M/s Water & Land Management Trg. & Research Institute, Hyderabad V. Director of Income-tax, (Exemp), Hyderabad

ITA 1598/HYD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91650 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI P.M.JAGTAP, ACCOUNTANT MEMBER ITA NO.1598/HYD/2012 : ASSESSMENT YEAR 2012 - 13 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD (PAN AIYPA 2655 H) V/S. DIRECTOR OF INCOME - TAX (EXEMPTION) , HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI D.SUDHAKAR RAO DR DATE OF HEARING 28 .4.2015 DATE OF PRONOUNCEMENT 13.5.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIR E CTE D AGAINST THE ORDER OF THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD DATE D 30.7.2012, WHEREBY HE REFUSED TO GRAN T REGISTRATION SOU G HT B Y THE ASSESSEE UN D ER S .12A OF THE ACT. 2. THE ASSESSEE IN TH E P R ESEN T CA S E IS AN IN S TITU T ION WHICH WAS ESTABLI S H E D IN THE YEAR 1983 UN D ER THE OVERALL CONTROL OF THE IRRIGATION D EPARTMENT OF GOVERNMENT OF AN D H R A PRADESH. I T WAS CONVERTED AND REGISTERED AS A SOCIETY IN THE YEAR 1992 UNDER THE SOCIETIES REGISTRATION ACT AS AN AUTONOMOUS BODY. AN APPLICATION IN FORM NO.10A WAS FIL E D BY IT ON 19.1.2012 SEEKIN G R E GI ST RATION UN DE R S .12 A OF THE AC T. IN ORDER TO DISPOSE OF THE SAID APPLI C A T ION, A QUESTIONNAIRE WAS ISSUED BY THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) REQUIRIN G THE ASSESSEE TO FURNISH THE DE T AIL S O N I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 2 SPECIFIC POINTS AND A L S O TO P R O D U C E B O OKS OF ACCOUNT, BILL S AND VOUCH E RS AND OTHER DOCUM E N T S FOR VERIFI CA TION . BESIDES CO M PLYING WITH THE SAID REQUIREMENTS OF THE DIRECTOR OF INCOME - TAX(EXEMPTION), THE ASSESSEE ALSO BROUGHT TO THE NOTICE OF THE DIRECTOR OF INCOME - TAX(EXEMPTION) ITS MAIN OBJECTS AS UN D ER: - (A) TO TRAIN DIF FERENT LEVEL GOVERNMENT FUNCTIONARIES OF THE DEPARTMENT OF IRRIGATION AND COMMAND AREA DEVELOPMENT AND THE DEPARTMENT OF AGRICULTURE AND OTHER ALLIED DEPARTMENTS AND AGENCIES OF THE STATE GOVERNMENT DEALING WITH ASPECTS RELATING TO WATER AND LAND MANAGEMEN T IN PLANNING, DESIGNING, CONSTRUCTION, OPERATION AND MAINTENANCE OR IRRIGATION AND DRAINAGE NETWORKS ETC., WITH DUE EMPHASIS ON MICRO - LEVEL FUNCTIONING AND ON - FARM IRRIGATION PRACTICES TO ENSURE OPTIMUM UTILIZATION OF WATER AND L AND RESOURCES; (B) TO E NSURE FULL UN DE RSTANDING O F TH E P R IN C IPL E S O F EFFICIEN T OPERATIONAL PLANS AND IMP R O V ED IRRIGATION PRACTICES AT ALL L E VELS OF SCHEME MANAGEMENT AND AMONG THE FARMERS. (C) TO PROVIDE A BETTER UNDERSTANDIN G AMONG TH E WATER USERS O F THE OPTIMAL UTIL I ZATION OF WATER AND LAN D RESOU R CES AND TO INCULCATE A SENSES OF B E LONGIN G . (D) TO FUN CT ION AS AN APEX BODY ON ALL MATERS RELATING TO W A TER AND LAND MANAGEM E N T AND RENDER ADV IC E TO THE S T ATE GOVER NMEN T AND THE DEPARTMEN T S O F THE ST ATE GO V ERNMENT, DEALIN G WITH THESE MAT T ERS PERTAININ G TO POLICI E S OF WATER AND LAND MANAGEMENT WITH A VIEW TO IMPROVE THE PE R FORM A N C E; AND DEAL WI T H ANY O TH E R ISSU E S ENTRUSTED BY THE GOVERNM E N T TO THE IN S TI T UTE; (E) TO PROVIDE CO NSULTANCY S ER V I C ES TO TH E GOVERNM E N T , LOCAL BODIES, ASSO C IATION S AND INDI VIDUALS IN TH E A REAS OF WATER AND LAND MANAGEMENT; (F) TO UN D ERTAKE INTENSIVE AND NEED BASED RESEARCH ON WATER AND LAND MAN A GEMENT WITH THE I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 3 COLLABO R ATION OF OTHER IN S TITUTION S , ASSOCIATIONS AN D SOCIETIES INTERESTED IN SI M I L AR OBJECTS; IT WAS ALSO SUBMITTED ON BEHALF OF TH E ASSESSEE B E FORE THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) THAT IT IS RECOGNI S ED AS ON E O F THE APEX INSTI T UTES IN AN D HRA PRADESH AND IS KNOWN IN INDIA FOR THE ACTIVITIES UNDER PARTICIPATORY IN IRRIGATION MANAGEMENT. IT WA S SUBMITTED THAT WALAMTARI HAS DECENT IN F RASTRUCTURE WITH CLASS ROOMS AND AUDITORIUMS FOR CON D UCTING CLASSES AND WORKSHOPS/SEMINARS. IT WAS SUBMITTED T HAT THOUGH THE GOVERNMEN T OF ANDH R A PRADESH SUPPORTS THE IN S T I T U TE THROUGH GRANTS - IN - AID, IT EARNS SIZEABLE PO R TION OF ITS IN CO M E THROUGH CAPACITY BUIL D IN G SER V I C ES AND THROUGH CONSULTANCIES. IT WAS SUBMI T TED THAT T H E ASSESSEE SOCIETY IN CONSONANCE OF I T S OBJECTIVES ORGANIZED VAR IOUS TRAINING FOR FARMERS AT FIELD TRAINING CENTRES IN TH E STA TE. 3. AFTER CON S I DE RING THE SUBMI S SION S MADE BY TH E ASSESSEE AND THE MATERIAL PLACED ON RECORD B E FORE HIM, THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) NOTED THAT THE ASSESSEE SOCI E TY WAS MAINLY FUNCTIONING AS A TRAINING INSTI T UTE FOR THE PU R P O SE OF TRAI N ING OF VARIOUS GOVERNM E N T OFFICIALS IN TH E FIELD OF WATER AND LAND MANAGEMENT AND WAS ALSO PROVIDING GUIDANCE TO TH E F ARMERS. HE HOWEVER , NOTED THAT THE ASSESSEE AT THE SAME TIME WAS ALSO RENDERING CONSU L TANCY SERVI C ES TO VARIO U S ORGANISATION S AND EARNING SUBSTANTIAL AMOUNT O F INCOME F R OM THE SAID ACTIVITIES. HE HELD THAT ALTHOUGH TH E SE SERVICES RENDERED BY TH E ASSESSEE SOCIETY IN THE M AT TER O F WATER AND LAND MANAGEMENT FOR THE BENEFIT OF THE FARMERS AND OTHER ORGANIZATIONS FELL UN DE R THE AMBIT OF ADVANCING OF AN OBJECT OF GENERAL PUBLIC UTILITY, THE ACTIVITY O F PROVIDING CONSUL T AN C Y SERVI C ES YIELDING SUBSTANTIAL IN C OM E WAS HIT BY THE P R O V I S O TO S.2(15) INSERTED IN TH E STATUTE BY THE F IN A N C E ACT, 2008 I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 4 WITH EFFECT F R OM 1.4.2009. ACCOR D INGLY, RELYING ON TH E SAID PROVISO, H E H E L D THAT THE AC T IV ITY OF THE ASSESSEE OF PROVI D IN G CON S U L TANCY SERVI C ES YI E LDING SUBSTANTIAL IN COME WAS SUFFICIEN T TO IN DI CATE COMM E RC I AL INTENTION ON TH E P A RT OF TH E ASSESSEE SOCI E TY, AND TH E R EF ORE, THE ASSESSEE SOCIETY COULD NO T B E CON S I DE RED AS CARRYING ON A N Y CHARITABLE ACTI VI TY TO B E ELIGIBLE FOR REGISTRATION UN DE R S.12A O F THE AC T. AC C ORDINGLY, THE R E GI S TRATION SOUGHT BY THE ASSESSEE WAS DENIED BY THE LEARNED DIRE CTOR OF INCOME - TAX(EXEMPTION) VIDE HIS ORDER DATE D 30.7.2012, WHICH IS IMPUGNED BY TH E ASSESSEE IN TH E PR E SEN T APPEAL FIL E D BEFORE THE TRIBUNAL . 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OB S ERVED THAT THE BASIC NATURE OF THE AI MS AND OBJECTIVES O F TH E ASSESSEE SOCI E TY BEIN G CHARITABLE IS NO T DISPUTED BY THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) IN HIS IMPU G N E D ORDE R . AS A MAT T ER OF FACT, IN PARGRAPH NO.3 OF HIS IMPU G N ED ORD E R, H E HAS AGR EED THAT THE SE R VICES PROVIDED BY TH E ASSESSEE SOCI E TY IN TH E M A TTER OF W A TER AND LAND MANAGEMEN T FOR TH E BENEFIT OF TH E FARM E RS AND OTHER ORGANI SA TION S FELL UN D ER THE AMBIT OF ADVANCEMENT OF AN OBJE C T OF GENERAL PUBLI C UTILITY. HOW E VER, KEEPING IN VIEW O N E OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE OF P R OVI D ING CONSULTANCY SERVI C ES, WHICH YIELDED SUBSTANTIAL INCO M E, HE H E L D RELYING ON TH E P R O V I S O TO S.2(15) INSERTED IN TH E S T ATUTE BY THE FIN A N CE ACT, 2008 WITH EFFECT F R OM 1.4.2009, THAT T H E ENTIRE ACTIVITY O F THE ASSESSEE SOCI E TY CANNOT B E CON S I DE RED AS FOR CHARITABLE PU R PO S E IN ORD E R TO BE E LIGIBLE FOR REGISTRATION UN D ER S.12A OF THE AC T. IN THI S REGARD, IT I S OBSERVED THAT A SIMILAR ISSUE HAD COME UP FOR CON S I D ERATION BEFORE THE HON'BL E DELHI HIGH COURT IN TH E CASE OF INDIA TRADE P ROMOTION ORGA NISA TIOSN V/S. DIRECTOR OF INCOME - TAX(EXEMPTION) (1124 DTR ( DEL ) 329) CITED BY THE LEARNED COUN S EL FOR THE ASSESSEE , I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 5 WHEREIN THE CLAIM O F TH E ASSESSEE , WHICH WAS OTHERWISE ESTABLI SH ED TO B E FOR THE PU R PO S ES OF ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY , FOR GRANT OF APPROVAL U/S. 10(23C)(IV) WAS DE N IED EXEMPTION BY THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) , RELYING ON THE P R OVI S O TO S.2(15). HON'BLE DELHI HIGH C OU R T HO W EVER, DIR ECTED THE LEARNED DIRECTOR OF INCOME - TAX(EXEMPTION) TO GRANT SUCH APPROVAL TO TH E ASSESSEE UN D ER S.10(23 C )( IV) , AFTER CON S I DE RIN G THE PU R PO SES AND EFFECT O F THE PROVISO TO S.2(15) OF THE AC T, AS IN S ERTED IN TH E STATUTE BY THE F INAN C E ACT, 2008 WITH EFFE CT F R OM 1ST APRIL, 2009 ELABORATELY. THE REL E VANT PO R TION OF THE OBSERVATION S OF HON'BLE DELHI HIGH COURT IN THIS CONTEXT IS EXTRAC T ED HEREUNDER F R OM THE HEAD - NOTE OF THE REPO R T (114 DTR) - THE PROVISO TO S. 2(15) DOES NOT MAKE ANY DISTINCTION BETWEEN ENTITIES CARRYING ON REGULAR TRADE, COMMERCE OR BUSINESS OR PROVIDING SERVICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS ON THE ONE HAND AND GENUINE CHARITABLE ORGANIZATIONS ON THE OTHER. IT MUST BE REMEMBERED THAT THE COURT IS CONSTRUING THE EXPRESSION 'CHARITABLE PURPOSE' NOT IN A VACUUM, BUT IN THE SPECIFIC CONTEXT OF S. 10 (23C)(IV). SEC. 10 DEALS WITH THE INCOMES NOT INCLUDED IN TOTAL INCOME. AND, 5 10(23C) (IV) SPECIFICALLY D E ALS WITH THE INCOME RECEIVED B Y ANY PERSON ON BEHALF OF, INTER ALIA, AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. THEREFORE, THE MEANING OF THE EXPRESSION 'CHARITABLE PURPOSES' HAS TO BE EXAMINED IN THE CONTEXT OF S. 10(23C)( IV). LOOKING AT THE SAID EXPRESSION FROM THIS STAND POINT, IT BECOMES CLEAR THAT IT HAS A REFERENCE TO INCOME. BECAUSE, IT IS ONLY WHEN SUCH AN INSTITUTION HAS AN INCOME THAT THE QUESTION OF NOT INCLUDING THAT INCOME IN ITS TOTAL INCOME WOULD ARISE. THE REFORE, MERELY BECAUSE AN INSTITUTION, WHICH OTHERWISE IS ESTABLISHED FOR A CHARITABLE PURPOSE, RECEIVES INCOME WOULD NOT MAKE IT ANY LESS A CHARITABLE INSTITUTION. WHETHER THAT INSTITUTION, WHICH IS ESTABLISHED FOR CHARITABLE PURPOSES, WILL GET THE EXE MPTION UNDER S. 10(23C)(IV) - WOULD HAVE TO BE DETERMINED BY THE PRESCRIBED AUTHORITY HAVING REGARD TO THE OBJECTS OF THE INSTITUTION AND ITS IMPORTANCE THROUGHOUT INDIA OR THROUGHOUT ANY STATE OR STATES. THERE IS NO DE N YING THAT HAVING REGARD TO THE OBJ ECTS OF THE ASSESSEE AND ITS IMPORTANCE THROUGHOUT INDIA IN THE FIELD OF ADVANCEMENT OF PROMOTION O F TR A DE AND COMMERCE, THE ASSESSEE WOULD BE ENTITLED TO BE REGARDED AS AN INSTITUTION WHICH WOULD QUALIFY FOR THAT EXEMPTION. THE ONLY THING THAT IS TO BE E XAMINED IS - WHETHER THE ASSESSEE HAD BEEN ESTABLISHED FOR CHARITABLE PURPOSES'? THE FACT THAT IT DERIVES INCOME DOES NOT, IN ANY WAY, DETRACT FROM THE POSITION THAT IT IS AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. THEREFORE, MERELY BECAUSE THE ASSESSEE DERIVES RENTAL INCOME, INCOME OUT OF SALE OF TICKETS AND SALE OF I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 6 PUBLICATIONS OR INCOME OUT OF LEASING OUT FOOD AND BEVERAGES OUTLETS IN THE EXHIBITION GROUNDS, DOES NOT, IN ANY WAY, AFFECT THE NATURE OF THE ASSESSEE AS A CHARITABLE INSTITUTIO N IF IT OTHERWISE QUALIFIES FOR SUCH A CHARACTER. TO PUT IT PLAINLY, IF AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES DID NOT RECEIVE AN INCOME AT ALL, THEN WHAT WOULD BE THE NEED FOR TAKING ANY BENEFIT UNDER S. 10(23C)(IV). THEREFORE, IF A MEANING IS GIVEN TO THE EXPRESSION 'CHARITABLE PURPOSE' SO AS TO SUGGEST THAT IN CASE AN INSTITUTION, HAVING AN OBJECTIVE OF ADVANCEMENT OF GENERAL PUBLIC UTILITY, DERIVES AN INCOME, IT WOULD BE FALLING WITHIN THE EXCEPTION CARVED OUT IN THE FIRST PROVISO TO S . 2(15), THEN THERE WOULD BE NO INSTITUTION WHATSOEVER WHICH WOULD QUALIFY FOR THE EXEMPTION UNDER S. 10(23C)(IV). AND, THE SAID PROVISION WOULD BE RENDERED REDUNDANT. THIS IS SO, BECAUSE, IF THE INSTITUTION HAD NO INCOME, RECOURSE TO S. 10(23C)(IV) WOU LD NOT BE NECESSARY. AND, IF SUCH AN INSTITUTION HAD AN INCOME, IT WOULD NOT, ON THE INTERPRETATION SOUGHT TO BE GIVEN BY THE REVENUE, BE QUALIFIED FOR BEING CONSIDERED AS AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. SO, EITHER W?:Y , THE PROVISIONS OF S. 10(23C)(IV) WOULD NOT BE A V AILABLE EITHER BECAUSE IT IS NOT NECESSARY OR BECAUSE IT IS BLOCKED. THE INTENTION BEHIND INTRODUCING THE PROVISO TOS.2(Q5) COULD CERTAINLY NOT HAVE BEN RO RENDER TEH PROVISIONS OF S.10(23C)(IV) REDUNDANT. MERELY BECAUSE A FEE OR SOME OTHER CONSIDERATION IS COLLECTED OR RECEIVED BY AN INSTITUTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTEBTISHEA FOR A CHARITABLE PURPOSE. IT IS ALSO IMPORTANT TO NOTE THAT ONE MUST EXAMINE AS TO WHAT IS THE DOMI NANT ACTIVITY OF THE INSTITUTION IN QUESTION. IF THE DOMINANT ACTIVITY OF THE INSTITUTION WAS NOT BUSINESS, TRADE OR COMMERCE, THEN ANY SUCH INCIDENTAL OR ANCILLARY ACTIVITY WOULD ALSO NOT FALL WITHIN THE CATEGORIES OF TRADE, COMMERCE OR BUSINESS. IT IS CLEAR FROM THE FACTS OF THE PRESENT CASE THAT THE DRIVING FORCE IS NOT THE DESIRE TO EARN PROFITS BUT, THE OBJECT OF PROMOTING TRADE AND COMMERCE NOT FOR ITSELF, BUT FOR THE NATION - BOTH WITHIN INDIA AND OUTSIDE INDIA. CLEARLY, THIS IS A CHARITABLE PURP OSE, WHICH HAS AS ITS MOTIVE THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY TO WHICH THE EXCEPTION CARVED OUT IN THE FIRST PROVISO TO S. 2(15) WOULD NOT APPLY. IF A LITERAL INTERPRETATION WERE TO BE GIVEN TO THE SAID PROVISO, THEN IT WOULD' RISK BEING HIT BY ART. 14 (THE EQUALITY CLAUSE ENSHRINED IN ART. 14 OF THE CONSTITUTION). IT IS WELL - SETTLED THAT THE COURTS SHOULD ALWAYS ENDEAVOUR TO UPHOLD THE CONSTITUTIONAL VALIDITY OF A PROVISION AND, IN DOING SO, THE PROVI SION IN QUESTION MAY HAVE TO BE READ DOWN. IT WOULD BE PERTINENT TO REITERATE THAT S. 2(15) IS ONLY A DEFINITION CLAUSE. SEC. 2 BEGINS WITH THE WORDS, 'IN THIS ACT, . UNLESS THE CONTEXT OTHERWISE REQUIRES'. THE EXPRESSION 'CHARITABLE PURPOSE' , APPEARIN G IN S. 2(15) HAS TO BE SEEN IN THE CONTEXT OF S. 10(23C)(IV). WHEN THE. EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN S. 2(15), IS READ IN THE CONTEXT OF S .. 1O(23C)(IV) THE COURT WOULD HAVE TO GIVE UP THE STRICT AND LITERAL INTERPRETATION' SOUGHT TO BE GIVEN TO THE EXPRESSION 'CHARITABLE PURPOSE' BY THE REVENUE. THE' INTRODUCTION OF THE PROVISO TO S. 2(15) BY VIRTUE OF THE FINANCE ACT, 2008 WAS' DIRECTED TO PREVENT THE UNHOLY PRACTICE OF PURE TRADE, COMMERCE AND BUSINESS ENTITIES FROM MASKING THEI R ACTIVITIES AND PORTRAYING THEM IN THE GARB 'OF AN ACTIVITY WITH THE OBJECT OF A GENERAL PUBLIC UTILITY. IT WAS NOT DESIGNED TO HIT AT THOSE INSTITUTIONS, WHICH HAD THE ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UTILITY AT THEIR HEARTS AND WERE CHARI TY INSTITUTIONS. THE ATTEMPT WAS TO REMOVE THE MASKS I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 7 FROM THE ENTITIES, WHICH WERE PURELY TRADE, COMMERCE OR BUSINESS ENTITIES, AND TO EXPOSE THEIR TRUE IDENTITIES. THE OBJECT WAS NOT TO HURT GENUINE CHARITABLE ORGANIZATIONS. AND, THIS WAS ALSO THE ASSU RANCE GIVEN BY THE FINANCE MINISTER WHILE INTRODUCING THE FINANCE BILL, 2008...... IN CONCLUSION, THE EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN S. 2(15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT OF S. 10(23C)(IV). IT IS ALSO CLEAR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO S. 2(15), THEN THE PROVISO WOULD BE AT RISK OF RUNNING FOWL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ART. 14 OF THE CONSTITUTION OF INDIA. IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF S. 10(23C)(IV) BECAUSE, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECT INTERPRETATION OF THE PROVISO TO S. 2(15) WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES 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. IN BOTH THE ACTIVITIES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMME RCE OR BUSINESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NAT URE 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 NO T DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TQ 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 CHARITABLE PURPOSES. THUS, WHILE UPHOLDING THE CONSTITU TION A L VALIDITY OF THE PROVISO TO S. 2(15), IT HAS TO BE READ DOWN IN THE MANNER INDICATED ABOVE. AS A CONSEQUENCE, THE IMPUGNED ORDER DT. 23RD JAR:. , 2013 IS SET ASIDE AND A MANDAMUS IS ISSUED TO THE RESPONDENT TO GRANT APPROVAL TO THE ASSESSEE UNDER S. 10(23C)(IV) WITHIN SIX WEEKS FROM THE DATE OF THIS JUDGMENT. IN OUR OPINION, THE RATIO OF THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION (SUPRA) IS DIRECTLY APPLICABLE TO THE ISSUE INVOLVED IN THE PRESENT CAS E AND R ESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED DIRECTOR OF INCOME - TAX (EXEMPTION) , WITH A DIRECTION TO GRANT REGISTRATION TO THE ASSESSEE SOCIETY UNDER S.12A OF THE ACT. I TA NO. 1 598 /H YD/20 1 2 M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, HYDERABAD 8 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 13 TH MAY , 2015 SD/ - SD/ - (G.C.GUPTA) ( P.M.JAGTAP ) VICE PRESIDENT ACCOUNTANT MEMBER D T/ - 13 TH MAY, 201 5 COPY FORWARDED TO: 1. M/S. WATER AND LAND MANAGEMENT TRAINING & RESEARCH INSTITUTE, C/O. SHRI K.VASANT KUMAR, A.V. RAGHU RAM, ADVOCATES, FLAT NO.610, 6TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD - 1. 2 . DIRECTOR OF INCOME - TAX(EXEMPTION) HYDERABAD 3. ASSTT . DIRECTOR OF INCOME - TAX(EXEMPTION) I, HYDERABAD 4. DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD B.V.S