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TMI Blog2021 (10) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... t health and safety, cleanliness and also creating awareness about the legal provisions and duties and obligations under Income Tax Act and other laws to help them becoming a law abiding citizens. In this background, we are of the opinion that endeavors of the assessee society tantamounts to advancement of public utility and hence making such objects charitable in nature and susceptible to s.2(15). The object beneficial to a section of the public is also an object of general public utility. Hence, the case of the assessee gets covered in the fourth limb of Section 2(15) of the Act i.e. the advancement of any other object of general public utility . This being so, the assessee would be entitled to the benefit meant for charitable trust as contemplated in the scheme of the Act. Other objection of the CIT(E) that assessee society has purchased the land and distributed the same to its members by way of 99 years of lease - merely leasing of developed plots to its members on the basis of their respective contributions does not make the assessee ineligible for registration as a charitable entity per se. No merit in the contention of the CIT(E) that land purchased by the society is not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , fraternity, patriotism, true self- respect and public service among drug dealers members. (4) To develop physical, mental, literary, social, cultural status of drug dealer members and organize seminars and workshops related for pharmaceuticals business for increasing knowledge of members. (5) To get the laws detrimental to the interest of drug dealer members amended, make the new laws that are necessary and administer the implementation of these laws. (6) To abstain from initiating the movement nor sanctioning it till the legal remedies for resolving each business related problem are exhausted, decision to be taken by Governing Body based on majority if deemed necessary. (7) To inculcate the spirit of working for public interest with honesty, dedication and enthusiasm amongst the drug dealers members. (8) To publish regular newsletters and publications for spreading information and ' knowledge among drug dealers and make them aware. (9) To conduct elections in the presence of supervisor and present the details of income and expenditure in the specified time period. (10) To achieve the aforesaid objections only law abiding, truth and non- violence means and princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contribution was not without consideration or an act of philanthropy. It was thus contended that the CIT(E) misinterpreted the facts and did not appreciate the distinction between the 'contribution' and 'donation' inasmuch as the members never intended to give donation which would mean parting money without consideration. It was further submitted that there is no dispute over the fact that the assessee society had purchased the land for developing the market place out of the contribution of the members. Also there is no dispute over the fact that the assessee purchased the land in its own name vide the registered purchased deed. Further, there is no dispute over the fact that the assessee had developed the market place for its members engaged in pharma business. It is further an undisputed fact that developed plots were allotted to its members in proportion to their contributions by way of lease agreement for 99 years. Learned counsel also pointed out that the land purchased has been duly recorded in the regular books of accounts and all the expenses incurred on development of land have also been accounted for in the books of accounts and disclosed in the balance sheet. The statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in organized manner under well- developed infrastructure. (b) The activities of assessee society fall within the fourth limb of Section 2 (15) of the Act i.e. 'the advancement of any other object of general public utility' which carries a very wide connotation. (c) The area of operation of the assessee society extends to the whole state of Chhattisgarh as can be seen from memorandum of association of the assessee society. (d) The assessee is essentially a trade association formed with the object of protecting the rights and interest of members engaged in the pharma business. The similarly placed trade association with like objects have been held to be eligible for registration under s.12 AA of the Act on the ground that their objects were found to be falling within the expression 'any other object of general public utility' as employed in Section 2(15) of the Act. (e) A reference was made to the decision of Surat bench in ACIT vs. Gujarat Hira Bourse dated 22 .06 .2021, wherein the Finance Minister's speech in Parliament was quoted with reference fourth limb to the said Proviso to Section 2 (15) of the Act. The Finance Minister in the said speech stated that the Chamber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the learned counsel submitted that at the time of considering the eligibility for registration under s.12AA of the Act, the CIT(E) has to only examine the objects of the assessee society and genuineness of the transaction. The scope of enquiry does not go beyond this as provided under s.12AA(1)(ab) of the Act. The judgment rendered by the jurisdictional High Court in CIT vs. Chhattisgarh Urology Society (2018) 303 CTR 299 (CG) was referred. 6.6 The learned counsel contended that the assessee society do not belong to a particular community/family and any person engaged in pharma business can become member of assessee society regardless of his cast, creed or religion and without discrimination. 6.7 In summation, the learned counsel submitted that the trade association has been formed for the advancement of public utility with reference to the pharma dealers. In the wake of long line of judicial precedents wherein the registration was granted to other associations in similarly placed situations, it was urged that the assessee should also be treated similarly and registration claimed w.e.f. 01.04.2018 by an application dated 30.03.2019 in terms of provisions of Section 12A(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 1 (SC), it was observed that: " 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. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge of a trust or institution to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect unsound principle of management. We, therefore, agree with Beg. J. When he said in Sole Trustee, Loka Sikhshana Trust' s case [ 1975] 101 ITR 234, 256 (SC) that: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the general public at large, therefore, it could not be held to be a trust set up for advancement of any other object of general public utility cannot be sustained and is herby vacated.- Ahmedabad Rana Caste Association vs. CIT (1971) 82ITR 704 (SC) followed. For the attainment of its objects, viz., to act as a group of associations/ federations functioning at national and State level with an object to address the national issues relating to real estate sector and better standard for its all member associations, to encourage fraternity, feelings of co- operation and mutual help among the members of the confederation in respect of the subjects connected with the common good of trade, industry and profession of building, construction and development of funds, and to encourage adoption and promotion of fair business practices according to an ethical code of fair business practices and to maintain efficiency, dignity and integrity of the confederation, the assessee-trust had to carry out certain activities, i . e., holding conventions, exhibitions, meetings, etc. Insofar carrying out of such activities are concerned, carrying on of the same for the furtherance of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility'. This being so, the assessee would be entitled to the benefit meant for charitable trust as contemplated in the scheme of the Act. 9. We also advert to the other objection of the CIT(E) that assessee society has purchased the land and distributed the same to its members by way of 99 years of lease. In similar facts situation, the co-ordinate bench of Tribunal in ACIT vs. Gujarat Hira Bourse ITA No. 2917/Ahd/2014 dated 22.06.2021 observed as under: "If the primary object of an entity like " Chamber of Commerce, professional association, a bar council, etc" is the promotion of any trade, industry, profession, etc. the fact that the business community or the profession as the case may be would be benefit therefrom, would not take away the object from the realm of object of general public utility and, therefore, they would be held established for a charitable purpose. In view of the above factual and legal position, it is quite clear that the object of the assessee is of general public utility and does not hit by first proviso to section 2(15) of the Act. To establish a bourse for promotion of exports of diamond, gems, pearl and jewellery and to provide inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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