TaxTMI 
TaxTMI 
2013 (1) TMI 63
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....duction of quality seed in accordance with the Seed Act. (b) to recognize varieties (and kinds where improved varieties are not available) eligible for seed certification and publish annually lists indicating the names of such varieties and kinds. (c) to maintain a list of sources of breeder and foundation seeds approved by the Central Seed Certification Board in the case of variety grown in more than one State and by the State Seed Certification Board in the case of varieties of local importance. (d) to verify upon receipt of an application for certification that the variety is eligible for certification that the application has been submitted in accordance with the procedure prescribed by the State Seed Certification Governing Board and that the source of seed used for planting is from approved sources. (e) to provide for the inspection of a seed fields, seed processing plants and seed lots in accordance with the procedures outlined by the Central Seed Certification Board. (f) to ensure that the seeds certified in the State conform to the Standards prescribed by the Central Seed Certification Board. (g) to grant certificates, ....
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....f any other objects of general public utility. (iii) that the words or phrase 'charitable purpose' or 'public utility' do not find place in the objects of the agency. (iv) that the agency is not carrying out its activities for any charitable purposes which is the basic requirement to be satisfied in terms of section 10 (23C) (iv) of the Act. (v) that the agency is not registered under the provisions of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987." 5. Challenging the said order, the petitioner has filed the present writ petition. 6. The petitioner contends that that it has been filing income tax returns claiming exemption under the provisions of the Act as it is existing solely for charitable purposes; that such approval/exemption was granted under Section 10 (23C) (iv) for the assessment years 1984-85 to 1988-89, 1989-90 to 1991-92, 1992-93 to 1994-95 and 1995-96 to 1997-98; that the petitioner had suffered losses for the period 1998-99 to 2004-05 and therefore there was no need for claiming exemption for the said period and it did not file any application seeking approval/exemption for that period. It con....
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....re for a charitable purpose or not by carefully analyzing the financial accounts for the financial year 2009-10; that the activities of the petitioner do not indicate involvement of any charitable activity or advancement of any other objects of general public utility; that the requirement of registration under Section 43 of the AP Charitable and Hindu Religious Institutions and Endowments Act, 1987 was held to be relevant by the Andhra Pradesh High Court in its order dated 11-11-2010 in W.P.No.21248 of 2010 and batch M/s. New Noble Education Society v. The Chief Commissioner of Income Tax-I wherein the High Court had held that the term "education" is covered by the definition of "charitable purpose" under Section 2 (15) of the I.T. Act and also covered under the AP Charitable and Hindu Religious Institutions and Endowments Act, 1987, that the Chief Commissioner of Income Tax was justified in not granting approval under Section 10 (23C) (iv) of the Act on the ground that the petitioner institutions therein were not registered under the AP Charitable and Hindu Religious Institutions and Endowments Act, 1987. He also contended that the activities of the petitioner indicate that seed g....
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....-10(1)96-SD.IV issued by Government of India, Ministry of Agriculture (Dept. of Agriculture & Co-operation), New Delhi. Along with Minutes of the 13th Meeting of SCCB. (xiii) Lr.No.18-10(i)/96-SD.IV issued by Government of India, Ministry of Agriculture (Dept. of Agriculture & Co-operation), New Delhi. (xiv) Lr.No.18-9,'96-SD.IV issued by Government of India, Ministry of Agriculture (Dept. of Agriculture & Co-operation), New Delhi. (xv) Statement showing the Revenue & Expenditure for the Financial year 2009-10 along with Crop-wise Revenues calculated for the Crop year 2009-10 separately. 11. He also relied upon the judgment in Commissioner of Income Tax v. Agricultural Market Committee [2011] 336 ITR 641 (AP), Director of Income Tax (Exemptions) v. Institute of Chartered Accountants of India [2012] 347 ITR 86 and Institution of Chartered Accountant of India v. The Director General of Income Tax (Exemptions) [2012] 347 ITR 99. 12. Sri J.V. Prasad, learned Standing Counsel for the Income Tax Department, supported the order of the 1st respondent and relied upon the decisions in State of UP v. Mahindra and Mahindra [2011] (42) VST 365 (SC), Info Parks, Kerala v. Deputy C....
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....ade, commerce or business by its clients/agents in the certified seeds and therefore the petitioner was rightly denied the benefit of the exemption. 13. We have noted the contentions of both parties. 14. Before dealing with the respective contentions, we propose to take note of Section 10 (23C) (iv) of the Act and Section 2 (15) of the Act. "Section 10. Incomes not included in total income: In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- ........... (23C) any income received by any person on behalf of - ** ** ** (iv) any other fund or institution established for charitable purposes which may be approved by the prescribed authority, having regard to the objects of the fund or institution and its importance through out India or through out any State or States; or ..........." 15. Section 2 (15) as amended by Finance (Nos.2) Act, 2009 is as follows: "(15) "charitable purpose" ....
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....that the petitioner shall carry on the functions of the certification agency under the Seeds Act, 1966 in the Andhra Pradesh State with effect from 01-06-1977. The objects of the petitioner have already been set out above. The petitioner thus certifies the Seeds which meet the minimum seeds certification standards as per Indian Minimum Seed Certification Standards, 1988. Seed growers enter into contract with a society/agent, who approaches the petitioner for certification of the seeds and after securing certification, they sell the certified seeds to the farmers at a market price determined by them. The petitioner collects a fee for providing certification as the process of certification involves technical and scientific evaluation of the seeds although the fee collected by it would be enough to enable it to sustain its activities and may not result in much profit. The term "advancement of any other object of general public utility" used in Section 2 (15) of the Act includes all objects to promote the welfare of the public particularly when the object is to promote or protect the interest of a particular trade or industry. The activity of the petitioner which facilitates sale of ce....
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....es "in relation to trade, commerce or business" by facilitating trade in agricultural commodities by farmers/growers of agricultural produce or livestock, we are of the opinion that the activity of agricultural market committee may not come within the ambit of "charitable purpose". 19. The counsel for the petitioner submits that the petitioner is itself not engaging in any activity which is in the nature of trade, commerce or business and therefore it has to be held to be an agency whose activities are for "charitable purpose" under Section 2 (15) of the Act and therefore entitled to the benefit under Section 10 (23C) (iv) of the Act. The contention of the petitioner's counsel if accepted would mean that the words "any activity of rendering any service in relation to any trade, commerce or business" in the first proviso to Section 2 (15) of the Act have to be ignored. This is not permissible because the High Court cannot substitute or ignore the wording in a provision in a statute. In Aswini Kumar Bose v. Arabinda Ghose AIR 1952 SC 368, the Supreme Court held that it is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage, if the....
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....f, the said clause (second limb of the stipulation under clause (b) is rather otiose. Since the activity of the assessee involving any trade commerce or business, is already excluded from the charitable purpose by virtue of the first limb (clause (a)) itself, there is no necessity to stipulate further, by way of clasue (b), adding the words "or any activity of rendering any service in relation to any trade, commence or business. As it stands so, giving a purposive interpretation to the statute, it may have to be read and understood that the second limb of exclusion under clause (b) in relation to the service rendered by the assessee, the terms "any trade, commerce or business refer to the trade, commerce or business pursued by the recipient to whom the service is rendered (as there may be a situation involving letting out the premises for purposes other than involving trade, commerce or business as well)." 22. We endorse the said view of the Kerala High Court in the above case and we respectfully follow the same. 23. In the case of Institute of Chartered Accountants (3 supra), the Delhi High Court had taken the view that the activity of conducting coaching classes by the s....