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TMI Blog2016 (8) TMI 1445X X X X Extracts X X X X X X X X Extracts X X X X ..... ls and distributed the same amongst its members and other commercial entities having same kind of business on cost to cost basis. The activity carried out by the assessee at the most benefit the members of the assessee society and certain commercial entities having same kind of business as that of the members of the assessee society and the public who purchases the produce of these entities. Hence this venture of the assessee society cannot be inferred beyond the scope of Advancement of any other object of general public utility . Therefore, relying in the decision cited by the learned assessing officer we are of the considered view that the proviso to section 2(15) of the Act would be applicable in the case of the assessee and accordingly, the surplus earned by the assessee deserves to be brought under the ambit of tax. - Decided in favour of revenue - I.T.A. Nos. 2006 to 2008/Mds/2014 - - - Dated:- 3-8-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For the Appellant : Mr. Shiva Srinivas,JCIT For the Respondent : Dr.Anitha Sumanth, Advocate ORDER Per A. Mohan Alankamony, AM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to secure licences for scarce raw materials. c) To educate the trade community and the public regarding export and import procedures, policies of Government etc. d) To enlighten the trade community and the public regarding income - tax, sales - tax and also the present requirement of the trade in general with a view to secure compliance with the country's laws. e) To help poor students for education, for the marriage of poor girls, for charitable purpose circumstances, like burials etc, and also poor aged people. f) To engage from time to time in such activities as may be required to achieve the above objects in advancement of the trade, commerce and industry of the country. Provide that a) None of the activities carried on shall be with the intention of earning profits and b) None of the activities carried on above said shall be carried on outside India. 5. During the course of assessment proceedings, it was noticed by the learned Assessing Officer that the assessee society purchased wattle from Africa and distributed those goods to its members and other concerns in the same industry with margin of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munity. That prosperity would be shared also by those who engage in trade, commerce and industry but on that account the purpose is not rendered any the less an object of general public utility. It may be remembered that promotion and protection of trade, commerce and industry cannot be equated with promotion and protection of activities and interests merely by persons engaged in trade, commerce and industry. 4.5 The provisos to section 2(15) would apply only when the business undertaken is an unrelated business of the charitable organization. Unrelated business income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity. The term trade or business generally includes any activity conducted for the production of income from selling goods or performing services. But such activity loses its identity as a trade or business if it is directly related to the exempt purposes of the organization. 4.6 To distinguish the characteristics of unrelated business acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Institute of Chartered Accountants of India v DGIT(E) 358 ITR 91 (Del). It stated that the expressions trade , commerce and business occurring in first proviso to Section 2( 15) must be read in the context of intent and purport of Section 2(15) and cannot be interpreted to mean any activity carried on in an organized manner.The purpose and dominant object for which an institution carried on its activities is material to determine whether the same is business or not. The purport of first proviso to Section 2(15) is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or fee. Object of introducing first proviso is to exclude organizations which are carrying on regular business from the scope of charitable purpose . The expressions trade , commerce and business must be interpreted restrictively. Where the dominant object of an organization is charitable, any incidental activity for furtherance of the object would not fall within the expressions. The intention of the legislature in introducing provisos to section 2(15) is not to curb all forms of business activity of a charitable instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Finance Minister on the floor of the Parliament, this institution should continue to be regarded as charitable organization with an object of advancement of any other general public utility. Therefore, the provisos to section 2(15) become squarely inapplicable to the facts and circumstances of the case. 4.13 Even if the object or purpose may not be regarded as charitable in its popular signification as not tending to give relief, it would still be included in the expression charitable purpose if it advances an object of general public utility. When the object of a trust is the carrying on of an object of general public utility, it is that object of general public utility which must not involve the carrying on of an activity for profit. It is immaterial how the money for achieving or implementing such purpose was found. The fact that money was obtained by the running of an activity for profit would not make the object of the trust not charitable. In view of the above discussion, I am of the considered view that the appellant society. is entitled I for exemption u/s 11 of the Act though it is covered under the last limb of any other object of general public utility w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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