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TMI Blog2021 (9) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 2. Appellant, ACIT (E), Circle 2 (1), New Delhi (hereinafter referred to as the Revenue ) by filing the present appeals sought to set aside the impugned orders both dated 04.07.2017 passed by the Commissioner of Income - tax (Appeals)-40, Delhi qua the Assessment Years 2013-14 2014-15 on the identical grounds inter alia that :- 1. On the basis of facts and circumstances of the case and in law, the Ld. CIT (A) has erred in ignoring the fact that the assessee is not eligible for exemption u/s 11 of the I.T. Act, 1961. 2. On the basis of facts and circumstances of the case and in law, the Ld. CIT (A) has erred in ignoring the fact that the assessee is rendering services to the laboratories and by monitoring such labs carrying out activities in a commercial manner with a view to earn profit and charging fee from them which is liable to be taxed under the head Profit Gains of Business and Profession and as such, its activities are not in charitable nature. 3. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee being a society registered under Societies Registration Act is also granted registration under section 12A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operative part of the order passed by the ld. CIT (A) is extracted for the sake of brevity as under :- 5.1.2 I have considered the assessment order and also the submissions of the appellant. I've also considered the decision of the Hon'ble ITAT, Delhi Bench E in ITA No. 1115/Del/2013 for assessment year 2009 - 10 in appellant's own case and also the decision of the Hon'ble Delhi High Court in the appellant's own case in ITA 284/2016. Hon'ble IT AT in the appellant's own case for assessment year 2009 - 10 (supra) have held that the assessee is eligible for exemption under sections 11 and 12 as the assessee is not engaged in any trade, commerce business and its dominant and prime objective is charitable in nature in accordance with section 2(15). The operative part of the judgement is reproduced below: 05. We have carefully considered the submission of parties and also the orders of lower authorities. We have perused the objects of the trust for which it is created and also the governing council of the trust . The main object of the formation of this society is to give the laboratories accreditation by which the quality standards in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the introduction of the proviso to section 2(15) by virtue of the Finance Act, 2008, was directed to prevent the unholy practice of pure trade, commerce and business entities from masking their activities and portraying them in the garb of an activity with the object of a general public utility. It was not designed to hit at those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions. The attempt was to remove the masks from the entities, which were purely trade, commerce or business entities, and to expose their true identities. The object was not to hurt genuine charitable organisations. And, this was also the assurance given by the Finance Minister while introducing the Finance Bill 2008. 56. In GS1 (supra) it was contended by the Revenue that GS1 (India) had acquired intellectual property rights from GS1 (Belgium) and thereafter received registration fees from third parties in India. This was sought to be equated to royalty payments. It was also contended that GS1 (India) had huge surpluses of receipts over expenditure and that payments were made to GS1 (Belgium). According to the Revenue, all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner charges fee and, therefore, is carrying on business, has to be rejected. The intention behind the entire activity is philanthropic and not to recoup or reimburse in monetary terms what is given to the beneficiaries. The element of give and take is missing, but decisive element of bequeathing is present. In the absence of 'profit motive' and charity being the primary and sole purpose behind the activities of the petitioner is perspicuously discernible and perceptible. The court also held (page 155 of 360 ITR) : 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 longterm and should not depend upon Government, in other words, taxpayers should not subsidize the said activities, which nevertheless are charitable and fall under the residuary clause 'general public utility'. The impugned order does not refer to any statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution established for charitable purposes. 06. We are also of the view that amendment made in section 2(15) of the act with effect from 1.4.2016 by substituting the first proviso and second proviso by a single proviso, which would now exempt the business income, where the activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility so that it recognizes all the activities consistent with the objects, where the objects are not prompted by profit motive, from the purview of liability bringing the law to conform The Constitution which was challenged before Honourable Delhi High court in above decision. The effect of this provision would bring those trusts and institutions, like assessee, with the object of general public utility on par with those with the other three objects in respect of the treatment for income from business, if it is incidental to the objects as provided under section 11 (4A) of the Act, subject to certain limitation. 07. In view of above we reverse the order of CIT (A) and hold that assessee is eligible for exemption u/s 11 12 of the Income Tax Act as assessee is not engaged in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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