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2017 (8) TMI 25
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....he assessee is a trust registered u/s 12A of the Income Tax Act vide order dated 02.08.2000 and also registered u/s 80G of the Income Tax Act. It is a non-profit organization registered as a society under the Societies Registration Act 1860 on 08.06.1999 with the main object of providing platform for the officers of Oil industry, educationist, students, and technologist for educating them in areas of petroleum such as exploration, drilling, production etc. It organizes various seminars on these topics. For the impugned year, it filed its return of income on 30.9.2009 declaring nil income along with audited report. The ld Assessing Officer has held that the assessee's activities are falling under the category of 'advancement of any other object of general public utility and is carrying on the business because the activities of the trust are capable of generating profit. Therefore, the ld Assessing Officer denied the assessee the applicability of provision of section 11 and 12 of the Act and determined total income of the assessee at Rs. 82200268/- vide order dated 23.12.2012 u/s 143(3) of the Act. the assessee aggrieved with the order of the ld Assessing Officer preferred an appeal ....
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....ned under section 2(15) of the Act;since the assessee-society had charged fees for its activities resulting in surplus, first proviso to the said section, was attached. * Feeling aggrieved, the appellant filed appeal before the CIT(Appeals), who allowed the appeal holding that the activities of the assessee-society were in the nature of „education‟ and not falling within the last limb, viz; „advancement of general public utility‟. * Hence, the present appeal has been filed by the Revenue before the Hon‟ble Tribunal. SUBMISSIONS Section 2(15) of the Act defines "charitable purpose" as under:- "........... (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: ..........." In the case of the assessee, the predominant object, as stated above, is to: * Provides a forum for national and international experts in Hydrocarbon Industry for exchange of views and sharing of knowledge, expertise and expe....
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.... has instituted a "Petrotech Chair Professor of Petroleum Technology" at the Indian Institute of Technology, New Delhi to: * Facilitate teaching and research environment friendly technologies in hydrocarbon sector. * Promote pursuit of excellence in education and research (including advising and continuing education) in hydrocarbon technologies. * Facilitate conduct of programmes to prepare students at Graduate and Post-Graduate levels in Petroleum Technology Area; and * Act as liaison between academia and hydrocarbon industry. * The assessee-society opened „Petrotech Chapters‟ at various universities/institutes wherein faculty/students will get a good forum to organise regular events/meets for better learning in the field of Petroleum Engineering. * The assessee-society has entered into a MoU with University of Alberta, Canada under which, besides faculty exchange, Petrotech has so far organised four successful Industry Educational tours for the benefit of Indian Oil & Gas Industry. The tours provided an opportunity to the participants to update themselves on technologies of the future pertaining to the hydrocarbon sector. * Granting of Doctorate fellowsh....
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....e objects of the assessee involve carrying on of any activity in the nature of trade, commerce or business for cess or fee or any other consideration, then, irrespective of the nature of use or application of income, the assessee shall not be regarded as existing for charitable purpose. Similarly, if any of the objects of an assessee involve carrying on of activity of rendering service in relation to trade, commerce or business for consideration then, too, the assessee shall cease to be regarded as carrying on any activity for charitable purpose. It would, thus, be appreciated that the proviso to section 2(15) of the Act applies to trust/ institution falling in the last limb of the definition of „charitable purpose‟ if they carry on commercial activities in the nature of business, trade or commerce. Construing the expression „business‟, the Hon‟ble Supreme Court in the case of Distributers Baroda P. Ltd.(83 ITR 377) has held that „business‟ refers to real, substantial, organized course of activity for earning profits as „profit motive‟ is essential requisite for conducting business. Following the above decision, the Specia....
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....profit, it is an ordinary case of trade and if the transactions are on large scale they are called as commerce: Gannon Dunkerley& Co v. State of Madras (1954) 5 STC 216 (Mad.). On perusal of the aforesaid, it would be noticed that the three words, viz. „trade‟, „commerce‟ and „business‟, connote and indicate a series of organized activities primarily undertaken on commercial lines for profit motive. Reliance, in this regard, is placed on the following decisions: * ICAI v. DGIT( E): 358 ITR 91(Del. HC) * PHD Chambers of Commerce & Industry v. DIT(E): 357 ITR 296 (Del. HC) * Hamdard Laboratories India vs. DGIT: 216 Taxman 201 (Del. HC) * India trade Promotion Organization vs. DGIT(E): 371 ITR 333 (Del. HC) * GS1 India vs. DGIT(Exemptions): 262 CTR 585 (Del. HC)) * Bureau of Indian Standards vs. DGIT(Exemptions): 27 taxmann.com 127 (Del. HC) * DIT v. Ahmedabad Management Association: 366 ITR 85 (Guj. HC) * DivyaYogMandir Trust vs. JCIT: 153 ITD 368 (Del.) * Mehrangarh Museum Trust vs. ACIT: 67 SOT 1 (Jodh.) * Water and Land Management Training and Research Institute vs. DGIT(E): 40 ITR(T) 559 (Hyd.) * Hoshiarpur Improvement T....
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....he objectives and/ or the activities is commercial in nature so as to fall within the mischief of proviso to section 2(15) of the Act, inasmuch asthe mandate of the assessee is to work as a non-profit society for the objects specified in the MOA. This is patently clear from the following clauses of the MOA of the assessee: " 4.5.8 All the incomes, earning, immovable and/or movable properties of the Society shall be solely utilised and applied towards the promotion of the objects only as set forth in this Memorandum of Association ....... 4.5.10 The Society will not be distributing any profit/surplus earned in the normal course of functioning of the Society, and any profit/surpluses shall be solely used for furtherance of its objectives" In view of the aforesaid, it is respectfully submitted that the activities of the assessee are not at all covered by the mischief of proviso to section 2(15) of the Act. Even though the CIT(A) has not dealt with the submission of the assessee regarding non-applicability of proviso to section 2(15) of the Act, even in a situation where the activities of the assessee falls in the last limb of section 2(15) of the Act, viz, advancement ....
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....2(15) of the Act, which is education though it has been mentioned as 1st lirnb in submissions of appellant but it makes no difference as it has been emphasized by the Circular No. 11/2008 dated 19.12.2008 that amendment in section 2(15) does not apply to first three limbs, which are; i) relief of the poor (ii) education and (iii) medical relief. It applies only to last limb which is advancement of ^ any other object of general public utility. In the above said Circular it has been emphasized as under:- "2.1 The newly inserted proviso to section 2(15) -will not apply in respect of the first three limbs of section 2(15) i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities. 2.2 Relief of the poor encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small ....