ACIT, Nashik V. M/s AYURVED SEVA SANGH, Nashik

ITA 1560/PUN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1171 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Gift; Depreciation; Charitable institution; Earning of tax free income; Non compliance; Capital expenditure
• Section: 143(3); 80G; 12A; 12; 11

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , !', $ % BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1560/PN/2013 ASSESSMENT YEAR : 2010-11 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 1, NASHIK. . APPELLANT VS. M/S AYURVED SEVA SANGH, NEAR GHADGE MAHARAJ BRIDGE, GANESH WADI, PANCHAVATI, NASHIK 422 003. PAN : AABTA2900J . RESPONDENT DEPARTMENT BY : SHRI B. C. MALAKAR ASSESSEE BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 20.08.2015 / DATE OF PRONOUNCEMENT: 31.08.2015 & / ORDER PER PRADIP KUMAR KEDIA, AM : THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A )-I, NASHIK DATED 02.05.2013 RELATING TO ASSESSMENT YEAR 2010-11 PASS ED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE A.O. HAS ERRE D IN APPLYING FIRST PROVISO TO SECTION 2(15) TO THE CASE OF THE APPELLANT TRUST. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE A.O. HAS ERRE D IN TAXING THE EXEMPT INCOME OF RS.27,79,180/- UNDER SECTION 10(23C)(IIIAB). 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE A.O. HAS ERRE D IN NOT SETTING OFF BROUGHT FORWARD DEFICIT OF RS.51,25,546/- WHILE COMPUTING THE INCOM E OF THE TRUST. 2 ITA NO.1560/PN/2013 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE A.O. HAS ERRE D IN NOT REDUCING CAPITAL EXPENDITURE OF RS.62,47,446/- INCURRED BY THE TRUST ON THE OBJECTS OF THE TRUST BEING APPLICATION OF INCOME. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, NASHIK WAS JUSTIFIED TO HELD THAT THE A.O. HAS ERRE D IN NOT COMPUTING THE INCOME OF THE CHARITABLE TRUST REGISTERED UNDER THE B.P.T. AC T AND AS PER PROVISIONS OF INCOME TAX ACT, 1961. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE ASSES SING OFFICER MAY BE RESTORED. 7. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVID ENCE TO SUBSTANTIATE HIS CASE. 8. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY , AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASION DEMANDS. 3. BRIEFLY STATED, THE ASSESSEE IS A CHARITABLE TRU ST REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950. THE TRUST IS DULY REGISTER ED UNDER SECTION 12A W.E.F. 31.07.1975 AND RECOGNIZED UNDER SECTION 80G W.E.F. 01.04.2009 VIDE APPROVAL DATED 10.11.2009. IT ALSO EMERGES THAT THE ASSESSE E INSTITUTION IS ESTABLISHED SINCE 1924 AND WORKING TOWARDS CHARITABLE PURPOSES FOR MO RE THAN 80 YEARS. THE ACTIVITIES OF THE TRUST ARE RUN THROUGH THE MEDIUM OF FIVE SECTIONS AND A CONSOLIDATED INCOME & EXPENDITURE ACCOUNT AND BALANCE SHEET OF T HE ASSESSEE (AYURVED SEVA SANGH) IS PREPARED BASED ON THE AUDIT REPORTS OF TH E VARIOUS SECTIONS. THE DETAILS OF THE SAID SECTIONS ARE AS UNDER :- SECTION ACTIVITY AYURVED MAHAVIDYALAYA THE EDUCATION INSTITUTE IS AF FILIATED TO PUNE UNIVERSITY AND THE MAHARASHTRA UNIVERSITY OF HEALTH & SCIENCE AND IMPARTS EDUCATION OF AYURVED UPTO POST GRADUATE LEVEL. AROGYASHALA HOSPITAL IT HAS BED STRENGTH OF 150 BED S AND THE HOSPITAL ORGANIZES MEDICAL CAMPS IN THE INTERIORS TO PROVIDE MEDICAL HELP TO THE POOR PEOPLE. AUSHADI BHAVAN MANUFACTURING AND SELLING OF AYURVED IC MEDICINES. AYURVED PRATIKA PUBLISHES MONTHLY MAGAZINE WHICH CR EATES AWARENESS ABOUT DEVELOPMENT IN THE FIELD OF AYURVEDA. AYURVED SANSHODHAN VIBHAG CONDUCTING RESEARCH IN TH E FIELD OF AYURVEDA. 3 ITA NO.1560/PN/2013 4. THE RETURN OF INCOME OF THE ASSESSEE TRUST IS OU TLINED AS UNDER :- PARTICULARS AMOUNT (RS.) GROSS RECEIPTS 5,02,16,925 LESS: ESTABLISHMENT EXPENSES 88,92,298 LESS: DEPRECIATION 13,16,599 LESS: EXPENDITURE ON THE OBJECT OF THE TRUST (REVEN UE) 3,63,22,867 SURPLUS BEFORE CAPITAL EXPENDITURE 36,85,161 LESS: CAPITAL EXPENDITURE 62,47,446 DEFICIT WITHOUT CONSIDERING 15% RELAXATION (25,62,2 85) 5. THE ASSESSING OFFICER HAS ASSESSED THE TAXABLE I NCOME OF THE ASSESSEE TRUST AT RS.36,85,161/- BY RESORTING TO DENIAL OF E XEMPTION ON THE GROUND THAT THE ACTIVITY CARRIED ON BY ONE OF ITS SECTION, NAMELY, AUSHADI BHAVAN IS IN THE NATURE OF BUSINESS AND THE SAME IS HIT BY THE PROVISO TO S ECTION 2(15) OF THE ACT. THE ASSESSING OFFICER HAS NETTED THE SURPLUS/DEFICIT AS PER INCOME AND EXPENDITURE ACCOUNT OF ALL THE SECTIONS AND ARRIVED AT TAXABLE INCOME OF RS.36,85,161/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER N OTICED THAT ONE OF THE SECTIONS OF THE TRUST NAMELY AUSHADI BHAVAN IS CARRYING ON ACTIVITY OF MANUFACTURING OF AYURVEDIC MEDICINES, WHICH IS COMMERCIAL IN NATURE. HE OBSERVED THAT TOTAL SALE FROM THIS MANUFACTURING ACTIVITY FROM AUSHADI BHAV AN STANDS AT RS.3,21,80,532/-. THE COST OF THE PRODUCTION IS STATED TO BE RS.2,10, 86,342/- AND GROSS PROFIT IS RS.1,25,57,482/- I.E. 39% OF THE SALES. THE NET PR OFIT IS STATED TO BE RS.27,25,450/- I.E. 8.4% OF THE SALES. BASED ON THESE BROAD STATI STICS, THE ASSESSING OFFICER HELD THAT AUSHADI BHAVAN SECTION IS A MANUFACTURING UN IT WHICH IS BEING RUN ON COMMERCIAL BASIS. THE NET PROFIT OF RS.27,25,450/- IS OF SUBSTANTIAL NATURE AND IT IS NOT FOR THE PURPOSE WHICH INCLUDE ANY RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, ETC. AS CONTEMPLATED IN THE DEFINITION OF CHARITAB LE PURPOSE UNDER SECTION 2(15) OF THE ACT. THE ASSESSEE, ON THE OTHER HAND, RELIED U PON THE COPY OF THE TRUST DEED AND SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE MAIN OBJECT OF THE TRUST IS TO PROMOTE AYURVEDA AND CREATE AWARENESS OF AYURVEDA A S ENSHRINED IN ANCIENT 4 ITA NO.1560/PN/2013 SHASHTRAS AND GRANTHAS. IN ORDER TO FULFILL THE MA IN OBJECT, THE TRUST IS MANUFACTURING SCIENTIFIC AYURVEDIC MEDICINES BESIDE S THEIR OTHER ACTIVITIES. SO, IT IS TO BE UNDERSTOOD THAT THE MANUFACTURING ACTIVITY IS UNDERTAKEN TO FULFILL THE OBJECT OF THE TRUST AND NOT WITH THE OBJECTIVE OF CARRYING ON ANY BUSINESS ACTIVITY/PROFIT MOTIVE. THE OBJECTS OF THE TRUST ARE MEDICAL RELIEF AND ED UCATIONAL IN NATURE AND HENCE ANY ACTIVITY UNDERTAKEN IN PURSUANCE OF THESE OBJEC TS ARE IN THE NATURE OF MEDICAL RELIEF AND EDUCATIONAL IN NATURE. THUS, THE ACTIV ITY OF MANUFACTURING SCIENTIFIC AYURVEDIC MEDICINES FALLS UNDER MEDICAL RELIEF AND EDUCATIONAL CATEGORY AND NOT UNDER ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL P UBLIC UTILITY. THEREFORE, THE PROVISO TO SECTION 2(15) OF THE ACT DOES NOT APPLY TO THE CASE OF THE ASSESSEE TRUST AS THIS PROVISO IS RESTRICTED TO THE ASSESSEE WHOSE OBJECT IS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE MANUF ACTURING ACTIVITY IS ONLY INCIDENTAL TO THE MAIN OBJECT OF THE TRUST AND CANNOT BE CONSTRUE D TO BE ONE OF TRADE OR BUSINESS. THE ASSESSEE FURTHER CONTENDED THAT WITHOUT MANUFAC TURING AND SELLING/PROVIDING AYURVEDIC MEDICINES AT REASONABLE RATES TO THE GENE RAL PUBLIC AT LARGE, THE OBJECT OF THE TRUST CANNOT BE ATTAINED. THE ASSESSEE FURTHER CONTENDED THAT BESIDES MAKING AVAILABLE MEDICAL HELP AND AYURVEDIC MEDICINES WITH IN THE REACH OF GENERAL PUBLIC AT MODERATE COST, THE MANUFACTURING ACTIVITY IS ALS O USEFUL AS UNDER :- 1. VISIT TO THE RAS-SHASTRA NIRMAN BHAVAN (AUSHADI BHAVAN) IS COMPULSORY FOR EVERY STUDENT OF AYURVED MAHAVIDHYALAYA. THIS HELP S IN IMPARTING KNOWLEDGE ABOUT AYURVEDA. 2. THE KNOWLEDGE ACQUIRED IN THE MANUFACTURING ACTI VITY ABOUT ADVANCEMENT OF AYURVEDA IS INCLUDED IN THE SYLLABUS OF AYURVED MAH AVIDHYALAYA FOR CREATING AWARENESS AMONGST STUDENTS. WITHOUT PREJUDICE TO THE ABOVE, IT IS PERTINENT TO NOTE THAT EVEN IF THE INCOME FROM AUSHADI BHAWAN IS TREATED AS NOT INCOME FROM C HARITABLE PURPOSE THEN ALSO THE TAXABLE INCOME OF THE TRUST IS NIL AS MENTIONED BELOW. IT IS WORTH NOTING HERE THAT THE PUBLIC CHARITABLE TRUST OF AYURVED SEVA SA NGH IS A SINGLE ENTITY FORMED MORE THAN 85 YEARS AGO CARRYING ON CHARITABLE ACTIV ITY AND HENCE REGISTERED AS CHARITABLE TRUST UNDER THE BOMBAY TRUST ACT, 1950. ALL THE CHARITABLE ACTIVITIES CARRIED ON BY THE TRUST ARE GENUINE. 5 ITA NO.1560/PN/2013 6. IT IS FURTHER CASE OF THE ASSESSEE THAT THE OBJE CT OF THE TRUST IS DISCERNIBLE FROM ITS TRUST DEED AND ACTUAL APPLICATION OF FUNDS . THE DETAILS OF APPLICATION TOWARDS OBJECT OF THE TRUST ARE AS UNDER :- SECTION AMOUNT OF APPLICATION % OF APPLICATION AYURVED MAHAVIDYALAYA 3,03,81,532 83.64 AROGYASHALA RUGNALAYA 44,80,338 12.33 P.G. COURSE AND LADIES HOSTEL 13,74,491 3.78 HEAD OFFICE 86,505 0.25 TOTAL 3,63,22,866 100 7. FROM THE ABOVE TABULATED DATA, IT IS THE CASE OF THE ASSESSEE THAT 99% OF THE APPLICATION OF FUNDS IS TOWARDS EDUCATIONAL AND MED ICAL PURPOSES. THE SURPLUS FROM AUSHADI BHAVAN IS TRANSFERRED TO HEAD OFFICE S ECTION AND THEREFROM IT IS APPLIED FOR AYURVED RUGNALAYA (MEDICAL) AND AYURVED MAHAVIDYALAYA (EDUCATION) AND P.G. COURSE (EDUCATION). IN THE LIGHT OF THE A BOVE FACTS, IT IS THE CASE OF THE ASSESSEE THAT THE OBJECTS OF THE ASSESSEE TRUST ARE TOWARDS RELIEF TO THE POOR, EDUCATION AND MEDICAL RELIEF. 8. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT MAKING AVAILABL E MEDICAL HELP AND AYURVEDIC MEDICINES AT LOWER COST IS HOLLOW IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCES. HE RELIED UPON THE GROSS PROFIT RATIO AND NET PROFI T RATIO AND ALSO EXPENSES TOWARDS ADVERTISEMENT, SALES INCENTIVE SCHEME, ETC. TO SUPP ORT HIS OBSERVATION THAT THE MANUFACTURING ACTIVITY IS COMMERCIAL IN NATURE. LI KEWISE, VISIT OF STUDENTS TO MANUFACTURING UNIT AND AWARENESS CREATED CANNOT BE ACCEPTED AS CHARITABLE ACTIVITY EITHER UNDER THE EDUCATION OR MEDICAL R ELIEF. HE DREW PARALLEL WITH THE PHARMACEUTICAL COMPANIES WHICH ARE NOT COVERED UNDE R SECTION 2(15) OF THE ACT AS CHARITABLE ENTITIES. HE FURTHER STATED THAT MANUFA CTURING ACTIVITY OF THE TRUST IS NOT ACCEPTED FOR THE PURPOSE OF MEDICAL RELIEF OR EDUCA TION. IT WAS TREATED AS PURPOSE 6 ITA NO.1560/PN/2013 OF GENERAL PUBLIC UTILITY AND THEREFORE PROVISO TO SECTION 2(15) OF THE ACT IS INVOKED. HE FURTHER STATED THAT ON THE READING OF SECTION 2( 15) OF THE ACT AND ITS PROVISO THAT A CHARITABLE INSTITUTION CAN CONDUCT BUSINESS ACTIV ITY INCIDENTAL TO ITS OBJECT AND CAN CLAIM EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT IN SO FAR AS ITS AGGREGATE VALUE OF RECEIPTS FROM BUSINESS ACTIVITY IS NOT MORE THAN RS.10 LACS. IN THE INSTANT CASE, THE GROSS RECEIPTS AS WELL AS THE NET PROFIT ARE BE YOND THE THRESHOLD LIMIT OF RS.10 LACS AND HENCE SECTION 2(15) OF THE ACT IS APPLICAB LE. THE TOTAL REVENUE SURPLUS OF THE TRUST IS RS.36,85,161/- AND THE NET PROFIT OF A USHADI BHAVAN SECTION IS RS.27,25,450/- WHICH IMPLIES THAT MANUFACTURING ACT IVITY OF THE TRUST IS A SUBSTANTIVE ACTIVITY AND NOT JUST INCIDENTAL TO THE OBJECT OF T HE TRUST. THE ASSESSING OFFICER NEXT OBSERVED THAT THE CHARITABLE PURPOSE OF SECTIONS, N AMELY, AYURVED MAHAVIDYALAYA, AROGYA SHALA RUGNALAY AND OTHER MANUFACTURING UNIT OF AUSHADI BHAVAN IS WELL ACCEPTED AND THEREFORE THE ASSESSEE WAS GRANTED 12A CERTIFICATE AND ASSESSED AS A CHARITABLE PURPOSE. PRIOR TO AMENDMENT IN SECTIO N 2(15) OF THE ACT, THEREFORE THE ASSESSEE TRUST IS BEING ASSESSED WITHOUT GRANTING E XEMPTION UNDER SECTION 11 AND 12 OF THE ACT HOLDING THE ACTIVITIES TO BE FOR THE PURPOSES OF GENERAL PUBLIC UTILITY. HE ACCORDINGLY ASSESSED THE INCOME AT RS.36,85,161/ -. SIMULTANEOUSLY, CAPITAL EXPENDITURE INCURRED WAS NOT ALLOWED WHEN AS A CONS EQUENCE OF DENIAL OF EXEMPTION UNDER SECTION 11 AND 12 OF THE ACT. 9. AGGRIEVED BY THE FINDINGS OF THE ASSESSING OFFIC ER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 10. BEFORE THE CIT(A), THE ASSESSEE REITERATED THAT THE ASSESSEE TRUST IS REGISTERED UNDER SECTION 12A W.E.F. 31.07.1975 AND RECOGNIZED UNDER SECTION 80G W.E.F. 01.04.2009 AND IS ESTABLISHED SINCE 1924 FOR CHARITABLE PURPOSES. THE ACTIVITIES OF THE TRUST ARE RUN THROUGH VARIOUS SEC TIONS AS SUBMITTED BEFORE THE ASSESSING OFFICER AND THEREFORE ENTITLED TO EXEMPTI ON UNDER SECTION 11 AND 12 OF 7 ITA NO.1560/PN/2013 THE ACT. THE ASSESSEE ALSO SUBMITTED THAT 99% OF T HE APPLICATION OF FUNDS ARE TOWARDS THE OBJECT OF THE TRUST, NAMELY, EDUCATION AND MEDICAL PURPOSES. THE SURPLUS FROM MANUFACTURING UNIT I.E. AUSHADI BHAVAN IS TRANSFERRED TO HEAD OFFICE SECTION AND APPLIED FOR ITS CHARITABLE OBJECTS. 11. THE ASSESSEE FURTHER RELIED UPON CBDT CIRCULAR NO.11 OF 2008 DATED 19.12.2008 AND CONTENDED THAT PROVISO TO SECTION 2( 15) OF THE ACT IS NOT APPLICABLE TO ASSESSEE TRUST WHOSE OBJECT ARE EITHER : (I) REL IEF TO POOR; (II) MEDICAL RELIEF; AND, (III) EDUCATION, EVEN IF THEY INCIDENTALLY CARRY ON A COMMERCIAL ACTIVITY SUBJECT TO THE FOLLOWING CONDITIONS :- (1) THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAI NMENT OF THE OBJECTIVES OF THE ENTITY. (2) SEPARATE BOOKS OF ACCOUNT SHOULD BE MAINTAINED IN RESPECT OF SUCH BUSINESS . 12. ON FACTS, SEPARATE BOOKS OF ACCOUNT ARE MAINTAI NED FOR AUSHADI BHAVAN SECTION AND BUSINESS IS INCIDENTAL TO THE ATTAINMEN T OF THE OBJECTIVES OF THE TRUST AND THEREFORE CONSIDERING THE CHARITABLE OBJECTS AND IN THE LIGHT OF CBDT CIRCULAR (SUPRA) PROVISO TO SECTION 2(15) IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE TRUST. THEREFORE, THE ASSESSEE TRUST IS ENTITLED TO EXEMPT ION UNDER SECTION 11 AND 12 OF THE ACT. 13. THE ASSESSEE CONTROVERTED THE OBSERVATIONS OF T HE ASSESSING OFFICER THAT THE MANUFACTURING AND SELLING OF AYURVEDIC MEDICINE S IS A BUSINESS ACTIVITY AND SAME IS IN THE NATURE OF ADVANCEMENT OF OBJECT OF G ENERAL PUBLIC UTILITY. THE ASSESSEE CONTENDED THAT THE MANUFACTURING AND SELLI NG ACTIVITY OF AYURVEDIC MEDICINES IS NOT THE OBJECT OF THE TRUST BUT AN INC IDENTAL ACTIVITY FOR FULFILLMENT OF OBJECTS OF THE TRUST I.E. MEDICAL, EDUCATION. THE ASSESSING OFFICER HAS INCORRECTLY TREATED THE ACTIVITY AS THE OBJECT OF THE TRUST AND NOT THE OBJECT ITSELF. 8 ITA NO.1560/PN/2013 14. AS AN ALTERNATIVE PLEA, THE ASSESSEE CONTENDED THAT EVEN IF IT IS ASSUMED FOR THE PURPOSE OF DEBATE THAT THE ACTIVITY OF AUSHADI BHAVAN SECTION IS NOT CHARITABLE PURPOSE, THEN ALSO THE INCOME OF THE CHARITABLE TRU ST IS TO BE CALCULATED AS PER THE PROVISIONS OF THE ACT. THE TRUST IS REGISTERED UND ER THE BOMBAY PUBLIC TRUST ACT AS CHARITABLE TRUST CARRYING ON EDUCATIONAL AND MEDICA L ACTIVITIES AND HENCE INCOME OF THE TRUST IS TO BE WORKED OUT AS PER THE PROVISIONS OF THE ACT AND BROUGHT FORWARD DEFICIT OF RS.51,25,546/- OF THE TRUST IS TO BE RED UCED FROM THE COMPUTATION OF THE INCOME. SIMILARLY, CAPITAL EXPENDITURE INCURRED OF RS.62,47,446/- BEING APPLICATION TOWARDS OBJECTS OF THE TRUST IS ALSO REQUIRED TO BE REDUCED IN THE COMPUTATION OF INCOME. 15. AS PER STATEMENT OF FACT FILED BEFORE THE CIT(A ), HE TOOK AN ALTERNATIVE PLEA THAT INCOME ASSESSED BY THE ASSESSING OFFICER AT RS .36,85,161/- INCLUDES SURPLUS OF RS.27,79,180/- IN RESPECT OF AYURVED MAHAVIDYALY A, WHICH IS SUBSTANTIALLY FINANCED BY THE GOVERNMENT AND HENCE EXEMPTION UNDE R SECTION 10(23C)(IIIAB) OF THE ACT IS AVAILABLE TO THE ASSESSEE. BEFORE THE C IT(A), THE ASSESSEE ALSO FURTHER CONTENDED THAT WHEN MANUFACTURING AYURVEDIC MEDICIN ES AND SUPPLYING THE SAME TO THE GENERAL PUBLIC, THE EDUCATIONAL OBJECT OF AY URVED MAHAVIDYALYA AND MEDICAL RELIEF OBJECT OF AYURVED HOSPITAL CANNOT BE FULFILL ED. THE AYURVEDIC PRODUCTS ARE NECESSARY FOR PRACTICING AYURVED TREATMENT OF PATIE NTS AND FOR KEEPING GOOD HEALTH OF THE PATIENTS AND GENERAL PUBLIC. 16. THE CIT(A) HAVING REGARD TO THE FACTS OBSERVED THAT IT IS AN UNDISPUTED FACT THAT THE OBJECTS OF THE TRUST IS MEDICAL RELIEF AND EDUCATION FOR WHICH THE TRUST IS RUNNING AYURVED HOSPITAL & AYURVED COLLEGE ON LARGE SCALE AND UTILIZING ITS INCOME ON THE ABOVE OBJECTS OF THE TRUST. IN VIEW OF THE ABOVE CHARITABLE OBJECT, THE TRUST HAS BEEN REGISTERED UNDER THE BOMBAY PUBLIC TRUST A CT, 1950 AND ALSO UNDER SECTION 12A OF THE IT ACT. THE CIT(A) AGREED TO TH E CONTENTION OF THE ASSESSEE THAT 9 ITA NO.1560/PN/2013 THE MANUFACTURING OF MEDICINES IS INCIDENTAL ACTIVI TY OF THE TRUST TO ATTAIN THE MAIN OBJECTS OF THE MEDICAL RELIEF AND MEDICAL EDUCATION , AS IN THE ABSENCE OF AYURVEDIC MEDICINES, THE OBJECTS OF THE TRUST CANNOT BE ATTAI NED. THE CIT(A) FURTHER OBSERVED THAT THE SEPARATE BOOKS OF ACCOUNT HAS BEEN MAINTAI NED IN RESPECT OF ACTIVITY OF AUSHADI BHAVAN. HE NEGATED THE CONTENTION OF THE A SSESSING OFFICER IN DRAWING SIMILARITY WITH THE PHARMACEUTICAL COMPANIES. HE O BSERVED THAT THE OBJECT OF THE PHARMACEUTICAL COMPANIES IS THAT OF EARNING PROFIT AND DISTRIBUTING THE SAME TO THE SHAREHOLDERS AS DIVIDEND OR BONUS SHARES AND THEREF ORE SUCH COMPANIES ARE NOT AND CANNOT BE REGISTERED UNDER BOMBAY PUBLIC TRUST ACT AS PUBLIC CHARITABLE TRUST. ACCORDINGLY, IT WILL BE INCORRECT TO MAKE COMPARISO N WITH THE PHARMACEUTICAL COMPANIES. IN THE LIGHT OF THE FACTS BROADLY NOTED ABOVE, HE CONCLUDED THAT THE TRUST IS ENGAGED IN THE ACTIVITY OF RELIEF TO POOR, EDUCATION AND MEDICAL RELIEF AND CANNOT BE SAID TO HAVE ENGAGED IN THE ACTIVITY OF A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. HE, ACCORDINGLY, HELD T HAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN DENYING THE BENEFITS GRANTED BY SECTIO N 11 AND 12 OF THE ACT TO THE ASSESSEE TRUST. 17. AS REGARDS, THE CLAIM OF EXEMPTION OF RS.27,79, 180/- UNDER SECTION 10(23C)(IIIAB) OF THE ACT, THE CIT(A) NOTED THAT AY URVED MAHAVIDYALAYA SECTION HAS EARNED SURPLUS OF RS.27,79,180/- WHICH HIS INCLUDED IN TOTAL SURPLUS OF THE TRUST AMOUNTING TO RS.36,85,161/-. IT WAS FURTHER NOTED THAT OUT OF TOTAL GROSS INCOME OF RS.3,36,67,083/- OF AYURVED MAHAVIDYALAYA THE GOVER NMENT GRANTS RECEIVED WERE RS.3,24,56,977/-. THEREFORE, IT IS UNDISPUTED FACT THAT THE SURPLUS OF RS.27,79,180/- OF AYURVED MAHAVIDYALAYA IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(23C)(IIIAB) OF THE ACT. 10 ITA NO.1560/PN/2013 18. THE CIT(A) ALSO ALLOWED BROUGHT FORWARD DEFICIT OF RS.51,25,546/- AND ALLOWED THE SAME TO BE CARRIED FORWARD AND IS TO BE REGARDED AS APPLICATION OF INCOME. 19. AS REGARDS, THE CLAIM OF THE ASSESSEE IN RESPEC T OF CAPITAL EXPENDITURE OF RS.62,47,446/- INCURRED BY THE TRUST ON THE OBJECTS OF THE TRUST AND THEREFORE APPLICATION OF INCOME. THE CIT(A) HELD THAT THE CA PITAL EXPENDITURE IS ALLOWABLE INSPITE OF DEPRECIATION CLAIMED BY THE ASSESSEE IN VIEW OF DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. IN STITUTE OF BANKING PERSONNEL SELECTION REPORTED IN 264 ITR 110 (BOM). HE THEREF ORE HELD THAT CAPITAL EXPENDITURE INCURRED IS ALLOWABLE AS APPLICATION OF INCOME OF THE ASSESSEE TRUST. 20. THE CIT(A) ALSO ADDRESSED THE GRIEVANCE OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS ERRED IN NOT COMPUTING THE INCOME OF TH E CHARITABLE TRUST REGISTERED UNDER THE B.P.T. ACT AS PER PROVISIONS OF THE INCOM E TAX ACT, 1961. HE OBSERVED THAT THE ASSESSEE TRUST BEING A PUBLIC CHARITABLE T RUST AND IS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 AND ALSO UNDER SECTIO N 12A OF THE IT ACT, THE OBJECTS OF THE TRUST ARE CHARITABLE OBJECTS. THE T RUST IS, THEREFORE, GOVERNED BY THE PROVISIONS OF SECTION 11, 12 & 13 OF THE ACT AND AL SO APPLICABLE PROVISIONS OF SECTION 10 OF THE IT ACT AND HELD IN FAVOUR OF THE ASSESSEE. 21. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US. 22. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. IN FURTHERANCE, HE PRIMA RILY CONTENDED THAT THE MANUFACTURING ACTIVITY CARRIED ON BY ONE OF SECTION S OF THE ASSESSEE TRUST IS CLEARLY A MANUFACTURING ACTIVITY EARNING SUBSTANTIAL PROFIT S QUA THE TOTAL PROFITS AND IS CLEARLY COMMERCIAL IN NATURE. THE OBJECTS OF THE A SSESSEE TRUST CANNOT BE SAID TO 11 ITA NO.1560/PN/2013 BE TOWARDS CHARITABLE PURPOSES AS CONTEMPLATED UN DER SECTION 2(15) R.W. PROVISO THERETO. HIS MAIN PLANK OF CONTENTION IS THAT THE ACTIVITY OF MANUFACTURING OF MEDICINES AND SELLING THEREOF IS NEITHER BE TERMED EDUCATIONAL NOR MEDICAL RELIEF. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ADVERTED ATTENTION TO SECTION 10(23C)(IIIAB) AND (IIIAC) OF THE IT ACT AND VEHEME NTLY ARGUED THAT THE INCOME-TAX RELIEFS ARE GIVEN TO THE EDUCATIONAL INSTITUTION UN DER SECTION (IIIAB) OF THE ACT AND RELIEFS ARE GIVEN TO HOSPITAL AND OTHER INSTITUTION S ENGAGED IN IMPARTING MEDICAL RELIEFS UNDER SECTION (IIIAC) OF THE ACT. HE SUBMI TTED THAT IN VIEW OF SEPARATE SUB- SECTIONS I.E. (IIIAB) AND (IIIAC) TO SECTION 10(23C ), THE RELIEF CAN BE EITHER TAKEN UNDER EDUCATION OR TOWARDS MEDICAL TREATMENT AND NO T BOTH. IN ORDER TO REFLECT THIS INTENTION OF LEGISLATURE, SEPARATE SUB-SECTIONS (II IAB) AND (IIIAC) TO SECTION 10(23C) OF THE ACT HAS BEEN INSERTED IN THE STATUTE. THE RELI EFS AVAILABLE ARE NOT OVERLAPPING TO EACH OTHER BUT ARE EXCLUSIVELY IN NATURE. THERE FORE, ARGUMENT OF THE ASSESSEE THAT THE MANUFACTURING ACTIVITY OF MEDICINES ONE OF THE SECTIONS OF THE ASSESSEE TRUST IS ALSO EDUCATIONAL IN NATURE ALONG WITH MEDI CAL RELIEF TO THE POOR IS A DAMPSQUIB. THE PLEA OF THE LD. DEPARTMENTAL REPRES ENTATIVE FOR THE REVENUE IS THAT THE ASSESSEE CANNOT SEEK RELIEF BOTH UNDER ED UCATIONAL RELIEF AS WELL AS MEDICAL RELIEF AS PROVIDED IN MAIN PROVISIONS OF SECTION 2(15) OF THE ACT. AS A SEQUEL TO THE ABOVE, THE LD. DEPARTMENTAL REPRESENT ATIVE FOR THE REVENUE CONTENDED THAT THE CASE OF THE ASSESSEE FALLS UNDER THE RESIDUAL RELIEF, NAMELY, ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE ACTIVITY OF THE ASSESSEE BEING ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, IT IS CLEARLY NOT CHARITABLE IN NATURE AS IT INVOLVES THE CARRYING ON THE MANUFACTURING ACTIVITY, WHICH IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS FOR CONSIDERATION IRRESPECTIVE OF THE USE OR APPLICATION OF THE INCOM E FROM SUCH MANUFACTURING ACTIVITY, IN VIEW OF PROVISO CARVED OUT TO SECTION 2(15) OF THE ACT. HE THEREFORE SUBMITTED THAT THE ASSESSEE IS NOT ENTITLED TO RELI EF UNDER THE PROVISIONS OF THE ACT 12 ITA NO.1560/PN/2013 AS CLAIMED SINCE THE ACTIVITIES OF THE ASSESSEE ARE COMMERCIAL IN NATURE AND NOT CHARITABLE ONE. 23. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF INDIAN CHAMBER OF COMMERCE VS. CIT REPORTED IN 101 ITR 796 (SC) FOR THE PROPOSITION TH AT ADVANCEMENT OF CHARITABLE OBJECTS MUST NOT INVOLVE PROFIT MAKING ACTIVITIES. IT IS NOT ENOUGH IF THE OBJECT BE ONE OF GENERAL PUBLIC UTILITY. THE ATTAINMENT OF T HAT OBJECT SHALL NOT INVOLVE ACTIVITIES FOR PROFIT. THE ASSESSEE CANNOT BE GRANTED EXEMPTI ON FOR MAKING INCOME BY METHODS WHICH IN THE HANDS OF OTHER PEOPLE WOULD HA VE BEEN EXIGIBLE TO TAX. HE NEXT RELIED UPON THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT REPORTED IN 1 01 ITR 234 (SC) TO SUBMIT THAT THE VERY CONCEPT OF CHARITY DENOTES ALTRUISTIC TH OUGHT AND ACTION. THE OBJECT MUST NECESSARILY BE FOR BENEFIT OF OTHERS RATHER THAN ON ESELF. 24. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED T HAT THE ASSESSING OFFICER HAS MISREAD AND MISCONSTRUED THE FACTS OF THE CASE. HE SUBMITTED THAT THE ASSESSEE IS PURSUING CHARITABLE OBJECTS FOR LONG AND IS DULY RE GISTERED UNDER SECTION 12A OF THE ACT AND IS ALSO RECOGNIZED UNDER SECTION 80G OF THE ACT. THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE CLEARLY REFLECTS THE OB JECT OF THE ASSESSEE TRUST WHICH IS ESTABLISHED FOR EDUCATION AND MEDICAL RELIEFS, ETC. . ONE OF ITS SECTIONS, NAMELY, AYURVED MAHAVIDYALAYA IS SUBSTANTIALLY ADDED BY THE GOVERNMENT GRANTS. THE MANUFACTURING ACTIVITY BEING ITS SECTION, NAMELY, A USHADI BHAVAN WHICH RESULTED IN PROFITS IS ONLY INCIDENTAL TO ITS PRIMARY OBJECT I. E. IMPARTING EDUCATION AND PROVIDING MEDICAL RELIEFS TO THE NEEDY. THE MANUFACTURING AC TIVITY IS NOT THE OBJECT OF THE TRUST PER SE BUT A CONDUIT TO ACHIEVE THE PRIMARY OBJECTS. FURT HER SECTION 2(15) OF THE IT ACT WHICH DEFINES CHARITABLE PURPOSE ALSO COVERS TH E ACTIVITIES OF THE ASSESSEE. AS 13 ITA NO.1560/PN/2013 PER THE DEFINITION, CHARITABLE PURPOSE INCLUDES R ELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, ETC. THE ASSESSEE TRUST IS ESTABLISHED FOR THE PURPOSE O F EDUCATION AND MEDICAL RELIEF AND THEREFORE THE ASSESSEE IS FULLY ELIGIBLE FOR EX EMPTION UNDER SECTION 11 AND 12 OF THE ACT AS CLAIMED. IN THE ALTERNATE, THE ASSESSEE IS ALSO ENTITLED FOR RELIEF UNDER SECTION 10(23C)(IIIAB) OF THE ACT WHICH IS AVAILABL E FOR EDUCATIONAL PURPOSES AND SECTION 10(23C)(IIIAC) WHICH IS AVAILABLE TOWARDS M EDICAL RELIEF AS THE ASSESSEE IS ALSO SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. T HE CENTRAL ISSUE INVOLVED IN THE PRESENT APPEAL IS WHETHER THE MANUFACTURING ACTIVIT Y WHICH HAS RESULTED IN A PROFIT OF RS.27,25,450/- BY ONE OF ITS SECTIONS OF THE ASS ESSEE, NAMELY, AUSHADI BHAVAN TANTAMOUNTS TO COMMERCIAL/BUSINESS ACTIVITY IN THE GIVEN FACTS OR THE ACTIVITY IS CHARITABLE IN NATURE. IN ORDER TO EXAMINE THE CONT ROVERSY INVOLVED, IT WOULD BE PERTINENT TO REFER TO SECTION 2(15) OF THE ACT WHIC H DEFINES THE MEANING OF EXPRESSION CHARITABLE PURPOSE. SECTION 2(15) OF THE ACT IS APPLICABLE AT THE RELEVANT TIME READS AS UNDER :- 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF A RTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYIN G 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 BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, 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 APPLY IF THE AGGR EGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS [TEN LAKH RUPEES] OR LESS IN THE PREVIOUS YEAR;] 14 ITA NO.1560/PN/2013 26. ON CLOSE READING OF THE AFORESAID STATUTORY DEF INITION OF EXPRESSION CHARITABLE PURPOSE IT CAN BE SEEN THAT THE IMPUGN ED EXPRESSION HAS BEEN DEFINED IN INCLUSIVE MANNER, WHICH INCLUDES (I) RELIEF OF T HE POOR (II) EDUCATION (III) MEDICAL RELIEF AND RESIDUAL OBJECTS I.E. (IV) ADVANCEMENT O F ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, ETC.. HOWEVER, THE FIRST PROVISO THERETO CARVES OUT AN EXCEPTION TO THE MAIN DEFINITION AND HOLDS THAT ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY SHALL NOT BE CHARITABLE PURPOSES, IF IT INVOLVES CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE OR COMMERCE OR BUSINESS, ETC. IRRESPECTIVE OF NATURE O F USE OR APPLICATION OF INCOME OF SUCH ACTIVITY. THEREFORE, PROVISO TO SECTION 2(15) GIVES DIFFERENTIAL TREATMENT TO THE OBJECTS NAMELY RELIEFS OF THE POOR, EDUCATION AND M EDICAL RELIEF, ETC. VIS--VIS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY. IT IS THE CASE OF THE ASSESSEE TRUST THAT ITS ACTIVITIES ARE IN THE FIELD OF EDUCATION AND MEDICAL RELIEF AND THEREFORE PROVISO TO SECTION 2(15) OF THE ACT DOES NOT COME INTO PLAY AT ALL, WHEREAS IT IS THE CASE OF THE REVENUE THAT THE NATURE OF TH E ACTIVITY CONDUCTED BY THE ASSESSEE FALLS WITHIN THE AMBIT OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 27. THE RELEVANT OBJECT CLAUSE OF THE ASSESSEE TRUS T AS SET OUT IN ITS MEMORANDUM OF ASSOCIATION IS EXTRACTED BELOW TO ASC ERTAIN THE MAIN OBJECTS OF THE ASSESSEE TRUST :- 4) THE AIMS AND OBJECTS OF THE AYURVED SEVA SANGH NASH IK 4.1) TO IMPART INSTRUCTIONS & EDUCATION IN AYURVED BY SHARING, ESTABLISHING, CONDUCTING, AYURVEDIC SCHOOLS, COLLE GES, POST GRADUATE COURSES, RESEARCH INSTITUTES & LIABRARIES AND BY ED ITING, PRINTING, PUBLISHING & SELLING, THE BOOKS, MAGAZINES, JOURNAL S, NEWSPAPER ON AYURVEDIC AND ALLIED SUBJECTS. 4.2) TO ESTABLISH AND CONDUCT, AYURVEDIC AND ALLIED RESEARCH LABORATORIES, PHARMACIES, BOTANICAL GARDENS, MUSEUM, STUDY CIRCLE S ETC. FOR IMPROVEMENT OF AYURVEDIC SCIENCE. 4.3) TO START, ESTABLISH & CONDUCT DEPARTMENTS, INS TITUTES FOR I) PROMOTION OF AYURVEDIC LITERATURE. II) AYURVEDIC DRUG MANUFACTURING INDUSTRIES. 15 ITA NO.1560/PN/2013 III) TRAINING OF STUDENTS, NURSES, VILLAGE WORKERS ETC. 4.4) TO STANDARDIZE AYURVEDIC MEDICINES AND TO BRIN G MEDICAL HELP WITHIN THE REACH OF THE GENERAL PUBLIC WITHOUT ANY DISTINC TION OF CASTE AND CREED AND TO MAKE AYURVEDIC MEDICINES ANY AYURVEDIC HERBS AVAILABLE TO PUBLIC AT MODERATE COST. 4.5) TO START, ESTABLISH, CONDUCT, MANAGE AYURVEDIC PREVENTORIA, SANITORIA, HEALTH RESORT, HOSPITALS, DISPENSARIES, NURSING HOMES, CONVALESCENT HOMES, MEDICAL SHOPS, ETC. 4.6) TO PROMOTE AND ESTABLISH BRANCHES OF THE AYURV ED SEVA SANGH NASHIK AND TO PROMOTE CO-ORDINATION, AFFILIATION, A MALGAMATION OF OTHER SOCIETIES OR ASSOCIATIONS WITH AYURVED SEVA S ANGH NASHIK HAVING SIMILAR OBJECT. 4.7) TO PROMOTE THE STUDY OF OTHER SCIENCES CONDUSI VE TO THE PROMOTION OF AYURVEDIC SCIENCE. 4.8.A) FOR ACHIEVING THE ABOVE MENTIONED OBJECTS, T O ACQUIRE MOVABLE & IMMOVABLE PROPERTIES BY PURCHASE, LEASE, EXCHANGE, GIFT, ACQUISITION THROUGH GOVT. ETC. 4.8.B) FOR ACHIEVING THE ABOVE MENTIONED OBJECTS TO DISPOSE OFF OR SELL OR MORTGAGE ANY MOVABLE OR IMMOVABLE PROPERTY OR ANY R IGHTS OR PREVILEDGES OR RAISE LOANS NECESSARY AND CONDUSIVE TO THE PROMOTION OF THE OBJECTS OF AYURVED SEVA SANGH NASHIK. 4.8.C) TO ACCEPT OR TO RECEIVE DONATIONS, GIFTS, PR ESENTS, ENDOWMENT, CHARITIES, DEPOSITS WITH OR WITHOUT INTEREST OR ANY OTHER KIND OF HELP CONDUSIVE TO THE ABOVE OBJECTS. 28. IT IS MANIFEST FROM THE OBJECT CLAUSES NOTED HE REIN ABOVE THAT THE AIM AND OBJECT OF THE ASSESSEE TRUST IS TO RENDER EDUCATION IN THE FIELD OF AYURVEDA AND TO PROMOTE MEDICAL HELP AND PROVIDE HOSPITALS AND HEAT H RELATED SERVICES. 29. IN THE CIRCUMSTANCES, WE FAIL TO UNDERSTAND AS TO HOW SUCH ACTIVITIES CAN BE TERMED ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL UTILITY TO BE COVERED BY THE EMBARGO PROVIDED IN THE FIRST PROVISO. ONCE THE ACT IVITIES OF THE ASSESSEE ARE EDUCATIONAL AND MEDICAL IN NATURE, THE CONSIDERATIO NS OF ELEMENT OF BUSINESS ACTIVITY AND PROFIT MOTIVES EMBEDDED THEREIN ETC. A RE RENDERED WHOLLY IRRELEVANT UNDER S. 2(15) OF THE ACT. THE ASSESSEE TRUST HAS B EEN GRANTED REGISTRATION U/S 12A OF THE ACT BY THE REVENUE ON THE BASIS OF THE AFORE SAID OBJECT CLAUSES. THE ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE NOT FOUND BY THE RE VENUE TO BE ULTRA VIRES THE OBJECTS. IT IS TRUE THAT MERELY BECAUSE THE CIT HAS GRANTED REGISTRATION U/S 12A WILL 16 ITA NO.1560/PN/2013 NOT BY ITSELF PRECLUDE THE AO FROM EXAMINING COMPLI ANCE U/S 11 OF THE ACT. HOWEVER, IN THE PRESENT CASE, NO COGENT CASE OF NON COMPLIANCE HAS BEEN MADE OUT. MERELY BECAUSE SOME MANUFACTURING ACTIVITIES I N THE NATURE OF ALLEGED BUSINESS ACTIVITIES ARE INVOLVED, THIS WILL NOT CHA NGE THE CHARACTER OF ACTIVITY. THE ASSESSEE HAS DEMONSTRATED AS TO HOW THESE ALLIED MA NUFACTURING ACTIVITY HAS ASSISTED ITS KEY OBJECTS IN THE AREA OF EDUCATION A ND MEDICAL RELIEFS. THE RECEIPTS FROM MANUFACTURING ACTIVITIES HAVE BEEN ADMITTEDLY APPLIED TOWARDS THE OBJECTS OF THE TRUST. THE RELEVANT FIRST PROVISO TO S. 2(15 ) WHICH HOLDS ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY AS NON CHARITABLE IF IT INV OLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF BUSINESS, ETC. HAS NO APPLICATION IN THE FACTS OF THE CASE. THE CRITERIA THAT ACTIVITY SHOULD NOT BE IN THE NATURE OF BUSINE SS OR COMMERCE ETC. FOR THE PURPOSES OF S. 2(15) IS RESTRICTED ONLY TO ADVANCEM ENT OF RESIDUAL OBJECTS OF GENERAL PUBLIC UTILITY EXCLUDING RELIEF OF THE POOR, EDUCAT IONS, MEDICAL RELIEF ETC. THEREFORE, IN OUR CONSIDERED VIEW, MANUFACTURING ACTIVITY ALLIED TO EDUCATION AND MEDIAL RELIEFS ETC. RESULTING IN PROFITS IS NO HANDICAP FOR HOLDIN G THE ACTIVITIES TO BE CHARITABLE IN NATURE UNDER SECTION 2(15) OF THE ACT IRRESPECTIVE OF FACT THAT IT MAY INVOLVE CARRYING ON OF COMMERCIAL ACTIVITIES PROVIDED INCOME FROM SU CH ACTIVITIES ARE UTILIZED TOWARDS CHARITABLE PURPOSES. THIS VIEW IS ALSO FORTIFIED BY THE CBDT CIRCULAR NO. 11/2008 DATED 19/12/2008. 30. THE RELIEF WAS CLAIMED U/S 11 & 12 OF THE ACT I N THE COURSE OF ASSESSMENT. THE ASSESSEE RAISED GROUNDS BEFORE THE CIT(A) ON A DIFFERENT TANGENT FOR GRANTING RELIEF U/S 10(23C) OF THE ACT ON THE SAME SET OF FA CTS. THE MAIN PLANK OF THE ARGUMENTS OF LEARNED DR WAS THAT BENEFIT UNDER S. 1 0(23C) IS NOT AVAILABLE TO THE ASSESSEE AS SUB CLAUSE (IIIAB) WHICH GRANTS EXEMPTI ON EDUCATIONAL ACTIVITY AND SUB CLAUSE (IIIAC) WHICH GRANTS RELIEF TO ASSESSEE ENGA GED MEDICAL FIELD ARE INDEPENDENT AND MUTUALLY EXCLUSIVE. THE ASSESSEE SHOULD BE ENGA GED IN ANY ONE OF THE ACTIVITIES AND NOT BOTH TO AVAIL 10(23C). WE DO NOT FIND SUCH PLEA TO BE LEGALLY 17 ITA NO.1560/PN/2013 SUSTAINABLE. THE VERY DEFINITION OF CHARITABLE PUR POSE UNDER S. 2(15) IS INCLUSIVE IN NATURE AND NOT MUTUALLY EXCLUSIVE. THE ASSESSEE IS ENTITLED TO RELIEF IN ANY OF THE SUB CLAUSE DEHORS THE RELIEF FOR OTHER ACTIVITY AVA ILABLE UNDER OTHER SUB CLAUSE. THE STAND OF THE ASSESSEE THAT THE RECEIPTS FROM MANUFA CTURING ACTIVITY HAS BEEN APPLIED FOR FURTHERANCE OF THE PRINCIPLE OBJECTS AL SO REMAINS UNCONTROVERTED. AS A LOGICAL COROLLARY, THE ACTIVITIES IN QUESTION ARE N OT FOR THE PURPOSES OF PROFIT AS CONTEMPLATED IN S. 10(23C) (IIIAB) & (IIIAC) OF THE ACT. THE CASE LAWS RELIED UPON THE REVENUE ARE DISTINGUISHABLE ON FACTS SINCE THE PROFITS FROM MANUFACTURING ACTIVITY HAS BEEN APPLIED IN THE PROCEEDINGS FOR LA RGER OBJECT OF CHARITABLE NATURE OF EDUCATION AND MEDICAL RELIEF. IN THE ABSENCE ANY O THER PLEA TO VACATE THE ORDER OF CIT(A) GRANTING RELIEF ON THIS ISSUE, WE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). THE GROUNDS NO. 1 & 2 OF THE R EVENUE APPEAL ARE THEREFORE DISMISSED. 31. OTHER GROUNDS OF APPEAL ARE CONSEQUENTIAL IN NA TURE. ONCE THE ACTIVITIES OF THE ASSESSEE TRUST HAS BEEN HELD TO BE CHARITABLE I N NATURE AND ELIGIBLE FOR RELIEF UNDER THE PROVISIONS OF THE ACT, OTHER GROUNDS BECO MES IRRELEVANT AND INCONSEQUENTIAL. NO PARTY HAS ADVANCED ANY ARGUMENT S CONCERNING THESE GROUNDS AT THE TIME OF HEARING. ACCORDINGLY, REST OF THE GR OUNDS ARE NOT ADJUDICATED UPON. 32. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF AUGUST, 2015. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 31 ST AUGUST, 2015. 18 ITA NO.1560/PN/2013 & ' ()* +*( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. &, / BY ORDER , //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' , / ITAT, PUNE