2025 (12) TMI 181

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....ther and dispose of by common order. ITA No. 674/COCH/2025 is taken as lead case. 3. The assessee is a charitable society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955(Act No. Xll of 1955) and also registered u/s 12A of the Act. The primary object of the assessee is to conduct social activities aimed to for improving the living conditions and welfare of the poor and marginal section of the society. The assessee filed his return for impugned assessment year by declaring total income Nil, the assessee claimed exempted income u/s 11 as main object of the assessee applicable to provision u/s. 2(15) of the Act. The notice u/s 148A was issued and assessee's case was reopened on the ground that the assessee is not a charitable organization but the business community. It is observed by Ld.AO that the major activities of the assessee is trading and processing of milk. The assessee has declared total sell of milk amounting to Rs. 107.96 crore. Whereas the assessee declared the net profit of Rs. 13.93 crore against the trading and processing activities of milk. Thus, Ld.AO decided that the assessee was not participated in any ac....

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....n small and marginal farmers. These objectives clearly fall under the first limb of Section 2(15) of the Income-tax Act, i.e., "relief of the poor", which is a recognized charitable purpose. All the objects of the appellant are oriented towards relief of the poor, and none of its activities fall under the restrictive category of "advancement of any other object of general public utility (GPU)". Copies of the Memorandum of Association and Rules & Regulations of the society are enclosed herewith (Page no 129 to 138) In pursuit of its objectives, the society undertakes several educational and livelihood oriented initiatives, including training and educating farmers in the local areas of Tamil Nadu (Surandai, Perayoor, Dindigul, and Theni) on the benefits of milk farming and cattle rearing as a sustainable means of livelihood. The society operates a model cattle farm at Theni as a live demonstration center for this purpose. The appellant also extends various welfare and financial assistances to poor farmers, such as: Cattle feed subsidies, Educational aid, Marriage aid, Housing aid, Medical aid, Distribution of food to the poor, Promotion of apiculture, Farme....

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....2008 dated 19.12.2008 (Copy of the circular is enclosed herewith) The relevant portion of the Circular No. 11/2008 dated 19.12.2008 read as under "The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), ie, relief of the poor, education or medical relief Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities. 'Relief of the poor encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under section 11(4A) or the seventh proviso to section 10(23C) which are that (i)....

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....GPU charities have been recognized as distinct from the 'per se categories' of charity (education, medical relief, relief to the poor; and later -preservation of water sheds, monuments, environment, and yoga). The judgment of this court in Dharmadeepti (supra) has clarified that the per se categories - are not subjected to the restrictive condition of eschewing activities of profit. This enunciation of the principle has been endorsed in all later decisions starting with Surat Art Silk (supra). Therefore, (1975) 3 SCR 783 (1960) 3 SCR 837 (1991) 1 SCR 938 the restriction imposed by Parliament against charities - prohibiting them from carrying on activities of profit do not apply to the first six categories. Although the occasion did not so arise in Surat Art Silk (supra) (since this Court was dealing with AYs prior to 1975), the provision in Section 13(1)(bb) which prevailed then with effect from 01.04.1977 made the position clearer in that it permitted these per se category charities, in the course of their actual carrying on of their activities, to earn profits. Of course, this provision was deleted from 01.04.1984. Alongsidé, the restriction imposed on GPUs from en....

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....ined the documentary evidence placed on record, and perused the judicial precedents relied upon by both sides. The core controversy revolves around whether the assessee-society-engaged in procurement, chilling, processing and sale of milk sourced from small and marginal farmers-continues to be eligible for exemption under Sections 11 and 12, and whether its activities fall within the first limb of Section 2(15) i.e., "relief of the poor", or whether its activities constitute a purely commercial venture disentitling it from exemption. It is an admitted fact that the assessee is a charitable society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, 1955 and duly registered under Section 12A of the Act. Its stated objects-relief, upliftment, economic support, and welfare of small and marginal farmers-are not disputed. The assessee has consistently carried out activities such as farmer-training programmes, cattle-rearing demonstrations, financial assistance, welfare schemes, subsidies, and other public-oriented initiatives aimed at improving the livelihood of economically weaker farming communities. The primary basis for reopening un....