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TMI Blog2015 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general public utility, the proviso to Section 2(15), which had been introduced with effect from 01.04.2009 was applicable. This led to an order dated 23.02.2012 passed by the respondent withdrawing the exemption, which had earlier been granted under Section 10(23C)(iv) from the assessment year 2009 10 onwards. 3. It is not disputed that the petitioner was engaged in socially and economically desirable activities relating to the promotion of Indian trade and that the activities of the petitioner fell within the ambit of the expression the advancement of any other object of general public utility as appearing in Section 2(15) of the said Act. But, because of the new proviso to Section 2(15), the petitioner s objects were not regarded as charitable purposes. It was observed in the said order dated 23.02.2012 that the petitioner, inter alia, had huge surpluses in banks, it had given its space for rent during Trade Fairs and Exhibitions, it had received income by way of sale of tickets and income from food and beverage outlets in Pragati Maidan, etc. The respondent, by virtue of the said order dated 23.02.2012, held that even if the petitioner s contention that it by itself was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, would be examined and considered in accordance with law. Thereafter, the petitioner filed the rectification application under Section 154 of the said Act before the respondent seeking rectification of the alleged mistakes which were apparent on the record, which resulted in the order dated 23.02.2012. 5. The petitioner gave a detailed explanation regarding the nature of its activities. With regard to space rent, it was pointed out that in order to enable the petitioner to fulfill its objectives, the Union Cabinet in its meeting held on 27.04.1976, deemed it fit to allot the Pragati Maidan Complex to the petitioner, which was spread over an area of 123.50 acres at a nominal ground rent of Re 1 per annum for the initial 5 years, which was subsequently revised to ₹ 6 lakhs (approximately) per annum and the same ground rent continues till date. The Central Government did not change the market rate or commercial rate of the premium land. It was pointed out that this special nature of the government lease, as compared to the commercial rates that could have been charged by the government, had enabled the petitioner to provide space for exhibitions, seminars, conferences and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les and stall numbers of the participating companies for guidance of the visitors and the receipts generated therefrom is treated under the head Sale of Publications . The income received on this account is only a few lakhs of rupees each year. It was contended that the receipt of this amount on account of sale of the guides is not in the nature of profit and is merely incidental to achieving the main object of the petitioner, which is promotion of trade through the medium of trade fairs and exhibitions. 8. On the aspect of income derived from sale of tickets, the petitioner pointed out that the sale of tickets is not done to earn profit, but only for the purposes of controlling the number of people who visit the trade fair. It was also clarified that no entry fee is charged from visitors for majority of the fairs organized by the petitioner. The main component of the revenue from sale of entry tickets pertains to the annual event of the India International Trade Fair organized in Pragati Maidan in November. It was further pointed out by the petitioner that even for this event, the intention behind charging the entry fee was not to earn profit, but the same was charged only fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsures that the functions of the petitioner are managed in accordance with the rules and regulations and in consonance with the object for which the petitioner was constituted. The accounts of the petitioner are also subject to various audits - internal audit, statutory audit and audit by the Comptroller and Auditor General of India to ensure compliance of all the statutory requirements. It was, therefore, submitted by the petitioner that there could be no denying that the petitioner was neither constituted nor was it permitted to indulge in any commercial activity with a profit motive. It was submitted that the contentions of the petitioner were rejected by the respondent in the order dated 23.02.2012 without ascribing any reasons and, therefore, the said order needed to be rectified. 11. However, all these submissions of the petitioner, which were made by it in its Section 154 Application, were rejected and the respondent passed the impugned order dated 23.01.2013 by holding that the exemption granted earlier under Section 10(23C)(iv) by notification dated 01.05.2008 had been correctly withdrawn by the order dated 23.02.2012 from the assessment year 2009 2010 and onwards. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Kerala High Court in the case of Info Parks Kerala v. Deputy Commissioner of Income-tax: (2010) 329 ITR 404. Reliance was also placed by the respondent on a decision of the High Court of Andhra Pradesh in the case of Andhra Pradesh State Seed Certification Agency v. Chief Commissioner of Income-tax III, Hyderabad: 256 CTR 380 (AP). 14. Being aggrieved by the said impugned order dated 23.01.2013, the petitioner is before us by way of the present writ petition. Mr Syali, the learned senior counsel, appearing for the petitioner, drew our attention to the note for the Cabinet prepared by the Secretary, Foreign Trade with regard to the creation of the petitioner as a company under Section 25 of the Companies Act, 1956. From the said note, it is, inter alia, evident that prior to the formation of the petitioner, the work of exhibitions and commercial business of the Government was distributed between the following three organizations: a) India International Trade Fair Organisation (IITFO) - a wing of the Ministry of Commerce; b) Indian Council of Trade Fairs and Exhibitions - a registered society (ICTFE); and c) Directorate of Exhibitions and Commercial Publicity - a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss; or (b) any activity of rendering of any service in relation to any trade, commerce or business, for a fee or cess or any other consideration, irrespective of the nature of use or application of the income from such activity, or the retention of such income, by the concerned entity. This amendment will take effect from the 1st day of April, 2009 and will accordingly apply in relation to the assessment year 2009 10 and subsequent assessment years. 16. A reference was also made to the following extract from the Speech of the Minister of Finance on 29.02.2008: 180. Charitable purpose includes relief of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade commerce or business and earning income have sought to claim that their purpose would also fall under 'charitable purpose'. Obviously, this way not the intention of Parliament and, hence, I propose to amend the law to exclude the aforesaid cases. Genuine charitable organizations will not in any way be affected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities which wear the mask of a charity. Genuine charitable organizations were not to be affected in any way. Mr Syali submitted that while this was the object, which is clearly discernible from the Speech of the Finance Minister, the proviso to Section 2 (15) of the said Act hits even genuine charitable organizations, such as the petitioner. 19. He submitted that unequals have been treated in a like manner. The unequals being purely commercial entities on the one hand and charitable organizations on the other. Since both these entities have been treated in the like fashion, discrimination is writ large on the proviso to Section 2(15) of the said Act. Mr Syali made a reference to the Supreme Court decision in the case of Venkateshwara Theatre v. State of Andhra Pradesh and Others: 1993 (3) SCC 677. The relevant passages of the said decision are as under: 20. Article 14 enjoins the State not to deny to any person equality before the law or the equal protection of the laws. The phrase equality before the law contains the declaration of equality of the civil rights of all persons within the territories of India. It is a basic principle of republicanism. The phrase equal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so discrimination can arise if persons who are unequals, i.e., differently placed, are treated similarly. In such a case failure on the part of the legislature to classify the persons who are dissimilar in separate categories and applying the same law, irrespective of the differences, brings about the same consequence as in a case where the law makes a distinction between persons who are similarly placed. A law providing for equal treatment of unequal objects, transactions or persons would be condemned as discriminatory if there is absence of rational relation to the object intended to be achieved by the law. 24. In K.T. Moopil Nair v. State of Kerala (supra), this Court was dealing with a law providing for imposition of uniform land tax at a flat rate without having regard to the quality of the land or its productive capacity. The law was held to be violative of Article 14 of the Constitution on the ground that lack of classification had created inequality. 25. The said decision in K.T. Moopil Nair's case (supra) has been explained by this Court in Jalan Trading Co. (Pvt.) Ltd. v. Mill Mazdoor Union: (1966) 2 LLJ 546, in the context of challenge to the validity of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al' treatment. This is more so when uniform taxes are levied. It is not proved to us how the different plantations can be said to be hostilely or unequally' treated. A uniform wheel tax on cars does not take into account the value of the car, the mileage it runs, or in the case of taxis, the profits it makes and the miles per gallon it delivers. An mbassador taxi and a fiat taxi give different outturns in terms of money and mileage. Cinemas pay the same show fee. We do not take a doctrinaire view of equality. 20. Mr Syali pointed out that, in the present case, not only is there discrimination because unequals have been treated in the same manner, but there is hostile discrimination insofar as the petitioner is concerned as it has resulted in the loss of charitable status of the petitioner for all times to come. Therefore, according to Mr Syali, the proviso to Section 2(15) of the said Act is hit by the principle of equality enshrined in Article 14 of the Constitution of India. 21. Mr Syali further emphasized that the reliance placed by the respondents in the impugned order dated 23.01.2013 on the decision of the Kerala High Court in Infoparks Kerala (supra) was misp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a distinct and separate ground, it is really in substance and effect merely an aspect of the second ground based on violation of Articles 14 and 16. Article 16 embodies the fundamental guarantee that there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. Though enacted as a distinct and independent fundamental right because of its great importance as a principle ensuring equality of opportunity in public employment which is so vital to the building up of the new classless egalitarian society envisaged in the Constitution, Article 16 is only an instance of the application of the concept of equality enshrined in Article 14. In other words, Article 14 is the genus while Article 16 is a species, Article 16 gives effect to the doctrine or equality in all matters relating to public employment. The basic principle which, therefore, informs both Articles 14 and 16 is equality and inhibition against discrimination. Now, what is the content and reach of this great equalising principle? It is a founding faith, to use the words of Bose, J., a way of life , and it must not be subjected to a narrow pedantic or lex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines and those masquerading as charitable. The grouping of all entities, including those that are purely commercial and / or business entities and charitable organizations, which are not so, is in itself a faulty grouping as unequals have been grouped together. While the object is of debarring and preventing purely commercial or business entities from taking the benefit of the exemptions available to charitable organizations, the effect is that even charitable organizations, which have objects of general public utility and are not purely business or commercial entities, are being denied the benefit of exemption. By virtue of the amendment, an all pervasive legislation has been introduced, whereby benefit to genuine institutions carrying on charitable purposes of the advancement of any other object of general public utility have also been denied the benefit of exemption. In other words, those who masquerade or indulge in a device or a mask to hide their true commercial nature and purpose are classified or grouped together with entities which do not and, as such, this amounts to treatment of unequals as equals which is not permissible in law. Reliance was placed on Venkateshwara Thea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the above submissions, Mr Syali submitted that the prayers sought in this writ petition are liable to be granted and ought to be granted. 29. Ms Suruchi Aggarwal, appearing for the revenue, referred to para 12(d) of the respondent s order dated 23.02.2012 and submitted that, although the petitioner was engaged in socially and economically desirable activities relating to promotion of Indian trade and, as such, was an organization involved in the advancement of objects of general public utility, this does not make any difference insofar as the application of proviso in Section 2(15) of the said Act is concerned. She submitted that the amendment is reasonable inasmuch as a second proviso has also been provided by virtue of the Finance Act 2010 with retrospective effect from 01.04.2009, which stipulates that the first proviso would not apply if the aggregate value of receipts from the activities referred to in the first proviso was ₹ 25 lakhs or less in a given previous year. According to her, the provisions of the first proviso cannot be considered to be arbitrary and unreasonable inasmuch as by introduction of the second proviso with retrospective effect from 01.04.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les have given rise to rule of 'reading down' the provisions if it becomes necessary to uphold the validity of the law. 57. In several cases, courts have invoked and applied the doctrine of 'reading down' and upheld the constitutional validity of the Act. xxxx xxxx xxxx xxxx xxxx 61. But it is equally well settled that if the provision of law is explicitly clear, language unambiguous and interpretation leaves no room for more than one construction, it has to be read as it is. In that case, the provision of law has to be tested on the touchstone of the relevant provisions of law or of the Constitution and it is not open to a Court to invoke the doctrine of reading down with a view to save the statute from declaring it ultra vires by carrying it to the point of perverting the purposes of the statute . 31. In Arun Kumar (supra), the Supreme Court, while referring to its earlier decision Delhi Transport Corporation v. D.T.C. Mazdoor Congress and Ors.: 1991 Supp (1) SCC 600, observed that in that case the Supreme Court held that the provision in question was ultra vires and unconstitutional and refused to apply the doctrine of reading down. The Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(15) of the said Act for determining as to whether a particular activity, which entails the advancement of any other object of general public utility, can be termed as a charitable purpose or not, would not be relevant at all. In particular, she submitted that no reliance could be placed on the decision of the Supreme Court in the case of Surat Art Silk (supra) after the introduction of the first proviso to Section 2(15) of the said Act. She placed reliance on the following observations of the Division Bench in ICAI (I) (supra): 12. As the first proviso was introduced with effect from 1st April, 2009, the scope and ambit of the said proviso to Section 2(15) of the Act has to be examined and considered. Earlier orders under Section 10(23C)(iv) are not relevant and are inconsequential, as they have not examined the scope and ambit of the first proviso. The proviso applies only if an institution is engaged in advancement of any other object of general public utility and postulates that such an institute is not charitable if it is involved in carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object of the trust or institution was to carry out object of general public utility and this was the primary or dominant purpose and not carrying on any activity for profit, the same would satisfy the requirements of Section 2(15) as it existed. It was immaterial whether members had benefitted from some of the activities. The aforesaid observations of the Supreme Court in the said case and other cases will be relevant only for determining and deciding the question whether the trust or institution is carrying on any business. ... 34. Ms Aggarwal then referred to ICAI (II) (supra) in an attempt to show that the same would not come in aid of the petitioner. 35. Ms Aggarwal then submitted that the proviso to Section 2(15) should be construed as carving out an exception to the main proviso to which it has been enacted as a proviso. For this proposition, she placed reliance on a Division Bench of this court in Haryana Acrylic Manufacturing Co. v. Commissioner of Income-tax and Another: 308 ITR 38 (Delhi). She referred to the following observations: 25. Let us now examine the provisions of Section 147 as applicable to the present case. It has been pointed out above that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. (Vide also Corporation of City of Toronto v. Attorney General for Canada (1946) AC 32, 37). In Ali M.K. v. State of Kerala: [2003] 11 SCC 632, 637, the Supreme Court made similar observations: 10. The normal function of a proviso is to except something out of the enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment. As was stated in Mullins v. Treasurer of Surrey (1880) 5 QBD 170; 42 LT 128 (referred to in Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Singh: AIR 1961 SC 1596 and Calcutta Tramways Co. Ltd. v. Corporation of Calcutta: AIR 1965 SC 1728), when one finds a proviso to a section the natural presumption is that, but for the proviso, the enacting part of the section would have included the subject matter of the proviso. The proper function of a proviso is to except and to deal with a case which would otherwise fall within the general language of the main enactment and its effect is confined to that case. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inasmuch as the petitioner rents out space at Pragati Maidan, its activity would be an activity involving profits and, therefore, would be covered as a trade, commerce or business activity. 39. Mr Syali, in rejoinder, reiterated his submissions made in his opening arguments and emphasized once again that the object behind the introduction of the proviso to Section 2(15) of the said Act was to catch hold of persons / entities who were disguising their trade, commerce and business activities as charity. The object was not to deny the beneficial provisions of the Income-tax Act to genuine charities, whose incidental activities involved generation of income. He submitted that, in the first instance, the clubbing together of unequals - purely business and commercial entities and charitable entities - was violative of Article 14 of the Constitution of India. There is a clear intelligible differentia between trading, commercial and business entities and charitable entities and one determinative factor being the desire to make profits in the former and lack of it in the latter. The object of introduction of the proviso, was to prevent such trading, commercial and business entities f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity; Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year; 41. Rule 2 C of the Income-tax Rules, 1962: 2C. Guidelines for approval under sub-clauses (vi) and (v) of clause (23C) of section 10. - (1) The prescribed authority under sub-clauses (iv) and (v) of clause (23C) of section 10 shall be the Chief Commissioner or Director General, to whom the application shall be made as provided in sub rule (2). (2) The application to be furnished under sub-clauses (iv) and (v) of clause (23C) of Section 10 by a fund, trust or institution shall be in Form No.56. Explanation. - For the purposes of this rule, Chief Commissioner or Director General means the Chief Commissioner or Director General whom the Central Board of Direct Taxes may, authorise to act as prescribed authority for the purposes of sub clause (iv) or sub clause (v) of clause (23C) of Section 10 in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner was established for charitable purposes and, therefore, its income was not to be included in the total income and was, therefore, granted the benefit of exemption. We have already noted above, while discussing the facts of the case that the income received by the petitioner is from the letting out of space, sale of publications, sale of tickets and leasing out food and beverages outlets in Pragati Maidan. The dominant and main object of the petitioner is to organise trade fairs / exhibitions in order to promote trade, commerce and business not only within India, but internationally. This is done through the organisation of trade fairs, including the annual International Trade Fair and other exhibitions. It is for this purpose that the space is let out to various entities during the said fairs and exhibitions. All these activities, including the sale of tickets and sale of publications are an inherent part of the main object of the petitioner. It is clear from the facts of the case that profit making is not the driving force or objective of the petitioner. It is registered under Section 25 of the Companies Act, 1956, which specifically applies to entities which intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness, it has to be examined whether there is an element of profit making or not. Similarly, while considering whether any activity is one of rendering any service in relation to any trade, commerce or business, the element of profit making is also very important. 46. At this juncture, we may point out that we are in agreement with the argument advanced by Mr Syali that the proviso to Section 2(15) does not make any distinction between entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business on the one hand and genuine charitable organizations on the other. It must be remembered that we are construing the expression charitable purpose not in a vacuum, but in the specific context of Section 10(23C)(iv) of the said Act. As pointed out above, Section 10 deals with the incomes not included in total income. And, Section 10(23C)(iv) specifically deals with the income received by any person on behalf of, inter alia, an institution established for charitable purposes. We have to, therefore, examine the meaning of the expression charitable purposes in the context of Section 10(23C)(iv). Looking at the said expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s did not receive an income at all, then what would be the need for taking any benefit under Section 10(23C)(iv) of the said Act. Therefore, if a meaning is given to the expression charitable purpose so as to suggest that in case an institution, having an objective of advancement of general public utility, derives an income, it would be falling within the exception carved out in the first proviso to Section 2(15) of the said Act, then there would be no institution whatsoever which would qualify for the exemption under Section 10(23C)(iv) of the said Act. And, the said provision would be rendered redundant. This is so, because, if the institution had no income, recourse to Section 10(23C)(iv) would not be necessary. And, if such an institution had an income, it would not, on the interpretation sought to be given by the revenue, be qualified for being considered as an institution established for charitable purposes. So, either way, the provisions of Section 10(23C)(iv) would not be available, either because it is not necessary or because it is blocked. The intention behind introducing the proviso to Section 2(15) of the said Act could certainly not have been to render the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld regulatory and sovereign authorities, set up under statutory enactments, and tasked to act as agencies of the State in public duties which cannot be discharged by private bodies. Often, apart from the controlling or parent statutes, like the BIS Act, these statutory bodies (including BIS) are empowered to frame rules or regulations, exercise co-ercive powers, including inspection, raids; they possess search and seizure powers and are invariably subjected to Parliamentary or legislative oversight. The primary object for setting up such regulatory bodies would be to ensure general public utility. The prescribing of standards, and enforcing those standards, through accreditation and continuing supervision through inspection etc., cannot be considered as trade, business or commercial activity, merely because the testing procedures, or accreditation involves charging of such fees. It cannot be said that the public utility activity of evolving, prescribing and enforcing standards, involves the carrying on of trade or commercial activity. 50. In ICAI(II) (supra), while considering whether the activities of ICAI fell within the proviso to Section 2(15) as introduced with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expressions business , trade or commerce as used in the first proviso must, thus, be interpreted restrictively and where the dominant object of an organisation is charitable any incidental activity for furtherance of the object would not fall within the expressions business , trade or commerce . 52. With regard to the Surat Art Silk case (supra), this court, in ICAI (II) (supra) observed as under: 69. In the case of Addl. Commissioner of Income Tax v. Surat Art Silk Cloth Manufacturers Association: [1980] 121 ITR 1 (SC), the Supreme Court held as under:- The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit making is the predominant object of the activity, the purpose, though an object of general public utility would cease to be a charitable purpose. But where the predominant object of the activity is to any out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely be cause some profit arises from the activity. 70. Although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. If the dominant activity of the institution was not business, trade or commerce, then any such incidental or ancillary activity would also not fall within the categories of trade, commerce or business. It is clear from the facts of the present case that the driving force is not the desire to earn profits but, the object of promoting trade and commerce not for itself, but for the nation both within India and outside India. Clearly, this is a charitable purpose, which has as its motive the advancement of an object of general public utility to which the exception carved out in the first proviso to Section 2(15) of the said Act would not apply. We say so, because, if a literal interpretation were to be given to the said proviso, then it would risk being hit by Article 14 (the equality clause enshrined in Article 14 of the Constitution). It is well-settled that the courts should always endeavour to uphold the Constitutional validity of a provision and, in doing so, the provision in question may have to be read down, as pointed out above, in Arun Kumar (supra). 54. It would be pertinent to reiterate that Section 2(15) is only a definition clause. Section 2 begins with the words, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge surpluses of receipts over expenditure and that payments were made to GS1 (Belgium). According to the revenue, all this entailed that GS1 (India) was engaged in business, trade or commerce . The petitioner herein refuted this. In this backdrop, this court asked the question - can it be said that the petitioner is engaged in activities which constitute business, commerce or trade ? While answering the said question, the court held as under: 21. As observed above, legal terms, trade , commerce or business in Section 2(15), mean activity undertaken with a view to make or earn profit. Profit motive is determinative and a critical factor to discern whether an activity is business, trade or commerce. The court further held:- 22. Business activity has an important pervading element of self interest, though fair dealing should and can be present, whilst charity or charitable activity is anti thesis of activity undertaken with profit motive or activity undertaken on sound or recognized business principles. Charity is driven by altruism and desire to serve others, though element of self preservation may be present. For charity, benevolence should be omnipresent and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast clause should be wholly, substantially or in part must be funded by voluntary contributions. No such requirement has been pointed out or argued. A practical and pragmatic view is required when we examine the data, which should be analyzed objectively and a narrow and coloured view will be counter productive and contrary to the language of Section 2(15) of the Act. 58. In conclusion, we may say that the expression charitable purpose , as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running fowl of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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