Asst.Director of Income-tax (Exemptions)-III, Hyderabad V. Andhra Pradesh Foods, Hyderabad

ITA 1637/HYD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6181 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-10-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: B SATYANARAYANA MURTY
• Keywords: Gift; Charitable institution
• Section: 143(3); 12AA; 148

Judgement Text

ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NOS.1637 TO 1640/HYD/2013 (ASSESSMENT YEARS: 2005-06 TO 2007-08 & 2010-11) ASSTT. DIRECTOR OF INCOME TAX (EXEMPTION)-III HYDERABAD VS TELANGANA FOODS (FORMERLY KNOWN AS ANDHRA PRADESH FOODS) HYDERABAD PAN: AAATA 4938 R FOR REVENUE : SHRI P. CHANDRA SEKHAR, DR FOR ASSESSEE : SHRI B.SATYANARAYANA MURTY O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL ARE REVENUES APPEALS FOR THE A.YS 2005-06 TO 2007-08 AND 2010-11. IN ALL THESE APPEALS, REVENUE IS AGGRIEVED BY THE ORDERS OF THE CIT (A)-VI, HYDERABAD, DATED 2 0.09.2013. 2. FOR ALL THE ABOVE A.YS, THE COMMON GRIEVANCE OF TH E REVENUE IS THAT THE CIT (A) HAS ERRED IN HOLDING TH AT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. THE RE VENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR A.Y 2005- 06 WHICH ARE SIMILAR TO GROUNDS RAISED IN THE OTHER APPEALS: 1. THE ORDER OF THE LD.CIT (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE DATE OF HEARING : 10.01.2017 DATE OF PRONOUNCEMENT : 08.02.2017 ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 2 OF 11 ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 OF THE I.T ACT, 1961. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN IN THE STATEMENT OF COMPUTATION OF TOTAL INCOME SIGNED BY ITS MANAGING DIRECTOR FILED WITH THE RETURN OF INCOME, THE ASSESSEE HAS STATED THAT ITS INCOME CONSTITUTES INCOME FROM BUSINESS, THEREBY ADMITTING ABOUT ENGAGING IN BUSINESS ACTIVITY DR. RING THE PREVIOUS YEAR 2004-05, THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS DOING CHARITABLE ACTIVITY. 4. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN THE ASSESSEE IS ENGAGED IN MANUFACTURE AND SUPPLY OF FOOD PRODUCTS, MENTIONED IN COI.NO.8(A) PERTAINING TO NATURE OF BUSINESS OR PROFESSION IN THE TAX AUDIT REPORT IN FORM NO.3CD, FILED U/S.44AB OF THE IT ACT, 1961, THE ACTIVITY OF THE ASSESSEE, UNDER THAT CIRCUMSTANCES, DOES NOT COME UNDER THE PURVIEW OF SECTION 2(15) OF THE I.T ACT, 1961, AND HENCE, IT IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE I.T ACT, 1961. 5. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN THE ASSESSEE IS ENGAGED IN PRODUCTION AND SALE OF FOOD PRODUCTS, AS OBSERVED BY THE LD. CIT(APPEALS) IN PARA 7.8 OF THE APPELLATE ORDER, CIT(APPEALS) ERRED ILL HOLDING THAT THE OBJECTS OF THE ASSESSEE ARE FOR CHARITABLE PURPOSE. 6. THE LD. CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE WAS MAINLY WORKING AS A CONTRACTOR, SUPPLYING FOOD PRODUCTS PRODUCED IN ITS FACTORY TO STATE GOVERNMENT DEPARTMENTS AND THE SAME DO NOT COME UNDER THE AMBIT OF PROVISIONS OF SECTION 2(15) OF THE I.T ACT, 1961. 7. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN THE ASSESSEE IS SELLING FOOD PRODUCTS TO VARIOUS STATE GOVERNMENT DEPARTMENTS, THE LD. ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 3 OF 11 CIT(APPEALS) ERRED IN HOLDING THAT THE ACTIVITY OF THE ASSESSEE FALLS UNDER THE PURVIEW OF 'RELIEF OF POOR'. 8. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN THE ASSESSEE IS PAYING ALL OTHER APPLICABLE TAXES INCLUDING SALES TAX, SERVICE TAX, VAT ETC., ON ITS TURNOVER, WHICH SHOWS ITS NATURE AS A COMMERCIAL ORGANIZATION, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE'S ACTIVITY REMAINS 'RELIEF OF POOR'. 9. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND WHEN IN THE RETURN OF INCOME THE ASSESSEE HAS ADMITTED ABOUT ENGAGING IN BUSINESS ACTIVITY AND FURTHER ADMITTED HIGH NET PROFIT MARGIN OF 6.36% OF ITS TURNOVER, AS EVIDENT FROM COL. NO.32(B) OF THE AUDIT REPORT IN FORM NO.3CD FILED ALONG WITH THE RETURN OF INCOME, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ACTIVITY OF THE ASSESSEE FALLS WITHIN THE PURVIEW OF 'RELIEF OF POOR', AND THUS WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UJS.11 OF TH E I.T ACT, 1961. 10. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. BRIEF FACTS LEADING TO THE ABOVE DISPUTES ARE AS UNDER:- THE ASSESSEE IS A SOCIETY REGISTERED U/S 12AA OF TH E I.T. ACT. THE ASSESSEE SOCIETY IS DIRECTED BY THE DEPARTMENT OF W OMEN & CHILD WELFARE OF THE GOVT. OF A.P FOR SUPPLY OF NUTRITIOU S FOOD TO UNDER- NOURISHED CHILDREN, PREGNANT WOMEN AND LACTATING MO THERS OF BELOW POVERTY LINE. THE ASSESSEE WAS GRANTED REGIST RATION U/S 12AA OF THE ACT W.E.F. 23.3.1989 AND HAS BEEN FILIN G THE RETURN OF INCOME CLAIMING EXEMPTION U/S 11 OF THE I.T. ACT SI NCE THEN. THE ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 4 OF 11 ASSESSEE WAS GRANTED EXEMPTION U/S 11 FOR ALL THE A .YS UP TO A.Y 2004-05. 4. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y 2005-06 DECLARING TOTAL INCOME OF RS.4,37,42,619 AF TER CLAIMING EXEMPTION U/S 11 OF THE ACT. THE ASSESSMENT U/S 143 (3) WAS COMPLETED ACCEPTING THE RETURNED INCOME. SUBSEQUENT LY, A NOTICE U/S 148 WAS ISSUED FOR REOPENING THE ASSESSMENT AND THE ASSESSMENT U/S 143(3) DATED 25.3.2013 WAS COMPLETED DENYING THE EXEMPTION U/S 11 AND BRINGING TO TAX THE INCOME OVER EXPENDITURE. SIMILARLY, EXEMPTION U/S 11 WAS DENIED IN ALL THE LATER A.YS ALSO. AGGRIEVED, THE ASSESSEE PREFERRED A PPEALS BEFORE THE CIT (A) FOR EACH OF THE A.YS AND THE CIT (A) HAS ALLOWED THE SAME. AGGRIEVED BY THE ORDER OF THE CIT (A), THE RE VENUE IS IN APPEAL BEFORE US FOR ALL THE A.YS. 5. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO, W HILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE CIT (A). RESPECTIVE REPRESENTATIVES ALSO FILED WRIT TEN SUBMISSIONS IN SUPPORT OF THEIR CONTENTIONS. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE H AS BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT W.E.F. 23. 3.1989 AND HAS BEEN ALLOWED EXEMPTION U/S 11 OF THE ACT FOR ALL TH E A.YS UP TO A.Y 2004-05. THE OBJECTS OF THE ASSESSEE SOCIETY ARE AS UNDER: I. TO PROVIDE, EXPAND AND FACILITATE SUPPLY OF NUTRITIOUS FOODS TO SCHOOL AND PRE-SCHOOL CHILDREN, PREGNANT WOMEN AND LACTATING MOTHERS AND SUCH OTHER CATEGORIES OF BENEFICIARIES AS THE ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 5 OF 11 GOVERNMENT MAY FROM TIME TO TIME DECIDE WITHIN THE GENERAL FRAME WORK OF THE GOVERNMENT'S SOCIAL WELFARE PROGRAMME WITH A VIEW TO IMPROVING THE NUTRITIONAL STATUS OF VULNERABLE SECTIONS OF THE LOWER INCOME GROUPS AND TO ESTABLISH AND MANAGE FOOD OR OTHER FACTORIES FOR THE PURPOSE; II. TO CREATE RAW MATERIAL PRE-PROCESSING AND FOOD PROCESSING CAPACITY WITH ASSISTANCE FROM THE GOVT. OF INDIA, STATE GOVERNMENT AND INTERNATIONAL AGENCIES LIKE CARE AND UNICEF AND ALSO NATIONAL AGENCIES AND USE THE SAME FOR PRODUCTION OF RTE SNACKS AND OTHER PRODUCTS FOR THE NUTRITION PROGRAMMES OF THE STATE IN PARTICULAR AND FOR NUTRITION PROGRAMMES IN GENERAL; III. TO PROCESS RAW MATERIALS OF HIGH NUTRITIVE VALUE INDIGENOUS AS WELL AS IMPORTED FOR THE PRODUCTION OF READY-TO-EAT SNACKS, FORMULATED FLOURS AND OTHER TYPES OF PROCESSED FOODS; IV. TO PROMOTE AND ASSIST INSTITUTIONS FOR THE STUDY OF FOOD AND NUTRITION PROBLEMS AND REQUIREMENTS; V. THE PROPAGATION OF KNOWLEDGE AND EXPERIMENTAL MEASURES THE ASSISTANCE TO PROSECUTION, DEVELOPMENT AND COORDINATION OF RESEARCH GENERALLY OR SPECIFICALLY IN CONNECTION WITH STUDY OF THE CAUSES, MODE OF SPREAD AND PREVENTION OF DISEASES DUE TO MAL-NUTRITION; VI. TO EXCHANGE INFORMATION KNOWLEDGE AND PERSONNEL WITH OTHER INSTITUTIONS, ASSOCIATIONS AND SOCIETIES EITHER IN INDIA OR ELSEWHERE INTERESTED IN THE SAME SUBJECTS; VII. TO PREPARE AND PUBLISH ANY PAPERS OR PERIODICALS IN FURTHERANCE OF THE OBJECTS OF THE COUNCIL AND CONTRIBUTE TO ANY SUCH PERIODICALS; ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 6 OF 11 VIII. TO PUT TO USE ANY AVAILABLE EXCESS PRE- PROCESSING AND PROCESSING CAPACITY IN THE PLANTS OF THE FACTORY FOR ASSISTING OTHER GOVERNMENT UNITS-CENTRAL AND STATE AND ALSO FOR INTRODUCING THE PRODUCTS OF THE FACTORY INTO ADJACENT STATES FOR THEIR PROGRAMMES OF NUTRITION IT SHALL BE POSSIBLE ALSO THE FACTORY TO UTILIZE ANY PORTION OF ITS CAPACITY NOT ACTUALLY USED IN IMPLEMENTATION OF GOVERNMENT PROGRAMMES OF NUTRITION, FOR MARKETING OF ITS PRODUCTS; IX. TO AFFILIATE, COORDINATE, REGULATE AND DEVELOP THE WORKING OF FOOD AND NUTRITION PROJECTS IN ANDHRA PRADESH; X. TO COORDINATE WITH THE GOVERNMENT OF ANDHRA PRADESH, GOVERNMENT OF INDIA, INTERNATIONAL AGENCIES SUCH AS UNICEF, CARE AND VOLUNTARY AGENCIES TO ENSURE REGULAR SUPPLY OF NUTRITIOUS FOODS TO SCHOOL GOING CHILDREN, PRESCHOOL CHILDREN PREGNANT WOMEN, NURSING MOTHERS AND OTHER VULNERABLE GROUPS; XI. TO ISSUE APPEALS AND APPLICATIONS FOR MONEY AND FUNDS AND FURTHERANCE OF THE SAID OBJECTS AND TO ACCEPT GIFTS, DONATIONS AND SUBSCRIPTIONS OF CASH AND SECURITIES AND OF ANY PROPERTY EITHER MOVABLE OR IMMOVABLE; XII. TO ACQUIRE AND HOLD, WHETHER TEMPORARILY OR PERMANENTLY ANY MOVABLE OR IMMOVABLE PROPERTY NECESSARY, OR CONVENIENT FOR THE FURTHERANCE OF THE OBJECTS OF THE COUNCIL WHETHER IN INDIA OR OUTSIDE THE FRONTIER OF INDIA. XIII TO SELL, LEASE, EXCHANGE AND OTHERWISE TRANSFER ALL OR ANY OF THE PROPERTIES, MOVABLE OR IMMOVABLE, OF THE COUNCIL; XIV, TO CONSTRUCT, MAINTAIN AND ALTER ANY BUILDINGS OR WORKS NECESSARY OR CONVENIENT FOR THE PURPOSE OF THE COUNCIL; ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 7 OF 11 XV. TO UNDERTAKE AND ACCEPT THE MANAGEMENT OF ANY ENDOWMENT OR TRUST FUND OR DONATIONS THE UNDERTAKING WHEREOF MAY SEEM DESIRABLE FROM THE POINT OF IMPLEMENTATION OF NUTRITION PROGRAMMES; XVI. TO OFFER PRIZES AND TO GRANT SCHOLARSHIPS, IN FURTHERANCE OF THE OBJECTS OF THE COUNCIL; XVII. TO UNDERTAKE, ORGANIZE AND FACILITATE STUDY COURSES, CONFERENCES, LECTURES, SEMINARS, SUMMER INSTITUTES AND THE LIKE; XVIII. TO UNDERTAKE AND PROVIDE FOR THE PUBLICATION OF BOOKS, PERIODICALS JOURNALS AND RESEARCH PAPERS IN FURTHERANCE OF THE OBJECTS OF THE COUNCIL ; XIX. TO CONSTITUTE SUCH COMMITTEE OR COMMITTEES OR SUCH STUDY GROUP OR STUDY GROUPS OR SUCH WORKING GROUP OR WORKING GROUPS AS THE COUNCIL MAY CONSIDER NECESSARY FOR THE PERFORMANCE OF ITS FUNCTIONS; XX. TO SUBSCRIBE TO OR TO COOPERATE WITH OTHER INSTITUTIONS HAVING OBJECTS SIMILAR TO THOSE OF THE COUNCIL IN SUCH MANNER AS MAY BE CONDUCIVE TO THE REALIZATION OF THEIR COMMON OBJECTS AND TO DEPUTE ITS MEMBER(S) TO SERVE ON THE COMMITTEES OF THOSE INSTITUTIONS AS ITS REPRESENTATIVE( S); XXI. TO MAKE RULES FOR THE CONDUCT OF THE AFFAIRS OF THE COUNCIL TO ADD TO, AMEND, VARY OR ANNUAL THEM FROM TIME TO TIME; XXII. TO DOING OF ALL SUCH OTHER LAWFUL THINGS AS ARE INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS; 7. FROM A READING OF THE ABOVE OBJECTS, IT IS CLEAR THAT THE ASSESSEES OBJECTIVE IS TO SERVE THE POOR, MAINLY C HILDREN AND WOMEN, PARTICULARLY PREGNANT AND LACTATING MOTHERS. THE AO HAS ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 8 OF 11 DISALLOWED THE EXEMPTION U/S 11 ON THE GROUND THAT THE ASSESSEE IS ONLY A CONTRACTOR SUPPLYING FOOD TO VARIOUS DEPA RTMENTS OF GOVT. OF A.P TO IMPLEMENT ITS FLAGSHIP PROGRAMMES A ND THAT THE GOVT. IS REIMBURSING THE ASSESSEE WHICH IS RESULTIN G IN EXCESS OF INCOME OVER EXPENDITURE. ANOTHER GROUND ON WHICH TH E EXEMPTION IS DISALLOWED IS THAT THE ASSESSEE IS CARRYING ON A CTIVITY FOR PROFIT AND IS ALSO PAYING OTHER TAXES SUCH AS SALES TAX, V AT AND SERVICE TAX AND THEREFORE IT SHOULD ALSO PAY THE INCOME TAX . FOR COMING TO THIS CONCLUSION, THE AO HAS ALSO RELIED UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF INDIAN CHAMBER OF COMMERCE VS. CIT REPORTED IN 101 ITR 796. THE CIT ( A), ON THE OTHER HAND, HAS CONSIDERED THE OBJECTIVES OF THE AS SESSEE AND HAS HELD THAT THE ASSESSEE IS NOT CARRYING ON THE ACTIV ITIES FOR THE BENEFIT OF ANY GENERAL PUBLIC ENTITY BUT IS CARRYIN G ON RELIEF FOR THE POOR AND THEREFORE IT FALLS UNDER THE FIRST LIMB OF THE DEFINITION OF CHARITABLE PURPOSE AND EVEN IF IT IS CARRYING ON AN Y BUSINESS ACTIVITY, IT DOES NOT LOSE ITS CHARACTER OF A CHAR ITABLE PURPOSE AND THUS CANNOT BE DENIED EXEMPTION U/S 11 OF THE ACT. 8. WE FIND THAT THE DIT (E) HAD CANCELLED THE REGIS TRATION GRANTED TO THE ASSESSEE W.E.F. 1.4.2005 BY ORDERS D ATED 25.09.2014 AND THE ASSESSEE HAD CHALLENGED THE SAME BEFORE THE INCOME TAX APPELLATE TRIBUNAL. THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.759/HYD/2014 DATED 15.05.2015 HA S RESTORED THE REGISTRATION U/S 12AA OF THE ACT BY OBSERVING T HAT THE ASSESSEE CANNOT BE REFERRED TO AS THE CONTRACTOR TO THE GOVT. OF A.P AS IT IS INVOLVED IN MANUFACTURE AND SUPPLY OF FOOD TO THE BENEFICIARIES AND ONLY THE SUPERVISORY ACTIVITIES A RE CARRIED ON BY THE GOVT. OF A.P. IN BRINGING OUT SCHEMES FOR THE B ENEFIT OF THE ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 9 OF 11 BENEFICIARIES AND FIXING A SUITABLE PRICE TO MEET T HE COST OF MANUFACTURING AND OTHER OVERHEADS. FURTHER, THE HON' BLE TRIBUNAL HAS ALSO HELD THAT THERE IS NO PROHIBITION IN THE ACT THAT A CHARITABLE INSTITUTION SHOULD NOT INDULGE IN ANY OF THE BUSINESS ACTIVITIES AD THAT THE ONLY RESTRICTION IS THAT IT SHOULD CONFORM TO THE PROVISIONS OF SUB SECTION 4 AND 4A OF SECTION 1 1 OF THE IT. ACT AND THAT THE ACTIVITY SHOULD COME WITHIN THE PROVIS IONS OF SECTION 2(15) OF THE ACT DEFINING THE CHARITABLE PURPOSE. T HUS, THE GROUNDS ON WHICH THE ASSESSEE HAS BEEN DENIED EXEMP TION FOR THE A.YS BEFORE US HAVE ALREADY BEEN CONSIDERED BY THE C OORDINATE BENCH OF THE TRIBUNAL FOR RESTORING THE REGISTRATIO N TO THE ASSESSEE. 9. THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF INDIAN CHAMBER OF COMMERCE (CITED SUPRA) WAS WIT H REGARD TO THE MEANING OF THE TERM ADVANCEMENT OF ANY OBJECT O F GENERAL PUBLIC UTILITY NOT INVOLVING THE CARRYING ON THE AC TIVITY FOR PROFIT. THE ASSESSEE THEREIN WAS PRIMARILY ENGAGED IN ACTIV ITIES WHICH WAS PRIMARILY PROMOTION OF PRODUCTS AND TRADE INTER ESTS AND OTHER ALLIED SERVICE OPERATIONS AND THE BONE OF CONTENTIO N BEFORE THE HON'BLE SUPREME COURT WAS THAT THE 3 SOURCES (A) AR BITRATION FEES LEVIED BY THE CHAMBER, ( B ) FEES COLLECTED FOR THE CERTIFICATES OF ORIGIN, AND ( C ) SHARE OF PROFIT IN MESSRS. CALCUTTA LICENSED MEASURERS FOR ISSUE OF CERTIFICATES OF WEIGHMENT AN D MEASUREMENT FALL WITHIN THE EXCLUSION. THE HON'BLE SUPREME COUR T CONSIDERED THAT ALL THESE 3 SERVICES WERE EXTENDED TO THE MEMB ERS AND NON MEMBERS OR RATHER TO THE TRADE GENERALLY AND IT WAS IN THESE CIRCUMSTANCES THAT THE HON'BLE SUPREME COURT CONSID ERED THE DEFINITION OF CHARITABLE PURPOSE AND IN PARTICULA R CLAUSE 4 THEREOF ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 10 OF 11 AND HAS HELD THAT SECTION 2(15) EXCLUDES FROM EXEMP TION CARRYING ON ACTIVITIES FOR PROFIT EVEN IF THEY ARE LINKED WI TH THE OBJECTIVES OF GENERAL PUBLIC UTILITY. IT IS FURTHER HELD THAT TO BRING HIMSELF WITHIN SECTION 2(15), THE ONUS IS ON THE ASSESSEE T O SHOW THAT HIS OBJECTS ARE OF GENERAL PUBLIC UTILITY AND THUS THE ADVANCEMENT OF THESE OBJECTS THERE IS NO INVOLVEMENT OF ACTIVITIES FOR PROFIT. IN THE CASE BEFORE US, THE ASSESSEE HAS CLEARLY PROVED THA T IT IS NOT INVOLVED IN THE ACTIVITY OF ADVANCEMENT OF ANY OTHE R OBJECTS FOR GENERAL PUBLIC UTILITY BUT THAT IT IS INVOLVED IN A CTIVITY FOR RELIEF OF THE POOR ALBEIT BY THE GOVT. OF A.P. THE FACT THAT THE ASSESSEE ONLY MANUFACTURES AND SUPPLIES THE FOOD ITEMS TO THE GOV T. OF A.P. ITSELF, PROVES THAT THE ASSESSEE IS RENDERING THE S ERVICES THROUGH THE GOVT. OF A.P. THE PRICE OF THE GOODS IS NOT FIX ED BY THE ASSESSEE AT THE TIME OF ITS SUPPLY BUT IT IS FIXED BY THE GOVT. OF A.P. DEPENDING ON THE EXPENDITURE INCURRED BY THE A SSESSEE AND ALSO ITS OVERHEAD WHICH IS ALSO EVIDENT FROM THE FA CT THAT THE ASSESSEE SUFFERED LOSSES IN CERTAIN YEARS WHILE IT HAS EXCESS OF INCOME OVER EXPENDITURE IN CERTAIN OTHER YEARS. THE EXCESS OF INCOME OVER EXPENDITURE ALONE CANNOT BE A DETERMINI NG FACTOR AS TO THE NATURE OF THE ASSESSEES ACTIVITIES. THE EXE MPTION U/S 11 DEPENDS ON THE NATURE OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE AND NOT AS TO WHETHER THE ASSESSEE IS MAKING PROFIT OUT OF SUCH ACTIVITY. THE ESTABLISHMENT OF FACTORIES FOR MANUFA CTURING OF THE FOOD ARTICLES IS ALSO ONE OF THE ANCILLARY ACTIVITI ES OF THE ASSESSEE. THEREFORE, WE AGREE WITH THE FINDING OF THE CIT (A) THAT THE ASSESSEE IS AN INSTITUTION ENGAGED IN THE ACTIVITIE S FOR RELIEF OF THE POOR AND THEREFORE, WHETHER IT IS MAKING PROFIT OR OTHERWISE BECOMES IRRELEVANT WHILE GRANTING EXEMPTION U/S 11 OF THE ACT. FURTHER, THE CIT (A) HAD ALSO CALLED FOR A REMAND RE PORT FROM THE ITA NOS 1637 TO 1640 OF 2013 ANDHRA PRADESH FOODS HYDERABAD PAGE 11 OF 11 AO ABOUT THE APPLICATION OF INCOME AND HAS OBSERVED THAT IT HAS COMPLIED WITH THE PROVISIONS OF SECTION 11(4A) OF T HE ACT. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE O RDER OF THE CIT (A) FOR ALL THE A.YS. 10. IN THE RESULT, REVENUES APPEALS FOR ALL THE A. YS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 8 TH FEBRUARY, 2017. VINODAN/SPS COPY TO: 1 ASSTT. DIRECTOR OF INCOME TAX (E)-III, 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500004 2 ANDHRA PRADESH FOODS, NACHARAM INDUSTRIAL AREA, NA CHARAM, HYDERABAD 3 CIT (A)-IV HYDERABAD 4 DIT (E) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER