TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 605
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....t that activities carried out by your appellant are in accordance with the bye laws and are the same activities based on which the 12A registration was granted, ought not to have denied the exemption u/s. 11. 4. Your appellant submits that the CIT (A) as well as the assessing officer wrongly observed that the appellant is a like a trade union ignoring the facts that the activities taken up by the appellant are charitable in nature and exemption under 11 may be granted. 5. Your appellant submits that the CIT (A) has erred in stating that the exemption under section 11 cannot be granted in the absence of form 10 for accumulation of 85% Ignoring the fact on the record that form 10 filed is available in the records for verification. The exemption u/s. 11 may be granted. 6. For these and such other grounds that may be taken at the time of hearing." 3. Brief facts of the case are that, the appellant viz., 'The Indus Entrepreneurs (TIE), Hyderabad Chapter' is a registered Society under the A.P. Societies Registration Act, 2001 with the main objects of - (1) To encourage, support and nurture entrepreneurship by providing educational, networking and mentoring a....
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.... not a charitable organisation going by the aims and objects, but, it is a commercial entity engaged in the business of trade, commerce and business and, therefore, observed that, the appellant society is not entitled for exemption u/sec. 11 of the Act. The Assessing Officer had also discussed the issue in light of the income derived by the appellant trust from its activities and held that the appellant receives 48% of it's total income from the activities of trade, commerce or business and further, it derives around 22% of the profit from its activities and, therefore, it cannot be said that the appellant is a 'charitable institution' which is eligible for exemption u/sec. 11 of the Act. Therefore, rejected the arguments of the assessee and assessed the excess of income over expenditure of Rs. 33,80,537/- as 'Income from Business and Profession'. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee reiterated the arguments taken before the Assessing Officer and submitted that, the appellant is a charitable organisation engaged in imparting education to young entrepreneurs right from incub....
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....ned Counsel for the Assessee further referring to the aims and objects of the society submitted that, the appellant objects are falling under the definition of 'Education' as defined u/sec. 2(15) of the Act. Further, the observation of the Assessing Officer that, the appellant is a commercial organisation engaged in the activity of trade, commerce or business, is devoid of merits going by the aims and objects of the assessee society and the activities carried out during the year under consideration. Therefore, he submitted that, the assessment of income and upheld by the learned CIT(A) on different grounds should be deleted. 6.1. Learned Counsel for the Assessee further referring to the definition of 'Charitable Purpose' and also in reply to question from the Bench submitted that the appellant society cannot be considered as a General Public Utility [in short "GPU"] because, carrying out certain activities which are in relation to rendering services to trade, commerce or business per se cannot be as GPU activities. Further, even in the decision of Hon'ble Supreme Court in the case of ACIT (Exemptions) vs., Ahmedabad Urban Development Authority [2022] 449 ITR 389 (SC) while exami....
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....refully considered the relevant bye-laws of the appellant society which are available in the paper book filed by the assessee and upon careful consideration of the relevant main aims and objects of the appellant society, we are of the considered opinion that the appellant objects does not fall under the definition of "Education" as claimed by the learned Counsel for the Assessee. Further, going by the aims and objects, the appellant's objects clearly falls under the last limb of "Charitable Purpose" i.e., "Advancement of any other Objects of GPU" and, therefore, in our considered view, the claim of exemption u/sec. 11 of the Act should be examined in light of definition of "Charitable Purpose" as defined u/sec. 2(15) of the Act and proviso provided therein. 8.1. The provisions of sec. 2(15) of the Act define "Charitable Purpose" which includes, relief of the poor, education, yoga, medical relief, preservation of environment including water sheds, forests and wild life and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of General Public Utility. Further, proviso provided to Sec. 2(15) of the Act defines, adv....
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....im for tax exemption would have to be again subjected to rigors of the proviso to sec. 2(15) of the Act". The Hon'ble Supreme Court further held that, "the assessee advancing GPU cannot engage itself in any trade, commerce or business, or providing service in relation thereto for any consideration. However, in the course of achieving the object of GPU, the concerned Trust, Society or other such Organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that, (i) the activities of trade, commerce or business are connected to the achieving of its objects of GPU and (ii) the receipt from such business or commercial activity or service in relation thereto, does not exceed the quantified limit of 20% of total receipts of the previous year." 8.2. In the present case, going by the aims and objects of the appellant-society, the appellant-society in the course of achieving of it's objects of GPU had carried-on the activity of nature of trade, commerce or business and, therefore, in our considered view, the appellant-society can be considered as GPU institution and the exemption claimed u/sec. 11 of the Act needs to be ex....