M/s. India International Centre, New Delhi V. ADIT(E), New Delhi

ITA 3124/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91004 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Assessee Lawyers: R K KAPOOR
• Keywords: Revision of order; Charitable institution; Rule of consistency; Retrospective amendment; Competent authority
• Section: 143(3); 142(1); 80HHC; 80G; 12A; 263; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER ITA NO. 3124/DEL/2014 A.Y. 2009-10 INDIA INTERNATIONAL CENTRE, VS. ASSTT. DIRECTOR OF 40, MAX MULLER MARG, INCOME-TAX,(E), INV. CIR.( 1), LODHI ESTATE, NEW DELHI. NEW DELHI. PAN: AAATI 0660 C ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI PRADEEP D0000000000000 000000000000000INODIA FCA & SHRI R.K. KAPOOR CA RESPONDENT BY : SHRI R.I.S. GILL CIT(DR) DATE OF HEARING : 10-03-2015 DATE OF ORDER : 11-05-2015. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST T HE ORDER DATED 31-03-2014 U/S 263OF THE INCOME-TAX ACT, 1961, PASSED BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), NEW DELHI, RELATING TO A.Y. 2009-10. 2 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED ITS RETURN OF INCOME ON 29-9-2009 DECLARING NIL INCOME FOR AY 2009-10. THE AO COMPLETED THE ASSESSMENT U/S 143(3) AFTER EXAMINING THE DETAILS A ND EXPLANATIONS AND THE BOOKS OF ACCOUNTS AT NIL INCOME. SUBSEQUENTLY, LD. DIRECT OR OF INCOME-TAX (EXEMPTIONS) (DIT(E) IN SHORT), EXAMINED THE RECORDS AND NOTIC ED THAT AS PER INCOME AND EXPENDITURE ACCOUNT, TOTAL INCOME OF THE ASSESSEE H AD BEEN SHOWN AT RS. 2640.96 LAKHS. OUT OF THIS, RS. 783.18 LAKH HAD BEEN CONSID ERED FOR COMPUTATION OF INCOME FOR CHARITABLE ACTIVITY U/S 10(23C)(IV) AND REMAINI NG AMOUNT HAD BEEN CLAIMED EXEMPT ON THE PRINCIPLE OF MUTUALITY. LD. DIT(E) EX AMINED THE ACCUMULATION CHART AND INCOME AND EXPENDITURE ACCOUNT AND CONCLUDED TH AT MAJOR ACTIVITIES OF THE ASSESSEE REVOLVED AROUND ACCOMMODATION AND CATERING FACILITIES AND THESE ACTIVITIES WERE NOT ON NO-PROFIT/LOSS BASIS, SINCE THERE WAS CONTINUOUS SURPLUS BEING REFLECTED IN THE ACCOUNT FOR MANY PREVIOUS YEARS. HE FURTHER OBSERVED THAT THE SECOND OBJECTIVE, AS PER MEMORANDUM OF ASSOCIATION VIZ. TO UNDERTAKE, ORGANIZE AND FACILITATE STUDY COURSES, CONFERENCES, SEMINARS , LECTURES AND RESEARCH IN MATTERS RELATING TO DIFFERENT CULTURAL PATTERNS OF THE WORL D, WAS NOT CHARITABLE IN ITSELF BUT BECOMES CHARITABLE ONLY WHEN IT IS READ WITH FIRST OBJECTIVE VIZ. TO PROMOTE UNDERSTANDING AND AMITY BETWEEN THE DIFFERENT COMMU NITIES OF THE WORLD BY UNDERTAKING OR PROMOTING THE STUDY OF THEIR PAST AN D PRESENT CULTURES, BY 3 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE DISSEMINATING OR EXCHANGING KNOWLEDGE THEREOF, AND BY PROVIDING SUCH OTHER FACILITIES AS WOULD LEAD TO THEIR UNIVERSAL APPRECI ATION. HE POINTED OUT THAT IN THE FIRST CATEGORY THERE WERE GENERAL CITIZEN OF THE WO RLD WHEREAS BENEFICIARIES IN THE SECOND CATEGORY WERE EXCLUSIVE SELECTED MEMBERS OF THE SOCIETY AND THEIR FEW INVITED GUESTS. SHE, THEREFORE, CONCLUDED THAT THE TRUST COULD NOT BE CALLED AS SERVING THE GENERAL PUBLIC. SHE FURTHER OBSERVED TH AT SINCE THE TRUST ITSELF WAS APPLYING THE PRINCIPLE OF MUTUALITY IN RESPECT OF A DMISSION FEE, SUBSCRIPTION, INCOME FROM HOSTEL ROOMS, FOOD AND BEVERAGE, SALE A ND EXPENSES THEREOF, IT COULD BE CONCLUDED THAT NATURE OF THE TRUST WAS TO SERVE ITS MEMBERS TO THEIR BENEFITS. 2.1. LD. DIT(E) FURTHER EXAMINED THE BYE LAWS OF TH E SOCIETY AND CONCLUDED THAT THEY DID NOT FULFILL THE CRITERIA TO COME UNDER THE PRINCIPLE OF MUTUALITY. SHE, ACCORDINGLY, ISSUED A NOTICE U/S 263 ON 11-3-2014, WHICH WAS FURTHER AMENDED BY NOTICE DATED 28-3-2014, REQUIRING THE ASSESSEE TO S HOW CAUSE AS TO WHY THE ORDER PASSED BY THE AO MAY NOT BE TREATED AS ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF REVENUE AND ACCORDINGLY BE SET ASIDE. 2.2. THE ASSESSEE FILED DETAILED REPLIES VIDE ITS L ETTER DATED 24-3-2014, 29-3-2014 AND 31-3-2014, WHICH HAVE BEEN REPRODUCED EXTENSIVE LY IN PARA 2 OF LD. DIT(E)S ORDER. AFTER CONSIDERING THE ASESSEES REPLY, THE L D. DIT(E), AFTER DETAILED DISCUSSION, HELD THAT AO FAILED TO EXAMINE THE APP LICATION OF SECTION 2(15) READ 4 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE WITH THIRD PROVISO TO SECTION 143(3) AND ALSO READ WITH SECTION 13(8) OF THE INCOME- TAX ACT, 1961. SHE FURTHER OBSERVED AS UNDER: THIS IS A CLEAR CASE OF NON APPLICATION OF MIND AN D NON APPLICATION OF LAW. THE ASSTT. ORDER BY MERE READIN G OF IT IS ERRONEOUS AS IT HAS TREATED THE WHOLE OF INCOME OF THE ASSESSEE AS EXEMPT WITH REFERENCE TO SECTION 11,12 AND 13 TH OUGH THE ASSESSEE HAD SUBMITTED REPORT IN FORM NO. 10BB ONLY WITH RESPECT OF PART INCOME OF RS. 7,90,08,192/- THE ASS ESSEES CLAIM OF EXEMPTION WITH RESPECT TO BALANCE INCOME HAS THU S NOT BEEN EXAMINED AT ALL. FURTHER, IN VIEW OF THE DISCUSSION AS ABOVE, ASSESSEES CLAIM OF EXEMPTION EITHER U/S 10(23C)(IV ), U/S 11 OR UNDER THE PRINCIPLE OF MUTUALITY DO NOT APPEAR TO B E TENABLE. THEREFORE, ENTIRE SURPLUS OF RS. 290.70 LACS TO BE EXEMPT WAS TO BE BROUGHT TO TAX, WHICH THE AO HAS FAILED TO DO. T HUS, THE ORDER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. 2.3. THE MAIN REASONS FOR ARRIVING AT THE AFOREMENT IONED CONCLUSION WERE AS UNDER: (A) THE ASSESSEE SOCIETY IN ITS AUDIT REPORT IN FOR M NO. 10BB HAD SHOWN ONLY PART OF ITS INCOME AND EXPENDITURE ATTRI BUTABLE TO ACTIVITIES IN TERMS OF SECTION 10(23C)(IV), WHEREAS THE TOTAL INCOME/EXPENDITURE/ SURPLUS ETC. AS PER THE INCOME & EXPENDITURE A/C OF THE ASSESSEE FOR THE CURRENT ASSESSMENT YEAR WERE RS. 2640.96 LACS/ 2348.19 LACS/ RS. 292.17 LACS RESPECTIVELY. IN ITS RETURN FILED IN IT R 7, THE ASSESSEE HAD SHOWN ONLY INCOME OF RS. 7,90,08,192/- FROM OTHER S OURCES AND CLAIMED THE SAME TO BE EXEMPT U/S 10(23C)(IV). BOTH THE RETURN OF INCOME AS WELL AS THE FORM NO. 10BB WERE SILENT ON BALANCE INCOME. (B) THE EXEMPTION U/S 10(23C)(IV) WAS SUBJECT TO FU LFILLMENT OF CONDITIONS LAID DOWN IN THE ORDER NOTIFYING THE ASS ESSEE U/S 5 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 10(23C)(IV). THE ASSESSEES ACTIVITIES INCLUDED PRO VIDING OF SERVICES I.E. ACCOMMODATION, FOOD & BEVERAGES ETC., FOR PAY MENT OF CHARGES, WHICH COMES WITHIN THE MISCHIEF OF PROVISO 1 & 2 TO SECTION 2(15) READ WITH THIRD PROVISO TO SECTION 143(3). (C) SHE ALSO POINTED OUT THAT AS PER INCOME & EXPEN DITURE A/C OF THE ASSESSEE, THE SURPLUS GENERATED IN ASSESSEES C ASE WAS RS. 292.17 LACS AS AGAINST RS. 230.08 LACS IN THE PRECEDING YE AR. THEREFORE, THE ASSESSEES CLAIM THAT THE ACTIVITIES WERE NOT ON C OMMERCIAL LINE, WAS NOT TENABLE. (D) AS REGARDS THE ASSESSERES CLAIM THAT INCOME WA S NOT TAXABLE INCOME, BEING DERIVED FROM MUTUAL CONCERN, SHE OBSE RVED THAT ASSESSEE HAD CLAIMED THAT PARTLY INCOME WAS COVERED BY THE PROVISIONS OF SECTION 10(23C)(IV) READ WITH SEC. 2( 15) AND PARTLY BY PRINCIPLE OF MUTUALITY. SHE OBSERVED THAT AN ASSESS EE COULD HAVE INCOME FROM DIFFERENT HEADS OR INCOME FROM DIFFEREN T SOURCES, BUT IT COULD NOT HAVE ITS INCOME AND EXPENDITURE FOR THE S AME SOURCES APPORTIONED ON THE BASIS OF DIFFERENT PRINCIPLES, A S CLAIMED BY THE ASSESSEE. SHE, ACCORDINGLY, HELD THAT THE ASSESSEE COULD NOT BE ALLOWED TO COMPARTMENTALIZE ITS ACTIVITIES AND INCOME ARISI NG THEREFROM UNDER CHARITABLE ACTIVITIES AND MUTUAL ACTIVITIES. ALL TH E ACTIVITIES HAD TO BE SEEN IN ITS TOTALITY. (E) WHILE CULTURAL AND INTELLECTUAL ACTIVITIES OF T HE ASSESSEE WERE OPEN TO GENERAL PUBLIC, THE ACCOMMODATION AND RELAT ED ACTIVITIES WERE RESTRICTED ONLY TO ITS MEMBERS AS WELL NON MEMBERS SPECIALLY INVITED TO PARTICIPATE IN THE ACTIVITIES OF THE SOCIETY. TH US, THERE WAS NO COMPLETE IDENTITY BETWEEN THE CONTRIBUTORS AND PART ICIPATORS AND, 6 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE THEREFORE, THE ASSESSEE COULD NOT BE CONSIDERED TO BE COVERED BY PRINCIPLE OF MUTUALITY. 3. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE CON DENSED GROUNDS OF APPEAL AND SUBMITTED THAT THE ASSESSEE HAS ASSAILED THE ORDER OF LD. DIT(E) ON FOLLOWING GROUNDS: 1. THAT THE LD. DIT (EXEMPTION) HAS GROSSLY ERRED IN LAW AND ON THE FACTS OF THE APPELLANT'S CASE IN HOLDING THAT THE ORDER PASSED BY THE AO U/S 143(3) IS ERRONEOUS AND PREJUD ICIAL TO THE INTERESTS OF REVENUE. . 2. THAT THE ORDER PASSED U/S 263 DATED 31.03.2014 IS BAD IN LAW AND THE REVISION ORDER ULS.263 DESERVES TO BE C ANCELLED. 3. THAT THE LD. DIT (EXEMPTION) HAS ERRED IN LAW IN HOLDING THAT THE AO FAILED TO EXAMINE THE APPLICABILITY OF 1ST AND 2ND PROVISO OF SECTION 2(15) OF THE INCOME TAX ACT READ WITH 3RD PROVISO TO SECTION 143(3) AND PROVISIONS OF SECTION 13(8) ALTHOUGH NEITHER 3RD PROVISO TO SECTION 143(3) NOR SECTION 13(8) WERE ON STATUTE BOOK WHEN AO. PASSED THE ASSE SSMENT ORDER. 4. THAT THE LD. DIT (EXEMPTION) HAS GROSSLY ERRED I N HOLDING THAT PROVISIONS OF SECTIONS 11, 12, 13 AND SECTION 10(23C)(IV) OF THE INCOME TAX ACT ARE NOT APPLICABL E TO THE FACTS OF THE APPELLANT IN SPITE OF THE FACT THAT RE GISTRATION U/S 12A, 80G AND 10(23C)(IV) REMAIN INTACT. 5. THAT THE LD. DIT (EXEMPTION) GROSSLY ERRED IN LA W IN HOLDING THAT THE ACTIVITIES SUCH AS ACCOMMODATION, FOOD AND BEVERAGES TO THE MEMBERS OF THE APPELLANT REPRESENT TRADE AND BUSINESS IRRESPECTIVE OF THE FACT THAT 'DOMINANT OB JECT' OF THE APPELLANT REMAINS CHARITABLE NOT DRIVEN BY 'PROFIT MOTIVE'. 6. THAT THE LD. DIT (EXEMPTION) GROSSLY ERRED IN LA W IN INVOKING PROVISIONS OF SECTION 263 ALTHOUGH IT WAS NOT A CASE OF 7 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 'NO ENQUIRY' BY THE AO ON THE APPLICABILITY OF PROV ISIONS OF SECTION 2(15) WITH ITS LATEST AMENDMENT. 7. THAT THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) HAS ERRED IN HOLDING THAT ALL THE ACTIVITIES OF THE ASSESSEE HAD TO BE SEEN IN TOTALITY AND THE ASSESSEE CANNOT BE ALLOWED TO COMP ARTMENTALIZE ITS ACTIVITIES AND INCOME ARISING THERE FROM UNDER CHARITABLE ACTIVITIES AND MUTUAL ACTIVITIES. 8. THAT THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTI ONS) HAS ERRED IN HOLDING THAT THE AO HAS FAILED TO BRIN G TO TAX THE ENTIRE SURPLUS OF RS.292.70 LAKHS. 9. THAT EACH GROUND IS INDEPENDENT OF AND WITHOUT P REJUDICE TO THE OTHER GROUNDS RAISED HEREIN. 3.1. LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS REG ISTERED U/S 12A SINCE 18- 6-1973 AND ALSO APPROVED U/S 80G(5) AND FURTHER NOT IFIED U/S 10(23C)(IV) FOR THE AY 2006-07 ONWARDS VIDE NOTIFICATION NO. 13/200 7 DATED 19-1-2007. HE SUBMITTED THAT ALL THESE REGISTRATIONS ARE STILL S UBSISTING. LD. COUNSEL SUBMITTED THAT SINCE THE INCEPTION TILL DATE, THE A SSESSMENT HAS BEEN COMPLETED U/S 143(3). HE POINTED OUT THAT THE MAIN ALLEGATION AND THE FINDINGS GIVEN IN THE ORDER U/S 263 BY THE DIT(EXEM PTION) ARE THAT ACTIVITIES UNDERTAKEN BY THE ASSESSEE INCLUDED PROVIDING OF SE RVICES SUCH AS ACCOMMODATION, FOOD AND BEVERAGES ON CHARGEABLE BAS IS AND, THEREFORE, SUCH ACTIVITIES WERE CAUGHT WITHIN THE MISCHIEF OF PROVISO 1 & 2 TO SECTION 8 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 2(15) READ WITH THIRD PROVISO TO SECTION 143(3) AND SECTION 13(8) OF THE I.T. ACT. 3.2. LD. COUNSEL SUBMITTED THAT ASSESSMENT WAS COMP LETED U/S 143(3) OF THE ACT ON 26-12-2011, WHEREAS THIRD PROVISO TO SEC TION 143(3) AS WELL AS SECTION 13(8) OF THE I.T. ACT WERE INTRODUCED BY TH E FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 1-4-2009. THEREFORE, WHEN THE ASSESSMENT WAS FRAMED BY THE AO, THIRD PROVISO TO SECTION 143(3) A S WELL AS SECTION 13(8) WERE NOT ON THE STATUTE BOOK AND IT WAS IMPOSSIBLE FOR ANY ASSESSING AUTHORITY TO ENVISAGE AS TO WHAT PROVISIONS OF LAW WERE GOING TO BE INCORPORATED OR CHANGED IN FUTURE. HE RELIED ON TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) AS ALSO CIT VS. SASKEN COMMUNICATION INDIA LTD. TAXSUT RA-538-HC-2014- KARNATAKA, FOR THE PROPOSITION THAT WHEN ASSESSMEN T ORDER IS PASSED BASED ON THE LAW PREVALENT AT THE TIME OF ASSESSMENT ORDE R, THE SAME CANNOT BE REVISED U/S 263. 3.3. LD. COUNSEL FURTHER SUBMITTED THAT THE AO HAD ISSUED A QUESTIONNAIRE IN COURSE OF ASSESSMENT PROCEEDINGS DATED 23.8.2011 AND HAD RAISED SPECIFIC QUERIES VIDE QUESTION NO.2 AND QUESTION NO.13 ON TH E APPLICABILITY OF THE PROVISIONS OF SECTION 11, 12 AND 13 READ WITH SEC. 2(15), IN VIEW OF THE LATEST 9 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE AMENDMENT. HE POINTED OUT THAT IN THE QUESTIONNAIRE , A.O. RAISED A SPECIFIC QUERY NO.I3, WHETHER ANY BUSINESS ACTIVITIES WERE B EING CARRIED OUT BY THE ASSESSEE. THE ASSESSEE VIDE ITS SUBMISSIONS HAD SPE CIFICALLY EXPLAINED THE NATURE OF ACTIVITIES BY HIGHLIGHTING THAT HOW THE A CTIVITIES OF THE ASSESSEE REMAINED CHARITABLE IN NATURE. THEREFORE, THIS CANN OT BE SAID TO BE A CASE OF NO ENQUIRY BY THE AO. HE RELIED ON FOLLOWING DECI SIONS: - MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243-ITR-83 ( SC) - CIT VS. GREEN WORLD CORN., 181 TAXMAN -111 (SC) - CIT VS. SUNBEAM AUTO LTD., 332 ITR 167 (DEL.) - CIT VS. ANI! KUMAR SHARMA, 335 ITR 83 (DEL.) - CIT VS. GABRIEL INDIA LTD., 203 ITR 108 (BORN.) - CIT V. KANDA RICE MILLS, 178 ITR 446 (P&H) 2013- TIOL-761-HC-DEL 3.4. HE FURTHER POINTED OUT THAT SIMILAR ENQUIRIES WERE ALSO MADE BY THE CBDT WHILE NOTIFYING THE SOCIETY U/S.10(23C)(IV) OF THE I.T. ACT AND ON ONLY BEING SATISFIED, IT HAD NOTIFIED THE ASSESSEE SOCIETY AS AN ELIGIBLE ENTITY U/S.10(23C)(IV) OF THE I.T. ACT. THEREFORE, IT CAN NOT BE SAID THAT THE ACTIVITIES OF THE ASSESSEE WERE HIT BY THE MISCHIEF OF PROVISO TO SEC. 2(15). 3.5. LD. COUNSEL SUBMITTED THAT BEFORE THE AO AS WE LL BEFORE THE LD. DIT(E) DETAILED NOTE ON THE ACTIVITIES AND ANNUAL R EPORT WAS FILED. THE AO FORMED AN OPINION THAT THE ACTIVITIES OF THE ASSESS EE SOCIETY WERE CHARITABLE 10 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE IN NATURE. THEREFORE, ONCE THE AO HAD TAKEN A POSSI BLE VIEW, THEN, LD. DIT(E), UNDER HER POWER OF REVISION U/S 263, COULD NOT IMPOSE HER OWN VIEW TO GIVE A DIFFERENT FINDING. HE RELIED ON FOLLOWING DECISIONS: - MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243-ITR-83 ( SC) - CIT VS. GREEN WORLD CORN., 181 TAXMAN - 111 (SC) 3.6. LD. COUNSEL FURTHER SUBMITTED THAT IN THE INIT IAL NOTICE OR IN THE REVISED NOTICE U/S 263, LD. DIT(E) NEVER RAISED ANY ISSUE O N THE APPLICABILITY OF THIRD PROVISO TO SECTION 143(3) OR SECTION 13(8) OR FIRST PROVISO TO SECTION 2(15), BUT IN HER ORDER, SHE RELIED UPON THESE PROVISIONS ONLY. LD. COUNSEL POINTED OUT THAT THE BASIS OF ORDER HAS TO BE THE SAME AS IN THE SHOW CAUSE NOTICE. FOR THIS PROPOSITION HE RELIED ON FOLLOWING DECISI ONS: - CIT V. ASHISH RAJ PAL 320 ITR 674; - CIT VS. SOFTWARE CONSULTANTS 341 ITR 240 (DEL.). 3.7. LD. COUNSEL FURTHER SUBMITTED THAT EVEN AFTER INSERTION OF PROVISO TO SECTION 2(15) OF THE 1.T. ACT, VARIOUS COURTS HAVE HELD THAT MERELY CHARGING A FEE FOR SOME OF THE ACTIVITIES, WHICH MAY RESULT IN SURPLUS, DOES NOT IPSO- FACTO MEANS THAT THE ACTIVITIES OF THE SOCIETY ARE COMMERCIAL IN NATURE. THE TRADE OR COMMERCE IN THE NORMAL COURSE IS DIFFERENT THAN WHAT IS REQUIRED U/S. 2(15) OF THE I.T. ACT. HE RELIED ON FOLLOWING JUDGMENTS FOR THIS PROPOSITION 11 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE - ICAI VS. DGIT(EXEMPTIONS), 347 ITR 99 (DEL); - DIT(EXEMPTIONS) VS. C.A. STUDY CIRCLE, 347 ITR 32 1 (MAD.); - TOLANI EDUCATION SOCIETY VS. DIT(EXEMPTIONS), (20 13) 259 CTR (BORN.) 26 - BUREAU OF INDIAN STANDARDS V. DGIT (EXEMPTION), 358 ITR 78 (DEL.); - ICAI V. DGIT (EXEMPTIONS), 358 ITR 91 (DEL.) - DIT (EXEMPTION) V. SABARMATI ASHRAM, 362 ITR 539 (G UJ.) - COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATI ONS V. DGIT, 2014- TIOL-855-HC-DEL-IT 3.8. LD. COUNSEL FURTHER REFERRED TO THE ANNUAL ACC OUNTS AND POINTED OUT THAT THE GROSS RECEIPTS OF THE SOCIETY FOR THE YEA R ENDED 31ST MARCH 2009 WAS RS.26.40 CRORES, WHICH INCLUDED INTEREST INCOME OF RS.6.17 CRORES. AS AGAINST THIS, THE TOTAL EXPENDITURE WAS RS.23.48 CR ORES. THE OVERALL SURPLUS, AS ALSO STATED BY THE DIT(E), WAS RS.2.92 CRORES. T HEREFORE, NO ACTIVITY, WHATSOEVER, OF THE SOCIETY COULD BE SAID OR ALLEGED TO BE GENERATING ANY SURPLUS. THE SURPLUS, IF ANY, HAD RESULTED ONLY BEC AUSE OF INTEREST INCOME BEING EARNED BY THE SOCIETY ON THE ACCUMULATED FUND S OF EARLIER YEARS. 3.9. LD. COUNSEL SUBMITTED THAT THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF INDIA TRADE PROMOTION ORGANISATION V. D.G. OF INCOME TAX (EXEMP TIONS) AND OTHERS, WHEREIN THE HON'BLE DELHI HIGH COURT, WHILE UPHOLDI NG THE CONSTITUTIONAL VALIDITY OF THE FIRST PROVISO TO SECTION 2(15) INTR ODUCED W.E.F. 01.04.2009, 12 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE HAS HELD THAT EVEN AFTER INSERTION OF FIRST PROVISO TO SECTION 2(15), WHAT IS REQUIRED TO BE SEEN IS THAT WHAT IS THE DOMINANT AN D MAIN OBJECT I.E. PREDOMINANT OBJECT OF SOCIETY. SO LONG AS PROFIT MA KING WAS NOT THE DRIVING FORCE AND OBJECTIVE OF THE ASSESSEE, THEN MERELY CH ARGING SOME FEE FOR SOME OF THE ACTIVITIES DOES NOT PUT IT IN THE CATEGORY O F NON- CHARITABLE ENTITY IN RESPECT OF THE OBJECTS FALLING IN THE CATEGORY OF ' ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. 3.10. LD. COUNSEL POINTED OUT THAT THERE IS NO CHAN GE IN THE OBJECTS OR IN THE ACTIVITIES OF THE CENTRE FOR THE LAST FIVE DECADES OR MORE. THEREFORE, THE RULE OF CONSISTENCY HAS TO BE APPLIED. FOR THIS PROPOSIT ION HE RELIED ON FOLLOWING DECISIONS: - DY. DIRECTOR OF INCOME TAX VS. SHANTI DEVI PROGR ESSIVE EDUCATIONS SOCIETY [2012] 340 ITR 320 (DELHI). - EXCEL INDUSTRIES SC-2013- TIOL-52-SC-IT 3.11. AS REGARDS THE OBJECTION RAISED BY LD. CIT ON ACCOUNT OF PRINCIPLE OF MUTUALITY, LD. COUNSEL SUBMITTED THAT THIS HAS BEEN ACCEPTED IN THE PREVIOUS YEARS IN ASSESSEES OWN CASE. 13 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 3.12. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE S 2 & 3 OF THE PB, WHEREIN INCOME & EXPENDITURE A/C IS CONTAINED AND POINTED OUT THAT THE INTEREST INCOME IS RS. 617.45 LACS AND THE SURPLUS GENERATED RS. 292.17 LACS. NO DONATIONS HAVE BEEN RECEIVED BY ASESSEE. THEREFO RE, IT IS EVIDENT THAT NO SURPLUS IS GENERATED FROM CATERING, HOSTEL ACTIVITI ES. SURPLUS IS BORN FROM INTEREST INCOME EARNED ON FDRS. HE POINTED OUT THAT ASSESSEE INCURRED LOSS FROM HOSTEL ACTIVITIES. THEREFORE, THERE IS NO QUES TION OF ANY TRADE OR BUSINESS BEING CARRIED OUT BY ASSESSEE. THE WHOLE O BJECT IS TO DISSEMINATE KNOWLEDGE FOR UPLIFTING THE SOCIAL CONSCIOUSNESS OF THE SOCIETY IN GENERAL. 4. LD. CIT(DR) REFERRED TO THE ASSESSMENT ORDER AND POINTED OUT THAT THERE COULD NOT BE ANY SHORT/ NON-SPEAKING ORDER AS IS THE PRESENT ONE, WHICH HAS BEEN PASSED WITHOUT ANY APPLICATION OF MIND. 4.1. LD. CIT(DR) FURTHER SUBMITTED THAT AO HAS TO G IVE SPECIFIC FINDING AS TO HOW THE SURPLUS ACCRUED TO ASSESSEE I.E. WHETHER FROM INTEREST INCOME, AS CLAIMED BY ASSESSEE, OR FROM THE ACTIVITIES CARRIED OUT BY ASSESSEE. 5. LD. COUNSEL FOR THE ASSESSEE IN THE REJOINDER SU BMITTED THAT IT IS WELL SETTLED LAW THAT HOW AO WRITES AN ORDER IS NOT WITH IN ASSESSEES CONTROL. THE AO ACCEPTED THE ASSESSEES EXPLANATION AFTER CONSID ERING THE ANNUAL REPORT. HE RELIED ON 256 ITR 1. 14 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. AT THE OUTSET WE MAY POINT OUT THAT AS FAR AS THE OBJECTION OF LD. DIT(E) AS REGARDS THE INCOME NOT BEING RETURNED BY ASSESSEE IN ITS INCOME- TAX RETURN OR IN FORM 10BB IS CONCERNED, THE SAME W AS CLAIMED AS EXEMPT ON ACCOUNT OF CONCEPT OF MUTUALITY, AS IN EARLIER YEAR S AND, THEREFORE, THERE WAS NO BASIS FOR THE AO TO TAKE ANY CONTRARY VIEW ON TH E SAME. ACCORDINGLY, THE PROCEEDINGS U/S 263 INITIATED BY LD. DIT(E) ON THIS COUNT IS NOT AT ALL TENABLE IN LAW, PARTICULARLY WHEN THIS VIEW HAS BEEN TAKEN BY THE DEPARTMENT SINCE INCEPTION. 6.1. NOW COMING TO THE MAIN GROUND REGARDING APPLIC ABILITY OF PROVISO TO SECTION 2(15) BY THE LD. DIT(E). THIS PROVISO HAS B EEN MADE APPLICABLE TO INSTITUTIONS NOTIFIED U/S 10(23C)(IV) W.E.F. 1-4-20 09 BY INSERTING 17 TH PROVISO TO SECTION 10(23C)(IV) BY FINANCE ACT 2012, AS REPRODUCED BELOW: PROVIDED ALSO THAT THE INCOME OF A TRUST OR INSTIT UTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) SHALL BE IN CLUDED IN ITS TOTAL INCOME OF THE PREVIOUS YEAR IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICAB LE TO SUCH TRUST OR INSTITUTION IN THE SAID PREVIOUS YEAR, WHE THER OR NOT ANY APPROVAL GRANTED OR NOTIFICATION ISSUED IN RESPECT OF SUCH TRUST OR INSTITUTION HAS BEEN WITHDRAWN OR RESCINDED. 15 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 6.2. PRIOR TO SUCH INSERTION, THE POSITION OF LAW WAS LIKE THIS. SECTION 2(15) DEFINED THE CHARITABLE PURPOSE. THIS IS AN INCLUS IVE DEFINITION AND, THEREFORE, IN VIEW OF THE OPENING PHRASE OF SECTION 2, WHICH READS AS UNLESS THE CONTEXT OTHERWISE REQUIRES, THE SAID DEFINITIO N COULD NOT BE IMPORTED TO INSTITUTIONS NOTIFIED U/S 10(23C)(IV) BY COMPETENT AUTHORITY. HERE APPROVAL ENTITLED THE INSTITUTION, SUBJECT TO FULFILLMENT OF CONDITIONS LAID DOWN IN NOTIFICATION READ WITH CONDITIONS LAID DOWN IN SECT ION 10(23C). IN VIEW OF 7 TH PROVISO TO SECTION 10(23C), THE COMPETENT AUTHORITY WAS REQUIRED TO EXAMINE THAT IF THE INSTITUTION WAS DERIVING ANY IN COME FROM PROFITS AND GAINS, THEN THE SAID BUSINESS WAS ONLY INCIDENTAL T O THE ATTAINMENT OF ITS MAIN OBJECT. HOWEVER, AFTER APPLICATION OF PROVISO TO SECTION 2(15), BY INSERTION OF 17 TH PROVISO TO SECTION 10(23C) BY FINANCE ACT, 2012 WI TH RETROSPECTIVE EFFECT FROM 1-4-2009, THE AMBIT HAS CONSIDERABLY BE EN WIDENED AND IF AN ASSESSEE IS CARRYING ON ANY ACTIVITY WHICH IS IN TH E NATURE OF TRADE, COMMERCE OR BUSINESS THEN THE ASSESSEE CANNOT BE SA ID TO BE CARRYING ON CHARITABLE ACTIVITIES. IN VIEW OF CHANGED LEGAL POS ITION, LD. DIT(E) CONCLUDED THAT SINCE AO HAD NOT CONSIDERED THE APPLICABILITY OF PROVISO TO SECTION 2(15), THE ASSESSMENT ORDER WAS ERRONEOUS AS WELL A S PREJUDICIAL TO THE INTEREST OF REVENUE. 16 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 6.3. ADMITTEDLY, THE THIRD PROVISO TO SECTION 143(3 ), REQUIRING THE AO TO EXAMINE THE APPLICABILITY OF PROVISO TO SECTION 2(1 5) IN CASE OF INSTITUTIONS NOTIFIED U/S 10(23C)(IV) IN VIEW OF INSERTION OF 17 TH PROVISO TO SECTION 10(23C), WAS NOT ON STATUTE BOOK AT THE TIME WHEN A SSESSMENT ORDER WAS PASSED AND SINCE THE NOTIFICATION REMAINED IN FORCE , IN ANY VIEW OF THE MATTER, THE INVOCATION OF SECTION 263 BY LD. DIT(E) WAS NOT JUSTIFIED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF MAX INDIA LTD. (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER:- WE FIND NO MERIT IN THE SAID CONTENTIONS. FIRSTLY, IT IS NOT IN DISPUTE THAT WHEN THE ORDER OF THE COMMISSIONER WAS PASSED THERE WERE TWO VIEWS ON THE WORD 'PROFITS' IN THAT SECTION. THE PROBLEM WITH SECTION 80HHC IS THAT IT HAS BEEN AMEN DED ELEVEN TIMES. DIFFERENT VIEWS EXISTED ON THE DAY WH EN THE COMMISSIONER PASSED THE ABOVE ORDER. MOREOVER, THE MECHANICS OF THE SECTION HAVE BECOME SO COMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHERENTLY POSSIBLE. THER EFORE, SUBSEQUENT AMENDMENT IN 2005 EVEN THOUGH RETROSPECT IVE WILL NOT ATTRACT THE PROVISION OF SECTION 263 PARTICULAR LY WHEN AS STATED ABOVE WE HAVE TO TAKE INTO ACCOUNT THE POSIT ION OF LAW AS IT STOOD ON THE DATE WHEN THE COMMISSIONER PASSED T HE ORDER DATED MARCH 5, 1997, IN PURPORTED EXERCISE OF HIS P OWERS UNDER SECTION 263 OF THE INCOME-TAX ACT. 6.4. FURTHER WE FIND THAT 263 PROCEEDINGS INITIATED BY LD. DIT(E) ON THE GROUND THAT THERE WAS NO APPLICATION OF MIND BY AO CANNOT BE SUSTAINED BECAUSE VIDE QUESTIONNAIRE DATED 23-8-2011, THE AO HAD ISSUED NOTICE U/S 142(1) AND HAD REQUIRED THE ASSESSEE AS UNDER: 17 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 2. NOTE ON THE ACTIVITIES OF THE TRUST IN AY 2009- 10, EXPLANATION ALONG WITH DOCUMENTARY PROOF TO JUSTIFY THAT THESE ACTIVITIES WERE CHARITABLE AS PER SECTION 11,12,13 READ WITH SECTIO N 2(15) IN LIGHT OF THE RECENT AMENDMENT. SHOW COMPUTATION AS TO HOW 85 % IS APPLIED FOR OBJECTS OF THE TRUST. 6.5. FURTHER IN QUESTION NO. 13 THE ASSESSEE WAS RE QUIRED AS UNDER: 13. WHETHER ANY BUSINESS IS CARRIED OUT BY THE TRUST/SOCIETY/INSTITUTION. IF YES, PLEASE PRODUCE T HE COMPLETE BOOKS OF ACCOUNTS ALONG WITH BILLS/ VOUCHERS IN RESPECT OF S UCH BUSINESS ACTIVITIES. 6.7. THE ASSESSEE HAD GIVEN DETAILED REPLY, THE CON TENTS FROM WHICH HAVE BEEN REPRODUCED IN LATER PART THIS ORDER. THEREFORE , THIS CANNOT BE SAID THAT THERE WAS NON APPLICATION OF MIND BY AO. WE FURTHER FIND CONSIDERABLE FORCE IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSE SSEE THAT AO HAD TAKEN ONE OF THE POSSIBLE VIEWS AFTER CONSIDERING THE ASSESSE ES REPLY AND, THEREFORE, 263 PROCEEDINGS COULD NOT BE INITIATED AGAINST THE ASSESSEE. THEREFORE, IT CANNOT BE SAID THAT AOS ORDER WAS IN ANY MANNER ER RONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE. 6.8. HOWEVER, SINCE DETAILED ARGUMENTS HAVE BEEN AD VANCED BEFORE US WITH RESPECT TO APPLICABILITY OF PROVISO TO SECTION 2(15), WE PROCEED TO EXAMINE THE SAME. FIRST OBJECTION OF REVENUE IS WIT H REGARD TO THE AMOUNTS REALIZED OUT OF CATERING FACILITIES PROVIDED AT THE CENTRE. CATERING FACILITIES WERE PROVIDED IN THE CENTRE FOR MEMBERS WHO CAME TO THE CENTRE OR STAYED IN THE CENTRE AND ATTENDED DISCOURSES, CONFERENCES, SE MINARS, LECTURES ETC. WE 18 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE REPRODUCE THE FOLLOWING NOTE FILED BY ASSESSEE ON C ATERING FACILITIES AT THE CENTRE: INDIA INTERNATIONAL CENTRE NOTE ON CATERING FACILITIES AT THE CENTRE CATERING FACILITIES ARE PROVIDED IN THE CENTRE FOR MEMBERS WHO COME TO THE CENTRE OR STAY IN THE CENTRE AND ATTEND THE DISCOURSES, CONFERENCES, SEMINARS, LECTURES. THE CE NTRE HAS TWO DINING HALLS AND TWO LOUNGES. THE DINING HALL OPERA TES FOR BREAKFAST, LUNCH AND DINNER. THE LOUNGE PROVIDES VA RIETY OF SNACKS, TEA COFFEE AND SOFT DRINKS. IN THE DINING H ALL OF THE MAIN CENTRE, A MEMBER CAN BOOK A TABLE FOR MAXIMUM OF 8 PERSONS INCLUDING GUESTS. IT MAY BE STATED THAT IT IS ONLY THE MEMBERS WHO CAN HOLD CONFERENCES, SEMINARS AND THE CENTRE IS ALSO PROVIDING CATERING SERVICES TO THEM. THE RULES RELATING TO THE BOOKING AND CANCELLATION OF IIC CONFERENCING AN D CATERING FACILITIES: 1. OUTSIDE CATERING OR FOOD ITEMS BROUGHT FROM OUTS IDE ARE NOT PERMITTED. 2. CELL PHONES SHOULD BE SWITCHED OF BEFORE ENTERIN G INTO CONFERENCING VENUES AND THE NOISE OUTSIDE THE CONFE RENCE ROOMS AND AUDITORIUM MUST BE AVOIDED. 3. SALE OF TICKET, BOOKS, COLLECTION OF DONATION OR ANY COMMERCIAL ACTIVITY IS NOT PERMITTED. 4. LIVE BAND, MARRIAGE CEREMONIES, CHILDREN'S PARTI ES OR ANY ANOTHER FUNCTION WHERE RITUALS INVOLVING PENDIT , PHERA, HAVAN ETC. ARE NOT PERMITTED. 5. MEETING OR POLITICAL, RELIGIOUS NATURE AND AGM A RE NOT PERMITTED. 6. IT MAY NOT BE OUT OF PLACE TO MENTION HERE THAT THE NOTICE HAS ALSO BEEN GRANTED EXEMPTION FROM INCOME TAX UND ER SUB CLAUSE (IV) OF CLAUSE (23C) OF SECTION 10 OF INCOME TAX ACT. 19 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE THE KITCHEN AND THE DINING HALL ARE OPERATED BY IIC 'S OWN STAFF MEMBERS AND NO OUTSOURCING IS DONE FOR THE SA ID FACILITIES. RULES AND REGULATIONS BOOKING OF TABLES: 1. IN THE DINING HALL OF THE MAIN CENTRE, A MEMBER CAN BOOK A TABLE FOR MAXIMUM OF 8 PERSONS AND IN THE DI NING HALL, ANNEXE FOR 10 PERSONS. 2. THERE IS NO PROVISION FOR RESERVING OF TABLE IN THE LOUNGE. 3. CHILDREN BELOW 8 YEAR OF AGE ARE NOT ALLOWED IN THE DINING HALL OF BOTH THE MAIN CENTRE AND ANNEXE. MEM BERS ACCOMPANIED BY CHILDREN WHO VISIT THE LOUNGE MAY US E THE OUTER VERANDAH OF THE LOUNGE IN THE MAIN CENTRE. IN THE ANNEXE LOUNGE, CHILDREN BELOW 8 YEARS OF AGE ACCOMP ANYING MEMBERS ARE ALLOWED TO AVAIL OF CATERING FACILITIES ONLY DURING LUNCH HOURS ON SATURDAY, SUNDAY AND OTHER PUBLIC HO LIDAYS BETWEEN 12.30PM TO 2.30 PM. 4. TABLES ARE NOT ALLOWED TO BE JOINED IN ANY CATER ING OUTLETS. 5. USE OF CELL PHONES IS NOT PERMITTED IN THE DININ G HALL, LOUNGE. CELL PHONE MAY KINDLY BE KEPT IN VIBRATION MODE. 6. MEMBERS ARE REQUESTED TO SPEAK IN A MANNER THAT DOES NOT DISTURB THOSE SEATED AT THE NEIGHBORING TABLE. 6.9. THE SECOND OBJECTION IS WITH RESPECT TO HOSTEL ACCOMMODATION PROVIDED ON RENT. ON THIS ASPECT THE ASSESSEE HAS G IVEN THE FOLLOWING NOTE: NOTE ON ACTIVITIES CARRIED ON BY INDIA INTERNATIONA L CENTRE INDIA INTERNATIONAL CENTRE (IIC) IS A SOCIETY REGIS TERED UNDER THE SOCIETIES ACT OF 1860 AND IS STRICTLY GOVERNED BY I TS MEMORANDUM OF ASSOCIATION AND RULES & REGULATIONS. THE 20 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE OBJECTS OF THE SOCIETY ARE WHOLLY CHARITABLE IN NAT URE AND IT HAS BEEN SO HELD RIGHT FROM ITS INCEPTION YEAR AFTER YE AR. THERE IS ABSOLUTELY NO CHANGE IN THE OBJECTS OR THE ACTIVITI ES OF THE CENTRE RIGHT FROM ITS INCEPTION. HOSTEL SERVICES ARE PREDOMINANT TO SUB-SERVE THE MA IN OBJECTIVE OF THE CENTRE I.E. ORGANIZING A VERY LARGE NUMBER O F PROGRAMMES THROUGHOUT THE YEAR WHICH ARE OPEN TO TH E GENERAL PUBLIC, FREE OF COST, THE PRICE OF WHICH IS INESTIM ABLE. THE ACTIVITY OF HOSTEL PROVIDES BASIC AMENITIES TO ALL THE INVITEES IN THE SEMINARS, CULTURAL AND OTHER FUNCTIONS AND TO R ESEARCH SCHOLARS FREE OF COST AND ONLY GUESTS OF MEMBERS AR E ALLOWED TO AVAIL OF FACILITIES IN CASE SURPLUS ACCOMMODATION I S AVAILABLE AT TIMES. YOUR KIND ATTENTION IS INVITED TO ART.VII OF MEMORANDUM OF THE CENTRE WHICH STATES 'TO ORGANIZE AND MAINTAI N, AS FAR AS POSSIBLE, ON NO-PROFIT NO-LOSS BASIS, LIMITED RESID ENTIAL ACCOMMODATION, WITH CULTURAL AND EDUCATIONAL AMENIT IES, FOR THE MEMBERS OF THE SOCIETY COMING TO PARTICIPATE IN THE ACTIVITIES OF THE SOCIETY AND OF OTHER BODIES WITH COGNATE OBJECTIVES, AS WELL AS, NON- MEMBERS, SPECIALLY INV ITED TO PARTICIPATE IN THE ACTIVITIES OF THE SOCIETY', WE G IVE HEREIN BELOW A RESUME OF THE ACTIVITIES OF THE CENTRE. THE CENTRE ORGANIZES VERY LARGE NUMBER OF PROGRAMME S THROUGHOUT THE YEAR, WHICH INCLUDED SEMINARS, TALKS , DISCUSSIONS, MUSIC, DANCE, DANCE DRAMAS, DOCUMENTAR Y FILMS, ART EXHIBITIONS, FEATURE FILMS ETC. OF THESE ROUGHL Y 50% CAN STATED TO BE IN THE DOMAIN OF ACADEMIC AND INTELLEC TUAL ACTIVITIES IN TERMS OF SEMINARS, TALKS, DISCUSSIONS AND THE BA LANCE 50% IN TERMS OF CULTURAL PROGRAMMES, SUCH AS DANCE, MUSIC ETC. ALL THESE PROGRAMMES ARE OPEN TO THE GENERAL PUBLIC FRE E OF COST, THE PRICE OF WHICH IS INESTIMABLE. THE ENTIRE NERVE CENTRES OF THE INSTITUTION REVOLVE AROUND THESE PROGRAMMES. A VERY SIGNIFICANT NUMBER OF MEMBERS I THEIR GUESTS COME TO THE CENTRE OR STAY IN THE CENTRE AND ATTEND THE DIS COURSES, CONFERENCES, SEMINARS, LECTURES ETC. SPONSORED BY T HE IIC ON ITS OWN INITIATIVE OR IN COLLABORATION WITH NUMBER OF C ULTURAL, ACADEMIC, INTELLECTUAL INSTITUTION IN THE COUNTRY, 21 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE IN ADDITION TO WHAT THE IIC AND OUR COLLABORATOR OR GANIZE, THE CENTRE ALSO MAKES ITS FACILITIES AVAILABLE TO MEMBE RS AND THEIR GUESTS FOR CONDUCTING PROGRAMMES OF ONLY ACADEMIC, INTELLECTUAL OR CULTURAL CATEGORY OF FUNCTIONS. 150 0 PROGRAMMES IN A YEAR ARE ORGANIZED BY MEMBERS AND THEIR GUESTS PROVIDING ACADEMIC DISCUSSION CONTRIBUTING TO THE INTEJ!ECTUA L THOUGHT IN THE COUNTRY AND ALSO ORGANIZING NUMBER OF CULTURAL PROGRAMMES BENEFITING THE CITIZENS OF DELHI. THESE PROGRAMMES ARE ORGANIZED IN THE AUDITORIUM, CONFERENCE HALLS, ROOM S AND LECTURE HALLS. THERE ARE ALSO NUMBERS OF OTHER SEMINARS, LARGE AND SMALL, WHERE NUMBERS OF PEOPLE WERE PROVIDED HOSPITALITY B Y IIC FOR STAY IN THE HOSTEL. IN ADDITION THERE ARE LARGE NUM BERS OF SMALLER PROGRAMMES SPREAD THROUGHOUT THE YEAR. FOR THESE PR OGRAMMES A VERY LARGE NUMBER OF MEMBERS AND THEIR GUESTS STA Y FOR VARYING PERIODS OF TIME. IT IS DIFFICULT TO BUILD I NFORMATION SYSTEM OR REFLECT IN THE ACCOUNTS AS TO WHICH OR HO W MANY MEMBERS ATTEND WHICH PROGRAMMES LIKE SEMINARS OR CU LTURAL EVENTS. THE PROGRAMMES ALWAYS NEED NOT NECESSARILY BE IN THE IIC, LIKE NOMINEES OF UNIVERSITIES ATTENDING CONFER ENCE IN A NUMBER OF INSTITUTIONS IN DELHI. AS PER THE RULES T HESE MEMBERS ARE ENTITLED TO STAY. THAT IIC IS A CENTRE FOR PROMOTION OF INTELLECTUAL AND CULTURAL ACTIVITIES CAN BE SEEN WHEN WE COMPARE IT WITH OTHE R INSTITUTIONS. THIS IS BECAUSE THE CENTRE IS GEARED TO BE ONLY AN INSTITUTION OF NOT ONLY FOR PROMOTING CULTURE AND A CADEMIC THOUGHT. BUT ALSO IN INDUCTING MEMBERS ENSURES THAT THE MEMBERS FULFILL THE OBJECTS OF THE CENTRE. ANNUAL SUBSCRIPTION IS CHARGED FROM THE MEMBERS. 6.10. IN THE BACKDROP OF AFOREMENTIONED FACTUAL BAC KGROUND, WE PROCEED TO EXAMINE WHETHER THESE ACTIVITIES TAKE COLOUR OF TRA DE OR BUSINESS ACTIVITY OR MERELY FACILITATING IN ACHIEVEMENT OF DOMINANT OBJE CT OF ASSESSEE, WHICH IS THE TEST. 22 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 6.11. THE ASSESSEE SOCIETY WAS FORMED TO PROMOTE, UNDERSTANDING AND AMITY BETWEEN DIFFERENT COMMUNITIES OF THE WORLD B Y UNDERTAKING OR PROMOTING STUDY OF THEIR PAST AND PRESENT CULTURE, BY DISSEMINATING OR EXCHANGING KNOWLEDGE THEREOF, AND TO PROVIDE FACILI TIES FOR UNDERTAKING, ORGANIZING AND FACILITATING STUDY COURSES, CONFEREN CES, SEMINARS, LECTURES AND RESEARCH ON VARIOUS MATTERS IN ORDER TO ACHIEVE TH ESE OBJECTS AND TO PROVIDE FACILITIES AND ALSO FOR ESTABLISHING AND MAINTAINI NG LIBRARIES AND UNDERTAKING SUCH PUBLICATIONS THE ASSESSEE HAD TO EARN INCOME T O INCUR EXPENDITURE ON THE ACTIVITIES. AT THIS JUNCTURE WE MAY OBSERVE THA T UNLESS THERE IS PROFIT MOTIVE IN CARRYING OUT AN ACTIVITY, IT CANNOT TAKE COLOUR OF TRADE OR COMMERCE. 6.12. THE PREDOMINANT ACTIVITIES OF THE CENTRE WAS NOT TO EARN INCOME BUT TO PROVIDE FACILITIES FOR DISSEMINATING OR EXCHANGING KNOWLEDGE AS PER THE OBJECT OF THE SOCIETY. THERE IS NO GAINSAYING THAT WITHOUT CREATING A PROPER PLATFORM THE PRIMARY OBJECT OF DISSEMINATION AND EX CHANGING OF KNOWLEDGE COULD NOT BE ACHIEVED. THEREFORE, MERELY BECAUSE IN CIDENTAL INCOME WAS EARNED BY ASSESSEE SOCIETY FOR ACHIEVING ITS DOMINA NT OBJECT FROM PROVIDING HOSTEL AND CATERING ACTIVITIES, IT CANNOT BE SAID THAT THE ASSESSEE WAS DOING TRADE OR BUSINESS AS CONTEMPLATED UNDER PROVISO TO SECTION 2(15). THE CENTRE 23 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE HAD TO NECESSARILY CHARGE FOR THE HOSTEL, CATERING AND USE OF SUCH FACILITIES FROM MEMBERS/ PARTICIPANTS SINCE IT HAD TO RECOVER COST AND AT THE SAME TIME HAVE ENOUGH FUNDS TO CARRY OUT THE CHARITABLE ACTIV ITIES. WE ARE REMINDED AT THIS JUNCTURE OF AN OLD SAYING EVERYTHING COMES AT A PRICE. IT IS INCOMPREHENSIBLE THAT AN INSTITUTION WHICH IS CARRY ING OUT CHARITABLE OBJECTS WILL PROVIDE THE ESSENTIAL FACILITIES FREE OF CHARG E. IT IS NOT THE ALLEGATION OF LD. DIT(E) THAT THE MAIN OBJECT OF ASESSEE, IN ANY MANNER, DID NOT FULFILL THE CRITERIA OF CHARITABLE ACTIVITY. ON THE CONTRARY SH E HERSELF HAS OBSERVED THAT THE FIRST CATEGORY DOES FULFILL THE CHARITABLE PURP OSE/ CRITERIA AND IT IS ONLY THE SECOND CATEGORY I.E. GIVING OF HOSTEL, CATERING ETC . THAT THE ASSESSEES ACTIVITIES ARE CAUGHT WITHIN THE MISCHIEF OF SECOND PROVISO TO SECTION 2(15). IT IS ALSO NOT THE CASE OF LD. DIT(E) THAT THERE WA S NO FREE ACCESS TO THE GENERAL PUBLIC FOR PROGRAMMES SUCH AS DANCE, MUSIC, SEMINARS ETC. IN ITS REPLY THE ASSESSEE HAD ALSO POINTED OUT THAT THERE WERE NUMBER OF OCCASIONS WHEN THE CENTRE DID NOT CHARGE INSTITUTIONS FOR HOL DING THEIR PROGRAMMES SUCH AS LECTURES, DISCUSSIONS OR SEMINARS ETC. ADMI TTEDLY THERE IS NO FUNDING FROM GOVERNMENT OR ANY OTHER OUTSIDE BODIES TO SUST AIN ACTIVITIES OF PROMOTION OF CULTURAL AND INTELLECTUAL ACTIVITIES A ND, THEREFORE, THE ASSESSEE HAD TO BE TOTALLY SELF SUPPORTING AND SELF FINANCIN G AND FOR THIS PURPOSE, IN 24 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE ORDER TO ACHIEVE ITS MAIN OBJECTIVE, IT HAD TO CHAR GE AND EARN RECEIPTS FROM MEMBERS SO THAT THE ACTIVITIES COULD BE CARRIED OUT . ADMITTEDLY, THE ASSESSEE IS DISSEMINATING KNOWLEDGE TO GENERAL PUBLIC ON SUB JECTS RANGING FROM ART, DANCE, URBAN DEVELOPMENT MEANS ETC. THROUGH CONFERE NCES, LECTURES ETC. IT WAS FURTHER POINTED OUT BEFORE AO THAT EVEN WHILE C HARGING THE MEMBERS, THERE WAS NO COMMERCIAL MOTIVE IN FIXING THE RATES . THE RATES WERE NOWHERE NEAR THE COMMERCIAL RATES AND WERE GENERALLY FIXED TO RECOVER THE COST AND COST OF ACTIVITIES TO RUN THE CENTRE. THESE ACTIVIT IES COULD NOT BE TREATED IN THE NATURE OF TRADE OR COMMERCE. 6.13. AS REGARDS HOSTEL ACCOMMODATION, THERE WERE N UMBER OF ROOMS AND GUIDELINES FOR HIRING OF THE ACCOMMODATION AND ALSO THERE WERE RESTRICTIONS. IT WAS ALSO POINTED OUT THAT, AS COULD BE SEEN FROM THE LIST OF PROGRAMMES, THE ASSESSEE CONDUCTED VERY LARGE NUMBER OF PROGRAM MES DURING THE YEAR WHICH COVERED DISCUSSIONS, MUSIC, DANCES, EXHIBITI ONS AND ALSO CERTAIN SPECIAL PROGRAMMES SUCH AS FESTIVALS DURING THE COU RSE OF THE YEAR. THESE PROGRAMMES WERE PUBLISHED THROUGH THE NEWSPAPERS AN D WEBSITE. FURTHER E- MAILS WERE SENT TO MEMBERS AS WELL AS NON-MEMBERS. PERIODICAL ARTICLES ALSO APPEARED IN THE VARIOUS NEWSPAPERS HIGHLIGHTING S OME OF THE SPECIAL PROGRAMMES CONDUCTED BY THE CENTRE. 25 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE 6.14. AS REGARDS LD. DIT(E)S OBJECTION WITH REGAR D TO THE MEMBERSHIP OF THE CENTRE, THE ASSESSEE HAD POINTED OUT BEFORE TH E AO ITSELF THAT INDIVIDUAL MEMBERSHIP WAS OPEN TO ALL PERSONS OF INDIA OR FORE IGN ORIGIN. RULE 4(A) OF RULES & REGULATIONS PROVIDES QUALIFICATION FOR MEMB ERSHIP. THERE ARE SEVERAL CATEGORIES FOR MEMBERS, AS REPRODUCED BELOW : 4. QUALIFICATION FOR MEMBERSHIP A. INDIVIDUAL MEMBERSHIP OF THE FOLLOWING CLASSES, OPEN TO PERSONS OF INDIAN OR FOREIGN ORIGIN, SHALL BE SUBJE CT TO THE PROVISIONS SET OUT BELOW: (A) HONORARY MEMBERS (I) SUBJECT TO THEIR CONSENT, THE PRESIDENT OF IN DIA, THE VICE-PRESIDENT OF INDIA AND THE PRIME MINISTER OF I NDIA WILL BE HONORARY MEMBERS OF THE CENTRE. (II) THE BOARD MAY INVITE SUCH OTHER PERSONS, AS IT MAY DEEM FIT, TO BE HONORARY MEMBERS. (B) FOUNDATION MEMBERS FOUNDATION MEMBERS ARE THOSE PERSONS WHO TOOK AN AC TIVE INTEREST OR PART IN THE ESTABLISHMENT OF THE CENTRE AND WERE ENROLLED AS SUCH. (C) LIFE MEMBERS LIFE MEMBERS ARE PERSONS OF HIGH ATTAINMENT IN EDU CATION, SCIENCE, CULTURE, ART OR OTHER AREAS OF PUBLIC ACTI VITY WHO ARE ADMITTED AS SUCH. (D) MEMBERS MEMBERS ARE PERSONS IN THE FIELDS OF ACADEMIA, ART, CULTURE, SCIENCE, TECHNOLOGY, SPORTS OR THOSE ENGAGED IN PUB LIC OR 26 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE PROFESSIONAL FUNCTIONS AND ACTIVITIES AND ARE ADMIT TED AS SUCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY THE BOARD IN THIS BEHALF. (E) ASSOCIATE MEMBERS ASSOCIATE MEMBERS ARE PERSONS WHO ARE ADMITTED AS S UCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY THE BOARD IN THIS BEHALF. (F) OVERSEAS ASSOCIATE MEMBERS OVERSEAS ASSOCIATE MEMBERS ARE PERSONS WHO ARE ADMI TTED AS SUCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY THE BOARD IN THIS BEHALF. (G) TEMPORARY MEMBERS TEMPORARY MEMBERS ARE PERSONS WHO ARE ADMITTED AS S UCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY THE BOARD IN THIS BEHALF. (H) SHORT TERM ASSOCIATE MEMBERS SHORT TERM ASSOCIATE MEMBERS ARE PERSONS WHO ARE AD MITTED AS SUCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY T HE BOARD IN THIS BEHALF PROVIDED ALWAYS THAT NO PERSON SHALL BE ELIGIBLE FOR ADMISSION UNDER RULE 4(C) TO (F) UNLESS HE/SHE HAS COMPLETED 25* YEARS OF AGE AT THE TIME OF APPLYING FOR ENROL MENT. PROVIDED FURTHER THAT AN APPLICANT FOR INDIVIDUAL M EMBERSHIP, OTHER THAN TEMPORARY MEMBERSHIP, SHOULD BE DULY PRO POSED AND SECONDED BY TWO INDIVIDUAL MEMBERS (OTHER THAN AN ASSOCIATE, OVERSEAS ASSOCIATE, SHORT TERM ASSOCIATE AND TEMPORARY MEMBER), ONE OF THEM CERTIFYING THAT THE APPLICANT IS PERSONALLY KNOWN TO HIM OR HER AND IS, IN HIS OP INION, A PERSON FIT TO BE ADMITTED AS A MEMBER OF THE CENTRE . 6.15. FROM THE RULE, IT IS EVIDENT THAT MEMBERS ARE PERSONS IN THE FIELD OF ACADEMIC, ART, CULTURE, SCIENCE, TECHNOLOGY, SPORT S OR THOSE ENGAGED IN PUBLIC OR PROFESSIONAL FUNCTIONS AND ACTIVITIES AND ARE ADMITTED AS SUCH IN ACCORDANCE WITH THE DECISIONS TAKEN BY THE BOARD IN THIS BEHALF, IN ORDER TO 27 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE ACHIEVE THE MAIN OBJECT OF ASSESSEE OF DISSEMINATIN G KNOWLEDGE IN VARIOUS FIELDS TO PUBLIC AT LARGE. 6.16. THE ASSESSEE ALSO POINTED OUT THAT THE MEMBER S ARE PRESENTLY FROM ALL OVER THE WORLD AND ABOUT 30% OF MEMBERS ARE OUTSIDE THE DELHI NCR REGION. 6.17. FROM THE DETAILED SUBMISSIONS OF ASSESSEE, RE PRODUCED EARLIER, WHICH HAVE NOT BEEN CONTROVERTED BY DEPARTMENT, WE FAIL T O UNDERSTAND AS TO HOW THESE ACTIVITIES CAN BE SAID TO HAVE AN IOTA OF COM MERCIAL/ TRADE COLOUR. THE DOMINANT OBJECT OF THE ASSESSEE IS DEFINITELY FOR T HE WELL BEING OF PUBLIC AT LARGE BY ORGANIZING VARIOUS SEMINARS FOR THE WELFA RE OF PEOPLE BY DISSEMINATING KNOWLEDGE IN VARIOUS FIELDS IN ORDER TO UPLIFT THE SOCIAL CONSCIOUSNESS OF THE SOCIETY AT LARGE. (THE COMPOSI TION OF MEMBERSHIP CLEARLY EXEMPLIFIES THE REAL INTENTION OF ASSESSEE. WE FAIL TO UNDERSTAND AS TO HOW THE HOSTEL ACCOMMODATION PROVIDED TO VARIOUS IN VITEES COULD BE CONSIDERED AS A COMMERCIAL ACTIVITY. BEFORE ANY AC TIVITY CAN BE BRANDED AS BEING IN THE NATURE OF TRADE OR COMMERCE, THE AO H AS TO DEMONSTRATE THE INTENTION OF PARTIES BACKED WITH FACTS AND FIGURES OF CARRYING OUT ACTIVITIES WITH PROFIT MOTIVE. MERE SURPLUS FROM ANY ACTIVITY, WHICH UNDISPUTEDLY HAS BEEN UNDERTAKEN TO ACHIEVE THE DOMINANT OBJECT, DOE S NOT IMPLY THAT THE 28 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE SAME IS RUN WITH PROFIT MOTIVE. THE INTENTION HAS T O BE GATHERED FROM CIRCUMSTANCES WHICH COMPELLED THE CARRYING ON AN AC TIVITY. IN THE PRESENT CASE, LD. COUNSEL HAS CLEARLY DEMONSTRATED THAT SUR PLUS WAS GENERATED FROM INTEREST INCOME AND NOT FROM CATERING OR HOSTEL ACT IVITIES. THEREFORE, THE OBJECTION OF LD. DIT(E) DOES NOT SURVIVE ON THIS CO UNT ALSO. 8.18. THE PRIMARY OBJECT OF INSERTION OF PROVISO TO SECTION 2(15) WAS TO CURB THE PRACTICE OF EARNING INCOME BY WAY OF CARRYING O N OF TRADE OR COMMERCE AND CLAIMING THE SAME AS EXEMPT IN THE GARB OF PURS UING THE ALLEGED CHARITABLE OBJECT OF GENERAL PUBLIC UTILITY. THIS P ROVISO NEVER MEANT TO DENY THE EXEMPTION TO THOSE INSTITUTIONS, WHERE THE PRED OMINANT OBJECT IS UNDENIABLY A CHARITABLE OBJECT AND IN ORDER TO ACHI EVE THE SAME INCIDENTAL ACTIVITIES, ESSENTIAL IN THE GIVEN CIRCUMSTANCES, ARE CARRIED ON. 6.19. IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT THE PROVISO TO SECTION 2(15) IS NOT AT ALL APPLICABLE IN THE PRESENT CASE AND, THEREFORE, LD. DIT(E) WAS NOT AT ALL JUSTIFIED IN INVOKING THE PROCEEDING S U/S 263. 6.20. FURTHER WE FIND THAT THE ASSESSEES CASE IS S QUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION VS. DIRECTOR GENERAL OF INCOMEW TAX ( EXEMPTIONS) & OTHERS (WP(C) NO. 1872/2013 DATED 22-1-2015) 2015-TIOL-227 -HC-DEL-IT, HELD AS UNDER: HAVING HEARD THE MATTER, THE HIGH COURT HELD THAT, IF A MEANING IS GIVEN TO THE EXPRESSION 'CHARITABLE PURPOSE' SO AS TO SUGGEST THAT IN CASE /1/ EN INSTITUTION, HAVI NG AN OBJECTIVE OF ADVANCEMENT OF GENERAL PUBLIC UTILITY, DERIVES A N INCOME, IT 29 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE WOULD BE FALLING WITHIN THE EXCEPTION CARVED OUT IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, THEN THERE WOU LD BE NO INSTITUTION WHATSOEVER WHICH WOULD QUALIFY FOR THE EXEMPTION U/S 10(23C)(IV) OF THE ACT. AND, THE SAID PROVISION WOULD BE RENDERED REDUNDANT. THIS IS SO, BECAUSE, IF THE INS TITUTION HAD NO INCOME, RECOURSE TO SECTION 10(23C)(IV) WOULD NOT B E NECESSARY. AND, IF SUCH AN INSTITUTION HAD AN INCOM E, IT WOULD NOT, ON THE INTERPRETATION SOUGHT TO BE GIVEN BY TH E REVENUE, BE QUALIFIED FOR BEING CONSIDERED AS AN INSTITUTION ES TABLISHED FOR CHARITABLE PURPOSES. SO, EITHER WAY, THE PROVISIONS OF SECTION 10 (23C)(IV) WOULD NOT BE AVAILABLE, EITHER BECAUSE IT IS NOT NECESSARY OR BECAUSE IT IS BLOCKED. THE INTENTION B EHIND IF INTRODUCING THE PROVISO TO SECTION 2(15) OF THE ACT COULD CERTAINLY NOT HAVE BEEN TO RENDER THE PROVISIONS O F SECTION 10 (23 C)(IV) REDUNDANT; ++ IT IS APPARENT THAT MERELY BECAUSE A FEE OR SOME OTHER CONSIDERATION IS COLLECTED 01 RECEIVED BY AN INSTIT UTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTABLISHED F OR C 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 B USINESS, TRADE OR COMMERCE, THEN ANY SUCH INCIDENTAL OR ANCILLARY ACTIVITY WOULD ALSO NOT FALL WITHIN THE CATEGORIES 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 F OR THE NATION - BOTH WITHIN INDIA AND OUTSIDE INDIA. CLEARLY, THI S IS A CHARITABLE PURPOSE, WHICH HAS AS ITS MOTIVE THE ADV ANCEMENT OF AN OBJECT 0, GENERAL PUBLIC UTILITY TO WHICH THE EX CEPTION CARVED OUT IN THE FIRST PROVISO TO SECTION 2(15) 0, THE AC T WOULD NOT APPLY. IT IS SO SAID, BECAUSE, IF A LITERAL INTERPR ETATION 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 S HOULD' ALWAYS ENDEAVOUR TO UPHOLD THE CONSTITUTIONAL VALIDITY OF A PROVISION AND, IN DOING 50, THE PROVISION IN' QUESTION MAY NE VER TO BE READ DOWN; 30 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE ++ THE INTRODUCTION OF THE PROVISO TO SECTION 2(15) BY VIRTUE OF THE FINANCE ACT, 2008 WAS DIRECTED TO PREVENT THE U NHOLY PRACTICE OF PURE TRADE, COMMERCE AND BUSINESS ENTIT IES FROM MASKING THEIR ACTIVITIES AND PORTRAYING THEM IN THE GARB OF AN ACTIVITY WITH THE OBJECT OF E GENERAL PUBLIC UTILIT Y. IT WAS NOT DESIGNED TO HIT AT THOSE INSTITUTIONS, WHICH HAD TH E ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UTILITY AT THEIR H EARTS AND WERE CHARITY, INSTITUTIONS. THE ATTEMPT WAS TO REMOVE TH E 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 CHARITABLE ORGANIZATIONS. AND, THIS WAS ALSO THE ASSURANCE GIVEN BY THE FINANCE MINISTER WHILE INTRO DUCING THE FINANCE BILL 2008; ++ THE EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN SECTION 2(15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT O. SECTION 10(23C)(IV) OF THE ACT. IT IS ALSO CLEAR THAT IF TH E LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION 2 (15) OF THE ACT, THEN THE PROVISO WOULD BE AT RISK OF RUNNING F OWL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ARTICLE 14 OF TH E CONSTITUTION INDIA. IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IT THE CONTEXT OF SECTION 10(23C)(IV) BECAUSE, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECT INTERPRETATION OF THE PROVISO TO SECTION 2(15) OF THE ACT WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXC EPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, COMME RCE OR BUSINESS OR' ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATI ON TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, IN THE NATUR E OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING A NY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DO MINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, I: PROFIT MAKI NG, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COM MERCE OR BUSINESS: OR INDIRECTLY IN THE RENDERING OF ANY SER VICE IN RELATION 31 ITA 3124/DEL/2014 INDIA INTERNATIONAL CENTRE TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD N OT BE ENTITLED TO CLAIM ITS OBJECT TO BE A 'CHARITABLE PU RPOSE'. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMA RILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUG H THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARI TABLE PURPOSES; ++ THUS, WHILE THIS COURT UPHOLDS THE CONSTITUTIONA L VALIDITY OF THE PROVISO' TO SECTION 2(15) 0, THE ACT, IT HAS TO BE READ DOWN IN THE MANNER INDICATED. AS A CONSEQUENCE, THE IMPU GNED ORDER DATED 23.01.2013 WAS SET ASIDE AND A MANDAMUS WAS I SSUED TO THE RESPONDENT TO GRAM APPROVAL TO THE PETITIONER U /S 10(23C)(IV) OF THE ACT WITHIN SIX WEEKS FROM THE DA TE OF THIS JUDGMENT. 6.21. IN VIEW OF ABOVE DISCUSSION WE HOLD THAT, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE LD. DIT(E) WAS NOT JUSTIFIED IN INITIATING REVISIONARY PROCEEDINGS U/S 263 OF THE A CT. ACCORDING ORDER PASSED BY THE DIT(E) U/S 263 OF THE ACT IS QUASHED AND THE ASSESSMENT ORDER PASSED BY THE AO IS RESTORED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11-05-2015. SD/- SD/- (C.M. GARG ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: ______-05-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR