TaxTMI 
TaxTMI 
2019 (9) TMI 608
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....CIT(E) at page 6 of the impugned order. 3. The appellant society is registered under Section 12A of the Income-tax Act, 1961 as a charitable organization. From AY 1982-83 and onwards the appellant society was assessed by the Revenue after granting benefit of exemption u/s 11 of the Act. For the relevant AY 2012-13 the appellant society had filed a return of income declaring net deficit of Rs. 31,35,144/-. The case of the appellant society was assessed u/s 143(3) vide order dated 23.02.2015 and the benefit of Section 11 & 12 was allowed by the AO. Subsequent thereto the ld. Pr. CIT in exercise of his revisionary jurisdiction issued a show cause notice u/s 263 of the Act directing it to show cause as to why the assessment order should not be held to be erroneous in so far as prejudicial to the interests of the Revenue for wrongly allowing exemption u/s 11 of the Act in respect of the income derived from services rendered. According to the ld. Pr. CIT services rendered by the appellant society did not qualify as 'charitable purpose' within the meaning of Section 2(15) of the Act. In response the appellant society furnished written explanation wherein it was submitted that the 's....
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....e commercial in nature and therefore impermissible under the proviso to sec. 2(15) of the Act. According to ld. Pr. CIT, the appellant society was acting as an "agent" for providing manpower services to different public institutions and public sector undertakings which was nowhere relatable to its stated charitable objectives and therefore, held that it cannot be considered as activities for charitable purpose. The ld. counsel for the appellant submitted that providing employment/placement to ex-servicemen is one of the objects mentioned in clauses (e)& (f) of its Memorandum of Association. The ld. counsel further submitted that providing employment opportunity to the financially weak and technically unqualified ex-servicemen who return to civil life post active defense service, is a charitable activity. Therefore, he contended that the ld. Pr.CIT was not correct in denying the benefit of Section 11 to the appellant society. Per contra the Ld. DR supported the order of the ld. Pr. CIT and does not want us to interfere with the order of Ld CIT(E). 5. After giving a thoughtful consideration to the facts involved in the present case and having regard to the provisions of Section....
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....ure in the armed forces. During the time when they are in active defence service, they are posted in remote and far flung areas to guard the boarders of India [even at Siachein glaciers and forward posts] where they do not have any access not only to civic amenities but also do not have access to any training facilities for equipping themselves after post-retirment. In view of the strenuous and rigorous regime followed in armed forces, these personnel retire at middle-ages [mostly by 35 to 40 years] and after having sacrificed their best of adult-hood for the services of the Nation, away from their near and dear ones, when they retire at middle ages as discussed, they are required to be suitably be rehabilitated when they return to civil life from their tough regimental life. However, in view of the fact that these personnel are not technically qualified or trained in skilled jobs and at the same time required to be financially secured in post retired life; the assessee society acts as an interface for economic up-liftment of ex- servicemen and help them in obtaining employment to meet their cost of livelihood. The activities of the assessee society towards economic up-liftment ....
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....ollowing observations of the Hon'ble Apex Court in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1is of much relevance in the given facts of the present case. "The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit-making is the predominant object of the activity, the purpose, though an object of general public utility, would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity. The exclusionary clause does not require that the activity must be carried on in such a manner that it does not result in any profit. It would indeed be difficult for persons in charge o1f a trust or institution to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect uns....