14. The necessary facts have been given and the object and working of the foundation has also been projected. Before proceeding further the definition of the words 'charitable purpose' may be noticed, given under section 2(15) : "(15) 'charitable purpose' includes relief of poor, education, medical relief and the advancement of any other object of general public utility;" 15. I have recorded the contentions of the parties and have referred to the decision in Samaj Kalyan Parishad's case and accept the appellant-advocate's contention that the decision in that case went against the assessee because of the finding that profit activity was not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the actual facts prevailing, there was no question of making any profit at all. And in fact, not only no profits are made but there is no likelihood of such event even in foreseeable future. When I observe this I should not be understood to say that because of non-earning of profit I am taking the view that dominant purpose of the foundation is as contemplated in the last 10 words of clause (15) of section 2. According to me, there has been no activity for profit at all. 19. As far as the learned Commissioner's approach that there was an activity for profit by the foundation, the same is held to be erroneous on the face of it because : (a) the loans are advanced without interest; (b) no securities are taken for the advance, except ..... X X X X Extracts X X X X X X X X Extracts X X X X
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