TaxTMI 
TaxTMI 
2013 (10) TMI 1126
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....uld be confined only to the Members of the Society. III. The Society is charging fees for rendering services in relation to trade, commerce or business for a cess or fee which is clearly covered by the proviso to Section 2(15) of the Act. Aggrieved against the order of the Director of Income Tax (Exemptions), Chennai, assessee has come in appeal before the Tribunal. 3. Shri Piyush Kaushik, Advocate appearing on behalf of the assessee submitted that the assessee is a society registered under the provisions of Tamil Nadu Societies Registration Act, 1975. The Society has been formed to undertake, encourage, facilitate and promote relationship between Indian and Japan in general without any element of profit. The ld. Counsel further submitted that the object clause of the assessee-society provide for a complete restriction on making of profits and transfer of any profit or property to any Member whether directly or indirectly in any manner. The earnings from whatever sources are applied towards promotion of objects of the Society. The ld. Counsel for the assessee contended that it is evident from the Memorandum of Association of the Society that the Society shall functi....
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....e ld. AR placed on record the copies of the orders of the Delhi Bench of the Tribunal, the orders of the Hon'ble Delhi High Court and the Hon'ble Supreme Court of India. 4. On the other hand, Shri Rajib Kumar Hota, appearing on behalf of the Revenue strongly supported the order of the Director of Income Tax (Exemptions) and submitted that the aims and objects of the society do not specify as to how the alleged beneficial activities of the society are being used for charitable purposes. The beneficiaries of the Society are outside India as well. The ld. DR further contended that the objects of the society are hit by the amendment brought in by the Finance Act of 2008 in Section 2(15) effective from 01-04-2009. The ld. DR further contended that a perusal of the aims and objects of society would show that the society is working more towards mutual benefit and not for any charitable purposes. The benefit of the activities of the society, if any, are available only to small selected group of persons. In order to support his contentions, the ld. DR relied on the judgment of the Hon'ble Supreme Court of India in the cases of H.E.H. Nizam's Religions Endowment Trust reported as 59 ITR 582....
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.... on their income either under sub-section (23C) of Section 10 or 11 of the Act on the ground that they are charitable institutions. Such institutions were taking advantage of fourth limb of the definition of charitable purposes i.e., "advancement of an object of general public utility". The claims were made under the guise of advancement of an object of general public utility in respect of an activity carried out on commercial lines which was contrary to the intention of the provision. The CBDT Circular No. 11 of 2008 dated 19-12-2008 explains the intention of the legislature to introduce the proviso to Section 2(15) with a view to limiting the scope of the phrase 'advancement' of any other object of 'general public utility'. 6. A perusal of Board Circular No. 11 of 2008 (supra) would clarify the implications arising from the amendment. The relevant extract of the circular is re-produced herein below: "1. XXXXXX 2. XXXXXX 3. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility' i.e. the fourth limb of the definition of 'charitable purpose' contai....
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.... be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business". A conjoint reading of the circular and the objects of the assessee- society would show that the aims and objects of the society are not hit by the newly introduced proviso to sub-section (15) of Section 2 of the Act. The assessee is charging admission fee and monthly subscription fee from its Members. Apart from this, the assessee is also accepting grants and special contributions, admission/registration fee for seminars/conferences conducted by the Society. The assessee is not charging any fee for the services rendered by it. The fees charged by way of admission fee, monthly subscription, admission and registration fee etc., are utilized only for the promotion of the aims and objects of the Society. Clause-1 of the aims and objects put complete embargo on earning profit from any of the activities of the Society. Profit is the essence of trade, commerce or business. When services are rendered without profit motive, the element of trade, commerce or business disappears from such activities. Therefore, it can b....