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TMI Blog2016 (9) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s. 35(1)(2) of the act. We fail to concur with this line of reasoning as section 35 rejection order denying deduction of expenditure on scientific research stands on a totally different footing as against the impugned exemption proceedings. We make it clear that we are dealing with section 2(15) r.w.s. 11 of the Act wherein the only issue is that of the assessee being engaged in charitable activities in furtherance to its charitable objects followed by application of income in furtherance thereto. We accordingly are of the opinion that both the lower authorities have wrongly rejected assessee’s exemption claim by invoking section 2(15) proviso of the act, since it neither carries out any activity in the nature of trade, commerce business nor any activities or renders any service in relation to the same whilst collecting the impugned cess @ 12 paisa per liter from milk producers in lieu of making them avail the above stated facilities. The assessee’s activities hereinabove in making available the facilities in question to milching animals are to ensure that they are free from diseases, their breed improvement and overall well being. We apply all the above stated constitutiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 30% considering the status of the appellant as A.O.P. without granting the proper deductions available under the Income Tax Act. It is submitted that the same be allowed now. (4.) Without prejudice to the appellant's right to get the exemption u/s. 11(1)(a), it is submitted that the Ld. CIT (A) erred in not giving the set off of earlier years' carried forward losses of ₹ 4,02,28,751/- as per section 72 of the Income Tax Act. It is submitted that the appellant is entitled to set off of losses of earlier years duly computed and quantified and the same be allowed in view of the specific treatment given by the Assessing Officer to the appellant trust. (5) The Ld. CIT (A) erred in not appreciating the facts and allowing alternate plea and ground that the appellant charitable trust is mainly doing the activity of medical relief to the animals and therefore, proviso to section 2(15) is not applicable to the appellant. It is submitted that the same be held now. 3. This assessee is an AOP (trust) established to carry research, development and extension work conducive to economic development of agriculturist. Its object clauses mainly clause no. 3.6 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption u/s. 11 to the appellant by holding that the objects of the appellant involved activities/services rendered for advancements of other object of general public utilities for which the appellant is receiving cess. He has also relied upon the fact that the appellant has been denied approval u/s. 35(1)(ii) of the IT Act, 1961 stating that the appellant is not carrying our any research activities. Accordingly, the AO has held that during the F.Y. 2009-10 relevant to A.Y. 2010-11, the activities of the trust are no longer charitable in view of the revised provisions of clause (15) of section 2 of the Act which defines the charitable purposes and hence the appellant Is no more eligible u/s. 11 of the Act for the A.Y. 2010-11. 3.3.1 So far as appellant's submissions are concerned, it has given details of the activities/services being carried out by it and has claimed that there is no trade, commerce or any business within the meaning of section 16 is carried 2(15) which is carried out by the appellant. In this regard it is seen that the appellant has itself stated that it has incurred huge expenditure on research on maternity, animal nursery, infertility, vaccination, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of milk, manufacture of different milk products and sale of the same. These activities are in the nature of trade, commerce or business because of the fact that the activities of these 3 tiers along with the activities of milk producers, who form the root level of this structure, are profit oriented. The appellant is providing services to such milk producers and their cattle. As against this the appellant is charging a cess of 12 paisa per litre of milk deposited by the milk producers with Village Dairy Cooperative Society. Thus the appellant's claim that the cess being received by it is not for rendering any service in relation to any trade or business is not correct. This is also supported by the fact that the appellant has also received substantial contribution from Kaira District Co-operative Milk Producer Union Ltd., Anand (KDCMPUL) which is the District Level Cooperative Milk Producers Union for the Kaira District. Thus, the appellant is services in relation to trade or business for a cess. It has also received other consideration in the form of contribution from KDCMPUL. Accordingly, the action of the AO of holding that the appellant's activities are not for charita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developing patented diagnostic and therapeutic products and clinical trials, to allow them your cheese plant for production of RECEPTOL and colostrums products for exclusive use by BIOMIC, for the purpose of which Biomix would build a pilot plant at Amul Cheese Factory and Amul shall only source and procure colostrums for Biomix as per agreed price. This again is a pure business activity providing facility to the company M/s. BIOMIX, and has nothing to do with conducting research by you. Thus, the appellant has also been found to be engaged in the business activities directly. 3.3.5. The other contention of the appellant is that since it was granted registration u/s. 12, 12A, 12AA, hence, it continued to be a charitable trust and could not be denied the legitimate benefit provided u/s. 11 of the IT Act 1961. In this regard it is seen that the registration u/s. 12A 12AA are pre-requisite for claiming benefit of exemption u/s 11. But even after registration u/s. 12A and 12AA, an assessee has to fulfill the conditions laid down in section 11 13 in order to get the exemption u/s. 11. As per section 11(1)(a), income derived from property held under trust fully or charit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect on registration granted to said institution under Section 12AA. 3.3.6. The alternative plea of the appellant is that it is doing activity of medical relief. The objects of the appellant have been reproduced by the AO in his assessment order. From this it can be seen that the objects of the appellant are multi faceted. The first object of the appellant is to carry research, development and extension work conductive to the economic development of agriculturist and to provide an organization for the benefit and service to the farmers and further to implement programs to improve the productive efficiency of live stock, husbandry and agriculture. Other objects include to provide or give and/or loan to village co-operative to build milk collection centre and/or equipment with a view to improve the standards of hygiene and quality of milk. Another object is relating to augmenting water supply resources, building warehouse for storage of cattle feed or agriculture produce, to establish laboratory, research institutions and may organize works and training camps and undertake all such activities for the benefits of the farmers. The object to undertake research and run veterinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny activity in the nature of trade, commerce business nor any activities or renders any service in relation to the same whilst collecting the impugned cess @ 12 paisa per liter from milk producers in lieu of making them avail the above stated facilities. A co-ordinate bench of this tribunal in DCIT vs. Andhra Pradesh Civil Supplies Corporation (2016) 70 taxmann.con 48 (Hyderabad) also interprets the above stated proviso to conclude that an Assessing Officer has to satisfy the relevant conditions u/s. 2(15) 1st proviso in question before denying such an exemption. We accordingly accept assessee s arguments on the main issue. 8. We now proceed to adjudicate an equally important question as to whether the assessee s action in making available its medical facilities admittedly in the nature of providing maternity, animal nursery, fertility, vaccination to milch animals belonging to milk producers in lieu of cess collection @ 12 paisa per liter deserves to be treated under the specific category of medical relief or it has to be held as an association advancing any other objects of general public utility. Section 2(15) 1st proviso applies in latter category only being specific in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking steps for preserving and improving the breeds of cows and calves and other milching animals. This Act gives rise to a safe inference that the State makes all its laws keeping in mind these Directive Principles contained in Chapter IV hereinabove including those under Article 265. We further notice that similar provisions are also there in chapter IV(A) incorporating fundamental duties of every Indian citizen Article 51(g) inter alia prescribes to have compassion for living creatures. We deem it appropriate to opine in view of all these constitutional provisions that the same hold good for interpretation of the Income Tax as well since neither the Constitution nor the Act contains any specific distinction between living beings for the purpose of providing medical relief to humans or animals. Hon ble apex court also deals with the issue of fundamental rights; more particularly right to life of animals in India in a recent judgment Animal Welfare Board of India vs. A. Nagaraja and others Civil Appeal no. 5387/2014 decided on 07-05-2014 known as the famous Jalli Kattu ban case. Their lordships take into account all corresponding provisions in the Constitution of India, Preven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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