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TMI Blog2019 (6) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee, we hold that the Assessee s income is not includible in the total income and therefore the income returned by the Assessee is directed to be accepted. Allow the grounds of appeal of the assessee. - ITA No.254 And 255/Bang/2019 - - - Dated:- 17-6-2019 - Shri Jason P Boaz, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri P.C.Khincha, CA For the Respondent : Shri Pradeep Kumar, CIT(DR) ORDER PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeals against different orders of the CIT(A)-14 for the assessment years 2013-14 and 2014-15 where issues are identical and similar. Therefore, for the sake of convenience, they were heard together and common consolidated order is being passed. 2. For the sake of convenience, we shall take up ITA No.254/Bang/2019. At the time of hearing, learned AR has not pressed ground No.3 and also raised additional grounds of appeal which are admitted. The ld. AR argued only on the ground of denial of exemption u/s 11 of the Act whereas the other grounds of appeal are on the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted issue and made observations that the assessee is entitled for benefits of exemption u/s 11 at paras.44 to 49: 44. We have given a very careful consideration to the rival submissions. The purpose for which the Assessee exists is for the advancement of any other object of general public utility . The fact that the Assessee enjoyed registration u/s.12AA of the Act in the past is itself sufficient to come to this conclusion. The withdrawn of registration u/s.12AA of the Act was only consequent to the introduction of the proviso to Sec.2(15) of the Act by the Finance Act, 2008. Therefore, the question that we need to be answered is as to whether the proviso to Sec.2(15) of the Act would be applicable to the case of the Assessee. 45. We shall now understand the approach to be adopted in coming to the conclusion as to whether the proviso to Sec.2(15) of the Act will be applicable to the Assessee in the light of the decision of the Hon ble Delhi High Court in the case of India Trade Promotion Organization Vs. DGIT(Exemption) and others 371 ITR 333 (Delhi). The learned counsel for the Assessee has placed strong reliance on this decision to suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness is carried on and it generates income, the fact that such income is applied for charitable purposes, would not make any difference and the activity would nonetheless not be regarded as being carried on for a charitable purpose. If a literal interpretation is to be given to the proviso, then it may be concluded that this factwould have no bearing on determining the nature of the activity carried on by the petitioner. But, in deciding whether any activity is in the nature of trade, commerce or business, it has to be examined whether there is an element of profit making or not. Similarly, while considering whether any activity is one of rendering any service in relation to any trade, commerce or business, the element of profit making is also very important. (iii) The meaning of the expression charitable purposes has to be examined in the context of income , because, it is only when there is income the question of not including that income in the total income would arise. Therefore, merely because an institution, which otherwise is established for a charitable purpose, receives income would not make it any less a charitable institution. Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes. (emphasis supplied) 46. It can be seen from the various provisions of the KIAD Act which we have set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas in the state.(b)Provide basic infrastructure in the industrial areas.( ) Acquire land for Single Unit Complexes.(d)Acquire land for Government agencies for their schemes and infrastructure projects. The dominant and main object of the Assessee is charitable and not for making profits. 48. A look at the income stream of the Assessee clearly reveals that all the activities from which the Assessee derives income are an inherent part of the main object of the Assessee. It is clear from the facts of the case that profit making is not the driving force or objective of the Assessee. Rather the purpose for which the Assessee was created is to regulate and develop drinking water and drainage facilities in the urban areas of the State of Karnataka and for matters connected therewith. This makes it clear that any income generated by the Assessee does not find its way into the pockets of any individuals or entities. It is to be utilized fully for the purposes of the objects of the petitioner. 49. Keeping in mind the above factual aspects and the provisions of the KIDA Act, and principle laid down in the aforesaid decision of the Hon ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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