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TMI Blog2020 (9) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... le purpose towards promotion of main objects set out in the Memorandum of Association of the assessee association, thus, in absence of any substantial allegation or incriminating material. We are unable to accept view of the CIT that the assessee association is conducting these activities with the main object of earning profits. In the present case, the activities of the assessee's association cannot be termed either trade , commerce or business simply because the assessee association is receiving some charges or fees for rendering services on non- commercial principles to State Road Transport Undertakings and other concern members for a fee or charges. As Indian Trade Promotion Organisation vs. DGIT [ 2015 (1) TMI 928 - DELHI HIGH COURT] wherein it was held that thus, first proviso to section 2(15) of the Act would have been to be read down and interpreted in the context of section 10 (23C) (iv) of the Act as the context requires such interpretation where assessee is not driving primarily by desired or motive to earn profit but to pursue activities in furtherance of its objects of general public utility then it must be recognized as an institution established for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case and in law, Ld CIT(A) has erred in allowing the appeal of the assessee by ignoring the fact that the activity of the assessee does not fall under relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments of places or objects of artistic or historic interest and that the assessee had receipts under the heads Revenue from Test Laboratory and Consultancy Receipts which were commercial in nature and their aggregate value exceeded ₹ 10 Lac. (b) On the facts in the circumstances of the case and in law, Ld CIT(A) has erred in allowing the appeal of the assessee by ignoring the fact that the facts of the cases relied upon by CIT(A) are distinguishable from the facts of the instant case and that in the case of ITPO vs DGIT, department has filed SLP before Hon ble Supreme Court against the decision of Hon ble Delhi High Court. 8. Similar grounds have been raised by the Revenue in ITA No.4741/Del/2017 for A.Y. 2014-15. 9. Before us, at the outset, both the parties submitted that though the appeals are for two different years but the facts and issue involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 on identical facts had allowed the appeal of the assessee and had directed the AO to allow exemption u/s 11 12 with consequent benefits. He accordingly following the orders for earlier years allowed the appeals of the assessee. Aggrieved by the order of CIT(A), Revenue is now before us. 12. Before us, at the outset, the Learned DR fairly submitted that identical issue arose in assessee s own case in A.Y. 2012-13 before the Tribunal and the Co-ordinate Bench of Tribunal has decided the issue in favour of the assessee. He, therefore, submitted that considering the aforesaid facts, the appeals be decided accordingly. Learned AR on the other hand submitted that identical issue arose in assessee s own case in earlier years and the issue has been decided by the Tribunal in assessee s favour and the order of Tribunal has attained finality. He, thus supported the order of CIT(A). 13. We have heard the rival submissions and perused the material available on record. The issue in the present case is with respect to allowing exemption u/s 11 12 to the assessee. The AO had denied the benefit of exemption u/s 11 12 of the Act by concluding that the Assessee failed to qualify as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of charitable purpose . The purpose of introducing the proviso to section 2(15) of the Act can be understood from the Budget Speech of the Finance Minister while introducing the Finance Bill, 2008. The relevant extract to the Speech is as under (see [2008] 298 ITR (St.) 33, 65) : ... 'Charitable purpose' includes reli8ef of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt, as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes have sought to claim that their purposes would also fall under 'charitable purpose' obviously, this was not the intention of Parliament and, hence, I propose to amend the law to exclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee association was carrying on laboratory test and consultancy services with the main object of earning profit in the line of business , trade or commerce . Accordingly we respectfully held that the benefit of the ratio of the decision of Hon'ble Punjab Haryana High Court (Supra) is not available for the revenue as the facts of the present case are clearly distinguishable from that case. 28. Turning to the facts of the present case, we note that the assessee association is an association of Apex Governing Body of State Road Transport Undertakings (STU) registered as a society under the Society's Registration Act which is wholly patronized by the Central Government for working under the Ministry of Road Transport and Highways and the Secretary to the Government of India, Ministry of Road Transport and Highways is the ex-officio president of the assessee association and the governing body of the assessee association includes representatives from all the State Road Transport Undertakings. 29. We also note that the assessee association was established with the main object of improving public transport system in the country and its objects as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organization is charitable any incidental activity for furtherance of the object would not fall within the expression business , trade or commerce . 32. In view of the ratio of the judgment of Hon'ble High Court of Delhi if we analysis the facts and circumstances of the present case at the outset we note that the activity laboratory testing and consultancy is certainly bringing revenue for the assessee association but the CIT has not controverted or demolition this fact that the main object for which assessee association was created by Government of India is to impart services to the State Road Transport Undertakings and from careful reading of the objects of the assessee association as reproduced hereinabove clearly mandates its charitable objects and purpose. The contention of the assessee association also support from this fact that the assessee association have not revised its laboratory test charges since 2001 and the services are provided on the similar line by charging reasonable fees without any profit earning object. 33. After going through the objects and activities of the assessee association it is clear that the assessee association did not carry on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociation is receiving some charges or fees for rendering services on non- commercial principles to State Road Transport Undertakings and other concern members for a fee or charges. 35. At this juncture, we also respectfully follow the ratio laid down by the Hon'ble Delhi High Court in the case of Indian Trade Promotion Organisation vs. DGIT (Supra) wherein it was held that thus, first proviso to section 2(15) of the Act would have been to be read down and interpreted in the context of section 10 (23C) (iv) of the Act as the context requires such interpretation where assessee is not driving primarily by desired or motive to earn profit but to pursue activities in furtherance of its objects of general public utility then it must be recognized as an institution established for charitable purposes. The Hon'ble Delhi High Court in the case of Institute of Chartered Accountant of India vs. DGI 347 ITR 99 (Delhi) held that the object of the first proviso to section 2(15) of the Act is to include any transaction for a fee or money and the activity would be business if it is undertaken with the profit motive but in some cases this fact must be determinative and the profit moti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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