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TMI Blog2014 (6) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... rt] It is not the case of the Assessee that it is running a normal schooling for sports. Therefore, we hold that the Assessee s activities do not fall within the term education . CIT has used material behind the back of the Assessee for rejecting the registration and has not given him proper opportunity, we, therefore, with our above observation set aside the order of CIT and restore this issue to the file of CIT with the direction that the CIT shall look into the matter of registration of the institution afresh after giving proper and sufficient opportunity to the Assessee to prove that the objects for which the Assessee institution is created are genuine and are for charitable purposes. We may clarify that while considering the application of the Assessee for registration, the CIT should not apply proviso to Sec. 2(15) retrospectively. If he so choses that in view of the proviso inserted w.e.f. 1.4.2009 the activities carried on by the Assessee no more remains charitable as per the amended definition of Sec. 2(15), he may pass an order u/s 154 rectifying his order withdrawing the registration of the Assessee in case he grants registration to the Assessee w.e.f. 1.4.2009 by passin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned Commissioner of Income-tax is illegal, arbitrary and without jurisdiction by incorporating the materials found during the course of survey conducted u/s 133A of the Act on 28.03.2006 which is three years subsequent to the application filed by the appellant and for that matter the learned Commissioner of Income-tax has exceeded in his jurisdiction by examining the matter not relating to the period for which the application for registration is filed. 7. That, the learned Commissioner of Income-tax has passed the order in a bias, preconceived and motivated manner by mentioning the name of the authorized representative in a derogatory manner and for that matter the order of refusal by the learned Commissioner of Income-tax is liable to be quashed and/or annulled. 8. That, the learned Commissioner of Income-tax has committed serious error by not considering that the appellants activity includes education of all kind particularly the game of cricket has enunciated in its main objects and for that matter the activities of the appellant is coming within the restricted meaning of education u/s 2 (15) of the Act and not a wider meaning i.e. advancement of any other object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als prior to 2002 and for that matter the order of the learned Commissioner of Income-tax is liable to be quashed and/or annulled. 15. That, the learned Commissioner of Income-tax has committed serious error by refusing registration u/s 12AA of the Act from the financial year 2002-03 where as the application has been made to grant registration from 01.04.1997 and for that matter the order passed by the learned Assessing Officer is liable to be quashed and/or annulled. 2. The brief facts of the case are that the Assessee is a society registered under the Societies Registration Act, 1860 on 18.3.1961 vide registration no. 346/44 of 1960-61 but the Assessee claims that it was established on 15.8.1959. The Assessee applied for registration u/s 12A in Form no. 10A vide its application dt. 31.3.2003 before CIT, Cuttack alongwith application for condonation of delay requesting the CIT to condone the delay and grant registration u/s 12A w.e.f. 1.4.1997. Copy of the accounts for the financial year ending 1997-98 to 2002-03 were not filed before CIT while copy of accounts for the subsequent period were duly filed. Upto A.Y 1993-94 the Association was granted exemption u/s 10(23C). CIT d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2008-2009 would not be considered as involving any activities of genuine charity. Hence for such financial year 2008-2009 onwards the association is not eligible for Registration u/s 12A of the Income Tax Act, 1961. The net result of the application claimed to be filed on 31.3.2003 and presumed not to have been disposed off by the competent Income Tax Authorities is hereby dismissed in toto ab initio. For all Financial Years from 2002-2003 onwards whatever income the association has shown shall not be considered for exemption u/s 11 of the Income Tax Act, 1961. The Assessing Officer shall have to reference the assessment for such financial years treating the status of Orissa Cricket Association as any other association of persons ignoring the claim of the association for the applicability of the provision of section 11 of the Income Tax Act, 1961.‖ 3. The Assessee has filed its written submission which reads as under : ―1. That, the Orissa Cricket Association is a society registered under the Societies Registration Act, 1860 having its registered office at Barabati Stadium, Cuttack. The said Society has been created to impart physical education through the mediu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation was conducted in the residence of one Sri Ashribad Behera, the Honorary Secretary of Orissa Cricket Association, and consequential survey U/s.133A of the Act was conducted in the Office premises of the assessee on 28.03.2006. Consequent upon the search operation conducted in the premises of the honorary secretary, the learned A.O. has passed orders of assessment U/s.153C of the Act, for the assessment years 2001-01 to 2006-07 in the case of present assessee which was challenged by the appellant before the learned C.I.T.(A), Cuttak and subsequently the order of C.I.T(A) was challenged before this Hon'ble Tribunal. It is pertinent to mention here that, while completing the assessment u/s.153C none of the Authorities below had taken note of the fact, that the application for grant of exemption to the assessee has been pending with the learned Commissioner, since 31.03.2003. 3. That during the Course of hearing of the Quantum Appeals, your assessee drew attention of this Hon'ble Tribunal regarding the. inaction of the Department in granting exemption U/S.12A of the Act and it was also brought to the notice of this Tribunal that the learned A.O has completed the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's case falls within the ambit of the phase of the definition general public utility. Law has been well settled by the Hon'ble Gujarat High Court (reported in 246 ITR page No.188) that, to serve to have a charitable purpose, it is not necessary that, the objects must be to serve the whole of mankind or all persons living in a country or province, it is required to be noted that, if a section of the public alone are given the benefit, it cannot be said that, it is not a Trust for charitable purpose in the interest of public ; it is not necessary that, public at large must get the benefit ; the criteria here is the objects of general public utility. Thus in order to be charitable, the purpose must be directed to the benefit of the community or a section or a community therefore the expression ―objects of general public utility is not restricted to the objects beneficial to the whole of mankind, an object beneficial to a section of a public is an object of general public utility, the section of the community sort to be benefited must undoubtedly be sufficiently defined and identifiable by some common quality of a public or impersonal. In view of the above settled principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. 4. For that, the society has not been created to earn handsome income by arranging cricket matches or its intention is not to make profit, rather all the above activities mentioned in paragraph No.3 clearly indicates its noble intention of charity. The international matches arranged by the society has not been held to get income, rather the same are being arranged to facilitate the cricketers of the State of Odisha to get a practical knowledge and to learn how to play in international matches and to know the techniques of the foreign country players. It goes without saying that even for the District level matches no tickets are sold. The matches are promoted so that young and promising cricketers can come down and get a practical knowledge. It is pertinent to mention here that, in the international matches 50% of the tickets are being distributed among the Districts Associations and clubs with a request to send their cricketers to avail the facility of learning how to play international matches . 5. For that, for facilitating cricket the basic amenities like preparation of international standard playground, security, flood light, display board, sports equipments, gymnasiums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, because the entire issue has to be seen from the two limbs of the provisions of section 2(15) of the Act i.e. (a) Whether the promotions of sports and games, cricket in the present case, is charitable or not within the ambit of definition as provided under section 2(15) of the Act . And (b) Whether such promotions of sports or games and promotion of cricket are carried out in the profit motive or not so as to be treated as in the nature of trade, commerce or business or charitable purpose. With regard to the first limb, your assessee wants to draw the kind attention of this Hon'ble Tribunal to the CBDT circular number 395 dated 24.09.1984 wherein the board had advised that, promotions of sports and games is considered to be charitable purpose within the meaning of the section of the 2(15) of the Act and with regard to the second limb, it is respectfully submitted that, law is well settled by the Hon'ble Supreme Court that, the primary and dominant purpose of the trust or institution has to be examined to determine whether the trust or institution is involved in carrying out any activity for profit and if the object of the trust or institution is to carry out the object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applied for the object of the association and any excess of income over expenditure if any, has not been accumulated for future expenditure towards the attainment of the objects of the association. It has also not been objected that, any part of the surplus of the association has been utilised for the benefit of its members. When the fact stood thus and remained undisputed, the commissioner should not have ignored the above facts and also should not have denied to grant exemption to the assessee. The impugned findings of the commissioner of Income tax runs contrary to the facts on record and thus are liable to be rejected and the claim of the assessee being well within the parameter of law, needs to be allowed in the interest of justice. 10. For that, it is not for the first time the commissioner of income tax has examined the activities of the assessee rather the activities of the assessee were well examined by the Chief Commissioner of Income Tax and exemption u/s.10(23) of the I.T. Act were granted to the assessee from the assessment year 1985-86 to till the assessment year 1993-94 and there is no changes in the activities of the assessee till date. If the activities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation of the learned Commissioner is not backed by any evidence, hence needs to be rejected in toto. 13. That, the learned commissioner of income tax at para-30 of the impugned order has mentioned that survey operation u/s. 133A of the Act was conducted in the premises of the appellant on 28.03.2006 and also incriminating documents; books of account were found and impounded, on the basis of which he has given the findings of financial irregularities. But on a bare perusal of the assessment order so passed against the assessee are , it will be found that, not a single addition has been made against the assessee on the basis of that seized documents. Therefore the findings of the learned Commissioner are baseless and runs contrary to the facts on record. Hence needs to be rejected in the interest of justice. That in view of the above facts and circumstances, it is most respectfully submitted that the order of rejection of application for registration passed by the Ld. Commissioner is illegal, arbitrary, erroneous, without any material evidence on record and not maintainable in the eye of law and is liable to be interfered with by this Hon'ble Tribunal. 4. The ld. DR on the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, the CIT has to examine the accounts of the assessee from the F.Y. 2002-03 till the F.Y. 2009-10 i.e. the year in which the CIT had passed the order U/s 12AA(1) (f) (i) of the IT Act. 1961. Had the CIT Cuttack passed the order 12AA of the Act without examining the accounts for the period 01.04.2002 to 22.03.2010, i.e. F.Ys. 2002-03 to 2009-10, the CIT would have failed in his duty while implementing the Act. Hence, it is submitted that the CIT, Cuttack had not exceeded his jurisdiction by examining the accounts of the assessee for the F.Y. 2002-03 to 200809 and there is nothing illegal about it. 3. The third ground of appeal is that, the Ld. Commissioner of Income-tax has committed serious error by invoking the amended section 2 (15) of the Act which was not in existence in the year under consideration in which the appellant has filed the application or for the period for which the appellant has filed the application for grant of registration. u/s 12AA of the Act in Form No-10A read with Rule 17A of the I.T. Rule and for that matter the order of the Ld. Commissioner of Income-tax is liable to be quashed. It is submitted that the CIT has committed serious error by invoking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular read as : ―The newly inserted proviso to section 2(15) will apply to entities whose purpose is ―advancement of any other object of general public utility‖, i.e. , the fourth limb of the definition of ―charitable purpose‖ contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. A conjoint reading of the Memo Explaining the provision of Finance bill, 2008 and CBDT's circular dated 19.12.2008 will make it abundantly clear firstly, that the entity not engaged in commercial activities will not be hit by proviso to sec 2(15) of Act and secondly, whether an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact. Therefore it would appear that the proviso of Sec. 2(15) of the Act was intended to clarify the position of activities carried on in commercial tines not to be charitable in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be seen from Para 11 of the order u/s 12AA which reads as follows: ―After assumption of jurisdiction over the petition originally filed on 31.03.2003 a fresh hearing was given to the association and clarifications have been called for from the association by the competent Income-tax Authorities vide letter dated 10.08.2009 on various issues raised in the questionnaire to be filed by 25.08.2009. On behalf of the Orissa Cricket Association the authorized representative Sri Diganta Das, Advocate had appeared on 25.08.2009 seeking an adjournment up to 23.09.2009. Compliance could not be made on 23.09.2009. As per the request of the Learned Counsel the case was further adjournment up to 14.10.2009. On 14.10.2009 the association could not make any compliance to the questionnaire raised but a petition was filed requesting further time. Accordingly the case was re-fixed on 21.10.2009. On this date also there was no compliance on behalf of the association. However, on 26.10.2009 written reply was submitted by one Mr.N. K. Nanda claiming to be authorized representative of the Orissa Cricket Association in place of the Original authorized representative Sri Diganta Das, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate a mandatory intent. This Court is also of the opinion that when public duty is to be performed by the public authorities, the time limit which is granted by the Statute is normally not mandatory but is directory in the absence of any clear statutory intent to the contrary. (See Montreal Street Railway Company v. Normandin, AIR 1917 Privy Council 142 at page 144). Here there is no such express statutory intent, nor does it follow from necessary implication. For this reason we cannot accept the contention of the learned counsel for the petitioner on the interpretation of Section 12AA(2). Therefore in view of the decision of jurisdictional High Court as above, as no order was passed by the CIT Cuttack granting or refusing registration on the application of appellant for registration u/s 12A, though filed on 31.03.2003 till March 2010, the CIT, Cuttack had passed an order u/s 12AA, in the case of the appellant on 22.03.2010 dismissing the application for the financial years 2002-03 to 2008-09 and in respect of the financial year 2008-09 onwards the amended provision of Sec 2(15) of the ITAT Act 1961 would clearly be applicable to the appellant. The operating portion of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to reference the assessment for such financial years treating the status of Orissa Cricket Association as any other association of persons ignoring the claim of the association for the applicability of the provision of section 11 of the Income-tax Act, 1961. Therefore, in view of the decision of jurisdictional High Court in the case of M/s Srikhetra, A.C Bhakti Vedanta Vs. ACIT Quoted above, the CIT Cuttack has jurisdiction to examine and incorporate the materials found during the course of survey u/s 133A conducted in the case of the appellant on 28.03.2006 which is 3 years subsequent to the application filed by the appellant. 7. The seventh ground is that the Ld. Commissioner of income-tax has passed the order in a bias, preconceived and motivated manner by mentioning the name of the authorized representative in a derogatory manner and for that matter the order of refusal by the learned Commissioner of income-tax is liable to be quashed and/or annulled. It is submitted that, the order passed by CIT, Cuttack is very objective and not preconceived and motivated as alleged by appellant through its AR. The CIT, Cuttack never made any derogatory remark against the AR in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature has retrospective effect as held by the Hon'ble Madras High Court in the case of CIT Vs Soft Beverages Pvt. Ltd 1993, 272 ITR 270 and the decision of the Hon'ble Kolkata High Court in the case of CIT Vs Ananda Marga Pracharak Sangha 218 ITR 254 wherein it was held that when a provision is capable of interpreting without any clarification the amendment would only clarify the same. Therefore, as the amendment to section 2(15) of the IT Act, 1961 by the Finance Act, 2008 is intended to merely clarify when ‗the advancement of any other object of general public utility' shall not a charitable purpose, the amendment to section 2(15) of the Act, is deemed to be retrospective in its application. 11. The eleventh ground is that the Ld. Commissioner of Income-tax has committed serious error both in law as well as in facts by applying the provision of section 13(1) (c) (ii) of the Act for refusing to grant the registration u/s 12AA of the Act and for that matter the order of refusal by the Ld. Commissioner of Income-tax is liable to be quashed and/or annulled. It is submitted that, the CIT, Cuttack has correctly invoked the provision of section 13(1)(c)(ii) of the Act and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,16,000=00 was returned by the payee to the Honorary Secretary of the association in cash. A similar documentary evidence for the year 2003-2004 reveals that fabricated bills for construction of ground gallery was prepared by one Sonalika Roy, W/o- Sailesh Roy, Proprietor of M/s. Kalinga Supplies for ₹ 8,43,930=00 against the actual cost of materials of about ₹ 5 lakhs and the excess of ₹ 3,50,000=00 was returned to the relatives of the Honorary Secretary of the association. Para-47. From the statement recorded on oath under the Income Tax Act, 1961 from the ex-treasurer and council members of Orissa Cricket Association on 01.06.2006 it is found that the Honorary Secretary by over ruling all the objections of the treasurer had incurred room hiring charges from players who attended training camp for cricket even if most of the players stayed at Cuttack during the training camp and the rent amount was paid to the relatives of the Honorary Secretary of the association. Para-48. The survey documents also show that S.S. Caterer was paid a sum of ₹ 40.5 lakhs from Orissa Cricket Association by producing bogus bills through the assistance of Honorar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(i) of the Act at Para-50 & Para -52 held as under: Para-50 : From the actual activities carried on by the Orissa Cricket Association over the years it would transpire that they par take the character of commercial activities comprising of receipts from sale of tickets to general public, receipts from letting out plant and machinery, premises of the association, contractual receipts from broadcasting rights, telecasting rights, advertisement and publicity, etc. The entire conducting of cricketing activities has merged with the composite activity of an entertainment industry with sporting activities with the objective of generating commercial surplus. In this sense the current activities would be promotion or encouragement of entertainment. A person who pays a sum of ₹ 10,000=00 to sit in the corporate box inside the cricket stadium is not only paying such service charges for enjoying live cricket match but also for enjoying all other specialized amenities of entertainment such as free lunch/dinner/enjoying musical shows, fashion shows, dance, party with celebrities and players. It certainly does not involve any activity of charity on the part of the cricket association. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e players on auction. They quote the highest price for the best player according to them. Every team is trying to bring in maximum number of prominent cricketers so that they have a better chance of winning the IPL matches. The capital invested by the owners of the team is redeemed by advertisement revenue. The owners of the IPL teams are conducting these matches for the purpose of harvesting profits out of their investments. By any stretch of imagination, it is not possible to call IPL matches as activities of public utility carried on by the assessee. IPL match is a big game of big money. In fact it is an entertainment industry by itself‖. Hence, the Commissioner of Income-tax, Cuttack has not committed any error by considering the sports activity especially cricket activity of the appellant as a business risk for the purpose of commercial game and in refusing to grant registration to the appellant. 14. The fourteenth ground is that the Ld. Commissioner of Income-tax has committed serious error both in law as well as in fact as well as in law by refusing the grant of registration u/s 12AA of the Act for the financial year 2002-03 to 200809 when the application has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organization with an application for condonation of delay. In this petition the association also claimed that inspite of the fact that the object of the association are public charitable in nature till date no certificate of registration has been issued. In view of the provisions of sub-sec(I) of Sec. 12A the appellant should have made an application for registration of the institution in the prescribed form and in the prescribed manner to the CIT Cuttack before the 1st day of July 1973 or before the expiry of a period of one year from the date of the establishment/creation of the institution whichever is later. When there is delay the reason for the delay i.e. the reason that prevented the appellant from making the application before the expiry of the period aforesaid should have been brought to the notice of the CIT Cuttack. The satisfaction of the CIT is essential for condonation of delay. However this discretion is removed from financial Act 2007 w.e.f. 01.06.2007. Hence, there is no error in the order of CIT Cuttack passed u/s 12AA of the Act dated 22.03.2010. For the reasons stated above it is requested that the order of the CIT Cuttack is a well reasoned and speaking or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, a legal mistake has occurred in the order of the CIT dtd. 13.04.2006 from the date when the proviso under section 2(15) has been inserted as the institution no more remains to have been created/established for charitable purposes or religious purposes. It is not the case of the assessee institution that it has been created or established for religious purposes. If the registration will remain continued, the purpose of amendment made in section 2(15) will be defeated and injustice will be caused to those institutions having the similar objects as the assessee has but created or established after the amendment in section 2(15) of the Income-tax Act. We cannot read the proviso in this manner.‖ (copy of the order is enclosed) Similar view was also taken by the Hon'ble ITAT, Mumbai Bench ‗B' in the case of Mumbai Cricket Association Vs. DIT (Exemption), Mumbai reported in [2012] 24 taxmann.com 99(Mum) wherein DIT (Exemp.) has cancelled the registration u/s 12A of the Act and the Hon'ble Tribunal, Mumabi ‗B' Bench upheld his order (copy enclosed). For the reasons stated above, it is submitted that this is a case where the CIT Cuttack after considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssigned to them by the Association. k. To foster the spirit of sportsmanship amongst students and members of affiliated organisations. l. To maintain a panel of Umpires and to do such acts as may be necessary for this purpose (particularly for good supervision and control of game) m. To arrange, organise, authorise or control League and Knock-out tournaments and other representative matches, including matches with other States and Countries. n. To frame, add, alter, maintain and enforce rules, bye-laws and regulations for the control and governance of the game of Cricket in Orissa and to maintain discipline among it members and among players, officials and affiliated organisations and also other Institutions/bodies connected with the game of Cricket in Orissa. o. To take such actions as may be necessary to co-ordinate the activities of its members and affiliated organisations in relation to this Association or amongst themselves. 4. For the attainment of the aforesaid objects the Association may :- a. Edit, compile, print and publish any newspapers, periodicals or leaflets. b. Establish or support or aid in the establishment or support of any other association havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered Association shall vest in this registered Association. The society has applied for registration u/s 12A vide application dt. 31.3.2003 alongwith application for condonation of delay mentioning therein that inadvertently the application form was not filed by the then Advocate who was looking after taxation matters of the Association and there was also a complete change in the office bearers of the Association. The above lapse was pointed out recently. Therefore, it was requested to condone the delay and grant registration u/s 12A w.e.f. 1.4.1997. We noted from the paper book filed by the Assessee that the Assessee has filed copy of income and expenditure as well as balance sheet for the year ended 31.3.2000 onwards. For the A.Y ended 1997, 1998 and 1999 no accounts were filed before the AO. The main source of income of the Assessee is not only the membership fees but umpiring, examination fee, sponsorship fee, receipt from advertisement, affiliation fee. Even the Assessee has got TV rights receipt from BCCI relating to international matches. International matches are conducted by the Assessee for which tickets etc. are sold. This fact is clear from the income and expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2AA (b) Where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the explanation below sub section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (c) [***] (2) where an application has been made on or after the 1st day of June, 2007 the provisions of sections 11 and 12 shall apply in relation to the income of such year in which such application is made. Procedure for registration "Section 12 AA 12AA. (1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished, under an instrument, the instrument in original, together with one copy thereof; and where the trust is created, or the institution is established, otherwise than under an instrument, the document evidencing the creation of the trust or the establishment of the institution, together with one copy thereof : Provided that if the instrument or document in original cannot conveniently be produced, it shall be open to the [***] Commissioner] to accept a certified copy in lieu of the original; (b) where the trust or institution has been in existence during any year or years, prior to the financial year in which the application for registration is made, two copies of the accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up. 5.2 From the provision of the section 12A, it is clear that this section states that provision of Section 11 and 12 are not applicable unless condition for registration of the Trust or institution is fulfilled. Section 12 (1) (a) requires making of an application for registration; in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Income Tax Act to prove that it has been established for charitable or religious purpose. It is not the case of the assessee society that it is a religious society. Section 2(15) defines the charitable purpose. This section was amended by the Finance Act 2008. The CIT took the view that the amended proviso to Sec. 2(15) would be applicable to the activities of the Association for the earlier F.Y 2002-03 to 2007-08 as the Assessee was providing certain services to the general public to view live cricket matches in its premises by charging a fee which varies according to the type of the services rendered and also by receiving incidental service charges for commercial exploitation of its premises from various commercial enterprises towards advertisement/publicity/broadcasting and telecasting facilities. The CIT was of the view that so far as the proviso to Sec. 2(15) is concerned, it was merely clarificatory in nature and was applicable to the earlier assessment year and therefore he took the view that the Assessee was not engaged in charitable purposes. We noted that the CIT did not deny that the Assessee was engaged in advancement of any other objects of public utility. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Court held that the fact that this amendment was made effective from April 1, 1988, therefore, does not in any way have the effect of denuding the original entry of a part of its content. The synthetic essence being but one form of a blended flavouring concentrate was a blended flavouring concentrate before the amendment as also after the amendment. This decision recognizes that wherever there is an ambiguity in the interpretation and if an amendment is made clarifying the ambiguity, it would have a retrospective effect. In the case of Sec. 2(15), as it existed prior to the insertion of the proviso, there was no ambiguity on the interpretation of Sec. 2(15) - what does the advancement of any object of general public utility mean? Whether it includes therein carrying on of any activity in the nature of trade, commerce or business. In fact, by putting the proviso by Finance Act, 2008 w.e.f. 2009 the legislature specified that advancement of any other general public utility shall not be a charitable purpose if it involves carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any services in relation to a trade, commerce or business fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will take effect from the 1st day of April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years. From the explanation, it is apparent that the intention of the legislature is clear that the entities operating on commercial lines should not be allowed exemption on their income either u/s 10(23C) or under Sec. 11 on the ground that they are charitable institutions and they are engaged in advancement of object of general public utility. The memorandum does not speak of ambiguity in the existing definition of charitable purpose as given u/s 2(15). The amendment is not by way of clarification but limits the scope of the phrase „advancement of any other objects of general public utility‟ so that the benefit may not be available to any activity in the nature of trade, commerce or business or any activity of rendering of any service in relation to trade, commerce or business for a fee, cess or any other consideration irrespective of the nature of the use or application of the income from such activity or retention of such income by the concerned entity. Therefore, in our opinion, CIT has to look into the definition of cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or business. The profit motive is required while an institution is carrying on trade, commerce or business. The use of words „carrying on any activity in the nature of trade, commerce or business‟ in our opinion will mean that there need not be profit motive in carrying on the activity by the institution. If we interpret the words „carrying on of any activity in the nature of trade, commerce or business‟ equivalent to the words „carrying on trade, commerce or business‟ there would have been no need of incorporating in the proviso, the words „of any activity in the nature of‟ prior to the words „trade, commerce or business‟. The legislature is fully aware of that an institution which is incorporated for charitable purpose cannot not have profit motive. Due to this reason, if we go to the background of Sec. 2(15), the Hon'ble Supreme Court interpreted Sec. 2(15) in the case of Addl. CIT Vs. Surat Art Silk Cloth Manufacturers Association 121 ITR 1 when the Section 2(15) contained the words "not involving the carrying on of any activity for profit" after "advancement of any other object of general public utility". Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusively or essentially on charity. The learned judge also added that the restrictive condition "that the purpose should not involve the carrying on of any activity for profit would be satisfied if profit-making is not the real object." 5.6 The advancement of any other object of general public utility of "charitable purpose" was further explained by the Supreme Court in C.I.T vs. Federation of Indian Chambers of Commerce & Industry, 130 ITR 186 (SC). The question involved in this case was whether the income derived by a Chamber of Commerce from (a) arbitration fees levied by the chamber (b) fees collected for issuing certificates of origin and (c) share of profit in Messers, Calcutta Licenced Measures for issue of certificate of weighment and measurement, was exempt from income-tax under Section 11 read with Section 2(15) of the Act. Explaining the new qualifying words in the 1961 Act "not involving the carrying on of any activity for profit" added in Section 2(15), Krishna Iyer J. who delivered the judgement of the Court Observed as under: ―The true test is to ask for answers to the following questions: (a) Is the object of the assessee one of general public utility? (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis. If the fee charged for doing so is more or less commensurate with the expense, the chamber had to incur, a minor surplus will not attract tax. Every type of service oriented activity where some charge is levied from the beneficiary and at the end of year some surplus is left behind, does not lose the benefit of Section 2 (15). For then, one cannot conceive of any object of general public utility, which can be advanced by the Chamber of Commerce. The Court went on to add that in the absence of any "magna carta" binding the Chamber not to sell arbiter justice, it is not entitled to claim exemption from tax in respect of income from such activities. 5.7 An attempt was made by the Counsel for the assessee in Sole Trustee, Loka Shikshana Trust v. C.I.T, 101 ITR 234 to claim that "profit" under Section 2(15) of the Act means private profit. The Supreme Court, however, repelled the said contention on the ground that the word used in the definition given in Section 2(15) is profit and not private profit and it would not be permissible to read in the above definition the word "private" as qualifying "profit" even though such word is not there. The Supreme Court pointed out further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other object of general public utility shall not be a charitable purpose if it involves carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for cess or fee or any other consideration irrespective of the nature of use or application or retention of the income from such activity. This amendment is not retrospective in operation, therefore, on that basis, CIT cannot reject the application for registration provided the Assessee complies with all other conditions. CIT, if he thinks that the Assessee is hit by the proviso to Sec. 2(15) w.e.f. 1.4.2009, can pass order u/s 154 rectifying the order granting registration to the Assessee as that will tantamount to a mistake of law apparent on record. 5.10 We noted that the provisions of Sec. 12AA(1)(a) & (b) mandates that when a charitable trust/institution makes an application for registration, the CIT at this stage is not required to examine whether the applicant trust has applied any income for charitable purpose or not. At this stage, all that the Commissioner should examine is whether the application is made in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f scholastic instruction, which a person has received. The word ―education has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of traveling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach you a lesson and in the process make you wiser though poorer. If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But this is not the sense in which the word ―education is used in clause (15) of Section 2. Wh ..... 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