DDIT, CHENNAI V. Council for Leather Exports, CHENNAI

ITA 1192/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9869 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Charitable institution; Rule of consistency
• Section: 12A; 12AA; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # , $ & BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 1192/MDS/2014 ( / ASSESSMENT YEAR: 2010-11) DEPUTY DIRECTOR OF INCOME TAX(EXEMPTIONS-IV), AAYAKAR BHAVAN ANNEXE BLDG, 3 RD FLOOR, 121 MG ROAD CHENNAI-600 034. VS M/S. COUNCIL FOR LEATHER EXPORTS, CMDA TOWER-II, 3 RD FLOOR, GANDHI IRWIN BRIDGE ROAD,EGMORE, CHENNAI-600 008. PAN:AAACC4697G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. P.RADHAKRISHNAN, JCIT /RESPONDENT BY : MR. R.VIJAYARAGHAVAN, ADVOCATE /DATE OF HEARING : 13 TH MAY, 2015 /DATE OF PRONOUNCEMENT : 26 TH JUNE, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-VII, CHENNAI D ATED 22.01.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS TH AT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT ASSOCIATION IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND THE ASSESSEE ASSOCIATION IS NOT HIT BY AM ENDED PROVISIONS OF SECTION 2(15) OF THE ACT UNDER THE OB JECT OF 2 ITA NO.1192/MDS/2014 GENERAL PUBLIC UTILITY. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ACTIVITIES OF THE A SSESSEE QUALIFY AS CHARITABLE ACTIVITY AS DEFINED UNDER SEC TION 2(15) OF THE ACT AND COLLECTION OF CERTIFICATION FEE, MEMBE RSHIP FEE ARE INCIDENTAL ACTIVITIES WHICH WERE NATURAL DOMINA NT ACTIVITIES WHICH CONFORM TO THE OBJECTS OF THE ASSESSEE SOCIET Y. 3. BRIEF FACTS ARE THAT ASSESSEE IS A COMPANY REGI STERED UNDER SECTION 25 OF THE COMPANIES ACT. THE MAIN OBJ ECTS OF THE ASSESSEE ARE TO SUPPORT, PROTECT, MAINTAIN INCR EASE AND PROMOTE EXPORT LEATHER ARTICLES AND PRODUCTS AND BY E- PRODUCTS OF LEATHER INDUSTRY. THE COUNCIL FOR LEAT HER EXPORTS IS AN AUTONOMOUS NON-PROFIT COMPANY REGISTERED UNDE R INDIAN COMPANIES ACT ENTRUSTED WITH EXPORT PROMOTION ACTI VITIES AND DEVELOPMENT OF INDIAN LEATHER INDUSTRY. CLE IS APEX BODY OF 2400 MEMBERS RAPIDLY GROWING INDIAN LEATHER INDU STRY. CLES ACTIVITIES ARE MULTIPLE AND DIRECTED TOWARDS ASSISTING ITS MEMBERS IN EXTENDING THEIR GLOBAL REACH THEREBY IN CREASING THEIR EXPORTS. IN THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE RECEIVED ME MBER SUBSCRIPTION, CERTIFICATION FEE, SALE OF PUBLICATIO NS, INTEREST ON 3 ITA NO.1192/MDS/2014 DEPOSITS, BULLETIN REVENUE ETC. HE ALSO NOTICED THA T ASSESSEE IS INCURRING EXPENSES TOWARDS SALARY AND STAFF REL ATED EXPENSES, ADMINISTRATIVE EXPENSES, EXPENSES ON CODE C ACTIVITIES. ANALYZING THESE EXPENSES AND INCOME, TH E ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE IS NOT DOING ANY MULTIPLE ACTIVITIES OF ANY NATURE I.E. RELIEF TO POOR, MEDICAL AID/RELIEF AND EDUCATION. THE ACTIVITIES OF THE ASS ESSEE ARE NOT FALLING UNDER THE LIMB OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY FOR THE REASON THAT ACTIVITIES OF TH E ASSESSEE ARE ONLY FOR REGISTERED MEMBERS AND NOT FOR GENERAL PUB LIC. THE ACTIVITIES OF THE ASSESSEE ARE PURELY ON COMMERCIAL LINES. ASSESSING OFFICER HELD THAT ACTIVITIES OF THE ASSE SSEE ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND THER EFORE APPLYING PROVISO TO SECTION 2(15) OF THE ACT, THE A SSESSEE WAS DENIED EXEMPTION UNDER SECTION 10(23C)OF THE AC T. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) HELD T HAT ASSESSEES ACTIVITIES ARE COVERED BY LAST LIMB OF T HE DEFINITION UNDER SECTION 2(15) OF THE ACT I.E. ANY OTHER OBJEC TS OF GENERAL PUBLIC UTILITY AND IS NOT INVOLVED IN ANY A CTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE COMMISS IONER OF INCOME TAX (APPEALS) HELD THAT DENIAL OF EXEMPTI ON UNDER 4 ITA NO.1192/MDS/2014 SECTION 2(15) AND SECTION 10(23C)(IV) OF THE ACT IS NOT BASED ON PROPER APPRECIATION OF FACTS. AGAINST THIS ORDER , THE REVENUE IS IN APPEAL BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE ASSESSING OFFICER. 5. COUNSEL FOR THE ASSESSEE SUBMITS THAT AN IDENTIC AL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. THE SOUTHERN INDIA CHA MBER OF COMMERCE & INDUSTRY VS. JCIT IN ITA NOS.2733 & 2734/MDS/2014 DATED 17.04.2015 HOLDING THAT THE ASSOCIATION IS NOT HIT BY AMENDED PROVISIONS OF SEC TION 2(15) OF THE ACT AND THE ASSESSEE ASSOCIATION IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT. COUNSEL SUB MITS THAT FACTS BEING IDENTICAL, THE RATIO OF THE SAID DECISI ON MAY BE APPLIED TO THE CASE ON HAND. 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES AND THE CASE LAWS RELIED ON. THE ASSESSEE, COUNCIL FOR LEATHER EXPORTS (CLE) IS AN AUTONOMOUS NON-PROFIT COMPANY 5 ITA NO.1192/MDS/2014 REGISTERED UNDER INDIAN COMPANIES ACT. THE MAIN ACT IVITIES OF THE ASSESSEE ARE AS UNDER:- PROMOTING, FACILITATING AND ATTRACTING FOREIGN DIR ECT INVESTMENTS INTO INDIAN LEATHER INDUSTRY INCLUDING JOINT VENTURES, TECHNICAL COLLABORATIONS AND STRATEGIC ALLIANCES; DISSEMINATING MARKET INFORMATION, TRENDS AND POLICY IMPLICATIONS AND PUBLISHING INFORMATION ON COMMERCI AL TECHNICAL AND TECHNOLOGICAL DEVELOPMENTS IN INDIAN LEATHER INDUSTRY; PARTICIPATING IN MAJOR INTERNATIONAL FAIRS AND SPEC IALIZED TRADE SHOWS ACROSS THE GLOBE, ORGANIZING BUYER-SELL ER MEETS IN INDIA AND ABROAD BESIDES B2B MEETS IN FOCU S COUNTRIES; OFFERING TECHNICAL, MARKETING AND DESIGN ASSISTANCE TO INDIAN EXPORTERS IN TERMS OF DESIGN INPUTS, PRODUCT DEVELOPMENT, BRANDING AND MARKETING; INVITING KEY RESOURCE PERSONNEL FOR FAIRS, SEMINARS AND LECTURES FOR EXCHANGE OF INFORMATION, KNOWLEDGE IDE AS AND STRATEGIES. 6 ITA NO.1192/MDS/2014 7. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT PROCEEDINGS NOTICED THAT ASSESSEE HAS RECEIVED ENTR ANCE MEMBERSHIP SUBSCRIPTION, CERTIFICATION FEE, BULLETI N REVENUE, INTEREST ON DEPOSITS ETC. AND HAS INCURRED VARIOUS EXPENSES TOWARDS SALARIES AND STAFF RELATED EXPENSES, ADMINI STRATIVE EXPENSES, NET EXPENSES OF CODEC ACTIVITIES AND THER E WAS SURPLUS OF ` 2.45 CRORES OUT OF INCOME OF ` 6.65 CRORES. THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE IS NOT DOING ANY CHARITABLE ACTIVITY AND THE ACTIVITIES OF THE A SSESSEE ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND HE APPLIED PROVISO TO SECTION 2(15) OF THE ACT AND DENIED EXEM PTION UNDER SECTION 10(23C)(IV) OF THE ACT. ON APPEAL, TH E COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT DENI AL OF EXEMPTION UNDER SECTION 2(15) AND 10(23C)(IV) OF TH E ACT BY THE ASSESSING OFFICER IS NOT BASED ON PROPER APPREC IATION OF FACTS. WHILE HOLDING SO, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- 4.4 GOVERNMENT OF INDIA, MOF DEPARTMENT OF REVENUE, CBDT IN ITS NOTIFICATION NO.23/2007 DATED 06.02.2007 NOTIFIED THAT ANY INCOME OF THE COUNCIL FOR LEATHER EXPORTS, CHENNAI SHALL NOT BE INCLUDED IN THE TOTAL INCOME FROM THE AY 2004-05 ONWARDS IN TERMS OF SEC.L0(23C)(IV) OF THE ACT. 7 ITA NO.1192/MDS/2014 SEC.10(23C)(IV) READS AS UNDER: (23C) ANY INCOME RECEIVED BY AN PERSON ON BEHALF OF... (IV) ANY OTHER FUND OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY, HAVING REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THROUGHOUT INDIA OR THROUGH OUT ANY STATE OR STATES; OR 4.5 THE ASSESSEE ALSO APPLIED FOR REGISTRATION U/S 12AA OF THE ACT VIDE ITS LETTER DATED 20.05.1997. WHILE REJECTING THE APPLICATION, THE DIT(E), CHENNA I IN HIS ORDER IN NO.DIT(E) NO.2(64)J97-98 DATED 12.11.1997 DECLARED THAT THE ASSESSEE WILL CLAIM EXEMPTION U/S 10(23C)(IV) OF THE ACT AND NOT UNDER THE GENERAL SECTIONS OF 11 & 12A OF THE ACT. 4.6 IN VIEW OF THE ABOVE FACTS, THE APPELLANT CONTINUES TO ENJOY EXEMPTIDN UJS 10(23C)(IV) OF THE ACT. FOR THE AY 2010-11, THE AO WAS OF THE OPINION THAT THE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION U/S 10(23C)(IV) OF THE ACT AS THE APPELLANT HAS NOT SATISFIED THE BASIC CONDITION OF 'ESTABLISHED FOR CHARITABLE PURPOSE'. ACCORDING TO THE AO, THE APPELLANT WAS NEITHER ESTABLISHED FOR CHARITABLE PURPOSE NOR DOING ANY ACTIVITY IN THE NATURE OF CHARITY. 5. PERUSAL OF OBJECTS SET OUT IN PAGE 2 & 3 OF TH E ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER WAS WELL AWARE OF THE OBJECTS OF THE COMPANY WHILE PASSING THE IMPUGNED ORDER. OBJECTS (A) TO (N) OF S.NO.1 ARE THE MAIN OBJECTS O F THE COMPANY AND OTHER OBJECTS ARE SUPPLEMENTARY TO THE MAIN OBJECTS AND THE ACTIVITIES OF THE COMPANY IN MY OPINION ARE IN ACCORDANCE WITH THE OBJECTS OF THE COMPANY. THE OBJECTS OF THE COMPANY ARE COVERED BY THE LAST LIMB OF THE DEFINITION U/S 2(15) OF THE ACT I.E. 'ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY'. THE AO'S VIEW THAT THE ACTIVITIES ARE ONLY FOR MEMBERS AND NOT FOR THE GENERAL PUBLIC ARE NOT ACCEPTABLE AS THE PERSONS ENGAGED IN THE LEATHER INDUSTRY ARE SECTION OF GENERAL PUBLIC. THE VIEW HELD BY THE AO IS NOT CORRECT AND NARROW INTERPRETATION OF THE DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT. THE 8 ITA NO.1192/MDS/2014 DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE A CT IS AN INCLUSIVE DEFINITION AND COVERS IN ITS AMBIT ANY ACTIVITY WHICH IS IN THE NATURE OF GENERAL PUBLIC UTILITY. GENERAL PUBLIC UTILITY DOES NOT MEAN THAT IT SHOULD COVER THE WHOLE POPULATION. IT IS SUFFICIENT IF IT COVERS A DISTINCT GROUP OF POPULATION IRRESPECTI VE OF CASTE, CREED, RELIGION, ETC. IN THIS CASE, THE BENEFICIARIES ARE EXPORTERS OF LEATHER GOODS FOR WHOSE BENEFITS, THE APPELLANT COMPANY HAS BEEN WORKING. FOR THIS PURPOSE ONLY, THE CBDT GRANTED EXEMPTION U/S 10(23C)(IV) OF THE ACT AND THE EXEMPTION GRANTED CONTINUES TILL DATE. MOREOVER, WHILE REJECTING THE APPLICATION OF THE APPELLANT, T HE DIT(E), CHENNAI ALSO DECLARED THAT THE APPELLANT CAN CLAIM EXEMPTION UNDER SPECIFIC PROVISION OF SE.10(23C)(IV) OF THE ACT. MOREOVER CIRCULAR NO.11/2008 DATED 19.12.2008 CLARIFIES THAT THE NEWLY INSERTED PROVISO TO SEC.2(15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OR U/S 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. 5.1 IN THIS CASE, STUDY OF INCOME AND EXPENDITURE STATEMENT AND BALANCE SHEET AND OBJECTS OF THE COMPANY REVEALS THAT THE ACTIVITY CARRIED ON BY IT IS BY NO STRETCH OF IMAGINATION INDICATES TRADE, COMMERCE OR BUSINESS. CERTIFICATION FEES ARE COLLECTED FROM MEMBERS FOR THEIR BENEFIT ONLY WHICH ARE USEFUL FOR AVAILING CUSTOMS DUTY BENEFIT FROM THE GOVERNMENT OF INDIA. OTHER RECEIPTS SUCH AS INTEREST OF DEPOSITS, SALE OF PUBLICATIONS, BULLETI N REVENUE, ETC. ARE ONLY INCIDENTAL IN NATURE AND ARE NOT IN THE NATURE OF COMMERCIAL ACTIVITY. GRANT IN AID IS RECEIVED FROM THE GOVERNMENT OF INDIA EVERY YEAR FOR EXPENDITURE RELATING TO EXHIBITIONS ABROAD, PUBLICITY ABROAD, SEMINAR IN INDIA, BUYER SELLER MEET, ETC. THE VARIOUS ACTIVITIES DETAILED B Y THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DO NOT REVEAL ANY COMMERCIAL ACTIVITY AND ALL THE ACTIVITIES ARE AIMED AT ASSISTING THE EXPORTERS IN THEIR BUSINESS ACTIVITIES. THE EARNING OF SURPLUS B Y THE APPELLANT LED THE ASSESSING OFFICER TO 9 ITA NO.1192/MDS/2014 THE CONCLUSION THAT ITS ACTIVITIES ARE PURELY ON COMMERCIAL LINES. THE AO'S FINDINGS THROUGHOUT THE ASSESSMENT ORDER ON THE CONTRARY, STRENGTHENS THE STAND OF THE APPELLANT THAT IT HAS BEEN CARRYING ON ACTIVITIES WHICH ARE IN THE NATURE OF ANY OBJECT OF GENERAL PUBLIC UTILITY. IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT'S ACTIVITIES ARE COVERED BY THE LAST LIMB OF THE DEFINITION U/S 2(15) OF THE ACT I.E. ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND IS NOT INVOLVE D IN ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THEREFORE, I AM OF THE OPINION THAT THE DENIAL OF EXEMPTION U/S 2(15) AND SEC.10(23C)(IV) OF THE ACT BY THE AO ARE NOT BASED ON PROPER APPRECIATION OF FACTS AND HENCE NOT TENABLE. 5.2 I HOLD THAT THE APPELLANT IS ENTITLED TO EXEMPT ION U/S 10(23C)(IV) OF THE ACT. HENCE, I DIRECT THE AO TO DELETE THE ADDITION MADE AND ACCEPT THE RETURN OF INCOME FILED BY THE APPELLANT. 8. ON GOING THROUGH THE ABOVE FINDINGS, WE DO NOT F IND ANY INFIRMITY IN THE ORDER PASSED BY THE COMMISSION ER OF INCOME TAX (APPEALS) IN DIRECTING THE ASSESSING OFF ICER TO GRANT EXEMPTION UNDER SECTION 10(23C)(IV) OF THE AC T. 9. IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATIO N VS. DIRECTOR GENERAL OF INCOME TAX(EXEMPTIONS) & OTHER S (2015) TIOL 227-HC-DEL-IT, THE DELHI HIGH COURT HEL D AS UNDER:- 58 . IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION 'CHARITABLE PURPOSES' AS DEFINED IN SECTION 2(15) 10 ITA NO.1192/MDS/2014 CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS . IT HAS TO TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLE AR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION 2(15) OF THE SAID ACT, THEN THE PROVISO WOULD BE AT RISK OF RUNNING FOWL OF THE PRINCIPLE O F EQUALITY ENSHRINED IN ARTICLE 14 OF THE CONSTITUTIO N INDIA. IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SECTION 10(23C)(I V) BECAUSE, IN OUR VIEW, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECT INTERPRETATION OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE T HAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITE D TO ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION , WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABL E PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RE LATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM ITS OBJECT TO BE A 'CHARIT ABLE PURPOSE'. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT 11 ITA NO.1192/MDS/2014 DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROF ITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARITAB LE PURPOSES. 10. AS COULD BE SEEN FROM THE ABOVE OBSERVATIONS OF THE HONBLE HIGH COURT THAT IF THE DOMINANT AND PRIME O BJECT OF THE INSTITUTION WHICH CLAIMS TO HAVE BEEN ESTABLISH ED FOR CHARITABLE PURPOSES, IS PROFIT MAKING WHETHER ITS A CTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR INDIRECTLY IN RENDERING OF ANY SERVICE IN RELATION TO ITS ANY TRADE, COMMERCE OR BUSINESS, THEN THE ASSESSEE WOU LD NOT ABLE TO CLAIM ITS OBJECT TO BE CHARITABLE PURPOSES. ON THE OTHER HAND, WHERE THE INSTITUTION IS NOT DRIVEN PRI MARILY BY A DESIRE OR MOTIVE TO EARN PROFITS BUT TO DO CHARITY THROUGH ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY, TH E INSTITUTION CAN BE REGARDED AS AN INSTITUTION ESTABLISHED FOR C HARITABLE PURPOSES. IN THE CASE ON HAND, WE DO NOT FIND IT I S ESTABLISHED THAT THE DOMINANT AND PRIME OBJECT O F THE ASSESSEE IS PROFIT MAKING. THE ASSESSEE IS DOING C HARITY THROUGH ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTI LITY, 12 ITA NO.1192/MDS/2014 THEREFORE, IT IS AN INSTITUTION ESTABLISHED FOR CHA RITABLE PURPOSES. 11. A SIMILAR SITUATION AROSE BEFORE THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF THE SOUTHERN INDIA CHAMBER OF COMMERCE & INDUSTRY IN ITA NOS.2733 & 2734/MDS/2014 , WHEREIN THE TRIBUNAL BY ITS ORDER DATED 17.04.2015 HELD AS UNDER:- 3. COUNSEL FOR THE ASSESSEE SUBMITS THAT EXEMPTI ON UNDER SECTION 11 WAS DENIED BY THE LOWER AUTHORITIE S ON THE GROUND THAT ASSESSEE IS INTO BUSINESS AND THE ACTIVITIES OF THE ASSESSEE ARE NOT CHARITABLE AND F ALLS WITHIN THE LIMB OF OBJECT OF GENERAL PUBLIC UTILITY AND HENCE NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT IN VIEW OF THE AMENDMENT TO SECTION 2(15) OF TH E ACT. COUNSEL SUBMITS THAT VARIOUS CHARGES RECEIVED ARE INCIDENTAL TO CARRY ON ITS OBJECTS AND THEREFORE EX EMPTION UNDER SECTION 11 CANNOT BE DENIED. COUNSEL FOR THE ASSESSEE SUBMITS THAT PLACES RELIANCE ON THE RECENT ORDER OF KOLKATA BENCH OF THIS TRIBUNAL IN THE C ASE OF INDIAN CHAMBER OF COMMERCE VS. ITO(EXEMPTION) IN IT A NO.1491 & 128/KOL/2012 DATED 2.12.2014 FOR THE ASSESSMENT YEARS 2008-09 & 2009-10. REFERRING TO TH E SAID DECISION OF THIS TRIBUNAL, COUNSEL SUBMITS TH AT AN IDENTICAL ISSUE HAS COME UP BEFORE THE KOLKATA BENC H WHEREIN IT WAS HELD THAT RECEIPTS REPORTED BY THE ASSESSEE FOR MEETINGS, CONFERENCES, SEMINARS, ENVIRONMENT MANAGEMENT CENTRE, FEES FOR CERTIFICATE OF ORIGIN IS NOT IN THE NATURE OF BUSINESS AND IS INC IDENTAL TO CARRY ON THE OBJECTS OF THE ASSESSEE. THEREFORE, I N VIEW OF THE ABOVE DECISION, COUNSEL SUBMITS THAT DENYING EXEMPTION UNDER SECTION 11 TO THE ASSESSEE CHARITAB LE ORGANIZATION IS NOT JUSTIFIED. 4. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF LOWER AUTHORITIES. HE PLACES RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE 13 ITA NO.1192/MDS/2014 CASE OF INDIAN CHAMBERS OF COMMERCE VS. CIT ( 101 I TR 796) AND SUBMITS THAT IN VIEW OF THE SAID DECISION THE AUTHORITIES BELOW HAS RIGHTLY DENIED EXEMPTION TO T HE ASSESSEE UNDER SECTION 11 OF THE ACT. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHORITIES AND DECISIONS RELIED ON. ON GOING THRO UGH THE ORDER OF KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF INDIA CHAMBER OF COMMERCE VS. ITO (SUPRA), WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY COVERED BY THE SAID DECISION, AS THE TRIBUNAL HAD ELABORATELY CONSIDERE D THE ACTIVITIES OF THE ASSESSEE IN THAT CASE WHICH IS SI MILAR TO THAT OF THE ASSESSEE IN THE PRESENT APPEAL AND THE TRIBUNAL HELD THAT ASSESSEE IS A CHARITABLE ORGANIZ ATION AND THE RECEIPTS COLLECTED BY THE ASSESSEE ARE ONLY INCIDENTAL TO CARRY ON ITS CHARITABLE OBJECTS AND T HEREFORE, ASSESSEE IS NOT HIT BY NEWLY INSERTED PROVISO TO SE CTION 2(15) OF THE ACT. THE DECISION OF HONBLE SUPREME C OURT RELIED ON BY THE DEPARTMENTAL REPRESENTATIVE IN TH E CASE OF INDIAN CHAMBERS OF COMMERCE VS. CIT (SUPRA) WAS ALSO CONSIDERED BY THE KOLKATA BENCH OF THIS TRIBUNAL IN ITA NOS.1491 & 1284/KOL/2012 DATED 2.12.2014 IN DECIDING THE APPEALS, WHEREIN THE TRI BUNAL OBSERVED AS UNDER:- 35. IN VIEW OF THE ABOVE WE THUS NOW TURN TO EX AMINE AND ANALYSE IN FULL DETAILS THE PARTICULAR FACTS OF THE PRESENT CASE. T HAT THE ASSESSEE ASSOCIATION IS A CHARITABLE INST ITUTION, DULY REGISTERED AS SUCH U/S. 12A OF THE ACT, CARRYI NG ON ITS MAIN OBJECT OF DEVELOPMENT OF TRADE, INDUSTRIES AN D COMMERCE. THE MAIN OBJECTS FOR WHICH THE ASSOCIATIO N CAME INTO EXISTENCE, ARE CLEARLY SET OUT IN CLAUSE 3 OF THE MEMORANDUM OF ASSOCIATION WHICH DULY RECORDS AND RE ADS AS UNDER: 3(A) TO PROMOTE AND PROTECT THE TRADE, COMMERCE AN D INDUSTRIES AND IN PARTICULAR THE TRADE, COMMERCE A ND INDUSTRIES IN OR WITH WHICH INDIANS ARE ENGAGED OR CONCERNED. THE ACTIVITIES OF CONDUCTING ENVIRONMENT MANAGEMENT CENTRE, MEETINGS, CONFERENCES & SEMINAR AND ISSUANC E OF CERTIFICATE OF ORIGIN, BEING THE ACTIVITIES STATED TO BE SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINES S WERE ALL WELL COVERED BY THE MAIN OBJECT BEING FULLY CONNECT ED, INCIDENTAL AND ANCILLARY TO THE MAIN PURPOSE AND WE RE 14 ITA NO.1192/MDS/2014 CONDUCTED SOLELY FOR THE EMPOWERMENT, BETTERMENT AN D FOR CREATING AWARENESS AMONGST THE INDUSTRIALISTS IN OR DER TO BRING ABOUT THE DEVELOPMENT OF TRADE AND INDUSTRIE S IN INDIA. FURTHER IT IS TO BE NOTICED THAT THE MEMORANDUM HAS ALSO SPECIFICALLY AUTHORIZED THE CHAMBER TO DO ALL OTHE R THINGS AS MAY BE CONDUCTIVE TO THE DEVELOPMENT OF TRADE, COMM ERCE AND INDUSTRIES, OR INCIDENTAL TO ATTAINMENT OF THE ABOVE OBJECTIVES OR ANY OF THEM. THUS IT WAS ONLY FOR TH E PURPOSE OF SECURING ITS PRIMARY AIMS OF PROPER DEVELOPMENT OF BUSINESS IN INDIA THAT THE ASSESSEE WAS TAKING THE SAID ANCILLARY STEPS. THE SAID ACTIVITIES WERE NOT CARRI ED OUT INDEPENDENT OF THE MAIN PURPOSE OF THE ASSOCIATION OF THE INSTITUTION BEING THE DEVELOPMENT AND PROTECTION OF TRADE. THERE WAS NO INDEPENDENT PROFIT MOTIVE IN ANY OF TH E SAID ACTIVITIES. THE SURPLUS ARISING OUT OF THE SAME WAS MERELY INCIDENTAL TO THE MAIN OBJECT TO CHARITY. THE MAJOR ITY OF THE RECEIPTS IN THE SAID ACTIVITIES WERE OUT OF THE SPO NSORSHIPS AND DONATIONS. THE EXPENSES INCURRED ON THE SAID AC TIVITIES AS AND WHEN INCURRED WERE ALL SEPARATELY DEBITED TO THE SAID ACCOUNTS AND THE BALANCE WAS SHOWN AS SURPLUS OVER RECEIPTS. THUS IN VIEW OF THE ABOVE IT IS CLEAR THA T THE ALLEGED ACTIVITIES WERE ALL MERELY INCIDENTAL TO THE MAIN O BJECT OF THE ASSESSEE AND THE PREDOMINANT OBJECT OF THE ASSOCIA TION BEING THE PROMOTION DEVELOPMENT AND PROTECTION OF T RADE AND COMMERCE WHICH IS AN OBJECT OF GENERAL PUBLIC U TILITY, IT CAN NEVER BE THE CASE THAT IT IS ENGAGED IN BUSINE SS, TRADE OR COMMERCE OR IN ANY SERVICE IN RELATION TO BUSI NESS, TRADE OR COMMERCE THE INDIVIDUAL NATURE AND PURPOSE OF T HE SPECIFIC ACTIVITIES, IT IS STATED THAT THE ACTIVITI ES HELD BY AO AND THE (A) TO BE BUSINESS IN NATURE, WERE AS FOLLO WS: (A) MEETINGS, CONFERENCES & SEMINARS (B) ENVIRONMENT MANAGEMENT CENTRE (C)FEES FOR CERTIFICATE OF ORIGIN FACTS RELATING TO THESE ACTIVITIES ARE DISCUSSED IN DETAIL IN PARA 23 TO 25 OF THIS ORDER ABOVE, WHICH NEED NOT B E REPEATED. 36. FROM FACTS IN ENTIRETY, NOW THE QUESTION ARI SES IS WHETHER PRINCIPLE OF CONSISTENCY WILL APPLY OR NOT? FROM AY 1985-86 TO 2007-08 EXEMPTION U/S 11 OF THE ACT WAS ALLOWED. NOW, HAVING EXTENSIVELY WITH THE NEWLY AME NDED SECTION 2(15) OF THE ACT AND ITS ABSOLUTE INAPPLICA BILITY TO THE CASE OF ASSESSEE SUPPORTED BY VARIOUS JUDICIAL DECI SIONS, WE WILL DISCUSS THIS ISSUE WE FIND THAT CIT(A) WITHOUT APPRECIATING THAT THE BASIS PRINCIPLE UNDERLYING TH E DEFINITION OF CHARITABLE PURPOSE REMAINED UNALTERED, AND ON 15 ITA NO.1192/MDS/2014 AMENDMENT IN THE SECTION 2(15) OF THE ACT W.E.F. 01 /04/2009, WHEREBY THE RESTRICTIVE FIRST PROVISO WAS INSERTED THEREIN, LOWER AUTHORITIES HELD THAT THE SAME SUBSTANTIALLY CHANGED THE POSITION OF LAW AND THUS THE PRINCIPLE OF CONSI STENCY DID NOT APPLY. BUT WE ARE OF THE VIEW THAT A DETAILED READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS, I NTERPRETING THE DEFINITION OF CHARITABLE PURPOSE AS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF BUSINE SS IN RELATION TO THE SAID SECTION AMPLY REVELS THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS, ALL THROUGH THE YEARS, BEEN UPHELD TO BE THE DETERMINING FACTOR LAYING DOWN WHE THER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHERE T HE MAIN OBJECT OF THE INSTITUTION WAS CHARITABLE IN NATUR E, THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVEMENT OF T HE SAID, BEING INCIDENTAL OR ANCILLARY TO THE MAIN OBJECT, E VEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NO N MEMBERS, WERE ALL HELD TO BE CHARITABLE IN NATURE. HON'BLE APEX COURT IN THE EARLIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEARLY LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION WAS ADVANCEMENT OF OBJECT S OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR AC HIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATURE. IT WAS LAID OUT BY THE COURT THAT, THAT IF THE PRIMARY PURPOSE BE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL ENTRY INTO THE POLITICAL DOMAIN FOR ACHIEVING THAT PURPOSE, E.G. PROMOTION OF OR OPPOSITION TO LEGISLATION CONCERNING THAT PURPOSE, WAS CONTEMPLATED. IT WAS ONLY FOR THE PURPOSE OF SECURING ITS PRIMARY AIMS THAT IT WAS MENTIONED IN THE MEMORANDUM OF ASSOCIATION THAT THE CHAMBER MIGHT TAKE STEPS TO URGE OR OPPOSE LEGISLAT IVE OR OTHER MEASURES AFFECTING TRADE, COMMERCE OR MANUFAC TURES. SUCH AN OBJECT OUGHT TO BE REGARDED AS PURELY ANCIL LARY OR SUBSIDIARY AND NOT THE PRIMARY OBJECT. IN CONNECTI ON TO THE ABOVE CASE IT IS LAID OUT THE SAID CASE DEALT WITH THE ASSESSMENT OF THE ASSESSEE IN THE A.YS 1948-49 TO W HEREIN RELEVANT TO THE SAID AYS 8-49 TO 1952 -53, BY THE L AST PARAGRAPH OF SUB-SECTION (3) OF THE IT ACT, 1922, CHARITABLE PURPOSES WAS DEFINED AS .... IN THIS SUB-SECTION CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, BUT NOTHING CONTAINED IN 16 ITA NO.1192/MDS/2014 CLAUSE (I) OR CLAUSE (II) SHALL OPERATE TO EXEMPT FROM THE PROVISIONS OF THIS ACT PART OF THE INCOME FROM PROPERTY HELD UNDER A TRUST OR OTHER LEGAL OBLIGATION FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENSURE FOR THE BENEFIT OF THE PUBLIC. THE ADDING OF THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT: WAS INTRODUCED BY THE INCOME T AX ACT, 1961. HON'BLE APEX COURT IN THE EARLIEST DECISION I N THE CASE OF SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION ( SUPRA) HELD THE THEORY OF DOMINANT OR PRIMARY OBJECT OF TH E TRUST TO BE THE DETERMINING FACTOR SO AS TO TAKE THE CARRYIN G ON OF THE BUSINESS ACTIVITY MERELY ANCILLARY OR INCIDENTAL TO THE MAIN OBJECT. IT WAS HELD AS FOLLOWS:- (I) THAT THE DOMINANT OR PRIMARY PURPOSE OF THE ASSESSEE WAS TO PROMOTE COMMERCE AND TRADE IN ART SILK YARN, RAW SILK, COTTON YARN, ART SILK CLOT H SILK CLOTH AND COTTON CLOTH A SET OUT IN CLAUSE (A) AND THE OBJECTS SPECIFIED IN CLAUSES (B) TO (E) WERE MERELY POWERS INCIDENTAL TO THE CARRYING OUT OF THA T DOMINANT AND PRIMARY PURPOSE; (II)THAT THE DOMINANT OR PRIMARY PURPOSE OF THE PROMOTION OF COMMERCE AND TRADE IN ART SILK, ETC., WAS AN OBJECT OF PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WITHIN THE MEANING OF S.2(15) AND THAT THE ASSESSEE WAS ENTITLED TO EXEMPTION UNDER S 11(1)(A) AGAIN THE HON'BLE APEX COURT IN THE CASE OF FEDERAT ION OF INDIAN CHAMBERS OF COMMERCE & INDUSTRY (SUPRA) HELD THAT THAT THE DOMINANT OBJECT WITH WHICH THE FEDERATION WAS CONSTITUTED BEING A CHARITABLE PURPOSE VIZ. PROMOTION, PROTECTION AND DEVELOPMENT OF TRADE, COMMERCE AND INDUSTRY, THERE BEING NO MOTIVE TO EARN PROFITS, THE RESPONDENT WAS NOT ENGAGED IN ANY ACTIVITY IN THE NATURE OF BUSINESS OR TRADE, AND, IF ANY INCOME AROSE FROM SUCH ACTIVITY, IT WAS ONLY INCIDENTAL OR ANCILLARY TO THE DOMINANT OBJECT FOR THE WELFARE AN D COMMON GOOD OF THE COUNTRYS TRADE, COMMERCE AND INDUSTRY, AND ITS INCOME WAS, THEREFORE, EXEMPT FROM TAX UNDER S.11 OF THE IT ACT, 1961 17 ITA NO.1192/MDS/2014 AGAIN REITERATING THE DOMINANT PURPOSE THEORY, THE HON'BLE SC IN THE CASE OF SAI PUBLICATION FUND (SUPRA) LAID OUT AS FOLLOWS: ...IF THE MAIN ACTIVITY IS NOT BUSINESS, THEN ANY TRANSACTION INCIDENTAL OR ANCILLARY WOULD NOT NORMALLY AMOUNT TO BUSINESS UNLESS AN INDEPENDENT INTENTION TO CARRY ON BUSINESS IN THE INCIDENTAL OR ANCILLARY ACTIVITY IS ESTABLISHED. IN SUCH CASES, THE ONUS OF PROOF OF AN INDEPENDENT INTENTION TO CARRY ON BUSINESS : CONNECTED WITH O R INCIDENTAL OR ANCILLARY SALES WILL REST ON THE DEPARTMENT. THUS, IF THE MAIN ACTIVITY OF A PERSON IS NOT TRADE, COMMERCE ETC., ORDINARILY INCIDENTAL OR ANCILLARY ACTIVITY MAY NOT COME WITHIN THE MEANING OF BUSINESS. IN THE RECENT DECISION WHICH DEALS SPECIFICALLY WIT H THE NEWLY AMENDED SECTION 2(15) OF THE ACT, IN THE CASE OF IN STITUTE OF CHARTERED ACCOUNTANTS OF INDIA V. DIRECTOR GENERAL OF INCOME -TAX (EXEMPTIONS) [2012] 347 ITR 0099 DEL HC , LAYING DOWN THE VERY SAME PRINCIPLE IT WAS AGAIN L AID: THAT THE FUNDAMENTAL OR DOMINANT FUNCTION OF THE INSTITUTE WAS TO EXERCISE OVERALL CONTROL AND REGULATE THE ACTIVITIES OF THE MEMBERS/ ENROLLED CHARTERED ACCOUNTANTS. A VERY NARROW VIEW HAD BEEN TAKEN THAT THE INSTITUTE WAS HOLDING COACHING CLASSES AND THAT THIS AMOUNTED TO BUSINESS. AGAIN, HON'BLE BOMBAY HIGH COURT IN THE WP OF BAUN FOUNDATION TRUST (WRIT PETITION NO. 1206 OF 2010 IN THE HIGH COURT OF JUDICATURE AT BOMBAY 27 MARCH 2012) IT WAS HELD THAT 4... IT IS A WELL SETTLED POSITION IN LAW THAT THE DOMINANT NATURE OF THE PURPOSE FOR WHICH THE TRUST EXISTS HAS TO BE CONSIDERED. THE CHIEF COMMISSIONER HAS NOT DOUBTED THE GENUINENESS OF THE TRUST OR THE FACT THAT IT IS CONDUCTING A HOSPITAL. THUS FROM ALL THE ABOVE IT IS SEEN THAT THOUGH THE DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) HAS UN DERGONE CHANGES, THE PRINCIPLE UNDERLYING THE SAME HAS REMA INED THE SAME IN CONTEXT OF THE ABOVE, WITH REGARD TO TH E PRINCIPLE OF CONSISTENCY IT WOULD BE OF RELEVANC E HERE TO 18 ITA NO.1192/MDS/2014 QUOTE THE DECISION OF THE APEX COURT IN THE CASE OF RADHASOAMI SATSANG V. COMMISSIONER OF INCOME-TAX (1 93 ITR 321 SC) WHEREIN IT WAS HELD THAT: .... (II) THAT, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE DEPARTMENT TO TAKE A DIFFERENT VIEW FROM THAT TAKEN IN EARLIER PROCEEDINGS, THE QUESTION OF THE EXEMPTION OF THE ASSESSEE APPELLANT SHOULD NOT HAVE BEEN REOPENED.STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. THOUGH, EACH ASSESSMENT YEAR BEING A UNIT, WHAT WAS DECIDED IN ONE YEAR MIGHT NOT APPLY IN THE FOLLOWING YEAR; WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDERED, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 37. NOW COMING TO APPLICATION OF SECTION 28(III) OF THE ACT. WE FIND THAT SECTION 28(III) OF THE ACT PROVIDES TH AT THE INCOME DERIVED BY A TRADE, PROFESSIONAL OR SIMILAR ASSOCIATION FROM SPECIFIC SERVICES PERFORMED FOR IT S MEMBERS WILL BE BROUGHT TO CHARGE UNDER THE HEAD PROFITS A ND GAINS OF BUSINESS OR PROFESSION THE UNDERLYING IDEA BEHIND S. 28(III) IS THAT THERE MUST BE A BUSINESS FROM WHICH INCOME IS DERIVED AND THAT IN THE COURSE OF SUCH BUSINESS SPE CIFIC SERVICES MUST BE RENDERED FOR ITS MEMBERS. THE CONC EPT BEHIND S.28(III) IS TO CUT AT THE MUTUALITY PRINCIP LE BEING RELIED ON IN SUPPORT OF A CLAIM FOR EXEMPTION, WHEN THE AS SESSEE WAS ACTUALLY DERIVING INCOME OR MAKING PROFITS AS A RESULT OF RENDERING SPECIFIC SERVICES FOR ITS MEMBERS IN A CO MMERCIAL WAY. THE REASON FOR THE INTRODUCTION OF SECTION 28( III) OF ACT, TO IGNORE THE PRINCIPLE OF MUTUALITY AND REACH THE SURPLUS ARISING TO THE MUTUAL ASSOCIATION AND THIS IS CLEAR FROM THE FACT THAT THESE PROVISIONS ARE CONFIRMED TO SERVICE S PERFORMED BY THE ASSOCIATION FOR ITS MEMBERS. SUC H INCOME WOULD EITHER BE CHARGED AS BUSINESS INCOME O R UNDER THE RESIDUAL HEAD, DEPENDING UPON THE QUESTIO N WHETHER THE ACTIVITIES OF THE ASSOCIATION WITH THE NON- MEMBERS AMOUNT TO A BUSINESS OR OTHERWISE. SECTION 28(III) CONSTITUTES CERTAIN INCOME OF THE ASSOCIATION TO BE BUSINESS INCOME WITHOUT AFFECTING THE SCOPE OF THE EXEMPTION UNDER SECTION 11. SECTION 2(15) WHICH INCORPORATES THE DE FINITION OF CHARITABLE PURPOSES SIMPLY SHOWS THAT SEVERAL MUT UAL 19 ITA NO.1192/MDS/2014 ASSOCIATIONS MAY ALSO FALL WITHIN THE DEFINITION. T HE RECEIPTS DERIVED BY A CHAMBER OF COMMERCE AND INDUSTRY FOR PERFORMING SPECIFIC SERVICES TO ITS MEMBERS, THOUGH TREATED AS BUSINESS INCOME UNDER SECTION 28(III) WOULD STIL L BE ENTITLED TO THE EXEMPTION UNDER SECTION 11R.W.S. 2( 15) OF THE ACT, PROVIDED THERE IS NO PROFIT MOTIVE. THUS, ASSE SSEE BEING A CHARITABLE INSTITUTION CARRYING ON THE OBJECT OF PROMOTION AND DEVELOPMENT OF TRADE AND COMMERCE AND WHICH IS NOT INVOLVED IN THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF BUSINESS, THE SAID SECTION 28(III) OF THE ACT DOE S NOT APPLY. 38. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND DETAILE D READING OF THE VARIOUS JUDICIAL DECISIONS THROUGH THE YEARS , INTERPRETING THE DEFINITION OF CHARITABLE PURPOSE AS LAID OUT IN SECTION 2(15) OF THE ACT AND ALSO THE DEFINITION OF BUSINESS IN RELATION TO THE SAID SECTION AMPLY RE VELS THAT THE THEORY OF DOMINANT PURPOSE HAS ALWAYS, ALL THRO UGH THE YEARS, BEEN UPHELD TO BE THE DETERMINING FACTOR LAY ING DOWN WHETHER THE INSTITUTION IS CHARITABLE IN NATURE OR NOT. WHERE THE MAIN OBJECT OF THE INSTITUTION WAS CHARITABLE IN NATURE, THEN THE ACTIVITIES CARRIED OUT TOWARDS THE ACHIEVE MENT OF THE SAID, BEING INCIDENTAL OR ANCILLARY TO THE MAIN OBJ ECT, EVEN IF RESULTING IN PROFIT AND EVEN IF CARRIED OUT WITH NO N MEMBERS, WERE ALL HELD TO BE CHARITABLE IN NATURE. HON'BLE APEX COURT IN THE EARLIEST CASE OF ANDHRA CHAMBER OF COMMERCE (SUPRA) HAD CLEARLY LAID OUT THE PRINCIPLE THAT IF THE PRIMARY PURPOSE OF AN INSTITUTION WAS ADVANCEMENT OF OBJECT S OF GENERAL PUBLIC UTILITY, IT WOULD REMAIN CHARITABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR AC HIEVING THE MAIN PURPOSE, WAS PROFITABLE IN NATURE. IN OUR VIEW THE BASIC PRINCIPLE UNDERLYING THE DEFINITION OF CHARITABLE PURPOSE REMAINED UNALTERED EVEN ON AMENDMENT IN THE SECTION 2(15) OF THE ACT W.E.F. 01/04/2009, THOUGH THE RESTRICTIV E FIRST PROVISO WAS INSERTED THEREIN. ACCORDINGLY, IN THE G IVEN FACTS OF THE CASE AS DISCUSSED ABOVE IN DETAIL, THE ASSES SEE ASSOCIATIONS PRIMARY PURPOSE WAS ADVANCEMENT OF OB JECTS OF GENERAL PUBLIC UTILITY AND IT WOULD REMAIN CHARI TABLE EVEN IF AN INCIDENTAL OR ANCILLARY ACTIVITY OR PURPOSE, FOR ACHIEVING THE MAIN PURPOSE WAS PROFITABLE IN NATURE. HENCE, A SSESSEE IS NOT HIT BY NEWLY INSERTED PROVISO TO SECTION 2( 15) OF THE ACT. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 6. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIB UNAL, WE ALLOW THE APPEALS OF THE ASSESSEE. 20 ITA NO.1192/MDS/2014 12. RESPECTFULLY FOLLOWING THE SAID DECISIONS, WE U PHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) I N GRANTING DEDUCTION UNDER SECTION 10(23C)(IV) TO THE ASSESSEE AND REJECT THE GROUNDS RAISED BY THE REVENUE. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 26 TH JUNE, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .