TaxTMI 
TaxTMI 
2014 (3) TMI 767
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....ansport Services (in short "EMTS") in the State of Uttar Pradesh. One of the conditions of the tender was that the selected bidder should form a Special Purpose Vehicle (in short "SPV") to create EMTS in U.P. According to that, GVKEMRI floated an SPV, GVKEMRI Pvt. Ltd. which was incorporated as Private Limited Company on 11.12.2011 and entered into Tripartite Agreement with GVKEMRI (UP) Pvt. Ltd. and Government of Uttar Pradesh on December 21, 2011. Since GVKEMRI is having 51% share in the SPV, it was decided to convert the Private Limited Company to a non-profit one under section 25 of the Companies Act, 1956 and accordingly made an application to the Registrar of Companies on 1st December, 2012 and fresh registration was accorded to the company on 27.12.2012 according to which, name of the company has been changed to GVKEMRI (UP). 3. Assessee made an application under section 12AA for Registration which the learned DIT(E) rejected holding that assessee is a contract service provider and thus is a business entity and not a charitable organization. In analyzing the operations of the assessee, the learned DIT(E) considered some of the terms of the agreement and came to the conclusi....
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....re to respond to the telephone line within 20 seconds of the call and this require lot of coordination, by having centre process center etc. The amounts provided by the Government are only for basic cause and assessee is rendering services to the public free of cost as per the terms of the agreement. It was further submitted that the GVKEMRI itself handles on an average more than 20,000 emergency cases per day through '108' emergency ambulance service. This service is rendered across 14 states and 2 union territories. In the case of U.P. even though the GVKEMRI was a successful bidder, as per the terms of the agreement, it has to formulate a SPV specifically for the above purpose. Thus, there is no reason to hold that assessee is a contract service provider. Further as per the provisions of section 2(15) of IT Act even if assessee is incidentally in commercial activity, it is still considered as 'charitable activity' since assessee is involved in medical relief. Ld. Counsel relied on the decision of the Coordinate Bench in the case of Social Pedia Knowledge Foundation vs DIT(Exemptions) 141 ITD 398 also for the proposition that since assessee was registered under section 25 of the ....
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....ome Tax Act which is reproduced herein below : (15) "Charitable Purpose" includes relief of the poor, education, medical relief, (preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest) and the advancement of any other object of general public utility." Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.) Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is (ten lakh rupees) or less in the previous year;)" 7. A bare perusal of the definition of the term 'charitable purpose' shows that 'medical relief' is a charitable activity. Section 2(15) was amended vide Finance Act, 2008 by expanding main definition and inserting....
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....ably trained to handle any medical emergencies. Emergency Response Centre should also employ physician who should be trained to handle situations of emergency. The 'basic life support ambulance' was defined to mean an ambulance which carries basic and essential equipment and supplies for optimal emergency care at the scene and the ability to offer medical aid such as first aid, immobilization, oxygen therapy and other equipments as described in greater detail in the schedule-6. This indicates that the assessee was incorporated for charitable purpose of providing medical relief. Further assessee has been, even though incorporated as a private limited company originally, has converted itself into a non profit company and has been incorporated under section 25 of the Companies Act, 1956. There is no doubt with reference to the objects which are charitable in nature. Therefore, it has to be considered as a non-profit earning organization. 9. In the case relied by assessee of Social Pedia Knowledge Foundation (supra), the Coordinate Bench at Chennai has considered similar issue and held "A perusal of the object clause of the company shows that it has been incorporated with the aim of p....