The DIT(Exemptions), Cir-1, Ahmedabad V. Gujarat Industrial Security Force Society, Ahmedabad

ITA 257/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0600 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-03-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 12AA; 13; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./I.T.A. NO.257/AHD/2018 ( / ASSESSMENT YEAR : 2009-10) THE DCIT (EXEMPTIONS) CIRCLE-1 AHMEDABAD / VS. GUJARAT INDUSTRIAL SECURITY FORCE SOCEITY NR.NEW MENTAL HOSPITAL MEGHANINAGAR AHMEDABAD 380 016 ./ ./PAN/GIR NO. : AAAAG 0372 L ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIDHYUT TRIVEDI, SR.DR / RESPONDENT BY : SHRI TUSHAR HEMANI, SHRI P.B. PARMAR, ARS /DATE OF HEARING 11/ 03/2020 / DATE OF PRONOUNCEMENT 13 / 0 3 /20 20 / O R D E R PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)9, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-9 /10113/ITAT/17 DATED 27/11/2017 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 23/12/2011 RELEVANT TO ASSESSMENT YEAR (AY) 2009-10. ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 2 - 2. THE REVENUE HAS RAISED THE FOLLOWING SOLITARY G ROUND OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWING THE BENEFIT EXEMPTIONS U/S.11 WITHOUT CONSIDERING THE F ACT THAT THE ASSESSEE IS INVOLVED IN WIDESPREAD COMMERCIAL ACTIV ITIES IN NATURE OF BUSINESS AND THE ACTIVITY OF THE ASSESSEE IS COV ERED UNDER FIRST AND SECOND PROVISO TO SEC.2(15) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-TRUST FILED ITS RETURN OF INCOME ON 30/09/2009 DECLARING INCOME AT RS.NIL. T HE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICE AND SEEKING REPLY OF THE ASSESSEE, ORDER OF ASSESSMENT U/S.143(3) OF THE ACT WAS PASSED ON 23/12/2011 THEREBY MAKING DISALLOWANCES/ADDITIONS. 4. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREF ERRED APPEAL BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE CASE OF BOTH T HE PARTIES, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), NOW T HE REVENUE IS IN APPEAL BEFORE US ON THE GROUND MENTIONED HEREINABOVE. 6. THE SOLITARY GROUND RAISED BY THE REVENUE RELATE S TO CHALLENGING THE ORDER OF THE LD.CIT(A) IN ALLOWING THE BENEFIT OF E XEMPTION U/S.11 OF THE ACT TO THE ASSESSEE. 7. THE LD.DR APPEARING ON BEHALF OF THE REVENUE, SU BMITTED BEFORE US THAT ASSESSEE WAS INVOLVED IN WIDESPREAD COMMERCIAL ACTIVITIES IN THE NATURE ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 3 - OF BUSINESS AND THE ACTIVITY OF THE ASSESSEE IS COV ERED UNDER FIRST AND SECOND PROVISO TO SECTION 2(15) OF THE ACT. THE LD.DR ALS O RELIED UPON THE ORDER OF ASSESSING OFFICER, WHEREIN ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE HAD SPECIFICALLY HELD THAT DEDUCTION U/S.1 1 OF THE ACT CLAIMED BY THE ASSESSEE IS DENIED CONSIDERING THE FACT THAT ASSESS EE DOES NOT FULFIL THE CONDITIONS OF PROVISO 2 OF SECTION 2(15) OF THE AC T AND THUS THE ASSESSEE IS TREATED AS AOP AND, THEREFORE, ITS INCOME WAS BROUG HT TO TAXATION AS PER NORMAL PROVISIONS OF THE ACT AND ALSO HELD THAT SIN CE REGISTRATION OF THE SOCIETY WAS CANCELLED BY DIT(EXEMPTION), AHMEDABAD VIDE ORDER NO.DIT(E)/12AA/114/2009-10 DATED 22/01/2010, THEREF ORE THE GROUND OF DENIAL OF DEDUCTION U/S.11 OF THE ACT ALSO GETS STR ENGTHEN. 8. THE LD.AR, ON THE CONTRARY, RELIED UPON THE ORDE R OF THE LD.CIT(A) AND REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE CIT(A) WHICH ARE CONTAINED IN PARA-5 OF THE ORDER OF LD.CI T(A) AND THE SAME IS REPRODUCED BELOW: 5. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT A RE TAKEN TOGETHER FOR ADJUDICATION. THE APPELLANT DURING THE APPELLATE PR OCEEDINGS SUBMITTED ITS WRITTEN SUBMISSION, WHICH IS AS UNDER :- '2. FACTS OF THE CASE- AND SUBMISSIONS TO THE GROU NDS OF APPEAL EXPLANATIONS IN SUPPORT OF THE GROUNDS OF APPEAL AN D ABOVE REFERRED ASSESSMENT ORDER: PARA 2.4.2 AND 2.5 OF THE ASSESSMENT ORDER ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 4 - >THE LD. A.O ERRED IN LAW HAS STATED THAT 'THE ACTI VITIES OF GISFS PROVIDING THE SECURITY SERVICES TO VARIOUS ORGANISATION AND CHARG ING IT AT A PREMIUM IS CONSIDERED AS BUSINESS AND NOT ELEMENT OF CHARITY' >THE LD. AO ERRED IN LAW BY DISALLOWING EXEMPTION U NDER SECTION 11 BY STATING THAT THE PURPOSE OF THE ASSESSEE IS NOT CHARITABLE AS DE FINED U/S 2(15) AFTER THE AMENDMENT MADE IN FINANCE ACT 2008. MAV IT PLEASE YOUR HONOURS SECTION 2(15) OF THE INCOME TAX ACT, 1961 ('ACT') D EFINES 'CHARITABLE PURPOSE' TO INCLUDE THE FOLLOWING:- (I) RELIEF OF THE POOR (II) EDUCATION (III) MEDICAL RELIEF, AND (IV) THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THE FINANCE ACT, 2008 W.E.F. 1-4-2009 HAS AMENDED THE DEFINITION OF 'CHARITABLE PURPOSE UNDER SECTION 2(15). THE NEWLY INSERTED PROVISO TO SECTION 2(15) WILL AP PLY ONLY TO ENTITIES WHOSE PURPOSE IS 'ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY' I.E. THE FOURTH LIMB OF THE DEFINITION OF 'CHARITAB LE PURPOSE' CONTAINED IN SECTION 2(15). HENCE, SUCH ENTITIES WILL NOT BE ELIGIBLE FO R EXEMPTION UNDER SECTION 11 OF THE ACT IF THEY CARRY ON COMMERCIAL ACTIVITIES. WHETHER SUCH AN ENTITY IS CARRYING ON AN ACTIVITY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS IS A QUESTION OF FACT WHICH WILL BE DECIDE D BASED ON THE NATURE, SCOPE, EXTENT AND FREQUENCY OF THE ACTIVITY. THE AMENDED DEFINITION OF 'CHARITABLE PURPOSE' WO ULD NOT ALTER POSITION OF GISFS. NO DOUBT, PROVISO TO THIS DEFINITION CLARIFIES THAT ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY WILL NOT BE TREATED AS CHARI TABLE PURPOSE ONLY IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. HOWEVER, HERE IT IS REALLY NOT APPRECIATED THAT THE LD. A.O HAS IGNORED THE GENUINE CHARITABLE OBJECTS OF GISFS I.E. TO TRAIN SECURITY GUARDS, TO PROVIDE EMPLOYMENT OPPORTUNITIES; TO PROVIDE AWARENESS OF THE SECURITY WITHOUT ANY PE RSONAL PROFIT MOTIVE AT THE INSTANCE OF THE GOVERNMENT/SEMI GOVERNMENT/LOCAL BO DIES AND CONSIDERED ACTIVITIES OF GISFS AS TRADE, COMMERCE, OR BUSINESS. THE ESSEN TIAL CHARACTER OF THE GISFS AS MENTIONED ABOVE CANNOT BE CONVERTED INTO THE ONE WH ICH CARRIES ON TRADE, ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 5 - COMMERCE OR BUSINESS OR ACTIVITY OF RENDERING ANY S ERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS. IN BRIEF, THE PROVISO APPLIES ONLY IF - 1) AN INSTITUTION IS ENGAGED IN ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL PUBLIC UTILITY AND 2) IT IS INVOLVED IN CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION ANY TRADE, COM MERCE OR BUSINESS. AS THE LD AO HAS RAISED THE QUESTION THAT 'IS THE A CTIVITY OF THE GISFS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS?' IT IS QUESTION OF FACT AND CAN BE ANSWERED BASED ON THE NATURE, SCOPE, EXTENT AND FREQUENCY OF THE ACTIVITY. IF WE RELATE THE SAME WITH THE ASSESSEE, IT CAN BE FRAME AS FOLLOWS: NATURE: GISFS IS A SOCIETY REGISTERED UNDER THE SOCIETIES R EGISTRATION ACT, 1860 AND IT IS ALSO REGISTERED AS PUBLIC CHARITABLE TRUST UNDER THE BOM BAY PUBLIC CHARITABLE TRUST ACT, 1950. SCOPE: SCOPE INCLUDES: 1)TO PROVIDE COMPREHENSIVE SECURITY AND SAFETY SERVICES COVERING ALL ASPECTS OF PROTECTION TO LIFE AND PROPERTIES TO INDUSTRIES AND INDUSTRIAL UNDERTAKINGS IN GUJARAT. 2)TO PROVIDE EMPLOYMENT AND CAREER OPPORTUNITIES TO UNEMPLOYED YOUTHS OF RURAL AN D URBAN AREAS OF GUJARAT STATE. 3) TO RECRUIT EX-ARMY AND EX-OFFICERS FROM POLICE D EPARTMENT TO SUPERVISE THE GUARDS POSTED AT VARIOUS PLACES 4) TO ORGANIZE TRAINING, GUIDANCE AND INFORMATION C AMPS FOR THE SECURITY GUARDS TO BE ENGAGED BY THE SOCIETY. ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 6 - 5) THE SOCIETY HAS NO PROFIT MOTIVE. SURPLUS, IF AN Y, REMAINS'WITH THE SOCIETY IS USED ONLY FOR THE OBJECT OF THE SOCIETY. EXTENT AND FREQUENCY: GISFS CARRIES ITS CHARITABLE ACTIVITY IN ALL OVER G UJARAT WHICH INCLUDES GOVERNMENT/SEMI GOVERNMENT ENTITIES WITH CLEAR INTE NTION TO PROVIDE SECURITY, EMPLOYMENT AND AWARENESS OF THE SECURITY TO THE YOU THS OF RURAL AND URBAN AREAS OF STATE. THUS, THE SOCIETY WITHOUT ANY PROFIT MOTIVE ADHERED TO ITS PRIME OBJECTIVE AND NOT ANY TRADE, COMMERCE OR BUSINESS PURPOSES. FURTHER, THE SOCIETY IS NOT CHARGING ANY ELEMENT OF PROFIT. THE SOCIETY IS 100% SELF DEPENDANT GOVERNMENT SOCIETY. THE SOCIETY IS CHARGI NG ONLY BARE MINIMUM EXPENSES WHICH ARE REQUIRED TO MAINTAIN SOCIETY'S L ONG TERM OBJECTIVE AND AIMS. EVERY RUPEE EARNED BY THE SOCIETY IS SPENT FOR THE PURPOSE AND OBJECT OF THE SOCIETY WHICH ARE CHARITABLE IN NATURE. AS THERE IS NO SPECIFIC DEFINITION OF THE 'TRADE AN D COMMERCE' PROVIDED IN THE INCOME TAX ACT 1961, WE DERIVED THE DEFINITION OF ' TRADE AND COMMERCE 'AS PER ORDINARY PARLANCE. THIS READS AS FOLLOWS- IN ORDINARY PARLANCE, TRADE AND COMMERCE CARRY WI TH THE IDEA OF PURCHASE AND SALE WITH A VIEW TO MAKE PROFIT. IF A PERSON BUYS GOODS WITH A VIEW TO SELL THEM FOR PROFIT, IT IS AN ORDINARY CASE OF TRADE. IF THE TRA NSACTIONS ARE ON A LARGE SCALE, IT IS CALLED COMMERCE. DEFINITION OF BUSINESS AS PER SECTION 2(13) OF I.T ACT, 1961 READS AS FOLLOWS:- BUSINESS'40 INCLUDES ANY TRADE '40, COMMERCE OR MAN UFACTURE OR ANY ADVENTURE 40 OR CONCERN IN THE NATURE OF TRADE'40, COMMERCE OR MANU FACTURE. LOOKING TO THE AIM, OBJECTIVE AND ACTIVITIES OF T HE G/SFS, THE ACTIVITIES OR ADVENTURE CANNOT BE SAID IN NATURE OF THE TRADE OR COMMERCE OR MANUFACTURING HENCE IT COULD NOT FALL IN THE DEFINITION OF THE BU SINESS. IT IS SPONSORED AND CREATED BY GOVT, OF GUJARAT WITHOUT ANY INTENSION TO MAKE P ROFIT. THE PROVISO TO SECTION 2(15) DOES NOT MEAN THAT I N CASE AN ASSESSEE RECEIVES ANY PAYMENT FOR ANYTHING DONE FOR TRADE; COMMERCE OR BU SINESS, IT WILL BE HIT BY THE SAID PROVISO. IN ACCORDANCE WITH THE CBDT CIRCULAR, THE PROVISO APPLIES ONLY WHERE THE OBJECT OF GENERAL PUBLIC ACTIVITY IS A MASK OR DEVI CE TO HIDE THE TRUE PURPOSE OF TRADE, BUSINESS OR COMMERCE OR RENDERING OF ANY SER VICE IN RELATION THERETO. IT DOES ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 7 - NOT APPLY TO CASES WHERE THE SERVICES RENDERED ARE PURELY INCIDENTAL TO OR SUBSERVIENT TO THE MAIN OBJECTIVE OF GENERAL PUBLIC UTILITY'. THE GISFS ALSO SUBMITTED THAT REGULATORY FUNCTION BEING CARRIED OUT BY THE SOCIETY WAS ONLY INCIDENTAL TO THE MAIN OBJECT WHICH IS TO PROVIDE EMPLOYMENT TO THE UNEMPLOYED YOUTHS OF RURAL AND URBAN AREAS OF GUJAR AT STATE, WHICH IS CERTAINLY AN OBJECT OF GENERAL PUBLIC UTILITY AND, THEREFORE, QU ALIFIES TO BE TERMED AS 'CHARITABLE ACTIVITY' FOR THE PURPOSES OF SECTION 2 (15). MOREOVER, G/SFS IS PROVIDING ALL HIS ACTIVITY TO GOVERNMENT /SEMI GOVT ENTITIES AND NOT TO ANY NON GOVERNMENT BODY. THIS SHOWS THE CLEA R INTENTION OF THE ASSESSEE TO PROVIDE SECURITY,' EMPLOYMENT AND AWARENESS OF THE SECURITY TO THE YOUTHS OF RURAL AND URBAN AREAS OF GUJARAT STATE. AS STATED, G/SFS HAS PURE CHARITABLE PURPOSE WITH IN THE MEANING OF THE SECTION 2 (15) OF THE INCOME TAX ACT 1961 AND IT SATISFIED AL L THE REQUIREMENT OF SECTION 11 FOR THE EXEMPTION. SIR, WE WOULD LIKE TO STATE THAT THE SOCIETY HAS NOT RECEIVED ANY GRAND FROM THE GOVERNMENT. THE SOCIETY HAS NO PROFIT MOTIVE AT ALL . IT IS GIVING EMPLOYMENT OPPORTUNITIES TO MORE THAN 2400 SECURITY GUARDS, WH O ARE PROVIDING SECURITY SERVICES ALL OVER THE GUJARAT STATE. THEY CHARGE SERVICE CHA RGES AS REIMBURSEMENT OF THE EXPENSES PAYABLE TO SECURITY PERSONNEL AND. PURPOSE OF THE OBJECT AND GOAL OF THE SOCIETY. 2ND POINT OF THE PARA 2.5. PARA 2.6 OF THE ASSESSMENT ORDER( 2 ND POINT) AND > THE LD. AO FURTHER STATED IN THE ASSESSMENT ORDER THAT THE OTHER GROUND OF DENIAL OF THE DEDUCTION U/S 11 IS THAT THE REGISTRATION OF THE ASSESSEE SOCIETY HAS BEEN CANCELLED BY THE DIT (EXEMPTION), AHMEDABAD VIDE OR DER NO. IT (E)/12AA/1.14/2009-10 DATED 22.01.2010. MAV IT PLEASE YOUR HONOURS AS ALREADY SUBMITTED WITH A.O, THE ASSESSEE HAD P REFERRED AN APPEAL WITH H'BLE ITAT. OUTCOME OF THE SAID APPEAL IS PRONOUNCED IN F AVOUR OF THE ASSESSEE ON 30- 12-2011. THERE IS NO QUESTION OF CANCELLATION OF RE GISTRATION AS THE ACTIVITIES OF THE SOCIETY ARE 'GENUINE' AND IT IS BEING CARRIED OUT I N ACCORDANCE WITH THE OBJECT OF THE SOCIETY. IN THIS REGARD, WE CAN TAKE REFERENCE OF T HE LANDMARK JUDGEMENT OF CASE 'HIMACHAL PRADESH ENVIRONMENT PROTECTION & POLLUTIO N CONTROL BOARD VS CIT [2010]'. ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 8 - AS THE OUTCOME OF THE APPEAL IS PRONOUNCED ON 30- 12-2011 I.E. IMMEDIATELY AFTER THE ASSESSMENT ORDER, GISFS HAD SUBMITTED THE ORDER PASSED BY H'BLE ITAT AND REQUEST TO PASS REVISED ORDER TO A.O ON 02/01/2012. THE LD. A.O ERRED INTO LAW BY NEITHER INFORMING T HE ASSESSEE ABOUT HIS OBJECTION TOWARDS THE REPLY FILED BY THE ASSESSEE ON 02-01-20 12 NOR CALLING FOR ANY FURTHER CLARIFICATION ON THE REPLY FILED BY ASSESSEE DEBITE D COUNT OF THE ASSESSEE WITH RS 73,13,230/-. AS DESCRIBED ABOVE, PROPOSITIONS FROM THE JUDICIAL RULING OF HIMACHAL PRADESH ENVIRONMENT PROTECTION & POLLUTION CONTROL BOARD VS CIT[2010] A REGISTRATION GRANTED UNDER SECTION 12AA CAN ONLY BE WITHDRAWN WHEN THE COMMISSIONER IS SATISFIED THAT (A) THE ACTIVITIES OF THE TRUST OR THE INSTITUTIONS ARE NOT GENUINE; OR (B) THE ACTIVITIES OF THE ASSESSEE ARE NOT BEING CA RRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE INSTITUTION THERE CANNOT BE ANY OTHER LEGALLY SUSTAINABLE REASO NS FOR CANCELLING OR WITHDRAWING THE REGISTRATION GRANTED UNDER SECTION 12AA. AS DISCUSSED IN ABOVE SUBMISSION, THE SOCIETY FULFI LS ALL CONDITIONS OF THE SECTION 11 UNDER THE INCOME TAX ACT 1961 AND HENCE EXEMPTION U /S 11 CANNOT BE DISALLOWED. BEING THE AGGRIEVED BY THIS ORDER OF THE ASSESSING OFFICER, THE ASSESSEE IS PRAYING HEREWITH TO DELETE THE ADDITIONS AS MADE BY THE LD ASSESSING OFFICER AS DISCUSSED IN ABOVE SUBMISSION. THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER AND AMEND OR WITHDRAW ANY OF THE GROUNDS AT THE TIME OF HEARING OF APPEAL.' 9. WE HAVE HEARD THE LEARNED REPRESENTATIVES FOR BO TH THE PARTIES. WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. BEFORE WE DECIDE THIS ISSUE ON MERITS, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY THE LD.C IT(A) WHILE DEALING WITH THIS GROUND. THE LD.CIT(A) HAS DEALT WITH THIS ISS UE IN PARAS-2 TO 5 OF HIS ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 9 - ORDER, HOWEVER, THE OPERATIVE PORTION CONTAINED IN PARA-5.1 OF HIS ORDER IS REPRODUCED HEREUNDER: 5.1. I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION, FACTS OF THE CASE AS WELL AS THE OBSERVATION OF THE A.O. IT IS OBSERVED THAT THE A.O HAS INVOKED PROVISIONS OF PROVISO TO SEC.2(15) R.W.S. 13(8) OF THE ACT AND HA S CONSIDERED THE ACTIVITIES OF THE APPELLANT SOCIETY BEING IN THE NATURE OF TRADE, COM MERCE OR BUSINESS. THE A.O HAS ASSESSED THE INCOME OF THE APPELLANT AS AN AOP AND AS PER THE PROVISIONS OF SEC,28 TO 44 OF THE ACT. AT PARA 2.1.1 THE A.O HAS MENTION ED THE OBJECTS OF THE APPELLANT. AS PER THE OBJECTS THE MAIN OBJECT IS TO PROVIDE EM PLOYMENT OPPORTUNITIES TO THE UNEMPLOYED YOUTH OF RURAL AND URBAN AREAS OF GUJARA T AS WELL AS TO PROVIDE A WELL TRAINED AND DISCIPLINED SECURITY FORCE TO DIFFERENT GOVERNMENT AND SEMI GOVERNMENT ORGANIZATIONS. THE A.O HAS ALSO MENTIONED THAT THE REGISTRATION GRANTED TO THE APPELLANT WAS CANCELLED BY DIT(EXEMPTION) ON 22/1/2 010. HOWEVER, HON'BLE ITAT AHMEDABAD VIDE THEIR ORDER IN ITA NO. 902/AHD/2010 DATED 30/12/2011 HAD DIRECTED DIT(EXEMPTION) TO RESTORE THE REGISTRATION OF THE APPELLANT. ACCORDINGLY, ON 12/12/2013 THE DIT(EXEMPTION) HAD RESTORED THE ORDE R OF REGISTRATION GRANTED U/S.12AA DATED 9/11/2005. THEREFORE, THE APPELLANT IS CONSIDERED AS AN EXEMPT ENTITY AS IT HAS THE REGISTRATION U/S.12AA AVAILABL E WITH IT FOR THE CONCERNED ASSESSMENT YEAR. ACCORDING TO THE A.O THE APPELLANT HAS BEEN PROVIDING SECURITY SERVICES TO VARIOUS ORGANIZATIONS AND THUS IT IS IN VOLVED IN THE ACTIVITIES THAT ARE COMMERCIAL OR BUSINESS LIKE IN CHARACTER. DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS MENTIONED THAT IT HAS BEEN SET UP BY THE GOVERNMENT REGULATION OF STATE GOVERNMENT OF GUJARAT THE SOCIETY ITSELF HAS NO PROFIT MOTIVE. THE APPELLANT IS NOT FREE TO DECIDE THE RATE AT WHICH IT WOULD BE OFFERING THE SERVICES TO VARIOUS ORGANIZATIONS. AS PER THE CIRCULAR DATED 11/12/2003 ISSUED BY INDUSTRY AND MINE DEVELOPMENT, GOVT. OF GUJARAT, THE STATE GOVERNMENT OFFICES, SEMI-GOVT. OFFICES, GOVT. HOSPI TALS, BOARDS, NIGAMS ETC. CAN HIRE THE SERVICES OF THE APPELLANT WITHOUT BRINGING ANY TENDERS AND AS PER THE RATES FIXED FOR THE SOCIETY. THE RATES ARE FIXED BY THE G OVERNING BODY OF THE APPELLANT WHICH HAS THE REPRESENTATION OF THE STATE GOVT. OF GUJARAT. THE APPELLANT HAS ALSO SUBMITTED THAT IT IS NOT ADVERTISING OR MARKETING O R PARTICIPATING IN THE TENDERING OR BIDDING FOR THE WORK ORDERS IN ORDER TO EARN PROFIT FROM ITS ACTIVITIES. IT IS THE GOVT. REGULATION WHICH HAS DIRECTED IT TO OFFER ITS SERVI CES TO VARIOUS STATE GOVT. BODIES. THE RATES THAT ARE FIXED BY THE GOVERNING BODY OF T HE SOCIETY ARE BASED ON THE MINIMUM WAGES ACT FOR THE SKILLED AND SEMI-SKILLED EMPLOYEE. FURTHER THE APPELLANT HAS ALSO SUBMITTED THE ORDER OF CESTAT WEST ZONAL B RANCH, AHMEDABAD DATED 30/4/2010 WHEREIN THE CESTAT HAS HELD THAT NO SERVI CE TAX IS ALLOWABLE AS THE APPELLANT IS NOT A COMMERCIAL CONCERN. THE FINAL DE CISION IN THE CASE BEFORE CESTAT IS YET TO COME. CONSIDERING ALL THESE FACTS, I AM O F THE CONSIDERED OPINION THAT THE ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 10 - APPELLANT SOCIETY IS NOT UNDERTAKING ANY ACTIVITIES THAT ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. IT IS ESSENTIALLY AN ORGANIZA TION PROMOTED BY THE GOVT. OF GUJARAT FOR PROVIDING EMPLOYMENT OPPORTUNITIES TO T HE UNEMPLOYED YOUTHS IN RURAL AND URBAN AREAS OF GUJARAT AND PROVIDING SERVICES T O DIFFERENT GOVERNMENT/SEMI- GOVT. ORGANIZATIONS, BOARDS, CORPORATIONS ETC BASED ON THE GUJARAT GOVT. OFFICE ORDER WITHOUT PARTICIPATING IN THE TENDERING OR BID DING PROCESS. THEREFORE, THE PROVISO TO SEC.2(15) R.W.S. 13(8) WILL NOT BE APPLI CABLE TO THE APPELLANT AND THE APPELLANT IS ELIGIBLE FOR ALL THE BENEFITS U/S.11 & 12 OF THE ACT. THEREFORE, THE GROUNDS OF APPEAL OF THE APPELLANT ARE HEREBY ALLOW ED. 9.1. HAVING GONE THROUGH THE FACTS OF THE PRESENT C ASE AND AFTER HEARING THE PARTIES AT LENGTH, WE FIND THAT WHILE PASSING T HE ORDER OF ASSESSMENT, THE ASSESSING OFFICER CATEGORICALLY HELD THAT REGISTRAT ION OF ASSESSEE HAS ALREADY BEEN CANCELLED VIDE ORDER DATED 22/01/2010 BUT FROM THE RECORDS, WE OBSERVED THAT THE SAID REGISTRATION U/S.12AA WAS RE STORED BY THE HONBLE BENCH OF ITAT ON 30/12/2011 IN ITA NO.902/AHD/2010. EVEN OTHERWISE, AS PER THE FACTS OF THE PRESENT CASE, WE NOTICE THAT T HE ASSESSEE HAS BEEN SET UP BY THE GOVERNMENT REGULATION OF STATE GOVERNMENT OF GUJARAT AND THE SOCIETY ITSELF HAS NO PROFIT MOTIVE. THE ASSESSEE IS NOT FREE TO DECIDE THE RATE AT WHICH IT WOULD BE OFFERING THE SERVICES OF SECUR ITY TO VARIOUS ORGANIZATIONS. AS PER CIRCULAR DATED 11/12/2003 ISSUED BY THE INDU STRY AND MINE DEVELOPMENT, GOVERNMENT OF GUJARAT, THE STATE GOVER NMENT OFFICES, SEMI- GOVERNMENT OFFICES, GOVERNMENT HOSPITALS, BOARDS, N IGAMS, ETC. CAN HIRE THE SERVICES OF THE ASSESSEE WITHOUT BRINGING ANY TENDE RS AND AS PER THE RATES FIXED FOR THE SOCIETY. THE RATES ARE FIXED BY THE GOVERNING BODY OF THE ASSESSEE WHICH IS BEING REPRESENTED BY THE GOVERNME NT OF GUJARAT. ASSESSEE HAS SPECIFICALLY STATED THAT IT WAS NOT AD VERTISING OR MARKETING OR PARTICIPATING IN THE TENDERING OR BIDDING FOR THE W ORK ORDERS IN ORDER TO EARN PROFIT FROM ITS ACTIVITIES AND IT IS THE GOVERNMENT REGULATION WHICH HAS ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 11 - DIRECTED IT TO OFFER ITS SERVICES TO VARIOUS STATE GOVERNMENT BODIES AND THE RATES ARE FIXED BY THE GOVERNING BODY OF THE SOCIET Y ARE BASED ON THE MINIMUM WAGES ACT FOR THE SKILLED AND SEMI-SKILLED EMPLOYEE. WE HAVE ALSO TAKEN INTO CONSIDERATION THE SPECIFIC FACTS TH AT CESTAT, AHMEDABAD VIDE ORDER DATED 30/04/2010, WHEREIN IT WAS HELD THAT NO SERVICE TAX IS ALLOWABLE IN THE CASE OF ASSESSEE AS THE ASSESSEE IS NOT COM MERCIAL CONCERN. ALTHOUGH, THE FINAL DECISION IN THE CASE BEFORE THE CESTAT IS YET TO COME BUT CONSIDERING THE FACTS THAT FIRSTLY, THE SURPLUS WHI CH ACROSS TO THE ASSESSEE IS UTILIZED FOR ORGANIZING TRAINING, GUIDANCE AND INFO RMATIONAL CAMPS FOR THE SECURITY GUARDS EMPLOYED BY THE SOCIETY, ESTABLISHI NG, DEVELOPING AND MAINTAINING SUPPORT CENTERS FOR MAINTENANCE AND SUP PLY OF INFORMATION REGARDING SECURITY SERVICES, ADMINISTRATIVE, MANAGE MENT AND MAINTENANCE ACTIVITIES OF THE SOCIETY. WE ARE OF THE VIEW THAT THE EMPHASIS CAN ONLY BE ON THE PRE-DOMINANT OBJECT OF THE CONCERN TRUST AND IF PRE-DOMINANT OBJECT IS CHARITABLE IN NATURE WITH NO PROFIT MOTIVE, THEN IN THAT EVENTUALITY THE ACTIVITIES OF THE ASSESSEE TRUST CANNOT TREATED AS TRADE, COMMERCE, MERELY ON ACCOUNT OF THE FACT THAT THERE ARE SOME SURPLUS WIT H THE ASSESSEE. IN THIS RESPECT, WE FIND SUPPORT FROM THE FOLLOWING DECISIO NS: 1. AHMEDABAD URBAN DEVELOPMENT AUTHORITY VS. ACIT 396 ITR 323 (GUJ.), 2. CIT VS. GUJARAT INDUSTRIAL DEVELOPMENT CORPORATI ON (2017) 83 TAXMANN.COM 366 (GUJ.), 3. SABARMATI ASHRAM GAUSHALA TRUST VS. ADIT 362 IT R 539 (GUJ.), 4. DCIT VS. GANDHINAGAR URBAN DEVELOPMENT AUTHORITY ITA 2438-2440/AHD/2017, WHEREIN IT HAS ALSO BEEN SPECIFICALLY HELD THAT THE EMPHASIS MUST BE ON THE PRE-DOMINANT OBJECT OF THE CONCERN TRUST AND IF THE SAID PRE-DOMINANT ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 12 - OBJECT ARE AVAILABLE IN NATURE WITH NO PROFIT MOT IVE, THEN THE ACTIVITIES OF THE TRUST CANNOT BE TREATED AS TRADE, COMMERCE OR B USINESS MERELY ON ACCOUNT OF THE FACT THAT THERE ARE SOME SURPLUS. IN OUR VIEW, THE APPLICATION OF THE SURPLUS IS A MAIN CRITERIA FOR D ECIDING THE NATURE OF THE ACTIVITIES AND FROM THE RECORDS NOTHING WAS POINTED OUT BEFORE US THAT THE APPLICATION OF THE SURPLUS WAS IN THE NATURE OF ANY COMMERCIAL, TRADING OR BUSINESS ACTIVITIES. 9.2. EVEN BEFORE US, NO NEW FACTS OR CIRCUMSTANCES HAVE BEEN PLACED ON RECORD IN ORDER TO CONTROVERT THE FINDINGS OF THE L D.CIT(A) WHILE DECIDING THE SAID CASE. THEREFORE, WE FIND NO REASON TO INTERFE RE INTO OR TO DEVIATE FROM SUCH FINDINGS OF THE AUTHORITIES BELOW AND WE UPHOL D THE FINDINGS OF THE LD.CIT(A) AND REJECT THE GROUND RAISED BY THE REVEN UE. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 13 - 03 - 2020 AT AHMEDABAD SD/- SD/- ( AMARJIT SINGH) ( SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/ 03 /2020 $ . . , . % . ./ T.C. NAIR, SR. PS ITA NO.257/AHD/2018 DCIT (E) VS. GUJARAT INDUSTRIAL SECURITY FORCE SO CIETY ASST.YEAR 2009-10 - 13 - !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / CONCERNED CIT 4. ) ( ) / THE CIT(A)-9, AHMEDABAD 5. *+ , %%'( , '( , & / DR, ITAT, AHMEDABAD 6. , /0 / GUARD FILE. / BY ORDER, * % //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 11.3.20 (DICTATION-PAD 15 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..12.3.20 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.13.3.20 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.3.20 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER