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TMI Blog2023 (11) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... and 12/- does not meet even the cost of such packets and thus the activity is devoid of any profit motive essential to cast it as an activity of Trade, Commerce or business. 3. That, while invoking the proviso to Sec. 2(15), the Ld CIT(E), Bhopal totally failed to appreciate that the alleged activity of the Society does not qualify as "advancement of an object of general public utility (GPU Charity)" but qualify as "Relief to Poor" to which said proviso is not applicable; rendering the impugned order both incorrect and illegal. 4. That reliance of the Ld CIT(E), Bhopal on the Hon'ble Appex Court order as referred in her order is totally misplaced, in as much as, she has chosen only certain parts of the order without properly appreciating the judgment in its entirety. On the contrary various examples given by the Hon'ble Appex Court, in Para 173 fully support the case of the appellant Society that it is not engaged in any activity of Trade, Commerce or business. 5. That the appellant Society deserves to be granted registration u/s 12AB of the Act which may please be directed to be allowed. 6. That impugned order of the Ld CIT(E), Bhopal is also against the principals of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or selling small packets of puri sabzi was found and also the society is running food counter at 262, Jawali nagar providing concessional food and the income from the sale of food packages in various rate were shown in income and expenditure account. Therefore, the said activity is purely commercial in nature, thus it is rightly found that the assessee is engaged in commercial activities rather charitable activities. Therefore submitted that the order of the CIT(E) requires no interference. 6. We have heard both the parties and perused the material available on record. 6.1. The ld. CIT(E) while rejecting the application filed by the assessee u/s 12AB observed that, as per physical verification report submitted by ITO(E). Gwalior on 03.10.2022, the society has installed three different types of automatic machines used for kneading dough, rolling of Puris and peeling of potato's respectively. However, in the Balance Sheet for F.Y. 2021-22, no machine has been shown as fixed assets only one car has been shown in fixed assets. But as per the copy of the agreement produced by the applicant all the three machines were acquired after 01.04.2022 i.e. in the financial year 2022- 23 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities have been undertaken by the trust, it was not possible to register it, presumably because it was not possible to be satisfied about whether the activities of the trust are genuine. The Income Tax Appellate Tribunal, Delhi (for short, the 'Tribunal') reversed the orders of the Commissioner. The Revenue Department approached the High Court by way of filing an appeal. The High Court upheld the order of the Tribunal and came to the conclusion that in case of a newly registered trust even though there was no activities, it was possible to consider whether the trust can be registered under section 12AA of the Act. This judgment is assailed before us. Section 12AA undoubtedly requires the Commissioner to satisfy himself about the objects of the trust or institution and genuineness of its activities and grant a registration only if he is so satisfied. The said section requires the Commissioner to be so satisfied in order to ensure that the object of the trust and its activities are charitable since the consequence of such registration is that the trust is entitled to claim benefits under sections 11 and 12 of the Act. In other words, if it appears that the objects of the trust an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income Tax-II vs. R.S. Bajaj Society" which has taken the same view as that of the Delhi High Court in the impugned judgment. The Allahabad High Court has also referred to a similar view taken by the High Courts of Karnataka and Punjab & Haryana. Apparently, a contrary view has been taken by the Kerala High Court in the case of Self Employers Service Society vs. Commissioner of Income Tax - (2001) Vol.247 ITR 18. That view however does not commend itself. However, the facts in Self Employers Service Society (Supra) suggest that the Commissioner of Income Tax had observed that the applicant for registration as a Trust had undertaken activities which were contrary to the objects of the Trust. In the result, we find that there is no reason to interfere with the impugned judgment of the High Court of Delhi. The appeal is, accordingly, dismissed." As regards allegation of a temporary counter and selling of food packets, it is the specific case of the assessee that there was neither any counter nor food packets were being sold as such. The food was "distributed" though a small window at the site. 6.3. The CIT(E) while rejecting the registration observed that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the victimised, harassed poor, helpless, sick and elderly people in hospitals and other places is one of the main object of the Society which can be corroborated Clause No. 27 of the Bye Lows. The aforesaid activities if considered in true perspective and in totality, falls under the "Relief to the poor category and not under the "GPU" category. (c) The proviso to Sec. 2(15) of the Act is applicable only to "GPU charity and not to "Relief to poor is supported by the CBDT Circular No 11/2008 dated 19/12/2008. Thus, the proviso to Section 2(15) of the Act would have no application to the appellant's activities as the same covers only the residual class of charity falling under the "GPU" category. To attract the proviso to Sec. 2(15) of the Act activities should be motivated by profit earning. 8. It is to be noted that the charging of any amount towards consideration for such an activity (advancing general public utility) which is on cost-basis or nominally above cost, cannot be considered to be "trade, commerce, or business" or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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