Society for Participatory Research in Asia, New Delhi V. ITO (E), New Delhi

ITA 1553/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6550 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Charitable institution; Question of law
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL, NEW DELHI BENCHES, NEW DELHI SMC BENCH SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 1553/DEL/2015 A.Y. 2010-11 SOCIETY FOR PARTICIPATORY RESEARCH IN ASIA, 42, TUGHLAKABAD INSTITUTIONAL AREA, NEW DELHI 110 062 (PAN: AAATS1994H) VS. ITO(E), TRUST WARD-II, NEW DELHI ASSESSEE BY : MS. SHAILY GUPTA, CA DEPARTMENT BY: SHRI RAKESH KUMAR, SR. DR ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.1.2014 FOR THE A.Y. 2010-11 OF THE LD. CIT(A) -40, NEW DELHI RELATING TO ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ORDE R OF ASSESSMENT AND HAS FURTHER ERRED IN UPHOLDING THE DENIAL OF EXEMPTION CLAIMED UNDER SECTION 11 & 12 OF THE I.T. A CT. 2. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THAT THE REGISTRATION GRANTED TO THE SOCIETY UNDER SECTION 12A H AS NOT BEEN WITHDRAWN AND AS SUCH IT IS A FACT ACCOMPLI THAT ITS OBJECTS ARE-CHARITABLE. 2 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FAILED TO APPRECIATE THAT THE ASSESSEE SOCIETY IS A CHARIT ABLE INSTITUTION AND IS EXISTING FOR CHARITABLE PURPOSE WITHI N THE MEANING OF SECTION 2(15) OF THE I.T. ACT. 4. THAT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE IS HIT BY THE MISCHIEF OF PROVISO OF SECT ION 2(15) AND AS SUCH THE AO IS JUSTIFIED TO DENY THE EXEMP TION U/S 11(1) AND ACCORDINGLY CONFIRMED THE ACTION OF AO. IN F ACT, SUCH A FINDING HAS BEEN REACHED COMPLETELY RELYING ON THE CI T(A)-XXI, NEW DELHI ORDER FOR THE A Y 2009-10 IN THE ASSESSEE'S OW N CASE, AND THAT TO WITHOUT GOING IN TO THE MERITS OF THE ASSE SSEE'S CASE. THEREFORE, THE CIT(A) HAS COMPLETELY IGNORED AND OVER LOOKED THE ASSESSEE'S SUBMISSION BEFORE COMING TO THE CONCLUSION AND ALSO WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS ONLY E NGAGED IN PROVIDING TRAINING, ARRANGING CAPACITY BUILDING P ROGRAMMES, VOCATIONAL STUDIES, IMPARTING EDUCATION AND PROGRAM ON REMOVAL OF POVERTY. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FAILED TO COMPREHEND THAT THERE IS NEITHER ANY BASIS N OR THERE IS ANY MATERIAL, ON THE BASIS WHEREOF, ANY SUCH FINDING COULD BE ARRIVED. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS FURTHER ERRED IN SUSTAINING THE INTEREST LEVIED AND RE JECTING THE VARIOUS GROUNDS OF APPEAL RAISED BEFORE HIM SUMMARILY. IT IS THEREFORE PRAYED THAT THE ORDER OF CIT(A) AND THAT OF THE LD. ITO(E), TRUST WARD-II, DELHI BE SET ASIDE AND IT BE H ELD THAT THE DEMAND RAISED OF RS. 11,41,040/- WAS UNSUSTAINABLE BOTH ON LAW AND ON FACTS. 3 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR T HE ASSESSEE, AT THE VERY OUTSET STATED THAT ON THE SIMILAR ISSUES, THE APPEA LS OF THE ASSESSEE WERE ALLOWED BY THE ITAT VIDE ORDER DATED 27.5.2016 PASSED IN ITA NO. 2657/DEL/2013 FOR THE ASSESSMENT YEAR 2009-10 WHEREIN I T HAS BEEN HELD THAT INVOCATION OF PROVISO TO SECTION 2(15) OF THE ACT T O DENY CLAIM OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT IS NOT JUSTIFIED. ACCORDINGLY, GROUNDS OF APPEAL ARE ALLOWED. IT WAS FURTHER SUBMITTED THAT THE SAID ORDER OF THE ITAT HAS BEEN AFFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT. LD. A.R. OF THE ASSESSEE HAS FI LED A SMALL PAPER BOOK ENCLOSING THEREWITH THE COPY OF THE AFORESAID ORDE RS FOR RECORD. 4. IN HIS RIVAL SUBMISSIONS, THE LD. DR ALTHOUGH SUPPO RTED THE ORDER OF THE AO, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTI ONS OF THE LD. COUNSEL FOR THE ASSESSEE. 5. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HE PRESENT CASE, IT IS NOTICED THAT THE SIMILAR GROUNDS IN THE ASSESSMENT YEAR 20 09-10 WERE ALLOWED VIDE THE ORDER DATED 27.5.2016 BY THE G BENCH OF THE ITAT, DELHI PASSED IN ITA NO. 2657/DEL/2013 AND RELEVANT FINDI NG HAS BEEN GIVEN VIDE PARA NO. 7.1 & 8 OF THE SAID ORDER DATED 27.5.2013 W HICH READ AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. SECTIO N 2(15) OF THE ACT IS AMENDED BY THE FINANCE ACT, 2009 READS AS UNDER: 4 '2. DEFINITIONS.-IN THIS ACT, UNLESS THE CONTEXT OT HERWISE REQUIRES (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE PO OR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY; PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDE RATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR 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 ACTIVITIES REFERRED TO THEREIN IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR;' 5.1 CHARITABLE PURPOSE AS INDICATED ABOVE IS AN INC LUSIVE DEFINITION AND INCLUDES RELIEF OF THE POOR, EDUCATI ON, MEDICAL RELIEF, ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY AND 'PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST. AS REGARDS, THE PRO VISO INSERTED BY CIRCULAR NO. 11 OF 2008 DATED 19.12.2008 PROVIDES A S UNDER: 1. SECTION 2(15) OF THE INCOME-TAX ACT, 1961 (ACT ) DEFINES CHARITABLE PURPOSE TO INCLUDE THE FOLLOWING : I) RELIEF OF THE POOR II) EDUCATION III) MEDICAL RELIEF, AND IV) THE ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY. AN ENTITY WITH A CHARITABLE OBJECT OF THE ABOVE NAT URE WAS ELIGIBLE FOR EXEMPTION FROM TAX UNDER SECTION 11 OR ALTERNAT IVELY UNDER SECTION 10(23C) OF THE ACT. HOWEVER, IT WAS SEEN TH AT A NUMBER OF ENTITIES WHO WERE ENGAGED IN COMMERCIAL ACTIVITIES WERE ALSO CLAIMING EXEMPTION ON THE GROUND THAT SUCH ACTIVITI ES WERE FOR THE ADVANCEMENT OF OBJECTS OF GENERAL PUBLIC UTILITY IN TERMS OF THE 5 FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOS E. THEREFORE, SECTION 2(15) WAS AMENDED VIDEFINANCE ACT, 2008 BY ADDING A PROVISO WHICH STATES THAT THE ADVANCEMENT OF ANY O THER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE P URPOSE IF IT INVOLVES THE CARRYING ON OF (A) ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS; OR (B) ANY ACTIVITY OF RENDERING ANY SERVICE IN RELA TION TO ANY TRADE, COMMERCE OR BUSINESS; FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRES PECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION OF THE I NCOME FROM SUCH ACTIVITY. 2. THE FOLLOWING IMPLICATIONS ARISE FROM THIS AMEND MENT. 2.1 THE NEWLY INSERTED PROVISO TO SECTION 2(15) WIL L NOT APPLY IN RESPECT OF THE FIRST THREE LIMBS OF SECTION 2(15), I.E., RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF. CONSEQUENTLY, WH ERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELIEF OF THE POOR, ED UCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CHARITABLE PURPOSE EVE N IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITIES. 2.2 RELIEF OF THE POOR ENCOMPASSES A WIDE RANGE O F OBJECTS FOR THE WELFARE OF THE ECONOMICALLY AND SOCIALLY DISADVANTA GED OR NEEDY. IT WILL, THEREFORE, INCLUDE WITHIN ITS AMBIT PURPOSES SUCH AS RELIEF TO DESTITUTE, ORPHANS OR THE HANDICAPPED, DISADVANTAGE D WOMEN OR CHILDREN, SMALL AND MARGINAL FARMERS, INDIGENT ARTI SANS OR SENIOR CITIZENS IN NEED OF AID. ENTITIES WHO HAVE THESE OB JECTS WILL CONTINUE TO BE ELIGIBLE FOR EXEMPTION EVEN IF THEY INCIDENTA LLY CARRY ON A COMMERCIAL ACTIVITY, SUBJECT, HOWEVER, TO THE CONDI TIONS STIPULATED UNDER SECTION 11(4A) OR THE SEVENTH PROVISO TO SECT ION 10(23C) WHICH ARE THAT : (I) THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTA INMENT OF THE OBJECTIVES OF THE ENTITY, AND (II) SEPARATE BOOKS OF ACCOUNT SHOULD BE MAINTAIN ED IN RESPECT OF SUCH BUSINESS. SIMILARLY, ENTITIES WHOSE OBJECT IS EDUCATION OR MEDICAL RELIEF WOULD ALSO CONTINUE TO BE ELIGIBLE FOR EXEMPTION AS CHARITABLE INSTITUTIONS EVEN IF THEY INCIDENTALLY CARRY ON A C OMMERCIAL ACTIVITY SUBJECT TO THE CONDITIONS MENTIONED ABOVE. 3. THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL APPLY ONLY TO ENTITIES WHOSE PURPOSE IS ADVANCEMENT OF ANY OTHER OBJECT OF 6 GENERAL PUBLIC UTILITY I.E., THE FOURTH LIMB OF TH E DEFINITION OF CHARITABLE PURPOSE CONTAINED IN SECTION 2(15). HE NCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OR UNDER SECTION 10(23C) OF THE ACT IF THEY CARRY ON COMMERCIAL ACTI VITIES. WHETHER SUCH AN ENTITY IS CARRYING ON AN ACTIVITY IN THE NA TURE OF TRADE, COMMERCE OR BUSINESS IS A QUESTION OF FACT WHICH WI LL BE DECIDED BASED ON THE NATURE, SCOPE, EXTENT AND FREQUENCY OF THE ACTIVITY. 5.2 THUS THE AMENDED PROVISION OF SECTION 2(15) OF THE ACT WILL HAVE NO APPLICATION VIZ-A-VIZ THE CLAUSES OTHER THA N OBJECT OF GENERAL PUBLIC UTILITY. THE HONBLE COURT FURTHER IN THE CA SE OF INDIAN TRADE PROMOTION ORGANIZATION V. DGIT(E) 371 ITR 333 (DEL) ON EXAMINATION OF THE PROVISO, HAS HELD THAT THE PROVI SO HAS TWO PARTS. THE FIRST PART HAS REFERENCE TO THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE SECOND P ART HAS REFERENCE TO ANY ACTIVITY OF RENDERING ANY SERVICE 'IN RELATION TO' ANY TRADE, COMMERCE OR BUSINESS. BOTH THESE PARTS A RE FURTHER SUBJECT TO THE CONDITION THAT THE ACTIVITIES SO CAR RIED OUT ARE FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIV E OF THE NATURE OR USE OR APPLICATION OR RETENTION OF THE INCOME FROM SUCH ACTIVITIES. HOWEVER, IT WAS NOTED SPECIFICALLY THAT THE PROVISO APPLIES TO ONLY THE LAST PART OF THE CLAUSE OF SECTION 2(15) OF THE ACT I.E. OF ANY OTHER ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. THE HONBLE COURT HAS ALSO HELD THAT MERELY BECAUSE A F EE OR SOME OTHER CONSIDERATION IS COLLECTED OR RECEIVED BY AN INSTIT UTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTABLISHED FOR A CHARITABLE PURPOSE. IT HAS BEEN HELD THAT WHAT IS IMPORTANT IS TO EXAMINE AS TO WHAT IS THE DOMINANT ACTIVITY OF THE INSTITUTION. I F THE DOMINANT ACTIVITY OF THE INSTITUTION WAS NOT BUSINESS, TRADE OR COMMERCE, THEN ANY SUCH INCIDENTAL OR ANCILLARY ACTIVITY WOULD ALS O NOT FALL WITHIN 7 THE CATEGORIES OF TRADE, COMMERCE OR BUSINESS. IN THE AFORESAID JUDGMENT, IT HAS BEEN HELD AS UNDER: '27. AS OBSERVED ABOVE, FEE CHARGED AND QUANTUM OF INCOME EARNED CAN BE INDICATIVE OF THE FACT THAT THE PERSON IS CA RRYING ON BUSINESS OR COMMERCE AND NOT CHARITY, BUT WE MUST KEEP IN MI ND THAT CHARITABLE ACTIVITIES REQUIRE OPERATIONAL/RUNNING E XPENSES AS WELL AS CAPITAL EXPENSES TO BE ABLE TO SUSTAIN AND CONTINUE IN LONG RUN. THE PETITIONER HAS TO BE SUBSTANTIALLY SELF-SUSTAINING IN LONG-TERM AND SHOULD NOT DEPEND UPON GOVERNMENT, IN OTHER WORDS T AXPAYERS SHOULD NOT SUBSIDIZE THE SAID ACTIVITIES, WHICH NEV ERTHELESS ARE CHARITABLE AND FALL UNDER THE RESIDUARY CLAUSE GE NERAL PUBLIC UTILITY. THE IMPUGNED ORDER DOES NOT REFER TO ANY S TATUTORY MANDATE THAT A CHARITABLE INSTITUTION FALLING UNDER THE LAS T CLAUSE SHOULD BE WHOLLY, SUBSTANTIALLY OR IN PART MUST BE FUNDED BY VOLUNTARY CONTRIBUTIONS. NO SUCH REQUIREMENT HAS BEEN POINTED OUT OR ARGUED. A PRACTICAL AND PRAGMATIC VIEW IS REQUIRED WHEN WE EXAMINE THE DATA, WHICH SHOULD BE ANALYZED OBJECTIVELY AND A NA RROW AND COLOURED VIEW WILL BE COUNTER-PRODUCTIVE AND CONTRA RY TO THE LANGUAGE OF SECTION 2(15) OF THE ACT.' 5.3 IN FACT, IN AN EARLIER JUDGMENT DATED 26.09.201 3 , IN THE CASE OF CIVIL WRIT PETITION NO. 7797/2009 BETWEEN M/S GS1 INDIA AND DIRECTOR GENERAL OF INCCOME-TAX, THE ASSESSEE HAD A CQUIRED INTELLECTUAL PROPERTY RIGHTS FROM GS1 (BELGIUM) AND THEREAFTER RECEIVED REGISTRATION FEES FROM THIRD PARTIES IN IN DIA. THE HONBLE DELHI COURT HELD ON SUCH FACTS AS UNDER: '22. BUSINESS ACTIVITY HAS AN IMPORTANT PERVADING E LEMENT OF SELF- INTEREST, THOUGH FAIR DEALING SHOULD AND CAN BE PRE SENT, WHILST CHARITY OR CHARITABLE ACTIVITY IS ANTI-THESIS OF AC TIVITY UNDERTAKEN WITH PROFIT MOTIVE OR ACTIVITY UNDERTAKEN ON SOUND OR RECOGNIZED BUSINESS PRINCIPLES. CHARITY IS DRIVEN BY ALTRUISM AND DESIRE TO SERVE OTHERS, THOUGH ELEMENT OF SELF-PRESERVATION MAY BE PRESENT. FOR CHARITY, BENEVOLENCE SHOULD BE OMNIPRESENT AND DEMO NSTRABLE BUT IT IS NOT EQUIVALENT TO SELF-SACRIFICE AND ABNEGATION. THE ANTIQUATED DEFINITION OF CHARITY, WHICH ENTAILS GIVING AND REC EIVING NOTHING IN RETURN IS OUTDATED. A MANDATORY FEATURE WOULD BE; C HARITABLE ACTIVITY SHOULD BE DEVOID OF SELFISHNESS OR ILLIBER AL SPIRIT. ENRICHMENT 8 OF ONESELF OR SELF-GAIN SHOULD BE MISSING AND THE P REDOMINANT PURPOSE OF THE ACTIVITY SHOULD BE TO SERVE AND BENE FIT OTHERS. A SMALL CONTRIBUTION BY WAY OF FEE THAT THE BENEFICIARY PAY S WOULD NOT CONVERT CHARITABLE ACTIVITY INTO BUSINESS, COMMERCE OR TRADE IN THE ABSENCE OF CONTRARY EVIDENCE. QUANTUM OF FEE CHARGE D, ECONOMIC STATUS OF THE BENEFICIARIES WHO PAY, COMMERCIAL VAL UE OF BENEFITS IN COMPARISON TO THE FEE, PURPOSE AND OBJECT BEHIND TH E FEE ETC. ARE SEVERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUEST ION, IS IT BUSINESS?' 5.4 IT WAS FURTHER HELD AS UNDER: ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIV EN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARITAB LE PURPOSES. 5.5 IN THE SAID JUDGMENT, IT WAS CONCLUDED AS UNDER : THE CORRECT INTERPRETATION OF THE PROVISO TO SECTI ON 2(15) OF THE SAID ACT WOULD BE THAT IT CARVES OUT AN EXCEPTION F ROM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A C ESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DO MINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTAB LISHED FOR CHARITABLE PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRA DE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM IT S OBJECT TO BE A 'CHARITABLE PURPOSE'. 5.6 HAVING REGARD TO THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE APPELLANT SOCIETY HAS ENGAGED IN EDUCATION WHICH HAS BEEN ACCEPTED IN THE PRECEDING ASSESSMENT YEARS CONSISTE NTLY BY THE REVENUE IN ASSESSMENTS FRAMED UNDER SECTION 143(3) OF THE ACT. 9 6 COMING TO THE FACTS OF THE CASE, IT IS STATED THA T OBJECTIVES OF THE SOCIETY UNDER THE MEMORANDUM OF ASSOCIATION ARE AS UNDER: I. TO EXPLORE, DEVELOP, REFINE AND PROMOTE THE CONCEPT AND PRACTICE OF PARTICIPATORY RESEARCH; II. TO STRENGTHEN AND ADVANCE THE PARTICIPATORY RESEARC H NETWORK; III. TO PROMOTE RESEARCH, TRAINING, ACTION AND EDUCATION FOR PEOPLES PARTICIPATION IN DEVELOPMENTAL PROCESS NAT IONALLY AND INTERNATIONALLY; IV. TO CATALYZE, ADVOCATE AND SUPPORT USE OF PARTICIPAT ORY RESEARCH IN VARIOUS DEVELOPMENTAL PROJECTS AND PROG RAMS IN DIFFERENT COUNTRIES OF ASIA AND ELSEWHERE; V. TO USE PARTICIPATORY METHODOLOGIES TO PROMOTE AND E NHANCE DEMOCRATIC GOVERNANCE IN SOCIETY; VI. TO COLLABORATE AND MAINTAIN LINKS WITH OTHER NETWOR KS AND INSTITUTIONS FOR FULFILLING OBJECTIVES OF PRIA; VII. TO DISSEMINATE INFORMATION THROUGH ALL MEDIA-PRINT, ORAL OR ELECTRONIC; VIII. TO ESTABLISH AND MAINTAIN LIBRARIES, DOCUMENTATION AND RESOURCE CENTERS; IX. TO DEVELOP AND DISTRIBUTE LEARNING, PUBLIC EDUCATI ON AND ADVOCACY MATERIALS IN PRINT, AUDIO-VISUAL AND SOFTW ARE MODES AND TO CREATE FACILITIES FOR THE ACQUISITION, PRODUCTION, STORAGE AND DISSEMINATION OF THE SAME; X. TO ORGANIZE SEMINARS, WORKSHOPS, CONFERENCES, EXCHA NGE VISITS, STUDY TOURS ETC. ON ALL SUBJECTS OF INTERES T IN THE CONTEXT HEREOF FOR THE TIME BEING; XI. TO PROMOTE CONTINUING AND LIBERATING EDUCATION OF A DULTS IN PARTICULARLY THE UNDER PRIVILEGED AND DISEMPOWERED CITIZENS OF DIFFERENT SOCIETIES; XII. TO SPONSOR AND SUPPORT TRAINING PROGRAMS ON PARTICI PATORY RESEARCH AND ITS RELATED ASPECTS; XIII. TO PUBLISH BOOKS, PAPERS, MONOGRAPHS AND OTHER EDUC ATIONAL MATERIAL FOR FURTHERANCE OF THE OBJECTIVES OF PRIA; XIV. TO CONDUCT PROJECTS ON PARTICIPATORY RESEARCH AND R ELATED SUBJECTS BOTH ON ITS OWN AND ON BEHALF OF OTHERS; XV. TO SUPPORT, FUND AND COLLABORATE WITH SIMILAR PROJE CTS BEING CONDUCTED BY LIKE-MINDED INSTITUTIONS; XVI. TO PROMOTE NEW ORGANIZATIONS IN FURTHERANCE OF THE OBJECTIVES HEREOF; XVII. TO OFFER FELLOWSHIPS, SCHOLARSHIPS, PRIZES, STIPEND S, GRANTS ETC. IN FURTHERANCE OF THE OBJECTS OF PRIA; 10 XVIII. TO ISSUE APPEALS, PROPOSALS AND APPLICATIONS FOR MO NEY AND FUNDS IN FURTHERANCE OF THE SAID OBJECTS AND TO ACC EPT GIFTS, GRANTS, DONATIONS AND SUBSCRIPTIONS OF CASH AND SECURITIES AND OF ANY PROPERTY, MOVABLE OR IMMOVABLE; XIX. TO INVEST AND OTHERWISE DEAL WITH FUNDS AND MONEYS OF PRIA TO OPTIMIZE THE SAME, INCLUDING CREATION OF CORPUS FUND; AND TO VARY, ALTER OR TO TRANSPOSE SUCH INVESTMENTS FROM T IME TO TIME IN ACCORDANCE WITH LAWS OF THE LAND; XX. TO PURCHASE OR OTHERWISE ACQUIRE OR TAKE ON LEASE O R HIRE TEMPORARILY OR PERMANENTLY, ANY MOVABLE OR IMMOVABL E PROPERTY NECESSARY OR CONVENIENT FOR FURTHERANCE OF THE OBJE CTS OF PRIA; XXI. TO SELL, MORTGAGE, LEASE, EXCHANGE AND OTHERWISE TR ANSFER OR DISPOSE OF OR DEAL WITH ALL OR ANY PROPERTY, MOVABL E OR IMMOVABLE, OF PRIA FOR THE FURTHERANCE OF THE OBJECTS OF PRIA; XXII. TO CONSTRUCT, MAINTAIN, ALTER, IMPROVE OR DEVELOP A NY BUILDINGS OR WORKS NECESSARY OF CONVENIENT FOR THE OBJECTS OF PRIA; XXIII. TO CREATE ADMINISTRATIVE, ACADEMIC AND OTHER POSITI ONS NEEDED TO RUN PRIA AND TO MAKE APPOINTMENTS ACCORDI NGLY; XXIV. TO BORROW OR RAISE FUNDS ON MORTGAGE, PROMISSORY NO TES OR OTHER SECURITIES FOUNDED OR BASED UPON ALL OR ANY O F THE PROPERTIES OF PRIA OR WITHOUT ANY SECURITIES; XXV. TO MAKE RULES AND BYE-LAWS FOR CONDUCT OF THE AFFAI RS OF PRIA AND ADD TO, AMEND, VARY OR RESCINED THEM FROM TIME TO TIME; XXVI. TO DO, OR CAUSE TO GET DONE, ALL SUCH OTHER LAWFUL THINGS AS ARE CONDUCIVE OR INCIDENTAL TO THE ATTAINMENT OF TH E OBJECTS OF PRIA; XXVII. TO UTILIZE ALL INCOME OF PRIA TOWARDS PROMOTION OF AIMS AND OBJECTIVES OF PRIA ONLY. 6.1 WE NOTE THAT PURSUANT TO THE ABOVE OBJECTS, THE APPELLANT SOCIETY IN THE INSTANT YEAR, HAS DECLARED INCOME OF RS. 21,46,38,866/- , THE BREAK-UP OF THE AFORESAID INCOME IS AS UNDER: A) RESEARCH AND TRAINING GRANTS - RS. 15,91,42,03 9/- B) CONTRIBUTION RS. 4,18,69,272/- C) OTHER INCOME RS. 1,36,27,555/- 6.2 ACCORDING TO THE LEARNED ASSESSING OFFICER, SIN CE IN THE INSTANT YEAR, THERE WAS SURPLUS OF RS. 1.09 CRORES, THE SAME CLEARLY SHOWS THE PROFIT MOTIVE BEHIND THE ACTIVITIES CARRI ED OUT BY THE APPELLANT SOCIETY. IT HAS BEEN HELD THAT RECEIPTS O F THE APPELLANT 11 SOCIETY ARE CONTRACTUAL IN NATURE ON ACCOUNT OF DED UCTION OF TDS. FURTHER, IT HAS BEEN ALSO HELD THAT SINCE THE RECEI PTS FROM EDUCATIONAL ACTIVITIES IS ONLY RS. 20.65 LACS OUT O F TOTAL RECEIPTS OF RS. 21.46 CRORES DECLARED DURING THE YEAR, THEREFOR E ACTIVITIES OF THE APPELLANT CANNOT BE CONSIDERED TO BE EDUCATION. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER HAS ASSAILED THE ABOVE CON CLUSION BY POINTING OUT THAT CONSISTENTLY THAT THE REVENUE ITS ELF HAS ACCEPTED THAT THE APPELLANT IS ENGAGED IN EDUCATION. 6.3 WE FIND THAT IN THE YEAR 1984-85, IN THE CASE O F THE APPELLANT SOCIETY IN ITA NO. 4791/DEL/86, THE CLAIM OF THE AP PELLANT UNDER SECTION 10(22) OF THE ACT WAS DENIED AND THE MATTER TRAVELLED TO THE TRIBUNAL. ON APPEAL BY THE REVENUE, CLAIM OF EXEMP TION STOOD ACCEPTED BY TRIBUNAL. THE TRIBUNAL IN AN ORDER DAT ED 30.7.1987 HAS HELD AS UNDER: 4. AFTER TAKING INTO CONSIDERATION OF THE RIVAL S UBMISSIONS AND LOOKING TO THE FACTS TO AND GOING THROUGH SEC.10(22 ) AS PER WHICH ANY INCOME OF SOCIETY OR OTHER EDUCATIONAL INSTITUT IONS EXISTING SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE S OF PROFIT WILL NOT FORM PART OF THE TOTAL INCOME. WE ARE UNABLE TO INTERFERE IN THE FINDING OF THE AAC. THE ASSESSEE SOCIETY HAS BEEN P URSUING SOME ACTIVITIES AS IN THE PAST WHICH COMPRISED OF EDUCAT IONAL WORKSHOP AND TRAINING PROGRAMME FOR FIELD WORKER WHO ARE ENG AGED IN RURAL AND URBAN DEVELOPMENT AREAS IN INDIA. IT WAS IN ORD ER TO SUPPORT THE ABOVE EDUCATIONAL PROGRAMME THAT THE SOCIETY HAD CO NDUCTED SPECIAL WORKSHOP AND PRINTING AND LEARNING MATERIAL ABOUT THE THEME. WE ARE IN AGREEMENT WITH THE LEARNED APPELLA TE ASSTT. COMMISSIONER THAT THE BOOKS PUBLISHED FOR PURELY ED UCATIONAL PURPOSE, THE INCOME FROM THE SAME DESERVES TO BE EX EMPT U/S. 10(22). ACTION OF THE AAC IS, THEREFORE CONFIRMED A ND IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. 6.4 MOREOVER, WE ALSO NOTICE THAT THE ASSESSING OFF ICER IN THE ORDER FOR ASSESSMENT YEAR 1994-95 UNDER SECTION 143 (3) OF THE ACT HAS HELD AS UNDER: 12 THERE IS NO CHANGE IN THE AIMS, OBJECTS AND ACTIV ITIES OF THE SOCIETY. THE SOCIETY IS ENGAGED IN EDUCATIONAL ACTIVITIES LI KE TRAINING FOR ADULT EDUCATION, TRAINING OF TRAINERS, EDUCATIONAL PROGRAMMES FOR RURAL AND URBAN FIELD LEVEL WORKERS, TRAINING PROGR AMME ON OCCUPATIONAL HEALTHY RELATED ACTIVITIES ETC. ETC. T HE ACTIVITIES OF THE SOCIETY ARE COVERED U/S 10(22) OF THE ACT AND, THER EFORE, ITS INCOME IS ASSESSED AT RS. NIL. 6.5 FROM THE AFORESAID, IT IS APPARENT THAT THE ACT IVITIES OF THE APPELLANT HAVE BEEN ACCEPTED TO BE WITHIN THE SCOPE OF EDUCATION UNDER SECTION 2(15) OF THE ACT AND ALSO UNDER SECTI ON 10(22) OF THE ACT. IN SUCH CIRCUMSTANCES, THE CONCLUSION OF THE A SSESSING OFFICER TO HOLD THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT IN THE NATURE OF EDUCATION ONLY ON THE PRETEXT THAT INCOME FROM EDUC ATION IS CONFINED TO DISTANCE LEARNING COURSE FEE OF RS. 20.65 LACS O UT OF TOTAL RECEIPTS OF RS. 21.45 CRORES IS INCORRECT. ON THE C ONTRARY, WE NOTICE THAT THE ACTIVITIES OF THE APPELLANT ARE IN THE NAT URE OF PARTICIPATORY RESEARCH. IN THE ORDER OF ASSESSMENT OF THE APPELLA NT FOR ASSESSMENT YEAR 1983-84, IT HAS BEEN OBSERVED THAT THE PARTICI PATORY RESEARCH IS A NEW DEVELOPMENT OF THE LAST DECADE AND WAS ARISEN OUT OF THE EXPERIENCE OF GRASSROOTS EDUCATIONAL EFFORTS IN THE THIRD WORLD COUNTRIES. IT HAS BEEN NOTED THAT THE PARTICIPATORY RESEARCH CAN BE UTILIZED DEPEND UPON THE NEEDS OF THE POOR AND DEPR IVED. IT HAS BEEN NOTED THAT IT HAS WORKED ON THE PROBLEMS OF FOREST, LAND, RURAL DEVELOPMENT, DRINKING WATER, PRIMARY HEALTH CARE, W OMENS INCOME GENERATING EFFORTS, OCCUPATIONAL AND ENVIRONMENTAL HEALTH ETC. THE APPELLANT HAS ALSO EMPHASIZED THAT IT WORK WITH THE COMMUNITY ORGANIZERS, ADULT EDUCATOR, HEALTH CARE WORKERS, SO CIAL WORKERS ETC. IN TRAINING THEM TO USE PARTICIPATORY RESEARCH METH ODOLOGY IN THEIR WORK. THE APPELLANT PRODUCES OWN EDUCATIONAL MATER IALS FOR USE IN EDUCATIONAL PROGRAMMES AND FOR WIDER DISSEMINATION. 13 6.6 SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN THE CAS E OF PRAXIS INSTITUTE OF PARTICIPATORY PRACTICES V. DIT(E) 154 ITD 10 (DEL) WHEREIN IT HAS BEEN HELD AS UNDER: HAVING GONE THROUGH THE ACTIVITIES OF THE ASSESSEE MADE AVAILABLE AT PAGE NOS. 101, 113, 130, 141, 151, 156 ETC. OF T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE ABOUT THE ACTIVITIE S OF THE ASSESSEE, WE FIND THAT FOR CARE INDIA, THE TASK INVOLVES ON THE PART OF THE ASSESSEE IS PLANNING AND CONDUCTING CAPACITY BUILDING PROGRA M FOR STATE LEAD AND IMPLEMENTING PARTNERS, FIELD VISITS AND FACILIT ATION OF REFLECTION PROCESS OF THE ORGANIZATION DEVELOPMENT ETC. MAINLY IN RESPECT OF HIV AND SEX WORKERS. AT PAGE NOS. 8 & 9 OF THE ANNU AL REPORT RELEVANT ACTIVITIES AND PHOTOGRAPH STUDY FOR COMMUN ITY MOBILIZATION HAVE BEEN PROVIDED. FOR THE LEPROSY MISSION TRUST I NDIA (TLM) THE ROLE OF THE ASSESSEE IS TO FOCUS ITS APPROACH TO WO RK WITH PEOPLE AND COMMUNITIES EFFECTED LEPROSY AND DISABILITY AND TO ADDRESS POVERTY AND INDUSTRIES THROUGH ENHANCED QUALITY PEOPLE CENT ERED INTERVENTION. ONE OF THE POINTS TO BE ENSURED BY TH E ASSESSEE IS THE KEY AREA, WHERE CAPACITY IS LACKING AT THE FIELD LE VEL AND ALSO TO MAKE FIELD VISITS TO PROJECTS WHERE NEEDED. THE ASS ESSEE WAS TO VISIT SELECTED PROJECT LOCATIONS IN DELHI TO EXPLORE ALTE RNATIVE TO THE EXISTING STRUCTURE AND SYSTEM. FIELD WORK WILL BE O RGANIZED TO SENSITIZED THE USAGES OF THE PARTICIPATORY APPROACH ES, REQUIREMENT OF PARADIAGRAM SHIFT FROM TECHNICAL TO COMMUNITY CENTR IC APPROACHES. SEMI-STRUCTURED INTERVIEWS WILL BE HELD WITH THE LE PROSY EFFECTED, DISABILITY, SOCIALLY EXCLUDED PEOPLE TO KNOW ABOUT THEIR ASPIRATIONAL AND ATTITUDINAL BEHAVIOR WHICH THEY AR E LOOKING FOR. THE ASSESSEE WILL ALSO HOLD DISCUSSION WITH OFFICIALS O F LEPROSY MISSION. PAGE NO. 10/A OF THE ANNUAL REPORTS CONTAINS THE RE LEVANT ACTIVITIES AND PAGE 19C CONTAINS PHOTOGRAPH DEPICTING THE PLAN S. FOR THE PLAN INTERNATIONAL ( A CHILD RIGHTS ORGANIZATION WORKING TO ELEVATE CHILD POVERTY) THE OBJECTIVE IS TO UNDERSTAND THE CC BASE D MICROPLANNING THROUGH CLASSROOMS AND FIELD BASED TRAINING EVOLVES A PROCESS AND IDENTITY MYTHOLOGY FOR A PARTICIPATORY NEEDS ASSESS MENT TO DEVELOP LINE CENTERED COMMUNITY LEVEL MICROPLAN AND FIELD W ORK ETC., PAGE NOS. 18/19A OF THE ANNUAL REPORT CONTAINS THE RELEV ANT ACTIVITIES AND PHOTOGRAPHS DEPICTING THEREIN ONLINE HIGH AND MICRO LEVEL PLANNING FOR UNICEF, THE TASK OF THE ASSESSEE INVOLVE FIXING UNDERSTANDING THE LIVING CONDITION OF THE TRIBAL PEOPLE AND DYNAM ICS OF THEIR SOCIAL EXCLUSION (PAGE NO. 16 OF THE ANNUAL REPORT CONTAIN S THE RELEVANT ACTIVITIES AND PHOTOGRAPHS DEPICTING THE IMMERSIONA L LENDING 14 PROGRAM). FOR INTERNATIONAL LABOUR OFFICE (ILO), TH E TASK OF THE ASSESSEE IS TO CARRY OUT RAPID ASSESSMENT ON THE VU LNERABILITY OF WORKERS TO BONDAGES/LABOUR EXPLOITATION IN TAMILNAD U BY ORGANIZING SEPARATE WORKS JOB/CONSULTATION MEETINGS WITH EMPLOYER, NGOS AND GOVERNMENT ETC. ALSO TO FIND OUT SPECIFIC ISSUES OF WOMEN WORKERS SUCH AS CHILD CARE INCLUDING SEXUAL HARASSM ENT/VIOLENCE ETC. PAGE NO. 12 OF THE ANNUAL REPORT CONTAINS THE RELEVANT ACTIVITIES AND PHOTOGRAPHS DEPICTING THE LIVING AND WORKING CO NDITION OF WORKERS. 17. FOR PELLASTAKAA LASPSET-RADDA BANEN(SAVE THE CH ILDREN, CONTRACT FINLAND), THE ASSESSEE WAS ENTRUSTED TO UN DERTAKE THE STUDY ON QUALITATIVE BASE LINE IN EIGHT VILLAGE OF SOUTHE RN RAJASTHAN FOR FORMULATING AN EDUCATIONAL MODEL FOR PROMOTING AND PROTECTING THE RIGHTS OF CHILDREN OF INDIGENOUS COMMUNITY THROUGH A RIGHT BASED APPROACH IN THE AREA OF ROOT CAUSES OF VIOLATION OF RIGHTS OF CHILDREN, NATURE AND IMPACT OF SUCH VIOLATION ETC. 18. WE FIND THAT DURING THE YEAR, THE ASSESSEE UNDE RTOOK 25 SUCH PROJECTS, THE DETAILS OF WHICH WERE SUBMITTED BEFOR E THE AUTHORITIES BELOW BUT THE LEARNED CIT(APPEALS) OR THE ASSESSING OFFICER DID NOT DETERMINE THE NATURE OF THE ACTIVITIES FOR THE VERY PURPOSE OF THE OBJECTS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE INVOLVES IN CARRYING ON THE ACTIVITIES IN THE NATUR E OF RENDERING SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINESS AS ASSESSEE IS PROVIDING CONSULTANCY, WORKSHOP, TRAINING PROGRAM, CONDUCTING RESEARCH ON BEHALF OF OTHER AGENCIES. THUS, WE FIND THAT THE ABOVE VIEW OF THE ASSESSING OFFICER WAS BASED UPON THE FA CT THAT ASSESSEE IS PROVIDING CONSULTANCY, WORKSHOP AND TRAINING PRO GRAM ETC. WE ARE OF THE VIEW THAT THE ACTIVITIES OF THE ASSESSEE CAN IN NO WAY BE COVERED IN TRADE, COMMERCE ETC. AS IT IS NOT CHARGI NG ANY FEE FROM THE BENEFICIARIES WHO ARE POOR COMMUNITIES. IT IS A LSO WORTH NOTING THAT THE NGOS WHO HAVE ENGAGED THE ASSESSEE ARE ITS ELF CHARITABLE INSTITUTIONS LIKE WHO, UNICEF ETC. AND THEY ENSURE THAT THE GRANT ETC. GIVEN TO THE ASSESSEE ARE FULLY UTILIZED ONLY FOR THE PURPOSE OF CHARITABLE ACTIVITIES AND NOT FOR ANY BUSINESS. THE ASSESSEE DID NOT HAVE ANY RECEIPT IN EXCESS OF EXPENDITURE DURING TH E YEAR. THE BOOKS OF ACCOUNT CLEARLY SHOW THAT NO AMOUNT OF CURRENT R ECEIPT OR OUT OF UNUTILIZED RECEIPT OF THE PAST HAS BEEN TREATED AS PROFIT IN THE SENSE IT WOULD BE TREATED, HAD IT BEEN A BUSINESS AND THAT N O AMOUNT HAS EVER BEEN GIVEN TO ANY MEMBER OF THE BOARD OF THE S OCIETY OR ANY MEMBER OF THE ASSESSEE SOCIETY EXCEPT THE REIMBURSE MENT OF EXPENSES INCURRED IN CONNECTION WITH THE BOARD'S ME ETING. IT IS ALSO 15 NOT THE CASE OF THE DEPARTMENT THAT ANY PART OF PRO FIT OR GAIN SHOWN AS RECEIPT OVER EXPENDITURE HAS BEEN TRANSFERRED TO ANY MEMBER OF THE SOCIETY. THUS, THE ACTIVITY OF THE ASSESSEE SOC IETY IS CERTAINLY NOT FOR MAKING PROFIT AND IT IS CERTAINLY NOT IN THE NA TURE OF ANY TRADE, BUSINESS OR COMMERCE, SO AS TO BE HEADED BY THE FIR ST PROVISO TO SEC. 2(15) OF THE ACT EVEN IF IT IS TREATED AS ADVANCEME NT OF ANY GENERAL PUBLIC UTILITY. SIMILAR ARE THE FACTS IN THE CASE O F SOCIETY FOR ESSENTIAL HEALTH ACTION & TRAINING (SUPRA). IN THAT CASE ALSO, THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 42 LACS FROM SAS FOR RESEARCH CONDUCTING ON IMPLEMENTATION OF VARIOUS ME DICINE RELATED TO CHILDREN INVOCATION. THIS RESEARCH WAS PART OF T HE RESEARCH ACTIVITIES WHICH WERE TO BE CARRIED OUT BY SAS, BUT SAS COULD NOT CARRY OUT. THIS RESEARCH WAS CARRIED OUT BY THE ASS ESSEE SOCIETY IN PURSUANCE OF A WRITTEN ARRANGEMENT WITH SAS. AS PER THE ARRANGEMENT/AGREEMENT, THE ASSESSEE PROVIDED TECHNO -MEDICAL RESEARCH SUPPORT AND COMPILATION OF DATA IN A PROJE CT CALLED 'ROTA VIROS' . IN CONSIDERATION THEREAFTER, SAS AGR EED TO PAY THE ASSESSEE A LUMP SUM AMOUNT OF RS. 50 LACS. IT WAS T ERMED AS SERVICE FEE. THE ASSESSING OFFICER CONSTRUED THE ABOVE SAID AGREEMENT TO BE A COMMERCIAL AGREEMENT. THE SERVICES PROVIDED BY TH E ASSESSEE TO SAS WERE TAKEN AS BEING OF COMMERCIAL NATURE. THE A SSESSING OFFICER HELD THAT THE PROVISO TO SEC. 2(15) OF THE ACT IS APPLICABLE TO 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND NOT TO CHARITABLE ORGANIZATION ENGAGED IN PROVIDING EITHER RELIEF TO THE POOR OR MEDICAL RELIEF OR EDUCATION AND THAT SINCE THE ACTI VITIES OF THE ASSESSEE DID NOT FALL UNDER EITHER RELIEF TO THE PO OR OR MEDICAL RELIEF OR EDUCATION, IT COULD BE SAFELY PRESUMED THAT THEY FALL UNDER THE CATEGORY OF GENERAL PUBLIC UTILITY', THAT FOR SUCH ACTIVITIES, THE ASSESSEE WAS RECEIVING CONTRACTUAL INCOME, IRRESPEC TIVE OF WHETHER IT RESULTED IN PROFIT OR LOSS AND THAT AS SUCH, THE AS SESSEE HAD VIOLATION OF THE PROVISIONS OF SECTION 2(15) OF THE ACT, THAT SINCE THE ASSESSEE DID NOT FALL WITHIN THE SCOPE 'CHARITABLE PURPOSE', AS DEFINED IN SEC. 2(15) OF THE ACT, THE BENEFIT OF SEC. 11/12 OF THE ACT WAS BEING DISALLOWED TO THE ASSESSEE FOR THE YEAR UNDER CONSI DERATION. THE ASSESSING OFFICER ALSO SENT A PROPOSAL FOR WITHDRAW AL OF REGISTRATION TO THE ASSESSEE UNDER SEC. 12AA OF THE ACT TO THE D IT(E), SEPARATELY. THE GRIEVANCE OF THE REVENUE BEFORE THE ITAT WAS TH AT THE LEARNED CIT(APPEALS) HAS ERRONEOUSLY HELD THE ACTIVITIES OF THE ASSESSEE SOCIETY TO BE FALLING UNDER 'ADVANCEMENT OF ANY OTH ER OBJECT OF GENERAL PUBLIC UTILITY' AS DEFINED THEREIN. THE ITA T HELD THAT THE AIMS AND OBJECTS OF THE ASSESSEE SOCIETY, AS PER IT S MEMORANDUM OF ASSOCIATION INCLUDES MEDICAL RESEARCH AND INFORMAL EDUCATION AND COMMUNICATION ACTIVITIES OF HEALTH AND NUTRITIONAL ISSUE FOR URBAN 16 SLUM AND RURAL COMMUNITIES. THE ITAT THUS HELD THAT THE ACTIVITIES IN QUESTION IS UNDISPUTEDLY THE ACTIVITY OF RESEARCH I .E. TECHNO MEDICAL RESEARCH SUPPORT FOR RESEARCH AND COMPILATION OF DA TA ON ACCOUNT OF 'ROTA VIRUS' TO SAS. THEREFORE, THE ACTIVITY CAR RIED ON BY THE ASSESSEE CANNOT BE SAID TO BE BEYOND ITS MAIN AIMS AND OBJECTS. IT ALSO REMAINS IRREFUTABLE THAT THE ASSESSEE SOCIETY CONTINUES TO ENJOY REGISTRATION UNDER SEC. 12A OF THE ACT, AS A CHARIT ABLE TRUST, CONFIRMING THAT THE CHARITABLE PURPOSES FOR WHICH T HE ASSESSEE SOCIETY WAS ESTABLISHED REMAINS UNCHANGED. THE ACTI VITIES OF ASSESSEE DURING THE YEAR WAS IN PURSUANCE OF SUCH P URPOSES THEREAFTER FOLLOWING THE RATIO LAID DOWN BY THE CO- ORDINATE BENCH OF THE ITAT IN THE CASE OF HARNAM SINGH HARBANS KAUR V . DIT (EXEMPTION) [2012] 49 SOT 387/17 TAXMANN.COM 103, DELHI , THE ITAT UPHELD THE ACTION OF THE LEARNED CIT(APPEALS). AS PER THE CITED DECISIONS, CHARITABLE INSTITUTION REGISTERED UNDER SEC. 12A OF THE ACT AND CARRYING THE ACTIVITIES IN THE NATURE O F CHARITY, CANNOT BE HELD TO BE ENGAGED IN THE ACTIVITY OF ADVANCEMENT O F ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 19. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HYDERABA D BENCH OF THE ITAT IN THE CASE OF GVK EMRI (UP)(SUPRA). SIMILAR A RE FACTS IN THE CASE OF ASSESSEE AS MOST OF THE NGOS RELATED TO WHO /UNO ETC. DO NOT HAVE ANY EXPERIENCE OF CONNECTING/COLLECTING TH E POOR AND NEEDY PEOPLE LIKE DESTITUTE ORPHANS, SEX WORKERS, DRUG AD DICTS IN WHICH ASSESSEE SOCIETY HAS GAINED EXPERIENCE OVER A PERIO D OF TIME AND HAS CAPACITY TO COLLECT THESE PARTICULARS CLASSES OF PE OPLE AND MOTIVATE THEM TO GET OUT OF IT. BESIDES, THERE IS NO CHANGE IN THE ACTIVITY OF THE ASSESSEE WHICH ALL ALONG HAS BEEN COVERED UNDER THE FIRST THREE LIMBS OF CHARITABLE ACTIVITIES LAID DOWN UNDER SEC. 2(15) OF THE ACT AS IN THE ASSESSMENT YEARS FOR 2006-07, 207-08 AND 2008-0 9 IN THE ASSESSMENT FRAMED UNDER SEC. 143(3), THE ACTIVITIES OF THE ASSESSEE TRUST HAVE BEEN TREATED AS CHARITABLE IN NATURE AND WITHIN THE MEANING OF SEC. 2(15) OF THE ACT. AS DISCUSSED ABOV E, THE ACTIVITIES OF THE ASSESSEE FIRSTLY CANNOT BE TREATED AS ADVANCEME NT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY NOR IT CAN BE SAID THAT THE ACTIVITY OF THE ASSESSEE INVOLVES THE CARRYING OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. RESPECTFULLY FOLLOWING THE ABOVE REFERRED DECISIONS ON IDENTICAL ISSUES ON ALMOST SIMILAR FAC TS AS OF THE PRESENT ASSESSEE BEFORE US, WE HOLD THAT THE ACTIVITIES AS DISCUSSED HEREINABOVE OF THE PRESENT ASSESSEE CANNOT BE HELD TO BE ENGAGED IN THE ACTIVITY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC 17 UTILITY. THE ACTIVITIES CARRIED ON BY THE ASSESSEE CANNOT BE SAID TO BE BEYOND ITS MAIN AIMS AND OBJECTS AND IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE SOCIETY CONTINUED TO ENJOY REGIST RATION UNDER SEC. 12A OF THE ACT AS A CHARITABLE TRUST AND THAT THE C HARITABLE PURPOSE FOR WHICH THE ASSESSEE SOCIETY WAS ESTABLISHED REMA INED UNCHANGED. UNDER THE CIRCUMSTANCES, WE WHILE SETTING ASIDE THE FIRST APPELLATE ORDER AS WELL AS ORDER OF THE LEARNED DIT(E) DIRECT THE ASSESSING OFFICER TO ALLOW THE ASSESSEE THE CLAIMED EXEMPTION UNDER SEC. 11(12) OF THE ACT AND THE LD. DIT(E) IS DIRECTED TO ALLOW THE APPLICATION OF THE ASSESSEE FOR CONTINUANCE OF THE APPROVAL GRANTED UNDER SEC. 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. THE GROUNDS OF THE APPEALS ARE THUS ALLOWED IN FAVOUR OF THE ASSES SEE. 6.7 ALSO HONBLE DELHI HIGH COURT IN THE CASE OF CI T V. PRAXIS INSTITUTE OF PARTICIPATORY PRACTICES ITA NO. 672/20 15 DATED 23.9.2015 APPROVING THE ABOVE JUDGMENT HAS HELD AS UNDER: 3 THE QUESTION THAT AROSE IS WHETHER THE ACTIVITIE S OF THE ASSESSEE WOULD FALL WITHIN THE SCOPE OF GENERAL PU BLIC UTILITY UNDER SECTION 2(15) OF THE ACT AND WHETHER THE ASSESSEE I S THEREFORE ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12 OF T HE ACT? 4 THE ITAT HAS RETURNED A FACTUAL FINDING, AFTER AN ALYZING THE DOCUMENTS ON RECORD, THAT THE ACTIVITIES OF THE ASS ESSEE CAN IN NO WAY BE TERMED AS TRADE AND COMMERCE ETC. AS IT IS N OT CHARGING ANY FEE FROM THE BENEFICIARIES WHO BELONG TO THE POOR C OMMUNITIES. THE ITAT ALSO NOTED THAT THE NGOS LIKE THE WHO, UNICEF ETC. WHICH HAVE ENGAGED THE ASSESSEE ARE THEMSELVES CHARITABLE INSTRUCTIONS. THEY ENSURE THAT THE GRANTS GIVEN TO THE ASSESSEE A RE UTILIZED FOR THE PURPOSE OF CHARITABLE ACTIVITIES AND NOT FOR ANY BU SINESS. THE CONSULTANTS FEES WERE ALSO PAID OUT OF SUCH GRANTS . FURTHER, THE REVENUE WAS NOT ABLE TO SHOW THAT ANY PART OF THE P ROFIT OR GAINS HAS BEEN TRANSFERRED TO ANY MEMBER OF THE ASSESSEE SOCI ETY. 7. AS REGARDS THE BASIS OF SURPLUS, THE HONBLE APEX C OURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY V. CIT 372 ITR 699 HAS REFERRED TO THE JUDGMENT IN THE CASE OF AMERICAN HOTEL & LODGING ASSOCIATION, EDUCATIONAL INSTITUTE V. CBDT 301 ITR 86 (SC) AND NOTED AS UNDER : 18 11. THUS, THE LAW COMMON TO SECTION 10(23C)(IIIAD ) AND (VI) MAY BE SUMMED UP AS FOLL0WS: (1) WHERE AN EDUCATIONAL INSTITUTION CARRIES ON TH E ACTIVITY OF EDUCATION PRIMARILY FOR EDUCATING PERSO NS, THE FACT THAT IT MEAKS A SURPLUS DOES NOT LEAD TO T HE CONCLUSION THAT IT CEASES TO EXIST SOLELY FOR EDUCA TIONAL PURPOSES AND BECOMES AN INSTITUTION FOR THE PURPOSE OF MAKING PROFIT. (2) THE PREDOMINANT OBJECT TEST MUST BE APPLIED THE PURPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKING MOTIVE. (3) A DISTINCTION MUST BE DRAWN BETWEEN THE MAKING OF A SURPLUS AND AN INSTITUTION BEING CARRIE D ON FOR PROFIT. NO INFERENCE ARISES THAT MERELY BECAU SE IMPARTING EDUCATION RESULTS IN MAKING A PROFIT, IT BECOMES AN ACTIVITY FOR PROFIT. (4) IF AFTER MEETING EXPENDITURE, A SURPLUS ARISES INCIDENTALLY FROM THE ACTIVITY CARRIED ON BY THE EDUCATIONAL INSTITUTION, IT WILL ONT BE CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES. (5) THE ULTIMATE TEST IS WHETHER ON AN OVERALL VIE W OF THE MATTER IN THE CONCERNED ASSESSMENT YEAR THE OBJECT IS TO MAKE PROFIT AS OPPOSED TO EDUCATING PERSONS. 7.1 THE HONBLE COURT IN THE AFORESAID JUDGMENT AFF IRMED THE JUDGMENT OF THE PUNJAB & HARYANA HIGH COURT N THE C ASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUST V. UOI 327 ITR 73 WHEREIN IT WAS HELD THAT MERELY BECAUSE PROFITS HAV E RESULTED FROM THE ACTIVITIES OF IMPARTING EDUCATION, IT WOULD NOT RESULT IN CHANGE OF CHARACTER OF THE EDUCATION THAT IT WAS SOLELY FOR E DUCATIONAL PURPOSE. 8 THUS, RESPECTFULLY FOLLOWING THE AFORESAID JUDGME NTS, WE HOLD THAT THE INVOCATION OF PROVISO TO SECTION 2(15) OF THE ACT TO DENY CLAIM OF EXEMPTION UNDER SECTION 11 AND 12 OF THE A CT IS NOT JUSTIFIED. ACCORDINGLY, GROUNDS OF APPEAL ARE ALLOW ED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. 19 6. THE AFORESAID ORDER OF THE ITAT HAS BEEN AFFIRME D BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ITS ORDER DATED 25.11.20 16 IN ITA 845/2016 & CM NO. 43732/2016 BY HOLDING AS UNDER:- THE STANDARD QUESTION OF LAW SOUGHT TO BE URGED IS WHETHER HAVING REGARD TO THE FACTS OF THE CASE THE INCO ME TAX APPELLATE TRIBUNAL (ITAT) ACTED IN ACCORDANCE WITH LAW IN HOLDING THAT THE PROVISO TO SECTION 2(15) OF THE I NCOME TAX ACT, 1961 WAS NOT ATTRACTED SO AS TO DENY THE BENEF IT OF SECTION 11 OF THE ACT. THE ASSESSEE WAS A RECIPIENT OF RESEARCH AND TRAINING GRANT AND OTHER INCOME TO THE TUNE OF RS. 1.36 CRORES. THE AO DETERMINED THAT THE LATTER WERE COMMERCIAL RECEIPTS AND GUIDED BY PROVISO TO SECTION 2(15) AND HEL D THAT THE ASSESSEE COULD NOT AVAIL THE BENEFIT UNDER SECTIO N 11(23) OF THE ACT. THE ITAT RELIED UPON THE JUDGEMEN T IN THE CASE OF INDIA TRADE PROMOTION ORGANISATION VS. DIRECTOR GENERAL OF INCOME TAX (2015) 371 ITR 333 WHI CH HAD OBSERVED THAT AS LONG AS THE PREDOMINANT ACTIVITY OF AN INSTITUTION IS NOT BUSINESS OR COMMERCE, AND THAT THE SO CALLED SUSPECT INCOME IS DERIVED ON THE BASIS OF SOME SUBSIDIARY OR INCIDENTAL ACTIVITY, THE EXEMPTION CANNOT BE DENIED. THIS COURT NOTICES THAT THE REASONING IN INDIA TRADE PROMOTION ORGANIZATION (SUPRA) HAS BEEN AFFIRMED AN D APPLIED IN SEVERAL OTHER JUDGMENTS, THEREFORE, NO QU ESTION OF LAW ARISES. THE APPEAL IS, CONSEQUENTLY, DISMISSED. 20 7. I THEREFORE, AFTER CONSIDERING THE TOTALITY OF TH E FACTS AS DISCUSSED HEREINABOVE, IS OF THE VIEW THAT THE ISSUES INVOLVED IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ITAT DECISI ON DATED 27.5.2016 PASSED IN ITA NO. 2657/DEL/2013 (AY 2009-10 ) WHICH HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURTS ORDER DATED 25.11.2016, AS AFORESAID. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, THE PRESENT APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/02/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 17/02/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES