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TMI Blog2021 (1) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the previous year do not exceed 25% of the total receipts of the entity, the exclusion provision will not apply. In any event, having carefully perused the impugned order of the learned CIT(A) which deals with all the points raised by the Assessing Officer in a fair and comprehensive manner, we are inclined to endorse the well-reasoned findings and conclusions arrived at by the learned CIT(A).In view of these discussions, bearing in mind entirety of the case, and respectfully following decision of the coordinate bench- as referred to above, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. The appeal of is, therefore, dismissed. - ITA No. 2880/Mum/19, CO No 42/Mum/20 In ITA No. 2880/Mum/19 - - - Dated:- 5-1-2021 - Pramod Kumar (Vice President) and Pavan Kumar Gadale (Judicial Member) Ashima Gupta for the appellant Vipul Joshi for the respondent ORDER Pramod Kumar, VP: 1. By way of this appeal, the Assessing Officer has challenged correctness of the order dated 4th February 2019, passed by the learned CIT(A), in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of Hon'ble Mumbai Tribunal in the case of Shanmukhanand Fine Arts VS. DDIT(E)-1(2), ITA No.l975/Mum/2016 dated 02.03.2018 wherein the Hon'ble ITAT has set aside the order of the AO ignoring the fact not only facts of this case are different but otherwise also the department has accepted the decision of the Hon ble ITAT and filed appeal before the Hon ble High Court which is pending for adjudication. 5. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is right in directing the AO to allow the assessee exempt u/s. 11 of the Act ignoring the decision of Hon ble ITAT, Mumbai in the case of Maharashtra Industrial Development Corporation in ITA No. 6552/Mum/2014 dated 27.03.2015 for AY 201112 wherein it was held that the activities of the assessee are of commercial in nature and hence are hit by the proviso to section 2(15) of the Act. 3. The assessee before us is a public sector undertaking, working under Ministry of Railways in the Government of India, and a company registered under section 617 of the Companies Act, 1956. The assessee is engaged in the business of, as the Assessing Officer puts it, developing plans and implem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Companies Act,1956.It's shareholding is owned by the Ministry of Railways (Government of India) and the State Government of Maharashtra. At certain point of time, before appellant company was incorporated, certain projects relating to the transport needs of Mumbai Metropolitan Region (MMR) commuters were identified under MUTP. Such projects related to the urban transport infrastructure in MMR, which included the Sub-urban Rail Net Work of Mumbai also. Such projects involved huge financial resources, and the Railways were already facing severe operational problems in MMR, the Government at the Centre and in the State of Maharashtra found a resolution by setting-up a Special Purpose Vehicle (SPV) for speedy and efficient implementation of railway component of MUTP. Accordingly, assessee company was set-up as a SPV for taking up projects concerning Mumbai Sub-urban Rail Network. In fact, a perusal of the Main Objects clause in the Memorandum and Articles of Association of the assessee- company bears testimony to the above, and it reads as under:- A. MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON ITS INCORPORATION: (i) To develop coordinated plans and implement the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets created under MUTP. through assessee are transferred to / retained by the railways for operations maintenance and replacement. 6.2 It was also pointed out that the Direction General (D G) charges being received by the assessee are nothing but interdepartmental allocations to cover administrative overheads. It has been explained that the D G charges for work under MUTP is based on the quantum of work to be carried out by the assessee and are determined in terms of a standard policy of the Railways. It is also clear that assessee company functions under complete superintendence and control of Government of India, exercised through the Ministry of Railways. It is also asserted before us, and without any contravention, that assessee has not undertaken any activity for any partv other than the Government of India, and that the projects being undertaken by the assessee company are funded by the World Bank and/or by the budgetary support provided by the State Exchequer and no funds are received from any outside party. All the aforesaid features do show that the task of the assessee is to act as an overall co-ordination and implementing agency for the railway component of MUTP w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the concluding paragraph that the activities of the trust are not in accordance with the objects is only a bald assertion, devoid of any factual support. In fact, the main object of the assessee, as reproduced earlier, is to develop coordinated plans and the railway infrastructure projects, integrate urban development plan for Mumbai with rail capacity, etc. In order to, achieve the aforesaid, assessee company is an SPV tasked to execute the Sub-urban rail projects identified under MUTP. In our considered opinion, the Director has completely misdirected himself in construing the activities of the assessee. The various projects being undertaken by the assessee have been completely lost sight of and rather much has been made of the items of receipts by way of D G charges, interest incomes and expenses on administrative t and establishment overheads. Quite clearly, any organization would require to spend on administrative overheads in order to carry out its objectives. So however, the function of maintaining an administrative set-up cannot be confused with the objects for which the assessee company has been set up and which it has been undertaking ever since namely, the executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution and the said registration is in force as on today. Even if assessee is not a Company registered u/s.25 of Companies Act, 1956 it is still eligible for exemption u/s.11 as in the case of Delhi Stock Exchange Association limited, a company registered u/s 25 of the Companies Act, it was held to be eligible for exemption u/s 11 of the Act by the Hon'ble High Court, Delhi in the case Commissioner of Income-tax v/s. Delhi Stock Exchange Association Limited [2001] 119 TAXMAN 91 (DELHI) is under: 7. In the instant case, as noticed above, exemption under section 11 was disallowed in the past and in the present year only on the ground that the articles of association do not expressly prohibit declaration of dividend, etc., to the shareholders and not for any other reason. In our opinion, the flaw in the memorandum and articles of association which, according to the revenue, disentitled the assessee for claim under section 11, having been rectified during the previous year relevant to the assessment year/ 1974-75, the exemption under section 11 has to be allowed for the whole of the assessment year irrespective of the fact that the amendment took place in the midst of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008) 214 CTR 0081, (2007) 295 1TR 0561, (2008) 166 TAXMAN 0058, when the Hon'ble apex court held as under: 8. One of the objections raised on behalf of the Devartment was that Guiarat Maritime Board is not entitled to the benefit of s. 11 of the 1961 Act as the said Board was not a trust under Public Trust Act and, therefore, it was not entitled to claim registration under s. 12A of the 1961 Act. The Department's case was that the Maritime Board was a statutory authority. It was not a trust. Its business was not held under a trust. Its property was not held under trust. Therefore, the Board was not entitled to be registered as a charitable institution. It was the case of the Department that the Board was performing statutory functions. Development of minor ports in the State of Gujarat .cannot be termed as the work undertaking for charitable purposes and in the circumstances the CIT rejected the Board's application under s. 12A of the 1961 Act. In the light of the above case of the Department we are required to consider the expression any other object of general vublic utility in s. 2(15) of the 1961 Act. 9. At the outset, we may point out that s. 10(20) and s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh State Road Transport Corporation (supra), we find that, in the present case, Gujarat Maritime Board is established for the predominant purpose of development of minor ports within the State of Gujarat; the management and contra of the Board is essentially with the State Government and there is no profit motive, as indicated by the provisions of ss. 73, 74 and 7L of the 1981 Act. The income earned by the Board is deployed for he development of minor ports in India. In the circumstances, in c ur view the judgment of this Court in Andhra Pradesh State Ro id Transport Corporation (supra) squarely applies to the facts of the present case. 13. Before concluding we may mention that under the scheme of s. 11(1) of the 1961 Act, the source of income must be held under trust or under other legal obligation. Applying the said test it is clear, that Gujarat Maritime Board is under legal obligation to apply the income which arises directly and substantially from the business held under trust for development of minor ports in the State of Gujarat. Therefore they are entitled to be registered as charitable trust11 under 12A of the 1961 Act. 14. For the afore stated reasons, we s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f exemption u/s 11 of the Act being cancellation of registration u/s!2A by the DIT(E) being not in existence as on date by virtue of Hon'ble Mumbai ITAT decision in assessee's own case in ITA No. 1057/Mum/2014 ITA No,2626/Mum/2014, dated 03.08.2016. Therefore, the AO is directed not to deny exemption u/s 11 of the Act to the assessee on, the grounds mentioned in para 4 of his aforesaid assessment order. Provisio to section 2(15) of the Act: 10.2 As discussed in para 8.3 above, the AO, in addition to the aforesaid two grounds invoked by the AO to deny the assessee deduction u/s 11 of the Act, vide para 6 of his aforesaid assessment order also denied exemption u/s.11 of the Act invoking the newly inserted provisions of provisio to section 2(15) and section 13(8) of the Act by the Finance Act of 2009 w.e.f. 01.04.2009.The AO has held that the purpose of the assessee trust was 'the advancement of any other object of general public utility' and since assessee was engaged in commercial activities for a fees or cess either directly or indirectly and also the receipts from such .commercial activity is more than ₹ 25 lakhs, the provisions of proviso to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g due to such projects and action. 10.2.1 I find that the appellant is a Government Company incorporated on 12/07/1999 under section 617 of the Companies Act 1956. It's shareholding is owned by the Ministry of Railways (Government of India) and the State Government of Maharashtra. The appellant company was especially formed to 'implement railway component of MUTP (Mumbai Urban Transport Project) to cater to the transport needs of commuters of Mumbai Metropolitan Region (MMR) as the Railways were already facing severe operational problems and scarcity of funds in MMR. The above reproduced Main Objects clause in the Memorandum and Articles of Association of the assessee- company bears testimony to this fact. In the first phase of MUTP (at cost of ₹ 4501 crores) 101 EMU rakes have been procured, which have made 418 additional train services possible and generated an additional 33% carrying capacity in local trains in Mumbai. It has also been pointed out that a state of the art EMU maintenance car shed has been set up at Virar and additional 93 track kilometres have been added, which has facilitated segregating mainline operations from suburban operations. It was exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the activities of the assessee have been scrutinized by the Assessing Officer in the course of scrutiny assessments made under section 143(3) of the Act for various assessment years starting from 2003-04 to 2010-11 without any adverse findings and copies of such assessment orders have been placed in the Paper Book at pages 399 to 472. It is also an uncontroverted fact that that no profits are earned from the activity of executing projects of MUTP and the inflow by way of D G charges is an interdepartmental allocation to meet the administrative costs. From a perusal of details filed, I find that such charges are not even sufficient to cover the entire administrative cost, and the only other source of income is .interest earnings on bank deposits, which is being earned from a permitted mode of investment. It can be seen that even interest income is utilized towards the objects of the assessee company and in support reference has been made to a communication from Railway Board, a copy of which is placed at page 53 of the Paper Book titled 'INDEX of NOTES' filed before the ITAT and a copy submitted during the appellate proceedings. It is .also prescribed therein that any surpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st income from bank deposits out of funds of the government, pending their deployment towards specific railway project cannot qualify as ,an activity in nature of trade, commerce or business as held by the Honorable Mumbai Tribunal in the case of Bombay Presidency Golf Club Ltd. v/s. ITO - [(2016) 159 ITD 1050 (Mum - Trib] In which case it was clearly held that ...the investments made with banks is not an activity in the nature of trade, commerce or business but is income earned on application of moneys mandated under section ll(5)(iii). Thus, as per the provisions of section 11(5), the assessee is permitted to deposit in any account with a schedule bank on the deposits made therein and hence it cannot be said that interest received from the bank is in the nature of trade, commerce or business. 10.2.3 In recent years, a number of decisions of the various High courts and ITATs have come which have held that where objects of the assessees demonstrated that they existed and operated purely for purpose of achieving an object of general public utility and these objects had nothing to do with any trade, commerce or business and profit earning was not predominant purpose of assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court as well as decisions of the other High Courts, it is held that activities of the said organization cannot be considered as business . While holding so, Delhi High Court has observed and held as under: An activity would be considered 'business' if it is undertaken with profit motive, but in some cases, this may not be determinative, Normally, the profit motive test should be satisfied, but in a given case 1 Activity may be regarded as a business even when profit motive cannot established/proved. In such cases, there should be evidence and material to show that the activity has continued on sound and recognized business principles and pursued with reasonable continuity. There should be facts and other circumstances which justify and show that the activity undertaken is in fact in the nature of business. 12.6 In the aforesaid decision, after considering the decision of the Hon'ble Supreme Court in the case of CST v. Sai Publication Fund! [2002] 258 ITR 70/122 Taxman 437, it is held by the Delhi High Cow that thus, if the dominant activity of the assessee was not business, the] anv incidental or ancillary activity would also not fall within M definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce. 69. In the case of Addl Commissioner of Income Tax v. Surai Art Silk Cloth Manufacturers Association: [1980] 121 ITR 1 (SC), the Supreme Court held as under:-The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to sub serve the charitable purpose or to earn profit Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity.' 70. Although in that case the statutory provisions being considered by the Supreme Court were different and the utilization of income earned is, now, not a relevant consideration in view of the express words of the first proviso to section 2(15) of the Act, nonetheless the test of dominant object of an entity would be relevant to determine whether the entity is carrying on business or not. In the present case, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, and tasked to act as agencies of the State in public^ duties which cannot be discharged by private bodies. Often, apart from the controlling or parent statutes, like the BIS Act, these statutory bodies (including BIS) are empowered to frame rules or regulations, exercise coercive powers, including inspection, raids; they possess search and seizure powers and are invariably subjected to Parliamentary or legislative oversight. The primary object for setting up such regulatory bodies would be to ensure general public utility. The prescribing of standards, and enforcing those standards, through accreditation and continuing supervision through inspection etc., cannot be considered as trade, business or commercial activity, merely because the testing procedures, or accreditation involves charging of such fees. It cannot be said that the public utility activity of evolving, prescribing and enforcing standards, involves the carrying on of trade or commercial activity. 12.8 Circular No. 11 of 2008 issued by the CBDT fell for consideration by the Delhi High Court in the case of G.S.L India (supra). It is held that even as per the said circular, proviso to Section 2(15) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or trade in the absence of contrary evidence. Quantum of fee charged, economic status of the beneficiaries who pay, commercial value of benefits in comparison to the fee, purpose and object behind the fee etc. are several factors which will decide the seminal question, is it business? 27. As observed above, fee charged and quantum of income earned can be indicative of the fact that the person is carrying on business or commerce and not charity, but we must keep in mind that charitable activities require operational/running expenses as well as capital expenses to be able to sustain and continue in long run. The petitioner has to be substantially self-sustaining in long-term and should not depend upon government, in other words taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under WP(C) 1872/13 Pages 53 of 55 the residuary clause - general public utility. The impugned order does not refer to any statutory mandate that a charitable institution falling under the last clause should be wholly, substantially or in part must be funded by voluntary contributions. No such requirement has been pointed out or argued. A practical and pragmatic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Applying the aforesaid decisions to the facts of the case on hand and with respect to the activities of the AUDA - Ahmedabad Urban Development Authority under the provisions of the Gujarat Tow Planning Act by no stretch of imagination, it can be said that the activities of the assessee (AUDA) can be said to be in the nature of trade commerce or business and/or its object and purpose is profiteering Merely because under the statutory provisions and to meet with the expenditure of Town Planning Scheme and/or providing various service under the Town Planning Scheme, such as road, drainage, electricity water supply etc. if the assessee is permitted to sale the plots (land) to the extent of 15% of the total area under the Town Planning Scheme an while selling the said plots they are sold by holding the public auction, h cannot be said that activities of the assessee is profiteering, to be in tl\e nature of trade, commerce and business. 13.1 In the case of Lucknow Development Authority, Gomti Nagar (supra), it is held by the Allahabad High Court that the activities of the authority cannot be said to be in the nature of trade, commerce c business and/or profiteering and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding milk cattle; to improve the quality of cows and oxen and other related activities. The Assessing Officer denied the exemption to the trust under Section 11 of the Act on the ground that considerable income was generated from the activities of milk production and sale and therefore, considering the proviso to Section 2(15) of the Act, the said Trust-assessee was denied the exemption under Section 11 of the Act. While holding that the activities of the assessee trust still can be said to be for charitable purpose within the meaning of Section 2(15) of the Act and same cannot be said to be in the nature of trade, commerce or business for which proviso to Section 2(15) of the Act is required to be applied. In paras 6, 7, 8 and 12, it is observed and held as under: 6. The legal controversy in the present Tax Appeal centers around the first proviso. In the plain terms, the proviso provides for exclusion from the main object of the definition of the term Charitable purposes and applies only to cases of advancement of any other of general general public utility. If the conditions provided under the proviso are satisfied, any entity, even if involved in advancement of any other obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under any other object of general public utility. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only 'their members, these would not fall under the purview of the proviso to section 2 (15) owing to the principle of mutuality. However, if such organizations have dealings 'with non-members, their claim to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case on hand and the object and purpose for which the assessee is established/constituted under, the provisions of the Gujarat Town Planning Act and collection of fees and cess is incidental to the object and purpose of the Act, even the case would not fall under second part of proviso to Section 2(15) of the Act. 15.2 Considering the aforesaid facts and circumstances of the case, we are of opinion that the learned Tribunal has committed a grave error in holding the activities of the assessee in the nature of trade, commerce or business and consequently holding that the proviso to Section 2(15) of the Act shall be applicable and therefore, the assessee is not entitled to exemption under Section 11 of the Act. For the reasons stated above, it is held that the proviso to Section 2(15) of the Act shall not be applicable far as assessee- AUDA is concerned and as the activities of the assessee can be said to be providing general public utility services, the assessee is entitled to exemption under Section 11 of the Act. Both the questions are therefore, answered in favour of the assessee and against the revenue. 16. In view of the above and for the reasons stated above, the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al reversed the order of the DIT that the Hon'ble Bombay High Court confirmed the order of the Tribunal. In our opinion, during the continuation of registration^ is not permissible to the departmental authorities to challenge the charitable nature of the objects of a Trust. We would like to refer to the case of Ahmedabad Urban Development Authority (335 ITR 575)wherein the Hon'ble Gujarat High Court has held as under: Section 12AA of the Income-tax Act, 1961, lays down the procedure for registration in relation to the conditions .for applicability of sections 11 and 12 as provided in section 12A . Therefore, once the procedure is complete as pro-vided in sub-section (1) of section 12AA and a certificate is issued granting registration to the trust or institution the certificate is a document evidencing satisfaction about : (i) the genuineness of the activities of the trust or institution, and (ii) about the objects of The trust or institution. Section 12A stipulates that the provisions of sections 11 and 12 shall not apply in relation to income of a trust or an institution unless the conditions stipulated therein are fulfilled. Thus, granting of registration under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied for the mess but accommodation and other facilities were free of cost and apart from community development programmes, which were undertaken to educate rural women, they were taught various skills and made aware of how to live honourably. The Tribunal found that this was not an activity which would fall within the proviso to section 2(15). The Tribunal referred to two letters addressed by the trustees of the assessee-trust clarifying that in the past, such activities had been found to be incidental to the objects of the trust. Secondly, the donation received during the year had been utilised in the assessment year 2009-10 for achieving the object of the trust However, the bank interest received was continued and, then, there was a deficit. It was in these circumstances that the argument was canvassed that the fees collected for training women were only to meet the cost of expenses for providing them food items. Their accommodation and other facilities were free of cost. The Tribunal found that the trust may be set up for advancement of any other object of general public utility but that would not cease to be charitable purposes because the activities in which the trust was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in the earlier years.lt is true that principles of res judicata are not applicable to the income tax proceedings. But at the same time it is also true that principles of consistency have to be followed while deciding the tax matters. In the case of International tractors Ltd., the Hon'ble Delhi High Court(397 ITR 696)has held that deductions allowed in the earlier assessment years should not be withdrawn unless the circumstances have changed. The Hon'ble Allahabad High Court in the matter of Zazsons export Ltd.(397 ITR 400) has held as under: In order to maintain consistency, a view, which had been accepted in an earlier order ought not to be disturbed unless there was any material to justify the Department to take a different view of the matter. While deciding the appeal, the Hon'ble Court had taken note of the proceedings of the earlier AY.s. As the rule of consistency has not followed without bringing distinguishing features of the year under appeal, as compared to the facts of the earlier years, so, in our opinion the order of the FAA cannot be endorsed on this count. 6.3. We also find that one of the object of the assessee was to impart training in mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occurring in the first proviso to section 2(15) must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purposes but are conducting some activities for a consideration or a fee. The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit making is the predominant object of the activity, the purpose, though an object of general public utility would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. Considering the above, we hold that the assessee is running music school and providing medical services and it is utilising SH for augmenting its funds. In these circumstances in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erance of the object would not fall within the expression business , trade or commerce . In light of the above discussion, we decide the first ground of appeal in favour of the assessee. As we have allowed first ground of appeal, so, we hold that Gs.AO 2.4 and 5 have become infructuous. Hence we are not adjudicating them. (emphasis supplied) 10.2 In view of the above discussion, factual matrix and the judicial precedents, I am of the view that the assessee, being a government company especially formed to implement railway component of MUTP (Mumbai Urban Transport Project) to cater to the transport needs of commuters of Mumbai Metropolitan Region (MMR) has under taken projects funded fully by the government and using all its funds for its objectives without any profit mark up, existed and operated purely for purpose of achieving an object of general public utility and these objects had nothing to do with any trade, commerce or and profit earning was not predominant purpose of assessee, the proviso to section 2(15) could not have been invoked to decline benefit of sections 11. The A.O. is therefore, directed to allow the assessee exemption u/s. 11 of the Act. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Karnataka State Road Transport Corporation in ITA No. 302 of 2015 vide order dated 12.2.2015. We further note that import of incorporation of proviso to section 2(15) was considered by Hon'ble Kerala High Court in the case of Info Parks (supra) and Hon'ble Court have expounded as under :- 15. Yet another important aspect to be noted in this context is that, after the amendment by incorporating proviso to section 2(15), the 4th limb as to the advancement of any other object of general public utility will no longer remain as charitable purpose, if it involves carrying on of :- (a) any activity in the nature of trade, commerce or business. (b) any activity of rendering any service in relation to any trade, commerce or business for a cess or a fee or any other consideration, irrespective of the nature of use or application-or retention of the income from such activity. The first limb of exclusion from charitable purpose under clause (a) will be attracted, if the activity pursued by the institution involves any trade, commerce or business. But the situation contemplated under the second Limb [clause (b)l stands entirely on a different pedestal, with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the significance of the provision of section 2(15) in similar case of denial of exemption by invoking provision of section 2(15) of the Act. We may gainfully refer to the Tribunal s adjudication in this case as under :- 8. We have carefully considered the rival submissions. Sec. 2(15) of the Act defines the expression 'charitable purpose'. So far as it is relevant for our purpose, the expression 'charitable purpose' seeks to include 'education'. The case of the assessee is that its activities fall within the scope of the expression 'education' and, therefore, it is covered within the meaning of 'charitable purpose' contained in Sec. 2(15) of the Act. The stand of the Revenue is to the contrary as, according to it, the activities of the assessee are merely to carry out training, seminars, post-graduate training and, that too, against collection of fees and, therefore, cannot be considered as 'education'. Further, the expression 'charitable purpose' also includes the activity of 'advancement of any other object of general public utility'. According to the Revenue, even if the activities are to be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is conducting postgraduate Diploma courses and many Ph.D students are also registered with it for their Doctorial dissertation under the supervision of assessee's faculty members. It has also been pointed out that assessee has thirty full-time faculty of academicians from a wide range of disciplines, viz., Economics, Finance, Commerce, Business Management, Computer Science, Agricultural Science, etc. At the time of hearing, the learned representative has also emphasised that assessee has class rooms to conduct regular classes and the library in the educational campus has more than 60,000 books. It was also pointed out that assessee offers programmes in collaboration with Kellogg School of Management, Northwestern University USA, The London School of Economics and Political (LSC), UK and CME Group, Chicago, etc. All these assertions of the assessee have not found any negation by the assessing authority or even by the Revenue before us. 10. Before us, it was argued by the ld. DR that fee is being charged and subscriptions are received from the member-banks which generates surplus in the course of activities, and thus, the activities are not for education. It is well u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucting seminars and running training centres for employees of Urban Co-operative Banks, District Co-operative Banks, etc. The Hon'ble Gujarat High Court understood such activities to be falling within the expression 'education'. In coming to such a conclusion, the Hon'ble Court referred to the judgment of the Hon'ble Supreme Court in the case of Sole Trustee, Loka Shikshana Trust vs. CIT, 101 ITR 234 (SC) to contend that the word 'education' should not be confined only to scholastic instructions, but other forms of education are also included in the expression 'education'. Though the decision of the Hon'ble Gujarat High Court is in the context of Sec. 10(22) of the Act, yet, it is of relevance for us since it has explained the meaning of the expression 'education' which, in our view, is germane to decide the controversy before us. The assessee before us is indisputably engaged in conducting higher education training, coaching and research in the field of banking and finance, and the ratio of the judgment of the Hon'ble Gujarat High Court certainly goes to show that its activities are in the field of 'education' for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution and, therefore, it falls within the scope of the expression 'charitable purpose' contained in Sec. 2(15) of the Act. 15. Now, we may deal with the reference to proviso to Sec. 2(15) of the Act made by the Assessing Officer. Pertinently, the proviso to Sec. 2(15) of the Act is relevant qua the activity of 'advancement of any other object of general public utility' contained in Sec. 2(15) of the Act and not in relation to other limbs of activities contained therein. While in the earlier paras we have already held that the assessee is engaged in 'education', therefore, on this basis, it will be in the fitness of things to deduce that assessee is not ousted from Sec. 2(15) of the Act because the proviso is not applicable to it. In any case, if one is to examine the applicability of the proviso on merit, even then we find that the same does not come into operation in the present case. Firstly, the CBDT in its Circular no. 11/2008 dated 19.12.2008 clarified that the proviso would apply only in situations where there is a profit motive in the activities undertaken. Secondly, the phraseology of the proviso itself lends credence to a premise that it com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp the implementation of those policies by creating a climate of intellectual appreciation and emotional dedication . Therefore, looking at the background of the formation of the assessee and its stated objects, which we have reproduced in the earlier part of this order, the assessee-institute was to act as a catalyst for the new banking policy of the Government of India towards evolving appropriate guidelines for banks in the areas of management capabilities and improving the technical expertise of banking and awareness of national priorities in the banking profession. The stated objects clearly bring out that the activities of the assessee are exclusively in the field of education and research in the field of banking and finance. Not elaborating further on this aspect, as we have already inferred earlier that assessee is in the field of education, at this stage it would suffice for us to note that there is no commercial intent behind setting-up of the assessee. In fact, the Assessing Officer has sought to draw a parallel with the case before the Hon'ble Patna High Court in Bihar Institute of Mining Mine surveying (supra) which, in our view, is wholly inappropriate. The Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n applied by the assessee for purposes other than its stated objects, which ostensibly is in the field of education. Pertinently, upto Assessment Year 2008-09, assessee was accepted to be an entity engaged in education and in even in the captioned years there is no charge against the assessee that any of its activities have undergone any change. Therefore, merely because of insertion of the proviso, the nature of activities do not undergo a change unless it can be made out that profit motive is dominant allpervading in the activities, an aspect which is absolutely absent in the present case. Therefore, even if we were to go along with the stand of the Assessing Officer that the activities of assessee fall within the expression 'advancement of any other object of general public utility' contained in Sec. 2(15) of the Act, even then, from Assessment Year 2009-10 onwards, the insertion of proviso does not take away the benefits of Sections 11 12 of the Act from the assessee inasmuch as the proviso does not disentitle the assessee's activities from being considered as for charitable purpose because of the above discussion. Thus, on this aspect also, we uphold the stand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proportionality. To state the obvious assumption of the Assessing Officer is absurd. 33. Another limb of Assessing Officer s inference that assessee is engaging into profit oriented activities is that the assessee is arranging tour and travel packages on commercial basis for fees/charges. For this he has noted eight trips from the website. How will these eight trips stand against thousands of trips undertaken by the assessee for transporting ordinary passengers is beyond comprehension. The Assessing Officer s inference is totally unjustified. Details of other income which has been considered by the Revenue to be of a large scale pale into absolute insignificance when the same is considered as percentage to the non-operative revenue to operating revenue, which bring them to be lesser than 1% to the operating revenue. The same is emanating from the following chart submitted by learned Counsel of the assessee. Sr. No Particulars Amount in Rs. Percentage to Non- operating Revenue to Operating Revenue 1. Adverting 52122184 0.095% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prehensive manner, we are inclined to endorse the well-reasoned findings and conclusions arrived at by the learned CIT(A).In view of these discussions, bearing in mind entirety of the case, and respectfully following decision of the coordinate bench- as referred to above, we uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 8. The appeal of is, therefore, dismissed. 9. The assessee has also filed a cross objection claiming that the assessee, being State/ an instrumentality of the State, cannot be imposed the income tax, but given the fact that the departmental appeal has been dismissed, and given the fact that the learned counsel has stated that in the event of the departmental appeal being dismissed, the cross objection may be treated as not pressed, we see no need to deal with the same. We may, however, take on record learned counsel s statement that he may not press the issue raised in the cross objection at this stage, he would like to keep the issues raised therein alive, so that, if required, this issue be pursued in future. 10. The cross objection is, therefore, dismissed as not pressed. 11. To sum up, the appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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