Gujarat Industrial Security Force Society, Ahmedabad V. The DIT(Exemp.), Ahmedabad

ITA 2726/AHD/2010

• Counselvise Citation: 272620514 RSA 2010
• Duration Of Justice: 4 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-07-2015
• Assessment Year: misc
• Appeal Filed On: 21-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Charitable institution
• Section: 143(3); 37(1); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S.S. GODARA , JUDICIAL MEMBER GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY, NEAR NEW MENTAL HOSPITAL, MEGHANINAGAR, AHMEDABAD, PAN: AAAAG037L (APPELLANT) VS DY. DIT(EXEMPTION) AHMEDABAD (RESPONDENT) ASSESSEE BY: SHRI TUSHAR HEMANI, A. R. REVENUE BY: S H RI KAMLESH MAKWANA , SR. D.R . DATE OF HEARING : 23 - 07 - 2 015 DATE OF PRONOUNCEMENT : 14 - 08 - 2 015 / OR DER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE TWO ASSESSEE S APPEAL S FOR ASSESSMENT YEAR 2007 - 08 & 2008 - 09 ARISE FROM ORDER OF THE CIT(A) - XXI, AHMEDABAD DATED 1 5 - 07 - 2010 & 12 - 10 - 2012 IN APPEAL NOS. CIT(A) - XXI/174/DDIT(EXMP)/09 - 10 , & CIT(A) - I T A NO . 2726 A HD/20 10 & 132/AHD/2012 A SSESSMENT YEAR 2007 - 08 & 200 8 - 09 I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 2 XXI/833/1 1 - 12 RESPECTIVELY ; IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEE S FORMER APPEAL CHALLENGES THE LOWER APPELLATE ORDER AFFIRMING THE ASSESSING O FFICER S ACT ION DISALLOWING EXEMPTION O F RS. 88,22,896/ - U/S. 11(1)(A) AND DEDUCTION OF RS. 40,86,755/ - U/S. 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. ITS LATTER APPEAL PLEADS THAT THE LOWER AUTHORITY OUGHT NOT TO HAVE CONFIRMED TH E ASSESSMENT ORDER DISALLOWING SUM S OF RS. 1,39,98,749/ - U/S. 11(1)(A) AND RS. 42, 60,000/ - U/S. 11(2) OF THE ACT ; RESPECTIVELY . 3. BOTH PARTIES INFORM AT THE OUTSET THAT THE ASSESSEE S FIRST GROUND IN THE FORMER APPEAL AND BOTH OF ITS GRIEVANCE S IN THE LATTER CASE INVOLVE IDENTICAL ISSUE S . WE ACCORDINGLY TAKE UP THESE THREE GROUNDS TOGETHER FOR DISPOSAL. 4. THE AS S ESSEE IS A REGISTERED SOCIETY. IT CAME INTO EXISTENCE 04 - 07 - 1997. ITS OBJECTS READ AS UNDER: - AIM AND OBJECTS: THE AIMS AND OBJECTS FOR WHICH THE SOCIETY IS ESTABLISHED ARE AS UNDER: - (1) TO PROVIDE COMPREHENSIVE SECUR ITY AND SAFETY SERVICES COVERING ALL ASPECTS OF PROTECTION TO L IF E AND PROPERTIES TO INDUSTRIES AND INDUSTRIAL UNDERTAKINGS IN AND OUT OF GUJARAT. (2) TO PROVIDIN G EMPLOYMENT AND CAREER OPPORTUNITI ES TO YOUNG, UNEMPLOYED AND WELL - BUILT PERSONS TO ACT AS SECURI TY GUARDS. (3) TO RECRUIT EX - ARMY AND EX - OFFICERS F R O M POLICE DEPARTMENT SUPERVISE THE GUARDS POSTED AT VA R IO US PLACES . (4) TO PROVIDE SECURITY GUARDS TO CLIENTS TO PROTECT THEIR PROPERTIES AND EXECUTING SERVICE CONTRACTS FOR PROVIDING SERVICES LIKE CAR PARKING FA CILITY, LIFE OPERATION FACILITY ETC. I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 3 (5) TO ENSURE THE ADEQUATE AND TIMELY SUPPLY OF SECURITY GUARDS FOR THE PURPOSE OF FACILITATING AND DOING SECURITY WORK OR WATCH AND WA RD WORK IN ANY FACTORY OR ESTABLISHMENT. (6) TO LOCATE AND CONTACT PROSPECTIVE CLIENTS RES IDING IN AND OUT OF GUJARAT AND MOTIVE THEM TO EMPLOY SECURITY SERVICES AT REASONABLE COST. (7) TO CREATE AN AWARENESS AMONG THE CLIENTS RESIDING IN GUJARAT AND OUT OF GUJARAT FOR THE IMPORTANCE OF MAINTENANCE OF SECURITY FOR LIVES AND PROPERTIES OF INDUSTRIES AND INDUSTRIAL UNDERTAKINGS. (8) TO ORGANIZE TRAINING, GUIDANCE AND INFORMATION CAMPS FOR THE SECURITY GUARDS TO BE ENGAGED BY THE SOCIETY. (9) TO ESTABLISH, DEVELOP AND SUPPORT CENTERS FOR MAINTENANCE AND SUPPLY OF INFORMATION REGARDING SECURITY SERVICES. (10) TO PR OVIDE INFORMATION TO PUBLIC IN GENERAL AND ENTREPRENEURS IN PARTICULAR REGARDING THE OPPORTUNITIES AVAILABLE IN DIFFERENT AREAS OF SECURITY SERVICES. (11) TO COLLECT AND MAINTAIN DATABASE REGARDING SECURITY AGENCIES OPERATING IN GUJARAT AND OUT OF GUJARAT AND L IASE WITH THEM MATTERS OF MUTUAL INTEREST. (12) TO ORGANIS E THE TRAINING CAMPS PERIODICALLY TO IMPART TRAINING TO SECURITY PERSONNEL IN VARIOUS ASPECTS OF SECURITY AND KEEP THEM INFORMED REGARDING LATEST DEVELOPMENT IN TEN AREA OF SECURITY (13) TO MAINTAIN LIBRARY O F BOOKS IN CONNECTION WITH THE SECURITY , FIRE FIGHTING, FIRST AID AND CATALOGUE OF EQUIPMENT S AND SUPPLIERS AS WELL AS CURRENT AND PROSPECTIVE CLIENTS. (14) TO ORGANIS E, SPONSOR, ASSOCIATE OR PARTICIPATE IN ANY CAMPAIGN AIMED AT PROMOTION OF INDUSTRIAL SECURITY . (15) TO PUBLISH LITERATURE IN THE FORM OF BROCHURES, REPORTS, PAMPHLETS, PERIODICALS AND DISTRIBUTE THEM TO THE EXISTING AND PROSPECTIVE CLIENTS. (16) TO KEEP ABREAST OF THE LATEST EQUIPMENTS AND AMMUNITIONS AVAILABLE IN THE MARKET FOR PROTECTION OF LIVES AND PROP ERTIES OF INDUSTRIES AND INDUSTRIAL UNDERTAKINGS. (17) TO RAISE OR BORROW MONEY FROM TIME TO TIME FOR FURTHERANCE OF ANY OBJECTS OF THE SOCIETY WITH OR WITHOUT GIVIN G ANY SECURITY OR BY MORTGAGING /PLEDGING/HYPOTHECATING THE PRESENT OR THE FUTURE ASSETS OF THE S OCIETY. (18) TO PROVIDE, ASSIST AND ENCOURAGE WELFARE ACTIVITIES FOR SECURITY GUARDS INITIATED BY CENTRAL, STATE , LOCAL OR PRIVATE BODIES. (19) TO ADHERE AND ENSURE COMPLIANCE WITH THE VARIOUS CLASSIFICATION OF SECURITIES PROVIDED BY THE INDIAN POLICE TO VIPS. I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 4 (20) TO TR AIN THE CORE AND MOST EFFICIENT GROUP TO BE FORMED AS COMMANDO GROUP TO PROVIDE SECURITY SERVICES TO HIGH RISKED PERSONNEL, PLACES OR ANY EVENT. (21) TO PRESENT THE SOCIETY AND ITS INTEREST BEFORE LOCAL, STATE AND CENTRAL AUTHORITIES AND OTHER ORGANIZATIONS I N INDIA. (22) TO MAKE FROM TIME TO TIME BYE - LAWS FOR THE CONTROL, CONDUCT AND REGULATION OF THE AFFAIRS OF THE SOCIETY. (23) TO GENERALLY DO ALL SUCH THINGS AS ARE INCIDENTAL TO AND /OR CONDUCTIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS OR ANY OF THEM. ALL THE INCOME S, EARNINGS, MOVABLE OR IMMOVABLE PROPERTIES OF THE SOCIETY SHALL BE SOLELY UTILIZED AND APPLIED TO W ARDS THE PROMOTION OF ITS A IM S AND OBJECTS ONLY AS SET FORTH IN THE MEMORANDUM OF ASSOCIATION AND NO P OR TION THEREOF SHALL BE PAID OR TRANSFERRED DIRECTLY O R INDIRECTLY BY WAY OF DIVIDENDS , BONUS, PROFITS OR IN ANY MANNER WHATSOEVER, TO THE PRESENT OR PAST MEMBERS OF THE SOCIETY OR T O A NY PERSON CLAIMING THROUGH ANY ONE OR MORE OF THE PRESENT THE PAST MEMBERS. NO MEMBERS OF SOCIETY SHALL HAVE ANY PERSONAL CL AIM ON ANY MOVABLE OR IMMOVABLE PROPERTY OF THE SOCIETY OR MAKE ANY PROFIT, WHATSOEVER, BY VIRTUE OF HIS MEMBERSHIP. 5. T HE ASSESSEE DECLARED ITS RECEIPTS DERIVED FROM ACTIVITIES OF PROVIDING SECURITY SERVICES UNDER THE HEAD BUSINESS FROM ASSESSMENT YEA R S 1997 - 98 TO 2005 - 06. IT APPLIED FOR SECTION 12AA REGISTRATION ON 28 - 06 - 2005. THE DIT(E) GRANT ED THE SAME W.E.F. 01 - 04 - 2005 AFTER FINDING ITS OBJECTS AS CHARITABLE . THE ASSESSEE CLAIMED IMPUGNED EXEMPTIONS U/S. 11(1)(A) AND 11(2) OF THE ACT AS INDICATE D HEREINABOVE IN THESE TWO ASSESSMENT YEARS. THE ASSESSING OFFICER TOOK UP SCRUTINY . HE INTER ALIA NOTICED IT TO BE ENGAGED IN A BUSINESS VENTURE OF PROVIDING SECURITY TO GOVT., SEMI - GOVT. BODIES , BOARDS AND CORPORATIONS IN LIEU OF CHARGING FEE/REMUNERAT ION. HE VIEWED THE SAID ACTIVITIES AS NOT HAVING ANY CHARITABLE ELEMENT . THE ASSESSEE PLEADED ITSELF AS A SOCIETY WHOLLY SPONSORED AND CREA TED BY THE STATE GOVT. TO CREATE EMPLOYMENT OPPORTUNITIES FOR THE YOUTH BY WAY OF PROVIDING WELL TRAINED SECURITIES I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 5 SERVICE TO DIFFER ENT ORGANIZATIONS WITHOUT ANY PROFIT MOTIVE. IT STATED THAT CIRCULARS ARISING THEREFROM WOULD BE UTILIZED IN CARRYING OUT TRAINING AND MAINTENANCE ACTIVITIES ONLY WITHOUT ANY DIVERSION THEREOF . THE ASSESSING OFFICER DID NOT AGREE. HE O BSERVED IN FORMER ASSESSMENT ORDER DATED 14 - 12 - 2009 THAT THE ASSESSEE HAD BEEN CHARGING REMUNERATION FOR PROVIDING SECURITY SERVICES IN THE NATURE OF A BUSINESS ACTIVITIES . HE WAS OF THE OPINION THAT ITS OBJECTS REPRODUCED HEREINABO VE WERE NOT CHARITABLE . HE VIEWED ASSESSEE S ACTIVITIES PERFORMED IN SUCH A COMMERCIAL WAY WHEREIN ITS PROFITS WERE NOT DISTRIBUTED, BUT UTILIZED IN IMPROVING QUALITY OF SECURITY SERVICE S PROVIDED IN ORDER TO CHARGE HIGHER AMOUNT OF REMUNERATION FROM GOVT. AND OTHER ORGANIZATI ONS . CASE LAW OF PU NJAB URBAN DEVELOPMENT AUTHORITY VS. CIT 156 TAXMAN 37 WAS QUOTED . THE ASSESSING OFFICER IN THE LATTER ASSESSMENT ORDER DATED 30 - 11 - 2010 TOOK COGNIZANCE OF THE FACT THAT THE DIT(E) IN HIS ORDER DATED 22 - 01 - 2010 HAD ALREADY CANCELLED AS SESSEE S REGISTRATION U/S. 12AA (S) OF THE ACT. ALL THIS RESULTED IMPUGNED DISALLOWANCES BEING MADE U/S. 11(1)(A) AND 11(2) OF THE ACT . 6. THE ASSESSEE PREFERRED TWO SEPARATE APP EALS. W E FIND THAT BOTH THE LOWER APPELLATE ORDERS UNDER CHALLENGE ARE TOTA LLY NONSPEAKING SO FAR AS THE FINDINGS UNDER CHALLENGE ARE CONFIRMED. THE ONLY EXCEPTION IS THAT THE CIT(A) S LATTER ORDER TAKES COGNIZANCE OF FACT THAT A CO - ORDINATE BENCH OF THE TRIBUNAL HAS ALLOWED ASSESSEE S APPEAL THERE BY RESTORING SECTION 12A A REGIS TRATION CANCELLED AS ABOVE. HOWEVER, HE OBSERVES THAT SECTION 11 EXEMPTION IN QUESTION CAN STILL BE DENIED ON MERITS. 7. WE HAVE HEARD BOTH THE PARITIES AND GONE THROUGH THE CASE FILE. THE ASSESSEE SUBMITS THAT ITS OBJECTS ARE ALREADY HELD CHARITABLE , ITS ACTIVITIES PERFORMED ARE STRICTLY IN FURTHERANCE TO THE SAME AND THERE IS NO I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 6 BUSINESS ACTIVITY CARRIED OUT AS ALLEGED BY THE AUTHORITIES BELOW. THE REVENUE STRONGLY SUPPO RTS LOWER AUTHORITIES ACTION DENYING THE IMP UGNED EXEMPTIONS . IT TRANSPIRES F ROM THE CASE FILE THA T THE STATE GOVT. OF GUJARAT SET UP THE ASSESSEE S SOCIETY. ITS GOVERNING BODY COMPRISES OF THE STATE HOME SECRETARY, COMMANDANT GENERAL HOME GUARDS, FINANCE SECRETARY AND OTHER GOVT. FUNCTIONARIES ONLY. THE STATE GOVT. HOLDS ITS 100 % MEMBERSHIP. THE ASSESSEE ENJOYS SECTION 12AA REGISTRATION AS WELL SINCE 01 - 04 - 2005. WE REITERATE THAT THE DIT(E) HAD CANCELLED ITS REGISTRATION BY TAKING INTO ACCOUNT ITS ACCUMULATED PR OFIT FROM 2006 - 07 TO 2008 - 09 BY HOL D ING THAT ITS ACTIVITIES OF PROV IDING SECURITY SERVICES WERE ON A BUSINE SS SCALE. THE TRIBUNAL HAS SET ASI DE THE SAID ORDER (SUPRA) . THEREFORE, WE QUOTE THE CASE LAW OF HON BLE APEX COURT IN DCIT VS. SURAT CITY GYMKHANA (2008) 300 ITR 214 (SC) HOLDS THAT WHEN A TRUST IS REGISTERED, AN ASSESSING AUTHORITY CANNOT QUESTION ITS OBJECTS AS TO WHETHER THE SAME COMPRISE OF CHARITY ELEMENT OR NOT IN SUBSEQUENT PROCEEDINGS . THE HON BLE JURISDICTIONAL IN CASE OF (2000) 246 ITR 188 HIRALA L BHAGWATI VS. CIT (GUJ) HOLDS THAT SECTION 12AA REGISTRATI ON IS NOT AN EMPTY FORMALITY IN SUBSEQUENT PROCEEDINGS . WE DRAW SUPPORT THEREFORM AND HOLD THAT THE CIT(A) HAS E RRED IN AFFIRMING THE ASSESSING O FFICER S FINDINGS THAT THE ASSESSEE S OBJECTS ARE NOT CHARITABLE IN NATURE. 8. NOW , WE COME TO THE ASSESSIN G OFFICER S OPINION RELYING ON THE TRIBUNAL S ORDER IN THE CASE OF PUNJAB URBAN DEVELOPMENT AUTHORITY. IT IS NOTICED THAT THE ISSUE INVOLVED THEREIN WAS THE CONCERNED ASSESSEE S CLAIM OF SECTION 12AA REGISTRATION AND NOT THAT OF EXEMPTION AS IN THE INSTAN T CASE. THEREFORE, THE SAME ACCORDINGLY STANDS DISTINGUISHED B EING NOT APPLICABLE ON FACTS OR LAW . I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 7 9. THIS LEAVES US WITH LAST AND FINAL ISSUE BETWEEN THE PARTIES AS TO WHETHER THE ASSESSEE S ACTIVITIES IN PROVIDING SECURITY SERVICES INVOLVE ANY BUSINE SS ELEMENT OR NOT SO AS TO DENY IT SECTION 11 EXEMPTION . WE REFER TO ASSESEE S OBJECT CLAUSES WHEREIN ITS MAIN AIM IS TO PROVIDE COMPREHENSIVE SECURITI ES AND SAFETY SERVICES AFTER TRAINING OF THE UNEMPLOYED YOUTH AND WELL BUILT PERSONS FOR THE SAKE OF PRO VIDING EMPLOYMENT AND CAREER OPPORTUNITIES . THE REVENUE S FAIR ENOUGH IN NOT DISPUTING THE FACT THAT THIS ACTIVITY CONFIRM S TO ITS OBJECTS EXTRACTED HEREINABOVE. WE OBSERVE IN THESE FACTS THAT THE ASSESSEE S PRIMARY ACTI VITY IS THAT OF CREATING EMPLOYMENT OPPORTUNITIES ONLY AND SCALE OF FEES IS SO MODES T THAT IT CANNOT HAVE A PROFIT MOTIVE. THE CONSTITUTION OF GOVERNING/MANAGING BODY IS ALSO OF STATE GOVT. OFFICIALS AND AS SUCH PROFIT MOTIVE IS VIRTUALLY RULED OUT. A CO - ORDINATE BENCH OF DELHI TRIBUNAL I N ITA NO. 2996/DEL/2011 AWPO VS. DIT DECIDED ON 22/01/2015 HAS DECIDED THIS ISSUE AS UNDER: - AS REGARDS THE QUESTION, WHETHER THE ACTIVITY IS IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR NOT, ON THE GROUND THAT THE ASSESSEE IS CHARGING A REGISTRATION FEE FROM SOME OF THE REGISTRANTS, WE MAY REFER TO RULE 23(D) OF THE ASSESSEE APPELLANT - A COPY OF WHICH WAS PLACED BEFORE US AT PAGES 1 - 58 OF THE COMPILATION OF PAPERS, WHICH PROVIDES AS FOLLOWS: '23(D) FEES NOMINAL FEES AS MENTIONED BELOW WI LL BE CHARGED FROM THE REGISTRANTS FOR MEETING THE OPERATIONAL EXPENDITURE OF THE ESTABLISHMENT: I. OFFICES II. JUNIOR COMMISSIONED OFFICERS III. OTHER RANKS IV. VEERNARIS (WIDOWS) V. WIDOW';S WARDS/DEPENDENTS VI. DE PENDENTS OF SERVING/RETIRED ARMY PERSONNEL 9. WE FIND THAT THE NOMINAL FEES FOR THE REGISTRATION, WHICH IS A ONETIME FEES, IS I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 8 BARELY ENOUGH TO MEET EVEN PARTIAL COSTS OF RUNNING THIS ESTABLISHMENT, AND THE FACT THAT SUCH A NOMINAL FEES IS CHARGED FROM THE REGISTRANTS, IN OUR HUMBLE UNDERSTANDING, CANNOT CHANGE THE FUNDAMENTAL CHARACTER OF THIS CHARITABLE ACTIVITY. NOT ONLY THAT THE SCALE OF FEES IS TOO MODEST AND THE FACILITY OF REGISTRATION IS RESTRICTED ONLY TO SERVING OR FORMER ARMY PERSONNEL, AND THEIR DEPENDENTS, THE UNAMBIGUOUS OBJECTIVE OF THE ASSESSEE INSTITUTION IS TO PROMOTE WELFARE OF THE ARMY PERSONNEL AND THEIR DEPENDENTS. THERE ARE NO REASONS TO DOUBTS BONAFIDES OF THIS WELL INTENDED INITIATIVE OF THE INDIAN ARMY, BY WAY OF ARMY WELFA RE PLACEMENT ORGANIZATION WHICH IS WORKING UNDER DIRECT CONTROL OF THE MINISTRY OF DEFENCE IN THE GOVERNMENT OF INDIA. THERE IS NOTHING ON RECORD WHATSOEVER TO SUGGEST THAT THIS ORGANIZATION IS SET UP ON ANY COMMERCIAL BASIS. IT IS ONLY ELEMENTARY THAT THE MERE FACT THAT A FEES IS RECEIVED FROM THE REGISTRANTS, BY ITSELF, CANNOT CONVERT A CHARITABLE ACTIVITY INTO A COMMERCIAL ACTIVITY. THIS POSITION IS RECOGNIZED BY THE STATUE ITSELF IN SECOND LIMB OF EXPLANATION TO SECTION 2(15), A SPECIFIC REFERENCE MADE IS TO THE RECEIPT OF SUCH FEES FROM TRADE, COMMERCE AND BUSINESS, AND A FURTHER MONETARY LIMIT IS SET OUT EVEN ON AGGREGATE OF FEES EVEN FROM TRADE, COMMERCE OR BUSINESS. IF RECEIVING A FEES SIMPLICITOR COULD BE REASON ENOUGH TO HOLD THAT AN ACTIVITY CAN O NLY BE CHARITABLE ACTIVITY, THERE COULD NOT HAVE BEEN ANY JUSTIFICATION FOR SUCH RIDERS IN THE STATUTE ITSELF. THAT APART, TIME AND AGAIN, THE FUNDAMENTAL ESSENCE OF A BUSINESS ACTIVITY IS TO EARN PROFITS BUT THEN A PLAIN LOOK AT THE OBJECTIVE ( F ), AS REPR ODUCED IN PARAGRAPH 4 EARLIER IN THIS ORDER, WOULD SHOW THAT CLEARLY AND UNAMBIGUOUSLY PROFIT MAKING CANNOT BE AN OBJECTIVE IN THIS CASE. THE ASSESSEE INSTITUTION IS SET UP BY THE INDIAN ARMY AND IT SEEKS TO PROMOTE THE WELLBEING OF THEIR PERSONNEL AFTER T HEIR RETIREMENT FROM THE SERVICE, AS ALSO OF THE WIDOWS AND DEPENDENTS OF THE BRAVE ARMY MEN WHO SACRIFICE THEIR LIVES, AND HELP THEM INTEGRATE IN THE CIVIL SOCIETY BY TAKING UP SUITABLE EMPLOYMENT. THIS IS SURELY AN ACTIVITY OF GENERAL PUBLIC UTILITY, AND , THEREFORE, COVERED BY THE DEFINITION OF ';CHARITABLE PURPOSES'; UNDER SECTION 2(15). THE TRUE TEST FOR DECIDING WHETHER AN ACTIVITY IS BUSINESS ACTIVITY IS ( I ) WHETHER THE SAID ACTIVITY UNDERTAKEN WITH A PROFIT MOTIVE, OR ( II ) WHETHER THE SAID ACTIVITY H AS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES, AND PURSUED WITH REASONABLE CONTINUITY. CLEARLY, THEREFORE, IN A SITUATION IN WHICH AN ACTIVITY IS NOT UNDERTAKEN WITH A PROFIT MOTIVE OR ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES, SUCH AN ACTIVIT Y CANNOT BE CONSIDERED TO BE A BUSINESS ACTIVITY. WE MAY, IN THIS REGARD, USEFULLY REFER TO THE FOLLOWING OBSERVATIONS MADE BY HON';BLE DELHI HIGH COURT IN THE CASE OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V. DGIT (EXEMPTION) [2012] 347 ITR 99/[2011] 202 TAXMAN 1/13 TAXMANN.COM 175 . 'THEREFORE, WHILE CONSTRUING THE TERM ';BUSINESS'; FOR THE SAID SECTION, THE OBJECT AND PURPOSE OF THE SECTION HAS TO BE KEPT IN MIND. WE DO NOT THINK THAT A VERY BROAD AND EXTENDED DEFINITION OF THE TERM ';BUSINESS'; IS INTENDED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO S. 2(15) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FEE OR MONEY. AN ACTIVITY WOULD BE CONSIDERED 'BUSINESS' IF IT IS UNDERTAKEN WITH A PROF IT MOTIVE, BUT IN SOME CASES THIS MAY NOT BE DETERMINATIVE. NORMALLY THE PROFIT MOTIVE I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 9 TEST SHOULD BE SATISFIED BUT IN A GIVEN CASE ACTIVITY MAY BE REGARDED AS BUSINESS EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABLISHED/PROVED. IN SUCH CASES, THERE SHOULD BE EV IDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES, AND PURSUED WITH REASONABLE CONTINUITY. THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS.' 10 . THERE HAS TO BE, THEREFORE, SOMETHING MORE THAN MERE CHARGING A FEES BY AN INSTITUTION WHICH CAN DEMONSTRATE THAT ACTIVITY UNDERTAKEN IS IN THE NATURE OF BUSINESS, AND THE ONUS OF DEMONSTRATING THAT FACT IS ON THE REVENUE AUTH ORITIES. THE REASON FOR THIS ONUS IS SIMPLE; NOBODY CAN BE EXPECTED TO PROVE A NEGATIVE, AS WAS HELD BY HON';BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 AND THE ASSESSEE CANNOT, THEREFORE, BE ASKED TO PROVE THAT THE ASSESSEE IS NOT CARRYING ON AN ACTIVITY WITH BUSINESS MOTIVE. A PERUSAL OF THE IMPUGNED ORDER, HOWEVER, INDICATES THAT THE ONLY REASON FOR WHICH THE ASSESSEE IS HELD TO BE PURSUING BUSINESS ACTIVITY IS CHARGING OF FEES AND THERE IS NO OTHER LEGALLY SUSTAINABLE FINDING TO SUPPORT THAT CONCLUSION. IN VIEW OF THESE FACTS, AS ALSO BEARING IN MIND, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTIONS) WAS INDEED IN ERROR IN REJECTING THE REGISTRA TION UNDER SECTION 12A, AS SOUGHT BY THE ASSESSEE. WE, THEREFORE, DIRECT THE LEARNED DIRECTOR TO GRANT THE REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961. ORDER, ACCORDINGLY. 10. SO FAR AS THE REVENUE S OBJECTION OF REMUNERATI ON/FEE BEING CHARGED RESULTING IN SURPLUS IS CONCERNED, WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT IN A RECENT JUDGMENT DIT(E) VS. SABARMATI ASHRAM GAUSHAL A TRUST IN TAX APPEAL NO. 1162 OF 2013 DECIDED ON 15 - 01 - 2014 HOLDS THAT THE INCOME TAX LAW DO ES NOT EXPECT A TRUST TO DISPOSE OF ITS PRODUCE AT ANY CONSIDERATION L ESS THAN THE MARKET VALUE. AND ALSO THAT MERE GENERATION OF SURPLUS AT THE END OF THE YEAR WHOLLY INCIDENTAL THERETO WOULD NOT BE THE SOLE CONSIDERATION FOR HOLDING NATURE OF AN ACTIVIT Y TO BE TRADE, COMM ERCE OR BUSINESS AS UNDER: - MANY ACTIVITIES OF GENUINE CHARITABLE PURPOSES WHICH ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS MAY STILL GENERATE MARKETABLE P RODUCTS. AFTER SETTING OFF OF THE COST, FOR PRODUCTION OF SU C H MARKETABLEPRODUCTS FROM THE SALE CON SIDERATION, THE ACTIVITY MA Y LEAVE A SURPLUS. THE LAW DOES NOT EXPECT THE TRUST TO I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 10 DISPOSE OF ITS PRODUCE AT ANY CONSIDERATION LESS THAN THE MARKET VALUE. IF THERE IS P NYSURPLUS GENE RATED AT THE END OF THE YEAR, THAT BY ITSELF WOULD NOT BE THE SOLE CONSIDERATION FOR JUDGING WHETHER ANY ACTIVITY I S TRADE, COMMERCE OR BUSINESS PARTICULARLY IF GENERATING SURPLUS IS WHOLLY INCIDENTAL TO THE PRINCIPAL ACTIVITIES OF THE TRUST; WHI CH IS OTHERWISE FOR GENERAL PUBLIC U TILITY, AND THEREFORE, OF CHARITABLE NATURE. THE TRIBUNAL TOOK INTO ACCOUNT T HE OBJECTS OF THE TRUST WHICH ARE AS UNDER : 1. TO BREED THE CATTLE AND ENDEAVOU R TO IMPROVE THE QUALITY OF THE COWS AND OXEN IN V IEW OF THE NEED OF GOOD OXEN AS INDIA IS PROMINENT AGRICULTURAL COUNTRY AND THE COW M ILK AS FOOD IS BOTH CONDUCIVE TO AND REQUISITE FOR GOOD HEALTH AND LONGEVITY OF HUMAN LIF E. IN ORDER TO IMPROVE THE QUALITY OF THE CATTLE, IT IS VERY ESSENTIAL TO USE A HI GH QUALITY BULLS. HENCE TO PRODUCE AND TO GET PRODUCED THE BEST PEDIGREED BULLS AND TO CASTRATE THE SCRUB BULLS AND PROPAGATE THE WORK TO PRE PARE BULLOCKS BY CASTRATING THE BULLS WHICH DO NOT BECOME GOOD BULLS. 2. TO P RODUCE AND TO SELL THE COW MILK AND ITS VARIOUS PREPARATIONS SO AS TO POPULA RIZE THE USE OF COW MILK AND DO ALL OTHER WORKS FOR THE SAME. 3. TO HOLD AND CULTIVATE OR GET CULTIVATED AGRICULTURAL LANDS, TO KEEP GRAZING LANDS ETC . NECESSARY OR DESIRABLE FOR CATTLE KEEPING AND BREEDING OR TO REHABILITATE AND ASSIST RABARIS AND BHARWADS. 4. TO HOLD AND CULTIVATE OTH ER LAND ALSO IN ORDER TO EXPERIMENT IN THE IMPROVEMENT IN AGRICULTURE AND OBTAIN FINANCE SUPPORT IN ALL THE ACTIVITIES OF THE INSTI TUTION. 5. TO MAKE NECESSARY ARRANGEMENTS FOR GETTING INFORMATICS AND SCIENTIFIC KNOWLEDGE AND TO DO SCIENTIFIC RESEARCH WITH REG ARD TO KEEPING AND BREEDING OF THE CATTLE, AGRICULTURE, USE O F MILK AND ITS VARIOUS PREPARATIONS ETC A ND TO ESTABLISH SCIENTIFIC LABORATORIES, LIBRARIES, READING ROO MS RELATING TO THE KEEPING OF THE CATT LE, IMPROVEMENTOF AGRICULTURE ETC AND RECOGNIZE OR ASSIST SUCH INST ITUTIONS. I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 11 6. TO ESTABLISH OTHER ALLIED INSTITUTIONS LIKE LEATH ER WORK ETC AND TO RECOGNIZE AND HELP THEM IN ORDER TO MAKE THE COW KEEPING ECONOMICALLY VIABLE SUCCESSFULLY. 7. TO PUBLISH BOOKS, PERIODICALS, MONTHLIES, ADVERTISEMENTS, PAMPHLETS, S TATEMENTS ETC FROM TIME TO TIME AND FOR THAT MAT TER TO AR RANGE FOR PRINTINGPRESS, BUILDING ETC IN ORDER TO POPUL ARIZE THE OBJECTS OF T HE TRUST. 8.TO ACCEPT ALL THE TRUSTS AND BENEFACTIONS NOT INIMICAL TO THE TRUST OBJECTS CONDITIONALLY OR OTHERWISE. 9. TO OPEN SCHOOLS AND HOSTELS FOR IMPARTIN G EDUCATION IN COW KEEPING AND AGRICULTURE HAVING REGARD TO THE TRUST OBJECTS OR TO HELP SUCH SCHOOLS AND HOSTELS AND TO MAKE S UITABLE ARRANGEMENTS FOR TR AINING WORKERS REQUIRED FOR THE TRUST WORK. 10. TO GET THE MONEY FROM TIME TO TIME AS REQUI RED FOR THE TRUST WORK BY WAY OF GIFT, BORROW ON SECURITIES OF THE TRUST PROPERTIES OR OBTAIN IN ANY OTHER WAY AS DEEMED FIT BY THE TRUSTEES. 11. TO UNDERTAKE SUCH OTHER ACTIVITIES FROM TIME TO TIME FOR ACHIEVING OR HELPING THE TRUST OBJECTS AS DEEMED FIT BY THE TRUSTEES . THE TRIBUNAL ALSO NOTED THAT THE OBJ ECTS WERE ADMI TEDLY CHARIT ABLE IN NATURE. THE SURPLUS GENERATED WAS WHOLL Y SECONDARY. IT WAS, THEREFORE, THAT THE TRIBUNAL HELD THAT THE PROVISO TO SECTIO N 2 (15) OF THE ACT WOULD NOT APPLY. WE ARE WHOLL Y IN AGREEMENT WIT H THE VIEW OF THE TRIBUNAL. T HE OBJECTS OF THE TRUST CLEARLY ESTABLISH THAT THE SAME WAS FOR GENER AL PUBLIC UTILITY AND WHERE FOR CHARITABLE PURPOSES. T HE MAIN OBJECTIVE S OF THE TRUSTARE TO BREED THE CATTLE AND ENDEAVOUR TO IMPROVE THE QU A LITY OF THE COWS AND OXEN IN VIEW OF THE NEED OF GOOD OXEN A S INDIA IS PROMINENT AGRICULTURAL COUNTRY; TO PRODUCE AND SALE THE COW MILK; TO HOLD AND CULTIVATE AGRICULTURAL LANDS; TO KEEP GRAZING LANDS FOR CA TTLE KEEPING A ND BREEDING; TO REHABILI TATE AND ASSIST RABARIS ANDBHARWADS;TOMAKE NECESSARY ARRANGEMENTS FOR GETTING INFORMATIC S AND SCIENTIFIC KNOWLEDGEAND TO DO SCIENTIFIC RESEARCH WITH REGARD TO KEEPING AND BREEDING OF THE CATT LE, AGRICULTURE, USE OF MILK AND ITS VARIOUS PREPARATIONS, ETC.; TO ESTABLISH OTHER ALLIED INSTITUTIONS LIKE LEATHER WORK AND TO RECOGNIZE A I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 12 ND HELP THEM IN ORDER TO MAKE THE COW KEEPINGECONOMICALLYVIABLE;TO PUBLISH STUDY MATERIALS, BOOKS, PE RIODIC A LS, MONTHLIES ETC., IN ORDER TO PUBLICIZE THE OBJECTS OF THE TRUST AS ALS O TO OPEN SCHOOLS AND HOSTELS FO R IMPARTING EDUCTION IN COW KEEPING AND A GRICULTURE HAVING REGARD TO THE TRUST OBJECTS. ALL THESE WERE THE OBJECTS OF THE G ENERAL PUBLIC UTILITY A ND WOULD SQUA RELY FALL UNDER SECTION 2 (15) OF THE ACT. PROFIT MAKING WAS NEITHER THE AIM NOR OBJECT OF TH E TRUST. IT WAS NOT THE PRINCIPAL ACTIVITY. MERELY BEC AUSE WHILE CARRYING OUT THE ACTIVITIES F OR THE PURPOSE OF ACHIEVING THE OBJECTS OF THE TRUST, CERTAIN INCIDENTAL SURPLUSES WERE GENERATED, WO ULD NOT RENDER THE ACTIVITY IN THE NATURE OF TRADE, COM MERCE OR BUSINE SS. AS CLARIFIED BY THE CBDT IN ITS C IRCULAR NO. 11/2008 DATED 19TH D ECEMBER, 2008 THE PROVISO AIMS TO ATTRACT THOSE ACTIVITIES WHICH ARE TR ULY I N THE NATURE OF TRADE, COMMERCE OR BUSINESS BUT ARE CARRIED OUT U NDER THE GUISE OF ACTIVITIES IN THE NATURE OF PUBLIC UTILITY . DELHI HIGH COURT IN CASE OF INS TITUTE OF CHARTERED ACCOUNTANTS OF INDI A & ANR. VS. DIRECTOR GENERAL OF INCOME TAX [EXEMPTION] & ORS., REPORTED IN [2012] 347 ITR 99 (DELHI) CONSIDERED THESE VERY PROVISIONS IN THE CONTEXT OF ACTIVITIES OF T HE INSTITUTE OF CHARTERED ACCOUNTANTS HOLDING THAT THE FUNDAMEN TAL OR DOMINANT FU NCTION OF THE INSTITUTE WAS TO EXERCI SE OVERALL CONTROL AND REGULATE THE ACTIVITIES OF THE MEMBERS/ENROLLED CHARTERED ACCOUNTANTS A ND MERELY BECAUSE THE INSTITUTE WAS HOLDING COACHING CLASSES WHICH ALSO GENER ATE INCOME, THE COURT HEL D THAT PROVISO TO SECTION 2 (15) OF THE ACT W OULD NOT BE APPLIC ABLE. IT THUS HELD AND OBSERVED AS UNDER : SECTION 2 (15) DEFINES THE TERM CHARITABLEPURPOSE . THEREFORE, WHILE CONSTRUING T HE TERM BUSINESS FOR THE SAID SECTION, THE OBJECT AND PURPOSE OF THE SECTION HAS TO BE KEP T IN MIND. WE DO NOT THINK THAT A VE RY BROAD AND EXTENDED DEFINITION OF THE TERM BUSINE SS IS INTEN DED FOR THE PURPOSE OF INTERPRETING AND APPLYING T HE FIRST PROVIS O TO SECTION 2 (15) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FE E OR MONEY. AN ACTIVITY WOULD BE CONSIDERED BUSINESS IFITIS UNDERTAKEN WITH A PROFIT MOTIVE, BUT IN SOME CASES THIS M AY NOT BE DET ERMINATIVE. NORMALLY, THE PROFIT MOTIVE TEST SHOULD BE SATISFIED BUT IN A GIVEN CASE ACTIVITY MAY BE REGARDED AS BUSINESS EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABLISHED/PROVED. IN SUCH CASES, THERE SHOULD BE EVIDENCE AND MATERIAL TO SHOW THAT T HE ACTIVITY HAS CONTINUE D ON SOUND AND RECOGNIZED BUSINE SS PRINCIPLES, AND PURSUED W ITHREASONABLE CONTINUITY. THERE SHOULD BE FACTS AN D I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 13 OTHER CIRCUMSTANCES WHICH JUST IFY AND SHOW THAT THEACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. THE T EST AS PRESCRIBED IN RAIPUR MA NUFACTURING COMPANY [1967] 19 STC 1 (SC) AND SAI PUBLICATION FUND [2002] 258 ITR 70 (SC); [2002] 126 STC 288 (SC) CAN BE APPLIED. THE SIX INDICIA STIPULATED IN LORD FIS HER [1981] STC 238 ARE ALSO RELEVANT. EACH CASE, THER E FORE, HAS TO BE EXAMINED ON ITS OWN FACTS. IN VIEW OF THE AFORESAID ENUNCIATION, THE REAL ISSUE AND QUE STION IS THAT WHETH ER THE PETITIONER - INSTITUTE PURSUES THE ACTIVITY OF BUSINESS, TRADE OR COMMERCE. TO O UR MIND, THE RESPONDENT WHILE DEALING WITH THE SAID QUESTION HAS NOT APPLIED THEIR MIND TO THE LEGAL PRINCIPLES ENUNCIATED ABOVE AND HAVE TAKEN A RATHER NARROW AND MYOPIC VIEW BY HOLDING THAT THE PETITIONER - INSTITUTE IS HOLDING COACHING CLASSES AND THAT THIS AMOUNTS TO BUSINES S. IN THE RESULT, WE DO NOT FIND THAT THE TRIBUNAL HAS COMMITTED ANY ERROR AND THE TAX APPEAL IS THEREFORE DISM ISSED. 11 . WE DRAW SUPPORT FROM THE ABOVE SAID OBSERVATIONS AND REITERATE THAT EVEN THE ASSESSING OFFICER HAS EXPRESSED OPINION ABOUT THE ASSESSEE S SURPLUS BEING UTILIZED IN TR AINING AND OTHER ANCILLARY ACT IV ITIES AS PER THE OBJECTS. WE TAKE INTO ACCOU NT ALL THESE FACTS A ND THE ABOVE STATED CASE LAW FOR HOLD ING THAT THE ASSESSEE S ACTIVITIES OF PROVIDING SECURITY SERVICES ARE IN CONFIRMATION TO ITS OBJECTS ONLY AND NOT IN THE NATURE OF ANY TRADE , COMMERCE OR BUSINESS. THE AS SESSEE S FIRST SUBSTANTIVE G ROUND IN THE FO RMER CASE AND BOTH GROUNDS IN THE LATTER APPEAL CLAIMING SECTION 11(1)(A) AND 11(2) EXEMPTIONS OF RS. 88,22,869/ - , RS. 1,39,98,749/ - AND RS. 42,60,000/ - ; RESPECTIVELY SUCCEED. THE ASSESSEE S LATTER ITA NO. 132/AHD/2012 FOR ASSESSMENT YEAR 20 08 - 09 IS ALLOWED. 12 . THIS LEAVES US WITH THE ASSESSEE S SECOND GROUND IN ASSESSMENT YEAR 2007 - 08 CHALLENGING DISALLOWANCE OF RS . 40,86,755/ - U/S 2(24)(X) R.W.S. 36(I)(VA) OF THE ACT ARISING FROM THE FACT THAT IT HAD NOT DEPOSITED I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 14 EMPLOYEE S CONTRIBUTION TO PF AND ESI OF RS. 38,84,484/ - ALONG WITH EMPLOYER S CONTRIBUTION OF RS. 2,02,271/ - WITHIN THE PRESCRIBED TIME LIMIT. THE ASSESSEE CLAIMS TO HAVE DEPOSITED THE ABOVE STATED DUES BEFORE THE DUE DATES OF FILING OF RETURN. THE ASSESSING OFFICER INVOKED T HE ABOVE STATED PROVISIONS FOR MAKING THE IMPUGNED DISALLOWANCE. THE SAME STANDS CONFIRMED IN THE LOWER APPELLATE ORDER. WE FIND THAT THE HON BLE JURISDI CTIONAL HIGH COURT IN CIT VS. GUJARAT STATE TRANSPORT CORPORATION TAX APPEAL 637 OF 2013 DECIDED ON 26 - 12 - 2013 HAS ADJUDICATED THE VERY SUBSTAN TIAL QUESTI ON OF LAW AGAINST ASSESSEE AND IN FAVOUR OF THE R EVENUE. THE ASSESSEE FAILS TO POINT OUT ANY DISTINCTION ON FACTS AND LAW. HOWEVER, IT RAISES AN ALTERNATIVE PLEA THAT THE ABOVE SAID DISALLOWANCE ARISEN F ROM PERFORMANCE OF ITS CHARITABLE ACTIVITIES ONLY. IN OTHER WORDS, IT RELAT ES TO THE STATUTORY ESI AND PF DUES PERTAINING TO ITS SKILLED MANPOWER FOR WHOM IT HAS BEEN CARRYING OUT CHARITABLE ACTIVITIES FOR THE PURPOSE OF CREATING EMPLOYMENT. THE ASSESSE E REFERS TO THE TRIBUNAL S ORDER IN ITS OWN CASE FOR A.Y. 2006 - 07 ITA 2923/AHD/2009 DECIDED ON 21 - 04 - 2011 HOLDING AS UNDER: - 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO REASON FOR MAKI NG ANY ADDITION. FIRSTLY, AS POINTED OUT BY THE ID. AR BY REFERRING TO VARIOUS DOCUMENTS IN THE PAPER BOOK THAT PAYMENT IS EXCLUSIVELY FOR SERVICE TAX AND THERE IS NO PENAL ELEMENT INVOLVED IN IT. IN FACT THE SHOW CAUSE NOTICE ISSUED BY THE COMMISSIONER, ( SERVICE TAX) ON 21.10.2005, SHOWS THAT SUM OF RS.49,78,896/ - IS EXCLUSIVELY FOR SERVICE TAX AND ISSUE OF PENALTY WOULD BE CONSIDERED SEPARATELY. ACCORDINGLY THIS SUM CANNOT BE DISALLOWED U/S 37(1) AND EXPLANATION THERETO. 8. SIMILARLY, THIS SUM CANNOT BE TREATED AS NOT APPLIED FOR CHARITABLE PURPOSES. SERVICE TAX IS NOT A DEMAND IN ISOLATION OR INDEPENDENT OF ITSELF BUT IT IS IN RELATION TO SERVICES RENDERED BY THE ASSESSEE. THE AO HAS NO WHERE MENTIONED THAT ASSESSEE HAS RENDERED SOME NON - CHARITABLE SERVI CES OR SERVICES WHICH DID NOT I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 15 CONFORM TO THE OBJECTIVES OF THE TRUST OR ASSESSEE HAS APPLIED ITS INCOME TO NON - CHARITABLE OBJECTIVE. SUCH APPLICATION OF FUNDS TO CHARITABLE WORK HAS NOT BEEN DOUBTED BY THE AUTHORITIES BELOW. SERVICE TAX IS JUST AN ADDITION AL COST OF SERVICE RENDERED AND NOTHING MORE. THE PURPOSE FOR WHICH SERVICE TAX IS PAID CANNOT BE DIFFERENT THAN THE PURPOSE ON WHICH EXPENDITURE IS INCURRED I.E., RENDERING SERVICES FOR CHARITABLE WORK. IT IS INCORRECT TO HOLD THAT PURPOSE FOR RUNNING SER VICES WOULD BE CHARITABLE WHEREAS PURPOSE FOR PAYING SERVICE TAX ON SUCH SERVICES WOULD BE NON - CHARITABLE. 9. WE ACCORDINGLY ALLOW THE CLAIM OF THE ASSESSEE. 13 . THE REVENUE STRONGLY OBJECTS ADMISSION OF ALTERNATIVE PLEA. HOWEVER, IT FAILS TO RE BUT THE ABOVE STATED PROPOSITION PROPOUNDED BY LD. CO - ORDINATE BENCH THAT THE IMPUGNED D ISALLOWANCE IS IN RELATION TO PERFORMANCE OF CHARITABLE ACTIVITIES ONLY. WE IMPORT THE ABOVE STATED REASONING FOR ACCEPTING ASSESSEE S ALTERNATIVE ARGUMENT S . THE ASSES SEE S SECOND SUBSTANTIVE GROUND IN ITS FORMER APPEAL ALSO SUCCEEDS. ITA 2726/AHD/2010 FOR ASSESSMENT YEAR 2007 - 08 IS ACCEPTED. 14 . A SSESSEE S APPEALS ITA NOS. 2716/AHD/2010 & 132/AHD/2012 ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 14 - 08 - 2015 SD/ - SD/ - ( PRO MOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 14 /08 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD I.T.A NO S. 2726 /AHD/2 01 0 & 1 32/AHD/2012 A.Y. 2007 - 08 & 2008 - 09 PAGE NO GUJARAT INDUSTRIAL SECURITY FORCE SOCIETY VS. DY. DCIT (EXEMPTION) 16 6. GUARD FILE. BY ORDER/ , / ,