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TMI Blog2017 (11) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... to the first question of law. After taking note of the amendment to Section 11(6) in paragraph 33, the Madras High Court also took note of the Circular bearing No.1 of 2015, dated 21.01.2015 and came to the conclusion that the provisions of Section 11 (6) inserted w.e.f., 01.04.2015 would operate only prospectively w.e.f., the assessment year 2015-16. Insofar as the cases that arose prior to the amendment are concerned, almost all High Courts have taken the same view. The position may be different after the amendment. But in the case on hand, the same relates to a period prior to amendment. Therefore, we do not wish to admit the appeals on the third substantial question of law, merely for waiting for the outcome of the decision of the Supreme Court. We respectfully agree with the views expressed by the other High Courts and answer the third question of law in favour of the assessee. - I.T.T.A.Nos. 71 And 391 of 2017 - - - Dated:- 9-10-2017 - MR. V.RAMASUBRAMANIAN AND MR. ABHINAND KUMAR SHAVILI, JJ. For The Appellant : Mr. J.V. Prasad Sr. S.C for I.T For The Respondent : Mr. K. Vasanth Kumar COMMON JUDGMENT: (Per VRS, J) Both these appeals are by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/HYD/2012. The said order of the Tribunal became the subject matter of an appeal before this Court in I.T.T.A.No.168 of 2015. By a judgment dated 04.11.2015 this Court answered the question of law in favour of the assessee and dismissed the appeal I.T.T.A.No.168 of 2015 filed by the Revenue questioning the order of the Tribunal setting aside the cancellation of registration. 5. For the purpose of completion of narration, it should also be brought on record that for the assessment years 2003-04 up to the year 2009-10, the assessing officer denied exemption, but the assessee succeeded before this Court. 6. But insofar as assessment years 2010-11 and 2011-12 are concerned, the assessing officer took umbrage under the proviso to Section 2(15) inserted under the Finance Act 2/2009, dated 01.04.2009, to distinguish the decisions in favaour of the assessee with regard to the assessment years 2003-04 to 2009-10. This is how the questions of law that we have framed above have arisen for our consideration. As a consequence the whole dispute now revolves around the interpretation to the proviso to Section 2(15). Incidentally, one more issue with regard to depreciation with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year; 10. While institutions that are engaged in the relief to the poor, education, yoga, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest are categorized under one type under Section 2(15); the institutions established for the advancement of any other object of general public utility, are treated under Section 2 (15) as a separate category. This is very clear from the proviso to Section 2(15). There were two provisos inserted under Finance Act, 2010, w.e.f., 01.04.2009. The said provisos read as follows: Provided that the 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 rendering any service in relation to any trade, comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of fact, the Tribunal referred to the decision of the Delhi High Court in Institute of Chartered Accountants of India v. Director General of Income Tax (Exemptions) ( 2012) 347 ITR 99 (Delhi) , before coming to the conclusion that the assessee was not carrying on an activity in the nature of any trade, commerce or business. The Tribunal also pointed out that the charging of a fee by the assessee was not with profit motive and that therefore, merely because the assessee derived income they cannot be held to be carrying on an activity in the nature of trade, commerce or business. 15. The relevant findings of the Income Tax Appellate Tribunal in this regard can be usefully extracted as follows: The circumstances under which the services rendered by the appellant society to the Banks make clear that there is no profit motive in such activities because these activities were entrusted to the appellant society by the Reserve Bank of India as a part of its supervisory role over the Banks in India. In our considered opinion, viewed from any angle, the objects, either main or ancillary, are not in the nature of business or trade or commerce. The banks merely used the expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate individuals and the private institutions. But in this case, the assessee was created by the Reserve Bank of India for the improvement of the performance of the banks and financial sector of the country, ultimately to have a bearing upon the economy of the country. Therefore, the said decision does not go to the rescue of the revenue. 19. Once the first question of law is answered against the appellant/Revenue, the second question of law revolving around Section 13(8) may not arise at all. Section 13(8) revolves around the quantum as stipulated in clause (i) and (ii) of the Proviso to Section 2 (15). If the proviso has no application, the invocation of those two clauses would not apply. Hence, the second question of law does not arise for consideration in the light of our answer to the first question of law. 20. Insofar as the third question of law is concerned, it is admitted by Mr. J.V. Prasad, learned Senior Standing Counsel for Revenue that several High Courts have taken the view favouring the assessee and that all Special Leave Petitions arising out of the judgments of those Courts are now pending before the Supreme Court, after the grant of leave. The learned Stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 558 and the Karnnataka High Court in DIT (Exem) Vs Al-Ameen Charitable Fund Trust (2016) 67 taxmann.com 160 have accepted the claim of the assessee distinguishing both the judgment of the Supreme Court in Escorts as well as that of the Kerala High Court. 27. In view of the discussion above, the question of law is answered in favour of the assessee and against the revenue. 22. After taking note of the amendment to Section 11(6) in paragraph 33, the Madras High Court also took note of the Circular bearing No.1 of 2015, dated 21.01.2015 and came to the conclusion that the provisions of Section 11 (6) inserted w.e.f., 01.04.2015 would operate only prospectively w.e.f., the assessment year 2015-16. Insofar as the cases that arose prior to the amendment are concerned, almost all High Courts have taken the same view. The position may be different after the amendment. But in the case on hand, the same relates to a period prior to amendment. Therefore, we do not wish to admit the appeals on the third substantial question of law, merely for waiting for the outcome of the decision of the Supreme Court. We respectfully agree with the views expressed by the other High Courts and an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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