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TMI Blog2017 (3) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the finding of the CIT [Appeals] as well as the Assessing Officer denying the benefits of Section 11 [1](a) of the I.T Act and deleting additions of Rs. 3,36,06,368/- ?" [B] "Whether the Appellate Tribunal has substantially erred in giving the benefit of Sections 11 and 12 which the Assessing Officer disallowed by invoking the provision of Section 2 [15] r.w.s 13 [8] of the Act ?" 2. The facts leading to the present Tax Appeal in nutshell are as under : 2.1 That the assessee filed return of income for Assessment Year 2010-2011 and claimed exemption under Section 11 [1](a) of the Income-tax Act, 1961 [hereinafter referred to as, "the Act"] contending inter alia that the assessee Trust is providing medical facilities, and therefore, its activities are for charitable purposes under Section 2 [15] of the Act. However, the Assessing Officer applied proviso to Section 2 [15] of the Act and held that the assessee is a profit making company, and therefore, activities of the assessee trust are no longer charitable in view of amended provisions of "charitable purposes" and therefore assessee is not entitled to exemption under Section 11 [1](a) of the Act; as claimed. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the agriculturists, and therefore, the same can be said to be for "public utility service" as per Section 2 [15] of the Act, and therefore, proviso to Section 2 [15] of the Act shall be applicable. It is vehemently submitted by Shri Bhatt, learned counsel for the Revenue that the language of Section 2 [15] of the Act is very clear. It is submitted that the activities of the assessee will fall under the last limb of Section 2 [15] of the Act, viz., "advancement of any other object of general public utility." It is submitted that therefore when the activities of assessee are in the nature of trade, commerce or business, considering the proviso to Section 2 [15] of the Act, the activities of the assessee cannot be said to be for "charitable purpose", and therefore, the assessee is not entitled to exemption under Section 11 [1](a) of the Act. 4.1 It is further submitted by Shri Manish R Bhatt, learned counsel for the Revenue that even otherwise, the ultimate beneficiaries are the farmers who are doing commercial activities, and therefore also, the activities of the assessee cannot be said to be "for charitable purpose", and therefore, the assessee will not be entitled to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to Section 2 [15] of the Act will be applicable so as to consider the exemption claimed by the assessee under Section 11 of the Act ? 6. While considering the question posed for consideration of this Court, definition of Section 2 [15] is required to be referred to. Section 2 [15] of the I.T Act, as it stood amended by Finance Act, 2009 w.e.f 1st April 2009, reads as under :- Section 2(15): "Charitable purpose" relief of the poor, education, medical relief (preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects or artistic or historic interest) and the advancement of any other object of general public utility; Provided that advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of render any service in relation to any trade, commerce of 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 aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipments and materials, equipments for collection, chilling and storage of milk etc,. 3.10 To provide or give grant and/or loan to village cooperative for augmenting water supply resources for improvements of the milk yields, by better fodders and greensand by making drinking water available for livestock. 3.11 To render technical, financial, administrative and other necessary assistance, other cooperative organization in the field of divests husbandry and agriculture. 3.12 To provide and/or give grant or loan to village cooperative for build warehouse for storage of cattle feed or agriculture produce. 3.13 To establish and own livestock herds and farms to improve their breeds and may undertake or establish herd register and/or advisory services for improving productive efficiency of livestock. 3.14 To co-operate or collaborate with authorities, State or Union Government, International agencies and/or other Institutions anywhere in the world to further these objectives. 3.15 To undertake such programme, which can courage scientific practices of cultivation, conservation and use of fodders and cattle, feeds to improve productive efficiency of animals. 3.16 To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar statute; more particularly, the benevolent provision. The expression "medical relief " is required to be given widest meaning so as to achieve the object and purpose of granting exemption to an assessee, whose activities are for "charitable purpose". It is not in dispute that the assessee's activities includes providing maternity, animal nursery, fertility, vaccination to milch animals belonging to the milk producers. Thus, the assessee's activities are to ensure that milching animals are free from diseases, their breed improvement and overall well-being. Thus, we are of the opinion that activities of the medical relief, even to the animals, will fall under former specific category of "medical relief " and not covered under the last limb of Section 2 [15] of the Act ie., "advancement of any other object of general public utility". 8. Now so far as submissions on behalf of the Revenue that as the assessee is recovering/collecting the Cess for the services provided by them, and therefore, considering proviso to Section 2 [15] of the Act, the activities of the assessee cannot be said to be "for charitable purpose" and therefore, not entitled to exemption claimed under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he poor; education or medical relief and if it falls in the fourth limb i.e. advancement of any other object of general public utility and it is found that such activity of advancement of any other object of general public utility involves carrying on of (a) any activity in the nature of trade, commerce or business; or (b) any activity of rendering any service in relation 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, the same shall not be considered for "charitable purpose" and shall not be entitled to exemption under Section 11 of the Act. 10. Now so far as reliance placed upon a decision of the Hon'ble Supreme Court in the case of Sole Trustee, Lok Shikshan Trust [Supra] is concerned, as such, the same has been dealt with and considered in detail by the Division Bench of this Court in the case of Tax Appeal No. 707 of 2013 [Director of Income Tax (Exemption) vs. Ahmedabad Management Association] wherein, in para 5.4, the Division Bench has observed and held as under :- "5.4. Now while considering whether the activities of the assessee can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes" is intended to mean. We are certain that these observations were not intended to keep out of the meaning of the word "education", persons other than "young. The expression "schooling" also means "that schools, instructs or educates" (The Oxford English Dictionary Vol. IX, page 217). The Supreme Court has observed that the word "education" also connotes the whole course of scholastic instruction which a person has received. This clearly indicates that the observations of the Supreme Court were not intended to give a narrow or pedantic sense to the word "education". By giving further illustrations of a traveler gaining knowledge, victims of swindlers and thieves becoming wiser, the visitors to night clubs adding to their knowledge the hidden mysteries of life, the Supreme Court has indicated that the word "education" is not used in a loose sense so as to include acquisition of even such knowledge. The observations of the Supreme Court only indicate the proper confines of the word "education" in the context of the provisions of Section 2(15) of the Act.It will not be proper to construe these observations in a manner in which they are construed by the tribunal when it infers fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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