TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 769
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....e, commerce or business, which is the case here? 2. Whether the ITAT erred in law in directing the C.I.T. to register the assessee society U/s 12-AA when the assessee does not fall under the provisions of Section 2(15) which uses the language "any activity of rendering any service in relation to any trade, commerce or business for a cess or fee" which is the case here where the assessee is providing services with a profit motive? 3. Whether the ITAT erred in law in curbing the legislative powers provided to the C.I.T. U/s 12-AA regarding satisfaction that the activities are genuine before granting of registration? 4. Whether the ITAT has justified in directing the C.I.T. to register the society U/s 12-AA and not considering the facts that the assessee's sole activity was in the nature of trade, commerce or business which does not make its activities as advancement of any activities of general public utility and, therefore, it was ineligible for registration in terms of the first proviso of Section 2(15) of I.T. Act." While, the Commissioner of Income Tax, Meerut had rejected the assessee's application for grant of registration under Section 12-AA (1) (b) (ii) of the ....
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....counsel for the revenue submits that the Tribunal has in the first place misread the order of the CIT in so far as the Tribunal has assumed that the CIT had found that the activity of supply of mid-day-meals was an activity of general public utility. No finding was recorded by the CIT to that effect. Therefore, the Tribunal has erred in making an assumption as to the same. Also, the Tribunal having itself not recorded any finding that the activity of the assessee was charitable, it could not have directed the CIT to grant registration to the assessee. Second, Sri Shubham Agarwal, learned counsel for the revenue submits that in fact the CIT had reasoned that the activity of the assessee was purely contractual. According to him, it was therefore for the assessee to lead such evidence and establish that it was actually engaged in an activity of 'general public utility" and not an activity covered under the first proviso to Section 2(15) of the Act. According to the learned counsel for the revenue, no such evidence was led by the assessee. Third, he submits according to the Commissioner the assessee was discharging purely commercial obligations in pursuance of the contract awarde....
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....at village schools who may otherwise be malnourished or who may otherwise dropout from school. The policy of the State Government being wholly for the advancement of an object of general public utility, the assessee who had been engaged to give effect to and to carry out such policy, was clearly working for a charitable purpose. Then, in the alternative, learned counsel for the assessee submits that by virtue of the clear language of the second proviso to Section 2(15) of the Act, even if it is assumed that the assessee was engaged in an activity of trade, commerce or business for consideration, yet, in view of the fact that his total receipts were below Rs. 10,00,000/-, it was clearly entitled to registration under Section 12-AA of the Act. Having considered the argument so made by learned counsel for the parties, we first take note of the provision of Section 2(15) of the Act. It reads as below:- "2(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 obj....
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....Indian Association (supra), we have, in ITA No. 134 of 2013 ACIT Vs. Agra Development Authority, decided on 7.12.2017 held as below:- "Upon a co-joint reading of both the provisos to Section 2(15) of the Act, the legislative intent appears not to allow exemption to an assessee who may engage in an activity mentioned in the first proviso to Section 2(15) of the Act, if his receipts for a previous year exceed Rs. 10,00,000/-. At the same time the benefit is not to be denied to such an assessee it his receipts in the previous year do not exceed Rs. 10,00,000/-. The activities of any assessee are conducted on a day-to-day basis and accounts are made up at the year end. Therefore, at the relevant time i.e. during the previous year relevant to an assessment year, it may not always be predicted or determined or known as to whether the receipts (from activities have been specified in the first proviso to Section 2(15) of the Act) exceed the statutory limit of Rs. 10,00,000/- set in the second proviso to Section 2(15) of the Act. Then Section 13(8) of the Act had also been incorporated with retrospective effect from 1.4.2009 i.e. the date of introduction of the first proviso to Sectio....
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....re, the kitchen expenses and salary expenses were for the preparation of mid-day meals and transportation expenses were for supply of such mid-day meals to the various primary schools. The only other expenditure was telephone charges at Rs. 12,833/- and office rent at Rs. 14,400/- which are around Rs. 1,000/- per month which is necessary to supervise the activity of preparation and supply of mid-day meals." In view of the above, we are of the opinion that the activity of the assessee falls within the ambit of object of general public utility which is also accepted by the learned CIT himself in paragraph 4 of his order reproduced above by us." The Tribunal has, upon examination of the assessee's income & expenditure account found: (i) the total receipts (from the activity conducted by the assessee) were less than Rs. 10,00,000/-. Then, more importantly the Tribunal found (ii) the activity of the assessee involved preparation of mid-day-meals and it's supply to primary schools in villages as directed by the State Government; the assessee incurred kitchen expenses; salary expenses and; transportation expenses. Other than that, the assessee incurred nominal office expenses & t....