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TMI Blog2018 (6) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to trade, commerce or business carried on by such companies - also just because assessee was registered u/s 25 of the Companies Act, 1956 would not ipso facto make it eligible for registration u/s 12AA - thus unless the dominant activity show altruistic thought and action which reflects selflessness, we cannot say it involves any “charity’ - hence assessee is not carrying any charitable activity within the meaning of Section 2(15) - Decided against the assessee. - I.T.A. No.2565/CHNY/2017 - - - Dated:- 11-6-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Appellant : Shri. R. Vijayaraghavan, Adv For The Respondent : Shri. Vijay Kumar Punna, J. Standing Counsel ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER In this appeal filed by the assessee, it assails an order dated 29.09.2017 of ld. Commissioner of Income Tax (Exemptions), Chennai, denying it the registration sought u/s.12AA of the Income Tax Act, 1961 (in short the Act ). 2. Grounds taken by the assessee are reproduced hereunder:- 1.The Order of the Commissioner of Income Tax (Exemption) is contrary to law, facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the ld. Authorised Representative, assessee had conducted 25 to 30 investor awareness programmes in association with M/s. Nanayam Vikatan, a leading financial magazine of South. 4. Continuing his submissions, ld. Authorised Representative, pointed out that many mutual funds and life insurance companies like Goldman Sachs, Tata Life Insurance, Reliance Life Insurance, Bharti AXA Life Insurance, etc. were sponsoring programmes, which assessee was conducting for the benefit of public. Ld. Authorised Representative sought to bring to our attention the investor education material published on a periodic basis, and similar articles published in a fortnightly magazine. According to the ld Authorised Representative, assessee was conducting E-courses for imparting basic skills for making investment, to common people and had also developed a mobile app for this purpose. As per the ld. Authorised Representative, assessee was accredited by National Institute of Securities Market (NISM) as a provider of continuing professional education. Further, as per the ld. Authorised Representative, assessee had future plans to pursue educational courses to school children and college students an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Sole Trustee, Loka Shikshana Trust vs. CIT, 101 ITR 234. 7. We have considered the rival contentions and perused the orders of the authorities below. Before adverting to the facts, it will be apposite to extract Section 2(15) of the Act which defined charitable purpose. charitable purpose includes relief of the poor, education, medical relief, preservation of environment (including watersheds, 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 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, 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, unless:- ( i) Such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility and ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaluation subject to approval from the appropriate authorities in the field of investments and to conduct market surveys, investor surveys, opinion polls and other studies relating to investments and financial markets for the benefit of all irrespective of caste, creed and religion. 4. To create higher levels of intellectual abilities and standards in the field of investments and financial markets and to promote and inculcate honorable business practices . 8. First taking up the question whether assessee can be considered as engaged in education , what was held by the Hon ble Apex Court in the case of Sole Trustee, Loka Shikshana Trust at para 41 of its judgment is reproduced hereunder:- 41. The sense in which the word education has been used in s. 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of 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 ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helping the institutions having similar objects as of our Trust. These are all charitable objects. In case the Trust has a surplus income it cannot be spent on any object other than the objects of the Trust. For the present we have been educating the Kannada speaking people through newspapers and journals and we shall be taking up the other ways and means of education as noted in our trust deed as and when it is possible for the Trust. We have no option at all except to spend our income on the objects of our Trust which are all charitable without any doubt or ambiguity. Analysis of the object clause of the M/s. Loka Shikshana Trust, made by the Apex Court, appear at para 38 of the judgment and this is reproduced hereunder:- 38. In order to see as to whether the appellant-trust is for a charitable purpose, we may first go into the question as to what is the object of the appellant-trust. According to Mr. Palkhivala, learned counsel for the appellant, the object of the appellant-trust is education, while the stand of Mr. Sharma on behalf of the Revenue is that not education, but the last mentioned category in s. 2(15), viz., the advancement of any other object of general p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublishing or aiding the publication of books, booklets, leaflets, pamphlets, magazines, etc., in Kannada and other languages, all these activities being started, conducted and carried on with the object of educating the people; ( c) supplying the Kannada speaking people with an organ or organs of educated public opinion and conducting journals in Kannada and other language for the dissemination of useful news and information and for the ventilation of public opinion on matters of general public utility; and ( d) The original trustee shall have power and authority to spend and utilise the money and the property of the Trust for any of the purposes of this Trust in such manner, as to him may appear proper. The original trustee shall be entitled to operate all the banking accounts of the Trust. 10. The Original Trustee shall have full power to take over on such terms as he may deem fit such concern or concerns, or undertakings as, in his opinion, are congenial or conducive to any of the purposes of the Trust. 14. The original trustee shall be entitled to appoint a manager or managers of institutions of the trust, editor or editors and other subordinates for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The difficult question, however, still remains : What is the meaning of charitable purpose which is only indicated but not defined by s. 2(15) of the Act ? It seems to me that a common concept or element of charity is shared by each of the four different categories of charity. It is true that charity does not necessarily exclude carrying on an activity which yields profit, provided that profit has to be used up for what is recognised as charity. The very concept of charity denotes altruistic thought and action. Its object must necessarily be to benefit others rather than one's self. Its essence is selflessness. In a truly charitable activity any possible benefit to the person who does charitable act is merely incidental or even accidental and immaterial. The action which flows from charitable thinking is not directed towards benefiting one's self. It is always directed at benefiting others. It is this direction of thought and effort and not the result of what is done, in terms of financially measurable gain, which determines that it is charitable. This direction must be evident and obligatory upon the trustee from the terms of a deed of trust before it can be he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 Reliance Life Insurance 60 2016 Bharti AXA Life Insurance 131 2016 Tata Life Insurance 160 2017 Nanayam Vikatan, NSE, NSDL, CUB 6 2017 Tata Life Insurance 160 Claim of the assessee is that through the above awareness programmes, it was doing an activity of general public utility. It may be true that assessee was not collecting any fees from any of the participants but admittedly, it was collecting substantial amount as sponsorship fees from various sponsors. Further, almost all of these sponsors were from private sector and not from any Department of Government. A look at the Profit and Loss account of the assessee for years ending 31.03.2015 and 31.03.2016 give the nature of the revenue earned by it. Pertinent part is reproduced hereunder:- 31.03.2016 Rs. in 000 31.03.2017 Rs. in 000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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