AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 267
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....nd were not commercial activities, carried out for advancing its object. (ii) The above activities were not carried out for advancing the object of the trust for general public utility but were in the course of running the gaushalas and therefore not falling within the proviso, to Sec. 2(15) and the amendment therefore didn't apply to the appellant. (iii) The activities-are object of the trust itself in which the proviso to sec. 2(15) doesn't apply as there is a difference between the object itself and the advancement of other object involving the carrying on commercial activities. The proviso doesn't apply to the receipts from sale of milk, dividend and interest. (iv) The aforesaid activities are not carried out with a view to make any profit but for carrying out the objects of the trust. III. The DIT(E) erred in cancelling the registration u/s. 12AA(3) from Asst Year 2009-10 although registration under section 12A was withdrawn in Asst year 2011-12. The section doesn't authorize the DIT (E) from withdrawing / cancelling the registration in Asst.year 2011-1....
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....se stating that the assessee trust is engaged in activities which do not involve in the carrying on of any activity in the nature of trade, commerce or business or rendering of any services in relation to trade, commerce and business. It was explained that the trust is 130 years old and carries on Panjrapole activities consistently since its inception. It was strongly submitted that the main object of the assessee-trust is that of running Panjrapole activity which means cow breeding and protection of cows and oxen which do not involve in any trade, commerce or business. After considering the submissions of the assessee-trust, in the light of the amended provisions of Sec. 2(15) the DIT (Exem) was of the firm belief that in the assessee's case there are clear-cut earnings by it which is shown as income by way of sale of milk and interest and dividend which are clearly in far excess of Rs. 10 lakh as mentioned in proviso to Sec. 2(15) of the Act. The DIT (Exem) was of the opinion that the assessee is doing regular activities which are in the nature of business by way of sale of milk and as such directly hit by the proviso to Sec. 2(15) of the Act. The DIT (Exem.) finally conclude....
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.... erred in applying the proviso to Sec. 2(15) of the Act. To substantiate his submission, the ld. Counsel relied upon the decision of Delhi High Court in the case of ICAI 347 ITR 99 (Del) comparing the activity of selling milk at a price with the activities of the ICAI. The ld. Counsel submitted that in the case of the Institute of Chartered Accountants of India, the Hon'ble Delhi High Court held that a very narrow view had been taken that the institute runs coaching classes and this amounted to business. There was a clear distinction between coaching classes conducted by profit making coaching institutions and the courses and classes which were held by the institute. The Hon'ble Court held that the order denying exemption was not valid. 5.4 The ld. Counsel further relied upon the decision of the Tribunal Ahmedabad Bench in the case of Sabarmati Ashram Gaushala Trust v ADIT (Exem) 25 ITR 701. The ld. Counsel pointed out that this decision of the Tribunal squarely apply on the facts of the case as the impugned trust is also running Gaushala. 5.5 It was pointed out that the main object of Sabarmati Ashram Gaushala Trust (supra) are identical to the object of the impugned tru....
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....e High Court of Jammu and Kashmir in the case of Jammu Development Authority in [IT Appeal No. 164 of 2012]. 6.2 The ld. DR continued to argue that the assessee-Trust is selling milk at market price and very less part is distributed free of charge therefore the intention of the Trust is very clear. It is carrying out a commercial activity in the form of sale of milk and therefore the DIT(Exem.) has very rightly held that the assessee-trust is not for charitable purpose and once it-is held that the trust is not for charitable purpose it becomes a non-genuine trust which is one of the preconditions of Sec. 12AA(3) for cancelling the registration of such trust as the activities of the impugned trust once found to be non-genuine, the DIT(Exem.) was well within his powers of cancelling the registration. 7. We have considered the rival submissions and carefully perused the order of the DIT (Exem.) and also the decisions relied upon by the rival parties and the material evidences brought on record. 8. The undisputed fact emerging from the records are that the Trust is 130 years old was granted certificate of registration of societies on 5.5.1943. The Trust was also granted Certificate ....
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.... - "Charitable purpose" includes relief of the poor, education, medical relief and the advancement of any other object of general public utility not involving the carrying on of any activity of profit. This provision remained unchanged till its amendment by the Finance Act, 1983 and with effect from 1.4.1984 "not involving the carrying on of any activity of profit" was omitted. The Section remained unchanged till it was amended by the Finance Act, 2008 w.e.f 1.4.2009. This means that till the amendment brought by the Finance Act, 2008 the Revenue was convinced that the assessee-trust was not carrying out any commercial activity in the garb of charitable purpose. The activities of the trust were genuine and were for the charitable purpose.' 14. Now let us consider the provisions of Sec. 2(15) as they stand now. '"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 publ....
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....whole mankind. An object beneficial to a section of the public is an object of general public utility. In the case of CIT v. Swastik Textile Trading Co. (P.) Ltd. [1978] 113 ITR 852, the Hon'ble Gujarat High Court has held that establishing and maintaining Gaushalas and Panjrapole constitutes charitable purpose.' 16. The Hon'ble Finance Minister while presenting the Finance Act 2008 in his budget speech stated as follows: '"Charitable purpose includes relief of the poor, education, medical relief and any other objects of general public utility. These activities are tax exempt as they should be. However, some entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes have sought to claim that their purpose would also fall under "charitable purpose". Obviously, this was not the intention of the Parliament and hence, I propose to amend the law to exclude the aforesaid cases. Genuine charitable organizations will not in any way be affected.' 17. Thus the intention of the Hon'ble Finance Minister was only to exclude from exemption, entities carrying ....
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.... on record show that only 25% of the cows yield milk for the support of the remaining 75% cows. It cannot be denied that milk need to be procured from cows otherwise it will be detrimental/fatal if the milk is not procured regularly from time to time. The milk so procured is distributed free of charge to children, hospitals, schools, Balmandir, Mahila Anathashram etc. Thereafter, the remaining milk is distributed to general public at large at a very nominal rate. 22. This cannot be an activity by itself amounting to carrying on of any business, trade or commerce. The impugned trust is engaged in multi series activities of diverse nature but the primary and the dominant activity is Panjrapole. This predominant object of Panjrapole activity has been held to be a charitable purpose by the Hon'ble Gujarat High Court in the case of Swastik Trading Co. Ltd. (supra). The impugned trust would not loose its character of charitable purpose merely because some profits arises from the activity of the sale of milk. Such activity cannot be carried on in such a manner that it does not result in any profit. It be indeed be difficult for persons in-charge of a trust or institution to carry on ....
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....en level and clear it, cut into plots and sell at much higher prices. On this, the Tribunal has held that the activities of the assessee are aimed at earning profits. Similar were the facts before the Hon'ble High Court of Jammu and Kashmir in the case of Jammu Development Authority (supra). 27. The DR has also relied upon the decision of the Tribunal Panaji Bench in the case of Belgaum Urban Development Authority (supra). However, we find that in that case the Tribunal was referring to the registration certificate issued u/s. 12A to Belgaum Urban Development Authority (supra) by the DIT (Exem) Bangalore and while referring to the said certificate, the Tribunal observed that while granting registration, the CIT had no chance to examine the newly inserted proviso to Sec. 2(15) of the Act and the Tribunal was not aware what happened subsequently in that case after the coming into force the proviso to Sec. 2(15) and whether any rectification order has been passed by the department or not as there being mistake of law after coming into force the first proviso to Sec. 2915) of the Act. The facts of the case in hand are not even remotely connected with the facts of the case relied u....
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....holly for religious purposes and therefore the benefit of Section 11 of the Act ought to have been granted to the Appellant. 5. On the facts and in the circumstances of the case and without prejudice to grounds 1 to 4 above the ADIT(E) 11(2) and the CIT(A) ought to have held that the income of the Trust was exempt under Section 10(23C) of the Act. 6. On the facts and in the circumstances of the case and without prejudice to grounds I to 5 above the ADIT(E) 11(2) and the CIT(A) erred in holding that any part of the expenditure ought to be disallowed in computing the income of the Appellant." 32. During the course of the scrutiny assessment proceedings, the AO noticed that as per the income and expenditure account activities of the Trust are totally different from the objects of the trust. The AO observed that the assessee has shown sale of milk at Rs. 1,57,53,960/- interest and dividend income at Rs. 58,34,623/-. According to the AO, the assessee was doing the regular activities which are in the nature of business by way of sale of milk and the assessee trust is directly hit by the proviso to Sec 2(15) of the Act. The AO went on t....