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TMI Blog2017 (7) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent/assessee is actually at the outer gate. The very 1st entry pass is denied to the respondent, on a wrong application and understanding of the scope of Section 2(15). It is only after an institution is granted registration under Section 12AA that the examination of the gross receipts year after year for the purpose of finding out the eligibility for exemption would arise. Therefore, we are of the considered view that the Director of Income Tax (Exemptions) as well as the Tribunal committed 2 mistakes, namely, (a) that of overlooking the first 6 activities covered by Section 2(15) and focusing on the 7th activity which has a correlation to the first proviso and (b) that of looking at the gross receipts even before the grant of registration. - Decided against revenue - I.T.T.A. No. 56 of 2017 - - - Dated:- 15-3-2017 - V. Ramasubramanian And J. Uma Devi, JJ. For the Petitioner : Mr. J.V. Prasad For the Respondent : Mr. K. Vasantkumar JUDGMENT ( Per V. Ramasubramanian, J. ) This appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961, raising the following reframed substantial question of law: Whether, on the facts and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge to the 1st proviso to Section 2(15) of the Act. In other words, the contention of the department is that the Hyderabad Bench of the Tribunal was bound by the decision of the jurisdictional High Court and that when the gross receipts made by the assessee from out of the activities found to be commercial in nature, exceeded the limit set out in the proviso to Section 2(15), the assessee was not entitled to seek registration under Section 12A. 7. We have carefully considered the contentions of the learned counsel for the department. 8. In order to test the veracity of the contentions, we shall first take a look at the definition of the expression charitable purpose appearing in Section 2(15) of the Act, which reads as follows: charitable purpose includes relief of the poor, education, yoga, medical relief, preservation of environment (including water-sheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. A careful look at the definition of the expression charitable purpose appearing in Section 2(15) would show that it is an inclusive definition and not an exhaustive definition. This is clear from the usage of the word includes. The definition includes within its ambit, (1) relief of the poor, (2) education, (3) yoga, (4) medical relief, (5) preservation of environment including water-sheds, forests and wildlife, (6) preservation of monuments or places or objects of artistic or historic interest and (7) the advancement of any other object of general public utility. Interestingly, the first proviso does not deal with anyone of the first 6 items, namely, relief of the poor, education, yoga, medical relief, preservation of environment and preservation of monuments or places. The first proviso as it stood before 01-4-2016 or even as it stands after 01-4-2016 deals only with one of the 7 items covered by the substantive part of the definition, namely, advancement of any other object of general public utility. 13. The second proviso takes away from the ambit of the first proviso, even an activity relating to the advancement of any other object of general public utility, if the aggre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Even without disputing the findings recorded by the Original Authority, it could be easily seen that the main fallacy in the conclusion reached by the Director, lay in the fact that all the activities of the assessee were linked by the Director only to the last of the 7 items that form part of Section 2(15). In other words, both the Director as well as the Tribunal thought that the activities of the assessee would fall within the ambit of the words advancement of any other object of general public utility. By doing so, the Original Authority as well as the Tribunal omitted to take note of the activity, namely, preservation of environment including water-sheds, forests and wildlife. If these authorities had understood the activity carried out by the respondent to have a direct causal connection to the activity of preservation of environment, they would not have invoked the first proviso to Section 2(15). This is where the respondents appear to have gone wrong. 17. In Infoparks Kerala, the question that arose before a single Judge of the Kerala High Court was as to whether the refusal of the department to issue an exemption certificate under Section 197 of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that was decided by a Bench of this Court in A.P. State Seed Certification Agency, is beyond any pale of doubt. Therefore, the refusal of the Tribunal to follow the decision of this Court in A.P. State Seed Certification Agency cannot be found fault with. It is only in cases where the very same question of law had been raised and decided by the jurisdictional Court that the Bench of the Tribunal located within the jurisdiction of the said High Court is bound to follow the same. But that is not the case with A.P. State Seed Certification Agency. At the cost of repetition, it should be pointed out that we are concerned in this case with the refusal of registration to the assessee under Section 12AA, in contrast to A.P. State Seed Certification Agency which admittedly had registration under Section 12AA and which was not in dispute. 21. As rightly pointed out by Mr. K.Vasantkumar, learned counsel for the respondent, Section 13(8) of the Income Tax Act, 1961, inserted by the Finance Act, 2012 with effect from 01-4-2009 makes it clear that nothing contained in Section 11 or 12 shall operate so as to exclude any income from the total income of the previous year of the person in rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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