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TMI BlogCharitable purposeX X X X Extracts X X X X X X X X Extracts X X X X ..... r institution undertaking such activity or activities, of that previous year; In the Law Lexicon, the Encyclopedic Law Dictionary by P. Ramanatha Aiyer, the discussion has been made with the help of certain decisions and dictionaries, with regard to charitable, charitable object, charitable purpose, charity and charitable trust of public nature, relevant parts of which are reproduced hereunder: Charitable . Having the character or purpose of a charity. The word charitable , in a legal sense, includes every gift for a general public use, to be applied consistent with existing laws , for benefit of an indefinite number of persons, and designed to benefit them from an educational, religious, moral, physical or social standpoint. This term is synonymous with beneficent , benevolent , and eleemosynary . (Black) Connected with an object of charity, of the nature of charity [S.49, Indian Evidence Act and S.92(1), C.P.C.] Charitable purpose . In Charitable Endowments Act Charitable purpose includes relief of the poor, education, medical relief, and advancement of any other object of general public utility, but does not include a purpose which related exclusively to religious teaching or wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the litigating public, a spread legal literacy, promote law reforms and provide legal assistance to the poor, such purpose is the advancement of the object of general public utility and it will be a charitable purpose. C.I.T. Bombay v. Bar Council of Maharashtra, AIR 1981 SC 1462, 1467. [Income Tax Act (43 of 1961), Ss. 2(15) and 11.] The Black s Law Dictionary, Ninth Edition defines charitable , charitable purpose , and charitable trust thus: Charitable - Dedicated to a general public purpose, usu. for the benefit of needy people who cannot pay for benefits received. Charitable purpose The purpose for which an organization must be formed so that it qualifies as a charitable organization under the Internal Revenue Code Also termed charitable use. Charitable trust A trust created to benefit a specific charity, specified charities, or the general public rather than a private individual or entity. Charitable trusts are often eligible for favorable tax treatment. If the trust s terms do not specify a charity or a particular charitable purpose, a court may select a charity. Also termed public trust; charitable use. In Webster s New World Dictionary , the expressions of charitable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merce, business or any service in relation to such activities for any consideration (including a statutory fee etc.). This is emphasized in the negative language employed by the main part of Section 2(15). Therefore, the idea of a predominant object among several other objects, is discarded. The prohibition is relieved to a limited extent, by the proviso which carves out the condition by which otherwise prohibited activities can be engaged in by GPU charities. The conditions are: (a) That such activities in the nature of trade, commerce, business or service (in relation to trade, commerce or business for consideration) should be in the course of actual carrying on of the GPU object, and (b) The quantum of receipts from such activities should be exceed 20% of the total receipts. (c) Both parts of the proviso: (i) and (ii) (to Section 2 (15)) have to be read conjunctively-given the conscious use of or connecting the two of them. This means that if a charitable trust carries on any activity in the nature of business, trade or commerce, in the actual course of fulfilling its objectives, the income from such business, should not exceed the limit defined in sub-clause (ii) to the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, are prima facie not business or commercial receipts. However, this is subject to the caveat that if the assessing authorities discern that certain kinds of activities carried out by such regulatory body involved charging of fees that are significantly higher than the cost incurred (with a nominal mark-up) or providing other facilities or services such as admission forms, coaching classes, registration processing fees, etc., at markedly higher prices, those would constitute commercial or business receipts. In that event, the overall quantitative limit prescribed in the proviso to Section 2(15) (as amended from time to time) has to be complied with, if the regulatory body is to be considered as one with charitable purpose eligible for exemption under the IT Act. C.2. Like statutory authorities which regulate professions, statutory bodies which certify products (such as seeds) based on standards for qualification, etc. will also be treated similarly. D. Trade promotion bodies Bodies involved in trade promotion (such as AEPC), or set up with the objects of purely advocating for, coordinating and assisting trading organisations, can be said to be involved in advancement of objects o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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