AI Drafter 
TaxTMI 
TaxTMI 
2020 (1) TMI 42
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....ppeals) in the facts and circumstances of the case of the appellant and in law ought to have held that- (a) The objects of the appellant are "Charitable Purpose" as defined in Section 2(15) of the Act keeping in view the definition of "Charitable Purpose" in said sub-section being "Inclusive" and accordingly the provisions of Section 11 of the Act, have to be applied in assessment of its income. Without prejudice to the above and in the alternate (b) Though the objects of the appellant fall in the last limb of "advancement of any other objects of general public utility", the first Proviso to Section 2(15) of the Act cannot be applied to the activities carried on by the appellant keeping in view the objects of the Trust and accordingly, the objects of the appellant have to be considered as Charitable Purposes and the provisions of Section 11 of the Act have to be applied in assessment of its income. 2. Re. Rs. 150 Crores received during the year from the Central Government of India accounted inadvertently as Corpus Contribution: The Ld. C.I.T. (Appeals) in the facts and circumstances of the case of the appellant and in law ought to have h....
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.... that similar matter of grant of exemption, in assessee's own case, came up for consideration before this Tribunal for AY 2010-11 vide ITA No. 544/Mum/2014 order dated 18/01/2019 wherein the issue was decided in assessee's favor. The copy of the order has been placed on record. Au Contraire, Ld. CIT-DR supported the stand taken by lower authorities. 2.1 In the above background, we find that the assessee being Public Trust settled by Government of India, is registered with office of Charity Commissioner, Mumbai Region. The assessee hold registration u/s 12AA since 29/10/2007. With a view to facilitating medium and long term exports and considering the limitations of Export Credit Guarantee Corporation (ECGC) in providing adequate cover on its own and non-availability of reinsurance cover to such exports, the Government of India, Ministry of Commerce and Industry, Department of Commerce vide resolution dated 07/03/2008 established National Export Insurance Account (NEIA) Scheme, to be maintained and operated by a Public Trust. The assessee was thus set up in terms of this Government Resolution vide Trust Deed dated 21/03/2006 settled by President of India, acting through the Joint....
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.... accumulated aggregate surplus of Rs. 206.73 Crores at the end of this financial year. 2.4 The Ld. AO, noticing that the objects of the trust would fall under the last limb i.e. advancement of any other object of general public utility, concluded that the assessee was hit by first proviso to Sec. 2(15) since its activities involve carrying out of an activity in relation to any trade, commerce or business and accordingly, proceeded to deny the exemption as claimed by the assessee. 2.5 During the course of assessment proceedings, it was also noted that the assessee was in receipt of Rs. 150 Crores as Corpus Contribution during the year which was claimed to be exempt u/s 11(1)(d) of the Act. However, as per Ld.AO, the assessee could claim this exemption only if it was eligible for exemption u/s 11 of the Act otherwise all contributions including corpus contributions would form part of total income of the assessee as per Section 2(24)((iia). 2.6 The assessee defended its stand by drawing attention to its main objectives and submitted that since the objects were charitable in nature, the assessee was eligible to claim the said exemption which was further supported by the fac....
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....No. 544/Mum/2014 order dated 18/01/2019 wherein the matter was concluded in assessee's favor by the coordinate bench with following findings / observations: - ISSUE NO. 1 4. We have heard the argument advanced by the Ld. Representative of the parties and by perusing the record. We noticed that the AO applied the first proviso to Section 2(15) of the Act, 1961 and declined the claim of the assessee u/s 11/12 of the Act. The object of the assessee has been given in para no. 5 of the trust deed at page no. 11 which is hereby mentioned below:- (i) To implement the NEIA Scheme through ECGC (Export Credit Guarantee Corporation of India) for the benefit of medium and long term exporters (b) To implement such other schemes and programmes for the benefit of medium and long term exporters as the Government of India mainframe from time to time and direct the trust implement. 5. The assessee trust received policy premium payments from the following parties (i) Apar Industries Ltd. Rs. 1,86,12,015/- (ii) ONGC Videsh Ltd Rs. 2,06,32,870/- (iii) Hindustan Aeronautics Ltd. Bangalore Rs. 17,34,159/- total to the tune of Rs. 4,09,79,044/-. The assessee also paid the claim ....
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..... Subsequently, the said amendment was explained and interpreted by the CBDT Circular No.11/2018 dated 19.12.2008 in which trade, commerce and business is required to be decided on the basis of the nature, scope, extent, frequency of activities. Accordingly, the nature of the trust is hereby specified that the trust is to provide credit insurance cover to Indian Exporters keeping in view the national interest. The Trust is sponsored and the nature of activities of the trust is to provide credit insurance cover to Indian Exporters keeping in view of the national interest. The Trust is sponsored by Govt. of India with the objective to promote exports, improve competitiveness of Indian exports and to implement schemes formulated by the Govt. of India for the benefits of medium and long term exporters in national interest. Certainly, none of the above objectives are tainted with motive of trade, commerce or business as Govt. of India is not into business of providing Credit Insurance. Wherever, it has intended to do so, it has been done through Corporate structure e.g. ECGC of India Ltd. (Export Credit Guarantee Corporation) which does the credit insurance activity on commerci....
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....iv) because, in our view, the context requires such an interpretation. The correction interpretation of the proviso to section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purpose, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a charitable purpose. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes." 9. The facts of the presen....
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....ture / character of the transactions and the same could not be held to be conclusive. Therefore, the mere fact that the assessee credited the receipts as corpus contribution, in our considered opinion, would not make much difference and would not alter the true nature of the stated receipts. The said funds / receipts, as stated earlier, were more in the nature of specific grants and represent liability for the assessee and liable to be refunded in case of non-utilization. Therefore, the same being capital in nature, could not be even otherwise brought to tax. For the said proposition, strength could be drawn from the decision of Hon'ble Gujarat High Court rendered in Pr.CIT V/s State Fisheries Development Corporation Ltd. (94 Taxmann.com 466) wherein similar receipts were held to be capital in nature. This decision has already attained finality by way of dismissal of revenue's Special Leave Petition (SLP) which is reported at 102 Taxmann.com 221. Similar proposition has been laid down by Chandigarh bench of Tribunal in the case of Haryana Rural Development Authority V/s DCIT (162 TTJ 749 22/01/2014) wherein it has been held that grants-in-aid received by assessee from government....