SHREE NASHIK PANCHVATI PANJARPOLE, MUMBAI V. DIT (E), MUMBAI

ITA 1198/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5864 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 05-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDE
• Keywords: Business income; Rectification of order; Charitable institution; Cancellation of registration
• Section: 80G; 12A; 12AA; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J B ENCH, MUMBAI , , !'# , $ % BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BILL AIYA, AM ./ I.T.A. NO.1198/MUM/2012 ( & & & & / ASSESSMENT YEAR :2009-2010 SHREE NASHIK PANCHVATI PANJARPOLE. 1 ST FLOOR, LENTIN CHAMBER, FORT,MUMBAI-400 023 / VS. THE DIT (EXEM), PIRAMAL CHAMBERS, 6 TH FLOOR, LALBAUG, MUMBAI-400 012 ./ I.T.A. NO.4018/MUM/2013 ( & & & & / ASSESSMENT YEAR :2009-2010 SHREE NASHIK PANCHVATI PANJARPOLE. 1 ST FLOOR, LENTIN CHAMBER, FORT,MUMBAI-400 023 / VS. THE ADIT (EXEM), PIRAMAL CHAMBERS, 6 TH FLOOR, LALBAUG, MUMBAI-400 012 ' $ ./ ( ./ PAN/GIR NO. :AAATN 0263C ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , / ASSESSEE BY: SHRI ARVIND SONDE *+') - , / REVENUE BY: SHRI A. RAMCHANDRAN SHRI S.D. SRIVASTAVA - ./$ / DATE OF HEARING :05.03.2014 01& - ./$ / DATE OF PRONOUNCEMENT :26.03.2014 2 / O R D E R PER N.K. BILLAIYA, AM: ITA NO. 1198/MUM/2012 A.Y. 2009-10 WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE O RDER OF THE DIT (EXEM), MUMBAI DT.12.12.2011 BY WHICH THE DIT (EXEM ) HAS CANCELLED NASIK PANCHVATI PANJARPOLE 2 THE REGISTRATION ALLOWED TO THE TRUST HOLDING THE T RUST AS NON CHARITABLE TRUST/INSTITUTION. 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THE DIT (EXEMPTION) ERRED IN CANCELLING THE REGISTRATION OF THE TRUST U/S.I2AA (3) OF THE IT. A CT 1961 ON THE GROUND THAT THE TRUST HAS CEASED TO BE FOR CHAR ITABLE PURPOSE UNDER PROVISO TO SEC. 2(15) AS IT IS CARRYI NG ON THE COMMERCIAL ACTIVITIES FOR ACHIEVING ITS OBJECTS. II. THE DIT (E) FAILED TO APPRECIATE THAT: I. THE ACTIVITIES FOR SALE OF MILK AND INCOME BY WA Y OF INTEREST AND DIVIDEND WERE NOT COMMERCIAL ACTIVITIE S, CARRIED OUT FOR ADVANCING ITS OBJECT. II. THE ABOVE ACTIVITIES WERE NOT CARRIED OUT FOR A DVANCING THE OBJECT OF THE TRUST FOR GENERAL PUBLIC UTILITY BUT WERE IN THE COURSE OF RUNNING THE GAUSHALA AND THEREFORE NO T FALLING WITHIN THE PROVISO, TO SEC. 2(15) AND THE AMENDMENT THEREFORE DIDNT APPLY TO THE APPELLANT. III. THE ACTIVITIES ARE OBJECT OF THE TRUST ITSELF IN WHICH THE PROVISO TO SEC. 2(15) DOESNT APPLY AS THERE IS A D IFFERENCE BETWEEN THE OBJECT ITSELF AND THE ADVANCEMENT OF OT HER OBJECT INVOLVING THE CARRYING ON COMMERCIAL ACTIVITIES. TH E PROVISO DOESNT APPLY TO THE RECEIPTS FROM SALE OF MILK, DI VIDEND AND INTEREST. IV. THE AFORESAID ACTIVITIES ARE NOT CARRIED OUT WI TH A VIEW TO MAKE ANY PROFIT BUT FOR CARRYING OUT THE OBJECTS OF THE TRUST. III. THE DIT(E) ERRED IN CANCELLING THE REGISTRATIO N U/S. 12AA(3) FROM ASST YEAR 2009-10 ALTHOUGH REGISTRATI ON UNDER SECTION 12A WAS WITHDRAWN IN ASST YEAR 2011-1 2.THE SECTION DOESNT AUTHORIZE THE DIT (E) FROM WITHDRAW ING / CANCELLING THE REGISTRATION IN ASST.YEAR 2011-12 RETROSPECTIVELY FROM ASST.YEAR 2009-10. NASIK PANCHVATI PANJARPOLE 3 3. THE DIT(EXEMPTION) ISSUED A SHOW CAUSE NOTICE DT . 3.11.2011 PROPOSING TO WITHDRAW THE REGISTRATION GRANTED U/S. 12AA OF THE ACT. THE SHOW CAUSE NOTICE ISSUED AND SERVED UPON THE ASSESS EE READS AS UNDER: A PROPOSAL HAS BEEN RECEIVED FROM ADIT(E)-LL(2), M UMBAI, REGARDING THE CANCELLATION OF REGISTRATION GRANTED U/S.12A OF THE I.T.ACT IN YOUR CASE. THE FOLLOWING REASONS HAVE BE EN ACCORDED FOR DRAWING THE ABOVE CONCLUSION THE DETAILS OF THE OBJECT OF THE ASSESSEE TRUST AND THE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSI NESS (INCLUDING ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS; FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION OF THE INCOME FROM SUCH ACTIVITY) ARE AS UNDER: DETAILS OF OBJECTS OF THE ASSESSEE TRUST: 1. TO PROVIDE ASYLUM FOR OLD, MAIMED, SOCK, THY, WE AK, DISABLED AND STRAY ANIMALS AND BIRDS, MORE PARTICULARLY COWS AND OTHER MUCH CATTLE. 2 TO BRING ABOUT IMPROVEMENT IN BREEDING CATTLE IN INDIA AND TO SET UP, ESTABLISH, RAISE, MAINTAIN, DEVELOP AND UTILIZE FUNDS FOR THE BENEFICIAL PROMOTION, UP-KEEP, MAINTENANCE AND PROP AGATION OF COWS AND OTHER TYPES OF CATTLE. DETAILS OF ACTIVITIES IN THE NATURE OF COMMERCE OR TRADE DURINCGA.Y.2009-10 INCOME SALE MILK IS AT RS.1,57,53,960/-. BESIDES, I T HAS INCOME FROMINTEREST AND DIVIDEND TO THE TUNE OF RS.58,34,6 23/-. YOUR KIND ATTENTION IS DRAWN TO PROVISO TO SEC.2(15 ) OF THE INCOME TAX ACT, 1961 AND ALTER TAKING INTO ACCOUNT THE ACT IVITIES AS REFERRED TO IN EARLIER PARAS, IT IS CONSIDERED THAT YOUR TRUST/ INSTITUTION IS ENGAGED IN NON-CHARITABLE ACTIVITIES AND AS SUCH THE REGISTRATION AS GRANTED U/S.12A OF THE I.T.ACT, NEE DS TO BE CANCELLED / WITHDRAWN. IN VIEW OF THE AFORESAID REASONS, YOU ARE HEREBY GIVEN NASIK PANCHVATI PANJARPOLE 4 SHOW CAUSE AS TO WHY REGISTRATION AS GRANTED TO YOU SHOULD NOT BE WITHDRAWN BY INVOKING THE PROVISIONS OF SECTION 12A A(3). 4. THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTIC E FURNISHED A DETAILED SUBMISSION VIDE LETTER DT. 29.11.2011. IT WAS CONTENDED THAT THE ASSESSEE TRUST IS NOT HIT BY THE AMENDMENT OF DEFIN ITION OF CHARITABLE PURPOSE STATING THAT THE ASSESSEE TRUST IS ENGAGED IN ACTIVITIES WHICH DO NOT INVOLVE IN THE CARRYING ON OF ANY ACTIVITY IN T HE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERING OF ANY SERVICES IN RELATION TO TRADE, COMMERCE AND BUSINESS. IT WAS EXPLAINED THAT THE T RUST IS 130 YEARS OLD AND CARRIES ON PANJRAPOLE ACTIVITIES CONSISTENTLY S INCE ITS INCEPTION. IT WAS STRONGLY SUBMITTED THAT THE MAIN OBJECT OF THE ASSE SSEE-TRUST IS THAT OF RUNNING PANJRAPOLE ACTIVITY WHICH MEANS COW BREEDIN G AND PROTECTION OF COWS AND OXEN WHICH DO NOT INVOLVE IN ANY TRADE, CO MMERCE OR BUSINESS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE-T RUST, IN THE LIGHT OF THE AMENDED PROVISIONS OF SEC. 2(15) THE DIT (EXEM) WA S OF THE FIRM BELIEF THAT IN THE ASSESSEES CASE THERE ARE CLEAR CUT EAR NINGS BY IT WHICH IS SHOWN AS INCOME BY WAY OF SALE OF MILK AND INTEREST AND DIVIDEND WHICH ARE CLEARLY IN FAR EXCESS OF RS. 10 LACS AS MENTION ED IN PROVISO TO SEC. 2(15) OF THE ACT. THE DIT (EXEM) WAS OF THE OPINIO N THAT THE ASSESSEE IS DOING REGULAR ACTIVITIES WHICH ARE IN THE NATURE OF BUSINESS BY WAY OF SALE OF MILK AND AS SUCH DIRECTLY HIT BY THE PROVISO TO SEC. 2(15) OF THE ACT. THE DIT (EXEM.) FINALLY CONCLUDED THAT ONCE IT IS H ELD THAT THE ASSESSEE IS NOT FOR CHARITABLE PURPOSE, THEN THE TRUST ITSEL F BECOME NON GENUINE AS IT LOSES ITS PUBLIC CHARITABLE STATUS AND ACCORDI NGLY THE PROVISIONS OF SEC. 12AA(3) OF THE ACT GET ATTRACTED. THE DIT(EXEM.) W ENT ON TO WITHDRAW THE EXEMPTION ALLOWED TO THE TRUST IN EARLIER YEARS U/S. 12AA W.E.F. A.Y. 2009-10 HOLDING THE TRUST AS NON CHARITABLE TRUST. NASIK PANCHVATI PANJARPOLE 5 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. TH E LD. COUNSEL FOR THE ASSESSEE STRONGLY CONTENDED THAT THE ACTION OF THE DIT(EXEM) IS ULTRA VIRUS TO THE PROVISIONS OF SEC. 12AA(3) OF THE ACT . IT IS THE SAY OF THE LD. COUNSEL THAT THE DIT (EXEM) WHILE CANCELLING TH E REGISTRATION ALREADY GRANTED TO THE ASSESSEE-TRUST HAS EXCEEDED THE POWE RS VESTED ON HIM BY VIRTUE OF PROVISIONS OF SEC,. 12AA(3) OF THE ACT. THE LD. COUNSEL STRONGLY SUBMITTED THAT SEC. 12AA(3) ENVISAGES TWO CONDITIONS WHICH ALLOW THE COMMISSIONER TO CANCEL THE REGISTRATION. THE CONDITIONS ARE VIZ (I) THE COMMISSIONER IS SATISFIED THAT THE ACTI VITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE AND (II) THE ACTIVITIE S OF SUCH TRUST ARE NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION. 5.1. IT WAS EXPLAINED THAT THE ASSESSEE TRUST WAS E STABLISHED IN THE YEAR 1879 FOR THE PURPOSE OF PROTECTION AND PRESERVATION OF INFIRM ANIMALS MORE PARTICULARLY THE COWS. THE LD. COUNSEL TOOK U S TO THE MAIN OBJECTS OF THE TRUST AND EXPLAINED THAT THE MAIN OBJECTS OF THE TRUST ARE TO PROVIDE ASYLUM FOR OLD, MAIMED, SICK, DRY, WEAK, DISABLED A ND STRAY ANIMALS AND BIRDS MORE PARTICULARLY COWS AND OTHER MILK CATTLE. THE ASSESSEE TRUST IS ENGAGED IN THE IMPROVEMENT IN BREEDING CATTLE, UPKE EP, MAINTENANCE AND PROPAGATION OF COWS. 5.2. THE LD. COUNSEL EXPLAINED THAT NON PROCUREMENT OF MILK FROM COWS LEAD TO THE DEATH OF THE COWS WHICH WOULD BE A GAINST THE MAIN OBJECT OF THE INSTITUTION. THE MILK SO PROCURED IS GIVEN DAILY FREE OF CHARGE WITH SNACKS TO THE CHILDREN WHO VISIT THE PR EMISES OF THE ORGANIZATION. THEREAFTER THE MILK IS DISTRIBUTED T O POOR PATIENTS IN HOSPITAL FREELY AND ALSO DISTRIBUTED TO HOSPITALS/S CHOOLS/BALMANDIRS ETC AND THE BALANCE MILK IS SOLD AT THE SUBSIDIZED RATE S TO GENERAL PUBLIC WHO NASIK PANCHVATI PANJARPOLE 6 COME AND STAND IN LONG QUEUE FOR IT SO THAT THE PO OR AND NEEDY WHO STAND IN THE QUEUE WITH A CONTAINER GET THE MILK AT SUBS IDIZED RATES. 5.3. THE LD. COUNSEL FURTHER STATED THAT THE DIT (E XEM.) HAS GROSSLY ERRED IN APPLYING THE PROVISO TO SEC. 2(15) OF THE ACT. TO SUBSTANTIATE HIS SUBMISSION, THE LD. COUNSEL RELIED UPON THE DECISIO N OF DELHI HIGH COURT IN THE CASE OF ICAI 347 ITR 99 (DEL) COMPARING THE ACTIVITY OF SELLING MILK AT A PRICE WITH THE ACTIVITIES OF THE ICAI. T HE LD. COUNSEL SUBMITTED THAT IN THE CASE OF THE ICAI, THE HONBLE DELHI HI GH COURT HELD THAT A VERY NARROW VIEW HAD BEEN TAKEN THAT THE INSTITUTE RUNS COACHING CLASSES AND THIS AMOUNTED TO BUSINESS. THERE WAS A CLEAR D ISTINCTION BETWEEN COACHING CLASSES CONDUCTED BY PROFIT MAKING COACHI NG INSTITUTIONS AND THE COURSES AND CLASSES WHICH WERE HELD BY THE INS TITUTE. THE HONBLE COURT HELD THAT THE ORDER DENYING EXEMPTION WAS NOT VALID. 5.4. THE LD. COUNSEL FURTHER RELIED UPON THE DECISI ON OF THE TRIBUNAL AHMEDABAD BENCH IN THE CASE OF SABARMATI ASHRAM GA USHALA TRUST VS ADIT (EXEM) 25 ITR 701. THE LD. COUNSEL POINTED O UT THAT THIS DECISION OF THE TRIBUNAL SQUARELY APPLY ON THE FAC TS OF THE CASE AS THE IMPUGNED TRUST IS ALSO RUNNING GAUSHALA. 5.5. IT WAS POINTED OUT THAT THE MAIN OBJECT OF SAB ARMATI ASHRAM GAUSHALA TRUST (SUPRA) ARE IDENTICAL TO THE OBJECT OF THE IMPUGNED TRUST INASMUCH AS IN THE CASE OF THE SAID TRUST, THE OBJE CT IS TO BREED THE CATTLE AND ENDEAVOUR TO IMPROVE THE QUALITY OF COWS AND OX EN, TO PRODUCE AND SELL THE COWS MILK AND ITS VARIOUS PREPARATIONS SO AS TO POPULARIZE THE USE OF COW MILK AND DO ALL OTHER WORKS FOR THE SAME AND ON CONSIDERATION OF THESE OBJECTS, THE TRIBUNAL HELD THAT THE PROVISO T O SEC. 2(15) IS NOT NASIK PANCHVATI PANJARPOLE 7 APPLICABLE AND THE ASSESSEE-TRUST WAS ENTITLED TO E XEMPTION PROVIDED U/S. 11 OF THE ACT. 5.6. THE LD. COUNSEL ALSO PLACED RELIANCE ON THE DE CISION OF THE DELHI TRIBUNAL IN THE CASE OF AGGARWAL MITRA MANDAL TRUS T VS DIT (EXEMPTION) 106 ITD 531, ITAT AMRITSAR BENCH IN THE CASE OF SAINT KABIR EDUCATIONAL TRUST VS CIT 41 DTR 267 AND ITAT CHANDIGARH BENCH IN THE CASE OF H.P. GOVERNMENT ENERGY DEVELOP MENT AGENCY VS CIT 46 DTR 126. 5.7. THE LD. COUNSEL CONCLUDED THAT THE DIT(EXEMPTI ON) HAS GROSSLY FAILED IN APPRECIATING THE FACTS OF THE CASE VIS-- VIS OBJECTS OF THE TRUST AND ERRED IN APPLYING THE PROVISO TO SEC. 2(15) OF THE ACT AND THEREBY EXCEEDED THE POWERS VESTED ON HIM BY VIRTUE OF THE PROVISIONS OF SEC. 12AA(3) OF THE ACT. THE LD. COUNSEL PRAYED THAT TH E ORDER OF THE DIT(EXEMPTION) DESERVES TO BE SET ASIDE. 6. IN HIS REBUTTAL, THE LD. DEPARTMENTAL REPRESENTA TIVE ARGUED THAT WITH THE INSERTION OF THE PROVISO TO SEC. 2(15) OF THE ACT, THE LEGISLATURE HAS MADE ITS INTENTION VERY CLEAR THAT IN THE GARB OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, THE TRUST/I NSTITUTIONS WILL LOOSE THEIR EXEMPTION IF THEY ARE INVOLVED IN CARRYING ON OF AN Y ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. THE LD. DR FURTHER SUBMITTED THAT T HE APPLICATION OF THE INCOME OR THE USAGE OF THE INCOME IS NOT RELEVANT. IN SUPPORT OF HIS CONTENTION THAT PROVISO TO SEC. 2(15) IS VERY MUCH APPLICABLE TO THE FACTS OF THE CASE, THE LD. DR RELIED UPON THE DECISION OF THE TRIBUNAL PANAJI BENCH IN THE CASE OF BELGAUM URBAN DEVELOPMENT AUT HORITY VS CIT IN ITA NO. 214/PNJ/2011. NASIK PANCHVATI PANJARPOLE 8 6.1. IT IS THE SAY OF THE LD. DR THAT IN THIS CASE, THE TRIBUNAL HAS HELD THAT NON APPLICATION OF THE PROVISO TO SEC. 2(15) O F THE ACT AMOUNTS TO MISTAKE OF LAW AFTER COMING INTO FORCE OF THE PROVI SO TO SEC. 2(15) OF THE ACT. THE LD. DR ALSO RELIED ON THE DECISION OF THE AMRITSAR BENCH IN THE CASE OF IMPROVEMENT TRUST 41 TAXMAN.COM 403 AND ALS O ON THE DECISION OF THE HIGH COURT OF JAMMU AND KASHMIR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY IN ITA NO. 164 OF 2012. 6.2. THE LD. DR CONTINUED TO ARGUE THAT THE ASSESSE E TRUST IS SELLING MILK AT MARKET PRICE AND VERY LESS PART IS DISTRIBU TED FREE OF CHARGE THEREFORE THE INTENTION OF THE TRUST IS VERY CLEAR. IT IS CARRYING OUT A COMMERCIAL ACTIVITY IN THE FORM OF SALE OF MILK AND THEREFORE THE DIT(EXEM.) HAS VERY RIGHTLY HELD THAT THE ASSESSEE- TRUST IS NOT FOR CHARITABLE PURPOSE AND ONCE IT IS HELD THAT THE TRU ST IS NOT FOR CHARITABLE PURPOSE IT BECOMES A NON GENUINE TRUST WHICH IS ONE OF THE PRE-CONDITIONS OF SEC. 12AA(3) FOR CANCELLING THE REGISTRATION OF SUCH TRUST AS THE ACTIVITIES OF THE IMPUGNED TRUST ONCE FOUND TO BE NON GENUINE, THE DIT(EXEM.) WAS WELL WITHIN HIS POWERS OF CANCELLING THE REGISTRATION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE ORDER OF THE DIT (EXEM.) AND ALSO THE DECISIONS RELIED UPON BY THE RIVAL PARTIES AND THE MATERIAL EVIDENCES BROUGHT ON RECORD. 8. THE UNDISPUTED FACT EMERGING FROM THE RECORDS AR E THAT THE TRUST IS 130 YEARS OLD WAS GRANTED CERTIFICATE OF REGISTRATI ON OF SOCIETIES ON 5.5.1943. THE TRUST WAS ALSO GRANTED CERTIFICATE O F REGISTRATION U/S. 12A ON 4.8.1975, CERTIFICATE OF REGISTRATION BY CHARITY COMMISSIONER, BOMBAY ON 29.5.1953. THE TRUST IS ALSO AN APPROVED TRUST U/S. NASIK PANCHVATI PANJARPOLE 9 10(23C)(IV) VIDE ORDER DT. 22.2.2008. RENEWAL OF CE RTIFICATE U/S. 80G WAS GRANTED ON 5.11.2008 BY DIT(EXEM.), BOMBAY. 9. THE ONLY REASON FOR WITHDRAWING THE REGISTRATION ALLOWED EARLIER U/S. 12AA OF THE ACT IS THAT IN THE OPINION OF THE DIT (EXEM), SINCE THE RECEIPTS FROM THE SALE OF MILK DURING THE YEAR UNDE R CONSIDERATION EXCEEDED THE THRESHOLD LIMIT AS PRESCRIBED UNDER TH E PROVISO TO SEC. 2(15) OF THE ACT, PROMPTED THE DIT (EXEM.) TO COME TO THE CONCLUSION THAT THE ASSESSEE-TRUST IS DOING REGULAR ACTIVITIES WHICH ARE IN THE NATURE OF BUSINESS BY WAY OF SALE OF MILK AND THEREFORE SUCH ACTIVITY OF THE ASSESSEE-TRUST HAS MADE THE TRUST NON GENUINE THERE BY LOOSING THE STATUS OF BEING PUBLIC CHARITABLE TRUST. 10. THE OBJECTS OF THE TRUST CAN BE SUMMARIZED INTO THE FOLLOWING CATEGORIES:- I) PANJRAPOLE AND GAUSHALAS II) AGRICULTURE, RURAL DEVELOPMENT AND PRESERVATION OF NATURAL RESOURCES. III) SCIENTIFIC RESEARCH IV) EDUCATION V) MEDICAL RELIEF VI) RELIEF OF POOR VII) GENERAL PUBLIC UTILITY 11. IT IS NOT IN DISPUTE THAT THE TRUST IS PURSUING THESE OBJECTS SINCE ITS INCEPTION. THE BONE OF CONTENTION IS THE 7 TH OBJECT UNDER THE HEAD GENERAL PUBLIC UTILITY WHICH INTER ALIA PROVIDES (A) TO GIVE MILK FREE OF NASIK PANCHVATI PANJARPOLE 10 CHARGE OR ON PAYMENT TO CHILDREN CHARITABLE INSTIT UTIONS (B) TO PROVIDE AT REASONABLE RATES, MILK AND MILK PRODUCTS TO PUBLIC IN GENERAL WITH A VIEW TO PROMOTE, MAINTAIN OR IMPROVE THE HEALTH OF PUBLI C. IN PURSUANCE OF THESE OBJECT, THE TRUST IS SELLING MILK AT SUBSIDI ZED RATES WHICH IN THE OPINION OF THE DIT (EXEM.) AMOUNTS TO CARRYING ON O F A BUSINESS ACTIVITY. 12. IT IS NOT IN DISPUTE THAT THE ASSESSEE TRUST IS CARRYING ON THESE ACTIVITIES SINCE ITS INCEPTION AND WAS ALLOWED EXEMPTION/REGISTRATION U/S. 12AA OF THE ACT AND IS ALSO A NOTIFIED TRUST U/S. 1 0(23C)(IV) OF THE ACT. THE ACTIVITIES HAVE NOT CHANGED BUT THE RELEVANT PR OVISIONS OF THE ACT HAS SEEN AMENDMENTS FROM TIME TO TIME. 13. SECTION 2(15) AS IT STOOD IN THE STATUTE AFTER THE REPEAL OF THE 1922 ACT READ AS UNDER: SECTION 2(15) CHARITABLE PURPOSE INCLUDES RELIE F OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY OF PROFIT. THIS PROVISION REMAINED UNCHANGED TILL ITS AMENDMEN T BY THE FINANCE ACT, 1983 AND WITH EFFECT FROM 1.4.1984 NO T INVOLVING THE CARRYING ON OF ANY ACTIVITY OF PROFIT WAS OMITTED. THE SECTION REMAINED UNCHANGED TILL IT WAS AMENDED BY THE FINANCE ACT, 2008 W.E.F 1.4.2009. THIS MEANS THAT TILL THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2008 THE REVE NUE WAS CONVINCED THAT THE ASSESSEE-TRUST WAS NOT CARRYING OUT ANY COMMERCIAL ACTIVITY IN THE GARB OF CHARITABLE PURPO SE. THE ACTIVITIES OF THE TRUST WERE GENUINE AND WERE FOR T HE CHARITABLE PURPOSE. NASIK PANCHVATI PANJARPOLE 11 14. NOW LET US CONSIDER THE PROVISIONS OF SEC. 2(1 5) AS THEY STAND NOW. 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, E DUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENT S OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST]AND THE AD VANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, I F IT INVOLVES THE CARRYING ON OF ANY ACTIVITY 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, 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 (TWENTY FIVE LAKH RUPEES) OR LESS IN THE PREVIOUS YEAR]. THIS PROVISO WAS ADDED ONLY IN RESPECT OF THE LAST LIMB OF THE PROVISIONS OF SEC. 2(15) WHICH RELATES TO THE ADVAN CEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CH ARITABLE PURPOSE IF IT INVOLVES CARRYING ON OF AN ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE. THE SECOND LIMB IS NOT RELEVANT TO THE FACT UNDER CONSIDERATION. A CLOSE PERUSAL OF THE AFOREM ENTIONED PROVISO SHOW THAT THE SPIRIT OF THE SECTION IS SAME AS PER THE SECTION 2(15) AS IT STOOD PRIOR TO THE AMENDMENT BROUGHT BY FINANCE ACT , 1983 AS MENTIONED HEREINABOVE. 15. ALL THAT HAS TO BE DECIDED NOW IS WHETHER THE A CTIVITY OF THE SALE OF MILK CONSTITUTES CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, WHICH ACTIVITIES THE TRUST IS CARRYING ON PRIOR TO THE AMENDMENT BROUGHT BY FINANCE ACT, 1983. GENERAL MEANS PERTAINING TO WHOLE CLASS, NASIK PANCHVATI PANJARPOLE 12 PUBLIC MEANS THE BODY OF PEOPLE AT LARGE INCLUDIN G ANY CLASS OF THE PUBLIC, UTILITY MEANS USEFULNESS. THEREFORE, THE ADVANCEMENT OF ANY OBJECT OF BENEFIT TO THE PUBLIC OR A SECTION OF THE PUBLIC AS DISTINGUISHED FROM IN DIVIDUAL AND GROUP OF INDIVIDUALS WOULD BE A CHARITABLE PURPOSE. AN OBJE CT OF PUBLIC UTILITY NEED NOT BE AN OBJECT IN WHICH THE WHOLE OF THE PUB LIC IS INTERESTED. IT IS SUFFICIENT IF WELL DEFINED SECTION OF THE PUBLIC BE NEFITS BY THE OBJECTS WHICH MEANS THAT THE EXPRESSION OBJECT OF GENERAL PUBLIC UTILITY IS NOT RESTRICTED TO OBJECTS BENEFICIAL TO THE WHOLE MANKI ND. AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. IN THE CASE OF CIT VS SWASTIK TRADING CO. LTD. 113 ITR 852, THE HONBLE GUJARAT HIGH COURT HAS HELD THAT ESTABLISHI NG AND MAINTAINING GAUSHALAS AND PANJRAPOLE CONSTITUTES CHARITABLE PUR POSE. 16. THE HONBLE FINANCE MINISTER WHILE PRESENTING T HE FINANCE ACT 2008 IN HIS BUDGET SPEECH STATED AS FOLLOWS: CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDU CATION, MEDICAL RELIEF AND ANY OTHER OBJECTS OF GENERAL PUB LIC UTILITY. THESE ACTIVITIES ARE TAX EXEMPT AS THEY SHOULD BE. HOWEVER, SOME ENTITIES CARRYING ON REGULAR TRADE, COMMERCE O R BUSINESS OR PROVIDING SERVICES IN RELATION TO ANY T RADE, COMMERCE OR BUSINESS AND EARNING INCOMES HAVE SOUGH T TO CLAIM THAT THEIR PURPOSE WOULD ALSO FALL UNDER CHA RITABLE PURPOSE . OBVIOUSLY, THIS WAS NOT THE INTENTION OF THE PARLIAMENT AND HENCE, I PROPOSE TO AMEND THE LAW TO EXCLUDE THE AFORESAID CASES. GENUINE CHARITABLE ORGANIZATIO NS WILL NOT IN ANY WAY BE AFFECTED. 17. THUS THE INTENTION OF THE HONBLE FINANCE MINIS TER WAS ONLY TO EXCLUDE FROM EXEMPTION, ENTITIES CARRYING ON BUSINE SS AND EARNING NASIK PANCHVATI PANJARPOLE 13 INCOMES FOR WHICH EXEMPTION WAS CLAIMED ON THE BASI S THAT THE PURPOSE WOULD FALL UNDER CHARITABLE PURPOSE. 18. THE CBDT CIRCULAR NO. 11/2008 DT. 19.12.2008 HA S EXPLAINED THE IMPLICATIONS ARISING FROM THE AMENDMENT BROUGHT TO THE PROVISIONS OF SEC 2(15) OF THE ACT. THE CBDT CLARIFIES THAT THE NEWL Y INSERTED PROVISO TO SEC. 2(15) WILL NOT APPLY IN RESPECT OF THE FIRST T HREE LIMBS OF SEC. 2(15) I.E. RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIE F. CONSEQUENTLY WHERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CHARITABLE PURPO SE, EVEN IF IT IS INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIA L ACTIVITY. THE BOARD FURTHER CLARIFIED THAT THE NEWLY INSERTED PROVISO TO SEC. 2(15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF AN Y OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E. 4 TH LIMB OF THE DEFINITION OF THE CHARITABLE PURPOSE CONTAINED IN SEC. 2(15). THE CIRCULAR FURT HER CLARIFIED IN THE FINAL ANALYSIS, WHETHER THE ASSESSEE HAS FOR ITS OB JECTS THE ADVANCEMENT OF ANY OTHER OBJECT OR GENERAL PUBLIC UTILITY IS A QUESTION OF FACT . IF SUCH ASSESSEE IS ENGAGED IN ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS OR RENDERS ANY SERVICE IN RELATION TO TRAD E, COMMERCE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT IT S OBJECT IS CHARITABLE PURPOSE. IN SUCH A CASE, THE OBJECT OF GENERAL PUB LIC UTILITY WILL BE ONLY A MASK OR DEVICE TO HIDE THE TRUE PURPOSE WHICH IS T RADE COMMERCE OR BUSINESS OR THE RENDERING OF ANY SERVICE IN RELATIO N TO TRADE, COMMERCE OR BUSINESS. EACH CASE WOULD THEREFORE BE DECIDED ON ITS OWN FAC TS AND NO GENERALIZATION IS POSSIBLE . 19. THUS, EVEN THE CBDT DOES NOT LAY DOWN ANY GUIDE LINES FOR DETERMINING WHETHER THE ENTITY IS CARRYING ON ANY C OMMERCIAL ACTIVITY. NASIK PANCHVATI PANJARPOLE 14 EACH CASE WOULD THEREFORE TO BE DECIDED ON ITS OWN FACTS AND AS THE CBDT HAS CLARIFIED GENERALIZATION IS NOT POSSIBLE. 20. COMING BACK TO THE OBJECTS OF THE IMPUGNED TRU ST, THE FUNDAMENTAL OR DOMINANT FUNCTION OF THE TRUST IS TO PROVIDE ASY LUM FOR OLD, MAIMED, SICK, DRY, WEAK, DISABLED AND STRAY ANIMALS AND BIR DS, MORE PARTICULARLY COWS AND OTHER SUCH MILK CATTLE AND TO BRING ABOUT IMPROVEMENT IN BREEDING CATTLE FOR THE BENEFICIAL PROMOTION, UP-KE EP, MAINTENANCE AND PROPAGATION OF COWS. THUS THE DOMINANT OBJECT IS T O RUN PANJRAPOLE AND THE ACTIVITIES RELATED TO IT. 21. FACTS ON RECORD SHOW THAT ONLY 25% OF THE COWS YIELD MILK FOR THE SUPPORT OF THE REMAINING 75% COWS. IT CANNOT BE DE NIED THAT MILK NEED TO BE PROCURED FROM COWS OTHERWISE IT WILL BE DETRIMEN TAL/FATAL IF THE MILK IS NOT PROCURED REGULARLY FROM TIME TO TIME. THE MILK SO PROCURED IS DISTRIBUTED FREE OF CHARGE TO CHILDREN, HOSPITALS, SCHOOLS, BALMANDIR, MAHILA ANATHASHRAM ETC. THEREAFTER, THE REMAINING MILK IS DISTRIBUTED TO GENERAL PUBLIC AT LARGE AT A VERY NOMINAL RATE. 22. THIS CANNOT BE AN ACTIVITY BY ITSELF AMOUNTING TO CARRYING ON OF ANY BUSINESS, TRADE OR COMMERCE. THE IMPUGNED TRUST IS ENGAGED IN MULTI SERIES ACTIVITIES OF DIVERSE NATURE BUT THE PRIMARY AND THE DOMINANT ACTIVITY IS PANJRAPOLE. THIS PREDOMINANT OBJECT OF PANJRAPOLE ACTIVITY HAS BEEN HELD TO BE A CHARITABLE PURPOSE BY THE HONB LE GUJARAT HIGH COURT IN THE CASE OF SWASTIK TRADING CO. LTD (SUPRA). TH E IMPUGNED TRUST WOULD NOT LOOSE ITS CHARACTER OF CHARITABLE PURPOSE MERELY BECAUSE SOME PROFITS ARISES FROM THE ACTIVITY OF THE SALE OF MI LK. SUCH ACTIVITY CANNOT BE CARRIED ON IN SUCH A MANNER THAT IT DOES NOT RES ULT IN ANY PROFIT. IT BE INDEED BE DIFFICULT FOR PERSONS IN-CHARGE OF A TRUS T OR INSTITUTION TO CARRY NASIK PANCHVATI PANJARPOLE 15 ON THE ACTIVITY SUCH THAT THE EXPENDITURE BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFI CULT ON PRACTICAL REALIZATION BUT WOULD ALSO REFLECT UNSOUND PRINCIPL E OF MANAGEMENT. 23. IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRU ST V. COMMISSIONER OF INCOME-TAX 101 ITR 234, THE HONBLE JUSTICE J. B AIG SPEAKING FOR THE APEX COURT THUS SAID THAT: IF THE PROFITS MUST NECESSARILY FEED A CHARITABLE PURPOSE, UNDER THE TERMS OF THE TRUST, THE MERE FACT THAT TH E ACTIVITIES OF THE TRUST YIELD PROFIT WILL NOT ALTER THE CHARITABLE CH ARACTER OF THE TRUST. THE TEST NOW IS, MORE CLEARLY THAN IN THE PAST, TH E GENUINENESS OF THE PURPOSE TESTED BY THE OBLIGATION CREATED TO SPE ND THE MONEY EXCLUSIVELY OR ESSENTIALLY ON CHARITY. 24. THE TEST FOR CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AS MENTIONED IN THE FIRST PROV ISO TO SEC. 2(15) WOULD BE SATISFIED IF PROFIT MAKING IS NOT THE RE AL OBJECT. THE HONBLE DELHI HIGH COURT IN THE CASE OF ICAI VS DIRECTOR GE NERAL OF INCOME TAX (EXEM) 347 ITR 99 HAD THE OCCASION TO CONSIDER THE GRIEVANCE OF THE ICAI WHICH WAS DENIED EXEMPTION U/S. 10(23C)(IV) OF THE ACT BECAUSE IN THE OPINION OF THE DGIT (EXEM.) THE INSTITUTE WAS H OLDING COACHING CLASSES AND THEREFORE WAS NOT AN EDUCATIONAL INSTIT UTION, CONSEQUENTLY THE INSTITUTE WAS COVERED UNDER THE LAST LIMB OF CHARIT ABLE PURPOSE I.E. ADVANCE OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILI TY IN THE LIGHT OF THE AMENDMENT BROUGHT O SEC. 2(15) OF THE ACT AS THE IN STITUTE WAS CHARGING FEES FOR CONDUCTING COACHING CLAUSES AND MAKING HUG E MONEY IN A SYSTEMATIC AND ORGANIZED MANNER. CONSIDERING THE F ACTS IN THE LIGHT OF NASIK PANCHVATI PANJARPOLE 16 THE AMENDED PROVISIONS OF SEC. 2(15), THE HONBLE D ELHI HIGH COURT HELD THAT THE ORDER DENYING THE EXEMPTION WAS NOT VALID. 25. THE TRIBUNAL IN THE CASE OF SABARMATI ASHRAM GA USHALA TRUST (SUPRA), ON IDENTICAL FACTS HAS HELD THAT THE ASSES SEE WAS NOT CONDUCTING ITS AFFAIRS ON COMMERCIAL LINES WITH A MOTIVE TO EA RN PROFITS OR HAS DEVIATED FROM ITS OBJECTS AS DETAILED IN THE TRUST DEED OF THE ASSESSEE. THE PROVISO TO SEC. 2(15) WAS NOT APPLICABLE. 26. THE RELIANCE BY THE LD. DR ON THE DECISION OF T HE TRIBUNAL IN THE CASE OF AMRITSAR BENCH IN THE CASE OF IMPROVEMENT T RUST (SUPRA) BY THE LD. DR IS MISPLACED INASMUCH AS IN THAT CASE THE DO MINANT ACTIVITY OF THE TRUST WAS TO PURCHASE LAND AT NOMINAL COST, THEN L EVEL AND CLEAR IT, CUT INTO PLOTS AND SELL AT MUCH HIGHER PRICES. ON THIS, THE TRIBUNAL HAS HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE AIMED AT EARNING PROFITS. SIMILAR WERE THE FACTS BEFORE THE HONBLE HIGH COURT OF JAMMU A ND KASHMIR IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY (SUPRA). 27. THE DR HAS ALSO RELIED UPON THE DECISION OF THE TRIBUNAL PANAJI BENCH IN THE CASE OF BELGAUM URBAN DEVELOPMENT AUT HORITY VS CIT(SUPRA). HOWEVER, WE FIND THAT IN THAT CASE THE TRIBUNAL WAS REFERRING TO THE REGISTRATION CERTIFICATE ISSUED U/S. 12A TO BELGAUM URBAN DEVELOPMENT AUTHORITY BY THE DIT (EXEM) BANGALORE AND WHILE REFERRING TO THE SAID CERTIFICATE, THE TRIBUNAL OBS ERVED THAT WHILE GRANTING REGISTRATION, THE CIT HAD NO CHANCE TO EXAMINE THE NEWLY INSERTED PROVISO TO SEC. 2(15) OF THE ACT AND THE TRIBUNAL WAS NOT A WARE WHAT HAPPENED SUBSEQUENTLY IN THAT CASE AFTER THE COMING INTO FOR CE THE PROVISO TO SEC. 2(15) AND WHETHER ANY RECTIFICATION ORDER HAS BEEN PASSED BY THE DEPARTMENT OR NOT AS THERE BEING MISTAKE OF LAW AFT ER COMING INTO FORCE THE FIRST PROVISO TO SEC. 2915) OF THE ACT. THE FA CTS OF THE CASE IN HAND NASIK PANCHVATI PANJARPOLE 17 ARE NOT EVEN REMOTELY CONNECTED WITH THE FACTS OF T HE CASE RELIED UPON BY THE LD. DR. 28. AFTER CONSIDERING THE ENTIRE FACTS IN TOTALITY , IN THE LIGHT OF THE DECISIONS DISCUSSED HEREINABOVE AND ALSO DRAWING SU PPORT FROM THE SPEECH OF THE HONBLE FINANCE MINISTER AND SUBSEQUE NT CLARIFICATIONS ISSUED BY THE CBDT WITHIN THE FRAME WORK OF THE AME NDED PROVISIONS OF SEC. 2(15) OF THE ACT, IN OUR CONSIDERED VIEW, THER E WAS NO MATERIAL WHICH MAY SUGGEST THAT THE ASSESSEE TRUST WAS CONDU CTING ITS AFFAIRS SOLELY ON COMMERCIAL LINES WITH A MOTIVE TO EARN PROFIT. THERE IS ALSO NO MATERIAL BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE ASSESSEE TRUST HAS DEVIATED FROM ITS OBJECTS WHICH IT HAS BEEN PURSUIN G SINCE LAST 130 YEARS, IN OUR HUMBLE OPINION AND UNDERSTANDING OF LAW, THE PROVISO TO SEC. 2(15) OF THE ACT IS NOT APPLICABLE ON THE FACTS OF THE CA SE AND THE ASSESSEE DESERVES CONTINUANCE OF REGISTRATION U/S. 12AA OF T HE ACT. WE, ACCORDINGLY SET ASIDE THE ORDER OF THE DIT(EXEM.) AND DIRECT THE DIT(EXEM) FOR THE CONTINUANCE OF THE REGISTRATION. 29. AS WE HAVE DIRECTED THE DIT(EXEM) FOR THE CONTI NUANCE OF THE REGISTRATION U/S. 12AA, WE DO NOT FIND IT NECESSARY TO DELIBERATE ON THE GRIEVANCE RAISED VIDE GROUND III. 30. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 4018/MUM/2013 A.Y. 2009-10 31. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-1, MUMBAI DT. 1.3.2013 PERTAINING TO A.Y. 2 009-10. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER: NASIK PANCHVATI PANJARPOLE 18 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ADIT(E) 11(2) AND THE CIT(A) ERRED IN DENYING THE B ENEFIT OF SECTION 11 OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT) TO THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ADIT(E) 11(2) AND THE CIT(A) ERRED IN HOLDING THAT THE 1ST PROVISO TO SECTION 205) OF THE ACT APPLIED TO THE A PPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO GROUNDS 1 AND 2 ABOVE THE ADIT (E) II (2)AND THE CIT(A) OUGHT TO HAVE HELD THAT THE PROVI SIONS OF SECTION 11 (4A) OF THE ACT WERE APPLICABLE TO THE A PPELLANT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO GROUNDS I TO 3 ABOVE THE ADIT( E) 11(2) AND THE CIT(A) OUGHT TO HAVE HELD THAT THE INCOME D ERIVED BY THE APPELLANT WAS HELD UNDER TRUST WHOLLY FOR RE LIGIOUS PURPOSES AND THEREFORE THE BENEFIT OF SECTION 11 OF THE ACT OUGHT TO HAVE BEEN GRANTED TO THE APPELLANT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO GROUNDS 1 TO 4 ABOVE THE ADIT( E) 11(2) AND THE CIT(A) OUGHT TO HAVE HELD THAT THE INCOME O F THE TRUST WAS EXEMPT UNDER SECTION 10(23C) OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO GROUNDS I TO 5 ABOVE THE ADIT( E) 11(2) AND THE CIT(A) ERRED IN HOLDING THAT ANY PART OF TH E EXPENDITURE OUGHT TO BE DISALLOWED IN COMPUTING THE INCOME OF THE APPELLANT. 32. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCE EDINGS, THE AO NOTICED THAT AS PER THE INCOME AND EXPENDITURE ACCO UNT ACTIVITIES OF THE TRUST ARE TOTALLY DIFFERENT FROM THE OBJECTS OF THE TRUST. THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN SALE OF MILK AT RS. 1, 57,53,960/- INTEREST AND DIVIDEND INCOME AT RS. 58,34,623/-. ACCORDING TO T HE AO, THE ASSESSEE WAS DOING THE REGULAR ACTIVITIES WHICH ARE IN THE N ATURE OF BUSINESS BY NASIK PANCHVATI PANJARPOLE 19 WAY OF SALE OF MILK AND THE ASSESSEE TRUST IS DIREC TLY HIT BY THE PROVISO TO SEC 2(15) OF THE ACT. THE AO WENT ON TO TREAT THE INCOME OF THE ASSESSEE AS BUSINESS INCOME EARNED FROM THE SALE OF MILK AN D INTEREST AND DIVIDEND AND DENIED THE EXEMPTION U/S. 11 OF THE AC T. 33. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 34. AGGRIEVED, ASSESSEE IS BEFORE US. WE HAVE DISC USSED AT LENGTH THE OBJECTS OF THE TRUST IN THE LIGHT OF THE AMENDED PR OVISIONS OF SEC 2(15) OF THE ACT IN ASSESSEES APPEAL IN ITA NO. 1198/M/12 W HEREIN AFTER A DETAILED DISCUSSION, WE HAVE HELD THAT THE ASSESSEE IS ELIGIBLE FOR THE CONTINUANCE OF REGISTRATION U/S. 12A OF THE ACT AND IS NOT HIT BY THE PROVISO TO SEC 2(15) OF THE ACT. IN THE LIGHT OF T HE DETAILED DISCUSSION IN ITA NO. 1198/M/12, WE HOLD THAT THE ACTIVITY OF SA LE OF MILK DOES NOT AMOUNT TO CARRYING ON OF ANY BUSINESS ACTIVITY AND IS NOT IN CONTRAVENTION TO THE PROVISO TO SEC. 2(15) OF THE ACT. FOLLOWING OUR DECISION IN ITA NO. 1198/M//12, THE ASSESSEE WILL CONTINUE TO AVAIL EXEMPTION U/S. 11 OF THE ACT. 35. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 36. TO COMPLETE THE ADJUDICATION SINCE WE HAVE HELD THAT PROVISO TO SEC 2(15) OF THE ACT IS NOT APPLICABLE ON THE FACTS OF THE CASE AND THE ASSESSEE IS ALSO AN APPROVED TRUST U/S. 10(23C)(IV) OF THE ACT. NASIK PANCHVATI PANJARPOLE 20 24. TO SUM UP, BOTH THE APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2014 . 2 - 1& $ 3 45 26.3.2014 1 - 6 SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 4 DATED 26.3.2014 . . ./ RJ , SR. PS 2 2 2 2 - -- - *. *. *. *. 7&. 7&. 7&. 7&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 96 *. , , / DR, ITAT, MUMBAI 6. 6: ; / GUARD FILE. 2 2 2 2 / BY ORDER, +. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI FIT FOR PUBLICATION JM AM