TaxTMI 
TaxTMI 
2020 (9) TMI 919
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....me for A.Y. 2013-14 on 31.03.2014 declaring Nil income. The case was selected for scrutiny and thereafter assessment was framed under section 143(3) vide order dated 14.03.2016 and the total income was determined at Rs. 5,11,38,830/-. 5. As far as A.Y. 2014-15 is concerned, assessee filed Nil return of income on 24.03.2015 and the assessment was framed u/s 143(3) vide order dated 01.12.2016 wherein the total income was determined at Rs. 2,39,32,330/-. 6. Aggrieved by the orders of AO, assessee carried the matter before the CIT(A) who vide consolidated order dated 24.05.2017 for A.Y 2013-14 and 2014-15, allowed the appeals of the assessee. 7. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds: "(a) On the facts & in the circumstances of the case and in law, Ld CIT(A) has erred in allowing the appeal of the assessee by ignoring the fact that the activity of the assessee does not fall under relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments of places or objects of artistic or historic interest and that the assessee had receipts ....
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.... and as also mutual association. He, thereafter, completed the assessment by invoking the proviso to section 2(15) and the total income of the assessee was determined at Rs. 5,11,38,830/-. 11. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who noted that the Hon'ble Tribunal in assessee's own case on identical facts for A.Y. 2009-10 had held that the activities of the laboratory testing and consultancy to be in furtherance of main and charitable object of the assessee association and it was also held that the activities undertaken by the assessee cannot be termed as activities with the main object of profit earning motive. He also noted that his predecessor for A.Y. 2009-10 & 2010-11 and his own orders for A.Y. 2011-12 & 2012-13 on identical facts had allowed the appeal of the assessee and had directed the AO to allow exemption u/s 11 & 12 with consequent benefits. He accordingly following the orders for earlier years allowed the appeals of the assessee. Aggrieved by the order of CIT(A), Revenue is now before us. 12. Before us, at the outset, the Learned DR fairly submitted that identical issue arose in assessee's own case in A.Y. 2012-13 before the T....
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....(Delhi) wherein their lordship provided a landmark interpretation to section 2(15) of the Act as well as newly inserted proviso to this section after considering the ratio and prepositions laid down by various judgments and orders of Hon'ble Supreme Court and High Court the relevant operative part of this order at page 122 para 67 reads as under :- "67. The expressions "trade", "commerce" and "business", as occurring in the first proviso to section 2(15) of the Act, must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. The purpose and the dominant object for which an institution carries on its activities is material to determine whether the same is business or not. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee. The object of introducing the first proviso is to exclude organizations which are carrying on regular business from the scope of "charitable purpose". The purpose of introducing the proviso to section 2....
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....ave not hesitation of hold that the facts of the present case clearly distinguishable. We are in agreement with the contention of the Ld. AR that the facts of the present case are clearly distinguishable from this case of Truck Operators Association (Supra) as in that case the assessee association was vigorously pursuing transportation with this by receiving freight charges on behalf of its member and the so called welfare activities adopted for the Truck Drivers, cleaners, mechanics of the truck owners were in the nature of staff welfare activities which were similar and common in the other transport business organizations which could not be termed for general public utility. In the present case, the CIT(A) have not conclusively held that the assessee association was carrying on laboratory test and consultancy services with the main object of earning profit in the line of "business", "trade" or "commerce". Accordingly we respectfully held that the benefit of the ratio of the decision of Hon'ble Punjab & Haryana High Court (Supra) is not available for the revenue as the facts of the present case are clearly distinguishable from that case. 28. Turning to the facts of the pres....
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....tivity which is carried on in an organized manner. 31. Explaining the dominant of object of newly inserted proviso to section 2(15) of the Act, speaking for Jurisdictional High Court of Delhi, their lordship also held that the first proviso to section 2(15) of the act does not purported to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee and the object of introducing first proviso is to exclude organizations which are carrying on regular business from the scope of charitable purpose. It was also held that expression "business" "trade" or "commerce" as used in first proviso must, thus, we interpreted restrictively and where the dominant object and organization is charitable any incidental activity for furtherance of the object would not fall within the expression "business", "trade" or "commerce". 32. In view of the ratio of the judgment of Hon'ble High Court of Delhi if we analysis the facts and circumstances of the present case at the outset we note that the activity laboratory testing and consultancy is certainly bringing revenue for the assessee association but the CIT has not controverted or ....
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....n of equipment, purchase of materials for thereon use at economical prices, promotional efficiency of Road Transport Services and deduction is operational cost of member State Road Transport Undertakings are the activities of charitable purpose towards promotion of main objects set out in the Memorandum of Association of the assessee association, thus, in absence of any substantial allegation or incriminating material. We are unable to accept view of the CIT that the assessee association is conducting these activities with the main object of earning profits. In the present case, the activities of the assessee's association cannot be termed either "trade" , "commerce" or "business" simply because the assessee association is receiving some charges or fees for rendering services on non- commercial principles to State Road Transport Undertakings and other concern members for a fee or charges. 35. At this juncture, we also respectfully follow the ratio laid down by the Hon'ble Delhi High Court in the case of Indian Trade Promotion Organisation vs. DGIT (Supra) wherein it was held that thus, first proviso to section 2(15) of the Act would have been to be read down and interpre....