TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 602
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....A No.121 of 2019 4. The common question of law raised in the appeals arise under Section 2(15) read with Section 12A of Income Tax Act (for short "the Act"). The assessee is the registered Society under Travancore Cochin Literary Scientific and Charitable Society vide Reg.No. A-354/88 dated 26.9.1988. The assessee was registered under Section 12A of the Act with CIT, Thiruvananthapuram vide Registration dated 23.4.2002. The assessee, for the assessment year 2009-2010, on 15.3.2010 filed the income tax returns. The assessee returns nil income after claiming Rs. 9,74,882/- as applied for charitable purpose. The assessment was taken up for scrutiny under Section 143(3) of the Act. The Assessing Officer through the assessment proceedings proposed to examine the claim of assessee under Section 12(5) read with Section 12A of the Act. In view of the proposed verification of the status of assessee for claiming exemption, the assessee was put on notice and in response thereto the assessee stated that the assessee is registered as a charitable society; the District Collector is the Chairman of the assessee Society; the other revenue officials such as RDO etc. either hold functional posts or....
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....ct, 1961, the advancement of any other object of general public utility shall not be a charitable purpos, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity or running services in relation to any trade, commerce or business, for a cess or feee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity. Provided further, that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is Rs. 25 lakhs or less in the previous year. Thus, provision of sec.2(15) are abundantly clear and does not require any interpretation. The activities carried on by the present assessee cannot be considered as activities of medical relief or education or relief to the poor. The correct way to express the nature of activities carried on by the assessee is to say that the assessee is carrying on "advancement of any other object of general public utility". When that is the case, the assessee is hit by the proviso to Sec.2(15) of the I.T.Act. The proviso reads that "advancement of any other object of general public utility" shall n....
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....ption." 7. Mr.Anil D.Nair argues that the activities of the assessee from the manner in which the circumstances are accepted by the authorities under the Act, would come under the expression viz. the advancement of any other object of general public utility in Section 2(15) which deals with charitable purposes. The argument proceeds that the definition is inclusive and from the consitution of society and the persons managing the society, nature of activities undertaken by the assessee, the assessee is entitled to exemption under Section 12A read with section 2(15). He laid much emphasis on the words in proviso to section 2(15) i.e. any activity of rendering any service in relation to the trade, commerce or business and such circumstance is absent in the case on hand and therefore the proviso is not applicable to assessee. He is not disputing the well established proposition of law and the presumption available in fact that all the issues are dependent on the specific circumstances the authorities or this Court would be considering and there is no direct precedent on the point in support of the case of the assessee. For persuasive value, he refers to the judgments reported in Commi....
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....2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility, i.e. The forth limb of the definition of charitable purpose' contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act, if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax u/s 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributor....