9911796707
TMI Blog2017 (4) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing Regn. No. 2950 of 2000. The assessee is also registered u/s 12A of the Income tax Act with effect from 01/04/2005. 2.1 The assessee filed its return of income for the AY 2010-11 on 14/10/2010 declaring Nil income after claiming exemption u/s 11 of the Income-tax Act, 1961 (in short 'the Act') and subsequently, the case was converted into scrutiny. Accordingly, notices u/s 143(2) & 142(1) of the Act were issued. In the scrutiny proceedings, AO observed that assessee has prominent aims and objectives as per the Memorandum of Association as below: i. To take over the State Resource Centre for Adult Education, from Andhra Mahila Sabha on a mutually agreed date and on mutually agreed terms and to run it with the assistance of the Govt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 4,14,20,798 2.3 AO opined that the provisions of section 2(15) of the Act clearly envisages 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, or business or commerce irrespective of the nature or application or retention of the income from such activity. 2.4 The AO observed that the assessee society is involved in the business activity i.e. sale of books/purchase and aggregate value of all such activities exceeds Rs. 10 lakhs. He further observed that assessee purchased the books from M/s VNR Books World and sold the same to Govt. Of A.P. He was of the view that purchase of books and sale of the same would cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial pattern of the SRCs was communicated. The letter, inter alia, stated as follows: "2 .... (iv) The SRCs will be permitted to create a rolling fund out of the sales proceeds of the books published by them. The prices of the books are to be fixed in consultation with the State Governments, so as to allow a marginal profit only. Apart from utilizing this money for publishing and production of books, the SRCs can also meet the 5% share of their contribution from this fund. 3. The expenditure of SRCs would continue to be met by the Central Government, State Government and the SRC under the existing arrangement which is in the ratio of 80:15:5 per cent respectively " 25. In accordance with the above arrangement and by virtue of its st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HRD, Government of India, the SRCs will be permitted to create a rolling fund out of the sales proceeds of the books published by them, whereas in the case of the assessee it has not published any books, but as per its Income & Expenditure etc, has purchased books at a cost of Rs. 3,68,15,166/- and has made sale out of the same at a consideration of Rs. 4,09,22,892/- and under that circumstances, such activity on part of the assessee being fully covered under advancement of any object of general public utility, the amended proviso to 5ec.2(15) of the Act, is fully applicable to the case of the assessee and hence, it is not eligible for exemption u/s. 11 of the Act. 4. It may be mentioned here that even for the A.Y. 2009-10, the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the AO in his order. No doubt, this activity will fall under 5th limb of charitable activity u/s 2(15) of the Act. i.e. advancement of any other object of general public utility. AO by observing income and expenditure statement of assessee, came to an understanding that assessee is in commercial activity considering buying and selling of books. In our considered view mere buying and selling may not be considered as commercial activity with the presence of some profit, which may be for the purpose meeting certain incidental expenditure in the society. In the given case, assessee has purchased some books and distributed the same as per the directions of Govt. of AP to Anganwadis with a minimum profit of 5% which also fixed in consulta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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