Appeal Details
Counselvise Citation
[2018] 125 COUNSELVISE.COM (IT) 7479 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 7 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-07-2018
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2013-2014
Appeal Filed On
15-12-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1382/CHD/2016 ASSESSMENT YEAR : 2013-14 CHANDIGARH LAWN TENNIS VS. THE ITO (EXEMPTIONS), ASSOCIATION, WARD, CHANDIGARH SECTOR 10, CHANDIGARH PAN NO. AAATC4943J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. Y.K. SUD, CA RESPONDENT BY : SMT. CHANDERKANTA, ADDL. CIT (O N 22.3.2018) & SH.YOGINDER MITTAL, SR. DR (ON 13.7.2018 ) DATE OF HEARING : 22.03.2018 & 13.7.2018 DATE OF PRONOUNCEMENT : 26.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDER DATED 21.10.2016 OF THE COMMISSIONER OF I NCOME TAX(A)- 2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] . 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOW ING GROUNDS:- 1 . THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF DENYING THE EXEMPTION OF RS. 1,06,14,830/- U/S 11 OF THE INCOME TAX ACT, 1961 ON THE GROUNDS THAT THE ASSESSEE IS H IT BY SECTION 13(8) OF THE INCOME TAX ACT. 2. THAT CIT(A) FAILED TO CONSIDER THE SUBMISSIONS M ADE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 2 BY THE ASSESSEE AND HAS WRONGLY GIVEN A FINDING THA T HOLDING OF THE DEVIS CUP TIE WAS NOT THE OBJECT OF THE ASSESSEE. 3. THAT THE LD. CIT(A) HAS SHOWN GROSS INDISCIPLIN E BY NOT FOLLOWING THE VARIOUS JUDGEMENTS OF HIGH COURTS AND ALSO OF JURISDICTIONAL ITAT WHILE UPHOLDING THE DISALLOWANCE OF EXEMPTION U/S 11 CLAIMED BY THE ASSESSEE. 3. BRIEF FACTS RELATING TO THE ISSUE AS CULLED OUT FROM THE ORDER OF CIT(A) ARE THAT THE ASSESSEE, M/S CHANDIGARH LAWN T ENNIS ASSOCIATION (HEREINAFTER REFERRED TO AS CLTA) IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT. T HE ASSESSEE IS ALSO REGISTERED AS A CHARITABLE ENTITY VIDE ORDER DATED 27.09.2006 OF THE CIT(E) U/S 12AA OF THE INCOME TAX ACT (IN SHORT TH E ACT). THE MAIN OBJECT OF THE ASSESSEE IS FOR THE PROMOTION OF GAME OF LAWN TENNIS BY CONTROLLING THE CONDUCT OF CHAMPIONSHIPS AND OTHER OPEN AND RESTRICTED COMPETITIONS WITHIN ITS JURISDICTION AND HOLDING COACHING CLASSES/SCHEMES FOR PLAYERS. DURING RELEVA NT YEAR UNDER CONSIDERATION, THE ASSESSEE HOSTED AN INTERNATIONAL EVENT CLOUD INDIA V/S NEW ZEALAND DAVIS CUP TIE FOR WHICH SEPA RATE INCOME AND EXPENDITURE ACCOUNT HAD BEEN MAINTAINED. THIS E VENT WAS HOSTED BY PROVIDING VARIOUS SERVICES AND FACILITIES LIKE I NFRASTRUCTURE, BOARDING AND LODGING, LOGISTICS, ADVERTISEMENT ETC. THESE FACILITIES WERE PROVIDED BY RECEIVING MONEY FOR ADVERTISEMENT FOR SOUVENIR, CORPORATE BOX INCOME, SALE OF TICKETS, SPONSORSHIP ETC. AND THUS A SURPLUS OF RS. 1,08,36,902/- WAS GENERATED. ASSES SING OFFICER OBSERVED THAT THE ASSESSEE SOCIETY WAS REGISTERED U /S 12AA ON ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 3 27.09.2006 AND THE OBJECTS WERE CHARITABLE BUT AFT ER THE AMENDMENT IN SECTION 2(15) OF THE ACT, THE DEFINITION OF CHAR ITABLE PURPOSE HAD UNDERGONE CHANGE AND THAT THE PROVISO TO THE SAID S ECTION LAID DOWN THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY WOULD NOT BE A CHARITABLE PURPOSE IF IT INVOLVED THE CARR YING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATI ON IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OR RETENTION OF TH E INCOME FROM SUCH ACTIVITY. ASSESSING OFFICER FURTHER OBSERVED THAT H OLDING OF DAVIS CUP TIE WAS NOT IN ACCORDANCE WITH THE OBJECT OF T HE SOCIETY AS IT WAS AN INTERNATIONAL EVENT WHICH HAD BEEN EXPLOITED BY THE ASSESSEE FOR COMMERCIAL PURPOSE BY ALLOWING OF PRIVATE SPONS ORS, SELLING TICKETS THROUGH PRIVATE CONCERNS, ALLOWING OF ADVER TISEMENT FROM VARIOUS BUSINESS ENTITIES. THE ASSESSEE HAD SURPLUS OF RS. 1,06,14,830/- AS PER CONSOLIDATED INCOME AND EXPEND ITURE STATEMENT. THE ASSESSING OFFICER THEREFORE HELD THAT THE ASSES SEE WAS NOT ELIGIBLE FOR EXEMPTION U/S SECTION 2(15) READ WITH SECTION 13(8) OF THE ACT AND THEREFORE THE ENTIRE SURPLUSES WAS BROU GHT TO TAX. 4. BEING AGGRIEVED BY THE SAID ORDER OF THE ASSESSI NG OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). HOWEVE R, LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE OBSERVING AS U NDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 4 APPELLANT, THE ASSESSMENT ORDER AND PERUSED THE DECISIONS RELIED UPON BY THE APPELLANT. THE RATIO I N THESE CASES IS THAT PROVISO TO SECTION 2(15) IS NOT HIT S O LONG AS THE RENDERING OF ANY SERVICE ARE PURELY INCIDENT AL TO THE MAIN OBJECTIVE OF GENERAL PUBLIC UTILITY CARRYI NG ON BY THE ASSESSEE. IN THE CASE OF INDIA TRADE PROMOTI ON ORGANISATION, THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE MAIN OBJECT OF THE ASSESSEE IS TO ORGANISE TRADE FAIRS / EXHIBITIONS IN ORDER TO PROMOTE TRADE, COMM ERCE AND BUSINESS AND THEREFORE, THE ACTIVITIES TAKEN BY THE ASSESSEE FOR SALE OF TICKETS AND SALE OF PUBLICATIO NS ARE INCIDENTAL TO THE MAIN OBJECTIVE OF THE ASSESSEE. I N THE INSTANT CASE, THE APPELLANT HAS ORGANISED DAVIS CUP TIE BETWEEN INDIA AND NEW ZEALAND IS AN INTERNATIONAL EVENT AND TOTALLY APART FROM THE OBJECTIVE OF THE ASSESSEE THE ASSESSING OFFICER HAS GIVEN REASONED FINDINGS THAT THE MAIN OBJECTIVES OF THE ASSESSES S OCIETY IS TO PROMOTE, DEVELOP AND POPULARIZE THE GAME OF TENNIS, TO PROMOTE AND MAINTAIN THE BONDS OF FRIENDSHIPS BETWEEN ALL THE AFFILIATED CLUBS AND INSTITUTIONS WITHIN ITS JURISDICTION AND ENCOURAGE NEW CLUBS AND INSTITUTIONS, TO CONTROL THE CONDUCT OF S UCH CHAMPIONSHIPS AND OTHER OPEN AN RESTRICTED COMPETIT IONS WITHIN ITS JURISDICTION AS MAY BE SANCTIONED BY THE ASSOCIATION AND / OR APPROVED BY THE AITA. AS PER T HE INCOME AND EXPENDITURE ACCOUNT FURNISHED BY THE ASSESSEE THE NORMAL SURPLUS OF RS. 15,96,663/- WAS GENERATED AS PER THE ACTIVITIES TAKEN BY THE ASSESS EE WHICH HAS BEEN LISTED ON PAGE 5 OF THE ASSESSMENT O RDER WHICH ARE INCIDENTAL TO THE DOMINANT OBJECT OF THE ASSESSEE. HOWEVER, BY HOLDING INDIA V/S NEW ZEALAND DAVIS CUP TIE, APPELLANT HAS THROWN OPEN THE SALE O F ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 5 TICKETS, ADVERTISEMENTS AND SPONSORSHIPS TO PRIVATE SPONSORS AND BUSINESS ENTITIES WITH THE MAIN MOTIVE TO EARN MAXIMUM PROFITS OR COMMERCIAL GAINS FROM THIS ACTIVITY. THEREFORE, THE HOLDING OF DAVIS CUP TIE C ANNOT BE SAID AS INCIDENTAL TO THE MAIN OBJECTIVE OF GENE RAL PUBLIC UTILITY CARRIED ON BY THE ASSESSEE. 5.3.1 APPELLANT HAS PLACED RELIANCE ON THE DECISION OF THE IMPROVEMENT TRUST OF ITAT CHANDIGARH BENCH IN WHICH THE ORDER OF ITAT, AMRITSAR BENCH IN THE CASE OF HOSHIARPUR IMPROVEMENT TRUST HAS BEEN FOLLOWED. IN THESE CASES THESE TRUST WERE CONSTITUTED UNDER THE PUNJAB TOWN IMPROVEMENT ACT WITH THE MAIN OBJECTIVE S OF BRINGING ABOUT IMPROVEMENT IN TOWNS. IN THESE CA SES, ASSESSEE SOLD RESIDENTIAL AND COMMERCIAL UNITS AND RESIDENTIAL AND COMMERCIAL LANDS AND EARNED PROFITS AND THESE ACTIVITIES WERE HELD BY THE JURISDICTIONAL TR IBUNAL AS INCIDENTAL TO THE ATTAINMENT OF ITS MAIN OBJECT. THE CASE OF THE APPELLANT IS ENTIRELY DIFFERENT WHEREIN THE DAVIS CUP TIE WAS ORGANIZED ENTIRELY DEVIATING FROM THE OBJECTIVES OF THE TRUST AND BY COMMERCIALLY EXPLOIT ING THE EVENT EARN HUGE SURPLUS OF RS. 1,92,54,745/- AS AGAINST THE NORMAL SURPLUS GENERATED FROM THE ACTIV ITIES OF THE TRUST DURING THE RELEVANT YEAR OF RS. 15,96, 663/-. THEREFORE, APPELLANT HAS DONE THE ACTIVITIES OF REN DERING SERVICE TO TRADE, COMMERCE OR BUSINESS FOR A COMMER CIAL CONSIDERATION, THESE ACTIVITIES ARE NOT INCIDENTAL OR SUBSERVIENT TO THE MAIN OBJECTIVE OF GENERAL PUBLIC UTILITY AND IS HIT BY PROVISO TO SECTION 2(15) OF T HE ACT. HENCE, THE ACTION OF THE A.O IN BRINGING TO TAX THE SURPLUS OF RS. 1,06,14,830/- U/S 13(8) IS UPHELD. GROUND OF APPEAL NO. 1, 2, 3 AND 4 ARE DISMISSED. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 6 5. BEING AGGRIEVED BY THE SAID ORDER OF THE LD. CIT (A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. SH. Y.K. SUD, THE LD. COUNSEL FOR THE ASSESSEE H AS MADE ORAL AS WELL AS WRITTEN SUBMISSIONS CONTENDING THEREIN T HAT AS PER OBJECT 3A AND 3C OF THE OBJECT CLAUSES OF THE MOA OF T HE ASSESSEE, HOLDING OF A DAVIS CUP TIE WAS / IS TOWARDS THE P ROMOTION, DEVELOPMENT AND POPULARIZING THE GAME OF TENNIS AMO NGST THE GENERAL PUBLIC. THAT THESE MATCHES OF INTERNATIONAL IMPORTANCE ARE WATCHED BY PUBLIC AT LARGE EITHER WATCHING IT LIVE BY BUYING TICKETS OR BY WATCHING THE GAME ON LIVE TELECAST OF THE TV CHANNELS. THE PUBLIC AND PEOPLE HAVING INTEREST IN THE GAME ARE H IGHLY BENEFITED BY WATCHING THE PROFESSIONAL PLAYERS OF TWO NATIONS CONTESTING AGAINST EACH OTHER. THAT AS PER THE CLAUSE 3C OF TH E OBJECT CLAUSES, TO CONDUCT THE CHAMPIONSHIP AND OTHER OPEN RESTRIC TED COMPETITIONS WITH THE SANCTION OF THE ASSOCIATION AND APPROVED B Y AITA IS THE CLEAR OBJECTIVE OF THE ASSESSEE TRUST. THAT EVEN TH E CHANDIGARH ADMINISTRATION AND GOVT. OF INDIA ALSO MONITOR AND SUPERVISE THE DAVIS CUP TIE. THAT IT CANNOT BE SAID THAT HOLDING OF INTERNATIONAL DAVIS CUP IS NOT THE OBJECTIVE OF THE TRUST. THAT T HE CHANDIGARH LAWN TENNIS ASSOCIATION HAS BEEN ESTABLISHED WITH T HE OBJECT OF PROMOTION OF THE LAWN TENNIS GAME BY TEACHING THE C HILDREN AND MAKING THEM PLAYERS AND ALSO FOR HOLDING OF THE VAR IOUS TOURNAMENTS AND COMPETITION APPROVED BY THE IATA AND ALL THESE OBJECTS HAVE BEEN CONSIDERED AS CHARITABLE BY CIT WHILE GRANTING THE REGISTRATION ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 7 TO THE TRUST. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT THE AO IN HIS ORDER HAS ALTHOUGH AGREED WITH T HE ASSESSEE THAT IT IS ENGAGED IN THE PROMOTION OF THE GAME LAWN TENNIS AND ALSO AGREED THAT ALL THE OBJECTS ARE CHARITABLE IN NATURE BUT Y ET HE GAVE A FINDING THAT THESE OBJECTS WERE / ARE PURSUED FOR COMMERCIA L GAINS. THAT THIS FINDING OF THE AO IS CONTRARY TO THE FINDING OF THE CIT IN AS MUCH THE CIT HAS ALLOWED THE REGISTRATION U/S 12AA BY HO LDING THE OBJECTS OF THE TRUST AS CHARITABLE AND THAT THE REG ISTRATION IS STILL CONTINUED TILL DATE. THAT AT THE TIME OF MAKING ASS ESSMENT, ALL THAT ASSESSING OFFICER HAS TO VERIFY AS TO THE ACTIVITIE S OF THE ASSESSEE ARE ACCORDING TO THE OBJECTS OF THE TRUST. THAT IT IS WELL SETTLED LAW THAT WHEN THE MOTIVE OF THE TRUST IS NOT OF MAKING PROFITS BUT FOR THE ATTAINMENT OF THE OBJECTS, IF ANY COMMERCIAL ACTIVI TY IS CARRIED ON, THE EXEMPTION U/S 11 CANNOT BE DENIED. THAT THE AS SESSEE CHANDIGARH LAWN TENNIS ASSOCIATION HAD HOSTED THE D AVIS CUP MATCHES EARLIER ALSO IN THE YEAR 1989-90 AND 1992-9 3 AND THE EXEMPTION TO THE INCOME OF THE TRUST WAS ALLOWED DU RING THESE YEAR U/S 11 AND FURTHER THAT THIS EXEMPTION HAS CONSISTE NTLY BEEN ALLOWED TO THE ASSESSEE EVER SINCE ITS INCEPTION IN 1975, THEREFORE APPLYING THE RULE OF CONSISTENCY, EXEMPTION U/S 11 SHOULD BE ALLOWED FOR THIS YEAR ALSO. THE LD. COUNSEL HAS FURTHER REFERRED TO THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF HOS HIARPUR IMPROVEMENT TRUST AND MOGA IMPROVEMENT TRUST 291 CTR 352 ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 8 STATING THAT THEREIN THE BENCH HAS TAKEN A VIEW THA T EXEMPTION U/S 11 IS AVAILABLE ON THE PROFITS GENERATED BY IMPROVE MENT TRUSTS ON THE GROUND THAT THE MOTIVE OF THE TRUST IS NOT TO CARRY ON ANY COMMERCIAL ACTIVITY AND MOTIVE IS NOT TO EARN ANY PROFITS AND ACTIVITIES CARRIED OUT MAY BE COMMERCIAL IN NATURE ARE FOR THE ATTAINM ENT OF THE MAIN OBJECTIVE, HENCE CHARITABLE, AND EXEMPTION U/S 11 W AS ALLOWED. THAT EVEN THE APPEAL AGAINST THIS ORDER OF THE MOGA IMPROVEMENT TRUST HAS BEEN DISMISSED BY P&H HIGH COURT IN THE J UDGMENT REPORTED IN 291 CTR 352 AT PAGE 395. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED U PON THE FOLLOWING CASE LAWS: I. ASST. CIT VS SURAT CITY GYMKHANA (2008) 300 ITR 214(SC) II. SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY VS. CIT & ANR.(2005) 278 ITR 262(P&H) III. HIRALAL BHAGWATI VS. CIT (2000) 246 ITR 188 (GUJ) IV. ANANDA MARGA PRACHARAKA SANGHA VS. CIT (1996) 218 ITR 254 (CAL) V. ITO VS MRS. DWARIKA PRASAD TRUST (1989) 30 ITD 84 (DEL)(SB) VI. ITO VS TRILOK TIRATH VIDYAVATI CHUTTANI CHARITABLE TRUST (2004) 90 ITD 569 (CHD) VII DDCA VS DIT 168 TTJ 425(ITAT DELHI) . 7. SH. Y.K. SUD, THE LD. COUNSEL FOR THE ASSESSEE, HAS ALSO MADE THE ALTERNATE SUBMISSIONS THAT THE ASSESSEE CHANDIG ARH LAWN TENNIS ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 9 ASSOCIATION IS INVOLVED IN IMPARTING TRAINING TO BO YS AND GIRLS IN TENNIS AND IS RUNNING A TENNIS ACADEMY HAVING COACH ES AND INSTRUCTOR THEREFORE THE ASSESSEE TRUST CAN BE SAID TO BE ENGAGED IN IMPARTING EDUCATION SINCE TEACHING TENNIS TO THE ST UDENTS AMOUNTS TO IMPARTING OF EDUCATION AND IS COVERED IN THE FIR ST LIMB OF SECTION 2(15) AND NOT AS A RESIDUAL CLAUSE. HE IN THIS RESP ECT HAS RELIED UPON THE DECISION OF THE DELHI BENCH OF THE TRIBUN AL IN THE CASE OF PITANJALI YOG PEETH NYAS VS ADIT(EXEMPTIONS) STAT ING THAT THE HONBLE DELHI BENCH HAS HELD THAT IMPARTING TRAININ G IN YOGA AMOUNTS TO EDUCATIONAL ACTIVITY AS PER THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF LOK SHIKSHA TR UST. HE, THEREFORE, HAS SUBMITTED THAT IMPARTING TRAINING IN LAWN TENNIS ALSO AMOUNTS TO EDUCATION AND THEREFORE THE ASSESSEE FAL LS IN THE FIRST LIMB OF THE DEFINITION OF CHARITABLE PURPOSES AS DE FINED U/S 2(15) AND THAT THE PROVISO IS NOT APPLICABLE TO THE ASSES SEE. 8. APART FROM ORAL SUBMISSIONS MADE BY SMT. CHANDAR AKANTA, THE LD. DR, WRITTEN SUBMISSIONS HAVE ALSO BEEN FILED BY SMT. SANGEETA SHARMA, THE LD. INCOME TAX OFFICER (EXEMPTIONS) O N BEHALF OF THE DEPARTMENT WHEREIN IT HAS BEEN CONTENDED SINCE THE ACTIVITIES OF APPELLANT IS DIRECTLY IN CONTRAST OF THE FIRST PROV ISO TO SECTION 2(15) OF THE ACT, SO, THE EXEMPTION U/S 11 AND 12 OF THE ACT HAS RIGHTLY BEEN DENIED. THAT SECTION 2 (15) OF THE ACT CLEARLY DEFINES THAT AS FAR AS THE FIRST THREE LIMBS ARE CONCERNED, IT CONS TITUTE CHARITABLE PURPOSE EVEN IF THEY INCIDENTALLY INVOLVE IN CARRY ING ON OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 10 COMMERCIAL ACTIVITIES BUT AS FAR AS THE FOURTH LIMB I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IS C ONCERNED, THE ENTITIES ARE NOT ELIGIBLE FOR EXEMPTION UNDER SECTI ON 11 OR UNDER SECTION 10(23C) OF THE ACT IF THEY CARRY ON COMMERC IAL ACTIVITIES. THAT WHILE INTERPRETING THE OBJECT AND SCOPE OF THI S SECTION, THE VARIOUS TRIBUNALS/COURTS HAVE DECIDED MANY IMPORTAN T CASES IN FAVOUR OF THE REVENUE. THAT IN THE CASE OF PUDA V S. CIT, REPORTED AS (2006) 103 TTJ CHD 988 , THE APPLICATIO N FOR REGISTRATION U/S 12A(A) FILED BY ABOVE NAMED STATUT ORY DEVELOPMENT AUTHORITY WAS REJECTED BY THE CIT, WHICH ORDER WAS FINALLY CONFIRMED BY THE ITAT OF CHANDIGARH BENCH VIDE A DE TAILED JUDGMENT OF TRIBUNAL DATED 01.06.2006, WHICH DECISI ON HAS BEEN FURTHER FOLLOWED BY VARIOUS TRIBUNALS AND ALSO BY T HE AMRITSAR BENCH WHILE DECIDING A SIMILAR CASE OF ANOTHER STAT UTORY GOVT. BODY I.E. JALANDHAR DEVELOPMENT AUTHORITY VS. CIT REPOR TED AS (2010) 35 SOT ASR 15 WHEREBY IT AGAIN UPHELD THE ORDER OF CIT REJECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF THE ACT VIDE A DETAILED JUDGMENT OF TRIBUNAL DATED 12.06.2009. THA T SINCE, MANY SUCH ENTITIES WERE SEEN ENGAGED IN COMMERCIAL ACTIV ITIES ALSO CLAIMING EXEMPTION ON THE GROUND THAT THEIR ACTIVIT IES WERE FOR THE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY IN TERMS OF THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOS E, HENCE, SECTION 2 (15) WAS AMENDED VIDE FINANCE ACT, 2008 BY ADDING A PROVISO WHICH STATES THAT THE ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 11 PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE I F IT INVOLVES THE CARRYING ON OF (A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; OR (B) ANY ACTIVITY OF RENDERING ANY SERV ICE IN 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. RELIANC E HAS ALSO BEEN PLACED ON CIRCULAR NO. 11/2008 DATED 19.12.2008 OF THE CBDT IN THIS RESPECT, WHICH WE WILL DISCUSS IN THE LATER PA RT OF THIS JUDGEMENT. IT HAS BEEN FURTHER CONTENDED THAT AFTER INSERTION OF THE ABOVE PROVISOS TO SECTION 2 (15) OF THE ACT, THE AM RITSAR BENCH OF THE TRIBUNAL WHILE INTERPRETING THE ENTIRE SCOPE AN D OBJECTS OF SECTION/CIRCULAR AND LEGAL POSITION, DECIDED A CASE OF ANOTHER STATUTORY GOVT BODY I.E. JAMMU DEVELOPMENT AUTHORI TY VS. CIT VIDE ORDER DATED 14.06.2012 REPORTED AS (2012) 52 SOT ASR 153 FOLLOWING THE JUDGMENTS IN THE CASES OF PUDA AND JALANDHAR DEVELOPMENT AUTHORITY (SUPRA) AND HAS UPHELD THE O RDER OF CIT WHICH CANCELED THE REGISTRATION WHILE PASSING AN OR DER U/S 12AA (3) OF THE ACT, WHEREIN, IT HAS BEEN HELD THAT IF ACTI VITIES OF ANY INSTITUTION/TRUST/SOCIETY UNDER THE FOURTH LIMB I.E . `THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FOR CESS OR F EE AND THE RECEIPTS THEREFROM CROSSES THE PRESCRIBED LIMIT (W HICH FOR THE YEAR UNDER CONSIDERATION WAS 25 LAKHS OR MORE) THEN THEY ARE NOT ELIGIBLE TO CONTINUE WITH REGISTRATION U/S 12A AND THE SAME IS ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 12 REQUIRED TO BE WITHDRAWN. THAT THE LIMIT OF RECEIP T IN SECOND PROVISO TO SECTION 2(15) WAS RS. 25 LAKHS FOR THE Y EAR UNDER CONSIDERATION. FURTHER THAT THAT THE JUDGMENT IN JAMMU DEVELOPMENT AUTHORITY WAS LATER UPHELD FIRSTLY BY HONBLE J&K HIGH COURT IN ITA NO. 164 OF 2012 VIDE ITS ORDER DA TED 07.11.2013 AND ALSO BY HONBLE SUPREME COURT IN SPECIAL LEAVE TO APPEAL (C) NO. 4990 OF 2014 VIDE ITS ORDER DATED 21.07.2014. T HAT THE AFORESAID DECISIONS OF THE TRIBUNAL PASSED IN THE CASES OF PUDA (SUPRA), JALANDHAR DEVELOPMENT AUTHORITY (SUPRA) AN D ALSO THE JAMMU DEVELOPMENT AUTHORITY VS. CIT (SUPRA) HAVE BEEN CONSISTENTLY FOLLOWED BY THE TRIBUNALS ALL THROUGHO UT THE COUNTRY, RELIANCE IN THIS RESPECT HAS BEEN PLACED ON THE FOL LOWING DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL: (A) ANDHRA PRADESH STATE HOUSING CORP. LTD. HYDERABAD VS. DIT (E), HYDERABAD ITA NO. 1845/HYD/2012 (HYDERABAD BENCH)VIDE ORDER DATED 19.04.2013. (B) HOUSING BOARD HARYANA, PANCHKULA VS. CIT, PANCHKULA, (CHANDIGARH BENCH) IN ITA NO. 1200/CHD/2004 VIDE ORDER DATED 30.05.2014 . (C) THE GREATER COCHIN DEVELOPMENT AUTHORITY, KOCHI VS. JT. DIT (E), KOCHI, (COCHIN BENCH) IN ITA NO. 792 & 793/COCH/2013 VIDE ITS JUDGMENT DATED 08.08.2014. (D) M/S PATIALA URBAN PLANNING & DEVELOPMENT AUTHORITY, PATIALA (PDA) VS. THE ITO, (CHANDIGARH) IN ITA NO. 674 & 675/CHD/2014 VIDE JUDGMENT DATED 06.05.2015. (E) A.P. HOUSING BOARD, HYDERABAD VS. DIT (E), (HYDERABAD ) IN ITA NO. 110/HYD/2008 VIDE ITS JUDGMENT DATED 03.06.2015 ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 13 (F) AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT (EXEMPTIONS), (AHMEDABAD) IN ITA NO. 712 AND 711/AHD/2013 AND ITA NO. 647 AND 2335/AHD/2014 VIDE ITS D JUDGMENT DATED 19.04.2016. 9. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF THE JURISDICTIONAL PB. & HRY. HIGH COURT, IN THE CASE O F THE TRIBUNE TRUST VS. CIT, REPORTED AS 390 ITR 547 (P&H) (WHIC H WE WILL DISCUSS IN DETAIL IN THE COMING PARAS OF THIS JUDGE MENT). 10. IT HAS BEEN FURTHER SUBMITTED ON BEHALF OF THE DEPARTMENT THAT THE ACTIVITIES OF THE APPELLANT ARE AIMED AT EARNIN G PROFIT AS IT IS CARRYING ON ACTIVITY IN THE NATURE OF TRADE, COMMER CE OR BUSINESS. THE PURPOSE OF APPELLANT IS MAKING PROFIT AND ALSO THERE IS NO SPENDING OF THE INCOME EXCLUSIVELY FOR THE PURPOSE OF CHARITABLE ACTIVITIES AND PROFITS OF THE ASSESSEE ARE NOT USED FOR CHARITABLE PURPOSE. REFERENCE HAS ALSO BEEN MADE TO THE FINANC IAL ACCOUNTS OF THE APPELLANT, AND IT HAS BEEN SUBMITTED THAT THE APPELLANT HOSTED THE INDIA- NEW ZEALAND DAVIS CUP TIE IN SEPTEMBER , 2012 BY PROVIDING VARIOUS SERVICES/ FACILITIES LIKE INFRAST RUCTURE, BOARDING AND LODGING, LOGISTICS, ADVERTISEMENT ETC. THESE FA CILITIES WERE PROVIDED BY RECEIVING VARIOUS TYPES OF FEES AND FIN ANCIAL CONSIDERATIONS. THAT THE ACTIVITY OF HOSTING THIS E VENT HAD BEEN CARRIED OUT IN ADDITION TO THE NORMAL ACTIVITIES BE ING CARRIED OUT FOR ADVANCEMENT OF OBJECTS OF THE APPELLANT. THUS, THIS ACTIVITY WAS OF COMMERCIAL NATURE WITH DOMINANT OBJECT TO EARN PROF IT. OUT OF TOTAL ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 14 INCOME OF RS. 1,92,54,745/-, THE ASSESSEE HAD RECEI VED INCOME TO THE TUNE OF RS. 1,60,14,000/- FROM SPONSORSHIP, WHICH W AS 83.16% OF THE TOTAL INCOME. THE APPELLANT EARNED HUGE PROFIT OF RS. 1,08,36,902/- FROM THE EVENT AFTER MEETING OUT EXPE NSES. IT HAS BEEN FURTHER CONTENDED THAT THE OBJECT CLAUSE OF THE APP ELLANT DOES NOT CONTAIN ANY CLAUSE THAT FOR FURTHERANCE OF ITS OBJE CTS, IT SHALL CHARGE ANY SUM LIKE SPONSORSHIP, ADVERTISEMENT OR MAKE COL LECTION THROUGH SALE OF CORPORATE TICKETS. THAT THE EVENT WAS EXPLO ITED COMMERCIALLY AS THE MAJOR FOCUS OF THE APPELLANT WAS TO UTILIZE THIS EVENT FOR COMMERCIAL GAINS. REFERENCE HAS ALSO BEEN MADE TO T HE INCOME AND EXPENDITURE ACCOUNT AND PERCENTAGE OF PROFIT AS GAT HERED FROM THE CONSOLIDATED BOOKS OF ACCOUNTS MAINTAINED BY THE AP PELLANT FOR FINANCIAL YEARS 2008-09 TO 2015-16 TO SUBMIT THAT T HE APPELLANTS SURPLUS TOOK AN UPTURN FROM THE FINANCIAL YEAR 2012 -13, THE YEAR UNDER CONSIDERATION AND IN WHICH DAVIS CUP TIE WAS ORGANIZED. THAT FROM THE FINANCIAL YEAR 2008-09 TO 2011-12, THE APP ELLANT EARNED ACCUMULATED SURPLUS OF RS . 7,96,473/- AND DURING THE FINANCIAL YEAR 2013-14 TO 2015-16, THE APPELLANT EARNED ACCUMULATE D SURPLUS OF RS. 94,88,969/-. HOWEVER, IN TOTAL CONTRAST, THE APPELL ANT, DURING THE YEAR UNDER CONSIDERATION I.E. FINANCIAL YEAR 2012-1 3, EARNED SURPLUS OF RS. 1,06,14,830/- AND EARNED 88% PROFIT WHICH CL EARLY ESTABLISHED THAT DOMINANT OBJECT OF THE APPELLANT WAS TO MAXIMI ZE PROFIT. A TABLE IN RESPECT OF CORPUS FUND, FIXED DEPOSIT RECE IPTS, BANK BALANCES AND INTEREST INCOME RECEIVED FOR THE FINAN CIAL YEAR 2008-09 ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 15 TO 2015-16 HAS ALSO BEEN FURNISHED TO CONTEND THAT THE APPELLANT HAS BEEN ACCUMULATING CORPUS FUND YEAR AFTER YEAR. THE FIXED DEPOSIT RECEIPTS OF THE APPELLANT ALSO INCREASED YEAR AFTER YEAR. THAT THE SAME IS THE CASE WITH INTEREST INCOME. THAT DURING THE YEAR UNDER CONSIDERATION, THE AMOUNT OF FDRS SURGED FROM RS. 1 3.86 LAKH TO RS. 86.20 LAKH AND THIS SHOWS THAT THE PROFIT EARNE D BY THE APPELLANT FROM HOSTING INDIA- NEW ZEALAND DAVIS CUP TIE HAS B EEN INVESTED IN THE FORM OF FDR. THAT IT IS EVIDENT FROM FINANCI AL ACCOUNTS THAT THE APPELLANT HAS INVESTED RS. 55,00,000/- IN FDRS IN STATE BANK OF PATIALA AND EARNED INTEREST OF RS. 60,883/- DURING THE YEAR UNDER CONSIDERATION. THAT CONSIDERING THE TREND OF CONTIN UED INVESTMENT IN FDRS, YEAR AFTER YEAR, WITHOUT ITS UTILIZATION TOWA RDS THE OBJECTS, THE INTENT OF THE APPELLANT TO EARN INCOME TO FURTH ER INCREASE PROFIT IS CLEARLY VISIBLE. RELIANCE IN THIS RESPECT HAS BE EN PLACED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF VISVESVARAYA TECHNOLOGICAL UNIVERSITY VS. ASSISTANT COMMISSIONER OF INCOME TAX (REPORTED AS 362 ITR 279). A TABLE SH OWING INCOME FROM ADMISSION/ TRAINING FEE, TRAINING EXPENSES, PR OFIT AND PROFIT PERCENTAGE FOR THE FINANCIAL YEAR 2008-09 TO 2015-1 6 HAS ALSO BEEN FURNISHED TO SUBMIT THAT THE APPELLANT HAS BEEN EAR NING HUGE PROFIT FROM TRAINING ACTIVITY ALSO WHICH IS UNJUSTIFIED A ND UNWARRANTED CONSIDERING THE CHARITABLE OBJECTS OF THE APPELLANT . IT HAS BEEN, THEREFORE, CONTENDED THAT THE INCOME EARNED BY THE ASSESSEE IS NOT ONLY IN THE DIRECT CONTRAST TO POST AMENDMENT OF SE CTION 2(15) AND ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 16 ITS PROVISO AND THAT THE SURPLUS ACCUMULATED OVER T HE YEARS HAS NOT BEEN PLOUGHED BACK FOR THE CHARITABLE PURPOSES. IT HAS THEREFORE BEEN SUBMITTED THAT THE LOWER AUTHORITIES RIGHTLY D ENIED THE CLAIM OF EXEMPTION TO THE ASSESSEE U/S 11 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. 11. THE ASSESSEE, HOWEVER, IN ITS REJOINDER HAS SUB MITTED THAT THE JUDGMENTS RELIED UPON BY THE AO ARE TOTALLY DISTING UISHABLE WHICH DO NOT SUPPORT THE FACTS OF THE ASSESSEE. THE JUDGM ENTS ARE AGAINST THE GRANTING OF REGISTRATION U/S 12A UNDER THE INCO ME TAX ACT WHEREAS IN THE CASE OF THE ASSESSEE THE REGISTRATIO N U/S 12A IS GRANTED AND MOST IMPORTANTLY IS THE FACT THAT REGIS TRATION IS INTACT TILL DATE AND NOT WITHDRAWN BY THE CIT. THAT THE AO COULD HAVE PROPOSED TO THE CIT FOR WITHDRAWAL OF THE REGISTRAT ION WHICH THE AO HAS NOT DONE. THAT THERE IS NO LAW LAID DOWN BY THE J&K HIGH COURT WHICH HAS APPROVED THE ORDER OF AMRITSAR BENCH ON F ACTS AND SINCE THERE WAS NO QUESTION OF LAW INVOLVED, THE HON'BLE SUPREME COURT DISMISSED THE SLP. THIS ISSUE HAS ALREADY BEEN CON SIDERED BY THE JURISDICTIONAL P&H HIGH COURT IN THE CASE OF MOGA IMPROVEMENT TRUST 291 CTR 352 WHEREIN IN PARA 84 OF THE JUDGME NT AT PAGE 407 THE HON'BLE HIGH COURT HAS DISMISSED THE PLEA OF TH E REVENUE OF GETTING SUPPORT FROM JAMMU DEVELOPMENT AUTHORITY CA SE. THAT SO FAR THE RELIANCE OF THE DEPARTMENT IN THE CASE TRI BUNE TRUST (SUPRA) IS CONCERNED, THE HONBLE HIGH COURT HAS O BSERVED THAT PROFIT WAS THE PRE-DOMINANT MOTIVE, PURPOSE AND OBJ ECT OF THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 17 ASSESSEE THE TRIBUNE TRUST. THAT THE TRIBUNE TRUS T HAD OVER THE YEAR ACCUMULATED HUGE PROFITS AND THERE WAS NOTHING IN THE CASE TO SHOW THAT THE SURPLUS ACCUMULATED OVER THE YEARS HA D BEEN PLOUGHED BACK FOR CHARITABLE PURPOSES. THAT, HOWEVER, IN THE CASE OF THE PRESENT ASSESSEE (CHANDIGARH LAWN TENNIS ASSOCIATIO N) PROFIT MAKING IS NOT THE MOTIVE OF THE ASSESSEE AND THE ON LY OBJECT OF THE ASSESSEE IS TO PROMOTE THE GAME OF LAWN TENNIS AND HOLD VARIOUS TOURNAMENTS FOR THE PROMOTION OF THE GAME. THAT THE HON'BLE P&H HIGH COURT IN THE CASE OF MOGA IMPROVEMENT TRUST REPORTED (SUPRA) HAS HELD THAT IF THE TRUST IS NOT SET UP WITH A MOTIVE OF MAKING PROFITS BUT DURING CARRYING ON OF ITS ACTIVI TIES ACCORDING TO THE OBJECTS IF ANY SURPLUS IS GENERATED WHICH IS AG AIN PLOUGHED BACK FOR THE ACTIVITIES OF THE TRUST EXEMPTION U/S 11 IS TO BE ALLOWED. IN THE PRESENT CASE OF THE ASSESSEE THE ENTIRE SURPLUS GENERATED FROM THE DAVIS CUP TIE HAS BEEN PLOUGHED BACK AND SPEN T FOR THE ACTIVITIES OF THE TRUST. THAT THE ASSESSING OFFICE R WHILE FRAMING THE ASSESSMENT HAS ONLY TO SEE THAT THE ASSESSEE TRUST HAS CARRIED OUT THE ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS AND 85% O F THE TOTAL RECEIPTS HAVE BEEN SPENT TOWARDS THE OBJECTS OF THE TRUST TO WHICH THE ASSESSEE HAS COMPLIED WITH AS PER THE PROVISION S OF THE INCOME TAX ACT U/S 11, 12 & 13. IT HAS BEEN FURTHER SUBMI TTED THAT THE ASSESSEE SOCIETY HOLDS VARIOUS TOURNAMENTS IN WHICH IT INCURS DEFICIT AS WELL AS SURPLUS. HENCE IT WILL NOT BE CORRECT TO SAY THAT THE TOURNAMENTS ARE ORGANIZED BY THE APPELLANT WITH COM MERCIAL MOTIVE. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 18 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE ALSO GONE THROUGH THE RECORDS. THE ISSUE INVOLVED IN THIS APP EAL REQUIRES THE INTERPRETATION OF SECTION 2(15) OF THE ACT INCLUDIN G THE PROVISO THERETO. FOR THAT PURPOSE, WE NEED TO LOOK AT THE C HANGES / AMENDMENTS BROUGHT OUT FROM TIME TO TIME IN THE PR OVISIONS OF SECTION 2(15) OF THE INCOME TAX ACT AS THESE HAVE BEARING UPON THE INTERPRETATION OF THE SECTION AS IT STANDS DURING T HE RELEVANT PERIOD AND AS ON TODAY. WE WILL ALSO CONSIDER THE JUDICIAL DECISIONS PASSED FROM TIME TO TIME INTERPRETING THE TIME TO TIME AME NDED PROVISIONS OF SECTION 2(15) OF THE ACT. WE HAVE THE BENEFIT O F DECISION OF THE CO-ORDINATE AMRITSAR BENCH OF THE TRIBUNAL IN THE C ASE OF HOSHIARPUR IMPROVEMENT TRUST CASE (SUPRA) AND ALS O OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF THE TRIBUNE TRUST (SUPRA). 13. IN THE INCOME-TAX ACT, 1922, THE RELEVANT /CORR ESPONDING PROVISION WAS SECTION 4(3) OF THE ACT, WHICH READ A S UNDER: SECTION 4(3) OF THE 1922 ACT: ' 4. APPLICATION OF ACT. .. .. . (3) THIS ACT SHALL NOT APPLY TO THE FOLLOWING CLASS ES OF INCOME: (I) ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRU ST OR OTHER LEGAL OBLIGATION WHOLLY FOR RELIGIOUS OR CHAR ITABLE PURPOSES, AND IN THE CASE OF PROPERTY SO HELD IN PA RT ONLY FOR SUCH PURPOSES, THE INCOME APPLIED OR FINALLY SET AP ART FOR APPLICATION THERETO. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 19 (II) TO (VIII) ' IN THIS SUB-SECTION 'CHARITABLE PURPOSES' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCE MENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY.' 14. THE ISSUE RELATING TO THE INTERPRETATION OF THE ABOVE PROVISIONS OF THE 1922 ACT CAME INTO CONSIDERATION OF THE PRIV Y COUNCIL IN THE CASE OF THE TRUSTEES OF THE TRIBUNE PRESS VS. CIT [(1939) 7 ITR 415 : AIR 1939 PC 208]. THE PRIVY COUNCIL TOOK INTO CONSIDERATION THE WILL OF SARDAR DYAL SINGH, THE FOUNDER OF THE TRIBUNE TR UST, AND OBSERVED THAT IT SEEMED UNREASONABLE TO DOUBT THAT HIS OBJECT WAS TO BENEFIT THE PEOPLE OF UPPER INDIA BY PROVIDING THEM WITH AN ENGLISH NEWSPAPER - THE DISSEMINATION OF NEWS AND THE VENTI LATION OF OPINION UPON ALL MATTERS OF PUBLIC INTEREST. THAT THE OBJECT OF THE PAPER COULD FAIRLY BE DESCRIBED AS 'THE OBJECT OF S UPPLYING THE PROVINCE WITH AN 'ORGAN OF EDUCATED PUBLIC OPINION' AND THAT IT SHOULD PRIMA FACIE BE HELD TO BE AN OBJECT OF GENER AL PUBLIC UTILITY. IT WAS, THEREFORE, HELD THAT PROPERTY OF THE ASSESS EE TRIBUNE PRESS WAS HELD UNDER TRUST WHOLLY FOR THE ADVANCEMENT OF GENERAL PUBLIC UTILITY. 15. THEREAFTER TO OVERCOME THE DECISION OF THE PRIV Y COUNCIL, THE SECTION 3(4) OF THE 1922 ACT WAS SUBSTITUTED WITH S ECTION 2 (15) OF THE 1961 ACT, WHEREBY THE WORDS NOT FOR PROFIT WE RE ADDED TO THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY I N THE PROVISIONS. THE PROVISIONS OF SECTION 2(15) OF THE 1961 ACT, AS THEY STOOD AT THAT TIME, READ AS UNDER: ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 20 SECTION 2 (15 ): 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVI TY FOR PROFIT.' 16. THUS IN THE 1961 ACT, ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY WAS QUALIFIED WITH THE CRUCI AL WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFI T.' WHICH WAS NOT THERE IN THE RELEVANT PROVISIONS OF SECTION 4(3) OF THE 1922 ACT. THE INTERPRETATION OF THE ABOVE SUBSTITUTED PROVISION B Y 1961, ACT CAME INTO CONSIDERATION BEFORE THE THREE JUDGES BENCH OF THE SUPREME COURT IN THE CASES OF SOLE TRUSTEE, LOK SHIKSHANA TRUST VS. CIT (1975) 101 ITR 234 (SC). THE ASSESSEE TRUST IN THAT CASE WAS CARRYING OUT THE ACTIVITY OF PRINTING AND PUBLISHIN G OF NEWSPAPER AND MAGAZINES. THE ASSESSEE CLAIMED THAT THE OBJECT OF THE ASSESSEE- TRUST WAS EDUCATION, WHILE THE STAND OF THE REVENUE WAS THAT THE ACTIVITY OF THE ASSESSEE WOULD FALL IN THE LAST MEN TIONED CATEGORY IN SECTION 2(15), VIZ., THE ADVANCEMENT OF ANY OTHER O BJECT OF GENERAL PUBLIC UTILITY. THE REASON FOR THE ABOVE DIVERGENC E IN THE STANDS OF ASSESSEE AND THE REVENUE WAS BECAUSE THE CONCLUDING WORDS OF THE DEFINITION IN SECTION 2(15) OF THE ACT 'NOT INVOLVI NG THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' DID NOT QUALIFY THE FIR ST THREE CATEGORIES OF RELIEF OF THE POOR, EDUCATION, OR MEDICAL RELIEF BU T QUALIFY ONLY THE FOURTH CATEGORY OF 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 21 PUBLIC UTILITY' WHICH WAS QUALIFIED WITH THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT . 17. HIS LORDSHIP JUSTICE H.R. KHANNA, WRITING THE M AJORITY VIEW (FOR HIMSELF & JUSTICE A.C. GUPTA) OBSERVED THAT T HE WORD 'EDUCATION' HAS NOT BEEN USED IN THAT WIDE AND EXTE NDED SENSE, ACCORDING TO WHICH EVERY ACQUISITION OF FURTHER KNO WLEDGE CONSTITUTES EDUCATION. THAT THOUGH A NUMBER OF OBJE CTS, INCLUDING THE SETTING UP OF EDUCATIONAL INSTITUTIONS, WERE ME NTIONED IN THE TRUST DEED AS THE OBJECTS OF THE TRUST, HOWEVER, TH E TRUST AT THAT TIME WAS CARRYING OUT ONLY THE LAST MENTIONED OBJECT OF THE TRUST, NAMELY, SUPPLYING THE KANNADA SPEAKING PEOPLE WITH AN ORGAN OR ORGANS OF EDUCATED PUBLIC OPINION VIZ THE PUBLICATION OF NEWS PAPER AND MAGAZINE. HIS LORDSHIP FURTHER RELYING ON THE DECIS ION OF THE JUDICIAL COMMITTEE IN THE CASE OF IN RE TRUSTEES O F THE TRIBUNE [1939]7 ITR 415 (PC) HELD THAT THE OBJECT OF THE AS SESSEE-TRUST (LOK SHIKSHANA TRUST) WAS 'THE ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY'. IT WAS FURTHER OBSERVED T HAT AS A RESULT OF THE ADDITION OF THE WORDS 'NOT INVOLVING THE CARRYI NG ON OF ANY ACTIVITY FOR PROFIT' AT THE END OF THE DEFINITION I N SECTION 2(15), EVEN IF THE PURPOSE OF TRUST WAS ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY, IT WOULD NOT BE CONSIDERED TO BE CHARITABLE PURPOSE UNLESS IT WAS SHOWN THAT THE ABOVE PURPOSE DID NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. THAT IN ORDER TO BRING A ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 22 CASE WITHIN THE FOURTH CATEGORY OF CHARITABLE PURPO SE, IT WOULD BE NECESSARY TO SHOW THAT: (1) THE PURPOSE OF THE TRUST IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, AND (2) THE ABOVE PURPOSE DOES NOT INVOLVE THE CARRYIN G ON OF ANY ACTIVITY FOR PROFIT. HIS LORDSHIP FURTHER OBSERVED THAT THAT THE WORD US ED IN SECTION 2(15) IS PROFIT AND NOT PRIVATE PROFIT AND IT WOULD NOT BE PERMISSIBLE TO READ IN THE ABOVE DEFINITION THE WORD 'PRIVATE' AS QUALIFYING PROFIT EVEN THOUGH SUCH WORD WAS NOT THERE. THAT THERE WAS ALSO NO APPARENT JUSTIFICATION OR COGENT REASON FOR PLACING SUCH A CONSTRUCTION ON THE WORD 'PROFIT'. THE WORDS 'GENER AL PUBLIC UTILITY' CONTAINED IN THE DEFINITION OF CHARITABLE PURPOSE W ERE VERY WIDE. THESE WORDS, EXCLUDE OBJECTS OF PRIVATE GAIN. THAT IT WAS ALSO DIFFICULT TO SUBSCRIBE TO THE VIEW THAT THE NEWLY A DDED WORDS 'NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFI T' MERELY QUALIFY AND AFFIRM WHAT WAS THE POSITION AS IT OBTAINED UND ER THE DEFINITION GIVEN IN THE ACT OF 1922. IF THE LEGISLATURE INTEND ED THAT THE CONCEPT OF CHARITABLE PURPOSE SHOULD BE THE SAME UNDER THE ACT OF 1961, AS IT WAS IN THE ACT OF 1922, THERE WAS NO NECESSITY F OR IT TO ADD THE NEW WORDS IN THE DEFINITION. THAT THE EARLIER DEFIN ITION DID NOT INVOLVE ANY AMBIGUITY AND THE POSITION IN LAW WAS C LEAR AND ADMITTED OF NO DOUBT AFTER THE PRONOUNCEMENT OF THE JUDICIAL COMMITTEE IN THE CASES OF IN RE THE TRIBUNE [1939] 7 ITR 415 (PC) AND IN AND ALL INDIA SPINNERS' ASSOCIATION V. CIT [1944] 12 ITR ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 23 482 (PC). IF DESPITE THAT FACT, THE LEGISLATURE ADD ED NEW WORDS IN DEFINITION AS IF THE NEWLY ADDED WORDS WERE EITHER NOT THERE OR WERE INTENDED TO BE OTIOSE AND REDUNDANT. 18. HOWEVER HIS LORDSHIP BEG, J. WRITING A SEPARATE ORDER WHILE STRESSING ON THE MEANING OF WORD 'INVOLVE' OBSERVE D THAT THE DICTIONARY MEANING OF THE WORD 'INVOLVE' WAS OF WID E IMPORT AND WOULD COVER ALL PROFIT MAKING, EVEN AS A MERE BY-P RODUCT, IF THIS WORD HAD STOOD ALONE AND BY ITSELF WITHOUT FURTHER QUALIFICATIONS BY THE CONTEXT. HOWEVER, THE USE OF THE WORDS 'FOR PRO FIT', SHOWED THAT THE INVOLVEMENT OF PROFIT MAKING SHOULD BE OF SUCH A DEGREE OR TO SUCH AN EXTENT AS TO INFER IT TO BE THE REAL OBJECT . IF THE PROFITS MUST NECESSARILY FEED A CHARITABLE PURPOSE, UNDER THE TE RMS OF THE TRUST, THE MERE FACT THAT THE ACTIVITIES OF THE TRUST YIEL D PROFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUST. THE GENUINEN ESS OF THE PURPOSE WAS TO BE TESTED BY THE OBLIGATION CREATED TO SPEND THE MONEY EXCLUSIVELY OR ESSENTIALLY ON 'CHARITY'. THAT IF PR OFIT MAKING RESULTS FROM THE ACTIVITY AND THESE PROFITS COULD BE UTILIS ED FOR NON- CHARITABLE PURPOSES, THE TRUST WOULD NOT BE EXEMPT FROM PAYING INCOME-TAX. HOWEVER AS PER BOTH THE MAJORITY AND MINORITY VIEW, IT WAS CONCLUDED THAT THE ACTIVITY OF THE TRUST WAS NOT CH ARITABLE PURPOSE BUT FOR MAKING PROFITS AND THE RELIEF WAS DENIED. 19. FURTHER THE MATTER CAME FOR DISCUSSION IN THE C ASE OF INDIAN CHAMBER OF COMMERCE VS. CIT (1975) 101 ITR 796 (S C) AND THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 24 MATTER WAS DECIDED IN FAVOUR OF THE REVENUE. COMME NTING ON THE EXPRESSION, NOT INVOLVING THE CARRYING ON OF ANY A CTIVITY FOR PROFIT', THEIR LORDSHIPS OBSERVED: 'NOTWITHSTANDING THE POSSIBILITY OF OBSCURITY AND OF DUAL MEANING WHEN THE EMPHASIS IS SHIFTED FROM 'ADVANCEMENT' TO 'OBJECT' USED IN S. 2(15), WE ARE CLEAR IN OUR MINDS THAT BY THE NEW DEFINITION THE BENEFIT OF EXCLUSION FROM TOTAL INCOME IS TAKEN AWAY WHERE IN ACCOMPLISHING A CHARITABLE PURPOSE THE INSTITUTION ENGAGES ITSELF IN ACTIVITIES FOR PROFIT.' 20. THE HONBLE SUPREME COURT, THUS, EMPHASIZED THA T IF IN THE ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UTILIT Y A TRUST RESORTS TO CARRYING ON OF ANY ACTIVITY FOR PROFIT, THEN NECESS ARILY S. 2(15) CANNOT CONFER EXEMPTION. IT NEEDS TO BE MENTIONED HERE THAT AS AGAINST THE ABOVE DEFINITION OF CHARITABLE PURPOSE, WHICH SEEKS TO PRECLUDE CARRYING ON OF ANY ACTIVITY FOR PROFIT INV OLVED IN ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY, SUB- SECTION (4) OF SECTION 11 STILL ALLOWED CARRYING ON OF ANY BUSINESS HELD IN TRUST FOR CHARITABLE OR RELIGIOUS PURPOSE. THE RELEVANT PART OF THE SAID PROVISION READ AS UNDER: '11. INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIOUS PURPOSES .(1) SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63, THE FOLLOWING INCOME SHALL NOT B E INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR O F THE PERSON IN RECEIPT OF THE INCOME (A )INCOME DERIVED FROM PROPERTY HELD UNDER TRUST W HOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; . . . ** ** ** ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 25 (4) FOR THE PURPOSES OF THIS SECTION 'PROPERTY HELD UNDER TRUST' INCLUDES A BUSINESS UNDERTAKING SO HELD. . . 21. ANOTHER SECTION 13(1)(BB) WAS INTRODUCED BY THE TAXATION LAWS AMENDMENT ACT, 1975 AND REMAINED ON THE STATUTE BOOK UNTIL OMITTED WITH EFFECT FROM 1-4-1984 PROVIDING THAT I N THE CASE OF A CHARITABLE TRUST OR INSTITUTION FOR THE RELIEF OF T HE POOR, EDUCATION OR MEDICAL RELIEF, ANY INCOME FROM BUSINESS CARRIED ON BY THE TRUST WILL NOT BE EXEMPT, UNLESS THE BUSINESS IS CARRIED ON IN THE COURSE OF ACTUAL CARRYING OUT OF A PRIMARY PURPOSE OF THE TRU ST OR INSTITUTION. 13. SECTION 11 NOT TO APPLY IN CERTAIN CASES.(1) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF T HE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF ** ** (BB)IN THE CASE OF A CHARITABLE TRUST OR INSTITUTIO N FOR THE RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF , WHICH CARRIES ON ANY BUSINESS, ANY INCOME DERIVED FROM SUCH BUSINESS, UNLESS THE BUSINESS IS CARRIED ON IN THE COURSE OF THE ACTUAL CARRYING OUT OF A PRIMA RY PURPOSE OF THE TRUST OR INSTITUTION;' 22. WITH THE AFORESAID AMENDMENT, WHEN READ IN ITS PLAIN AND LITERAL MEANING , THE INSTITUTIONS OR TRUSTS CARRYI NG ON THE ACTIVITY AS PER FIRST THREE LIMBS OF SECTION 2(15) I.E. FOR THE RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF WERE ALLOWED TO CARRY O N BUSINESS ACTIVITY ALSO, BUT SUBJECT TO THE CONDITION THAT SU CH BUSINESS IS CARRIED ON IN THE COURSE OF THE ACTUAL CARRYING OUT OF A PRIMARY PURPOSE OF THE TRUST OR INSTITUTION TO CLAIM THEIR ACTIVITY AS FOR CHARITABLE PURPOSES. HOWEVER, FOR THE INSTITUTION S CARRYING ON THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 26 ACTIVITY AS MENTIONED IN THE FOURTH LIMB I.E. FOR A DVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY, THE PROFIT MAKING WAS BARRED IN VIEW OF THE CRUCIAL WORDS NOT FOR MAKING PROFIT ADDED IN SECTION 2(15) OF THE ACT OF 1961. 23. HOWEVER, IT IS TO BE NOTED HERE THAT THE ABOVE DECISIONS IN THE CASES OF SOLE TRUSTEE, LOK SHIKSHANA TRUST VS. CI T (SUPRA) AND INDIAN CHAMBER OF COMMERCE VS. CIT (SUPRA) WERE OV ERRULED BY THE MAJORITY VIEW OF THE LARGER BENCH JUDGEMENT OF THE SUPREME COURT IN ADDL. CIT V. SURAT ART SILK CLOTH MANUFAC TURERS ASSN REPORTED IN [1978 ] 121 ITR 1 [1979] 2 TAXMAN 501 (SC). JUSTICE P.N. B HAGWATI WRITING MAJORITY VIEW FOR THE BENCH, IN PAR A 17 OF THE SAID ORDER HELD THAT THE ACTIVITY OF THE TRUST OR T HE INSTITUTION MUST BE FOR PROFIT IN ORDER TO ATTRACT THE EXCLUSIONARY CLAUSE. IT IS NOT THEREFORE ENOUGH THAT AS A MATTER OF FACT AN ACTIVI TY RESULTS IN PROFIT BUT IT MUST BE CARRIED ON WITH THE OBJECT OF EARNIN G PROFIT. THAT PROFIT-MAKING MUST BE THE END TO WHICH THE ACTIVITY MUST BE DIRECTED OR IN OTHER WORDS, THE PREDOMINANT OBJECT OF THE AC TIVITY MUST BE MAKING A PROFIT. THE HONBLE SUPREME COURT FURTHER OBSERVED: WHERE AN ACTIVITY IS NOT PERVADED BY PROFIT MOTIV E BUT IS CARRIED ON PRIMARILY FOR SERVING THE CHARITABLE PUR POSE, IT WOULD NOT BE CORRECT TO DESCRIBE IT AS AN ACTIVITY FOR PROFIT. BUT WHERE, ON THE OTHER HAND, AN ACTIVITY IS CARRIE D ON WITH THE PREDOMINANT OBJECT OF EARNING PROFIT, IT WOULD BE AN ACTIVITY FOR PROFIT, THOUGH IT MAY BE CARRIED ON IN ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 27 ADVANCEMENT OF THE CHARITABLE PURPOSE OF THE TRUST OR INSTITUTION. WHERE AN ACTIVITY IS CARRIED ON AS A MATTER OF ADVANCEMENT OF THE CHARITABLE PURPOSE OR FOR THE PURPOSE OF CARRYING OUT THE CHARITABLE PURPOSE, IT WOULD NOT BE INCORRECT TO SAY AS A MATTER OF PLAIN ENGLIS H GRAMMAR THAT THE CHARITABLE PURPOSE INVOLVES THE CARRYING ON OF SUCH ACTIVITY, BUT THE PREDOMINANT O BJECT OF SUCH ACTIVITY MUST BE TO SUBSERVE THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT. THE CHARITABLE PURPOSE SHOULD NOT BE SUBMERGED BY THE PROFIT MAKING MOTIVE ; THE LATTER SHOULD NOT MASQUERADE UNDER THE GUISE OF THE FORMER. THE PURPOSE OF THE TRUST, AS POINTED OUT BY ONE OF US (PATHAK, J.) IN DHARMADEEPTI V. CIT [(1978) 3 SCC 499 : 1978 SCC (TAX) 193] MUST BE ''ESSENTIALLY CHARITABL E IN NATURE' AND IT MUST NOT BE A COVER FOR CARRYING ON AN ACTIVITY WHICH HAS PROFIT MAKING AS ITS PREDOMINANT OBJECT. THIS INTERPRETATION OF THE EXCLUSIONARY CLAUSE IN S ECTION 2 CLAUSE (15) DERIVES CONSIDERABLE SUPPORT FROM THE S PEECH MADE BY THE FINANCE MINISTER WHILE INTRODUCING THAT PROVISION. THE FINANCE MINISTER EXPLAINED THE REASO N FOR INTRODUCING THIS EXCLUSIONARY CLAUSE IN THE FOLLOWI NG WORDS: 'THE DEFINITION OF 'CHARITABLE PURPOSE' IN THAT CLA USE IS AT PRESENT SO WIDELY WORDED THAT IT CAN BE TAKEN ADVAN TAGE OF EVEN BY COMMERCIAL CONCERNS WHICH, WHILE OSTENSI BLY SERVING A PUBLIC PURPOSE, GET FULLY PAID FOR THE BE NEFITS PROVIDED BY THEM NAMELY, THE NEWSPAPER INDUSTRY WHI CH WHILE RUNNING ITS CONCERN ON COMMERCIAL LINES CAN C LAIM THAT BY CIRCULATING NEWSPAPERS IT WAS IMPROVING THE GENERAL KNOWLEDGE OF THE PUBLIC. IN ORDER TO PREVEN T THE MISUSE OF THIS DEFINITION IN SUCH CASES, THE SELECT COMMITTEE FELT THAT THE WORDS 'NOT INVOLVING THE CA RRYING ON OF ANY ACTIVITY FOR PROFIT' SHOULD BE ADDED TO T HE DEFINITION.' (EMPHASIS SUPPLIED BY US) 24. THE HONBLE SUPREME COURT THUS TOOK DEPARTURE FROM THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 28 PLAIN ENGLISH GRAMMAR MEANING OF THE WORDS IN THE P ROVISIONS, BUT INTERPRETED THE PHRASE NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT SUFFIXED TO THE ADVANCEMENT O F ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IN THE PROVISIONS OF SECTION 2(15) OF THE 1961 ACT IN THE MANNER THAT IF THE INCOME FR OM THE PROFIT MAKING ACTIVITY IS PLOUGHED BACK TO SUBSERVE THE CH ARITABLE PURPOSE TO ACHIEVE THE END OR ULTIMATE MOTIVE OF C HARITY, THE ACTIVITY OF SUCH AN INSTITUTION WILL NOT BE EXCLUD ED FROM THE DEFINITION OF CHARITABLE PURPOSES. THE HONBLE SUPREME COURT HELD THAT IT WAS OBVIOUS THAT THE EXCLUSIONARY CLAUSE WAS ADDED WITH A VIEW TO OVERCOMING THE DECISION OF THE PRIVY COUNCIL IN THE OF THE TRUSTEES OF THE TRIBUNE PRESS [AIR 1939 PC 208 : (1939) 7 ITR 415] WHERE IT WAS HELD THAT THE OBJECT OF SUPPL YING THE COMMUNITY WITH AN ORGAN OF EDUCATED PUBLIC OPINION BY PUBLICATION OF A NEWSPAPER WAS AN OBJECT OF GENERAL PUBLIC UTILITY AND HENCE CHARITABLE IN CHARACTER, EVEN THOUGH THE ACTIVITY OF PUBLICATION OF THE NEWSPAPER WAS CARRIED ON COMMERC IAL LINES WITH THE OBJECT OF EARNING PROFIT. THAT T HE PUBLICATION OF THE NEWSPAPER WAS AN ACTIVITY ENGAGED IN BY THE TRUST FOR THE PUR POSE OF CARRYING OUT ITS CHARITABLE PURPOSE AND ON THE FACTS IT WAS CLEARLY AN ACTIVITY WHICH HAD PROFIT-MAKING AS ITS PREDOMINANT OBJECT, BU T EVEN SO IT WAS HELD BY THE JUDICIAL COMMITTEE THAT SINCE THE PURPOSE SERVED WAS AN OBJECT OF GENERAL PUBLIC UTIL ITY, IT WAS A CHARITABLE PURPOSE. THE HONBLE SUPREME COURT OBSERVED THAT IT ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 29 WAS CLEAR FROM THE SPEECH OF THE FINANCE MINISTER T HAT IT WAS WITH A VIEW TO SETTING AT NAUGHT THIS DECISION THAT THE EXCLUSIONARY CLAUSE WAS ADDED IN THE DEFINITION OF 'CHARITABLE P URPOSE'. THE TEST WHICH HAS, THEREFORE, NOW (AS PER SECTION 2(15) OF 1961 ACT) TO BE APPLIED WAS WHETHER THE PREDOMINANT OBJECT OF THE ACTIVITY INVOLVED IN CARRYING OUT THE OBJECT OF GENERAL PUBL IC UTILITY WAS TO SUB SERVE THE CHARITABLE PURPOSE OR TO EARN PROFIT. WHERE PROFIT- MAKING IS THE PREDOMINANT OBJECT OF THE ACTIVITY, T HE PURPOSE, THOUGH AN OBJECT OF GENERAL PUBLIC UTILITY, WOULD CEASE TO BE A CHARITABLE PURPOSE. BUT WHERE THE PREDOMINANT OBJEC T OF THE ACTIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARIT ABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY . THE EXCLUSIONARY CLAUSE DOES NOT REQUIRE THAT THE ACTIV ITY MUST BE CARRIED ON IN SUCH A MANNER THAT IT DOES NOT RESULT IN ANY PROFIT. HOWEVER, THE PROFITS, IF ANY, SHOULD BE PLOUGHED B ACK AND APPLIED TO CHARITABLE ACTIVITY TO SUBSERVE THE MAIN PURPOSE . T HE HONBLE SUPREME COURT HELD, IT WOULD INDEED BE DIFFICULT FOR PERSONS IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EXPENDITURE BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFICULT OF PRACTICA L REALISATION BUT WOULD ALSO REFLECT UNSOUND PRINCIPLE OF MANAGEM ENT. THE SUPREME COURT HELD THAT THE CONCLUDING WORDS 'NOT I NVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT' GO WITH THE 'OBJECT OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 30 GENERAL PUBLIC UTILITY' AND NOT WITH THE 'ADVANCEME NT'. HIS LORDSHIP, JUSTICE BHAGVATI, AS HE THEN WAS, EX PRESSING THE MAJORITY VIEW OBSERVED : THE REVENUE CONTENDED THAT WHATEVER BE THE OBJECT OF GENERAL PUBLIC UTILITY, ITS 'ADVAN CEMENT' OR ACHIEVEMENT CANNOT INVOLVE THE CARRYING ON OF ANY A CTIVITY FOR PROFIT; OTHERWISE THE PURPOSE OF THE TRUST WOULD NO T BE A CHARITABLE PURPOSE AND ITS INCOME FROM BUSINESS WOULD NOT BE I MMUNE FROM TAX LIABILITY. THIS CONTENTION CANNOT, HOWEVER, BE ACCEPTED AS ITS CONSEQUENCE WOULD BE AS FOLLOWS: I. THE TRUST OR INST ITUTION ESTABLISHED FOR PROMOTION OF AN OBJECT OF GENERAL PUBLIC UTILITY WOULD NOT BE ABLE TO ENGAGE IN BUSINESS FOR FEAR THAT IT MIGHT LOSE THE TAX EXEMPTION ALTOGETHER AND A MAJOR SOURCE OF INCOME F OR PROMOTING OBJECTS OF GENERAL PUBLIC UTILITY WOULD B E DRIED UP. IT IS DIFFICULT TO BELIEVE THAT THE LEGIS LATURE COULD HAVE INTENDED TO BRING ABOUT A RESULT SO DRAS TIC IN ITS CONSEQUENCE. IF THE INTENTION OF THE LEGISLATUR E WERE TO PROHIBIT A TRUST OR INSTITUTION ESTABLISHED FOR PROMOTION OF AN OBJECT OF GENER AL PUBLIC UTILITY FROM CARRYING ON ANY ACTIVITY FOR PROFIT, IT WOULD HAVE PROVIDED IN THE CLEAREST TERMS THAT NO SUCH TRUST O R INSTITUTION SHALL CARRY ON ANY ACTIVITY FOR PROFIT, INSTEAD OF USING INVOLVED AND OBSCURE LANGUAGE GIVING RISE TO LINGUISTIC PROB LEMS AND PROMOTING INTERPRETATIVE LITIGATION. II. SECTION 11(4) , WHICH DECLARES THAT 'PROPERTY HELD UNDER TRUST' SHALL INCLUDE A BUSINESS UNDERTAKING ENJOYING IMMUNITY FROM TAX AND WHICH GAVE STATUTORY RECOGNITION TO THIS PRINCIPLE DECIDED BY THIS COUR T IN EARLIER CASES, WOULD BE RENDERED WHOLLY SUPERFLUOUS AND MEANINGLESS, AFTER THE INSERTION OF CLAUSE (BB) IN SECTION 13(1) WITH EFFECT FROM 1-4-1977. (EMPHASIS SUPPLIED BY US) ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 31 25. HOWEVER, THERE WAS DISSENTING VIEW IN THE WORDS OF JUSTICE A.P. SEN POINTING OUT THAT IT IS NOT PERMISSIBLE FO R THE COURT TO WHITTLE DOWN THE PLAIN LANGUAGE OF THE SECTION. HE REMINDED THAT 'IT WOULD BE CONTRARY TO ALL RULES OF CONSTRUCTION' IN THE WORDS OF KHANNA, J., SPEAKING FOR HIMSELF AND GUPTA, J. IN L OKA SHIKSHANA TRUST, 'TO IGNORE THE IMPACT OF THE NEWLY ADDED WOR DS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT AND TO CONSTRUE THE DEFINITION AS IF THE NEWLY ADDED WORDS WERE EITHER NOT THERE OR WERE INTENDED TO BE OTIOSE AND REDUNDANT, I.E., AS QUALI FYING AND AFFIRMING THE POSITION UNDER THE ACT OF 1922.' ACCORDING TO S EN, J. 'IF AN OBJECT OF GENERAL PUBLIC UTILITY IS ENGAGED IN AN A CTIVITY FOR PROFIT, IT CEASES TO BE A CHARITABLE PURPOSE AND, THEREFORE, T HE INCOME IS NOT EXEMPT UNDER SECTION 11(1)(A). HE ALSO OBSERVED THAT THE CONCEPT OF PROFITS TO FEED THE CHARITY, THEREFORE, IS APP LICABLE ONLY TO THE FIRST THREE HEADS OF CHARITY AND NOT THE FOURTH . IT WOULD BE ILLOGICAL AND, INDEED, DIFFICULT TO APPLY THE SAME CONSIDERATION TO INSTITUTIONS WHICH ARE ESTABLISHED FOR CHARITABLE P URPOSES OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. ANY PROFIT- MAKING ACTIVITY LINKED WITH AN OBJECT OF GENERAL PUBLIC UTILITY WOU LD BE TAXABLE. THE THEORY OF THE DOMINANT OR PRIMARY OBJECT OF THE TRU ST CANNOT, THEREFORE, BE PROJECTED INTO THE FOURTH HEAD OF CHA RITY, VIZ., ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SO AS TO MAKE THE CARRYING ON OF A BUSINESS ACTIVITY MERELY ANCILLARY OR INCIDENTAL TO THE MAIN OBJECT.' HE ALSO POINTED OUT THAT THE DIRECT ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 32 TAX LAWS COMMITTEE IN ITS INTERIM REPORT ON CHARITA BLE TRUSTS (CHAPTER 2) IN 1977 HAD CONSIDERED THE QUESTION WHE THER THE EXPRESSION NOT INVOLVING THE CARRYING ON OF ANY AC TIVITY FOR PROFIT IN THE DEFINITION OF CHARITABLE PURPOSE SHOULD BE DELETED AND EXPRESSED ITS OPINION IN FAVOUR OF DELETION. THE GO VERNMENT HOWEVER DID NOT ACCEPT THE SUGGESTION. HE OBSERVED 'I FAIL TO COMPREHEND WHEN THE RECOMMENDATION HAS NOT BEEN ACT ED UPON BY THE GOVERNMENT BY SUITABLE LEGISLATION, HOW THIS CO URT CAN BY A PROCESS OF JUDICIAL CONSTRUCTION TO ACHIEVE THE SAM E RESULT.' 26. THE PURPOSE OF OUR ABOVE DISCUSSION, IS THAT WH ILE INTERPRETING THE SCOPE OF THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT.' SUFFIXED WITH THE ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY BOTH THE VIEWS AS TO WHETHER LITERAL INTERPRETATION OF THE ABOVE CLAUSE IS TO BE TAKEN O R THE SAME IS TO BE READ DOWN TO REMOVE HARDSHIP TO THE TRUSTS WHOSE EN D MOTIVE IS CHARITY AS THEY APPLY ALL SUCH PROFITS EARNED IN C HARITABLE ACTIVITY, WENT ON SIDE BY SIDE. EARLIER IN THE CASE OF LOK S HIKSHA TRUST (SUPRA) THE MAJORITY VIEW PREVAILED FOR THE LITERAL INTERPRETATION OF THE PROVISIONS OF THE SECTION 2(15) OF THE ACT, HOW EVER LATER ON IN THE CASE OF SURAT ART SILK MANUFACTURERS ASSN.(SU PRA) THE PROVISIONS WERE READ DOWN AND PURPOSE TEST OR TH E END OBJECT OR TO SAY PREDOMINANT OBJECT THEORY WAS APPLIED. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 33 27. HOWEVER, SHORTLY AFTER THE ABOVE JUDGMENT WAS D ELIVERED BY THE FIVE MEMBER BENCH HONBLE SUPREME COURT IN THE CASE OF SURAT ART SILK MANUFACTURERS ASSN. (SUPRA) , SUB- SECTION (4A) WAS INTRODUCED IN SECTION 11 BY THE FINANCE ACT, 1983 W ITH EFFECT FROM 1-4-1984 TO PROVIDE THAT A TRUST OR INSTITUTION FOR CHARITABLE OR RELIGIOUS PURPOSE WILL NOT GET THE BENEFIT OF EXEMP TION UNDER SECTION 11 IN RESPECT OF ANY PROFITS OR GAINS OF BUSINESS C ARRIED ON BY IT, UNLESS THE BUSINESS IS(I ) CARRIED ON BY A TRUST W HOLLY FOR PUBLIC RELIGIOUS PURPOSES AND THE BUSINESS CONSISTS OF PRI NTING AND PUBLICATION OF BOOKS OR PUBLICATION OF BOOKS OR THE BUSINESS IS OF A KIND NOTIFIED BY THE CENTRAL GOVERNMENT, OR (II) CA RRIED ON BY AN INSTITUTION WHOLLY FOR CHARITABLE PURPOSES AND THE WORK IN CONNECTION WITH THE BUSINESS IS MAINLY CARRIED ON B Y THE BENEFICIARIES OF THE INSTITUTION. THE LEGISLATURE, HOWEVER, OMITTED THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT FROM THE DEFINITION OF CHARITABLE PURPOSE IN SE CTION 2(15), AND ALSO OMITTED SECTION 13(1)(BB ). 28. IT IS PERTINENT TO MENTION HERE THAT THE ABOVE AMENDMENTS MADE BY THE FINANCE ACT 1983, DROPPING OF THE WORDS NOT INVOLVING THE CARRYING ON ANY ACTIVITY FOR PROFIT DID NOT BRING ANY MAJOR CHANGE AS CORRESPONDING AMENDMENTS WERE A LSO MADE IN SECTION 11 OF THE ACT WHEREIN MORE STRINGENT RES TRICTIONS (AS DISCUSSED ABOVE) WERE BROUGHT IN. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 34 29. THE RIGOUR OF NEWLY INSERTED SECTION 11(4A), HO WEVER, WAS DILUTED BY THE FINANCE (NO. 2) ACT, 1991 SUB-SECTIO N (4A) OF SECTION 11 WAS AMENDED WITH EFFECT FROM 1-4-1992 TO PROVIDE THAT SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SECT ION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, AS THE CASE MAY BE, INS TITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TR UST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. THE AMENDED SECTION 11(4A) READ AS UNDER: - 11(4A) : SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SECTION ( 3) OR SUBSECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTA L TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, AS TH E CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. 30. EXPLAINING THIS AMENDMENT IN LAW, THE CBDT CIRC ULAR NO. 621 DATED 19 TH DECEMBER 1991 [(1992) 195 ITR (ST) 154], READ WITH CIRCULAR NO. 642 DATED 15 TH DECEMBER 1992 [(1993) 199 ITR (ST) 7] STATED AS FOLLOWS: CBDT CIRCULAR NO. 621 DATED 19 TH DECEMBER 1991 [(1992 ] 195 ITR (ST) 154 @165 ] 15.8 IN ORDER TO BRING EXEMPTION OF CHARITABLE O R RELIGIOUS TRUSTS IN LINE WITH THE CORRESPONDING PROVISIONS IN SECTION 10(23C)(IV) OR (V), SUB-SECTION (4A) OF SECTION 1 1 HAS BEEN AMENDED TO PERMIT TRUST AND INSTITUTIONS TO CARRY O UT BUSINESS ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 35 ACTIVITIES IF THE BUSINESS ACTIVITIES ARE INCIDENTA L TO THE ATTAINMENT OF ITS OBJECTIVE. THE CHARITABLE OR RELI GIOUS TRUST WILL NO LONGER LOSE COMPLETE EXEMPTION FROM INCOME- TAX. HOWEVER, THE PROFITS AND GAINS FROM SUCH BUSINESS A CTIVITY WILL BE SUBJECTED TO TAX. CBDT CIRCULAR NO 642 DATED 15 TH DECEMBER 1992 IN PARTIAL MODIFICATION TO PARA 15.8 (AS EXTRACTED ABOVE) OF THE CIRCULAR NO. 621, DT. 19TH DEC., 1991 ISSUED FROM F . NO. 133/389/91-TPL, IT IS CLARIFIED THAT ACCORDING TO T HE PROVISIONS OF SECTION 11(4A) OF THE INCOME TAX ACT, AS AMENDED TH ROUGH THE FINANCE (NO. 2) ACT, 1991, WITH EFFECT FROM 1ST APR IL, 1992, PROFITS AND GAINS OF BUSINESS IN THE CASE OF A TRUST OR INS TITUTION WILL NOT BE LIABLE TO TAX IF THE BUSINESS IS INCIDENTAL TO T HE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE. IN ADDITION, SEPARATE BOOKS OF ACCOUNT ARE TO BE MAINT AINED BY THE TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. I NCOME OF ANY OTHER BUSINESS WHICH IS NOT INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR INSTITUTION WILL NOT BE EXEMPT FROM TAX. 31. THE MAJOR CHANGE, IN OUR VIEW, BROUGHT BY AMEND MENT TO SECTION 11(4A), IS THAT EARLIER THE PHRASE NOT INV OLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WAS APPLICABLE TO TH E FOURTH LIMB OF DEFINITION OF CHARITABLE PURPOSES AS PER THE PROV ISIONS OF SECTION 2(15) OF THE 1961 ACT I.E. IN RESPECT OF THE INSTIT UTIONS CARRYING OUT THE ACTIVITY FOR ADVANCEMENT OF GENERAL PUBLIC UTIL ITY. HOWEVER DROPPING THE CRUCIAL WORDS NOT INVOLVING THE CARRY ING ON OF ANY ACTIVITY FOR PROFIT FROM SECTION 2(15) AND BRINGIN G THE CRUCIAL WORDS UNLESS THE BUSINESS IS INCIDENTAL TO THE ATT AINMENT OF THE OBJECTIVES OF THE TRUST BY WAY OF AMENDMENT IN SEC TION 11(4A) ALLOWED THE INSTITUTIONS CARRYING OUT THE ACTIVITY FOR THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY TO CARRY OUT BUSINESS ACTIVITY ALSO, IF THE BUSINESS ACTIVITIES ARE INCIDENTAL TO THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 36 ATTAINMENT OF THEIR OBJECTIVE. EARLIER , THE PROVI SIONS OF SECTION 13(1)(BB) PROVIDED THAT THE INSTITUTIONS CARRYING OUT THE ACTIVITY UNDER THE FIRST THREE LIMBS I.E. RELIEF TO THE POOR , EDUCATION AND MEDICAL RELIEF ARE PERMITTED TO BUSINESS ACTIVITY I N THE COURSE OF THE ACTUAL CARRYING OUT OF THEIR PRIMARY PURPOSE. HOWEV ER, THE OMISSION OF SECTION 13(1) (BB) AND CORRESPONDING AMENDMENTS BROUGHT IN SECTION 11(4A) BROUGHT THE INSTITUTIONS CARRYING OU T THE ACTIVITY OF GENERAL PUBLIC UTILITY AT PAR WITH THE INSTITUTIONS CARRYING ON THE ACTIVITY AS PER FIRST THREE LIMBS OF SECTION 2(15) OF THE ACT ALLOWING THE CARRYING OF BUSINESS ACTIVITY INCIDENTAL TO ATT AINMENT OF THEIR OBJECT. THIS WAS INCONSONANCE WITH THE INTERPRETATI ON MADE BY THE HONBLE SUPREME COURT IN THE CASE OF SURAT ART SIL K CLOTH MANUFACTURERS ASSOCIATION (SUPRA). 32. THE PHRASE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST CAME UP FOR INTERPRETATION BEFORE THE SUPREME COURT IN THE CASE ASSTT. CIT V. THANTHI TRU ST [2001] 247 ITR 785 / 115 TAXMAN 126. THE ASSESSEE THEREIN WAS INVOLVED IN ACTIVITY OF PUBLISHING OF A NEWSPAPER. THE OBJECT O F THE TRUST WAS TO ESTABLISH THE SAID NEWSPAPER AS AN ORGAN OF EDUCATE D PUBLIC OPINION FOR THE TAMIL-SPEAKING READING PUBLIC TO DISSEMINAT E NEWS AND TO VENTILATE OPINION UPON ALL MATTERS OF PUBLIC INTERE ST AND TO ESTABLISH AND RUN SCHOOLS, COLLEGES, HOSTELS AND ORPHANAGES. THE COURT HELD THAT A BUSINESS, WHOSE INCOME IS UTILIZED BY THE TR UST OR THE INSTITUTION FOR THE PURPOSES OF ACHIEVING THE OBJEC TIVES OF THE TRUST ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 37 OR THE INSTITUTION, IS, SURELY, A BUSINESS WHICH IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST. THE FIND INGS OF THE HONBLE SUPREME COURT CAN BE DIVIDED INTO THREE PARTS: (I) DISCUSSING THE POSITION FOR THE PERIOD FROM THE ASSESSMENT YEARS 1979-80 TO 1983-84 , WHEN THE PROVISIONS OF SECTION 13(1)(BB) REMAINED ON THE STATUTE, THE COU RT HELD TO CLAIM THE EXEMPTION UNDER SECTION 11 THE BUSINESS M UST BE CARRIED ON IN THE COURSE OF THE ACTUAL ACCOMPLISHME NT OF RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. AS AN EXA MPLE, A PUBLIC CHARITABLE TRUST FOR THE RELIEF OF THE POOR, EDUCATION AND MEDICAL RELIEF THAT CARRIES ON THE BUSINESS OF WEAV ING CLOTH AND STITCHING, CLOTHING BY EMPLOYING INDIGENT WOMEN CAR RIES ON THE BUSINESS IN THE COURSE OF ACTUALLY ACCOMPLISHING IT S PRIMARY OBJECT OF AFFORDING RELIEF TO THE POOR AND IT WOULD QUALIFY FOR THE EXEMPTION UNDER SECTION 11 OF THE ACT. THE COUR T HOWEVER OBSERVED THAT IN THE INSTANT CASE, (THANTHI TRUST) THE BUSINESS THAT THE TRUST CARRIED ON WAS THAT OF RUNNING A NEW SPAPER. THAT BUSINESS, THOUGH IT WAS HELD BY THE TRUST AS A PART OF ITS CORPUS AND, THEREFORE, IN TRUST, DID NOT DIRECTLY ACCOMPLI SH, WHOLLY OR IN PART, THE TRUST'S OBJECTS OF RELIEF OF THE POOR AND EDUCATION. ITS INCOME ONLY FED SUCH ACTIVITY. IT COULD NOT BE HELD TO BE CARRIED ON IN THE COURSE OF THE ACTUAL ACCOMPLISHME NT OF THE TRUST'S OBJECTS OF EDUCATION AND RELIEF OF THE POOR . IT WAS, THEREFORE, NOT POSSIBLE TO ACCEPT THE ARGUMENT ON B EHALF OF THE TRUST THAT IT WAS ENTITLED TO THE EXEMPTION UNDER S ECTION 11. (II) HOWEVER, IN RESPECT OF THE ASSESSMENT YEARS 1984-85 TO 1991-92 WHEN THE PROVISIONS OF SECTION 13(1)(BB)) STOOD OMITTED THE COURT OBSERVED THAT SUB-SECTION (4) OF SECTION 11 REMAINS ON THE STATUTE BOOK AND IT DEFINES THE WORD S 'PROPERTY HELD UNDER TRUST' FOR THE PURPOSES OF SECTION 11 TO INCLUDE A BUSINESS HELD UNDER TRUST. SUB-SECTION (4A) RESTRIC TS THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 38 BENEFIT UNDER SECTION 11 SO THAT IT IS NOT AVAILABL E FOR INCOME DERIVED FROM BUSINESS UNLESS (A) THE BUSINESS IS CA RRIED ON BY A TRUST ONLY FOR PUBLIC RELIGIOUS PURPOSES AND IT IS OF PRINTING AND PUBLISHING BOOKS OR ANY OTHER NOTIFIED KIND. TH AT THE NEWSPAPER BUSINESS THAT WAS CARRIED ON BY THE TRUST DID NOT FALL WITHIN SUB-SECTION (4A). THE TRUST WAS NOT ONLY FOR PUBLIC RELIGIOUS PURPOSES, SO IT DID NOT FALL WITHIN CLAUS E (A). IT WAS A TRUST NOT AN INSTITUTION, SO IT DID NOT FALL WITHIN CLAUSE (B). IT MUST, THEREFORE, BE HELD THAT FOR THE ASSESSMENT YE ARS IN QUESTION, THE TRUST WAS NOT ENTITLED TO THE EXEMPTI ON CONTAINED IN SECTION 11 IN RESPECT OF THE INCOME OF ITS NEWSP APER. (III) HOWEVER, IN RESPECT OF THE ASSESSMENT YEAR 19 92-93 AND THEREAFTER CONSIDERING THE PROVISIONS OF AMENDED SE CTION 11(4A) OF THE ACT THE COURT HELD THAT THE SUBSTITUT ED SUB- SECTION (4A) (WITH EFFECT FROM 1-4-1992) STATES THA T THE INCOME DERIVED FROM A BUSINESS HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES SHALL NOT BE INCLU DED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE TRUST OR I NSTITUTION IF 'THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF TH E OBJECTIVES OF THE TRUST OR, AS THE CASE MAY BE, INSTITUTION' A ND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED IN RESPECT OF SUCH BUSINESS. CLEARLY, THE SCOPE OF SUB-SECTION (4A) IS MORE BENE FICIAL TO A TRUST OR INSTITUTION THAN WAS THE SCOPE OF SUB-SECT ION (4A) AS ORIGINALLY ENACTED. IN FACT, THE SUBSTITUTED SUB-SE CTION (4A) GIVES A TRUST OR INSTITUTION A GREATER BENEFIT THAN WAS GIVEN BY SECTION 13(1)(BB). IF THE OBJECT OF THE PARLIAMENT WAS TO GIVE TRUSTS AND INSTITUTIONS NO MORE BENEFIT THAN THAT G IVEN BY SECTION 13(1)(BB), THE LANGUAGE OF SECTION 13(1)(BB ) WOULD HAVE BEEN EMPLOYED IN THE SUBSTITUTED SUB-SECTION ( 4A). AS IT STANDS, ALL THAT IS REQUIRED FOR THE BUSINESS INCOM E OF A TRUST OR INSTITUTION TO BE EXEMPT IS THAT THE BUSINESS SHOUL D BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF T HE TRUST OR ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 39 INSTITUTION. A BUSINESS WHOSE INCOME IS UTILIZED BY THE TRUST OR THE INSTITUTION FOR THE PURPOSE OF ACHIEVING THE OB JECTIVES OF THE TRUST OR THE INSTITUTION IS, SURELY, A BUSINESS WHICH IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF T HE TRUST. IN ANY EVENT, IF THERE BE ANY AMBIGUITY IN THE LANGUAG E EMPLOYED, THE PROVISION MUST BE CONSTRUED IN A MANNER THAT BE NEFITS THE ASSESSEE. SINCE IT WAS NOT IN DISPUTE THAT THE INCO ME OF ITS NEWSPAPER BUSINESS HAD BEEN EMPLOYED TO ACHIEVE ITS OBJECTIVES OF EDUCATION AND RELIEF TO THE POOR AND THAT IT HAD MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT THE REOF, IT WAS THEREFORE, HELD THAT THE TRUST WAS ENTITLED TO THE BENEFIT OF SECTION 11 FOR THE ASSESSMENT YEAR 1992-93 AND THER EAFTER. THE SUPREME COURT, THEREFORE, HAS DRAWN THE DISTINC TION BETWEEN THE PHARSE IN THE COURSE OF THE ACTUAL CARRYING OUT OF THEIR PRIMARY PURPOSE AND THE PHRASE 'THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST. IT WAS THEREFORE, HELD THAT IF ALL THE SURPLUS IN ACQUIRING BUSINESS ASSET S IS INVESTED OR PLOUGHED BACK TO THE BUSINESS, BUSINESS WILL BE A B USINESS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST . 33. THE SUPREME COURT AGAIN CONSIDERED THE APPLICAB ILITY OF THE LAST LIMB OF THE DEFINITION OF CHARITABLE PURPOSE IN THE CASE OF CIT V. GUJARAT MARITIME BOARD [2007] 295 ITR 561 [2008 ] 166 TAXMAN 58 (SC), THE COURT OBSERVED THAT HE EXPRESSION ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IS OF THE WIDEST CONNOTATI ON. THE EXPRESSION WOULD PRIMA FACIE INCLUDE ALL OBJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PUBLIC. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 40 34. THE AMENDMENT BROUGHT BY FINANCE ACT 1983 TO S ECTION 2(15) REMAINED IN FORCE FROM 1984 TO 2009. THE LEGAL POSI TION REMAINED THAT TO CLAIM EXEMPTION FROM TAXATION UNDER SECTION 11 OF THE ACT, MAKING PROFITS FROM A BUSINESS ACTIVITY MUST BE INC IDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE TRUST I.E. IT MUST SUBSERVE THE END RESULT FOR THE END MOTIVE OF CHARITY. FURTHER THAT SEPARATE BOOKS OF ACCOUNTS SHOULD BE MAINTAINED IN RESPECT OF SUCH BU SINESS ACTIVITY BY THE ASSESSEE. 35. HOWEVER VIDE FINANCE ACT, 2008 W.E.F. 1.4.2009 , A NEW PROVISO (I.E. FIST PROVISO) WAS ADDED TO THIS PROVI SION, CARVING OUT AN EXCEPTION IN THE CASES OF ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL UTILITY: ' 2 (15) 'CHARITABLE PURPOSE ' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, 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;' (EMPHASIS SUPPLIED BY US) ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 41 36. THERE ARE TWO LIMBS OF THE ABOVE PROVISO TO SECTION 2(15) OF THE ACT, INTRODUCED W.E.F. 1.4.2009, I.E. THE ADVAN CEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' SHALL NOT B E A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON OF: (A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE O R BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, (B) IRRESPECTIVE OF THE NATURE OF USE OR APPLICATIO N, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY;' 37. THE ABOVE AMENDMENT WAS CARRIED IN SECTION SEEK S TO OVERCOME THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASES OF SURAT ART SILK (SUPRA) AND THANTHI TRUST (SUPRA ) AS RELEVANT TO THE PERIOD POST SUBSTITUTION OF THE SECTION 11(4A) OF THE ACT. FIRSTLY, THE POSITION THAT THE CARRYING OF BUSINESS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST AS WAS AL LOWABLE TO THE INTUITIONS U/S 11(4A) CARRYING THE ACTIVITY UNDER T HE ALL THE LIMBS OF SECTION 2(15) OF THE ACT IS NO MORE AVAILABLE TO TH E INSTITUTIONS CARRYING ON THE ADVANCEMENT OF OBJECT OF PUBLIC UTI LITY. THE INSTITUTIONS CARRYING OUT THE OBJECT OF PUBLIC UTIL ITY HAVE BEEN BARRED FROM DOING ANY ACTIVITY IN THE NATURE OF TRADE, COM MERCE OR BUSINESS FOR CLAIMING THEIR ACTIVITY FOR CHARITABLE PURPOSE S. SECONDLY THIS BAR IS IRRESPECTIVE OF APPLICATION OF INCOME FROM S UCH COMMERCIAL ACTIVITY. THAT IT WILL BE IMMATERIAL WHETHER THE I NCOME FROM THE COMMERCIAL ACTIVITY IS UTILIZED OR PLOUGHED BACK TO SUCH ACTIVITY SERVING OBJECT OF PUBLIC UTILITY. HOWEVER, THE RES TRICTION IMPOSED BY THE ABOVE AMENDMENT IS / WAS APPLICABLE ONLY IN RESPECT OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 42 FOURTH LIMB OF SECTION 2(15) OF THE ACT I.E. FOR TH E INSTITUTIONS OR TRUSTS CARRYING OUT THE ACTIVITY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. HENCE, THE RESTRICTION P UT BY SECTION 11(4A) WAS STILL APPLICABLE TO THE OTHER LIMBS IN T HE DEFINITION OF CHARITABLE PURPOSES U/S 2(15) OF THE ACT. 38. THE NOTE ON CLAUSES-MEMORANDUM EXPLAINING THE CLAUS E READ AS UNDER: 'RATIONALISATION AND SIMPLIFICATION MEASURES STREAMLINING THE DEFINITION OF 'CHARITABLE PURPOSE' SECTION 2(15) OF THE ACT DEFINES 'CHARITABLE PURPOS E' TO INCLUDE RELIEF OF THE POOR, EDUCATION, MEDICAL RELI EF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. IT HAS BEEN NOTICED THAT A NUMBER OF ENTITIES OPERATIN G ON COMMERCIAL LINES ARE CLAIMING EXEMPTION ON THEIR IN COME EITHER UNDER SECTION 10(23C) OR SECTION 11 OF THE A CT ON THE GROUND THAT THEY ARE CHARITABLE INSTITUTIONS. THIS IS BASED ON THE ARGUMENT THAT THEY ARE ENGAGED IN THE 'ADVANCEM ENT OF AN OBJECT OF GENERAL PUBLIC UTILITY' AS IS INCLUDED IN THE FOURTH LIMB OF THE CURRENT DEFINITION OF 'CHARITABLE PURPO SE'. SUCH A CLAIM, WHEN MADE IN RESPECT OF AN ACTIVITY CARRIED OUT ON COMMERCIAL LINES, IS CONTRARY TO THE INTENTION OF T HE PROVISION. WITH A VIEW TO LIMITING THE SCOPE OF THE PHRASE 'AD VANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY', IT IS PROPOSED TO AMEND SECTION 2(15) SO AS TO PROVIDE THAT 'THE ADVA NCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' SHALL N OT BE A CHARITABLE PURPOSE IF IT INVOLVES THE CARRYING ON O F: ( A ) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ( B ) ANY ACTIVITY OF RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A FEE OR CESS OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION OF THE INCOME FROM SUCH ACTIVITY, OR THE RETENTION OF SUCH INCOME, BY THE CONCERNED ENTITY. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 43 THIS AMENDMENT WILL TAKE EFFECT FROM THE IST DAY OF APRIL, 2009 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT YEAR 2009-10 AND SUBSEQUENT ASSESSMENT YEARS.' 39. THE CBDT ISSUED A CIRCULAR DATED 19.12.2008, PA RAGRAPH-3 WHEREOF READS AS UNDER: '3. THE NEWLY AMENDED S. 2(15) WILL APPLY ONLY TO T HE ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY I.E., THE FOURTH LIMB OF DEFINITION OF CHARITABLE PURPOSE CONTAINED IN S. 2(15). HENCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FO R EXEMPTION UNDER S. 11 OR UNDER S. 10(23C) OF THE AC T, 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 ACTIVITY. 3.1 THERE ARE INDUSTRY AND TRADE ASSOCIATIONS WHO CLAIM EXEMPTION FROM TAX UNDER S. 11 OR ON THE GROU ND THAT THEIR OBJECTS ARE FOR CHARITABLE PURPOSES AS T HESE ARE COVERED UNDER THE ANY OTHER OBJECT OF PUBLIC UTILITY. UNDER THE PRINCIPLE OF MUTUALITY, IF TRAD ING TAKES PLACE BETWEEN THE PERSONS WHO ARE ASSOCIATED TOGETHER AND CONTRIBUTE TO A COMMON FUND FOR THE FINANCING OF SOME VENTURE OR OBJECT, AND IN THIS RESPECT HAVE NO DEALINGS OR RELATIONS WITH ANY OUTS IDE BODY, THEN THE SURPLUS RETURNED TO SUCH PERSONS IS NOT CHARGEABLE TO TAX. THEREFORE, WHERE INDUSTRY OR TRA DE ASSOCIATIONS CLAIM BOTH TO BE CHARITABLE INSTITUTIO NS AS WELL AS MUTUAL MEMBERS, THESE WOULD NOT FALL UNDER THE PURVIEW OF S. 2(15) OWING TO THE PRINCIPLE OF MUTUALITY. HOWEVER, IF SUCH ORGANIZATIONS HAVE DEALINGS WITH THE NON-MEMBERS, THEIR CLAIM FOR ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 44 CHARITABLE INSTITUTION WOULD NOW BE GOVERNED BY THE ADDITIONAL CONDITIONS STIPULATED IN PROVISO TO S. 2 (15). 3.2 IN THE FINAL ANALYSIS, WHETHER THE ASSESSEE HAS FOR ITS OBJECT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IS A QUESTION OF FACT. IF S UCH ASSESSEE IS ENGAGED IN ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS OR RENDERS ANY SERVICE IN CONNECTION TO TRADE, COMMERCE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT ITS OBJECT IS FOR CHA RITABLE PURPOSES. IN SUCH A CASE, THE OBJECT OF GENERAL PU BLIC UTILITY WILL ONLY BE A MASK OR A DEVICE TO HIDE TH E TRUE PURPOSE WHICH IS TRADE, COMMERCE, OR BUSINESS OR RENDERING OF ANY SERVICE IN RELATION TO TRADE, COMM ERCE OR BUSINESS. EACH CASE WOULD, THEREFORE, HAVE TO BE DECIDED ON ITS OWN FACTS, AND GENERALIZATIONS ARE N OT POSSIBLE. AN ASSESSEE WHO CLAIMS THAT THEIR OBJECT IS CHARITABLE PURPOSE WITHIN THE MEANING OF S. 2(15) WOULD BE WELL ADVISED TO ESCHEW ANY ACTIVITY WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. (EMPHASIS SUPPLIED BY US) 40. THE ABOVE EXPLANATION GIVEN BY THE CBDT THAT TH E NEWLY AMENDED S. 2(15) WILL APPLY ONLY TO THE ENTITIES WH OSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION UN DER S. 11 OR UNDER S. 10(23C) OF THE ACT, IF THEY CARRY ON COMMERCIAL ACTIVITIES IRRESPECTIVE OF APPLICATION OF INCOME FROM SUCH ACT IVITY HAS NOT GONE WELL WITH THE INTERPRETATION GIVEN BY THE HIGH COURTS. THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT HAS DIS CUSSED AT LENGTH ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 45 THE EFFECT OF NEWLY INSERTED PROVISO TO SECTION 2(1 5) OF THE 1961 ACT W.E.F. 1.4.2009 WHILE REFERRING TO SEVERAL CASE LAW S OF OTHER HIGH COURTS OF THE COUNTRY AND HELD THAT BY THE INSERTIO N OF THE PROVISO, THE POSITION HAS RESTORED/REVERTED TO LEGAL POSITIO N AS DECLARED BY THE HONBLE SUPREME COURT IN SURAT ART SILK CASE (SUPRA) WHILE INTERPRETING THE UNAMENDED PROVISIONS OF 1961 ACT. THE HONBLE HIGH COURT HAS OBSERVED THAT THE CRUCIAL WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT AS WERE MEN TIONED ORIGINALLY IN THE SECTION 2(15) OF THE 1961 ACT, WERE AKIN TO THE WORDING INTRODUCED VIDE FINANCE ACT 2008 W.E.F. IST APRIL 2 009 I.E. 'ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. THE HONBLE HIGH COURT HAS OBSERVED THAT WHILE THE LEGISLATURE IN THE 1984 AMENDMENT WHICH CONTINUED U P TO THE YEAR 2009 ALTERED THE POSITION BY DELETING THE WORDS 'NO T INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT', IT REINTRO DUCED AN EXCLUSIONARY CLAUSE ALBEIT IN DIFFERENT AND WIDER T ERMS IN THE 2009 AMENDMENT. THE EXCLUSIONARY CLAUSE RELATED TO THE O BJECT OF GENERAL PUBLIC UTILITY AND NOT THE ADVANCEMENT THEREOF. TH E HONBLE HIGH COURT THEREAFTER REFERRING TO THE WORDS 'ANY ACTIVI TY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS AS MENTIONED IN THE PROVISO TO SECTION 2(15), AS AMENDED IN 2009 , OBSERVED THAT SUCH ACTIVITIES ARE CARRIED FOR PROFIT ONLY. THE HO NBLE HIGH COURT ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 46 REJECTED THE CONTENTION OF THE REVENUE THAT THE MEA NING OF THE ABOVE WORDS NATURE OF TRADE, COMMERCE OR BUSINESS WAS O F WIDER IMPORT AND THAT EVEN IF THE ADVANCEMENT OF OBJECT OF GENER AL PUBLIC UTILITY INVOLVES ANY ACTIVITY IN THE NATURE OF TRADE, COMME RCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS, IT WILL BE OUT OF THE DEFINIT ION OF THE WORD CHARITABLE PURPOSES. THE HONBLE HIGH COURT HELD THAT A WIDER MEANING OUGHT NOT TO BE GIVEN TO THESE WORDS ESPECI ALLY IN A TAXING STATUTE. THE HONBLE HIGH COURT OBSERVED THAT IF A TRADE OR BUSINESS FOR A COMMERCIAL ACTIVITY DID NOT RESULT IN PROFIT, IT WOULD NOT BE NECESSARY TO DEAL WITH THE SAME IN THE INCOME TAX A CT. THE HONBLE HIGH COURT OBSERVED THAT THERE WAS NOTHING IN THE A CT AND PARTICULAR IN SECTION 2 (15) THEREOF THAT INDICATED THAT THE L EGISLATURE CONTEMPLATED A TRADE OR A BUSINESS OR A COMMERCIAL ACTIVITY OTHER THAN FOR PROFIT. THE HONBLE HIGH COURT IN THIS R ESPECT REFERRED TO THE SEVERAL JUDGMENTS OF THE DELHI HIGH COURT INCLU DING IN THE CASE OF BUREAU OF INDIAN STANDARDS V. DGIT (EXEMPTIONS) [2013] 358 ITR 78/212 TAXMAN 210/[2012] 27 TAXMANN.COM 127, T HE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V. DGIT (EXEMPTIO NS), [2013] 358 ITR 91/217 TAXMAN 152/35 TAXMANN.COM 140 WHEREI N IT HAS BEEN HELD THAT WHILE CONSTRUING THE TERM BUSINESS FOR THE PURPOSE OF SECTION 2(15) OF THE ACT THE OBJECT AND PURPOSE OF THE SECTION MUST BE KEPT IN MIND AND A BROAD AND EXTENDED DEFINITION OF BUSINESS WOULD NOT BE APPLICABLE FOR THE PURPOSE OF INTERPRE TING AND APPLYING ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 47 THE FIRST PROVISO TO SECTION 2(15) OF THE ACT. THE OBJECT OF INTRODUCING THE FIRST PROVISO IS TO EXCLUDE ORGANIZ ATIONS WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF 'CHA RITABLE PURPOSE. THE EXPRESSIONS 'BUSINESS', 'TRADE' OR 'COMMERCE' A S USED IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIV ELY AND WHERE THE DOMINANT OBJECT OF AN ORGANISATION IS CHARITABLE, A NY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FA LL WITHIN THE EXPRESSIONS 'BUSINESS', 'TRADE' OR 'COMMERCE'. ALTH OUGH, IT IS NOT ESSENTIAL THAT AN ACTIVITY BE CARRIED ON FOR PROFIT MOTIVE IN ORDER TO BE CONSIDERED AS BUSINESS, BUT EXISTENCE OF PROFIT MOTIVE WOULD BE A VITAL INDICATOR IN DETERMINING WHETHER AN ORGANISAT ION IS CARRYING ON BUSINESS OR NOT. THE HONBLE HIGH COURT ALSO REFER RED TO THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF IN DIA TRADE PROMOTION ORGANIZATION V. DGIT (EXEMPTIONS) [2015] 371 ITR 333/229 TAXMAN 347/53 TAXMANN.COM 404 WHEREIN IT WA S HELD AS UNDER:- AN ACTIVITY WOULD BE CONSIDERED 'BUSINESS' IF IT I S UNDERTAKEN WITH A PROFIT MOTIVE, BUT IN SOME CASES, THIS MAY NOT BE DETERMINATIVE. NORMALLY, THE PROFIT MOTIVE T EST SHOULD BE SATISFIED, BUT IN A GIVEN CASE ACTIVITY MAY BE R EGARDED AS A BUSINESS EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABL ISHED / PROVED. IN SUCH CASES, THERE SHOULD BE EVIDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AN D RECOGNIZED BUSINESS PRINCIPLES AND PURSUED WITH REA SONABLE CONTINUITY. THERE SHOULD BE FACTS AND OTHER CIRCUMS TANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. 58. IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN SECTION 2(15) C ANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS T O TAKE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 48 COLOUR AND BE CONSIDERED IN THE CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLEAR 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 RUNN ING FOUL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ARTICLE 14 O F THE CONSTITUTION OF INDIA. IN ORDER TO SAVE THE CONSTIT UTIONAL 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 P ROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE THAT IT CARV ES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE I N RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FE E OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WH ICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURP OSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECT LY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM ITS OBJECT TO BE A 'CHARITABLE PURPOSE'. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUG H THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR C HARITABLE PURPOSES.' (EMPHASIS SUPPLIED BY US) 41. THE CRUCIAL POINT FOR THE ENTIRE DISCUSSION IN THE ABOVE CASE OF INDIA TRADE PROMOTION ORGANIZATION V. DGIT (EXEMPT IONS) WAS RELATING TO THE INTERPRETATION OF SECTION 2(15) R.W .S. 10(23C) (IV) OF THE INCOME TAX ACT. THE HONBLE HIGH COURT HAS OBS ERVED THAT THE EXPRESSION CHARITABLE PURPOSES IN CONTEXT OF SECT ION10 (23C) (IV) HAS A REFERENCE TO INCOME. IT IS ONLY WHEN AN INS TITUTE HAS AN ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 49 INCOME THAT IT WILL CLAIM EXEMPTION FROM ITS INCLUS ION IN THE TOTAL INCOME. THE HONBLE DELHI HIGH COURT THEREFORE HE LD THAT MERELY BECAUSE AN INSTITUTION WHICH OTHERWISE WAS ESTABLIS HED FOR A CHARITABLE PURPOSE, RECEIVES INCOME WOULD NOT MAKE IT ANY LESS A CHARITABLE INSTITUTION. THAT IT IS NOT THE INCOME B UT THE OBJECTS OF THE INSTITUTION THAT HAVE TO BE LOOKED INTO. THE HON BLE DELHI HIGH COURT OBSERVED THAT IT WAS UNDISPUTED THAT THE INST ITUTE (INDIA TRADE PROMOTION ORGANIZATION) HAD BEEN ESTABLISHED FOR CH ARITABLE PURPOSE. THE HONBLE HIGH COURT TOOK THE NOTICE THA T PRIOR TO THE AMENDMENT INTRODUCED W.E.F IST APRIL, 2009 THE IN STITUTE HAD BEEN RECOGNIZED AS AN INSTITUTION ESTABLISHED FOR CHARIT ABLE PURPOSES AND THAT THIS HAD BEEN DONE HAVING REGARD TO THE OBJECT S OF THE INSTITUTION AND ITS IMPORTANCE THROUGHOUT INDIA. T HE HONBLE HIGH COURT FURTHER OBSERVED THAT IF A MEANING IS GIVEN T O THE EXPRESSION CHARITABLE PURPOSE SO AS TO SUGGEST THAT IN CASE AN INSTITUTION, HAVING AN OBJECTIVE OF ADVANCEMENT OF GENERAL PUBLI C UTILITY, DERIVES AN INCOME, IT WOULD BE FALLING WITHIN THE E XCEPTION CARVED OUT IN THE FIRST PROVISO TO SECTION 2(15) OF THE SA ID ACT, THEN THERE WOULD BE NO INSTITUTION WHATSOEVER WHICH WOULD QUAL IFY FOR THE EXEMPTION UNDER SECTION 10(23C)(IV) OF THE SAID ACT AND THE SAID PROVISION WOULD BE RENDERED REDUNDANT. 42. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF THE TRIBUNE TRUST (SUPRA) FOLLOWING THE DECISION OF TH E HONBLE SUPREME COURT IN SURAT ART SILK (SUPRA) AND IN TH E LIGHT OF THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 50 SEVERAL DECISIONS OF THE HONBLE DELHI COURT HAS HE LD THAT THE PREDOMINANT OBJECT OF THE TRUST OR INSTITUTION IS T HE DECIDING FACTOR , IF THE PROFIT IS THE PRE-DOMINANT MOTIVE, PURPOSE AND OBJECT OF THE ASSESSEE TRUST THEN ITS ACTIVITIES CANNOT BE CONSID ERED FOR CHARITABLE PURPOSES AS PER THE DEFINITION OF CHARITABLE PURPOS ES IN THE LIGHT OF NEWLY INSERTED PROVISO W.E.F. 1.4.2009. BUT WHERE THE PREDOMINANT OBJECT OF THE ACTIVITY IS TO CARRY OUT THE CHARITAB LE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY . 43. FROM THE ABOVE DISCUSSION AND IN THE LIGHT OF D ECISIONS RENDERED BY THE DELHI HIGH COURT IN THE CASES AS DI SCUSSED ABOVE AND OF THE JURISDICTIONAL PB. & HRY. HIGH COURT IN THE CASE OF THE TRIBUNE TRUST (SUPRA) THE POSITION THAT HAS EMERGE D IS THAT AS IF THE NEW PROVISO TO SECTION 2(15) HAS NEVER BEEN BROUGHT IN AND HAS BEEN RENDERED REDUNDANT OR OTIOSE. THE THEORY OF PREDOMI NANT OBJECT OR ACTIVITY AND INCIDENTAL INCOME THEREFROM CAN WELL B E APPLIED AS PER THE PROVISIONS OF SECTION 11(4A) OF THE ACT AND AS INTERPRETED BY THE SUPREME COURT IN THE CASE OF THANTHI TRUST (SUPRA ) AND SEVERAL HIGH COURT DECISIONS THEREAFTER. EVEN WITH ALL DUE RESPECT, IN OUR HUMBLE OPINION, THE RESTRICTION PUT BY NEWLY INSERT ED PROVISO WAS APPLICABLE ONLY TO THE ACTIVITY OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY BUT NOT TO THE OTHER LIMBS OF THE DEFINITI ON AS PROVIDED U/S 2(15) OF THE ACT. HENCE, TO SAY THAT THE NEWLY INS ERTED PROVISO WOULD MAKE FOR ALL PURPOSES THE SECTION 2(23)(IV) O R SECTION 11 (4) ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 51 OF THE ACT REDUNDANT OR OTIOSE, IN OUR HUMBLE VIEW, MAY NOT BE CORRECT. EVEN THE CRUCIAL WORDS IN THE SECOND LIMB OF THE PROVISO IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY ARE ALSO REQUIRED TO BE CONSIDERED AND THE SAME, IN OUR VIEW, CANNOT BE IGNORED. BY THE I NSERTION OF THESE WORDS, INTENTION OF THE GOVERNMENT IS TO OVERCOME THE ULTIMATE OR END OBJECT OR TO SAY PREDOMINANT OBJECT THEORY AS WAS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASES OF SURAT AR T SILK (SUPRA) AND THANTHI TRUST (SUPRA). TO BE MORE PRECISE, TH E EFFECT OF THE ABOVE INTRODUCED WORDS IS THAT IT WILL BE IMMATERIA L IF THE FUNDS OR THE PROFITS FROM BUSINESS ACTIVITY ARE PLOUGHED BAC K TO SUBSERVE THE MAIN OR THE PREDOMINANT OBJECT OF THE TRUST. AGAIN, EVEN AT THE COST OF REPETITION, IT IS TO BE MENTIONED HERE THAT THIS RESTRICTION IS APPLICABLE ONLY TO THE ACTIVITY OF ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY BUT NOT TO THE OTHER LIMBS O F THE ACTIVITY AS INCLUDED IN THE DEFINITION PROVIDED U/S 2(15) OF TH E ACT. WE MAY FURTHER ADD HERE THAT THE PROHIBITION PUT BY THE ABOVE PROVISO IS NOT APPLICABLE IN RESPECT OF NON-BUSINES S INCOME OF THE INSTITUTION OR THE TRUSTS CARRYING ON THE ADVANCEME NT OF OTHER OBJECTS OF GENERAL PUBLIC UTILITY BUT ONLY IN RESPECT OF IN COME EARNED FROM THE ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BU SINESS. IN OTHER WORDS, THIS EXCLUSIONARY PROVISION WILL NOT EXCLUDE THE INSTITUTIONS HAVING INCOME OTHER THAN THE BUSINESS INCOME. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 52 44. IT IS PERTINENT TO MENTION HERE THAT PARLIAME NT ALSO REALIZED THAT THE ABSOLUTE RESTRICTION ON ANY RECEIPT OF COM MERCIAL NATURE IMPOSED BY THE PROVISO INSERTED W.E.F. 1.4.2009 TO SECTION 2(15) MAY CREATE HARDSHIP TO THE ORGANIZATIONS WHICH RECE IVE SUNDRY OR INCIDENTAL CONSIDERATIONS FROM SUCH ACTIVITIES. THE REFORE BY THE FINANCE ACT 2010, THERE WAS YET ANOTHER PROVISO (I. E. SECOND PROVISO) INSERTED WITH RETROSPECTIVE EFFECT FROM 1. 4.2009; NOW THE SECTION READ AS UNDER: '2 (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN T HE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDE RATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION, OF THE INCOME FROM SUCH ACTIVITY; PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT A PPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVI TIES REFERRED TO THEREIN IS 10 LAKH RUPEES OR LESS IN TH E PREVIOUS YEAR. (EMPHASIS SUPPLIED BY US) 45. THE CBDT ISSUED EXPLANATORY NOTES TO THE PROVIS IONS OF THE FINANCE ACT, 2010 VIDE CIRCULAR NO. 01/2011 DATED, THE 6TH APRIL, 2011, THE RELEVANT PART IN RESPECT OF THE AFORESAID AMENDMENT READ AS UNDER: 4. CHANGE IN THE DEFINITION OF CHARITABLE PURPOSE 4.1 FOR THE PURPOSES OF THE INCOME-TAX ACT, CHARIT ABLE PURPOSE HAS BEEN DEFINED IN SECTION 2(15) WHICH, A MONG OTHERS, INCLUDES THE ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 53 4.2 HOWEVER, THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY IS NOT A CHARITABLE PURPOSE , IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NAT URE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. 4.3 THE ABSOLUTE RESTRICTION ON ANY RECEIPT OF COMM ERCIAL NATURE MAY CREATE HARDSHIP TO THE ORGANIZATIONS WHI CH RECEIVE SUNDRY CONSIDERATIONS FROM SUCH ACTIVITIES. THEREFORE, SECTION 2(15) HAS BEEN AMENDED TO PROVID E THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUB LIC UTILITY SHALL CONTINUE TO BE A CHARITABLE PURPOSE IF THE TOTAL RECEIPTS FROM ANY ACTIVITY IN THE NATURE OF T RADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS DO NOT EXCEED RS.10 LAKHS IN THE PREVIOUS YEAR. 4.4 APPLICABILITY - THIS AMENDMENT HAS BEEN MADE EF FECTIVE RETROSPECTIVELY FROM 1ST APRIL, 2009 AND WILL, ACCO RDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2009-10 AN D SUBSEQUENT YEARS. 46. THE ABOVE PRESCRIBED LIMIT OF RECEIPTS UP TO RS.10 LAKHS FROM THE ANCILLARY ACTIVITY IN THE NATURE OF TRADE BUSI NESS OR COMMERCE BY THE INSTITUTIONS CARRYING OUT THE OBJECT OF GENE RAL PUBLIC UTILITY WAS INCREASED TO RS. 25 LAKHS VIDE FINANCE ACT 2011 W.E.F.1.4.2012. 47. BY THE FINANCE ACT 2015, THE FIRST AND SECOND P ROVISOS ALSO STAND SUBSTITUTED, WITH EFFECT FROM 1 ST APRIL 2016, WITH A NEW PROVISO TO SECTION 2(15). THE SECTION NOW IS READ A S UNDER: '2 (15) 'CHARITABLE PURPOSE ' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF A NY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 54 PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTI VITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR A NY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SU CH ACTIVITY, UNLESS (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY; AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT. OF THE TOTAL RECEIPTS, OF THE TRUS T OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES , OF THAT PREVIOUS YEAR 48. THE MEMORANDUM EXPLAINING THE CLAUSE READ AS UN DER: RATIONALIZATION OF DEFINITION OF CHARITABLE PURPOS E IN THE INCOME-TAX ACT THE PRIMARY CONDITION FOR GRANT OF EXEMPTION TO A T RUST OR INSTITUTION UNDER SECTION 11 OF THE ACT IS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST SHOULD BE AP PLIED FOR CHARITABLE PURPOSES IN INDIA. CHARITABLE PURPO SE IS DEFINED IN SECTION 2(15) OF THE ACT. THE SECTION, I NTER ALIA, PROVIDES THAT ADVANCEMENT OF ANY OTHER OBJECT OF GE NERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF REN DERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. HOWEVER, THIS RESTRICTION SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM T HE ACTIVITIES REFERRED ABOVE IS TWENTY FIVE LAKH RUPEE S OR LESS IN THE PREVIOUS YEAR. THE INSTITUTIONS WHICH, AS PART OF GENUINE CHARITAB LE ACTIVITIES, UNDERTAKE ACTIVITIES LIKE PUBLISHING BO OKS OR HOLDING PROGRAM ON YOGA OR OTHER PROGRAMS AS PART O F ACTUAL CARRYING OUT OF THE OBJECTS WHICH ARE OF CHA RITABLE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 55 NATURE ARE BEING PUT TO HARDSHIP DUE TO FIRST AND S ECOND PROVISO TO SECTION 2(15). THE ACTIVITY OF YOGA HAS BEEN ONE OF THE FOCUS AREA S IN THE PRESENT TIMES AND INTERNATIONAL RECOGNITION HAS ALS O BEEN GRANTED TO IT BY THE UNITED NATIONS. THEREFORE, IT IS PROPOSED TO INCLUDE 'YOGA' AS A SPECIFIC CATEGORY I N THE DEFINITION OF CHARITABLE PURPOSE ON THE LINES OF ED UCATION. IN SO FAR AS THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IS CONCERNED, THERE IS A NEE D IS TO ENSURE APPROPRIATE BALANCE BEING DRAWN BETWEEN THE OBJECT OF PREVENTING BUSINESS ACTIVITY IN THE GARB OF CHARITY AND AT THE SAME TIME PROTECTING THE ACTIVIT IES UNDERTAKEN BY THE GENUINE ORGANIZATION AS PART OF ACTUAL CARRYING OUT OF THE PRIMARY PURPOSE OF THE T RUST OR INSTITUTION. IT IS, THEREFORE, PROPOSED TO AMEND THE DEFINITION OF CHARITABLE PURPOSE TO PROVIDE THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR A NY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNLESS,- (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY; AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES, DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PERCENT. OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES , FOR THE PREVIOUS YEAR . THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 016 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2016-17 AND SUBSEQUENT ASSESSMENT YEARS. (EMPHASIS SUPPLIED BY US) 49. THUS, THE RESPECTIVE MEMORANDUMS EXPLAINING THE CLAUSES IN 2015 EXPLAIN THAT THE PURPOSE OF INSERTION OF SECON D PROVISO TO SECTION 2(15) AND SUBSEQUENT AMENDMENTS THERE TO WA S TO REMOVE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 56 THE HARDSHIP FACED BY THE INSTITUTIONS GENUINELY CA RRYING ON THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY DUE TO FIRST PROVISO TO SECTION 2(15) AND TO BRING APPROP RIATE BALANCE BETWEEN THE OBJECT OF PREVENTING BUSINESS ACTIVITY AND AT THE SAME TIME PROTECTING THE GENUINE CHARITABLE ACTIVITIES. THE AMENDMENTS BROUGHT OUT TO SECOND PROVISO W.E.F. 1.4.2016 SEEKS REMOVE HARDSHIP OF RESTRICTION OF RECEIPTS OF RS.25 LAKH T O THE INSTITUTES WHO CARRY ON THE GENUINE CHARITABLE ACTIVITIES FOR THE ADVANCEMENT OF THEIR OBJECT OF GENERAL PUBLIC UTILITY ON A LARG E SCALE AND RECEIVES INCIDENTAL OR SUNDRY RECEIPTS AS PER THEIR LARGE VOLUME OF ACTIVITY WHICH MAY CROSS THE PRESCRIBED LIMIT OF RS . 25 LAKHS. HENCE TO RATIONALIZE THE DEFINITION OF CHARITABLE PURPOSES THE LIMIT OF RECEIPT OF RS. 25 LAKHS HAS BEEN SUBSTITUT ED WITH 20% OF THE TOTAL RECEIPTS. 50. AT THIS STAGE, IT IS IMPORTANT TO NOTE THAT VID E FINANCE ACT 2012, WITH RETROSPECTIVE EFFECT FROM 1.4.2009 HAS I NSERTED SUBSECTION (8) TO SECTION 13 OF THE ACT, WHICH READ AS UNDER: [(8) NOTHING CONTAINED IN SECTION 11 OR SECTION 1 2 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROV ISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE C ASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. 51. THE PARLIAMENTARY NOTES ON CLAUSES EXPLAINING T HE ABOVE AMENDMENT TO SECTION 13 READ AS UNDER: ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 57 CLAUSE 6 OF THE BILL SEEKS TO AMEND SECTION 13 OF T HE INCOME-TAX ACT RELATING TO SECTION 11 NOT TO APPLY IN CERTAIN CASES. IT IS PROPOSED TO INSERT A NEW SUB-SECTION (8) IN T HE AFORESAID SECTION 13 SO AS TO PROVIDE THAT NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF T HE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF T HE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FRO M 1ST APRIL, 2009 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2009-2010 AND SUBSEQUENT ASSESSMENT YEARS. 52. A CORRESPONDING AMENDMENT HAS ALSO BEEN BROUGHT IN SECTION 10(23C) OF THE ACT INSERTED BY THE FINANCE ACT, 201 2, W.R.E.F. 1-4- 2009 ADDING THE FOLLOWING PROVISO ADDED: 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YE AR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF O F .. (IV) ANY OTHER FUND OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY , HAVIN G REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THROU GHOUT INDIA OR THROUGHOUT ANY STATE OR STATES; OR (V) ANY TRUST (INCLUDING ANY OTHER LEGAL OBLIGATION ) OR INSTITUTION WHOLLY FOR PUBLIC RELIGIOUS PURPOSES OR WHOLLY FOR PUBLIC RELI GIOUS AND CHARITABLE PURPOSES, WHICH MAY BE APPROVED BY THE PRESCRIBED A UTHORITY , HAVING REGARD TO THE MANNER IN WHICH THE AFFAIRS OF THE TR UST OR INSTITUTION ARE ADMINISTERED AND SUPERVISED FOR ENSURING THAT THE I NCOME ACCRUING THERETO IS PROPERLY APPLIED FOR THE OBJECTS THEREOF; . PROVIDED ALSO THAT THE INCOME OF A TRUST OR INSTITU TION REFERRED TO IN SUB- CLAUSE (IV) OR SUB-CLAUSE (V) SHALL BE INCLUDED IN ITS TOTAL INCOME OF THE PREVIOUS YEAR IF THE PROVISIONS OF THE FIRST PROVIS O TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE TO SUCH TRUST OR INSTITUTION IN T HE SAID PREVIOUS YEAR, WHETHER OR NOT ANY APPROVAL GRANTED OR NOTIFICATION ISSUED IN RESPECT OF SUCH TRUST OR INSTITUTION HAS BEEN WITHDRAWN OR RES CINDED; ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 58 53 . A CORRESPONDING AMENDMENT HAS ALSO BEEN BROUGHT TO SECTION 143(3) OF THE ACT INSERTED BY THE FINANCE ACT, 2012 , W.R.E.F. 1-4- 2009 WHICH DEALS WITH THE ASSESSMENT, ADDING THIRD PROVI SO THERETO: ASSESSMENT : 143. (1) (3) ON THE DAY SPECIFIED IN THE NOTICE, .. PROVIDED ALSO THAT NOTWITHSTANDING ANYTHING CONTA INED IN THE FIRST AND THE SECOND PROVISO, NO EFFECT SHALL BE GIVEN BY THE ASS ESSING OFFICER TO THE PROVISIONS OF CLAUSE (23C) OF SECTION 10 IN THE CASE OF A TRUS T OR INSTITUTION FOR A PREVIOUS YEAR, IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (1 5) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN SUCH PREVIOUS YEAR, W HETHER OR NOT THE APPROVAL GRANTED TO SUCH TRUST OR INSTITUTION OR NOTIFICATIO N ISSUED IN RESPECT OF SUCH TRUST OR INSTITUTION HAS BEEN WITHDRAWN OR RESCINDED. 54. THEREFORE, WITH THE INTRODUCTION OF SECOND PROV ISO TO SECTION 2(15) THERE IS A PARADIGM SHIFT FROM THE EARLIER PO SITION. THOUGH, SOME OF THE DECISIONS OF THE DELHI HIGH COURT AS RE FERRED TO ABOVE AND THAT OF THE PB. & HRY. HIGH COURT IN THE CASE O F THE TRIBUNE TRUST (SUPRA) HAVE BEEN DELIVERED SUBSEQUENT TO THE INTRODUCTION OF THE SECOND PROVISO TO SECTION 2(15) OF THE ACT, HOW EVER IN NONE OF THE ABOVE REFERRED TO DECISIONS THERE IS ANY DISCUS SION ABOUT THE EFFECT OF THE INTRODUCTION OF SECOND PROVISO TO SEC TION 2(15) OF THE ACT AND SUBSEQUENT AMENDMENTS THERETO, AMENDMENTS B ROUGHT IN SECTION 10(23C), SECTION 13 AND SECTION 143 OF THE ACT. THOUGH THE COURTS OF LAW HAVE INTERPRETED THE FIRST PROVISO TO SECTION 2(15) TAKING NOT CONSIDERATION THE HARDSHIPS FACED BY THE INSTITUTIONS GENUINELY INVOLVED IN CARRYING OUT THE CHARITABLE A CTIVITIES AND THEREBY DID NOT GO BY THE LITERAL MEANING OF THE W ORDS OF THE PROVISIONS AND INTERPRETED THE PROVISION TO MITIGAT E THE HARDSHIP TO ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 59 SUCH INSTITUTES AND TO BRING RATIONAL TO THE DEFINI TION OF CHARITABLE PURPOSES AND THEREBY HOLDING THAT THE CRUCIAL WORDS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FIND MENTIONED IN T HE SECOND PROVISO HAVE THE SAME MEANING AS WAS ASCRIBED TO TH E WORDS NOT FOR MAKING PROFITS AS WERE THERE IN THE ORIGINALLY INTRODUCED PROVISIONS OF SECTION 2(15) IN THE 1961 ACT. HOWEVE R, IN OUR VIEW, THAT WAS PERHAPS NEVER THE INTENTION OF THE PARLIAM ENT TO RESTORE THE POSITION TO THAT WAS OPERATIVE OR AS INTERPRETED BY THE COURTS OF LAW FROM THE YEAR 1961 TO THE YEAR1983. THAT IS WHY IMM EDIATELY IN THE NEXT FINANCIAL YEAR VIDE FINANCE ACT 2010 WITH RETR OSPECTIVE EFFECT FROM 1.4.2009, THE DATE WITH EFFECT FROM WHICH THE FIRST PROVISO TO SECTION 2(15) WAS INTRODUCED, THE SECOND PROVISO WA S BROUGHT IN WITH THE SOLE PURPOSE OF DILUTING THE RIGOURS OF TH E FIRST PROVISO AND TO MITIGATE THE HARDSHIP CREATED TO THE INSTITUTES GENUINELY CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY. SINCE WIT H THE INTRODUCTION OF SECOND PROVISO, THE RIGOUR OF THE FIRST PROVISO WAS DILUTED TO ENSURE APPROPRIATE BALANCE BEING DRAWN BETWEEN THE OBJECT OF PREVENTING BUSINESS ACTIVITY IN THE GARB OF CHARITY AND AT THE SAME TIME PROTECTING THE ACTIVITIES UNDERTAKEN BY THE GE NUINE ORGANIZATION, HENCE THE INTERPRETATION GIVEN BY THE COURTS TAKING INTO CONSIDERATION THE HARDSHIP CAUSED BY THE FIRST PROVISO , IN OUR VIEW, CAN NOT BE APPLIED AS SUCH AT THIS STAGE, BUT THE SAME IS REQUIRED TO BE LOOKED INTO IN THE LIGHT OF THE SEC OND PROVISO AND THE AMENDMENTS BROUGHT IN OTHER RELATED SECTIONS ALSO, AS DISCUSSED ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 60 ABOVE. IN OUR VIEW, IT WILL NOT BE PROPER TO JUST I GNORE THE SECOND PROVISO BROUGHT IN BY THE PARLIAMENT ON THE STATUTE BY FOLLOWING THE INTERPRETATION GIVEN BY THE COURTS OF THE FIRST PRO VISO WHICH WAS TO MITIGATE THE HARDSHIP CREATED BY THE FIRST PROVISO TO THE INSTITUTIONS GENUINELY CARRYING ON THE ACTIVITY OF GENERAL PUBLI C UTILITY. SINCE THE INTERPRETATION ADOPTED BY THE COURTS WAS NOT T HE LITERAL INTERPRETATION OF THE PROVISO, BUT THERE WAS DEPART URE FROM THE LITERAL MEANING BECAUSE OF THE HARDSHIPS WHICH MAY BE FACED BY THE TRUSTS CARRYING GENUINE CHARITABLE ACTIVITIES IN GI VING LITERAL AND PLAIN MEANING TO FIRST PROVISO, HENCE UNDER THE CIR CUMSTANCES, WHEN THE PARLIAMENT ITSELF HAS INTRODUCED THE SECOND PRO VISO TO REMOVE THE RIGOUR OF THE FIRST PROVISO AND TO MITIGATE THE HARDSHIPS CREATED BY THE FIRST PROVISO, HENCE THE INTERPRETATION OF T HE SECTION 2(15) IN THE CHANGED SCENARIO IS TO BE GIVEN BY TAKING INTO CONSIDERATION THE SECTION IN ITS ENTIRETY AND ALSO IN THE LIGHT OF CO NSEQUENTIAL AMENDMENTS CARRIED OUT IN SECTIONS 10(23C), 13, AND 143 OF THE ACT AND THEREBY MAKING THE NEWLY INSERTED SECOND PROVIS O AND AMENDMENTS THERETO AND OTHER AMENDED SECTION MEANIN GFUL AND WORKABLE SO AS TO ACHIEVE AND SERVE THE INTENDED PU RPOSES FOR WHICH THEY HAVE BEEN INTRODUCED BY THE LEGISLATURE IN THE STATUTE. 55. IT IS TO BE NOTED THAT THE SECTION 2(15) AS IT STOOD POST INSERTION OF THE FIRST PROVISO W.E.F.1.4.2009, THE CHARITABLE PURPOSES INCLUDED RELIEF TO THE POOR, EDUCATION, MEDICAL REL IEF, PRESERVATION OF ENVIRONMENT AND PRESERVATION OF MONUMENTS OR PLA CES OR OBJECTS ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 61 OF ARTISTIC OR HISTORIC INTEREST AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE FIRST PROVISO DOES N OT CONTROL OR RESTRICT THE DEFINITION OF CHARITABLE PURPOSES IN RESPECT OF TRUST CARRYING OUT THE ACTIVITY SUCH AS RELIEF TO POOR, E DUCATION, MEDICAL RELIEF, PRESERVATION OF MONUMENTS ETC. AS SPECIFICA LLY MENTIONED. HOWEVER SECTION 11(4A) DO PUT RESTRICTION ON BUSINE SS ACTIVITY OF SUCH INSTITUTIONS AND PROVIDES THAT THE SAME SHOULD BE INCIDENTAL TO THEIR MAIN OBJECTS. SUBSECTION 4A OF SECTION 11 NEI THER MAKES INOPERATIVE OR REDUNDANT THE PROVISIONS OF SECTION 2(15) NOR OF SUBSECTION 4 OF SECTION 11. ON THE OTHER HAND THE PROVISOS TO SECTION 2(15) ONLY PUT RESTRICTIONS ON THE BENEFITS AVAILABLE TO THE TRUSTS CARRYING ON THE ADVANCEMENT OF ANY OTHER OBJ ECT OF GENERAL PUBLIC UTILITY WHICH ALSO INVOLVES THE INCIDENTAL ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. NEWLY INSERT ED PROVISO TO SECTION 10(23C) ALSO CONTROLS OR RESTRICTS THE BENE FIT AVAILABLE TO THE INSTITUTIONS CLAIMING BENEFIT THEREUNDER, HOWEV ER NONE OF THE PROVISIONS, IN OUR VIEW, IN ANY MANNER, MAKES THE O THER SECTION INOPERATIVE, OTIOSE OR REDUNDANT. ON THE OTHER HAND , IN OUR VIEW, ADOPTING THE INTERPRETATION AS GIVEN BY THE COURTS TO THE FIRST PROVISO TO SECTION 2(15) BEREFT OF SECOND PROVISO A ND IGNORING SECTION 13(8) OF THE ACT AND OTHER RELATED AMENDMEN TS BROUGHT INTO SECTION 10(23C) AND SECTION 143(3) OF THE ACT WITH RETROSPECTIVE EFFECT FROM 1.4.2009, WOULD MAKE THESE PROVISIONS R EDUNDANT, OTIOSE AND INOPERATIVE. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 62 56. IT IS PERTINENT TO POINT HERE THAT THE HONBLE SUPREME COURT IN THE CASE OF THANTHI TRUST (SUPRA) WHILE INTERPRET ING THE RELEVANT PROVISIONS AS THEY STOOD FOR THE PERIOD FROM AY 198 4-85 TO AY 1991-92, DENIED THE BENEFITS OF EXEMPTION TO THE AS SESSEE TRUST APPLYING AND ADOPTING THE LITERAL INTERPRETATION OF THE MORE STRINGENT PROVISIONS OF SECTION 11(4A) OF THE ACT A S WERE THERE IN THE STATUTE FOR THE AFORESAID PERIOD. THOUGH, THE PROVISIONS OF SUB-SECTION (4) OF SECTION 11 REMAINED ON THE STATU TE BOOK WHICH DEFINES THE WORDS 'PROPERTY HELD UNDER TRUST' FOR T HE PURPOSES OF SECTION 11 TO INCLUDE A BUSINESS HELD UNDER TRUST , YET, THE SUPREME COURT OBSERVED THAT SUB-SECTION (4A) RESTRICTS THE BENEFIT UNDER SECTION 11 SO THAT IT IS NOT AVAILABLE FOR INCOME D ERIVED FROM BUSINESS UNLESS THE BUSINESS IS CARRIED ON BY A TR UST ONLY FOR PUBLIC RELIGIOUS PURPOSES AND IT IS OF PRINTING AND PUBLIS HING BOOKS OR ANY OTHER NOTIFIED KIND. THE COURT HELD THAT THE NEWSPA PER BUSINESS THAT WAS CARRIED ON BY THE TRUST DID NOT FALL WITHIN SUB -SECTION (4A). THIS FINDING OF THE HONBLE SUPREME COURT IS IN DEP ARTURE FROM THE EARLIER INTERPRETATION MADE BY IT IN THE CASE OF S URAT ART SILK CLOTH MANUFACTURES ASSOCIATION(SUPRA) WHEREIN IT WAS HEL D THAT THE LITERAL AND PLAIN MEANING OF THE PROVISIONS OF SECT ION 2(15) IN CONTEXT OF THE WORDS NOT FOR MAKING PROFIT WOULD RENDER THE PROVISIONS OF SECTION 11 (4) WHOLLY SUPERFLUOUS AND MEANINGLESS, DESPITE THE FACT THAT THESE WORDS BARRING THE ACTIV ITY OF THE MAKING ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 63 OF PROFIT WERE APPLICABLE ONLY IN RESPECT OF INSTIT UTIONS CARRYING ON THE ACTIVITY IN RESPECT OF ADVANCEMENT OF OTHER OBJ ECTS OF PUBLIC UTILITY, WHEREAS, THE PROVISIONS OF SECTION 11(4) S TILL HOLDING GOOD FOR THE INSTITUTIONS CARRYING IN THE ACTIVITY IN RE SPECT OF FIRST THREE LIMBS I.E. RELIEF TO POOR, EDUCATION AND MEDICAL RE LIEF. HOWEVER IN THE SUBSEQUENT DECISON IN THE CASE OF THANTHI TRUST (SUPRA) , THE SUPREME COURT APPLIED THE PLAIN LITERAL MEANING TO THE MORE STRINGENT PROVISIONS OF SUBSECTION 4A OF SECTION 11 AS THESE STOOD DURING THE PERIOD FROM AY 1984-85 TO AY1991-92 AND HELD THAT SUBSECTION 4A RESTRICTS THE BENEFITS UNDER SECTION 11, DESPITE NOTICING THE EXISTENCE OF THE PROVISIONS OF SUBSEC TION 4 OF SECTION 11 ON THE STATUTE. THE LATTER DECISION OF THE SUPR EME COURT IN THE CASE OF THANTHI TRUST (SUPRA), IN OUR VIEW, CANNOT BE IGNORED OR OVERLOOKED, WHILE INTERPRETING THE NEWLY AMENDED PR OVISIONS OF SECTION 2(15) OF THE ACT, ESPECIALLY THE SECOND PRO VISO, WHICH ALSO STRIVES TO CONTROL THE BENEFIT AVAILABLE TO THE INS TITUTIONS INVOLVED IN THE ACTIVITY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND NOT OF THE INSTITUTIONS CARRYING OUT TH E ACTIVITY IN RESPECT OF OTHER LIMBS, TO WHICH THE PROVISIONS OF AMENDED SUBSECTION 4A TO SECTION 11 CONTINUE TO APPLY. 57. ANOTHER CRUCIAL PHRASE BROUGHT IN THE FIRST PRO VISO ARE IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF INCOME FROM SUCH ACTIVITY. THE ADDITION OF THE ABO VE CRUCIAL WORDS OBVIOUSLY IS TO OVERCOME THE DECISION OF THE HON'BLE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 64 SUPREME COURT IN THE CASE OF SURAT ART SILK (SUPRA) AS WELL IN THE CASE OF ASSTT. CIT V. THANTHI TRUST (SUPRA) WHERE IN IT WAS HELD THAT IF ALL THE SURPLUS OR PROFIT FROM THE BUSINESS ACTIVITY IS INVESTED OR PLOUGHED BACK INTO THE ASSETS OF THE AS SESSEE OR APPLIED TO THE MAIN ACTIVITY, THE BUSINESS WILL BE A BUSINE SS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST. HOWEVER , THIS PROPOSITION HAS BEEN MADE INAPPLICABLE OR TO SAY BYGONE BY THE LEGISLATURE FOR THE INSTITUTIONS CARRYING ON OBJECT OF GENERAL PUBL IC UTILITY BY WAY INSERTING THE CRUCIAL WORDS IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT. 58. THE GOVERNMENT REALIZED NEED TO CURB THE PRACTI CE OF BUSINESS HOUSES TO CLAIM EXEMPTION ON THE GROUND TH AT THEY WERE CARRYING OUT OF OBJECTS OF GENERAL PUBLIC UTILITY A ND THEREBY MAKING THE BENEFIT OF EXEMPTION IN RESPECT OF BUSINESS CAR RIED OUT BY THEM IN THE MASK OF CHARITY AND THAT IS WHY THEY INTRODU CED FIRST PROVISO TO SECTION 2(15) THEREBY EXCLUDING THE INSTITUTIONS CARRYING ON THE OBJECT OF THE GENERAL PUBLIC UTILITY IF THEIR ACTIV ITIES INVOLVES CARRYING ON THE ACTIVITY OF BUSINESS TRADE OR COMME RCE OR THE SERVICES IN RELATION TO BUSINESS TRADE OR COMMERCE FOR A CESS OR FEE AND EVEN IT WAS ALSO CLARIFIED THAT APPLICATION OR THE RETENTION OF SUCH INCOME FROM SUCH ACTIVITY WILL BE IMMATERIAL. THE HIGH COURTS OF DELHI AND PB. & HRY. IN THE CAS ES AS REFERRED TO ABOVE , HOWEVER, HELD THAT THE ABOVE PROVISION WAS A HARSH ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 65 PROVISION AND THE CONSEQUENCES OF THE SAME COULD BE LIKE AS IT WERE THAT THE INTRODUCTION OF WORDS NOT FOR MAKING PROF ITS IN SECTION WHICH OPERATED FROM 1961 TO 1983. EVEN THE COURTS OF LAW ALSO FOLLOWING THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SURAT ART SILK (SUPRA) HELD THAT T HE LITERAL AND PLAIN MEANING CANNOT BE GIVEN TO THE SAID FIRST PROVISO T O SECTION 2(15) OF THE ACT AND THEREFORE, PROPOUNDED THE PRE-DOMIN ANT OBJECT THEORY OR THE ULTIMATE FULFILMENT OF OBJECT THEOR Y ON THE SAME LINES AS WAS GIVEN IN THE CASE OF SURAT ART SILK (SUPRA) BY THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT IN THE CASE OF SURAT ART SILK (SUPRA) IN PARA 11 OF THE DECISION HAS HELD THAT IN THE ORDINARY COURSE, THE DIFFERENT INTERPRETATION S HOULD NOT BE DONE IF THE WORDS OF THE STATUTE TAKEN COULD NOT ALTER T HE MEANING OF A STATUTORY PROVISION WHERE SUCH MEANING IS PLAIN AND UNAMBIGUOUS, BUT THEY CAN CERTAINLY HELP TO FIX ITS MEANING IN C ASE OF DOUBT OR AMBIGUITY. THE HON'BLE SUPREME COURT THEREAFTER DI SCUSSED AS TO WHAT WOULD BE THE CONSEQUENCE OF THE CONSTRUCTION O F THE PROVISIONS CONTAINED FOR ON BEHALF OF THE REVENUE A ND HELD THAT IN SUCH AN EVENT NO TRUST OR INSTITUTION WHOSE PURPOSE IS PROMOTION OF OBJECT TO GENERAL PUBLIC UTILITY WOULD BE ABLE TO C ARRY ON ANY BUSINESS, EVEN THOUGH SUCH BUSINESS IS HELD UNDER T RUST OR LEGAL OBLIGATION TO APPLY ITS INCOME WHOLLY TO THE CHARITABLE PURPOSE CARRIED ON BY THE TRUST OR INSTITUTION. HOWEVER, T HE HON'BLE SUPREME COURT HELD THAT IN SUCH AN EVENT THE PROVIS IONS OF SECTION ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 66 11 (4) WOULD BE RENDERED WHOLLY SUPERFLUOUS AND MEA NINGLESS. THE HIGH COURTS OF DELHI AND PB. & HRY. FOLLOWED THE OB OVE CONSTRUCTION MADE BY THE SUPREME COURT IN THE CAAE OF SURAT ART SILK CLOTH MANUFACTURERS ASSN. (SUPRA) 59. HOWEVER, THE GOVT. VERY SOON, EVEN BEFORE THE C OMING OF ABOVE INTERPRETATIONS BY THE HIGH COURTS, REALIZED THE CONSEQUENCE THAT WERE LIKELY TO ARISE FROM THE ABOVE AMENDMENT. THEREFORE, TAKING INTO CONSIDERATION THE HARSH AND STRICT MEAN ING OF THE FIRST PROVISO, IT WAS FELT THAT THE PLAIN AND LITERAL MEA NING TO THE FIRST PROVISO WOULD BE OF GREAT HARDSHIP TO THE TRUST OR INSTITUTION WHICH WERE GENUINELY CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY AND THAT IN THE COURSE OF WHICH IT ALSO GENERATES S OME INCIDENTAL OR ANCILLARY INCOME. IT WAS UNDER SUCH CIRCUMSTANCES T HAT THE SECOND PROVISO WAS BROUGHT IN THE NEXT FINANCIAL YEAR ITSE LF WITH RETROSPECTIVE EFFECT SO AS TO MAKE THE FIRST PROVIS O TO SECTION 2(15) WORKABLE AND TO REMOVE THE AMBIGUITY IN THE PROVIS IONS OF SECTION 2(15) OF THE ACT. NOW WITH THE INSERTION OF SECOND PROVISO, MEANING AND INTERPRETATION WHICH IS MORE RATIONAL H AS TO BE ARRIVED AT. HOWEVER, IF THE INTERPRETATION OF SECTION (2(15) A S PER THE DECISION OF THE HONBLE PB. & HRY. HIGH COURT IN THE CASE OF TRIBUNE TRUST(SUPRA) AND IN OTHER DECISIONS OF THE DELHI H IGH COURT AS DISCUSSED ABOVE CONSIDERING THE FIRST PROVISO TO SE CTION 2(15) ALONE AND IGNORING THE SUBSEQUENT AMENDMENTS, IS APPLIED TO THE AMENDED ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 67 SECTION 2(15), THEN IT WILL NOT ONLY MAKE THE SECON D PROVISO TO SECTION 2(15) BUT ALSO SECTION 13(8) AND CORRESPOND ING AMENDMENTS TO SECTION 10(23C) AND SECTION 143(3) REDUNDANT, ME ANINGLESS AND INOPERATIVE AND THE SITUATION WILL BE AS IF THE SEC OND PROVISO WAS NEVER INSERTED OR EXISTED IN THE ACT, WHAT TO SAY I TS SUBSEQUENT AMENDMENT BY WAY OF INCREASING THE LIMIT OF RS. 25 LACS AND THEN TO THE 20% OF THE TOTAL RECEIPTS AND OTHER CORRESPO NDING AMENDMENTS TO SECTION 10, SECTION 13, AND SECTION 1 43. IN OUR VIEW, STICKING TO THE INTERPRETATION WHICH WAS GIVEN BY T HE COURTS BEFORE INTRODUCTION OR BEREFT OF SECOND PROVISO TO SECTION 2(15) OF THE ACT, WOULD LEAD TO UNINTENDED CONSTRUCTION, WHICH WILL B E AGAINST THE SPIRIT OF STATUTORY PROVISIONS. THE SUBSEQUENT AME NDMENTS, AS DISCUSSED ABOVE, IN OUR VIEW, DEFINITELY HAVE A BE ARING ON THE INTERPRETATION WHICH WAS DONE BY THE COURTS OF LAW TAKING INTO CONSIDERATION THE HARSHNESS OF THE FIRST PROVISO TO SECTION 2(15) ALONE. HOWEVER, THE LEVERAGE PROVIDED TO THE INSTIT UTION BY WAY OF INSERTION OF SECOND PROVISO WOULD PROMPT US RE-THIN K AND RE- APPRAISE ABOUT THE LITERAL INTERPRETATION OF THE SE CTION. THE SUBSEQUENT AMENDMENTS BROUGHT IN SECTION 10(23C), S ECTION 13 AND SECTION 143 OF THE ACT WITH RETROSPECTIVE EFFECT FR OM 1.4.2009, THE DATE ON WHICH THE FIRST PROVISO COMES IN EFFECT, AL SO CANNOT BE IGNORED OR RENDERED REDUNDANT. AS IT STANDS, POST I NSERTION OF SECOND PROVISO, ALLOWS THE INSTITUTIONS TO CARRY ON THE INCIDENTAL ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS WHILE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 68 PURSUING OBJECTS OF GENERAL PUBLIC UTILITY OF THE T RUST OR INSTITUTION, BUT RESTRICTS THE RECEIPTS TO A SPECIFIED LIMIT. TH E SAID LIMIT PERHAPS WAS MADE SO AS TO ALLOW ONLY GENUINE INSTITUTIONS T O CLAIM EXEMPTIONS WHO WERE CARRYING OUT THE ACTIVITY OF CH ARITABLE PURPOSES AND THEIR MOTIVE IS NOT TO EARN HUGE PROFI TS. 60. NOW, LET US, ASSUME THAT THE INTERPRETATION TH AT THE INCOME DERIVED BY THE TRUST FROM ANCILLARY COMMERCIAL ACTI VITY WHILE CARRYING OUT THE PRE-DOMINANT OBJECT OF GENERAL PUB LIC UTILITY IS TOTALLY EXEMPT AS STOOD CANVASSED BY THE LD. COUNSE L FOR THE ASSESSEE IN THE LIGHT OF THE VARIOUS CASE LAWS INCL UDING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJA B & HARYANA IN THE CASE OF THE TRIBUNE TRUST (SUPRA) . IN THAT E VENT THE ARGUMENT THAT CAN BE REASONABLY PUT IS THAT THE SECOND PRO VISO INSERTED BY FINANCE ACT 2010 WITH RETROSPECTIVE EFFECT FROM 1 .4.2009 ALLOWING THE CARRYING OUT OF THE BUSINESS ACTIVITY UP TO THE PRESCRIBED LIMIT OF RECEIPTS FROM SUCH ACTIVITY WOU LD BE APPLICABLE IN THOSE CASES WHERE AN INSTITUTION OR TRUST IS CAR RYING OUT THE ACTIVITY OF ADVANCEMENT OF GENERAL PUBLIC UTILITY BUT AT THE SAME TIME ITS OBJECT IS ALSO TO MAKE PROFITS AS OBSERVED BY THE HONBLE SUPREME COURT IN THE CASE OF SURAT ART SILK CLOTH MANUFACTURES ASSOCIATION (SUPRA) IN RESPECT OF THE PRIVY COUNC IL DECISION IN THE CASE OF TRUSTEES OF THE TRIBUNE (SUPRA) AND THEN BY THE HONBLE PB. & HRY. HIGH COURT IN RESPECT OF ACTIVITIES CAR RIED OUT BY THE TRIBUNE PRESS TRUST IN THE CASE OF THE TRIBUNE TRU ST (SUPRA), IN ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 69 THAT EVENT SUCH INSTITUTIONS WOULD ALSO BE ELIGIBLE TO CLAIM EXEMPTION U/S 2(15) SUBJECT TO THE CONDITION THAT T HEIR TOTAL RECEIPTS WOULD NOT EXCEED THE PRESCRIBED LIMIT OF RS. 10 LAC S OR RS. 25 LACS OR 20% OF THE TOTAL RECEIPTS AS APPLICABLE FROM TIM E TO TIME. IN THAT SCENARIO, EACH AND EVERY TRUST OR INSTITUTION INDUL GED INTO BUSINESS ACTIVITY INVOLVING THE PROVIDING OF SOME SORT OF PU BLIC UTILITY SERVICES WILL CLAIM EXEMPTION IF TOTAL RECEIPT OF S UCH INSTITUTION DOES NOT EXCEED THE PRESCRIBED LIMIT. AS HELD BY T HE HONBLE SUPREME COURT IN THE CASE OF CIT V. GUJARAT MARITI ME BOARD [2007] 295 ITR 561 /[2008] 166 TAXMAN 58 (SC), THAT HE EXPRESSION ANY OTHER OBJECT OF GENERAL PUBLIC UTIL ITY IS OF THE WIDEST CONNOTATION. THE EXPRESSION WOULD PRIMA FACI E INCLUDE ALL OBJECTS WHICH PROMOTE THE WELFARE OF THE GENERAL PU BLIC. 61. A COMPANY OR TRUST INVOLVED IN THE INSURANCE BU SINESS FOR PROFIT WILL CLAIM THAT THE OBJECT, PURPOSE AND ACTI VITY OF THE INSURANCE ACTIVITY IS TOWARDS THE ADVANCEMENT OF OB JECT OF GENERAL PUBLIC UTILITY AS IT PROVIDES SECURITY AGAINST UNFO RESEEN EVENTS TO THE INSURED . AN INDUSTRIALIST WILL ALSO CLAIM EXE MPTION ON THE GROUND THAT BY WAY OF ESTABLISHING INDUSTRY, IT HAS CONTRIBUTED TOWARDS THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY AS WITH THE ESTABLISHMENT OF INDUSTRY, IT GENERATED EMPLOYM ENT AND THAT IT HAS ALSO CONTRIBUTED TOWARDS INFRASTRUCTURE DEVELOP MENT AND BOOSTING THE ECONOMY OF THE COUNTRY. A MANUFACTURE R OF MEDICINE WILL ALSO SO CLAIM THAT MEDICINES ARE MADE BY HIM W ITH THE OBJECT ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 70 OF PROVIDING PEOPLE OF COUNTRY THE ESSENTIAL AND US EFUL DRUGS FOR FIGHTING DREADED DISEASE AND SICKNESS AND EVEN LIFE SAVING DRUGS AND ALSO CONTRIBUTING TOWARDS IMPROVEMENT OF HEALT H OF THE PEOPLE FOR ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY . A ROAD CONTRACTOR WILL ALSO CLAIM THAT THE ROAD MAINTAINED OR CONSTRUCTED BY IT, THOUGH WITH PROFIT MOTIVE ARE FOR THE ADVANC EMENT OF OBJECT OF GENERAL PUBLIC UTILITY AS IT EASE MODE OF TRANSP ORT NOT ONLY OF THE PEOPLE BUT ALSO OF THE GOODS AND OTHER MATERIAL. E VEN A GENERAL MERCHANT, OPENING SHOP IN A RURAL AREA OR VILLAGE M AY CLAIM THAT THOUGH IT IS DOING THE RETAIL BUSINESS WITH THE MOT IVE OF PROFIT, HOWEVER, IT IS ALSO DOING THE ACTIVITY OF GENERAL P UBLIC UNITY BY WAY OF MAKING AVAILABLE DIFFERENT GOODS ON DAY TO D AY NEED AND NECESSITY OF THE PEOPLE OF THE VILLAGE WHO OTHERWIS E WOULD HAVE TO TRAVEL LARGE DISTANCES TO GET THE SAME. THE TAXATI ON LIMITS FIXED BY THE DEPARTMENT WILL FAIL AND THE TAXATION IN RESPEC T OF SUCH PERSONS DOING DIFFERENT BUSINESS WILL START ONLY IF THEIR R ECEIPTS DURING THE YEAR WOULD CROSS THE LIMIT AS PRESCRIBED FROM TIM E TO TIME. EVEN BIG INSTITUTIONS OR COMPANIES WILL DIVIDE THEM SELVES INTO SUBSIDIARIES OR SMALLER UNITS ENSURING THAT IN COME OF EACH OF SUCH TAXABLE UNIT OR ENTITY SHOULD NOT INCREASE THE PRESCRIBED MONETARY LIMIT OF THE RECEIPTS. SUCH AN INTERPRETAT ION OF THE SECOND PROVISO TO SECTION 2(15) WOULD LEAD TO ABSOLUTE ABS URDITY, CONFUSION AND UNWANTED AND UNCALLED FOR CONSEQUENCE S. EVEN IT WILL BE ALSO AN ISSUE IN DISPUTE AS WHICH OF THE AC TIVITY/ACTIVITIES OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 71 AN ASSESSEE IS/ARE TOWARDS THE ADVANCEMENT OF OBJEC T OF GENERAL PUBLIC UTILITY THOUGH MAY BE WITH PROFIT MAKING OBJ ECT ALSO AND WHICH OF THESE IS/ARE OF A PURE COMMERCIAL VENTURE. THUS. IN OUR VIEW, THE DIFFERENT BUT RELATED PROVISOS OF THE ACT ARE TO BE READ IN HARMONY WITH EACH OTHER. THE INTERPRETATION AS CAN VASSED FOR THE PERIOD PRIOR TO THE INTRODUCTION OF THE SECOND PROV ISO, IF ADOPTED NOW, WILL RENDER THE NEWLY INSERTED AMENDED PROVISI ONS OF THE ACT AS INFRUCTUOUS AND REDUNDANT. 62. THE ISSUE RELATING TO THE EFFECT OF INSERTION O F FIRST AND SECOND PROVISOS TO SECTION 2(15) OF THE ACT VIDE FINANCE A CTS 2008 AND 2009 RESPECTIVELY CAME INTO CONSIDERATION IN THE CA SE OF JAMMU DEVELOPMENT AUTHORITY VS. CIT (SUPRA) WHEREIN, IT HAS BEEN HELD THAT IF ACTIVITIES OF ANY INSTITUTION/TRUST/SOCIETY UNDER THE FOURTH LIMB I.E. `THE ADVANCEMENT OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY ARE IN THE NATURE OF TRADE, COMMERCE OR BU SINESS FOR CESS OR FEE AND THE RECEIPTS THEREFROM CROSSES THE PRESCRIB ED LIMIT THEN THEY ARE NOT ELIGIBLE TO CONTINUE WITH REGISTRATION U/S 12A AND THE SAME IS REQUIRED TO BE WITHDRAWN. HOWEVER, SUBSEQU ENTLY THE IMPACT OF THESE PROVISIONS WAS ALSO CONSIDERED BY T HE COORDINATE MUMBAI BENCHES OF THE TRIBUNAL IN THE CASES OF GHA TKOPAR JOLLY GYMKHANA V. DIRECTOR OF INCOME-TAX (E) REPORTED IN [2013] 40 TAXMANN.COM 207 (MUMBAI - TRIB.) AND COTTON TEXT ILES EXPORTS PROMOTION COUNCIL V. DIRECTOR OF INCOME-TAX (EXEMPT ION), MUMBAI REPORTED IN [2014] 44 TAXMANN.COM 168 [JUDICIAL ME MBER OF THIS ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 72 BENCH BEING PARTY TO THE SAID DECISIONS ALSO) WHERE IN IT HAS BEEN HELD THAT THE FIRST PROVISO TO SECTION 2(15) IS A VERY RIGOROUS PROVISION WHICH EXCLUDES THE INSTITUTION OR TRUST F ROM THE DEFINITION OF CHARITABLE TRUST, IF SUCH TRUST CARRIES ACTIVITI ES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS.IRRESPECTIVE OF THE NA TURE OF USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH AC TIVITY. THAT, HOWEVER, BY THE INSERTION OF THE SECOND PROVISO W.E .F. 01.04.2009 THE RIGOUR OF THE FIRST PROVISO HAS BEEN DILUTED AN D THAT THE FIRST PROVISO WILL NOT APPLY EVEN IF THE TRUST CARRYING O N BUSINESS ACTIVITIES IN THE COURSE OF ITS DOMINANT ACTIVITIES FOR THE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY AND THE GROSS RECEIPTS FROM SUCH ACTIVITIES IS RS.10.00 LAC S OR LESS IN THE PREVIOUS YEAR. HOWEVER WHERE THE GROSS RECEIPTS OF A CHARITABLE INSTITUTION, FROM ITS BUSINESS ACTIVITIES EXCEEDS L IMIT OF RS. 10 LAKHS, ASSESSEE WILL NOT BE ENTITLED FOR EXEMPTION OR OTHER ADMISSIBLE TAX BENEFITS FOR THAT RELEVANT YEAR BUT IT DOES NOT RESULT IN CANCELLATION OF ITS REGISTRATION AS CHARITABLE I NSTITUTION. THE ABOVE VIEW, NOW HAS BEEN AFFIRMED BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMP TION) V. NORTH INDIAN ASSOCIATION [2017] 79 TAXMANN.COM 410 (BOMBA Y) WHEREIN THE HONBLE HIGH COURT WHILE FURTHER RELYING UPON I TS ANOTHER DECISION IN THE CASE OF DIT (EXEMPTION) V. KHAR GY MKHANA[2016] 385 ITR 162/240 TAXMAN 407/70 TAXMANN.COM 181 (BOM. ) HAS DULY TAKEN NOTE OF THE PROVISIONS OF SECTION 13(8) OF TH E ACT INSERTED ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 73 VIDE FINANCE ACT 2012 W.R.E.F. 1.4.2009 AS WELL AS THE CBDT CIRCULAR NO.21 OF 2016 AND THOUGH, HELD THAT MEREL Y BECAUSE IN ONE YEAR INCOME OF ASSESSEE-TRUST EXCEEDED PRESCRIB ED LIMIT PROVIDED UNDER SECOND PROVISO TO SECTION 2(15), THA T BY ITSELF, COULD NOT WARRANT CANCELLATION OF REGISTRATION OF TRUST, HOWEVER, WHERE THE RECEIPTS ARE HIT BY THE PROVISO TO SECTION 2(15 ) OF THE ACT, THE BENEFIT OF EXEMPTION TO ITS INCOME FOR THE PREVIOUS YEAR RELEVANT TO THE SUBJECT ASSESSMENT YEAR WILL NOT BE AVAILABLE. HOWEVER IT HAS BEEN FURTHER HELD THAT IF THIS HAPPENS ON CONTINUOU S / REGULAR BASIS, IT COULD JUSTIFY FURTHER PROBE / INQUIRY BEFORE CON CLUDING THAT THE TRUST IS NOT GENUINE. 63. THOUGH IN THE ABOVE REFERRED TO DECISIONS OF MU MBAI BENCH OF THE TRIBUNAL AND THAT OF THE HONBLE BOMBAY HIGH CO URT (SUPRA), THE QUESTION WAS WHETHER THE REGISTRATION GRANTED U /S 12 TO THE CHARITABLE INSTITUTION CAN BE CANCELLED IF THE MONE TARY RECEIPTS FROM ITS BUSINESS ACTIVITY CROSSES THE LIMIT PRESCRIBED AS PER THE SECOND PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT AND IT WAS HELD THAT THE REGISTRATION ON THIS GROUND GRANTED TO A CHARIT ABLE INSTITUTION CANNOT BE CANCELLED. HOWEVER, IT IS TO BE NOTED TH AT IT WAS ALSO HELD THAT IN THE PREVIOUS YEAR DURING WHICH SUCH INCOME FROM BUSINESS ACTIVITY OF THE TRUST OR INSTITUTION CROSSES THE PR ESCRIBED LIMIT, BENEFIT OF EXEMPTION U/S 11 FOR THAT YEAR WILL NOT BE AVAILABLE TO SUCH TRUST OR INSTITUTION. IT IS, THEREFORE, TO BE NOTED THAT NOT ONLY SECOND PROVISO TO SECTION 2(15) OF THE INCOME TAX A CT BUT ALSO ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 74 INSERTION OF CORRESPONDING PROVISIONS OF SECTION 1 3(8) OF THE ACT HAVE BEEN DULY NOTED AND THEIR EFFECT DISCUSSED. WH AT WE WANT TO CONVEY IS THAT EXISTENCE AND EFFECT OF THE AMENDED PROVISIONS OF SECTIONS 2(15), SECTION 13, SECTION 23 AND SECTION 143 OF THE ACT CANNOT BE JUST IGNORED OR NEGATED RATHER THE SAME A RE TO BE READ ALONG WITH OTHER RELATING PROVISIONS OF THE ACT SUC H AS SECTIONS 11(4) AND 11 (4A) OF THE ACT AND A HARMONIOUS CONST RUCTION IS TO BE ARRIVED AT. 64. WE MAY POINT OUT HERE THAT IN THE DECISION OF THE COORDINATE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF HOSH IARPUR IMPROVEMENT TRUST (SUPRA), THE ISSUE RELATING TO THE EFFECT AND CONSEQUENCES OF INSERTION OF THE SECOND PROVISO W.E .F. 1.4.2009 DID NOT COME FOR DISCUSSION , HOWEVER, THE TRIBUNAL DID TAKE THE NOTE AMENDMENT TO SECTION 2(15) BY FINANCE ACT 2015 W.E. F. 2016 AND HELD THAT THE NEW PROVISO, WITH EFFECT FROM 1ST A PRIL 2016, SEEKS TO EXCLUDE, FROM THE SCOPE OF SECTION 2(15), THE SITUA TIONS IN WHICH EVEN IN THE COURSE OF PURSUING ADVANCEMENT OF ANY O BJECTS OF GENERAL PUBLIC UTILITY WHEN ANY ACTIVITIES IN THE N ATURE OF TRADE, COMMERCE OR BUSINESS ETC IS UNDERTAKEN IN THE COURS E OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY, UNLESS, THE ACTIVITY LEVEL REMAINS WITHIN THE THRESHOLD LIMIT I.E. RECEIPTS FROM SUCH ACTIVITIES ARE LESS T HAN TWENTY PERCENT OF TOTAL RECEIPTS OF THAT YEAR. THE RELEVANT PART O F THE ORDER IS REPRODUCED AS UNDER : ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 75 19. THIS SUBSTITUTION OF PROVISO TO SECTION 2(15), IN OUR CONSIDERED VIEW, MAY BE VIEWED AS REPRESENTING A PARADIGM SHIFT IN T HE SCOPE OF THE EXCLUSION CLAUSE. 20. THE PARADIGM SHIFT IS THIS. SO FAR AS THE SCOPE OF EARLIER PROVISOS IS CONCERNED, THE CBDT ITSELF HAS, DEALING WITH AN ASS ESSEE PURSING THE ADVANCEMENT OF ANY OBJECT OF GENERAL PUBIC UTILITY , OBSERVED THAT IF SUCH ASSESSEE IS ENGAGED IN ANY ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS OR RENDERS ANY SERVICE IN CONNECTION TO TR ADE, COMMERCE OR BUSINESS, IT WOULD NOT BE ENTITLED TO CLAIM THAT IT S OBJECT IS FOR CHARITABLE PURPOSES BECAUSE IN SUCH A CASE, THE OBJECT OF GENERAL PUBLIC UTIL ITY WILL ONLY BE A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE WHICH IS TRADE, COMMERCE, OR BUSINESS OR RENDERING OF ANY SERVICE I N RELATION TO TRADE, COMMERCE OR BUSINESS. THE ADVANCEMENT OF ANY OBJECTS OF GENERAL PUBLIC UTILITY AND ENGAGEMENT IN TRADE, COMMERCE AND BUSIN ESS ETC. WERE THUS SEEN AS MUTUALLY EXCLUSIVE IN THE SENSE THAT EITHER THE ASSESSEE WAS PURSUING THE OBJECTS OF GENERAL PUBLIC UTILITY OR P URSUING TRADE, COMMERCE OR BUSINESS ETC. IN THE GARB OF PURSING THE OBJECTS OF GENERAL PUBLIC UTILITY. AS THE CBDT CIRCULAR ITSELF DEMONSTRATES, THERE COULD NOT HAVE BEEN ANY SITUATION IN WHICH THE ASSESSEE WAS PURSING THE OBJ ECTS OF GENERAL PUBLIC UTILITY AS ALSO ENGAGED IN TRADE, COMMERCE OF BUSIN ESS ETC. IN THE NEW PROVISO, HOWEVER, EVEN WHEN THE ASSESSEE IS ENGAGED IN THE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC. AND SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANC EMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IT IS EXCLUDED FROM THE SCOPE OF CHARITABLE PURPOSES ONLY WHEN THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIV ITIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RECEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING S UCH ACTIVITY OR ACTIVITIES, OF THAT PREVIOUS YEAR . IN OTHER WORDS, EVEN WHEN THE ACTIVITIES ARE IN T HE COURSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY, BUT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC, THE PROVISO SEEKS TO EXCLUDE IT ONLY WHEN THE THRESHOLD LEVEL OF ACTIVITY IS NOT SATISFIED. WHETHER SUCH A STATUTORY PROVISION STANDS THE LEGAL SCRUTINY OR NO T IS ANOTHER ASPECT OF THE MATTER, AND THAT IS NONE OF OUR CONCERN AT PRESENT ANYWAY, IT IS BEYOND DOUBT THAT THE NEW PROVISO, WITH EFFECT FROM 1ST AP RIL 2016, SEEKS TO EXCLUDE, FROM THE SCOPE OF SECTION 2(15), THE SITUA TIONS IN WHICH EVEN IN THE COURSE OF PURSUING ADVANCEMENT OF ANY OBJECTS OF GE NERAL PUBLIC UTILITY WHEN ANY ACTIVITIES IN THE NATURE OF TRADE, COMMERC E OR BUSINESS ETC IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, UNLESS, OF COURSE, THE ACTIVITY LEVEL REMAINS WITHIN THE THRESHOLD LIMIT I.E. RECEI PTS FROM SUCH ACTIVITIES ARE LESS THAN TWENTY PERCENT OF TOTAL RECEIPTS OF THAT YEAR. 65. WE MAY POINT OUT HERE THAT THE AMRITSAR BENCH O F THE TRIBUNAL HAS HELD THAT SUBSTITUTION OF PROVISO TO SECTION 2( 15), BY FINANCE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 76 ACT 2015 HAS BROUGHT A PARADIGM SHIFT IN THE SCOPE OF THE EXCLUSION CLAUSE I.E FIRST PROVISO TO SECTION 2(15) OF THE AC T. HOWEVER THE PARADIGM SHIFT BROUGHT BY THE INSERTION OF SECOND P ROVISO TO SECTION 2(15) DID NOT COME FOR DISCUSSION BEFORE THE COORDI NATE BENCH OF THE TRIBUNAL. IN THE FIRST PROVISO, THE WORDS IF IT INVOLVES BEFORE THE WORDS THE CARRYING ON OF ANY ACTIVITY IN THE N ATURE OF TRADE, COMMERCE OR BUSINESS. IS CRUCIAL AND IMPORTANT W HICH MEANS THAT IT IS THE CARRYING ON OF ANY OTHER OBJECT OF G ENERAL PUBLIC UTILITY WHICH MAY INVOLVE THE ACTIVITY IN THE NATURE OF TRA DE, COMMERCE OR BUSINESS. THE ACTIVITY IN THE NATURE OF TRADE, COM MERCE OR BUSINESS SHOULD NOT BE SEPARATELY OR DISTINCTLY CARRIED OUT BUT IT SHOULD BE A PART OF THE MAIN ACTIVITY OF THE INSTITUTION. IN OUR VIEW, BY WAY OF ABOVE AMENDMENT BY FINANCE A CT 2015, THE PARLIAMENT JUST HAS REITERATED ITS EARLIER INTE NTION AND PURPOSE, AS WAS FOR INTRODUCING THE AMENDMENTS TO SECTION 2( 15) W.E.F. 1.4.2009, BY WAY OF AGAIN INTRODUCING THE CLAUSE (A ) TO THE PROVISO, WHEREIN, IT HAS BEEN MENTIONED THAT THE FIRST PROVI SO IS APPLICABLE IF THE RECEIPTS ARE GENERATED IN ACTUALLY CARRYING OUT THE OBJECT OF THE GENERAL PUBLIC UTILITY BEING INCIDENTAL OR ANCILLAR Y TO THE MAIN OBJECT. WE DO NOT FIND THAT THE ABOVE WORDS INTRODU CED BY THE FINANCE ACT 2015 ARE CLARIFICATORY OR EXPLANATORY, RATHER THE SAME ,IN OUR VIEW, IS REITERATION OF THE WORDING WHICH ALREADY WAS THERE IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT. RATHER THE SCOPE OTHERWISE, OF THE PROVISIO HAS ALSO BEEN CURTAILED BY BRINGING IN THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 77 MORE RESTRICTIVE WORDS IN THE COURSE OF ACTUAL CAR RYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY IN CLAUSE (A) TO THE PROVISO TO SECTION 2(15) OF THE ACT. THE SE WORDS ARE CRUCIAL IN THE LIGHT OF DIFFERENTIATION DRAWN BETWE EN THE PHRASES IN THE COURSE OF THE ACTUAL CARRYING OUT OF THEIR PRIM ARY PURPOSE AND THE PHRASE 'THE BUSINESS IS INCIDENTAL TO THE ATTA INMENT OF THE OBJECTIVES OF THE TRUST. BY THE SUPREME COURT IN T HE CASE OF CIT VS THANTHI TRUST (SUPRA). 66. NOW COMING TO THE POINT AS TO WHEN THE PROVISIO NS OF SECTION 2(15) ARE READ ALONG WITH OTHER RELATED OR CORRESPO NDING PROVISIONS IN PLAIN ENGLISH GRAMMAR MEANING, WHETHER THEY WOUL D RENDER EACH OR ANY OF THEM REDUNDANT OR INOPERATIVE, IF IT IS S O, WHICH PROVISION IS TO BE READ AND IN WHAT MANNER TO ARRIVE AT THE C ORRECT INTERPRETATION? THE RELEVANT ARGUMENTS AND DECISIO NS THAT CAN BE REFERRED IN THIS RESPECT TO ARE ENUMERATED AS UNDER : (I) THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION V. DGIT (EXEMPT IONS) (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS HELD THA T IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO S ECTION 2(15) OF THE ACT, THEN THERE WOULD BE NO INSTITUTIO N WHATSOEVER WHICH WOULD QUALIFY FOR THE EXEMPTION UN DER SECTION 10(23C)(IV) OF THE SAID ACT AND THE SAID PR OVISION WOULD BE RENDERED REDUNDANT. THAT IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WO ULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF S ECTION 10(23C)(IV). ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 78 (II) THAT SECTION 11(4) RECOGNIZES THAT PROPERTY HELD UNDER TRUST INCLUDES A BUSINESS UNDERTAKING AND, THEREFO RE, THE BUSINESS ACTIVITY IS NOT EXCLUDED FROM THE CHARITAB LE ACTIVITY OR CHARITABLE PURPOSE AND THAT THE LITERAL AND PLAIN MEANING TO FIRST PROVISO TO SECTION 2(15) OF THE AC T WILL MAKE THIS SECTION REDUNDANT. REFERENCE HAS BEEN MAD E TO THE DECISION OF THE HONBLE SUPREME COURT IN SURAT ART SILK CASE WHEREIN THE HONBLE SUPREME COURT HAS OBSERVED THAT SECTION 11(4) , WOULD BE RENDERED WHOLLY SUPERFLUOU S AND MEANINGLESS, AFTER THE INSERTION OF CLAUSE (BB) IN SECTION 13(1) WITH EFFECT FROM 1-4-1977. (III) THEN THERE IS SECTION 13(8) OF THE INCOME TAX ACT, WHICH STATES THAT NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME IF THE PROVISIONS OF FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICAB LE IN THE CASE OF SUCH PERSON. THIS SECTION IF READ ISOLATION OR IN C ONJUNCTION WITH THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, WILL MAK E THE PROVISIONS OF SECTION 10 (23C) (IV) AND SECTION 11(4) OF THE INCO ME TAX ACT INOPERATIVE, MEANINGLESS OR REDUNDANT. 67. TO ADDRESS ALL THE ABOVE NOTED POINTS OF ARGUM ENTS AND TO PROPERLY ANALYSE THE RELEVANT PROVISIONS ON THE STA TUTE AND THEIR INTERSE RELATION OR EFFECT ,WE DEEM IT PROPER TO REPRODUCE , EVEN AT THE COST OF REPETITION, THE RELEVANT PROVISIONS HER E UNDER: DEFINITIONS. SECTION 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, .. (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE PO OR, EDUCATION, YOGA, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLAC ES OR OBJECTS OF ARTISTIC ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 79 OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES T HE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR AN Y ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NAT URE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY, UNL ESS (I) SUCH ACTIVITY IS UNDERTAKEN IN THE COURSE OF ACTUAL CARRYING OUT OF SUCH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY; AND (II) THE AGGREGATE RECEIPTS FROM SUCH ACTIVITY OR ACTIVITIES DURING THE PREVIOUS YEAR, DO NOT EXCEED TWENTY PER CENT OF THE TOTAL RE CEIPTS, OF THE TRUST OR INSTITUTION UNDERTAKING SUCH ACTIVITY OR ACTIVITIES , OF THAT PREVIOUS YEAR; (24) 'INCOME' INCLUDES (I) ..; XXXXX (IIA) VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTI ON ESTABLISHED WHOLLY OR PARTLY FOR SUCH PURPOSES OR BY AN ASSOCIATION OR IN STITUTION REFERRED TO IN CLAUSE (21) OR CLAUSE (23), OR BY A FUND OR TRUST O R INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) OR BY ANY UNIVERS ITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAD) OR SU B-CLAUSE (VI) OR BY ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB-CL AUSE (IIIAE) OR SUB-CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10 OR BY AN ELECTO RAL TRUST. XXXXXXX XXXXXXX INCOMES NOT INCLUDED IN TOTAL INCOME. SECTION 10. IN COMPUTING THE TOTAL INCOME OF A PREV IOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAU SES SHALL NOT BE INCLUDED XXXXXXXXX (23C) ANY INCOME RECEIVED BY ANY PERSON ON BEHALF O F XXXXXXXXX (IV) ANY OTHER FUND OR INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES WHICH MAY BE APPROVED BY THE PRESCRIBED AUTHORITY , HAVIN G REGARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THROU GHOUT INDIA OR THROUGHOUT ANY STATE OR STATES; OR (V) ANY TRUST (INCLUDING ANY OTHER LEGAL OBLIGATION ) OR INSTITUTION WHOLLY FOR PUBLIC RELIGIOUS PURPOSES OR WHOLLY FOR PUBLIC RELI GIOUS AND CHARITABLE PURPOSES, WHICH MAY BE APPROVED BY THE PRESCRIBED A UTHORITY , HAVING REGARD TO THE MANNER IN WHICH THE AFFAIRS OF THE TR UST OR INSTITUTION ARE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 80 ADMINISTERED AND SUPERVISED FOR ENSURING THAT THE I NCOME ACCRUING THERETO IS PROPERLY APPLIED FOR THE OBJECTS THEREOF; XXXXXXXX PROVIDED ALSO THAT THE INCOME OF A TRUST OR INSTITU TION REFERRED TO IN SUB- CLAUSE (IV) OR SUB-CLAUSE (V) SHALL BE INCLUDED IN ITS TOTAL INCOME OF THE PREVIOUS YEAR IF THE PROVISIONS OF THE FIRST PROVIS O TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE TO SUCH TRUST OR INSTITUTION IN T HE SAID PREVIOUS YEAR, WHETHER OR NOT ANY APPROVAL GRANTED OR NOTIFICATION ISSUED IN RESPECT OF SUCH TRUST OR INSTITUTION HAS BEEN WITHDRAWN OR RES CINDED; XXXXXX XXXXXX INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIO US PURPOSES. SECTION 11. (1) SUBJECT TO THE PROVISIONS OF SECTION 60 TO 63, THE FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME XXXX (4) FOR THE PURPOSES OF THIS SECTION 'PROPERTY HELD UNDER TRUST' INCLUDES A BUSINESS UNDERTAKING SO HELD, AND WHERE A CLAIM IS MADE THAT THE INCOME OF ANY SUCH UNDERTAKING SHALL NOT BE INCLUDED IN THE T OTAL INCOME OF THE PERSONS IN RECEIPT THEREOF, THE ASSESSING OFFICER S HALL HAVE POWER TO DETERMINE THE INCOME OF SUCH UNDERTAKING IN ACCORDA NCE WITH THE PROVISIONS OF THIS ACT RELATING TO ASSESSMENT; AND WHERE ANY I NCOME SO DETERMINED IS IN EXCESS OF THE INCOME AS SHOWN IN THE ACCOUNTS OF TH E UNDERTAKING, SUCH EXCESS SHALL BE DEEMED TO BE APPLIED TO PURPOSES OT HER THAN CHARITABLE OR RELIGIOUS PURPOSES. (4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SECT ION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUS T OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, AS TH E CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUC H TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. XXXXXX XXXXXXX SECTION 13. . (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PRE VIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. XXXXXXXX ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 81 XXXXXXXX ASSESSMENT : 143. (1) (3) ON THE DAY SPECIFIED IN THE NOTICE, XXXXXXXX PROVIDED ALSO THAT NOTWITHSTANDING ANYTHING CONTAIN ED IN THE FIRST AND THE SECOND PROVISO, NO EFFECT SHALL BE GIVEN BY THE ASS ESSING OFFICER TO THE PROVISIONS OF CLAUSE (23C) OF SECTION 10 IN THE CAS E OF A TRUST OR INSTITUTION FOR A PREVIOUS YEAR, IF THE PROVISIONS OF THE FIRST PRO VISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN S UCH PREVIOUS YEAR, WHETHER OR NOT THE APPROVAL GRANTED TO SUCH TRUST O R INSTITUTION OR NOTIFICATION ISSUED IN RESPECT OF SUCH TRUST OR INS TITUTION HAS BEEN WITHDRAWN OR RESCINDED. 68. THE PROVISIONS OF DIFFERENT SECTIONS AS ENUMERA TED ABOVE, IN OUR VIEW, ARE TO BE READ TO BE IN HARMONY WITH EACH OTHER SO THAT EACH AND EVERY SECTION SHOULD AID AND SUPPLEMENT TO THE MEANING AND CONSTRUCTION OF OTHER, SO AS TO ARRIVE AT THE C ORRECT INTERPRETATION RATHER THAN TO READ ANY OR EACH OF THEM IN CONTRADI CTION OF EACH OTHER MAKING THE OTHER PROVISION/S REDUNDANT AND IN OPERATIVE LEADING TO CONFUSION, ANOMALY AND ABSURDITY. THERE FORE, THESE PROVISIONS ARE TO BE READ AS EACH PROVISION OF THE SECTION SUPPLEMENT TO OTHER AND NOT SUPPLANT THE OTHER AND SO THAT A REASONABLE CONSTRUCTION MAY BE ARRIVED AT AND APPLI ED AS MAY BE INTENDED BY THE PARLIAMENT WHILE INTRODUCING THE AB OVE PROVISIONS IN THE STATUTE. 69. IN OUR VIEW, WHEN WE READ THE AFORESAID RE LEVANT PROVISIONS OF THE DIFFERENT BUT RELATED SECTIONS IN HARMONY TO EACH OTHER, A VALID AND PROPER CONSTRUCTION CAN BE ARRIVED GIVING A MEANING INTERPRETATION . ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 82 69 (1) THE INTRODUCTION OF SECOND PROVISO TO SECTIO N 2(15) OF THE ACT, AS DISCUSSED ABOVE, HAS REMOVED THE ANOMAL IES WHICH HAVE OCCURRED DUE TO THE AFORESAID DIFFERENT PROVISIONS PRESENT IN THE STATUTE. THE PROPOSITION THAT IF ANY SURPLUS IS GEN ERATED FROM BUSINESS ACTIVITY WHICH IS AGAIN PLOUGHED BACK FOR THE ACTIVITIES OF THE TRUST EXEMPTION U/S 11 IS TO BE ALLOWED HAS BEE N DONE AWAY WITH BY THE CRUCIAL WORDS IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY INTRODUCED IN THE FIRST PROVISO OF SECTION 2(15) OF THE ACT. 69 (2). NOW, COMING TO THE PROVISIONS OF SECTION 10 (23C)(IV) OF THE ACT, THE INCOME RECEIVED BY ANY PERSON, ON BEH ALF OF ANY 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 THROUGH OUT INDIA OR THROUGHOUT ANY STATE OR STATES EXEMPT FROM TAXATION . NOW FOR APPROVAL TO CLAIM EXEMPTION U/S 10(23C)(IV), THE I NSTITUTE FOR THE FUND MUST FALL IN THE DEFINITION OF CHARITABLE PUR POSES WHICH INCLUDES ACTIVITY UNDER ALL OR ANY LIMB AS DISCUSSE D ABOVE AND CAN NOT BE SAID TO BE APPLICABLE SOLELY FOR ACTIVITY O F GENERAL PUBLIC UTILITY. SO FAR INSTITUTES ESTABLISHED FOR THE OBJE CTS OF RELIEF TO THE POOR, EDUCATION YOGA, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, THEIR INCOME MAY BE CLAIMED AS EXEMPT U/S 10(23C) (IV) IF THEY OTHERWISE FULFILL THE CONDITIO NS AS ENUMERATED ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 83 U/S 10(23C)(IV) OF THE ACT. SO FAR AS THE INSTITUT E CARRYING ON THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY, AS NOTED ABOVE, THEIR COMMERCIAL INCOME HAS ALSO NOT BEEN E XCLUDED IN THE LIGHT OF SECOND PROVISION TO SECTION 2(15) OF THE A CT BUT SUBJECT TO THE LIMIT PRESCRIBED OF THE QUANTUM OF RECEIPTS. IN RESPECT OF THE QUESTION THAT IF AN INSTITUTE OR A TRUST WILL NOT B E ENGAGED IN THE COMMERCIAL ACTIVITY, IT WILL NOT HAVE ANY INCOME AN D WHERE IS THE QUESTION OF CLAIMING EXEMPTION IS CORNERED, WE MAY POINT OUT HERE THAT THE INCOME OF A CHARITABLE INSTITUTION CANNOT BE ONLY FROM COMMERCIAL ACTIVITY, BUT THERE ARE OTHER MODES OF I NCOME ALSO AS PER THE PROVISIONS OF SECTION 2(24)(IIA) OF THE ACT. VO LUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND INCLUDED IN TH E DEFINITION OF INCOME APART FROM VOLUNTARY CONTRIBUTION, SUCH CHAR ITABLE TRUST OR INSTITUTION MAY RECEIVE GRANTS FROM OTHER MODES OR ACTIVITY WHICH MAY NOT IN STRICT TERM TO BE SAID TO BE THE ACTIVIT IES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. SUPPOSE, A TRUST OR I NSTITUTIONS ENGAGED IN THE ACTIVITY OF IMPARTING TRAINING IN SP ORTS RECEIVES A NOMINAL REGISTRATION FEE FROM THE TRAINEES. CAN IT BE SAID TO BE AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS? THE ANSWER WILL BE IN NEGATIVE. WHETHER A PARTICULAR ACTIVITY IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS IS TO BE EXAMINED TAKIN G INTO CONSIDERATION THE NATURE OF ACTIVITY, THE OBJECT AN D PURPOSE OF SUCH ACTIVITY, THE VOLUME OF SUCH ACTIVITY AND THE NATU RE AND VOLUME OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 84 THE RECEIPTS AND FURTHER THE APPLICATION THEREOF AL SO. EVERY RECEIPT OF INCOME, IN OUR VIEW, CANNOT BE TERMED AS ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS. 69(3). MOREOVER THE RESTRICTION PLACED IN THE FIRST PROVISO IS ONLY IN RESPECT OF THE INSTITUTIONS OR TRUSTS CARRY ING OUT THE ACTIVITY FOR THE ADVANCEMENT OF ANY OTHER OBJECT OF PUBLIC U TILITY, AND NOT IN RESPECT OF ACTIVITY FOR THE OTHER LIMBS OF SECTION 2(15). HENCE, IT CANNOT BE SAID THAT THE FIRST PROVISO CONTROLS, RES TRICTS OR BARS ANY INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES FOR CARRYING OUT THE OBJECTS OR ACTIVITIES IN RESPECT OF OTHER LIMBS AND GENERATING INCIDENTAL INCOME ALSO THEREFROM. 69(4). MOREOVER, THE ANOMALY, IF ANY, HAS BEEN RE MOVED WITH THE INTRODUCTION OF SECOND PROVISO TO SECTION 2(15) OF THE ACT WHEREIN THE INCOME FROM INCIDENTAL OR ANCILLARY CO MMERCIAL ACTIVITY HAS ALSO BEEN ALLOWED AND INCLUDED WHILE C ARRYING OUT THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY ALS O SUBJECT TO THE LIMIT PRESCRIBED OF THE RECEIPTS. THE SECOND PROVIS O OF THE SECTION IS IN CONSONANCE OF THE PROVISIONS OF SECTION 11(4) & (4A) OF THE INCOME TAX ACT. 69(5). WE MAY POINT OUT HERE THAT THE PROVISIONS OF SECTIONS 11(4) AND 11 (4A) OF THE ACT ARE GENERAL PROVISIONS AND ARE APPLICABLE TO ALL THE INSTITUTIONS CLAIMING EXEMPTI ON U/S 11 OF THE ACT CARRYING OUT ACTIVITY FOR CHARITABLE PURPOSES. DEFINITION OF THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 85 CHARITABLE PURPOSES AS PROVIDED U/S 2(15) OF THE INCOME TAX ACT INCLUDES RELIEF TO THE POOR, EDUCATION YOGA, MEDICA L RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. SUB SECTION 4A DO NOT BA R THE CARRYING ON OF BUSINESS ACTIVITY , HOWEVER, PUTS RESTRICTION TH AT SUCH BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJEC TIVES OF THE TRUST OR INSTITUTION AND SEPARATE BOOKS OF ACCOUNT ARE MA INTAINED. THE RESTRICTION PUT BY EARLIER SECTION 13(1)(BB) AND AF TER ITS OMISSION AND BY THE SUBSEQUENTLY INSERTED SECTION 11(4A) HAVE BEEN WELL CONSIDERED, INTERPRETED AND APPLIED BY THE HONBLE SUPREME COURT IN THE CASE OF THANTHI TRUST (SUPRA) AND THUS IT CAN NOT BE SAID TO BE SAID THERE IS ANY ANOMALY CREATED BY THE ABOVE PROVISIONS . 69(6). THEN THERE IS SUB SECTION (8) TO SECTION 13 OF THE INCOME TAX ACT WHICH STATES THAT NOTHING CONTAINED IN SECT IONS 11 OR 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM TOTA L INCOME OF THE PREVIOUS YEARS IF THE PROVISIONS OF FIRST PROVISO T O CLAUSE (15) OF SECTION 2 BECOMES APPLICABLE. SO THE CONSTRUCTION T HAT ANY TYPE OF RECEIPT WHICH IS INCIDENTAL OR ANCILLARY TO THE CAR RYING OUT OF THE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY WI LL BE CONSIDERED AS INCOME FROM CHARITABLE PURPOSES IF APPLIED, SUCH CONSTRUCTION WOULD NOT ONLY RENDER THE FIRST AND SECOND PROVISO TO SECTION 2(15) AS AMENDED FROM TIME TO TIME AND BUT ALSO SECTION 1 3(8) OF THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 86 STATUTE REDUNDANT AND INOPERATIVE DEFEATING THE PUR POSE FOR WHICH THEY WERE BROUGHT INTO STATUTE BY PARLIAMENT WILL B E DEFEATED. AT THE SAME TIME, WHEN WE READ THE PROVISIONS OF SECTI ON 13(8) IN ISOLATION, IT WILL MAKE THE PROVISIONS OF SECTIONS 11 (4) AND 11 (4A) OF THE ACT INOPERATIVE FOR THE INSTITUTION CARRYING OF OBJECT OF ADVANCEMENT OF GENERAL PUBLIC UTILITY, WHICH ALSO I NVOLVES THE ACTIVITY OF CARRYING OF BUSINESS, TRADE OR COMMERCE GENERATING ANCILLARY OR INCIDENTAL INCOME. HOWEVER, BY THE INS ERTION OF SECOND PROVISO TO SECTION 2(15) AS AMENDED FROM TIME TO TI ME, THE ANOMALY, IF ANY, HAS BEEN REMOVED. 70. A HARMONIOUS CONSTRUCTION OF THESE AMENDED PROV ISIONS WILL LEAD TO THE CONCLUSION THAT EACH OF THE PROVISIONS ARE IN AID TO AND SUPPLEMENT EACH OTHER. IN OUR VIEW, A REASONABLE A ND MEANINGFUL CONSTRUCTION THAT MAY BE ARRIVED NOW IS THAT AS PE R THE PROVISIONS OF SECTION 2(15) OF THE ACT, CHARITABLE PURPOSES ON THE FIRST PART WILL INCLUDE RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT AND PRESERVATION OF MON UMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND FURT HER AS PER THE PROVISIONS OF SECTION 11(4) OF THE ACT, SUCH TRUST OR INSTITUTION CAN HOLD BUSINESS ASSETS ALSO. HOWEVER, AS PER THE PRO VISIONS OF SECTION (4A), SUCH BUSINESS FOR PROFIT SHOULD BE INCIDENTA L TO THE ATTAINMENT OF THE OBJECTIVES OF SUCH TRUST OR INSTITUTION AND SEPARATE BOOKS OF ACCOUNT ARE TO BE MAINTAINED. FURTHER, TO CLAIM E XEMPTION U/S ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 87 10(23C)(IV) OF THE ACT, THE FUND OR INSTITUTES MUST BE ESTABLISHED FOR CHARITABLE PURPOSE AND IS APPROVED / REGISTERED BY THE PRESCRIBED AUTHORITY HAVING REGARD TO THEIR OBJECTS AND IMPORT ANCE THROUGHOUT INDIA AND OTHERWISE FULFILL THE OTHER CONDITIONS AS ENUMERATED U/S 10(23C) OF THE INCOME TAX ACT. HERE WE MAY POINT O UT THE RESTRICTION PUT BY SECTION 11(4A) OR SECTION 13(8) DO NOT IN ANY MANNER COMES INTO PLAY OR OTHERWISE RESTRICT THE BU SINESS ACTIVITY OF THE FUND OR INSTITUTIONS ESTABLISHED FOR CHARITABLE PURPOSES AND CLAIMING EXEMPTION U/S 10( 23C)(IV) OF THE ACT. BU T THE RESTRICTION INTER ALIA CREATED BY THE PROVISOS TO SECTION 2(15) READ WITH THE NEWLY INSERTED 18 TH PROVISO TO SECTION 10( 23C) (AS REPRODUCED ABOVE) AND NEWLY INSERTED PROVISO TO SECTION 143 (A S INSERTED BY FINANCE ACT 2012 W.E.F. 1.4.2009) WILL APPLY THAT T OO ONLY TO THE INSTITUTIONS CARRYING ON THE ACTIVITY OF ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND NOT TO THE INS TITUTIONS ESTABLISHED UNDER OTHER LIMBS OF THE DEFINITION OF CHARITABLE PURPOSES. THUS THE PROVISOS TO SECTION 2(15) OR T O SECTION 10(23C) OR TO SECTION 143 DO NOT MAKE THE PROVISIONS OF SEC TION 10(23C)(IV) REDUNDANT OR INOPERATIVE, BUT ONLY PUT SOME RESTRIC TIONS ON THE INSTITUTIONS CARRYING ON THE OBJECT OF GENERAL PUBL IC UTILITY IN RESPECT OF THEIR BUSINESS ACTIVITY. 71. AS PER THE SECOND PROVISO TO SECTION 2(15) OF THE ACT, INCOME FROM INCIDENTAL BUSINESS ACTIVITY SHOULD NOT CROSS THE LIMIT AS PRESCRIBED FROM TIME TO TIME AS PER THE AMENDMENTS CARRIED OUT IN ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 88 SECOND PROVISO OF THE INCOME TAX ACT AND THE PROVIS IONS OF SECTIONS 11(4) & (4A) AND SECTION 10(23C)(IV) CAN BE APPLIED ACCORDINGLY AND SUCH A CONSTRUCTION WILL NOT MAKE ANY PROVISION CONTRARY OR IN CONTRADICTION TO THE OTHER, RATHER WILL SUPPLEMENT EACH OTHER. EVEN THE SECTION 13(8) OF THE ACT CAN ALSO BE MEANINGFUL LY APPLIED WHICH WILL BE REQUIRED TO READ IN THE LIGHT OF THE SECOND PROVISO TO SECTION 2(15) OF THE ACT AND THUS HARMONIOUS CONSTRUCTION O F THE RELATED PROVISIONS WILL GIVE A MEANINGFUL AND WORKABLE INTE RPRETATION AS INTENDED BY THE PARLIAMENT. HENCE, IN THE LIGHT OF DISCUSSION MADE ABOVE OF THE RELEVANT PROVISIONS OF THE ACT, THE INTERPRETATION THAT MAY BE ARRIVED IS THAT FOR THE TRUSTS OR THE INSTITUTIONS CARRYING ON THE ACTIVITY INCLUDED IN THE FIRST PART OF DEFINITION OF CHARITABLE PURPOSE S AS DEFINED U/S 2(15) OF THE ACT VIZ. FOR THE OBJECTS OF RELIEF TO THE POOR, EDUCATION YOGA, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HI STORIC INTEREST AND ARE ALSO CARRYING ON THE BUSINESS ACTIVITY WHICH IS INCIDENTAL TO THE ATTAINMENT OF OBJECTIVE OF SUCH TRUST OR INSTITUTI ON [AS PROVIDED U/S 11(4A)], THEY ARE ENTITLED TO CLAIM EXEMPTION OF TH EIR INCOME INCLUDING THE INCOME FROM INCIDENTAL BUSINESS ACTIV ITY UNDER SECTION 11 OF THE ACT SUBJECT TO COMPLIANCE OR FULFILMENT O F THE OTHERWISE REQUIRED CONDITIONS INCLUDING INTER ALIA REGISTRA TION OF SUCH TRUST OR INSTITUTION U/S 12 A OF THE ACT OR MAINTAINING OF SEPARATE BOOKS OF ACCOUNT REGARDING BUSINESS ACTIVITY AS PER THE PROV ISIONS OF SECTION ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 89 11(4A) OF THE ACT ETC. AND SUBJECT TO THE APPLICABI LITY OF THE RELEVANT PROVISIONS OF SECTION 11, 12 AND 13 OF THE ACT, IRRESPECTIVE OF THE QUANTUM OF INCOME EARNED FROM SUCH INCIDENTA L BUSINESS ACTIVITY. IN OTHER WORDS, THERE IS NO CAP OR LIMIT PRESCRIBED FOR SUCH RECEIPTS TO BE ELIGIBLE FOR CLAIMING EXEMPTION FROM TAXATION U/S 11 OF THE ACT. AS DISCUSSED IN THE PARAS ABOVE OF THIS ORDER, ANY INCOME RECEIVED BY A PERSON ON BEHALF OF ANY FUND OR INSTITUTIONS E STABLISHED FOR CHARITABLE PURPOSES AS INCLUDED IN THE FIRST PART O F THE DEFINITION AS DEFINED U/S 2(15) OF THE ACT I.E. FOR THE OBJECTS O F RELIEF TO THE POOR, EDUCATION YOGA, MEDICAL RELIEF, PRESERVATION OF ENV IRONMENT AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST CAN BE CLAIMED AS EXEMPT FROM LEVY OF TAX U/S 10(23C)(IV) OF THE ACT IRRESPECTIVE OF THE QUANTUM OF SUCH INC OME I.E WITHOUT ANY CAP OR LIMIT ON SUCH INCOME SUBJECT TO FULFILLI NG THE OTHER CONDITIONS AS PRESCRIBED THEREIN SUCH AS APPROVAL O F SUCH FUND OR INSTITUTION BY THE PRESCRIBED AUTHORITY, HAVING REG ARD TO THE OBJECTS OF THE FUND OR INSTITUTION AND ITS IMPORTANCE THRO UGHOUT INDIA OR THROUGHOUT ANY STATE OR STATES. HOWEVER, THE TRUSTS OR INSTITUTIONS CARRYING ON SUC H ACTIVITY OR ESTABLISHED TO CARRY ON SUCH ACTIVITY, AS THE CASE MAY BE, THAT IS FALLING IN THE LAST LIMB OF THE DEFINITION OF CHAR ITABLE PURPOSES AS DEFINED U/S 2(15) OF THE ACT I.E. FOR THE ADVANCEME NT OF ANY OTHER OBJECT OF PUBLIC UTILITY WHICH ALSO INVOLVES THE CA RRYING OF ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 90 INCIDENTAL ACTIVITY IN THE NATURE OF TRADE COMMERC E OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE, THE RESTRIC TIONS INTER ALIA PUT BY THE PROVISOS TO SECTION 2(15) SUCH AS THAT THE INCIDENTAL BUSINESS ACTIVITY SHOULD BE IN THE COURSE OF ACTUAL CARRYING OUT OF THE MAIN OBJECT AND THE RECEIPTS THEREFROM SHOULD NOT CROSS THE LIMIT OR CAP (AS APPLICABLE FROM TIME TO TIME) AND FURTHER THAT IT WILL BE IMMATERIAL THAT THE FUNDS OR THE PROFITS FROM BU SINESS ACTIVITY ARE PLOUGHED BACK TO SUB SERVE THE MAIN OR THE PREDOMIN ANT OBJECT OF THE TRUST. IN THIS RESPECT THE WORDS IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SU CH ACTIVITY FINDING PLACE IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT WOULD COME INTO PLAY. HOWEVER, THE OTHER RESTRICTIONS AS PROVIDED UNDER SECTION 11(4A), 13(8) AND 143(3) AS DISCUSSED ABOV E, WOULD ACCORDINGLY APPLY FOR CLAIMING EXEMPTION U/S 11 OF THE ACT; HOWEVER, THE RESTRICTION INTER ALIA PUT UNDER THE P ROVISOS TO SECTION 10(23C)(IV) AND SECTION 143(3) ALONG WITH RESTRICTI ONS PUT BY THE PROVISOS TO SECTION 2(15), AS DISCUSSED ABOVE, WILL APPLY FOR CLAIMING EXEMPTION U/S10(23) (IV). THESE RESTRICTION PUT UNDER THE PROVISOS TO SECTION 2(15) ARE APPLICABLE ONLY TO TH E ACTIVITY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. 72. HOWEVER, EVEN AFTER HOLDING THAT THE HARMONIOUS READING OF THE RELATED PROVISIONS OF THE ACT, AS DISCUSSED ABO VE, WILL LEAD TO THE CONCLUSION THAT IT CANNOT BE SAID THAT ANY OF T HE RELATED SECTION ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 91 IS IN CONTRADICTION TO THE OTHER OR IN ANY MANNER M AKING INOPERATIVE OR REDUNDANT THE OTHER, WE STILL ARE OF THE VIEW, T HAT THERE REMAINS STILL AN ANOMALY WHICH HAS NOT BEEN ADDRESSED BY TH E PARLIAMENT TILL DATE BY WAY OF INTRODUCTION OF THE SUITABLE PROVISI ON. SUPPOSE THE INCOME FROM INCIDENTAL AND ANCILLARY ACTIVITY OF AN INSTITUTION IN THE COURSE OF CARRYING OUT OF ACTIVITY FOR ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY CROSSES THE LIMIT, AS PRESCR IBED FOR DIFFERENT ASSESSMENT YEARS AS PER THE PROVISOS TO SECTION 2(1 5), CAN IT BE SAID THAT SUCH AN INSTITUTION WILL NOT BE AN INSTITUTION CARRYING OUT THE OBJECTS FOR CHARITABLE PURPOSES. FOR EXAMPLE FOR THE ASSESSMENT YEAR 2009-10, THE TOTAL RECEIPTS OF AN INSTITUTION FROM THE ANCILLARY ACTIVITY IN THE SHAPE OF TRADE AND COMMERCE OR BUSI NESS ARE RS. 9.95 LACS, THE INSTITUTION WILL BE TREATED AS AN INSTITU TION FOR CHARITABLE PURPOSES AND ITS ENTIRE INCOME EXEMPT FROM TAXATION EITHER U/S 11 OR 10(23C) AS THE CASE MAY BE, WHEREAS, IF THERE IS A SLIGHT INCREASE OF RS. SIX THOUSANDS ONLY IN SUCH BUSINESS INCOME, SAY IT CROSSES THE LIMIT OF RS. 10 LACS, I.E SAY AT RS. 10.01 LACS, TH EN SUCH TRUST OR INSTITUTION WILL BE OUT OF PURVIEW OF THE CHARITAB LE PURPOSE AND ITS ENTIRE INCOME WILL BE INCLUDED IN THE TOTAL INCOME, INCLUDING THE RECEIPTS WHICH ARE NOT DIRECTLY CONNECTED WITH THE CARRYING OF THE INCIDENTAL ACTIVITY IN THE NATURE OF TRADE, COMMERC E OR BUSINESS. SUCH AN ANOMALY WILL CREATE UTTER CONFUSION AND WIL L OPERATE AS RESTRICTION ON THE INSTITUTION GENUINELY INVOLVED I N CARRYING OUT THE OBJECTS OF GENERAL PUBLIC UTILITY. THE INSTITUTES WHICH ARE RATHER ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 92 CARRYING OF THE ACTIVITY OF GENERAL PUBLIC UTILITY ON LARGE SCALE WILL NOT BE ENTITLED TO CLAIM THE BENEFIT UNDER THE PROV ISIONS OF SECTIONS 11 & 12 OF THE INCOME TAX ACT. EVEN THE NON-BUSINE SS INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION AND DONATIONS OR DIRECTLY RELATING TO CHARITABLE ACTIVITIES (AS DISCUSSED IN PARA 61 ( 2) ABOVE) AND NOT RELATING TO THE ACTIVITY IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS WOULD ALSO BECOME TAXABLE. THE MOMENT THE RECEIPTS FROM THE COMMERCIAL ACTIVITY CROSSES THE STIPULATED LIMIT, T HE PROVISIONS OF SECTION 13(8) OF THE ACT AND PROVISOS TO SECTION 10 (23C) AND SECTION 143 , AS THE CASE MAY BE, WILL COME INTO PLAY. IT WILL MEAN THAT THE ENTIRE INCOME OF AN INSTITUTION CARRYING ON THE OBJ ECT OF GENERAL PUBLIC UTILITY ON A SMALL SCALE INVOLVING INCIDENTA L COMMERCIAL ACTIVITY WILL BE TREATED AS EXEMPT AS IT WILL NOT C ROSS THE PRESCRIBED LIMIT OF RS. 10 LACS OR RS. 25 LACS OR 20% OF THE T OTAL RECEIPT AS APPLICABLE FOR THE DIFFERENT ASSESSMENT YEARS, HOWE VER, THE INCOME OF AN INSTITUTION CARRYING ON THE ACTIVITY OF GENER AL PUBLIC UTILITY ON LARGE SCALE WILL BECOME TAXABLE IF THE RECEIPTS FRO M THE INCIDENTAL COMMERCIAL ACTIVITY CROSSES THE LIMITS AS PRESCRIBE D FOR DIFFERENT ASSESSMENT YEARS AS NOTED ABOVE. THOUGH BY WAY OF A MENDMENT TO SECOND PROVISO VIDE FINANCE ACT 2015 W.E.F. 1.4.201 6, THE GOVERNMENT HAS TRIED TO REMOVE THE ANOMALY BY SUBST ITUTING FIXED LIMIT OF RECEIPTS OF RS. 25 LACS WITH THE 20% OF TH E TOTAL RECEIPTS, HOWEVER, THE QUESTION IS THAT THE RECEIPTS FROM THE INCIDENTAL OR ANCILLARY COMMERCIAL ACTIVITY CANNOT, IN OUR VIEW, BE CONTROLLED OR ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 93 RESTRICTED BY WAY OF MEASURING OR CONTROLLING THE A CTIVITIES WITH GOLDEN SCALE OR TO SAY TO CHECK THE SAME ON DAY TO DAY BASIS AND THE STOP CARRYING OUT THE INCIDENTAL ACTIVITY, WHICH OT HERWISE MAY BE NECESSARY TO ACHIEVE THE MAIN OBJECT OF GENERAL P UBLIC UTILITY, THE MOMENT THE RECEIPTS TOUCH THE THRESHOLD. THE HONBL E SUPREME COURT IN THE CASE OF SURAT ART SILK CLOTH MANF. A SSN. (SUPRA) HAS HELD, IT WOULD INDEED BE DIFFICULT FOR PERSONS IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EX PENDITURE BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT W OULD NOT ONLY BE DIFFICULT OF PRACTICAL REALIZATION BUT WOULD ALSO R EFLECT UNSOUND PRINCIPLE OF MANAGEMENT. THE SAME ANALOGY CAN WELL BE APPLIED IN THE FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE. 73. TO REMOVE THIS ANOMALY, PROPER CONSTRUCTION WIL L BE THAT THE INSTITUTION CARRYING OUT THE OBJECT OF ADVANCEMENT OF GENERAL PUBLIC UTILITY WHICH INVOLVE THE INCIDENTAL OR ANCILLARY A CTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND GENERATI NG INCOME THEREFROM, THE INCOME TO SUCH AN EXTENT AS IS LIMIT ED BY THE SECOND PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT SHOU LD BE TAKEN AS EXEMPT BEING TREATED AS INCOME FROM CHARITABLE PURP OSES AS PER THE RELEVANT PROVISIONS OF SECTIONS 2(15), SECTION 10, SECTION 11, SECTION 12 OR SECTION 13, AS THE CASE MAY BE AND W HEREVER APPLIED. THE OTHER INCOME WHICH IS NOT FROM THE COMMERCIAL A CTIVITY, SUCH AS, BY WAY OF VOLUNTARY DONATIONS, CONTRIBUTIONS, G RANTS OR NOMINAL REGISTRATION FEE ETC. OR OTHERWISE WILL REMAIN TO B E FROM CHARITABLE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 94 PURPOSES AND ELIGIBLE FOR EXEMPTION UNDER THE RELEV ANT PROVISIONS. HOWEVER, THE INCOME FROM ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OVER THE ABOVE LIMIT PRESCRI BED FROM TIME TO TIME AS PER THE SECOND PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, SHOULD BE TREATED AS INCOME FROM THE BUSINESS ACTIVITY AND LIABLE TO BE INCLUDED IN THE TOTAL INCOME. IN THIS WAY, THE RECEIPTS OF INCIDENTAL BUSINESS INCOME WHILE CARRYING OUT THE O BJECTS OF ADVANCEMENT OF GENERAL PUBLIC UTILITY, WHEN THESE C ROSS THE LIMIT PRESCRIBED U/S 2(15) OF THE ACT, WILL NOT RENDER S UCH INSTITUTE AS NON-CHARITABLE BRINGING INTO TAXATION ITS ENTIRE I NCOME INCLUDING NON-BUSINESS INCOME OR EVEN INCOME FROM CHARITABLE ACTIVITY ITSELF INCLUDING VOLUNTARY CONTRIBUTIONS AND DONATIONS. ON LY THE BUSINESS INCOME WHICH WILL BE OVER AND ABOVE THE PRESCRIBED LIMIT WILL BE SUBJECTED TO TAXATION. THE ABOVE INTERPRETATION OF THE DIFFERENT PROVISIONS OF THE ACT WILL LEAD TO A HARMONIOUS CO NSTRUCTION OF THE PROVISIONS REMOVING HARDSHIP CREATED BY THE FIRST AND SECOND PROVISO TO SECTION 2(15) READ WITH SECTION 13(8) OF THE ACT AND WILL ALSO STRIVE TO ACHIEVE THE OBJECTS AND PURPOSE OF SECTIONS 11(4) AND 11 (4A), 10(23C)(IV) AS WELL AS THE PROVISIONS OF S ECTION 2(15) ALONG WITH ITS PROVISO AND SECTION 13(8) OF THE INC OME TAX ACT. ANY OTHER INTERPRETATION OR CONCLUSION, IN OUR VIEW , WOULD NOT BE TOWARDS THE ACHIEVEMENT OF THE OBJECT OR PURPOSE FO R THEIR INSERTION OR INTRODUCTION IN THE STATUTE AND EVEN WILL LEAD T O HARDSHIP TO THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 95 INSTITUTIONS GENUINELY CARRYING ON THE ACTIVITIES O F ADVANCEMENT OF GENERAL PUBLIC UTILITY. 74. AFTER HOLDING AS ABOVE, NOW, LET US REVERT TO T HE FACTS OF THE PRESENT CASE. THE ASSESSEE HEREIN, INTER ALIA, HAS TAKEN A PLEA THAT THAT THE ASSESSEE- ASSOCIATION IS INVOLVED IN IMPAR TING TRAINING TO BOYS AND GIRLS IN TENNIS AND IS RUNNING A TENNIS AC ADEMY HAVING COACHES AND INSTRUCTOR THEREFORE THE ASSESSEE TRUST CAN BE SAID TO BE ENGAGED IN IMPARTING EDUCATION AND THUS, IS COVERED IN THE FIRST LIMB OF SECTION 2(15) AND NOT UNDER THE LAST OR RESIDUAL LIMB. THE LD. COUNSEL, IN THIS RESPECT, HAS RELIED UPON THE DECIS ION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF PITANJALI YOG PEETH NYAS VS ADIT (EXEMPTIONS) (SUPRA) WHEREIN IT HAS BEEN HELD THAT IMPARTING TRAINING IN YOGA AMOUNTS TO EDUCATIONAL ACTIVITY. 75. WE ARE NOT CONVINCED BY THE ABOVE ARGUMENT OF T HE LD. COUNSEL FOR THE ASSESSEE. EDUCATION AS DEFINED UN DER SECTION 2(15) OF THE ACT, IN OUR VIEW, CAN NOT BE ASCRIBED TO SUC H AN EXTENDED MEANING. IT DOES NOT APPEAR THE INTENTION OF THE LE GISLATURE TO INCLUDE TRAINING IN SPORTS IN DEFINITION AND SCOP E OF TERM EDUCATION FOR THE PURPOSE OF SECTION 2(15) OF THE ACT. NOT ONLY IN GENERAL PARLANCE BUT ALSO IN SPECIFIC TERMS, THE SP ORTS ACTIVITY IS CONSIDERED AS A SEPARATE AND DISTINCT ACTIVITY AS C OMPARED TO EDUCATION OR STUDIES. THE TERM TRAINING IMPLIES T HE ACT OF IMPARTING A SPECIAL SKILL OR BEHAVIOR TO A PERSON, BUT IT IS NOT EXACTLY ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 96 SAME AS EDUCATION, WHICH IS UNDERTAKEN FOR THE PURP OSE OF FURTHERING OF KNOWLEDGE AND DEVELOPING OF INTELLECT THROUGH A PROCESS OF SYSTEMATIC LEARNING SOMETHING IN AN INSTITUTION THA T DEVELOPS A SENSE OF JUDGMENT AND REASONING. AS DISCUSSED ABOVE IN THE OPENING PARAS OF THIS ORDER, HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOK SHIKSHANA TRUST VS. CIT(SUPRA) WHILE FURTHER R ELYING ON THE DECISION OF THE JUDICIAL COMMITTEE IN THE CASE OF IN RE TRUSTEES OF THE TRIBUNE [1939] 7 ITR 415 (PC) HAS HELD THAT TH E WORD 'EDUCATION' HAS NOT BEEN USED IN THAT WIDE AND EXTE NDED SENSE SO FAR AS THE PROVISIONS OF SECTION 2(15) OF THE ACT ARE C ONCERNED. HIS LORDSHIP JUSTICE H.R. KHANNA, WRITING THE MAJORITY VIEW (FOR HIMSELF AND JUSTICE A.C. GUPTA) OBSERVED AS UNDER : THE SENSE IN WHICH THE WORD 'EDUCATION' HAS BEEN U SED IN SECTION 2(15) IN THE SYSTEMATIC INSTRUCTION, SCHOOLING OR T RAINING GIVEN TO THE YOUNG IS PREPARATION FOR THE WORK OF LIFE. IT ALSO CONNOTES THE WHOLE COURSE OF SCHOLASTIC INSTRUCTION WHICH A PERSON HAS RECEIVED. THE WORD 'EDUCATION' HAS NOT BEEN USED IN THAT WIDE AND EXTE NDED SENSE, ACCORDING TO WHICH EVERY ACQUISITION OF FURTHER KNO WLEDGE CONSTITUTES EDUCATION. ACCORDING TO THIS WIDE AND EXTENDED SENS E, TRAVELLING IS EDUCATION, BECAUSE AS A RESULT OF TRAVELLING YOU AC QUIRE FRESH KNOWLEDGE. LIKEWISE, IF YOU READ NEWSPAPERS AND MAG AZINES, SEE PICTURES, VISIT ART GALLERIES, MUSEUMS AND ZOOS, YO U THEREBY ADD TO YOUR KNOWLEDGE. AGAIN, WHEN YOU GROW UP AND HAVE DE ALINGS WITH OTHER PEOPLE, SOME OF WHOM ARE NOT STRAIGHT, YOU LE ARN BY EXPERIENCE AND THUS ADD TO YOUR KNOWLEDGE OF THE WAYS OF THE W ORLD. IF YOU ARE NOT CAREFUL, YOUR WALLET IS LIABLE TO BE STOLEN OR YOU ARE LIABLE TO BE CHEATED BY SOME UNSCRUPULOUS PERSON. THE THIEF WHO REMOVES YOUR WALLET AND THE SWINDLER WHO CHEATS YOU TEACH YOU A LESSON AND IN THE PROCESS MAKE YOU WISER THOUGH POORER. IF YOU VISIT A NIGHT CLUB, YOU GET ACQUAINTED WITH AND ADD TO YOUR KNOWLEDGE ABOUT SOME OF THE NOT MUCH REVEALED REALITIES AND MYSTERIES OF LIFE. ALL THIS IN A WAY IS EDUCATION IN THE GREAT SCHOOL OF LIFE. BUT THAT IS NOT THE SENSE IN WHICH THE WORD 'EDUCATION' IS USED IN CLAUSE (15) OF SECT ION 2. WHAT EDUCATION CONNOTES IN THAT CLAUSE IS THE PROCESS OF TRAINING AND ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 97 DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY NORMAL SCHOOLING. THE QUESTION AS TO WHETHER A TRUST THE OBJECT OF WH ICH IS TO SUPPLY THE PEOPLE WITH AN ORGAN OF EDUCATED PUBLIC OPINION SHO ULD BE CONSIDERED TO BE ONE FOR EDUCATION OR FOR ANY OTHER OBJECT OF PUBLIC UTILITY WAS CONSIDERED BY THE JUDICIAL COMMITTEE IN THE CASE OF IN RE TRUSTEES OF THE TRIBUNE [1939] 7 ITR 415 (PC). IN THAT CASE A PERSON WHO OW NED A PRESS AND A NEWSPAPER CREATED A TRUST BY HIS WILL B Y WHICH HIS PROPERTY IN THE STOCK AND GOODWILL OF THE PRESS AND NEWSPAPE R WAS MADE TO VEST PERMANENTLY IN A COMMITTEE OF CERTAIN MEMBERS. IT W AS THE DUTY OF THE SAID COMMITTEE OF TRUSTEES UNDER THE WILL 'TO MAINT AIN THE SAID PRESS AND NEWSPAPER IN AN EFFICIENT CONDITION, AND TO KEE P UP THE LIBERAL POLICY OF THE SAID NEWSPAPER, DEVOTING THE SURPLUS INCOME OF THE SAID PRESS AND NEWSPAPER AFTER DEFRAYING ALL CURRENT EXP ENSES IN IMPROVING THE SAID NEWSPAPER AND PLACING IT ON A FOOTING OF P ERMANENCY'. IT WAS ALSO PROVIDED BY AN ARRANGEMENT MADE SUBSEQUENTLY T HAT IN CASE THE PAPER CEASED TO FUNCTION OR FOR ONLY OTHER REASON T HE SURPLUS OF THE INCOME COULD NOT BE APPLIED TO THE OBJECT MENTIONED ABOVE, THE SAME SHOULD BE APPLIED FOR THE MAINTENANCE OF A COLLEGE WHICH HAD BEEN ESTABLISHED OUT OF THE FUNDS OF ANOTHER TRUST CREAT ED BY THE SAME TESTATOR. THERE WAS SURPLUS INCOME IN THE HANDS OF THE TRUSTEES AFTER DEFRAYING THE EXPENSES OF THE PRESS AND NEWSPAPER. QUESTION AROSE AS TO WHETHER THAT INCOME WAS LIABLE TO BE ASSESSED IN THE HANDS OF THE TRUSTEES. THE JUDICIAL COMMITTEE HELD THAT THE OBJE CT OF THE SETTLOR WAS TO SUPPLY THE PROVINCE OF THE PUNJAB WITH AN ORGAN OF EDUCATED PUBLIC OPINION AND THIS WAS PRIMA FACIE AN OBJECT OF GENERAL PUBLIC UTILITY. THEIR LORDSHIPS UNEQUIVOCALLY EXPRESSED THE VIEW TH AT THEY WERE NOT PREPARED TO HOLD THAT THE PROPERTY REFERRED TO IN T HE VARIOUS PARAGRAPHS OF THE WILL WAS HELD FOR THE PURPOSE OF 'EDUCATION' IN THE SENSE THAT WORD WAS USED IN SECTION 4 OF THE INDIAN INCOME-TAX ACT OF 1922. THE ABOVE DECISION OF THE JUDICIAL COMMITTEE APPLIES DI RECTLY TO THE PRESENT CASE AND, IN VIEW OF THIS DECISION, WE WOUL D HOLD THAT THE OBJECT OF THE APPELLANT-TRUST WAS 'THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. 76. SO FAR AS THE RELIANCE OF THE LD. COUNSEL ON THE DE CISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF PITANJALI YOG PEETH NYAS VS ADIT(EXEMPTIONS)(SUPRA) IS CONCERNED, THE BENCH H AS CONSIDERED THE SPECIFIC AND DISTINCT FEATURES OF YOGA AS COMPARED TO A GA ME OR SPORT. APART FROM HOLDING THE SYSTEMATIC AND REGULAR CLASSES IN YOGA AS EDUCATIONAL ACTIVITY, THE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 98 TRIBUNAL HAS ALSO HELD THE YOGA AS FALLING UNDER THE OTHER LIMB MEDICAL RELIEF. IT HAS BEEN CONSIDERED THAT THE SUBJECT Y OGA HAS BEEN RECOGNIZED AS A SEPARATE STREAM OF SCIENCE AND EDUCATIONAL DEGREES COURSES SUCH AS M.A. (YOGA SCIENCE), M.SC. (YOGA SCIENCE), B.A. (YOGA SC IENCE) POST GRADUATE DIPLOMA IN PANCHKARMA, POST GRADUATE DIPLO MA IN YOGA SCIENCE AND POST GRADUATE DIPLOMA IN YOGA HEALTH AN D CULTURAL TOURISM HAVE BEEN OFFERED IN THE UNIVERSITY SET UP BY THE ASSESSEE TRUST IN THAT CASE, WHICH WAS DULY RECOGNIZED BY TH E GOVT. EVEN THE MATTER WENT IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT. THE HONBLE DELHI HIGH COURT WHILE ADMITTING THE APPEAL OF THE REVENUE HAS HOWEVER HELD THAT THE DISSEMINATION OF YOGA OR VEDIC PHILOSOPHY OR THE PRACTICE OF YOGA OR EDUCATION WITH RESPECT T O YOGA WAS WELL WITHIN THE LARGER TERM 'MEDICAL RELIEF' AND THAT N O SUBSTANTIAL QUESTION OF LAW WAS INVOLVED ON THIS ASPECT. IT IS FURTHER PERTINENT TO MENTION HERE THAT YOGA H AS BEEN SPECIFICALLY INCLUDED AS A LIMB OF CHARITY IN SECTI ON (15) OF THE ACT W.E.F. 01.04.2016 ON THE SAME LINES AS EDUCATION, M EDICAL RELIEF, RELIEF TO THE POOR, ETC. IN VIEW OF THE ABOVE DISCU SSION, THE CASE LAW CITED BY THE ASSESSEE IS NOT APPLICABLE TO THE FACT S AND CIRCUMSTANCES OF THE CASE. THE CONTENTION OF THE ASSESSEE THAT TH E ACTIVITY OF THE ASSESSEE OF PROVIDING TRAINING IN TENNIS IS EDUCATI ON, THEREFOR, CAN NOT BE ACCEPTED, HOWEVER, THE SAME CAN VERY WELL BE SAID TO BE TOWARDS THE ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY. ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 99 77. NOW COMING TO THE POINT AS TO WHETHER THE ACTIV ITY OF THE ASSESSEE IS HIT BY THE PROVISOS TO SECTION 2(15) AN D OTHER RELATED PROVISIONS OF THE ACT, IT IS NEITHER THE CASE OF TH E ASSESSING OFFICER NOR OF THE CIT(A) THAT THE ASSESSEE IS REGULARLY FO LLOWING COMMERCIAL ACTIVITY BY EXPLOITING ITS PROPERTY AND RIGHT TO HOLD MATCHES AND THEREBY EARNING INCOME BY WAY OF ALLOCA TING BROADCASTING RIGHTS, ADVERTISEMENTS, SALE OF TICKET S ETC. THE LD. COUNSEL HAS BROUGHT ON RECORD THAT AS PER ITS AIMS AND OBJECTS, THE ASSESSEE SOCIETY IS CARRYING ON THE ACTIVITY OF THE PROMOTION OF GAME OF THE TENNIS WHICH ALSO INCLUDES HOLDING OF DOMEST IC AND INTERNATIONAL MATCHES IN TENNIS. HE HAS FURTHER SU BMITTED THAT RIGHTS TO CONDUCT MATCHES LIKE DEVIS CUP, WHICH ARE POPULA R AMONG THE PEOPLE ARE GRANTED ONCE A WHILE TO THE ASSESSEE. TH AT THE ASSESSEE HAS ALSO BEEN RUNNING CHANDIGARH ACADEMY OF RURAL T ENNIS, WHEREIN, BOYS AND GIRLS FROM LOW INCOME FAMILIES OF REMOTE VILLAGES ARE SELECTED, IMPARTED TRAINING AND ARE TRAINED IN TENNIS AT THE COST BORNE BY THE ASSESSEE SOCIETY. EVEN OTHER SCHOOLIN G EXPENSES ARE BORNE BY THE ASSESSEE SOCIETY. THE LD. COUNSEL IN THIS RESPECT HAS PLACED RELIANCE ON THE BROCHURE AND SCHEME OF ASSES SEE SOCIETY. THE LD. COUNSEL HAS ALSO PLACED ON RECORD THE DETAILS O F INCOME DERIVED FROM DOMESTIC AS WELL AS INTERNATIONAL TOURNAMENTS FOR THE YEAR 2008-09 ONWARDS. AS PER THE CHART / DOCUMENTS PLACE D ON RECORD, FOR THE YEAR 2008-09, THE ASSESSEE SOCIETY ORGANIZED SI X DOMESTIC CHAMPIONSHIPS IN TENNIS AND FOUR INTERNATIONAL MATC HES. HOWEVER, IT ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 100 SUFFERED LOSS OF RS. 1,81,949/-IN ORGANIZING DOMEST IC TOURNAMENT AND A LOSS OF RS. 6,24,724.14 IN ORGANIZING THE IN TERNATIONAL TOURNAMENT IN TENNIS AND THEREBY TOTAL LOSS OF RS. 8,06,673.14. FOR THE YEAR 2009-10, THE ASSESSEE SOCIETY SUFFERED LOS S OF RS. 2,89,190/- IN ORGANIZING DOMESTIC TENNIS, WHEREAS, IT RECEIVED INCOME OF RS. 6,28,468/- FROM ORGANIZING INTERNATI ONAL TOURNAMENT THEREBY NET PROFIT OF THE ASSESSEE WAS AT RS. 3,39, 278/-. FOR THE YEAR 2010-11, THE ASSESSEE SOCIETY CONDUCTED 13 DOMESTIC TOURNAMENTS SUFFERING LOSS OF RS. 4,14,600/- AND ONE INTERNATIO NAL EVENT FOR JUNIOR PLAYERS SUFFERING LOSS OF RS. 20,253/- AND THEREBY TOTALLING LOSS TO RS. 4,34,853/-. FOR THE YEAR 2011-12, THE ASSESSEE SUFFERED LOSS OF RS. 5,20,968/- FROM DOMESTIC TOURNAMENT WHE REAS IT GOT PROFITS OF RS. 5,95,078/- FROM INTERNATIONAL MATCHE S AND THE NET INCOME OF THE ASSESSEE STOOD AT RS. 74,110/-. FOR THE YEAR 2013-14, THE ASSESSEE GOT POSITIVE NET INCOME FROM HOLDING OF DOMESTIC AS WELL AS INTERNATIONAL MATCHES AT RS. 25,15,760/- AN D FOR THE YEAR 2012-13, THE ASSESSEE GOT ALLOTTED DAVIS CUP AND IT GOT A POSITIVE NET INCOME OF RS. 1,06,14,830/- IN RESPECT OF WHICH EXEMPTION HAS BEEN CLAIMED FOR THE YEAR UNDER CONSIDERATION, HOWE VER THE SAME HAS BEEN DENIED BY THE REVENUE AUTHORITIES HOLDING THAT THE ASSESSEE WAS INDULGED IN COMMERCIAL ACTIVITY. HOWEVER, FOR T HE NEXT YEAR 2013-14, THE ASSESSEE GOT NET INCOME OF RS. 25,15,7 60/-. FOR THE YEAR 2014-15, THE ASSESSEE SUFFERED LOSS IN DOMES TIC MATCHES WHEREAS IT GOT POSITIVE INCOME IN ONE OF THE INTERN ATIONAL ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 101 TOURNAMENT, WHEREAS, HE SUFFERED LOSS IN TWO INTERN ATIONAL TOURNAMENTS AND THE NET INCOME OF THE ASSESSEE IN H OLDING ALL MATCHES CAME TO RS. 2,07,766 /-. FOR THE YEAR 2015-16, THE ASSESSEE SUFFERED LOSS OF RS. 22,22,965/- AND SIMILARLY FOR THE YEAR 2016-17, THOUGH THE ASSESSEE GOT NET POSITIVE INCOME FROM DO MESTIC MATCHES, HOWEVER, IT SUFFERED LOSSES FROM HOLDING OF INTER NATIONAL MATCHES AND THE NET RESULT WAS OF LOSS OF RS. 13,42,858/-. 78. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, HA S SUBMITTED THAT FOR THE PROMOTION OF GAME OF TENNIS, CATCHING YOUNG TALENT, NOT ONLY OUT OF URBAN POPULATION, BUT ALSO FROM RURAL POPULA TION, IMPARTING TRAINING IN TENNIS TO THEM AND EVEN FINANCIAL HELP INCLUDING THE SCHOOLING OF THE ECONOMICALLY WEAK PLAYERS IS ALSO DONE. SO FAR AS THE HOLDING OF DAVIS CUP AND EXPLOITATION OF THE MA TCH RIGHTS WAS CONCERNED, IT WAS EXPLAINED THAT THE ASSESSEE SOCIE TY NEED FUNDS FOR CARRYING OUT ITS ACTIVITIES AND ONCE AND WHILE IT G OT RIGHT TO ORGANIZE MATCH, WHICH OTHERWISE IS PART OF MAIN OBJECT OF TH E SOCIETY IN THE COURSE OF CARRYING OUT ITS OBJECTS, IT GOT INCIDENT AL INCOME WHICH IS OTHERWISE PLOUGHED BACK FOR SELF- SUBSTANCE AND FOR CARRYING THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY, HENCE, IT CANNOT BE SAID THAT THE ASSESSEE SOCIETYS PRE-DOMINANT OBJECT I S CHANGED OR THAT IT HAS BEEN INDULGED IN COMMERCIAL ACTIVITY. 79. WE FIND THAT EXCEPT THE ABOVE COMMERCIAL EXPLOI TATION OF RIGHTS DURING THE HOLDING OF DAVIS CUP MATCH, THERE IS NO DISPUTE ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 102 THAT THE PRE-DOMINANT OBJECT OF THE ASSESSEE SOCIET Y IS PROMOTION OF GAME OF TENNIS INCLUDING THE SELECTION OF PLAYERS, TRAINING OF PLAYERS, AND CONDUCT OF MATCHES BOTH DOMESTIC AND I NTERNATIONAL. WE, THEREFORE, DO NOT THINK THAT THE OTHER INCOME O F THE ASSESSEE SUCH AS FROM NOMINAL REGISTRATION FEES OR NOMINAL C OACHING FEES WHICH IS CHARGED SO AS TO ATTRACT ONLY THE GENUINEL Y INTERESTED TRAINEES / PLAYERS CAN BE SAID TO BE ITS BUSINESS I NCOME AS IT SANS THE PROFIT MOTIVE. THE LD. COUNSEL HAS EXPLAINED IN DET AIL THAT THE HOLDING OF MATCHES FOR COMMERCIAL PURPOSE IS NOT A REGULAR FEATURE OR REGULAR ACTIVITY OF THE ASSESSEE. EVEN THE DAVI S CUP WAS ALSO ORGANIZED AS PART OF THE OBJECTS OF THE ASSESSEE A ND EVEN THE INCIDENTAL INCOME HAS BEEN PLOUGHED BACK AND APPLI ED FOR CARRYING THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY. THER EFORE, IN THE LIGHT OF THE DECISION MADE ABOVE, WE HOLD THAT THOUGH THE ASSESSEE CHANDIGARH LAWN TENNIS ASSOCIATION IS CARRYING OUT THE ACTIVITIES TOWARDS THE ADVANCEMENT OF OBJECTS OF GENERAL PUBLI C UTILITY, WHICH IS ITS DOMINANT ACTIVITY, HOWEVER, IT HAS ALSO INV OLVED IN CARRYING OUT THE INCIDENTAL ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS IN THE COURSE OF ACTUAL CARRYING OUT OF ADVANCEMEN T OF OBJECT OF GENERAL PUBLIC UTILITY BY WAY OF COMMERCI ALLY EXPLOITING THE RIGHTS OF HOSTING THE DAVIS CUP MATCH. HO WEVER, AS PER THE AMENDED PROVISIONS OF SECTION 2(15), 10(23C), 11(4) , 11(4A), 13(8) AND 143(3) OF THE INCOME TAX ACT AND IN VIEW OF OUR DISCUSSION AND INTERPRETATION OF THE RELEVANT PROVISIONS AS GIVEN ABOVE, THE INCOME ITA NO. 1382/CHD/2016- CHANDIGARH LAWN TENNIS ASSOCIATION, CHANDIGARH 103 OF THE ASSESSEE FROM THE INCIDENTAL AND COMMERCIAL ACTIVITY I.E. INCOME FROM ORGANIZING OF DAVIS CUP UP TO THE LIMIT PRESCRIBED AS PER THE SECOND PROVISO TO SECTION 2(15), WHICH FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS RS. 25 LACS, WILL BE TR EATED AS INCOME FROM CHARITABLE PURPOSES AND THE ASSESSEE WILL BE ENTITLED TO CLAIM THE EXEMPTION U/S 11 OF THE ACT UP TO THAT EXTENT I N RESPECT OF THE SAID INCOME ALONG WITH OTHER INCOME, IF ANY, FROM T HE NON-BUSINESS ACTIVITY OF THE ASSESSEE. HOWEVER, THE INCOME OVER AND ABOVE AMOUNT FOR RS. 25 LACS FROM THE BUSINESS ACTIVITY I .E. FROM THE EXPLOITATION OF ITS RIGHT TO HOLD DAVIS CUP WILL BE TREATED AS BUSINESS INCOME OF THE ASSESSEE AND WILL BE LIABL E TO INCLUDE IN ITS TOTAL INCOME. THE ASSESSING OFFICER, THEREFORE, IS DIRECTED TO BIFURCATE THE INCOME FROM COMMERCIAL ACTIVITY AND N ON-COMMERCIAL ACTIVITY AND ASSESS THE INCOME OF THE ASSESSEE AS D IRECTED ABOVE. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSE SSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.7.2018 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26.7.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR
Other Referred Cases
-
Laws Referred To
-
Consultation on Entity Formation
₹0
1:1 Consultation on FEMA Compliance
₹1
Tax Holiday Secrets for Startups
₹0
Sales Forecasting Sheet
₹100
No Objection Letter for Use of Property – Partnership Firm
₹0
When Global Talent Meets GST: The Huawei Secondment Ruling explained
Team Counselvise - March 09, 2026
Finance Bill, 2026: Key GST Reforms that will Reshape Compliance and Cash Flows
Team Counselvise - February 03, 2026
Minimum Alternate Tax (MAT): Comprehensive Overview and Key Changes under Finance Bill, 2026
Team Counselvise - February 06, 2026