TaxTMI 
TaxTMI 
2025 (3) TMI 286
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....stances of the case, Ld. CIT(A) was correct in holding that the activities of the assessee of publication of books & training instructions, voluntary training of first aid, hygiene, sanitation, disaster management etc. is in nature of education within the meaning of section 2(15) of the IT Act. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) is correct in not appreciating the fact that the activities of the assessee is commercial in nature and squarely fall under the 'General Public Utility and hits the proviso to Section 2(15) of the Income Tax Act. 3. The brief facts of the case are that the Assessing Officer noted that as per the Income and Expenditure Account for the period under consideration, the assessee had generated surplus of Rs. 1,23,90,309/-against the total receipts of Rs. 2,36,30,463/-. Vide note sheet entry dated 30/11/2016, the assessee was required to justify its activities that it does fall within the meaning of proviso to section 2(15) of the Act as GPU. In response, it was submitted that the activities of the assessee fell under the limb 'Education' within the meaning of section 2(15). Copies of syllabi for lay Lecture....
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.... at Rs. 1,83,66,000/-. Aggrieved, assessee preferred appeal before CIT(A). 5. The CIT(A) after considering the submissions and documents of the assessee hold that the assessee is eligible for exemption u/s 11 of the Act. For this, CIT(A) relied on his predecessor orders for Asst. Year 2012-13 (which is noted in the CIT(A)'s order) and he observed in para 4.2.2 to 4.2.6 as under: - "4.2.2 I have considered the assessment order and also the submissions of the appellant. I have also referred to the orders of CIT(A)-40 for assessment year 2011-12 in appellant's own case in appeal no.35/2014-15 and orders of the CIT(A)-36 for assessment year 2012-13 in appeal no.59/2015-16. The Il. CIT(A)-36 in her order for assessment year 2012-13 has held as under: "6.1 The same issue of the assessee being covered by the amended proviso to section 2(15) of the I.T. Act was raised in the A.Y. 2011-12 also. For A.Y. 2011-12, the Ld. CIT(A) has held that "the society is carrying on charitable activities and is also engaged in providing educational services which are covered under the definition of Charitable Purposes u/s. 2(15) of the L.T. Act, as such the addition of Rs. 1,23,89,241/- is deleted." ....
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....Society in ITA No. 240, 348, 406, 463 & 464/2014 vide the order dated 18.11.2014, have held that the assessee is eligible for depreciation in the case of charitable or religious institution also. Further, recently in the case of Commissioner of Income-tax-III, Pune vs. Rajasthan and Gujarati Charitable Foundation, Poona in Civil Appeal No. 7186/2014 vide order dated 13/12/2017, the Hon'ble Supreme Court have held that depreciation is allowable in case of charitable institutions. In view of this, the claim of depreciation of the appellant is allowed. 4.2.6 As regards disallowance on account of donation given to Indian Red Cross Society, from the assessment order it is seen that the Assessing Officer has not given any reason for disallowing the same. This has presumably been disallowed since exemption had been denied under section 11. Since exemption has been granted under section 11, the Assessing Officer is directed to verify the receipt and the registration under section 12A of Indian Red Cross Society and allow the same." 6. We have heard the rival contentions and perused the material available on record. Admittedly, the assessee is a registered society U/s 12A of the Act ....
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....irely different perspective: that if at all any activity in the nature of trade, commerce or business, or a service in the nature of the same, for any form of consideration is permissible, that activity should be intrinsically linked to, or a part of the GPU category charity's object. Thus, the test of the charity being driven by a predominant object is no longer good law. Likewise, the ambiguity with respect to the kind of activities generating profit which could feed the main object and incidental profit-making also is not good law. What instead, the definition under Section 2(15) through its proviso directs and thereby marks a departure from the previous law, is - firstly that if a GPU charity is to engage in any activity in the nature of trade, commerce or business, for consideration it should only be a part of this actual function to attain the GPU objective and, secondly and the equally important consideration is the imposition of a quantitative standard - i.e., income (fees, cess or other consideration) derived from activity in the nature of trade, business or commerce or service in relation to these three activities, should not exceed the quantitative limit of Rs.10,00,....
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..... The seventh proviso virtually echoes Section 11(4A) in that business income derived by a charity (in the present case, the GPU charities) which arises from an activity incidental to the attainment of its objective is not per se excluded. 170. Classically, the idea of charity was tied up with eleemosynary 143. However, "charitable purpose" - and charity as defined in the Act have a wider meaning where it is the object of the institution which is in focus. Thus, the idea of providing services or goods at no consideration, cost or nominal consideration is not confined to the provision of services or goods without charging anything or charging a token or nominal amount. This is spelt out in Indian Chamber of Commerce (supra) where this Court held that certain GPUs can render Services to the public with the condition that they would not charge "more than is actually needed for the rendering of the services, - may be it may not be an exact equivalent, such mathematical precision being impossible in the case of variables, - may be a little surplus is left over at the end of the year - the broad inhibition against making profit is a good guarantee that the carrying on of the activity i....
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....rcumstances as in the present case, the Hon'ble Supreme Court, further, from paragraphs 247 to 252, has considered issue, as under: "247. The revenue appeals a decision of the Allahabad High Court affirming the order of the ITAT which had directed the CIT to grant registration under Section 12AA of the Income Tax Act. 248. The assessee is a registered society which was formed with the object of establishing and running a health club, Arogya Kendra; its object included organization of emergency relief centre, etc. Other objects, included promotion of moral values, eradication of child labour, dowry, etc. The assessee had entered into arrangements with the state agencies to supply mid-day meals to students of primary schools in different villages through contracts entered into with the Basic Shiksha Adhikari, District Meerut. It is a matter of record that the materials for preparation of mid-day meal was supplied by the government. The assessee society claimed that it only obtains nominal charges for preparation of mid-day meals. The assessee's claim for registration was rejected on the ground that it was involved in commercial activity. Upon appeal, the ITAT agreed with the ....
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....2. This court, in the normal circumstances, having regard to the above discussion, would have remitted the matter for consideration. However, it is apparent from the records that the tax effect is less than Rs. 10 lakhs. It is apparent that the receipt from the activities in the present case did not exceed the quantitative limit of Rs. 10 lakhs prescribed at the relevant time. In the circumstances, the impugned order of the High Court does not call for interference." Finally, while summarizing the conclusions, the Hon'ble Supreme Court, in paragraphs 253(A3) and (A4), held as under: "A.3. Generally, the charging of any amount towards consideration for such an activity (advancing general public utility), which is on cost- basis or nominally above cost, cannot be considered to be "trade, commerce, or business" or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief of "cess, or fee, or any other consideration" towards "trade, commerce or business". In this regard, the Court has clarified through illustrations what kind of services or goods provided o....