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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 ..... 21 (12) TMI 1499 - ITAT INDORE] has considered this aspect of nature of the activities of the assessee rust 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. Sometime trust or the other institution does not get complete donations either from public or from the government. In that case, if those trusts or education institutes charging nominal amount of fee in order to carrying out its activities in a smoother way, this cannot be called a part of commercial activities. Therefore, respectfully following the aforesaid judgments and as assessee is imparting education and training to students and public, its activities have not been doubted by the lower authorities. Therefore, in such circumstances, benefit of Section 11 of the Act cannot be denied. We set aside the impugned order of the CIT(E) and direct the CIT(E) to grant registration u/s 12AB of the Act to the assessee. Assessee appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... he point that whenever substantial justice and technical considerations are opposed to each other, cause of substantial justice has to be preferred by taking a justice oriented approach while deciding the matter of condonation of delay. Accordingly in the facts and circumstances of the case we are satisfied that the assessee has explained a reasonable and sufficient cause for not filing the appeal within the period of limitation and hence, the delay of 93 days in filing the appeal is condoned. The assessee has raised following grounds of appeal: "1. The Ld. CIT grossly erred in issuing order rejecting application for registration under section 12AB of the Act. 2. The Ld. CIT grossly erred on facts and also in law by considering charitable activities as commercial activities and rejecting application for registration under section 12AB of the Act. 3. The Ld. CIT grossly erred on facts and also in law for not considering submission filed, law and information/documents already on record and rejecting application for registration under section 12AB of the Act." 5. Ld. AR of the assessee has submitted that the assessee society has been constituted to carry on the charitable ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of environment, objects of artistic or historic interest etc. Thus the proviso to section 2(15) is not applicable in the case of the assesse. Even otherwise the proviso can be invoked only when the activities of the assessee are in the nature of advancing general public utility and that itself would not lead to the conclusion that the assessee is engaged in any trade commerce or business or provide services in relation thereto for any consideration. 5.1 He has relied upon the judgment of Hon'ble Supreme Court in caw of ACIT(E) vs. Ahmedabad Urban Development Authority 143 taxmann 278 and submitted that the Hon'ble Supreme Court in para 253 while summarizing the conclusion has observed that in course of achieving object of general public utility, the concerned trust or society can carry out trade, business or provide services in relation thereto for consideration provided the activities of trade commerce or business are connected/actually carried out to the achievement of its objects of general public utility and the receipt of such business or commerce activity or service in relation thereto does not exceed the quantified limit as prescribed from time to time and presently 20% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial on record. The Assessee society is registered under M.P. Society Registration Act, 1973 vide dated 04.08.2003. As per Momorandum of Association of the assessee society the objects of the society are given in para 3 as under: "3.1 To work in the field of society service, adult education women & child and services for the benefit of elderly people of the society. 3.2 To work in the Field of animal care and welfare, providing medical facilities to mainly stray animals 3.3 To work in the field of education, literature, photography, and all forms of fine arts. 34 To work in the field of science including Medical, Engineering, and Environmental research, Education and Training etc. 3.5 To work in the field of environmental protection and up gradation, development and conservation of water and rain-water Harvesting and recharging works in rural and urban areas and other rural development works. 3.6 To work in the field of agro based activities and solar energy. 3.7 To run all types of awareness, IE.C. activities, to organize trainings, camps etc related to various programmes in Rural, Semi Urban and Urban areas. 3.8 To run activities for upliftment of Social ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's activities are genuine and the objects of the assessee society are charitable in nature. 7.2 The CIT(E) has rejected the application on the ground that activities of the assessee society are commercial in nature because the assessee is charging against the services provided by it. The assessee has produced the details of the revenue by way of charging against services and extract of the income and expenditure account specifically total receipts, net surplus and percentage which are as under: A.Y. Total receipts Net surplus Percentage 2019-20 6,04,925/- 38,700/- 6.40% 2020-21 7,34,898/- 66,472/- 9.05% 2021-22 10,10,225/- 1,33,300/- 13.02% Therefore, if the assessee is charging amount only to recover the cost incurred for the charitable activities and for providing the training to the poor against normal charge and the said receipts are again applied by the assessee for achieving its overall objects of providing medical relief to the poor and stray animals then this nominal charges recovered by the assessee will not lead to the conclusion that activities of the assessee society are in the nature of trade and commerce. Further when the objects of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the activities are in the nature of trade and commerce attracting the proviso to section 2(15) of the Act. The Hon'ble Supreme Court while summarising the conclusion in para 253 has again reiterated this view in sub para (A) as under: "A. General test under Section 2(15) A.1. It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration ("cess, or fee, or any other consideration"); A.2. However, in the course of achieving the object of general public utility, the concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) the activities of trade, commerce or business are connected ("actual carrying out…" inserted w.e.f. 01.04.2016) to the achievement of its objects of GPU; and (ii) the receipt from such business or commercial activity or service in relation thereto, does not exceed the quantified limit, as amended over the years (Rs. 10 lakhs w.e.f. 01.04.2009; then Rs. 25 lakhs w.e.f. 01.04.2012; and now 20% of total receipts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Verification Report alongwith Inspector's Report on requisition points. In verification report, it is mentioned that the assessee is engaged in Consultancy services, Sales of Training material, various types of workshops and seminars on payment basis, running computer classes & women stitching classes in Orbit Mall A B Road Indore. The amount received by the assessee on various heads are also clear from the audit report and copy of ledgers submitted by the assessee. The total receipts/income have been generated by the assessee out of these activities. It is also clear that most of the activities carried out by the assessee are commercial in nature which cannot be treated as charitable. Hence, the assessee is found to be engaged in commercial activities. Further, notwithstanding to the above, if the activities of the assessee are treated as incidental commercial activities to the main charitable activities, then also there is violation of proviso to Section 2(15) of the Act, which is as under; "2(15) "charitable purpose" includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wild ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the conclusion of CIT(E) that the commercial receipts for assessee are more than 20% of the total receipt is contrary to the fact that the assessee is not doing any trade or business but is providing the services for achievement of charitable objects and in that process nominal fee is charged which is also not more than 20% of the total receipts of the assessee as manifest from the details given in the forgoing part of this order. The Co-ordinate Bench of this Tribunal in case of Crisp Society vs. DCIT-Exemption (supra) has considered this aspect of nature of the activities of the assessee and decided this issue in para 3 to 5.1 as under: "3. The assessee is registered under S.12AA of the Act and assessee has claimed exemption in the return under S.11 of the Act. The assessee is a trust carrying out to develop availability of skilled manpower in the state, running of short term courses in technical field for enhancement of technical competencies of students etc. From the memorandum of association of the assessee that its aims would be as under: "a) Enhancing the technical competencies of the intended target groups i.e. polytechnic students and staff, job seeking diplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 2(15) of the Act and held that assessee is not entitled for exemption under S.11 of the Act for the year under consideration as per provision of Section 13(8) of the Act. The AO made an addition of Rs. 1,50,21,153/-. 4. Thereafter, the assessee preferred first statutory appeal before the CIT(A) who dismissed the appeal of the assessee. 5. We have gone through the relevant records and impugned order. The learned AR argued that its activities are non-commercial and wrongly denied benefit of Section 11 of the Act. The learned AR relied upon on following cases: i. DIT(E) vs. National Safety Council 305 ITR 257 (Bom), ii. Saurashtra Education Foundation vs. CIT 273 ITR 139, iii. Harnam Singh Harbans Kaur vs. Director of Income Tax (Exemption), Delhi [2012] 17 taxmann.com 103 (Delhi Tribunal), iv. CIT(A) vs. Gujarat Maritime Board: 2007 14 SCC 704, v. CIT vs. Ahmedabad Rana Caste Assn. (1982) 2 SCC 542, vi. CIT vs. Andhra Chamber of Commerce (1965) 55 ITR 722 (SC), vii. Radhasoami Satsang vs. CIT 193 ITR 321, viii. Gujarat State Co-operative Union 195 ITR 279 (1992) ix. Ecumenical Christian Centre 139 ITR 226 (1983). 5.1 In these matters, l ..... 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