DDIT, CHENNAI V. Tamil Nadu Leather Tanners Exporters Importers Association, CHENNAI

ITA 2008/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8860 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 24-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVASJCIT
• Assessee Lawyers: DR ANITHA SUMANTH
• Keywords: Business income; Charitable institution
• Section: 143(3); 12; 11; 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS. 2006 TO 2008/MDS/2014 ( / ASSESSMENT YEARS: 2009-10 TO 2011-12) DEPUTY DIRECTOR OF INCOME TAX (EXEMPTIONS)-II, AAYAKAR BHAVAN, 3 RD FLOOR, CHENNAI-34. VS M/S. TAMIL NADU LEATHER TANNERS EXPORTERS IMPORTERS ASSOCIATION, 69/66, SYDENHAMS ROAD, PERIAMET, CHENNAI-600 003. PAN: AAATT4312Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHIVA SRINIVAS,JCIT /RESPONDENT BY : DR.ANITHA SUMANTH, ADVOCATE /DATE OF HEARING : 31 ST MAY, 2016 /DATE OF PRONOUNCEMENT : 3 RD AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THESE THREE APPEALS ARE FILED BY THE REVENUE AGGRIEVED BY THE COMMON ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS)-VII, CHENNAI DATED 28.03.20 14 IN ITA NO.560/11-12, 249/12-13 & 1080/13-14 PASSED UND ER SECTION 143(3) R.W.S. 250(6) OF THE ACT. SINCE THE ISSUES INVOLVED ARE IDENTICAL IN THESE THREE APPEALS, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO.2006 TO 2008/MDS/2016 2. THE REVENUE HAS RAISED SEVERAL ELABORATE GROUNDS IN THESE APPEALS, HOWEVER THE CRUX OF THE COMMON ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE SOCIETY IS ENTITLED FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 3. THERE IS A DELAY OF 14 DAYS IN FILING OF THE APP EAL FOR THE ASSESSMENT YEAR 2009-10 BY THE REVENUE. THE LEARNE D DIT (EXEMPTIONS) HAS FILED AN AFFIDAVIT STATING THAT TH E RECORDS IN THE APPEAL PAPERS INADVERTENTLY GOT MIXED UP WITH O THER FILES AND AFTER TRACING THE SAME, THE APPEAL WAS FILED B EFORE THE TRIBUNAL WITH A DELAY OF 14 DAYS. CONSIDERING THE P RAYER OF THE LEARNED DIT (EXEMPTIONS), WE ARE OF THE VIEW TH AT THE DELAY IN FILING OF THE APPEAL BY 14 DAYS REQUIRES T O BE CONDONED. ACCORDINGLY, WE HEREBY CONDONE THE DELAY IN FILING THE APPEAL AND TAKE UP THE APPEAL FOR ADJUDI CATION. 4. BRIEF FACTS OF THE CASE ARE THAT THAT THE ASSESS EE IS AN TRADE ASSOCIATION REGISTERED AS SOCIETY IN THE REG ISTRAR OF SOCIETIES, CHENNAI FILED ITS RETURN OF INCOME FOR T HE ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 ON 3 ITA NO.2006 TO 2008/MDS/2016 30.09.2009, 18.10.2010 AND 30.09.2011 RESPECTIVELY. THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION UNDER SEC TION 12A(A) OF THE ACT VIDE LETTER NO.DIT(E)NO.2 (529)/1 999-2000 DATED 22.12.2000. THE ACTIVITIES OF THE ASSOCIATION AS PER ITS MEMORANDUM OF ASSOCIATION PROVIDE AS FOLLOWS:- TO ENSURE THE, PROPER GROWTH OF ECONOMY IN THE COU NTRY AND THE AVAILABILITY OF STANDARD GOODS AT REASONABL E PRICES TO THE PUBLIC, TO ENCOURAGE EXPORTS WITH A V IEW TO IMPROVE THE FOREIGN EXCHANGE EARNINGS AND RESERVES OF THE COUNTRY AND TO SECURE A PRIDE OF PLACE FOR INDI A IN THE INTERNATIONAL TRADE RELATING TO LEATHER AND LEATHER PRODUCTS, AND TO SECURE THE AFORESAID ENDS. A) TO REPRESENT THE TRADE BEFORE THE GOVERNMENT, LOCAL AUTHORITIES, PANCHAYATS, RELATING TO TAX, RAW MATER IALS, ENVIRONMENTS ETC. B) TO REPRESENT BEFORE THE GOVERNMENT TO SECURE LICENCES FOR SCARCE RAW MATERIALS. C) TO EDUCATE THE TRADE COMMUNITY AND THE PUBLIC REGARDING EXPORT AND IMPORT PROCEDURES, POLICIES O F GOVERNMENT ETC. D) TO ENLIGHTEN THE TRADE COMMUNITY AND THE PUBLIC REGARDING INCOME - TAX, SALES - TAX AND ALSO THE PRESENT REQUIREMENT OF THE TRADE IN GENERAL WITH A VIEW TO SECURE COMPLIANCE WITH THE COUNTRY'S LAWS. E) TO HELP POOR STUDENTS FOR EDUCATION, FOR THE MARRIA GE OF POOR GIRLS, FOR CHARITABLE PURPOSE CIRCUMSTANCES , LIKE BURIALS ETC, AND ALSO POOR AGED PEOPLE. F) TO ENGAGE FROM TIME TO TIME IN SUCH ACTIVITIES AS MAY BE REQUIRED TO ACHIEVE THE ABOVE OBJECTS IN ADVANCEMEN T OF THE TRADE, COMMERCE AND INDUSTRY OF THE COUNTRY. PROVIDE THAT A) NONE OF THE ACTIVITIES CARRIED ON SHALL BE WITH THE INTENTION OF EARNING PROFITS AND 4 ITA NO.2006 TO 2008/MDS/2016 B) NONE OF THE ACTIVITIES CARRIED ON ABOVE SAID SHA LL BE CARRIED ON OUTSIDE INDIA. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE LEARNED ASSESSING OFFICER THAT THE A SSESSEE SOCIETY PURCHASED WATTLE FROM AFRICA AND DISTRIBUTE D THOSE GOODS TO ITS MEMBERS AND OTHER CONCERNS IN THE SAME INDUSTRY WITH MARGIN OF PROFIT. WATTLE IS ONE OF TH E MAIN CLEANING AGENTS FOR PROCESSING THE RAW HIDES. IN A DDITION TO THIS ACTIVITY, THE LEARNED ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE ASSOCIATION ALSO PROVIDED UNIFORM TO STUDE NTS, MEDICAL AID TO POOR AND EXTENDED DONATIONS FOR CHAR ITABLE CAUSES. IT WAS EXPLAINED BY THE ASSESSEE SOCIETY TH AT IT PROCURES RAW MATERIAL / WATTLE IN BULK FROM AFRICAN COUNTRIES AS IT IS AVAILABLE ONLY IN THOSE COUNTRIES AND DIST RIBUTED THE SAME TO SMALL TRADERS WHO DO NOT HAVE THE FACILITY TO IMPORT. IT WAS FURTHER EXPLAINED BY THE ASSESSEE SOCIETY TH AT THESE RAW MATERIALS ARE DISTRIBUTED AT LESS THAN THE MARK ET RATE, HOWEVER WITH A MARGIN OF PROFIT IN ORDER TO IRON OU T THE EXPENDITURE INCURRED BY THE SOCIETY AND COVER UP CU RRENCY FLUCTUATIONS. THUS IT WAS EXPLAINED THAT THE ACTIVI TY OF DISTRIBUTION OF WATTLE WAS CARRIED OUT WITHOUT ANY PROFIT MOTIVE. 5 ITA NO.2006 TO 2008/MDS/2016 BUT, IT WAS NOTICED BY THE LEARNED ASSESSING OFFICE R THAT THE ASSESSEE HAD EARNED SURPLUS FROM SUCH DISTRIBUTION `14,53,414/-, `26,79,130/- AND `49,20,557/- FOR THE ASSESSMENT YEARS 2009-10, 2010-11 AND 2011-12 RESPECTIVELY. THEREFORE, INVOKING THE PROVISO TO SE CTION 2(15) OF THE ACT, THE LEARNED ASSESSING OFFICER WITHDREW THE BENEFIT OF SECTION 11 & 12 OF THE ACT TO THE ASSESSEE AND B ROUGHT THE SURPLUS EARNED BY THE ASSESSEE TO TAX. 6. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) HELD THAT THE ACTIVITIES UNDERTAKEN BY TH E ASSESSEE TRUST ARE FOR THE FULFILLMENT OF THE CHARITABLE OBJ ECTS ON NON- COMMERCIAL LINES AND ARE NOT HIT BY THE PROVISIONS OF SECTION 2(15) OF THE ACT BY OBSERVING AS UNDER:- 4.4 THE ASSESSING OFFICER TOOK INTO ACCOUNT THE OBJECTS OF THE SOCIETY AS CAN BE SEEN FROM THE PAGE 2 OF THE ASSESSMENT ORDER OF ASSESSMENT YEAR 2009-10.AS CORRECTLY OBSERVED BY THE ASSESSING OFFICER THAT THE SOCIETY IS COMING UNDER THE LAST LIMB OF THE OBJECT OF 'GENERAL PUBLIC UTIL ITY'. THAT ITSELF DOES NOT MEAN THAT 2 ND PROVISO TO SEC.2(15) OF THE ACT IS AUTOMATICALLY ATTRACTED WHEN THE RECEIPTS EXCEED THE PRESCRIBED LIMIT OF RS.L0/25 LAKHS. WHERE AN ACTIVITY IS NOT PERVADED BY PROFIT MOTIVE BUT IS CARRIED ON PRIMARILY FOR SERVING THE DOMINANT CHARITABLE PURPOSES, IT WOULD NOT BE CORRECT TO DESCRIBE IT AS AN ACTIVITY FOR PR OFIT. ADVANCEMENT OR PROMOTION OF TRADE, COMMERCE AND INDUSTRY LEADING TO ECONOMIC PROSPERITY 6 ITA NO.2006 TO 2008/MDS/2016 ENSURES FOR THE BENEFIT OF THE ENTIRE COMMUNITY. THAT PROSPERITY WOULD BE SHARED ALSO BY THOSE WHO ENGAGE IN TRADE, COMMERCE AND INDUSTRY BUT ON THAT ACCOUNT THE PURPOSE IS NOT RENDERED ANY THE LESS AN OBJECT OF GENERAL PUBLIC UTILITY. IT MA Y BE REMEMBERED THAT PROMOTION AND PROTECTION OF TRADE, COMMERCE AND INDUSTRY CANNOT BE EQUATED WITH PROMOTION AND PROTECTION OF ACTIVITIES AND INTERESTS MERELY BY PERSONS ENGAGED IN TRADE, COMMERCE AND INDUSTRY. 4.5 THE PROVISOS TO SECTION 2(15) WOULD APPLY ONLY WHEN THE BUSINESS UNDERTAKEN IS AN 'UNRELATED BUSINESS' OF THE CHARITABLE ORGANIZATION. UNRELATED BUSINESS INCOME IS THE INCOME FROM A TRADE OR BUSINESS REGULARLY CONDUCTED BY AN EXEMPT ORGANIZATION AND NOT SUBSTANTIALLY RELATED TO THE PERFORMANCE BY THE ORGANIZATION OF ITS EXEMPT PURPOSE OR FUNCTION, EXCEPT THAT THE ORGANIZATION USES THE PROFITS DERIVED FROM THIS ACTIVITY. THE TERM 'TRADE OR BUSINESS' GENERAL LY INCLUDES ANY ACTIVITY CONDUCTED FOR THE PRODUCTION OF INCOME FROM SELLING GOODS OR PERFORMING SERVICES. BUT SUCH ACTIVITY LOSES ITS IDENTITY AS A TRADE OR BUSINESS IF IT IS DIRECTLY RELATED TO THE EXEMPT PURPOSES OF THE ORGANIZATION. 4.6 TO DISTINGUISH THE CHARACTERISTICS OF 'UNRELATE D BUSINESS ACTIVITY' AND 'RELATED BUSINESS ACTIVITY' AN ILLUSTRATION IS PROVIDED. A CHARITABLE ORGANIZATION ENGAGES PRIMARILY IN ACTIVITIES THAT FURTHER ITS EXEMPT PURPOSES. IT ALSO OWNS THE PUBLICATION RIGHTS TO A BOOK THAT DOES NOT RELATE TO ANY OF ITS CHARITABLE OBJECTS. THE ORGANIZATION EXPLOITS THE BOOK IN A COMMERCIAL MANNER BY ARRANGING FOR PRINTING, DISTRIBUTION, PUBLICITY, AND ADVERTISING IN CONNECTION WITH THE SALE OF THE BOOK. THESE ACTIVITIES CONSTITUTE A TRADE OR BUSINESS REGULARLY CONDUCTED. BECAUSE EXPLOITING THE BOOK IS UNRELATED TO THE ORGANIZATION'S EXEMPT PURPOSES (EXCEPT FOR THE USE OF THE BOOK'S PROFITS), THE INCOME IS UNRELATED BUSINESS INCOME. HOWEVER, IF THE ORGANIZATION HAS THE ACT OF DISSIPATION OF KNOWLEDGE THROUGH PUBLICATION OF BOOKS, PERIODICALS ETC AS ONE OF ITS CHARITABLE OBJECTS, THEN INCOME FROM SUCH ACTIVITY WILL NOT BE UNRELATED BUSINESS INCOME. 7 ITA NO.2006 TO 2008/MDS/2016 4.7 IN THE CASE UNDER CONSIDERATION THE PREDOMINANT PORTION OF THE INCOME EXCEEDING THE THRESHOLD LIMIT OF RS. 10,00,000/- IS THROUGH IMPOR T OF WATTLE EXTRACT AND SELLING IT TO MEMBERS AND EARNING INCOME OUT OF IT. THE INCOME OR SURPLUS SO EARNED IS PLOUGHED BACK INTO THE ORGANIZATION FOR USE IN ITS CHARITABLE ACTIVITY. THIS ACTIVITY IS SUBSTANTIALLY RELATED TO THE APPELLANT'S CHARITABLE PURPOSE AND CONTRIBUTES IMPORTANTLY IN ACCOMPLISHING THAT PURPOSE APART FROM PRODUCTION OF FUNDS. THEREFORE THE PROVISO TO SECTION 2(15) CANNOT BE INVOKED IN THE CASE OF THE APPELLANT. 4.8 THE 'B' BENCH OF ITAT AHMEDABAD IN THE CASE OF SABARMATI ASHRAM GAUSHALA TRUST V. ASSISTANT DIRECTOR OF INCOME-TAX ( EXEMPTION) [2013J 35 TAXMANN.COM 552 (AHMEDABAD - TRIB.) HAS HELD THAT WHERE THE AIMS AND OBJECTS OF ASSESSEE-TRUST WERE CHARITABLE AND PROFIT EARNED FROM SAID ACTIVITIES WAS INCIDENTAL IN NATURE, ASSESSEE WAS NOT HIT BY PROVISO TO SECTION 2(15). IT CLARIFIED T HAT WHERE A TRUST IS CARRYING OUT ITS ACTIVITIES ON NON-COMMERCIAL LINES WITH NO MOTIVE TO EARN PROFITS, FOR FULFILLMENT OF ITS AIMS AND OBJECTIVES , WHICH ARE CHARITABLE IN NATURE AND IN PROCESS EARN SOME PROFITS, THE SAME WOULD NOT BE HIT BY PROVISO TO SECTION 2(15). SINCE AIMS AND OBJECTS OF ASSESSEE-TRUST WERE CHARITABLE AND PROFIT EARNED FROM SAID ACTIVITIES IS INCIDENTAL IN NATURE, IT IS NOT HIT BY SECTION 2(15). 4.9 THE MEANING OF TRADE, COMMERCE OR BUSINESS WAS PROVIDED BY THE DELHI HIGH COURT IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V DGIT(E) 358 ITR 91 (DEL). IT STATED THAT THE EXPRESSIONS 'TRADE', 'COMMERCE' AND 'BUSINESS' OCCURRING IN FIRST PROVISO TO SECTION 2( 15) MUST B E READ IN THE CONTEXT OF INTENT AND PURPORT OF SECTIO N 2(15) AND CANNOT BE INTERPRETED TO MEAN ANY ACTIVITY CARRIED ON IN AN ORGANIZED MANNER.THE PURPOSE AND DOMINANT OBJECT FOR WHICH AN INSTITUTION CARRIED ON ITS ACTIVITIES IS MATERIAL T O DETERMINE WHETHER THE SAME IS BUSINESS OR NOT. THE PURPORT OF FIRST PROVISO TO SECTION 2(15) IS NO T TO EXCLUDE ENTITIES WHICH ARE ESSENTIALLY FOR CHARITABLE PURPOSE BUT ARE CONDUCTING SOME ACTIVITIES FOR A CONSIDERATION OR FEE. OBJECT OF INTRODUCING FIRST PROVISO IS TO EXCLUDE ORGANIZATIO NS 8 ITA NO.2006 TO 2008/MDS/2016 WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF 'CHARITABLE PURPOSE'. THE EXPRESSIONS 'TRADE', 'COMMERCE' AND 'BUSINESS' MUST BE INTERPRETED RESTRICTIVELY. WHERE THE DOMINANT OBJEC T OF AN ORGANIZATION IS CHARITABLE, ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FA LL WITHIN THE EXPRESSIONS. THE INTENTION OF THE LEGISLATURE IN INTRODUCING PROVISOS TO SECTION 2(15 ) IS NOT TO CURB ALL FORMS OF BUSINESS ACTIVITY OF A CHARITABLE INSTITUTION BUT TO CURTAIL THE BENEFITS TO ENTITIES WHICH CONDUCT BUSINESS IN THE GARB OF CHARITY. 4.10 IN THE APPELLANT'S CASE, FOR THE APPLICABILITY OF PROVISO TO SECTION 2(15), THE ACTIVITIES OF THE TRU ST SHOULD BE CARRIED OUT ON COMMERCIAL LINES WITH INTENTION TO MAKE PROFIT. WHERE THE TRUST IS CARRYI NG OUT ITS ACTIVITIES ON NON-COMMERCIAL LINES WITH NO MOTIVE TO EARN PROFITS, FOR FULFILMENT OF ITS AIMS AND OBJECTIVES, WHICH ARE CHARITABLE IN NATURE AND IN THE PROCESS EARN SOME PROFITS, THE SAME WOULD NOT BE HIT BY PROVISO TO SECTION 2( 15). THE AIMS AND OBJECTS OF THE ASSESSEE-TRUST ARE ADMITTEDLY CHARITABLE IN NATURE, AND WAS GRANTED REGISTRATION BY THE DIRECTOR OF INCOME TAX (EXEMPTION) UNDER SECTION 12AA. THE ASSESSEE HAS CARRIED OUT ITS ACTIVITIES IN ORGANIZING IMPORT OF WATTLE EXTRACT F OR THE FULFILLMENT OF ITS OBJECT OF PROMOTING LEATHER - TRADE IN TAMIL NADU AND IN THE PROCESS SOME PROFIT WAS EARNED BY THE ASSESSEE-TRUST, WHICH IS INCIDENTAL IN NATURE. MOREOVER SUCH SUBSTANTIAL INCOME EARNING ACTIVITY IS NEITHER A REGULAR BUSINESS ACTIVITY NOR A UN-RELATED BUSINESS ACTIVIT Y. THEREFORE THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE-TRUST FOR THE FULFILLMENT OF ITS CHARITABL E OBJECTS ON NON-COMMERCIAL LINES ARE NOT HIT BY THE PROVISO TO SECTION 2(15). 4.11 FINALLY IT BECOMES IMPERATIVE TO REPRODUCE THE HON'BLE FINANCE MINISTER'S SPEECH' WHILE MOVING AMENDMENTS TO DEFINE CHARITY U/S 2( 15). 'I ONCE AGAIN ASSURE THE HOUSE THAT GENUINE CHARITABLE ORGANIZATIONS WILL NOT IN ANY WAY BE AFFECTED. THE CBDT WILL, FOLLOWING THE USUAL PRACTICE, ISSUE AN EXPLANATORY CIRCULAR CONTAINING 9 ITA NO.2006 TO 2008/MDS/2016 GUIDELINES FOR DETERMINING WHETHER AN ENTITY IS CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. WHETHER THE PURPOSE IS A CHARITABLE PURPOSE WILL DEPEND ON THE TOTALITY OF THE FACTS OF THE CASE. ORDINARILY, CHAMBERS OF COMMERCE AND SIMILAR ORGANIZATIONS RENDERING SERVICES TO THEIR MEMBERS WOULD NOT BE AFFECTED BY THE AMENDMENT AND THEIR ACTIVITIES WOULD CONTINUE TO BE REGARDED AS 'ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. 4.12 THE APPELLANT IS AN INSTITUTION DEFINITELY FAL LING UNDER THE CATEGORY OF 'SIMILAR ORGANIZATIONS RENDERING SERVICES TO THEIR MEMBERS' AND GOING BY THE SPIRIT OF THE SPEECH OF THE HON'BLE FINANCE MINISTER ON THE FLOOR OF THE PARLIAMENT, THIS INSTI TUTION SHOULD CONTINUE TO BE REGARDED AS CHARITABLE ORGANIZATION WITH AN OBJECT OF ADVANCEMENT OF ANY OTHER GENERAL PUBLIC UTILITY. THEREFORE, THE PROVIS OS TO SECTION 2(15) BECOME SQUARELY INAPPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.13 EVEN IF THE OBJECT OR PURPOSE MAY NOT BE REGARDED AS CHARITABLE IN ITS POPULAR SIGNIFICATION AS NOT TENDING TO GIVE RELIEF, IT WOULD STILL BE INCLU DED IN THE EXPRESSION 'CHARITABLE PURPOSE' IF IT ADVANCES AN OBJECT OF GENERAL PUBLIC UTILITY. WHEN THE OBJECT O F A TRUST IS THE CARRYING ON OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT IS THAT OBJECT OF GENERA L PUBLIC UTILITY WHICH MUST NOT INVOLVE THE CARRYING ON OF A N ACTIVITY FOR PROFIT. IT IS IMMATERIAL HOW THE MONEY FOR ACHIEVING OR IMPLEMENTING SUCH PURPOSE WAS FOUND. THE FACT THAT MONEY WAS OBTAINED BY THE RUNNING OF AN ACTIVITY FOR PROFIT WOULD NOT MAKE THE OBJECT OF THE TRUST NOT CHARITABLE. IN VIEW OF THE ABOVE DISCUSSI ON, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT SOCIETY. IS ENTITLED I FOR EXEMPTION U/S 11 OF THE ACT THOUGH IT IS COVERED UNDER THE LAST LIMB OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WHICH IS NOT IN THE NATURE OF TRADE, COMMERCE AND INDUSTRY. MOREOVER, THE REGISTRATION U/S 12A(A) OF THE ACT WA S 10 ITA NO.2006 TO 2008/MDS/2016 ALLOWED TO CONTINUE BY THE ORDER OF THE DIT(E), CHENNAI IN HIS ORDER DATED 22.12.2000. I AM ALSO OF THE FIRM BELIEF THAT THE INCOME OF THE SOCIETY IS EXEMPT U/S 11 AND 12 OF THE ACT AS THE REGISTRATION U/S 12A(A) CONTINUED TO EXIST. HENCE, I DIRECT THE AO TO ACCEPT THE INCOME RETURNED AT NIL FOR ALL THE YEARS. 7. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE SOCIETIES ACTIVITY FALL S UNDER THE AMBIT OF THE LAST LIMB OF 2(15) OF THE ACT VIZ. GE NERAL PUBLIC UTILITY. HE FURTHER ARGUED STATING THAT THE ASSESS EE HAD CARRIED OUT TRADING ACTIVITY BY GENERATING SURPLUS WHICH IS OF COMMERCIAL NATURE AND THEREFORE, THE PROVISO TO SEC TION 15 OF THE ACT WOULD BE APPLICABLE .ACCORDINGLY THE SURPLU S EARNED BY THE ASSESSEE IS LIABLE TO BE TAXED. 8. THE LEARNED AUTHORIZED REPRESENTATIVE ON THE OTH ER HAND, ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE DECISIONS RELIED BY THE LEARNED CIT(A) AND WE DO NOT FIND IT TO BE APPLICABLE TO THE FACTS OF THE PR ESENT CASE 11 ITA NO.2006 TO 2008/MDS/2016 BEFORE US. ON EXAMINING THE FACTS OF THE CASE, IT I S EVIDENT THAT THE ASSESSEE IS PROCURING RAW MATERIAL FROM AF RICAN COUNTRIES AND DISTRIBUTING THE SAME TO ITS MEMBERS AS WELL AS OTHER CONCERNS WHICH HAS SIMILAR NATURE OF BUSINESS AS THOSE OF THE MEMBERS OF THE ASSESSEE SOCIETY. FURTHER FRO M THE OBJECTS OF THE ASSESSEE SOCIETY, IT IS EVIDENT THAT SUCH TRADING ACTIVITY INDULGED BY THE ASSESSEE SOCIETY IS NOT ME NTIONED IN THE OBJECTS OF THE ASSESSEE SOCIETY. MOREOVER, THE ACTIVITY OF THE ASSESSEE SOCIETY VIZ., PROCURING RAW MATERIALS FROM ABROAD AND DISTRIBUTING THE SAME WILL AMOUNT TO PUR E COMMERCIAL TRANSACTION BECAUSE IT IS PURELY A TRADI NG ACTIVITY GENERATING SUBSTANTIAL PROFITS. THERE IS NO ELEMENT OF CHARITY IN THIS KIND OF ACTIVITY INDULGED BY THE ASSESSEE S OCIETY. IT IS NOT A CASE WHERE THE ASSESSEE HAD IMPORTED RAW MATE RIALS AND DISTRIBUTED THE SAME AMONGST ITS MEMBERS AND OT HER COMMERCIAL ENTITIES HAVING SAME KIND OF BUSINESS ON COST TO COST BASIS. THE ACTIVITY CARRIED OUT BY THE ASSESSE E AT THE MOST BENEFIT THE MEMBERS OF THE ASSESSEE SOCIETY AN D CERTAIN COMMERCIAL ENTITIES HAVING SAME KIND OF BUS INESS AS THAT OF THE MEMBERS OF THE ASSESSEE SOCIETY AND THE PUBLIC WHO PURCHASES THE PRODUCE OF THESE ENTITIES. HENCE THIS 12 ITA NO.2006 TO 2008/MDS/2016 VENTURE OF THE ASSESSEE SOCIETY CANNOT BE INFERRED BEYOND THE SCOPE OF ADVANCEMENT OF ANY OTHER OBJECT OF GE NERAL PUBLIC UTILITY. THEREFORE, RELYING IN THE DECISION CITED BY THE LEARNED ASSESSING OFFICER WE ARE OF THE CONSIDERED VIEW THAT THE PROVISO TO SECTION 2(15) OF THE ACT WOULD BE AP PLICABLE IN THE CASE OF THE ASSESSEE AND ACCORDINGLY, THE SURPL US EARNED BY THE ASSESSEE DESERVES TO BE BROUGHT UNDER THE AM BIT OF TAX. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, ALL THE THREE APPEALS OF THE REV ENUE ARE ALLOWED IN ITS FAVOUR. ORDER PRONOUNCED IN THE OPEN COURT ON THE 3 RD AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 3 RD AUGUST, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .