Charitable purpose under section 2(15) fails where citizen services are run on a commercial, fee-based model.

An assessee-society seeking registration under section 12AA was held not to qualify as charitable because its citizen-service activities involved charging service fees and user charges beyond statutory fees. Applying the amended section 2(15), the object of general public utility loses charitable character where the activity is in the nature of trade, commerce or business, or consists of services connected with such activity for consideration. On the facts, the society's accounts and expenditure pattern showed commercial operations rather than charitable public utility work, so the refusal of registration was upheld.

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Issues: Whether the assessee-society was entitled to registration under section 12AA of the Income-tax Act, 1961 despite its activities of providing citizen services for charges, having regard to the amended definition of charitable purpose under section 2(15) of the Income-tax Act, 1961.

Analysis: The society's objects and accounts showed that it was charging service fees and user charges for a wide range of services, over and above the statutory fees, and that its expenditure was directed to running the centres and business operations rather than charitable public utility work. In view of the amendment to section 2(15), an object of general public utility ceases to be charitable where it involves activity in the nature of trade, commerce or business, or rendering services in relation thereto for fee or consideration. On the facts, the society's activities were found to be commercial in character and not established as charitable.

Conclusion: The assessee was not entitled to registration under section 12AA, and the refusal to register was upheld.

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