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TMI Blog2024 (11) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... if some profits are generated, it cannot be granted exemption provided the quantitative limit of 20% under 2nd proviso to Section 2(15) of the Act for the receipts from such profits is not exceeded? The prohibition against carrying on business or service relating to business is not attracted - if the quantum of such profits does not exceed 20% of its overall receipts. These facts and aspect of the case has not been adjudicated upon either by the Ld. AO or by the Ld. CIT(A). Hence, these facts need to be examined by the Ld. AO, therefore we agree with the arguments advanced on behalf of the revenue by the Ld. DR that matter needs to be restored to the Ld. AO. For the above discussions and the submissions made on behalf of parties, the impugned order is accordingly set aside and matter is restored to the file of the Ld. AO for deciding afresh keeping in mind the ratio of the judgment Ahmedabad Urban Development Authority (supra) as discussed. Appeal filed by the revenue is partly allowed for statistical purposes. - Shri. Prashant Maharishi, Accountant Member And Shri. Raj Kumar Chauhan, Judicial Member For the Assessee : Shri. Dilip J. Thakkar For the Department : Shri. Ashok Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para no. 3.1 of the impugned order. 4. The revenue being not satisfied with the order of the Ld. CIT(A) and has filed the appeal for the assessment years mentioned above and has raised following grounds: 1. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) is right in upholding the decision of the Hon ble ITAT in assessee s own case for A.Y. 2010-11 that the assessee is involved in the charitable activity and primary object of the assessee is education without appreciating the fact that the majority of the income of the assessee is coming from letting out of the property held by it and interest income and thus the object of the trust falls under the category of advancement of any other object of general public utility and thus shall attract the provisions of the proviso to section 2(15) on income from the activities such as exhibitions of commercial entities, professional artists, space for corporate meetings and functions etc. which clearly are activities in the nature of commerce or business and therefore such income is not exempt in view of section 13(8) of the I.T Act, 1961? 2. Whether on the facts and circumstances of the case and in law the Ld.CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see advancing general public utility (as is the case of the assessee in this case) cannot engage itself in trade, commerce or business for providing service in relation therein for any consideration. It is further held that 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 the activities of trade, commerce or business are connected to the achievement of its objects of general public utility; and the receipts do not exceed the quantified limit. The Ld. DR has relied the para no. 253 of this judgment wherein the Hon'ble Apex Court has held as under: 253. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of charitable purpose (w.e.f. 01.04.2009), as well as the later amendments, and other related provisions of the IT Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the conclusions arrived at by way of this judgment, neither precludes any of the assessees (whether statutory, or non-statutory) advancing objects of general public utility, from claiming exemption, nor the taxing authorities from denying exemption, in the future, if the receipts of the relevant year exceed the quantitative limit. The assessing authorities must on a yearly basis, scrutinize the record to discern whether the nature of the assessee s activities amount to trade, commerce or business based on its receipts and income (i.e., whether the amounts charged are on cost basis, or significantly higher). If it is found that they are in the nature of trade, commerce or business , then it must be examined whether the quantified limit (as amended from time to time) in proviso to Section 2(15), has been breached, thus disentitling them to exemption. 7. While relying the above judgment, the Ld. DR submitted that the matter needs to be restored to the file of the Ld. AO after setting aside the impugned order and it is the Ld. AO who may decide it afresh on the basis of the observation of the Hon'ble Supreme Court as extracted above. 8. The Ld. AR on the other hand submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itative limit (of not exceeding 20%) under second proviso to Section 2(15) for receipts from such profits, is adhered to. 172. Yet another manner of looking at the definition together with Sections 10(23) and 11 is that for achieving a general public utility object, if the charity involves itself in activities, that entail charging amounts only at cost or marginal mark up over cost, and also derive some profit, the prohibition against carrying on business or service relating to business is not attracted - if the quantum of such profits do not exceed 20% of its overall receipts. 12. It is thus clear from the above observation of the Hon'ble Apex Court that while actually carrying out the objectives of the general public utility, if some profits are generated, it cannot be granted exemption provided the quantitative limit of 20% under 2nd proviso to Section 2(15) of the Act for the receipts from such profits is not exceeded? 13. Further, the prohibition against carrying on business or service relating to business is not attracted - if the quantum of such profits does not exceed 20% of its overall receipts. These facts and aspect of the case has not been adjudicated upon either by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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