DDIT (E), Delhi V. PHD Chamber of Commerce & Industry, New Delhi

ITA 248/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91007 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: C S AGGARWAL
• Keywords: Capital asset; Depreciation; Charitable institution; Question of law; Benefit of exemption
• Section: 12A; 28

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI B.C. MEENA , ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO S . 248 & 1572/DEL/2013 ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 DDIT, VS. PHD CHAMBER OF COMMERCE & INDUSTRY, INV. CIR. - II, ROOM NO. 306, PHD HOUSE, OPP. ASIAN GAMES VILLAGE, AAYAKAR BHAWAN, NEW DELHI. LAXMI NAGAR, N. DELHI. AAACP1438L (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VIKRAM SAHAY, SR. DR RESPONDENT BY : SH. C.S. AGGARWAL, SR. ADV. DATE OF HEARING: 16 .02 .2015 DATE OF PRONOUNCEMENT: ORDER PER SHRI C.M. GARG, J.M. THESE APPEALS HAVE BEEN FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XXI, NEW DELHI DATED 15.11.2012 IN APPEAL NO. 128/2010 - 11 FOR A.Y. 2008 - 09 AND ANOTHER ORDER DATED 31.01.2013 IN APPEAL NO. 257/2011 - 12 FOR A.Y. 2009 - 10 RESPECTIVELY. 2. GROUNDS RAISED BY THE REVENUE IN ITA NO. 248/DEL/2013 : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE. 2. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE ACTIVITIES OF THE 2 ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DI RECTION TO ALLOW DEPRECIATION ON RS. 73,68,590/ - . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTION TO ALLOW DEDUCTION OF RS. 9,05,460/ - ON ACCOUNT OF PROVISION FOR LEAVE ENCASHMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTION TO ALLOW DEDUCTION OF RS. 65,00,000/ - ON ACCOUNT OF PROVISION OF GRATUITY. 3. GROUNDS RAISED BY THE REVENUE IN ITA NO. 1572/DEL/2013 READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE ACTIVITIES OF THE ASSESSEE ARE CHARITABLE IN NATURE; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961; 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION ON EARNED SURPLUS OF RS. 2,41,40,492/ - ON THE BASIS OF PRINCIPLE OF MUTUALITY; 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW DEPRECIATION OF RS. 76,62,753/ - ; 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT( A) HAS ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION OF RS. 73,36,350/ - ON ACCOUNT OF PROVISION FOR GRATUITY. 4. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. BRIEFLY STATED THE FACTS GIVING RISE T O THESE APPEALS ARE THAT THE ASSESSEE WAS ESTABLISHED IN 1909 AND IT WAS INCORPORATED AS A COMPANY ON 26.04.1951 AS PUNJAB CHAMBER OF COMMERCE AND THEREAFTER ON 13.08.1981 AFRESH CERTIFICATE OF INCORPORATION WAS ISSUED IN THE NAME OF PHD CHAMBER OF COMMERC E 3 AND INDUSTRY UNDER COMPANIES ACT, 1956. THE ASSESSEE IS ALSO REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 VIDE CERTIFICATE DATED 23/05/1994 FROM THE A.Y. 1996 - 97 UPTO A.Y. 2005 - 06 AND IT WAS GRANTED EXEMPTION U/S 11 OF THE ACT. FOR THE YEAR ASSESSMEN T YEAR UNDER CONSIDERATION, THE AO NOTED THAT THE ASSESSEE HAS NOT RESTRICTED ITS ACTIVITIES ONLY TO THE MEMBERS AND THE ASSESSEE IS DOING BUSINESS ACTIVITY EITHER SPECIFIC SERVICE TO ITS MEMBERS WHICH IS TAXABLE U/S 28(III) OF THE ACT OR THE BUSINESS OR P ROFESSIONAL SERVICES TO THE NON MEMBERS WHICH IS TAXABLE U/S 28 OF THE ACT. THEREAFTER THE AO HELD THAT SINCE THE ASSESSEE IS NOT CARRYING OUT ANY CHARITABLE ACTIVITY. THEREFORE, EXEMPTION U/S 11 OF THE ACT IS DENIED AND THE RECEIPTS COLLECTED FROM THE M EMBERS AND NON MEMBERS ARE TAXED U/S 28(III) OF THE ACT. 5. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHICH WAS ALLOWED BY PASSING THE IMPUGNED ORDER GRANTING PART RELIEF FOR THE ASSESSEE. NOW THE AG GRIEVED REVENUE BEFORE THIS TRIBUNAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. 6. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) CONTENDED THAT WHILE THE ASSESSEE IS NOT WORKING ACCORDING TO THE AIMS AND OBJECTIVES OF THE MEMORANDUM OF THE ASSOCIATION AND IS P ROVIDING SERVICES TO THE NON MEMBERS PERFORMING PROFESSIONAL SERVICES TO ALL THEN IT SHOULD BE INFERRED THAT THE ASSESSEE IS DOING BUSINESS ACTIVITY. THE LD. DR ALSO 4 CONTENDED THAT THE ASSESSEE HAS NOT RESTRICTED ITS ACTIVITIES ONLY TO THE MEMBERS. THERE FORE, EITHER SPECIFIC SERVICE TO ITS MEMBERS OR THE BUSINESS OR PROFESSIONAL SERVICES TO THE NON MEMBERS BOTH ARE TAXABLE U/S 28 OF THE ACT. THE LD. DR VEHEMENTLY CONTENDED THAT IN VIEW OF AFORESAID FACTS THE ASSESSEE IS NOT CARRYING OUT ANY CHARITABLE A CTIVITIES. THEREFORE, THE AO WAS CORRECT IN DENYING EXEMPTION U/S 11 OF THE ACT AND RIGHTLY TAXED ALL THE RECEIPTS COLLECTED FROM THE MEMBERS AND NON MEMBERS. 7. THE LD. DR SUPPORTING THE ORDER OF THE AO FOR A.Y. 2009 - 10 SUBMITTED THAT AFTER THE AMENDMENT TO SECTION 2(15) OF THE ACT W.E.F. A.Y. 2009 - 10 THE ASSESSEE S CLAIM OF EXEMPTION THE SIXTH LIMB OF THE CHARITABLE ACTIVITY MENTIONED IN SECTION 2(15) OF THE ACT IS NOT TENABLE. THE LD. DR ALSO DRAWN OUR ATTENTION TOWARDS PARAGRAPH NO. 14 OF THE ASSESSME NT ORDER FOR A.Y. 2009 - 10 AND SUBMITTED THAT THE ASSESSEE S CLAIM OF EXEMPTION ON THE MUTUALITY WAS RIGHTLY REJECTED AS THE ASSESSEE WAS UNDER THE PURVIEW OF NEWLY INSERTED PROVISO TO SEC. 2(15) OF THE ACT. THE LD. DR , JUSTIFYING THE ACTION OF THE AO FURTHER SUBMITTED THAT AFTER PROVISO INSERTED TO SEC. 2(15) OF THE ACT W.E.F. 2009 - 10 IN A CASE OF GENERAL PUBLIC UTILITIES THE ENTITIES WILL NO LONGER BE ENJOYING CHARITABLE STATUS IF THEY INVOLVE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATI ON TO ANY TRADE, OR BUSINESS F OR A CESS OR FEE OR ANY OTHER CONSIDERATION IRRESPECTIVE OF 5 THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY . THE LD. DR LASTLY SUBMITTED THAT THE AO RIGHTLY DENIED EXEMPTION U/S 11 & 12 OF THE ACT TO THE ASSESSEE SOCIETY AND RIGHTLY TAXED THE SAME. 8. REPLYING TO THE ABOVE, THE LD. SR. COUNSEL OF THE RESPONDENT ASSESSEE AT THE VERY OUTSET, SUBMITTED THAT WHILE FRAMING THE ASSESSMENT FOR A.Y. 2006 - 07 AND 2007 - 08, THE AO FOR THE FIRST TIME HELD THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF RENDERING SERVICES NOT ONLY TO ITS MEMBERS BUT ALSO TO THE NON MEMBERS AND, THEREFORE, THE PROVISIONS OF SEC. 11(4A) OF THE A CT (W.E.F. 01.04.12) WERE ATTRACTED AND HENCE EXEMPTION U/S 11(1) OF THE ACT COULD NOT BE GIVEN TO THE ASSESSEE. THE LD. SR. COUNSEL FURTHER POINTED OUT THAT IN THESE ASSESSMENT YEARS THE AO ALSO OBSERVED THAT SINCE THE EXEMPTION COULD BE HELD ALLOWABLE ONLY IF THE BUSINESS WAS INCIDENTAL TO THE CARRYING OUT OF THE PURCHASE OF THE TRUSTS AND SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED FOR THE BUSINESS. THE LD. SR. COUNSEL FURTHER POINTED OUT THAT THE AO FINALLY HELD THAT AS THE ASSESSEE WAS ALSO PROVIDING SERVICES TO THE NON MEMBERS AND HAD NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS THEREFORE, THE EXEMPTION U/S 11 OF THE ACT COULD NOT BE GRANTED TO THE ASSESSEE BECAUSE THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT CHARITABLE IN NATURE AS BY PROVIDING SERV ICES TO NON MEMBERS IT WAS CARRYING ON ACTIVITY FOR CONSIDERATION AND WITH PROFIT MOTIVE . 6 9. THE LD. SR. COUNSEL FURTHER POINTED OUT THAT THE FINDINGS OF THE AO DENYING THE EXEMPTION WAS UPHELD BY THE ITAT IN ITA NO. 1233/D/2010 DATED 31.03.2011 FOR A.Y. 2 006 - 07 AND ITA NO. 5685/D/2010 DATED 19.12.2011 FOR A.Y. 2007 - 08. THE LD. SR. COUNSEL STRENUOUSLY POINTED OUT THAT THE HON BLE HIGH COURT ALLOWED THE APPEALS OF THE ASSESSEE WHICH WERE FILED AGAINST THE ORDERS OF THE TRIBUNAL (SUPRA), BY ITS JUDGMENT REPO RTED IN 357 ITR 296 (DEL.). THE LD. SR. COUNSEL FURTHER DRAWN OUR ATTENTION TOWARDS PLACITUM 20 OF THE JUDGMENT OF HIGH COURT (SUPRA) AND SUBMITTED THAT THE HON BLE HIGH COURT HELD THAT THE AFORESAID FINDINGS OF THE TRIBUNAL THAT THE ASSESSEE S ACTIVITIES COULD NOT BE TERMED AS CHARITABLE CANNOT BE SUSTAINED AS THE ACTIVITIES PERFORMED BY THE ASSESSEE WERE SIMILAR WITH THE ACTIVITIES PROVIDED TO THE NON MEMBERS AND THE SAME WERE NOT WITH THE PROFIT MOTIVE AND, THEREFORE, CANNOT BE CHARACTERIZED AS NON CHAR ITABLE IN NATURE. THE LD. SR. COUNSEL OF THE ASSESSEE VEHEMENTLY CONTENDED THAT THE AFORESAID FINDINGS OF THE HON BLE HIGH COURT THAT THE ASSESSEE IS A CHARITABLE INSTITUTION AND HAD BEEN SET UP WITH A CHARITABLE OBJECT AND THERE WAS NO NEED TO MAINTAIN S EPARATE BOOKS OF ACCOUNTS. THE LD. SR. COUNSEL FURTHER POINTED OUT THAT FOR A.Y. 2009 - 10 THE ASSESSEE HAS MAINTAINED SEPARATE BOOKS OF ACCOUNTS AND DETAILS OF RECEIPTS AND ALLOCATION OF EXPENSES HAS BEEN PLACED AT PAGE NO. 49 TO 51 OF THE PAPER BOOK OF TH E ASSESSEE. THE LD. SR. COUNSEL ALSO DRAWN OUR ATTENTIONS TOWARDS THIS FACT THAT THE FACTUAL 7 SITUATION REMAINS THE SAME IN THE TWO SUBSEQUENT ASSESSMENT YEARS UNDER CONSIDERATION BEFORE US AS THERE IS NO CHANGE OF FACTS THAT THE ASSESEE CARRIED ON THE SAM E ACTIVITIES AS WERE CARRIED BY IT IN THE EARLIER ASSESSMENT YEARS AND SUCH ACTIVITIES ARE IN ACCORDANCE WITH ITS MEMORANDUM AND ARTICLE OF ASSOCIATION RIGHT FROM ITS INCORPORATION TILL DATE . 10. THE LD. SR. COUNSEL REITERATED ITS ARGUMENTS AND CONTENDED THAT THE AO HAD GONE WRONG IN DENYING EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE IN RESPECT OF ITS SURPLUS AS IS REFLECTED IN THE INCOME AND EXPENDITURE ACCOUNT ON THE GROUND THAT IT EITHER DID NO T CARRY OUT ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECTS OR THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE. 11. THE LD. SR. COUNSEL FURTHER POINTED OUT CALCULATION OF TAXABLE INCOME BY THE AO AND SUBMITTED THAT THE GROSS RECEIPTS AGGREG ATES TO RS. 11,75,01,190/ - FOR A.Y. 2008 - 09 AND AGGREGATES TO RS. 12,36,91,232/ - FOR A.Y. 2009 - 10 AND THE SURPLUS BEFORE DEPRECIATION WAS 3,06,27,500/ - FOR A.Y. 2008 - 09 AND RS. 3,22,63,291/ - FOR A.Y. 2009 - 10 RESPECTIVELY AND FOR A.Y. 2008 - 09 THE CLAIM OF D EPRECIATION WAS WRONGLY DENIED WHICH WAS A STATUTORY DEDUCTION IN VIEW OF DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF DIT(E) VS. INDRAPRASTHA CANCER SOCIETY (2015) 53 TAXMANN.COM 463 (DEL.) . 8 12. SUPPORTING THE IMPUGNED ORDERS OF T HE CIT(A) IN BOTH THE ASSESSMENT YEARS THE LD. SR. COUNSEL POINTED OUT THAT THE CIT(A) RIGHTLY DIRECTED THE AO TO ALLOW DEPRECIATION, PROVISION FOR LEAVE ENCASHMENT AND PROVISION OF GRATUITY FOR A.Y. 2008 - 09 AND THE CIT(A) WAS ALSO JUSTIFIED IN DIRECTING T HE AO TO ALLOW EXEMPTION ON EARNED SURPLUS ON THE BASIS OF PRINCIPLES OF MUTUALITY, TO ALLOW DEPRECIATION AND PROVISION FOR GRATUITY FOR A.Y. 2009 - 10. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO PLACED A REJOINDER AND SUBMITTED THAT THE PROVISO TO SEC. 2( 15) OF THE ACT WAS CAME INTO EXISTENCE W.E.F. A.Y. 2009 - 10. THEREFORE, THE AO WAS QUITE JUSTIFIED IN DENYING EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE IN VIEW OF NEWLY INSERTED PROVISION TO SECTION 2(15) OF THE ACT. 14. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN ASSESSEE S OWN CASE FOR A.Y. 2006 - 07 AND A.Y. 2007 - 08 (SUPRA) IN PARA 20 AT PAGE 310 HAS OBSERVED AS UNDER: 20. TURNING SPECIFICALLY TO THE FACTS OF THE CASE BEFORE US, WE FIND THAT THERE IS NO DISPUTE THAT THE OBJECTS OF THE ASSESSEE ARE CHARITABLE IN NATURE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. THE TRIBUNAL HAS SO HELD AND THAT FINDING IS NOT UNDER CHALLENGE BEFORE US BY THE REVENUE. CLAUSE 4 OF THE MEMORANDUM OF A SSOCIATION PRESCRIBED THE DISTRIBUTION OF PROFIT AND IS IN THE FOLLOWING TERMS: 4. THE INCOME AND PROPERTY OF THE COMPANY WHENSOEVER DERIVED SHALL BE APPLIED SOLELY TOWARDS THE PROMOTION OF THE OBJECTS OF THE COMPANY AS SET FORTH IN THIS MEMORANDUM OF AS SOCIATION, AND NO 9 PORTION BY WAY OF DIVIDEND OR BONUS OR OTHERWISE, SHALL BE PAID TO THE PERSONS WHO AT ANY TIME, ARE, OR HAVE BEEN, MEMBERS OF THE COMPANY, OR TO ANY OF THEM OR TO ANY PERSON CLAIMING THROUGH ANY OF THEM; PROVIDE THAT NOTHING HEREIN CONTAI NED SHALL PREVENT THE PAYMENT IN GOOD FAITH OF REMUNERATION TO ANY OFFICER OR SERVANTS OF THE COMPANY, TO ANY MEMBER THEREOF, OR TO ANY OTHER PERSON IN RETURN FOR ANY SERVICES ACTIVELY RENDERED TO, FOR OR ON BEHALF OF THE COMPANY OR OF INTEREST ON MONEY BO RROWED BY OR FOR THE PURPOSES OF THE COMPANY, FROM ANY PERSON, WHETHER A MEMBER OF THE COMPANY OR OTHERWISE. 15. WE FURTHER RESPECTFULLY NOTE THAT THE HON BLE HIGH COURT IN PARA 22 AT PAGE 311 HAS CLEARLY OBSERVED THAT THE ACTIVITIES AS DRIVEN BY CHARITAB LE MOTIVE IN THE SENSE IN WHICH A CHARITABLE PURPOSE IS DEFINED IN SECTION 2(15) OF THE ACT. THE PROVISIONS OF SECTION 11(4A) OF THE ACT ARE NOT ATTRACTED TO THE CASE OF THE ASSESSEE I.E. PHD CHAMBER OF COMMERCE & INDUSTRY. RESPECTFULLY FOLLOWING THE JUD GMENT OF THE HON BLE HIGH COURT OF DELHI IN ASSESSEE S OWN CASE (SUPRA), WE ARE INCLINED TO HOLD THAT THE ASSESSEE S ACTIVITIES ARE BEING DRIVEN BY A CHARITABLE MOTIVE ACCORDING TO ITS OBJECTS AS PER MEMORANDUM OF ASSOCIATION. 16. TURNING TO THE ISSUE O F NEWLY INSERTED PROVISO TO SECTION 2(15) OF THE ACT FIRSTLY WE RESPECTFULLY TAKE COGNIZANCE OF DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DGIT(E) (2015) 53 TAXMANN.COM 404 (DEL.) , WHEREIN THEIR LORDSHIPS HELD THAT THE CORRECT INTERPRETATION OF PROVISO TO SECTION 2(15) OF THE ACT WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM CHARITABLE 10 PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITE D TO THE ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. SPEAKING FOR HON BLE HIGH COURT OF DELHI THEIR LORDSHIPS FURTHER ELABORATED THAT IN BOTH THE ACTIVITIES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN AND IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITA BLE PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERING OF ANY SERVICES IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM ITS OBJEC T TO BE A CHARITABLE PURPOSE. THE HON BLE HIGH COURT ALSO OBSERVED THAT WHERE INSTITUTION IS NOT DRIVEN 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 REG ARDED AS AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. 17. THE HON BLE HIGH COURT ALSO HELD THAT THE INTRODUCTION OF THE FIRST PROVISO TO SECTION 2(15) OF THE ACT BY VIRTUE OF FINANCE ACT, 2008 WAS DIRECTED TO PREVENT THE UNHOLY PRACTISE OF PURE TR ADE, COMMERCE AND BUSINESS ENTITIES FROM MARKING THEIR ACTIVITIES AND PORTRAYING THEM IN THE GARB OF AN ACTIVITY WITH THE OBJECT OF A GENERAL PUBLIC UTILITY AND THE 11 PROVISO HAS NOT BEEN DESIGNED AND INSERTED TO HIT THOSE INSTITUTIONS, WHICH HAD THE ADVANCE MENT OF THE OBJECTS OF GENERAL PUBLIC UTILITY AT THEIR HARDS AND WERE CHARITY INSTITUTIONS. EMPHASIZING ON THE INTENTION OF THE LEGISLATION THE HON BLE HIGH COURT ALSO HOLD THAT THE OBJECT TO INSERT PROVISO TO SECTION 2(15) OF THE ACT WAS NOT TO HURT GENU INE CHARITABLE ORGANIZATIONS AND I T WAS ENFORCED TO REMOVE THE MAS K FROM THE ENTITIES, WHICH WERE PURELY TRADE, COMMERCE AND BUSINESS ENTITIES AND TO EXPOSE THEIR TRUE IDENTITIES A S PER ASSURANCE GIVEN BY THE THEN HON BLE FINANCE MINISTER WHILE INTRODUCING FINANCE BILL, 2008. THEIR LORDSHIPS ALSO MA DE IT CLEAR THAT IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO TO SEC. 2(15) OF THE ACT THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SEC. 10(23C)(IV) OF THE ACT BECAUSE CON TEXT REQUIRES SUCH INTERPRETATION. IT WAS ALSO HELD THAT WHEN THE EXPRESSION CHARITABLE PURPOSE AS DEFINED IN SEC. 2(15) OF THE ACT IS READ IN THE CONTEXT OF SEC. 10(23C)(IV) OF THE ACT, WE WOULD HAVE TO GIVE UP THE STRICT AND LITERAL INTERPRETATION SOU GHT TO BE GIVEN TO THE EXPRESSION CHARITABLE PURPOSE BY THE LEGISLATURE. 18 . WE RESPECTFULLY REPRODUCED RELEVANT OPERATIVE PARAGRAPH OF THE DECISION OF HON BLE HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DGIT(E) (SUPRA) WH ICH READS AS UNDER: 43. FROM THIS, IT IS CLEAR THAT PRIOR TO THE INTRODUCTION OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT, THERE WAS NO DISPUTE THAT THE PETITIONER WAS ESTABLISHED FOR CHARITABLE PURPOSES AND, 12 THEREFORE, ITS INCOME WAS NOT TO BE INCLUDED IN THE TOTAL INCOME AND WAS, THEREFORE, GRANTED THE BENEFIT OF EXEMPTION. WE HAVE ALREADY NOTED ABOVE, WHILE DISCUSSING THE FACTS OF THE CASE THAT THE INCOME RECEIVED BY THE PETITIONER IS FROM THE LETTING OUT OF SPACE, SALE OF PUBLICATIONS, SALE OF TICKETS AND LEASING OUT FOOD AND BEVERAGES OUTLETS IN PRAGATI MAIDAN. THE DOMINANT AND MAIN OBJECT OF THE PETITIONER IS TO ORGANISE TRADE FAIRS / EXHIBITIONS IN ORDER TO PROMOTE TRADE, COMMERCE AND BUSINESS NOT ONLY WITHIN INDIA, BUT INTERNATIONALLY. THIS IS DONE THROUGH THE ORGANISATION OF TRADE FAIRS, INCLUDING THE ANNUAL INTERNATIONAL TRADE FAIR AND OTHER EXHIBITIONS. IT IS FOR THIS PURPOSE THAT THE SPACE IS LET OUT TO VARIOUS ENTITIES DURING THE SAID FAIRS AND EXHIBITIONS. ALL THESE ACTIVITIES, I NCLUDING THE SALE OF TICKETS AND SALE OF PUBLICATIONS ARE AN INHERENT PART OF THE MAIN OBJECT OF THE PETITIONER. IT IS CLEAR FROM THE FACTS OF THE CASE THAT PROFIT MAKING IS NOT THE DRIVING FORCE OR OBJECTIVE OF THE PETITIONER. IT IS REGISTERED UNDER SEC TION 25 OF THE COMPANIES ACT, 1956, WHICH SPECIFICALLY APPLIES TO ENTITIES WHICH INTEND TO APPLY THEIR PROFITS, IF ANY, OR OTHER INCOME IN PROMOTING THEIR OBJECTS AND PROHIBITS, THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. THIS MAKES IT CLEAR THAT ANY INCO ME GENERATED BY THE PETITIONER DOES NOT FIND ITS WAY INTO THE POCKETS OF ANY INDIVIDUALS OR ENTITIES. IT IS TO BE UTILIZED FULLY FOR THE PURPOSES OF THE OBJECTS OF THE PETITIONER. 46. AT THIS JUNCTURE, WE MAY POINT OUT THAT WE ARE IN AGREEMENT WITH THE AR GUMENT ADVANCED BY MR SYALI THAT THE PROVISO TO SECTION 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 CH ARITABLE ORGANIZATIONS ON THE OTHER. IT MUST BE REMEMBERED THAT WE ARE CONSTRUING THE EXPRESSION 'CHARITABLE PURPOSE' NOT IN A VACUUM, BUT IN THE SPECIFIC CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT. AS POINTED OUT ABOVE, SECTION 10 DEALS WITH THE INC OMES NOT INCLUDED IN TOTAL INCOME. AND, SECTION 10(23C)(IV) SPECIFICALLY DEALS WITH THE INCOME RECEIVED BY ANY PERSON ON BEHALF OF, INTER ALIA, AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. WE HAVE TO, THEREFORE, EXAMINE THE MEANING OF THE EXPRESSI ON 'CHARITABLE PURPOSES' IN THE CONTEXT OF SECTION 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. THEREFORE, MERELY BECAUSE AN INSTITUTION, WHICH OTHERWISE IS ESTABLISHED FOR A CHARITABLE PURPOSE, RECEIVES INCOME WOULD NOT 13 MAKE IT ANY LESS A CHARITABLE INSTITUTION. WHETHER THAT INSTITUTION, WHICH IS ESTABLISHED FOR CHARITABLE PURPOSES, WILL GET THE EXEMPTION UNDER SECTION 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 DENYING THAT HAVING REGARD TO THE OBJECTS OF THE PETITIONER AND ITS IMPORTANCE THROUGHOUT INDIA IN THE FIELD OF ADVANCEMENT OF PROMOTION OF TRADE AND COMMERCE, THE PETITIONER WOULD BE ENTITLED TO BE REGARDED AS AN INSTITUTION WHICH WO ULD QUALIFY FOR THAT EXEMPTION. THE ONLY THING THAT WE HAVE TO EXAMINE IS - WHETHER THE PETITIONER 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 EST ABLISHED FOR CHARITABLE PURPOSES. THEREFORE, IN OUR VIEW, MERELY BECAUSE THE PETITIONER DERIVES RENTAL INCOME, INCOME OUT OF SALE OF TICKETS AND SALE OF PUBLICATIONS OR INCOME OUT OF LEASING OUT FOOD AND BEVERAGES OUTLETS IN THE EXHIBITION GROUNDS, DOES N OT, IN ANY WAY, AFFECT THE NATURE OF THE PETITIONER AS A CHARITABLE INSTITUTION IF IT OTHERWISE QUALIFIES FOR SUCH A CHARACTER. 53. FROM THE SAID DECISION, IT IS APPARENT THAT MERELY BECAUSE A FEE OR SOME OTHER CONSIDERATION IS COLLECTED OR RECEIVED BY AN INSTITUTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTABLISHED FOR A CHARITABLE PURPOSE. IT IS ALSO IMPORTANT TO NOTE THAT WE MUST EXAMINE AS TO WHAT IS THE DOMINANT 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 CATEGOR IES 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 PURPOSE, 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 SECTION 2(15) OF THE SAID ACT WOULD NOT APPLY. WE SAY SO, BECAUSE, IF A LITERAL INTERPRETATION WERE TO BE GIVEN TO THE SAID PROVISO, THEN IT WOULD RISK BEING HIT BY ARTICLE 14 (THE EQUALITY CLAUSE ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION). IT IS WELL - SETTLED THAT THE COURTS SHOULD ALWAYS ENDEAVOUR TO UPHOLD THE CONSTITUTI ONAL VALIDITY OF A PROVISION AND, IN DOING SO, THE PROVISION IN QUESTION MAY HAVE TO BE READ DOWN, AS POINTED OUT ABOVE, IN ARUN KUMAR (SUPRA). 55. IT WOULD BE APPROPRIATE TO ALSO EXAMINE THE OBSERVATIONS OF ANOTHER DIVISION BENCH OF THIS COURT IN G.S.1 (SUPRA). WHILE 14 CONSIDERING CIRCULAR NO.11 OF 2008 ISSUED BY THE CBDT, TO WHICH A REFERENCE HAS BEEN MADE EARLIER IN THIS JUDGMENT, THE DIVISION BENCH HELD THAT IT WAS EVIDENT FROM THE SAID CIRCULAR THAT THE NEW PROVISO TO SECTION 2(15) OF THE SAID ACT WAS 'APPLICABLE TO ASSESSES, WHO ARE ENGAGED IN COMMERCIAL ACTIVITIES, I.E., CARRYING ON BUSINESS, TRADE OR COMMERCE, IN THE GARB OF 'PUBLIC UTILITIES' TO AVOID TAX LIABILITY AS IT WAS NOTICED THAT THE OBJECT 'GENERAL PUBLIC UTILITY' WAS SOMETIMES USED AS A M ASK OR DEVICE TO HIDE THE TRUE PURPOSE, WHICH WAS 'TRADE, COMMERCE OR BUSINESS'.' FROM THIS, IT IS EVIDENT THAT THE INTRODUCTION OF THE PROVISO TO SECTION 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 THEIR 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 CHARITY INSTITUTIONS. THE ATTEMPT WAS TO REMOVE THE MASKS FROM THE ENTITIES, WHICH WERE PURELY TRADE, COMMERCE OR BUSINESS ENTITIES, AND TO EXPOSE THEIR TRUE IDENTITIES. THE OBJECT WAS NOT TO HURT GENUINE CHARITABL E ORGANIZATIONS. AND, THIS WAS ALSO THE ASSURANCE GIVEN BY THE FINANCE MINISTER WHILE INTRODUCING THE FINANCE BILL 2008. 19 . TURNING TO THE FACTUAL MATRIX OF THE PRESENT CASE THE AO AND THE LD. DR HAS NOT POINTED OUT ANY FACT THAT THERE WAS A CHANGE IN THE ACTIVITIES CONDUCTED BY THE ASSESSEE SOCIETY DURING F.Y. 2008 - 09 AND 2009 - 10 FROM THE ACTIVITIES WHICH THE ASSESSEE SOCIETY CARRIED ON DURING THE EARLIER ASSESSMENT YEARS. THEREFORE, WE MAY SAFELY INFER THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE SIMILAR DURING THE ASSESSMENT YEARS UNDER CONSIDERATION AS SIMILAR TO THE ACTIVITIES WHICH WERE CARRIED OUT DURING THE EARLIER ASSESSMENT YEARS. AS WE HAVE ALREADY NOTED THAT THE HON BLE HIGH COURT OF DELHI IN ITS JUDGMENT IN ASSESSEE S OWN CASE FOR A.Y. 2006 - 07 AND 2007 - 08 HAS HELD THAT IT IS PROPER TO VIEW THE 15 ACTIVITIES AS DRIVEN BY CHARITABLE MOTIVE IN THE SENSE IN WHICH A CHARITABLE PURPOSE IS DEFINED IN SECTION 2(15) OF THE ACT. AFTER CONSIDERING ALL FACTS AND CIRCUMSTANCES AND ACTIVITIES CONDUCTED AND DRIVEN BY THE ASSESSEE SOCIETY THEIR LORDSHIPS ALSO RECORDED THEIR SATISFACTION THAT THE PROVISIONS OF SECTION 11(4A) OF THE ACT ARE NOT ATTRACTED TO THE CASE OF THE ASSESSEE. MEANING THEREBY IN ASSESSEE S OWN CASE FOR IMMEDIATELY PREVIOUS ASSESSMENT YEARS IT WAS HELD THAT ACTIVITIES CONDUCTED AND DRIVEN BY THE ASSESSEE SOCIETY ARE OF CHARITABLE NATURE AND PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT AND THE PROVISIONS OF SECTION 11(4A) OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE SOCIET Y AND, THEREFORE, THE AO WAS NOT JUSTIFIED IN DENYING THE EXEMPTION U/S 11 OF THE ACT FOR THE ASSESSEE. 20 . TURNING TO THE CASE OF THE ASSESSEE FOR A.Y. 2008 - 09 FROM BARE READING OF THE IMPUGNED ORDER, WE OBSERVE THAT THE CIT(A) IN PARA 4.3 FOLLOWING THE ORDER OF HON BLE HIGH COURT OF DELHI DATED 19.10.2012 IN ASSESSEE S OWN CASE (SUPRA) HELD THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT IN A.Y. 2008 - 09 AND THE CIT(A) DELETED THE ADDITION MADE BY THE AO AMOUNTING TO RS. 3,06,27,500/ - . IN VIEW OF THE ABOVE NOTED FACTS, RESPECTFULLY FOLLOWING THE DECISION OF HON BLE HIGH COURT OF DELHI FOR A.Y. 2006 - 07 AND 2007 - 08 (SUPRA), WE ARE INCLINED TO HOLD THAT THE CIT(A) WAS QUITE JUSTIFIED IN GRANTING EXEMPTION U/S 11 OF 16 THE ACT TO THE ASSESSEE AND DELETING THE IMPUGNED ADDITION MADE BY THE AO FOR A.Y. 2008 - 09. 21 . TURNING TO THE CASE OF A.Y. 2009 - 10 FROM BARE READING OF THE IMPUGNED ORDER OF THE CIT(A) WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION S: 4.1 I HAVE GONE THROUGH THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE LD. AR BEFORE ME DURING APPEAL PROCEEDINGS. THE MAIN CONTENTION OF THE LD. AO IS THAT THERE IS AN AMENDMENT TO SEC. 2(15) OF THE INCOME TAX ACT, 1961 W.E.F. A.Y. 2009 - 10 WHEREIN IT HAS BEEN MENTIONED AS UNDER: [ SEC. 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDIAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE CHARITABLE PURPOSE, IF IT INVOLVES THE CARR YING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF SUE OR APPLICATION, OR R ETENTION, OF THE INCOME FROM SUCH ACTIVITY. PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TEN LAKH RUPEES OR LESS IN THE PREVIOUS YEAR. ] 4.2 IN THIS REGARD THE ISS UE WHETHER THE APPELLANT CHAMBER IS CARRYING ON ANY BUSINESS ACTIVITY AROSE IN A.Y. 2006 - 07 AND A.Y. 2007 - 08 AND WHEREIN THE HON BLE DELHI HIGH COURT VIDE ORDER DATED 19.10.2012 IN ITA NO. 368 - 369/2012 HAS ALLOWED THE APPEAL OF THE APPELLANT AND HAS HELD A S UNDER: PARA 7 OF ORDER 17 ...................IN THE OPINION OF THE TRIBUNAL, THE AO WAS NOT RIGHT IN THE CHARACTERIZATION OF THESE SERVICES, BOTH TO THE MEMBERS AS WELL AS NON MEMBERS, AS NON CHARITABLE ACTIVITIES, HOWEVER, IT UPHELD THE VIEW OF THE AO THA T IN RENDERING THESE SERVICES THE ASSESSEE WAS CARRYING ON A BUSINESS ACTIVITY. PARA 8 OF ORDER THE NICE QUESTION AS TO WHETHER BY RENDERING SPECIFIC SERVICES TO MEMBERS AND NON MEMBERS FOR A FEE, A TRADE, PROFESSIONAL OR SIMILAR ASSOCIATION CAN BE SAID TO BE CARRYING ON A BUSINESS ACTIVITY NEEDS TO BE EXAMINED. THE FURTHER QUESTION TO BE ADDRESSED, WITH REFERENCE TO SEC. 11(4A), WOULD BE WHETHER SU CH ACTIVITIES (WHICH AMOUNT TO A BUSINESS) WERE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OFTRUST OR INS TITUTION AND WHETHER SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED IN RESPECT OF SUCH ACTIVITIES. THERE CAN BE NO DOUBT THAT THE ACTIVITIES OF THE NATURE DESCRIBED ABOVE, IN THE CASE OF AN ASSESSEE SUCH AS THE PRESENT ONE, WHICH IS A TRADE ASSOCIATION - CHAMB ER OF COMMERCE & INDUSTRY, ESTABLISHED TO PROTECT THE INTEREST OF TRADE AND INDUSTRY IN PUNJAB, HARYANA AND DELHI WERE ACTIVITIES WHICH ARE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE CHAMBER. WE DO NOT THINK THAT THE TRIBUNAL IS JUSTIFIED IN TAK ING THE VIEW THAT THE ASSESSEE, WHICH IS A CHAMBER OF COMMERCE AND INDUSTRY, IS CARRYING ON BUSINESS ACTIVITIES WHICH REQUIRE COMPLIANCE WITH THE CONDITIONS OF SECTION 11(4A). PARA 18 OF ORDER THE TRIBUNAL IN THE PRESENT CASE DISAPPROVED THE VIEW TAKEN BY THE ASSESSING OFFICER THAT BY RENDERING PROFESSIONAL SERVICES TO MEMBERS AND NON - MEMBERS, IT WAS NOT CARRYING ON A CHARITABLE ACTIVITY. THIS WAS BECAUSE THE ASSESSEE S OBJECTS WERE CHARITABLE IN NATURE AND IT WAS SO REGISTERED U/S 12A. HOWEVER, IT TENDED TO VIEW THE ASSESSEE S ACTIVITIES AS AMOUNTING TO BUSINESS. IT EVEN OBSERVED THAT THE ADMITTED POSITION OF FACT IS THAT THE ASSESSEE HAS BEEN CARRYING ON BUSINESS ACTIVITIES . THIS PART OF THE ORDER OF THE TRIBUNAL WAS SOUGHT TO BE CORRECTED BY AN APPLICATION U/S 254(2) OF THE ACT BUT THAT APPLICATION WAS DISMISSED BY THE TRIBUNAL THOUGH WITH SOME CLARIFICATION. THE TRIBUNAL NOTED THAT ON THIS ASPECT THE FINDING OF THE CIT(APPEALS) WAS THAT THE ACTIVITIES WERE CARRIED ON PURSUANT TO THE OBJECTS AND, THEREFORE, THEY DO NOT CONSTITUTE BUSINESS. AT THE SAME BREATH IT HAS ALSO BEEN OBSERVED THAT THE RECEIPTS WERE EARNED BY REPETITIVE ACTIVITIES, WHICH CAN RIGHTLY BE TERMED AS BUSINESS. HAVING REGARD TO THE AUTHORITIES WHICH WE HAVE NOTICED ABOVE IT IS NOT PROPER TO 18 CHARACTERIZE THE ACTIVITIES OF THE CHAMBER AS ACTIVITIES AMOUNTING TO A BUSINESS IN THE GENERALLY UNDERSTOOD SENSE OF THE WORD, THE MOST IMPORTANT FEATURE OF BUSINESS BEING PROFIT MO TIVE. IT HAS NOT BEEN SUGGESTED BY THE INCOME TAX AUTHORITIES THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE CHAMBER WERE PROPELLED BY ANY PROFIT MOTIVE. IN SUCH CIRCUMSTANCES, IT IS PROPER TO VIEW THE ACTIVITIES AS DRIVEN BY A CHARITABLE MOTIVE IN THE SENSE IN WHICH A CHARITABLE PURPOSE IS DEFINED IN SECTION 2(15) OF THE ACT. IN THIS VIEW OF THE MATTER, WE ARE SATISFIED THAT THE PROVISION OF SECTION 11(4A) ARE NOT ATTACHED TO THE PRESENT CASE AND A REMAND TO THE AO FOR FINDING OUT WHETHER THE ACTIVITIE S WERE MAINTAINED FOR SUCH BUSINESS WAS UNNECESSARY. WE ACCORDINGLY ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE NEGATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HOWEVER, THERE SHALL BE NO ORDER AS TO COSTS . ON GOING THROUGH TH E AFORESAID ORDER PASSED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF THE APPELLANT CHAMBER, IT IS SEEN THAT THE HON BLE DELHI HIGH COURT HAS HELD THAT THE VARIOUS ACTIVITIES CARRIED OUT BY THE APPELLANT CHAMBER WERE NOT PROPELLED BY ANY PROFIT MOTIVE AN D, THEREFORE, IT WOULD NOT BE CORRECT TO CONCLUDE THAT THE APPELLANT WAS CARRYING OUT ANY BUSINESS ACTIVITY DURING THE YEAR. THE HON BLE DELHI HIGH COURT HAS FURTHER HELD THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE CHARITABLE IN NATURE. 4.3 THE AFORESAID ORDER OF THE HON BLE DELHI HIGH COURT WAS PASSED IN RESPECT OF A.Y. 2006 - 07 AND A.Y. 2007 - 08. THE INCOME TAX ACT HAS BEEN AMENDED W.E.F. A.Y. 2009 - 10 BY INSERTION OF PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT. IN VIEW OF THE PROVISIONS OF SE CTION 2(15) IT WILL BE SEEN THAT THE PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT WILL BE APPLICABLE ONLY IF THE ENTITY IS CARRYING OUT ANY ACTIVITY OR RENDERING ANY SERVICE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND MOST IMPORTANT FEATURE OF BUSIN ESS BEING PROFIT MOTIVE. IN THE PRESENT CASE ACTIVITIES CARRIED OUT BY THE APPELLANT WERE NOT PROPELLED BY ANY PROFIT MOTIVE. IN VIEW OF THE ABOVE AS THE APPELLANT CHAMBER HAS NOT CARRIED OUT ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND, THEREFORE, THE PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT IS NOT APPLICABLE IN THE CASE OF THE APPELLANT. THEREFORE, AS THE APPELLANT IS CARRYING OUT CHARITABLE ACTIVITIES IT IS ENTITLED TO EXEMPT U/S 11 OF THE INCOME TAX ACT. 19 IN VIEW OF THE ABOVE FAC TS AND FINDINGS, I AM OF THE OPINION THAT THE APPELLANT IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT IN A.Y. 2009 - 10 ALSO AS HELD IN EARLIER ASSESSMENT YEARS AND, THEREFORE, THE ADDITION OF RS. 27084321/ - IS HEREBY DELETED. GROUND NO. 1 OF THE APPELLANT IS ALLOWED. 22 . IN VIEW OF ABOVE OBSERVATIONS AND CONCLUSIONS OF CIT(A), WE NOTE THAT THE CIT(A) HAS CATEGORICALLY HELD THAT THE PROVISIONS OF SEC. 2(15) OF THE ACT WILL BE SEEN THAT THE PROVISO TO SECTION 2(15) OF THE ACT WILL BE APPLICABLE ONLY IF THE ENTITIES CARRYING OUT ANY ACTIVITY OR RENDERING ANY SERVICES IN THE NATURE OF TRADING, COMMERCE OR BUSINESS AND THE MOST IMPORTANT FEATURE OF THE BUSINESS IS BEING PROFIT MOTIVE. AFTER ANALYZING ENTIRE ACTIVITIES, RECEIPTS A ND ITS APPLICATION, THE CIT(A) FURTHER HOLD THAT ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT CARRIED OUT WITH PROFIT MOTIVE. AS WE HAVE RESPECTFULLY NOTED EARLIER THE OBSERVATIONS OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PRO MOTION ORGANIZATION VS. DGIT(E) (SUPRA) THAT THE EXPRESSION CHARITABLE PURPOSE AS DEFINED IN 2(15) OF THE ACT IS READ IN THE CONTEXT OF SE CTION 10(23C)(IV) OF THE ACT AND W E WOULD HAVE TO GIVE UP THE STRICT AND LITERAL INTERPRETATION SOUGHT TO BE GIVEN T O THE EXPRESSION CHARITABLE PURPOSE BY THE REVENUE AND IF AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSE DID NOT RECEIVE AN INCOME AT ALL THEN WHAT WOULD BE NEED FOR TAKING ANY BENEFIT U/S 10(23C)(IV) OF THE ACT. 23 . THEREFORE, IN OUR HUMBLE UNDERS TANDING, IF THE EXPRESSION CHARITABLE PURPOSE IS GIVEN MEANING THAT IN CASE AN INSTITUTION, WITH AN 20 OBJECT OF ADVANCEMENT OF GENERAL PUBLIC UTILITY, DERIVES AN INCOME THEN IT WOULD BE FALLING WIT HIN THE EXCEPTION CARVED OUT BY THE FIRST PROVISO TO SEC. 2 (15) OF THE ACT THEN NO ENTITY WOULD QUALIFY FOR THE EXEMPTION U/S 10(23C)(IV) OF THE ACT AND THIS MEANING OBVIOUSLY PRO VIDE THE EFFECT THAT THE PROVISION OF SEC. 10(23C)(IV) OF THE ACT WOULD BE RENDERED REDUNDANT. 2 4 . FINALLY RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF INDIA TRADE PROMOTION ORGANIZAT ION VS. DGIT (E) (SUPRA) WE NOTE THAT WE ARE UNABLE TO SEE ANY AMBIGUITY OR PERVERSITY IN THE ORDER OF THE CIT(A) WHICH GRANTED RELIEF FOR THE ASSESSEE BY DIRECTING THE AO TO ALLOW EXEMPTION U/S 11 OF THE ACT FOR THE ASSESSEE. AT THIS POINT, IT IS ALSO PERTINENT TO MENTION THAT THE AO HAS NOT BROUGHT OUT ANY FACT TO SUPPORT THIS ALLEGATION THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE SOCIETY WERE CONDUCTED OR DERIVED IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS AND THE DOMINANT AND PRIME OBJECTIVE OF THE ASSESSEE SOCIETY WAS TO EARN PROFIT I.E. ACTIVITIES OF THE ASSESSEE SOCIETY WAS DERIVED FOR PROFIT MOTIVE. 2 5 . BEFORE PARTING WITH THE ORDER WE ALSO FIND IT APPROPRIATE TO DEAL WITH THE OBJECTION OF THE LD. DR THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING DEPRECIATION TO THE ASSESSEE SOCIETY. ON THIS ISSUE WE RESPECTFULLY TAKE NOTE OF THE DECISION OF THE JURISDICT IONAL HIGH COURT OF DELHI IN THE CASE 21 OF DIT(E) VS. INDRAPRASTHA CANCER SOCIETY (SUPRA) , WHEREIN IT WAS HELD THAT WHERE A CHARITABLE INSTITUTION HA S PURCHASED A CAPITAL ASSET AND TREATED THE AMOUNT SPEND ON THE SAID ASSET AS APPLICATION OF INCOME THEN THE SAID CHARITABLE INSTITUTION IS ENTITLED TO CLAIM DEPRECIATION ON SAID ASSETS UTILIZED FOR THE ACTIVITIES OF THE INSTITUTION. AS WE HAVE ALREADY APPROVED THE CONCLUSION OF THE CIT(A) THAT THE ASSESSEE SOCIETY IS ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT THE N WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) DIRECTED THE AO TO ALLOW DEPRECIATION FOR THE ASSESSEE SOCIETY IN BOTH THE ASSESSMENT YEARS. THEREFORE, THIS GROUND AND OBJECTION OF THE LD. DR BEING DEVOID OF MERITS IS DISMISSED. 2 6 . WE DECLINE TO INTERFER E WITH THE CONCLUSION OF THE CIT(A) AS WE ARE UNABLE TO SEE ANY ILLEGALITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME AND, THEREFORE, GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS BEING DEVOID OF MERITS ARE DISMISSED. 27 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 1 . 0 5 . 2 0 1 5 S D / - S D / - ( B.C. MEENA ) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 . 0 5 . 2 0 1 5 *KAVITA, P.S. 22 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR 23 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 23 .04.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 01.05 .2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 0 1 . 0 5 . 2 0 1 5 4. DRAFT APPROVED BY THE SECOND MEMBER 1 1 . 0 5 . 2 0 1 5 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 1 1 . 0 5 . 2 0 1 5 6. DATE OF PRONOUNCEMENT OF ORDER 1 1 . 0 5 . 2 0 1 5 7. DATE OF FILE SENT TO THE BENCH CLERK 1 2 . 0 5 . 2 0 1 5 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER