TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 364
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....spondent/ assessee is an institution established in the year 1983 under the control of the Irrigation Department of the Government of Andhra Pradesh. The assessee filed an application in Form No.10A on 19-01-2012 seeking registration under Section 12AA of the Income Tax Act, 1961. 4. The Director of Income Tax (Exemptions) issued a questionnaire and the assessee submitted its response. The assessee claimed that the Government of Andhra Pradesh started the institute through grant-in-aid and that a sizeable portion of its income is earned through capacity building service and through consultancies. The Director of Income Tax observed that though the institute was mainly functioning as a training institute, for the purpose of training Government officials in the field of water and land management, the institute was also providing guidance to the farmers and rendering consultancy services to various organizations for a fee. With this view, the Director of Income Tax (Exemptions) rejected the application for registration. 5. As against the order of the Director, the assessee filed a statutory appeal before the Tribunal. The Tribunal allowed the application and directed registration, o....
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....l receipts, of the trust or institution undertaking such activity or activities, of that previous year; 9. It must be pointed out that the definition of the expression charitable purpose, as inserted by Finance Act, 1983 with effect from 01-4-1984 read as follows: Charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. But the said definition was completely changed by Finance Act, 2008 with effect from 01-4-2009. Thereafter, by an amendment under Finance Act, 2010, two provisos were inserted. These two provisos were substituted by new provisos under the Finance Act, 2015 with effect from 01-4-2016. 10. In the case on hand, the application for registration was made on 19-01-2012. At the time when the application for registration was made, the provisos that were available to Section 2(15) read as follows: 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,....
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....viso and (iii) that even those activities relating to advancement of any other object of general public utility which go out of the purview of the substantive part of Section 2(15) on account of the first proviso, may come back within the ambit of the substantive provision, if the aggregate value of the receipts is Rs. 25 lakhs or less in the previous year. 15. Keeping the scope of Section 2(15) in mind, if we come back to the facts of the present case as admitted by the department, it could be seen that the assessee is admittedly an institute functioning mainly as a training institute for the purpose of training various Government officials in the field of water and land management. The factual finding recorded in paragraph-3.0 of the order of the Director of Income Tax (Exemptions) may be usefully extracted as follows: From such submissions made during the course of proceedings, though it is noticed that the above institute was mainly functioning as a training institute for the purpose of training of various government officials in the field of water and land management and was also providing guidance occasionally to the farmers, at the same time, it is noticed that the asses....
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.... for approval under Section 10(23C) of the Act for a particular assessment year was correct or not. In the said case, the appellant/assessee already had a registration under Section 12AA of the Act. There was no issue before this Court as to whether the grant of registration to the assessee in that case under Section 12AA was correct or not. Section 10(23C) deals with incomes not included in total income. Therefore, the question that was examined by the Division Bench of this Court in A.P. State Seed Certification Agency was with respect to the inclusion of a particular income while computing the total income of the previous year. It did not relate to the entitlement of the institution to registration under Section 12AA. This Court never found fault with the grant of registration to the assessee in that case. Therefore, the question as to whether the respondent is entitled to registration under Section 12AA cannot be examined on the strength of the decision in A.P. State Seed Certification Agency. 19. Insofar as the decision of the Delhi High Court in India Trade Promotion Organisation is concerned, we have already indicated that what was under challenge before the Delhi High Cour....
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....t is only after an institution is granted registration under Section 12AA that the examination of the gross receipts year after year for the purpose of finding out the eligibility for exemption would arise. This has also been clarified by a Circular issued by the Central Board of Direct Taxes in Circular No.21/2016, dated 27-5-2016. Paragraph-2 of the said Circular reads as follows: 2. Section 2(15) of the Act provides definition of charitable purpose. It includes advancement of any other object of general public utility provided it does not involve carrying on of any activity in the nature of trade, commerce or business etc. for financial consideration. The 2nd proviso to said section, introduced w.e.f. 01-04- 2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed Rs. 25,00,000/- in the previous year, the purpose of such trust/institution shall be deemed as charitable despite it deriving c....