TaxTMI 
TaxTMI 
2017 (2) TMI 852
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....s a charitable institution and is existing for charitable purpose within the meaning of section 2(15) of the I.T. Act. 4. That the findings of the Commissioner of Income Tax (Appeals) that the assessee is hit by the mischief of proviso of section 2(15) and as such the AO is justified to deny the exemption u/s 11(1) and accordingly confirmed the action of AO. In fact, such a finding has been reached completely relying on the CIT(A)-XXI, New Delhi order for the A Y 2009-10 in the assessee's own case, and that to without going in to the merits of the Assessee's case. Therefore, the CIT(A) has completely ignored and overlooked the assessee's submission before coming to the conclusion and also without appreciating the fact that the assessee is only engaged in providing training, arranging capacity building programmes, vocational studies, imparting education and program on removal of poverty. 5. That the learned Commissioner of Income Tax (Appeals) has failed to comprehend that there is neither any basis nor there is any material, on the basis whereof, any such finding could be arrived. 6. That the learned Commissioner of Income Tax (Appeals) has further erred in sus....
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.... 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;" 5.1 Charitable purpose as indicated above is an inclusive definition and includes relief of the poor, education, medical relief, advancement of any other object of general public utility and "preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest. As regards, the proviso inserted by Circular No. 11 of 2008 dated 19.12.2008 provides as under: "1. Section 2(15) of the Income-tax Act, 1961 ('Act') defines "charitable purpose" to include the following :- i) Relief of the poor ii) Education iii) Medical relief, and iv) The advancement of any other object of general public utility. An entity with a charitabl....
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....ritable institutions even if they incidentally carry on a commercial activity subject to the conditions mentioned above. 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' contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity." 5.2 Thus the amended provision of section 2(15) of the Act will have no application viz-a-viz the clauses other than object of general public utility. The Hon'ble Court further in the case of Indian Trade Promotion Organization v. DGIT(E) 371 ITR 333 (Del) on examination of the proviso, has held that the proviso has two parts. The first part has reference to the carrying on of any activity in the nature of trade, commerce or business. The second part has reference to any a....
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....rty rights from GS1 (Belgium) and thereafter received registration fees from third parties in India. The Hon'ble Delhi Court held on such facts as under: "22. Business activity has an important pervading element of selfinterest, though fair dealing should and can be present, whilst charity or charitable activity is anti-thesis of activity undertaken with profit motive or activity undertaken on sound or recognized business principles. Charity is driven by altruism and desire to serve others, though element of self-preservation may be present. For charity, benevolence should be omnipresent and demonstrable but it is not equivalent to self-sacrifice and abnegation. The antiquated definition of charity, which entails giving and receiving nothing in return is outdated. A mandatory feature would be; charitable activity should be devoid of selfishness or illiberal spirit. Enrichment of oneself or self-gain should be missing and the predominant purpose of the activity should be to serve and benefit others. A small contribution by way of fee that the beneficiary pays would not convert charitable activity into business, commerce or trade in the absence of contrary evidence. Quantum ....
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.... advocate and support use of Participatory Research in various developmental projects and programs in different countries of Asia and elsewhere; v. To use participatory methodologies to promote and enhance democratic governance in society; vi. To collaborate and maintain links with other networks and institutions for fulfilling objectives of PRIA; vii. To disseminate information through all media-print, oral or electronic; viii. To establish and maintain libraries, documentation and resource centers; ix. To develop and distribute learning, public education and advocacy materials in print, audio-visual and software modes and to create facilities for the acquisition, production, storage and dissemination of the same; x. To organize seminars, workshops, conferences, exchange visits, study tours etc. on all subjects of interest in the context hereof for the time being; xi. To promote continuing and liberating education of adults in particularly the under privileged and disempowered citizens of different societies; xii. To sponsor and support training programs on participatory research and its related aspects; ....
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....p of the aforesaid income is as under: a) Research and training grants - Rs. 15,91,42,039/- b) Contribution - Rs. 4,18,69,272/- c) Other income - Rs. 1,36,27,555/- 6.2 According to the learned Assessing Officer, since in the instant year, there was surplus of Rs. 1.09 crores, the same clearly shows the profit motive behind the activities carried out by the appellant society. It has been held that receipts of the appellant society are contractual in nature on account of deduction of TDS. Further, it has been also held that since the receipts from educational activities is only Rs. 20.65 lacs out of total receipts of Rs. 21.46 crores declared during the year, therefore activities of the appellant cannot be considered to be education. The learned counsel for the assessee however has assailed the above conclusion by pointing out that consistently that the revenue itself has accepted that the appellant is engaged in education. 6.3 We find that in the year 1984-85, in the case of the appellant society in ITA No. 4791/Del/86, the claim of the appellant under section 10(22) of the Act was denied and the matter travelled to the Tribunal. On appeal ....
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....ssessment year 1983-84, it has been observed that the participatory research is a new development of the last decade and was arisen out of the experience of grassroots educational efforts in the Third World Countries. It has been noted that the Participatory Research can be utilized depend upon the needs of the poor and deprived. It has been noted that it has worked on the problems of forest, land, rural development, drinking water, primary health care, women's income generating efforts, occupational and environmental health etc. The appellant has also emphasized that it work with the community organizers, adult educator, health care workers, social workers etc. in training them to use participatory research methodology in their work. The appellant produces own educational materials for use in educational programmes and for wider dissemination. 6.6 Similar view has also been expressed in the case of Praxis Institute of Participatory Practices v. DIT(E) 154 ITD 10 (Del) wherein it has been held as under: "Having gone through the activities of the assessee made available at page Nos. 101, 113, 130, 141, 151, 156 etc. of the paper book filed on behalf of the assessee about....
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....pid assessment on the vulnerability of workers to bondages/labour exploitation in Tamilnadu by organizing separate works job/consultation meetings with employer, NGOs and government etc. Also to find out specific issues of women workers such as Child Care including sexual harassment/violence etc. Page No. 12 of the annual report contains the relevant activities and photographs depicting the living and working condition of workers. 17. For Pellastakaa Laspset-Radda Banen(save the children, contract Finland), the assessee was entrusted to undertake the study on qualitative base line in eight village of southern Rajasthan for formulating an educational model for promoting and protecting the rights of children of indigenous community through a right based approach in the area of root causes of violation of rights of children, nature and impact of such violation etc. 18. We find that during the year, the assessee undertook 25 such projects, the details of which were submitted before the authorities below but the Learned CIT(Appeals) or the Assessing Officer did not determine the nature of the activities for the very purpose of the objects. The Assessing Officer was of ....
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....a project called "ROTA VIROS" . In consideration thereafter, SAS agreed to pay the assessee a lump sum amount of Rs. 50 lacs. It was termed as service fee. The Assessing Officer construed the above said agreement to be a commercial agreement. The services provided by the assessee to SAS were taken as being of commercial nature. The Assessing Officer held that the proviso to sec. 2(15) of the Act is applicable to "any other object of general public utility and not to charitable organization engaged in providing either relief to the poor or medical relief or education and that since the activities of the assessee did not fall under either relief to the poor or medical relief or education, it could be safely presumed that they fall under the category of general public utility", that for such activities, the assessee was receiving contractual income, irrespective of whether it resulted in profit or loss and that as such, the assessee had violation of the provisions of section 2(15) of the Act, that since the assessee did not fall within the scope "charitable purpose", as defined in sec. 2(15) of the Act, the benefit of sec. 11/12 of the Act was being disallowed to the assessee for the ....
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....aritable activities laid down under sec. 2(15) of the Act as in the assessment years for 2006-07, 207-08 and 2008-09 in the assessment framed under sec. 143(3), the activities of the assessee trust have been treated as charitable in nature and within the meaning of sec. 2(15) of the Act. As discussed above, the activities of the assessee firstly cannot be treated as advancement of any other object of general public utility nor it can be said that the activity of the assessee involves the carrying 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. Respectfully following the above referred decisions on identical issues on almost similar facts as of the present assessee before us, we hold that the activities as discussed hereinabove of the present assessee cannot be held to be engaged in the activity of advancement of any other object of general public utility. The activities carried on by the assessee cannot be said to be beyond its main aims and objects and it is also an undisputed fact that the assessee society continued to enjoy registrati....
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....titution for the purpose of making profit. (2) The predominant object test must be applied - the purpose of education should not be submerged by a profit making motive. (3) A distinction must be drawn between the making of a surplus and an institution being carried on "for profit". No inference arises that merely because imparting education results in making a profit, it becomes an activity for profit. (4) If after meeting expenditure, a surplus arises incidentally from the activity carried on by the educational institution, it will ont be cease to be one existing solely for educational purposes. (5) The ultimate test is whether on an overall view of the matter in the concerned assessment year the object is to make profit as opposed to educating persons." 7.1 The Hon'ble Court in the aforesaid judgment affirmed the judgment of the Punjab & Haryana High Court n the case of Pinegrove International Charitable Trust v. UOI 327 ITR 73 wherein it was held that merely because profits have resulted from the activities of imparting education, it would not result in change of character of the education that it was solely for educational purpose. 8 Th....