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TMI Blog2024 (5) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... e steps for filing the appeal. Thus, Ld. AR has submitted that it is bona fide mistake on the part of the assessee for not taking steps within the period of limitation for filing the appeal. He has contended that the assessee has not got any benefit or achieved any purpose due to the delay in filing the present appeal. Hence Ld. AR has submitted that in the interest of justice the delay in filing the appeal may be condoned and appeal of the assessee be heard and adjudicated on merits. 3. On the other hand, ld. DR has raised no serious objection against the contention of delay and left the matter to the wisdom of the bench. 4. Having considered rival submissions and careful perusal of the contents of the application for condonation of delay as well as affidavit filed by the assessee we find that the assessee has explained the cause of delay as inadvertence and bonafide mistake for not filing the appeal in time and therefore, the conduct of the assessee is found to be honest in explaining the cause of delay. Further this is an appeal against rejection of application for registration u/s 12AB of the Act and there is no possibility of taking any advantage or achieving any hidden purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount for the assessment year 2019-20 to 2021-22. The CIT(E) also got spot verification of the assessee wherein no adverse or incriminating fact was found or gathered but the activities carried on by the assessee society were acknowledged. The CIT(E) has committed an error and concluded that most of the activities carried out by the assessee society are commercial in nature because of the reason that the assessee is taking some charges against the services. He has pointed out that the assessee has charged very nominal amounts in order to recover to its cost and the same is evident from the income and expenditure account for A.Y.2019-20 to 2021-22. He has referred to the details at page no.117 to 120 of the paper book and submitted that it shows the net surplus for these three years is very normal and then less than the 15% exemption provided u/s 11 of the Act for utilization of the income for charitable purpose whereas the assessee has even applied this surplus amount for achieving the objects of the assessee and therefore, it is not a profit but the surplus generated was again applied for charitable activities and objects of the assessee society. Ld. AR has thus submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 in case of CRISP Society vs. DCIT in ITA No.297 & 298/Ind/2020 wherein the Tribunal has held that the trust or education institute is running with a nominal fee to cover cost on account of its activities that cannot be held to be a commercial activity. Ld. AR has submitted that the CIT(E) while rejected application of the assessee as relied upon judgment of Hon'ble Supreme Court in case of M/s New Noble Education Society vs. CCIT 143 taxmann.com 276 however the said judgment is on the scope of inquiry and examination by the CIT(E) and not on the point of trade and commerce activities. Thus, Ld. AR has submitted that the impugned order of the CIT(E) is not sustainable in law and liable to set aside and the assessee be granted registration u/s 12AB of the Act. 6. On the other hand, Ld. DR has submitted that the CIT(E) has conducted physical verification report to verify the objects and activities of the assessee. In report of the spot verification of Ld. CIT(E) vide letter dated 17.10.2022 has pointed out that assessee is engaged in the consultancy services, sale of training material, various training seminars & workshops on payment basis, running computer classes and women stitch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e poor, needy persons and particularly adult education to women and children. The next object of the assessee is to work in the field of animal care and welfare, providing medical facilities to mainly stray animals. And then work in the field of science including medical, engineering and environmental research, education and training etc. Therefore, providing medical relied and education as well as help to the poor are in the category of charitable activities falling in the first part/limb of section 2(15) and not in the last limb being advancement of any other object of General Public Utility. The spot verification got done by the CIT(E) has confirmed the activities carried out by the assessee and it is not the finding of the CIT(E) that these activities are not carried out for achieving objects of the assessee. It is settle proposition that at the time of considering application for registration u/s 12AB the Commissioner has to satisfy himself from the record/documents as well as information provided by the applicant about the genuineness of the activities of trust or institution as well as about the objects of the trust or institutions being charitable in nature. The CIT(E) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation with some illustrations. The example of Gandhi Peace Foundation disseminating Mahatma Gandhi's philosophy (in Surat Art Silk) through museums and exhibitions and publishing his works, for nominal cost, ipso facto is not business. Likewise, providing access to low-cost hostels to weaker segments of society, where the fee or charges recovered cover the costs (including administrative expenditure) plus nominal mark up; or renting marriage halls for low amounts, again with a fee meant to cover costs; or blood bank services, again with fee to cover costs, are not activities in the nature of business. Yet, when the entity concerned charges substantial amounts- over and above the cost it incurs for doing the same work, or work which is part of its object (i.e., publishing an expensive coffee table book on Gandhi, or in the case of the marriage hall, charging significant amounts from those who can afford to pay, by providing extra services, far above the cost-plus nominal markup) such activities are in the nature of trade, commerce, business or service in relation to them. In such case, the receipts from such latter kind of activities where higher amounts are charged, should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted harmoniously with Section 2(15), with which there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achieving the GPU object, and the income, profit or surplus or gains must, therefore, be incidental. The requirement in Section 11(4A) of maintaining separate books of account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached. Similarly, the insertion of Section 13(8), seventeenth proviso to Section 10(23C) and third proviso to Section 143(3) (all w.r.e.f. 01.04.2009), reaffirm this interpretation and bring uniformity across the statutory provisions." 7.4 Thus, if the services or goods provided on cost or nominal mark-up basis the same would normally be excluded from the mischief of trade, commerce, or business and therefore, this itself cannot be a ground to treat the activities of the assessee in the nature of trade, commerce or business when the objects of the assessee are charitable in nature and these activities are carried out for achieving objects of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year," In view of the above proviso it is clear that the commercial receipts of the assessee are far more than 20% of total receipts during the years and the assessee does not come under the purview of section 2(15) of the Act for charitable purposes. Recently THE SUPREME COURT OF INDIA in CIVIL APPEAL NO. 3795 OF 2014 M/S NEW NOBLE EDUCATIONAL SOCIETY APPELLANT(S) VERSUS THE CHIEF COMMISSIONER OF INCOME TAX 1 AND ANR. RESPONDENT(S), held that- "While considering applications for approval, the Commissioner or the concerned authority as the case may be is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, trust or institution genuinely seeks to achieve the objects which it professes. The Commissioner or other authority is not in any manner constrained from examining accounts and other related d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding consultancy services to various government, semi-government and private organizations. Apart from the consultancy services, the assessee has also carried out job work for different institutions which is reflected from the income and expenditure account itself. The society has entered into agreements/contracts with institutions such as Rajiv Gandhi Technical University for providing them different services related to admission/registration of students, issuance of their ID Cards etc. The assessee society is charging a fix sum per student/percentage of fees for its services. It is found that the several activities carried out by the assessee society that it is not at all established for imparting education. The activities of the society itself show in no uncertain terms that the same are not in the nature of imparting education. The various activities discussed above such as design and development of website or MIS software application, different other consultancy services, job work and the services charging registration and annual subscription fees can never be termed as education u/s 2(15) of the Act. The learned AO did not agree with the activities which can fall under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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