M/s. Rubber Skill Development Council, New Delhi V. DIT(E), New Delhi

ITA 3216/DEL/2014

• Counselvise Citation: 321620114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-11-2015
• Assessment Year: misc
• Appeal Filed On: 26-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NANDITA KANCHAN
• Assessee Lawyers: GOPAL NATHANI
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO: 3216/DEL/2014 AY : - RUBBER SKILL DEVELOPMENT COUNCIL V S. DIT(E) (FORMERLY RUBBER SKILL DEVELOPMENT CENTRE), NEW DELHI. PHD HOUSE, 4 TH FLOOR, OPPOSITE ASIAN GAMES VILLAGE, SIRI FORT INSTITUTIONAL AREA NEW DELHI 110 016 (PAN AAGCR0960D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GOPAL NATHANI, CA RESPONDENT BY : SMT. NANDITA KANCHAN, CIT (DR) DATE OF HEARING : 16.11.2015 DATE OF PRONOUNCEMENT : .11.2015 O R D E R PER SUDHANSHU SRIVASTAVA JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 26.3.2014 OF THE LD. DIRECTOR OF INCOME TAX (EXEMPTIONS), NEW DELHI REJECTING THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION U/S 12AA OF T HE INCOME TAX ACT,1961. 2. BRIEFLY, THE FACTS OF THE CASE AS BORNE OUT FR OM THE RECORDS, ARE THAT THE ASSESSEE COMPANY HAS BEEN PROMOTED BY NATIONAL SKIL L DEVELOPMENT COUNCIL (NSDC), ALL INDIA RUBBER INDUSTRIES ASSOCIATION (AI RIA) AND AUTOMOTIVE TYRE MANUFACTURERS ASSOCIATION (ATMA) AND AS PER ITS ME MORANDUM ITS OBJECTIVES INCLUDE COMPLEMENTING THE VOCATIONAL EDUCATION SYSTEM FOR T HE RUBBER INDUSTRY SECTOR IN ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 2 20X5 MEETING NATIONWIDE REQUIREMENTS OF APPROPRIATELY TR AINED MANPOWER IN QUANTITY AND QUALITY ACROSS ALL LEVELS ON A SUSTAINED AND EVOLVI NG BASIS. AS PER THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE IT IS SEEN THAT IT I S A COMPANY INCORPORATED U/S 25 OF THE INDIAN COMPANIES ACT, 1956 AND ITS MAIN OBJECTS ARE AS UNDER :- 1. TO INITIATE, CARRY OUT, EXECUTE, IMPLEMENT, AID AND ASSIST ACTIVITIES TOWARDS SKILL DEVELOPMENT IN THE RUBBER SECTOR IN INDIA ('S ECTOR') AND MEETING THE ENTIRE VALUE CHAIN'S REQUIREMENTS OF APPROPRIATELY TRAINED MANPOWER IN QUANTITY AND QUALITY ON A SUSTAINED AND EVOLVING BA SIS. 2. TO DEVELOP A SKILL DEVELOPMENT PLAN FOR THE SECTOR AND MAINTAIN SKILL INVENTORY. 3. TO DETERMINE SKILLS/COMPETENCY STANDARDS AND QUALIF ICATIONS IN CONSONANCE WITH THE SECTOR NORMS. 4. TO PLAN AND EXECUTE TRAINING OF TRAINERS. 5. TO PROMOTE ACADEMIES OF EXCELLENCE. 6. TO ESTABLISH A WELL STRUCTURED SECTOR SPECIFIC LABOUR MARKET INFORMATION SYSTEM ('LMIS) TO ASSIST PLANNING AND DELIVE RY OF TRAINING. 7. TO FACILITATE IN STANDARDIZING THE AFFILIATION AND ACCREDITATION PROCESS FOR THE SECTOR. 8. TO COORDINATE PARTICIPATION OF SOCIAL PARTNER S, EMPLOYERS IN THE PRIVATE SECTOR, TRAINING PROVIDERS, PROFESSIONAL SOCIETIES AND NGOS/CIVIL SOCIETY GROUPS IN THE PROCESS OF SKILL DEVELOPMENT FOR THE SECTOR. 9. TO IDENTIFY THE SKILL DEVELOPMENT NEEDS OF TH E SECTOR,REVIEW INTERNATIONAL TRENDS IN SECTOR SKILL DEVELOPMENT AND IDENT IFY SECTOR SKILL GAPS AND TECHNOLOGY. 10. TO DO AND UNDERTAKE THE TASK OF EDUCATIONAL A ND VOCATIONAL SKILL UPGRADE FOR THE SECTOR. 11. FACILITATE IN SETTING UP A ROBUST AND STRINGE NT CERTIFICATION AND ACCREDITATION PROCESS FOR THE SECTOR TO ENSURE CONS ISTENCY AND ACCEPTABILITY OF STANDARDS. 12. NONE OF THE OBJECT OF THE COMPANY WILL BE CARRIED OUT ON COMMERCIAL BASIS. ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 3 20X5 13. NO OBJECT OF THE COMPANY WILL BE CARRIED OUT WI THOUT OBTAINING THE PRIOR APPROVAL / NO OBJECTION CERTIFICATE FROM THE CONCERNED COMPETENT AUTHORITIES WHEREVER REQUIRED AND OR PRESCRIBED. 3. THE ASSESSEE INSTITUTION ON 19.9.2013 MADE AN APPLICATION IN THE PRESCRIBED MANNER BEFORE THE LD. DIRECTOR OF INCOME TAX (EXEMP TIONS) SEEKING REGISTRATION U/S 12A OF THE ACT. HOWEVER, THE LD. DIT(EXEMPTIONS) WA S OF THE OPINION THAT THE ASSESSEE S MAIN SOURCE OF INCOME WAS GRANT RECEIVE D FROM NSDC I.E NATIONAL SKILL DEVELOPMENT COUNCIL FOR THE EXECUTION OF PROJECTS A LLOTTED TO IT. LD. DIT (EXEMPTIONS) ALSO NOTED THAT AS PER CLAUSE 12 OF PR E DISTRIBUTION CONDITIONS OF GRANT AGREEMENT, THE ASSESSEE WAS BOUND TO SHARE ITS EARN INGS AFTER TAX (EAT) WITH NSDC@15% TILL SUCH TIME THE ENTIRE GRANT AMOUNT WAS RETURNED BACK TO THE NSDC. THE LD. DIT (EXEMPTIONS) ALSO NOTED THAT IN ORDER T O EXECUTE THE PROJECTS, THE ASSESSEE HAD FURTHER OUTSOURCED THE WORK RELATING T O DEVELOPMENT OF SKILL AND SEMI SKILLED LABOUR FORCE TO DIFFERENT ORGANISATIONS FOR DIFFERENT PROJECTS. LD. DIT (EXEMPTIONS) ALSO OBSERVED THAT THE ASSESSEE HAS BE EN CHARGING FEES FROM THE CANDIDATES FOR PROVIDING SKILL-LABOUR COURSES AND P ROVIDING THEM CERTIFICATES FOR WHICH IT HAD ALREADY RECEIVED ADVANCES FROM THE NSD C. ACCORDINGLY, AS PER THE LD. DIT (EXEMPTIONS), THE ASSESSEE WAS A SERVICE PROVID ER AND ITS ACTIVITIES WERE IN THE NATURE OF BUSINESS. THEREFORE, AS PER THE LD. DIT ( EXEMPTIONS) THE CONDITIONS FOR GRANTING REGISTRATION U/S 12AA WERE NOT SATISFIED A ND THE APPLICATION FOR REGISTRATION WAS REJECTED. 4. THE LD. AR, REFERRING TO THE OBJECTS OF THE COMPANY, SUBMITTED BEFORE US THAT THE ASSESSEE COMPANY AS A PART OF ITS ACTIVITIES CA RRIES OUT SKILL GAP STUDIES IN VARIOUS ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 4 20X5 STATES TO IDENTIFY SKILL DEVELOPMENT NEEDS IN THE R UBBER INDUSTRY. ANOTHER OF ITS ACTIVITIES IS TO ESTABLISH LABOUR MARKET INFORMATIO N SYSTEM (LMIS) AS A ONE STOP DATA AND INFORMATION SOURCE ON THE LABOUR MARKET TO INTE GRATE AND MAP THE SUPPLY VERSUS DEMAND NEEDS AND FURTHER TO ASSIST IN PLANNING AND DELIVERY OF TRAINING. LD. AR FURTHER SUBMITTED THAT THE ASSESSEE ALSO DEVELOPS N ATIONAL OCCUPATION STANDARDS (NOS) SPECIFYING THE STANDARD OF PERFORMANCE THAT I NDIVIDUAL MUST ACHIEVE WHEN CARRYING OUT A FUNCTION IN THE WORKPLACE, BRINGING TOGETHER SKILLS, KNOWLEDGE AND UNDERSTANDING. ANOTHER ACTIVITY OF THE ASSESSEE COM PANY IS TO STANDARDIZE AFFILIATION, CERTIFICATION AND ACCREDITATION PROCESS TO MEASURE COMPETENCY. YET ANOTHER ACTIVITY IS TO PLAN AND EXECUTE TRAINING OF TRAINERS FOR EDU CATIONAL AND VOCATIONAL SKILL UPGRADE IN DIFFERENT AREAS IN DIFFERENT STATES. HE DREW OUR ATTENTION TO CLAUSE 17 OF INCIDENTAL OBJECTS OF THE COMPANY AND SUBMITTED THA T FEES, SERVICE CHARGES, CONSULTANCY CHARGES ETC. ARE CHARGED ONLY IN FURTHE RANCE OF THE OBJECTS OF THE COMPANY AND NOT FOR ANY OTHER PURPOSES. HE ALSO DRE W OUR ATTENTION TO CLAUSE V WHICH SPECIFIES THAT ALL INCOMES, EARNINGS, MOVABLE AND IMMOVABLE PROPERTIES OF THE COMPANY SHALL BE SOLELY UTILISED AND APPLIED TOWARD S THE PROMOTION OF ITS AIMS AND OBJECTS ONLY AS SET FORTH IN THE MEMORANDUM OF THE COMPANY AND NO PROFIT THEREOF SHALL BE PAID OR TRANSFERRED, DIRECTLY OR INDIRECTL Y, BY WAY OF DIVIDENDS, BONUS, PROFITS OR IN ANY MANNER WHATSOEVER TO THE PRESENT OR THE P AST MEMBERS OF THE COMPANY OR TO ANY PERSON CLAIMING THROUGH ANY ONE OR MORE OF T HE PRESENT OR THE PAST MEMBERS. THE LD. AR SUBMITTED THAT IT IS CLEARLY PR OVIDED IN THE MEMORANDUM THAT NONE OF THE OBJECTS OF THE COMPANY WILL BE CARRIED OUT ON COMMERCIAL BASIS. HE SUBMITTED THAT THE LD. DIT(EXEMPTIONS) EVEN WHILE HOLDING THAT THE AIMS AND ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 5 20X5 OBJECTS WERE OF GENERAL PUBLIC UTILITY (GPU) U/S 2( 15) OF THE INCOME TAX ACT, 1961 COMPLETELY MISTOOK THE ASSESSEES ACTIVITIES AND WR ONGLY LABELLED IT AS BEING IN THE NATURE OF COMMERCIAL ACTIVITY HOLDING IT SIMILAR TO ANY OTHER TRAINING INSTITUTE THAT CHARGES A HANDSOME FEE FOR EARNING PROFITS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY HAS BEEN INCORPORATED WITHIN THE P ARAMETERS LAID DOWN BY THE APPROACH PAPER OF THE GOVT. OF INDIA FOR THE PROMOT ION OF SKILL DEVELOPMENT COUNCILS. LD. AR ALSO PLACED RELIANCE ON THE FOLLOWING CASE L AWS:- 1. CIT VS. VIJAY VARGIYA VANI CHARITABLE TRUST (2014) 369 ITR 360 (RAJ.) 2. GUJARAT CRICKET ASSOCIATION VS. DIT (E) 19 ITR (TRI B) 520 (AHM) 3. CENTRAL INSTITUTE OF TOOL DESIGN VS. DIT(E) 41 ITR (TRIB) 578 (HYDERABAD) 5. THE LD. AR ALSO DREW OUR ATTENTION TO PAGES 1 27 TO 129 OF THE PAPER BOOK WHICH CONTAINS COPIES OF REGISTRATION CERTIFICATE G RANTED U/S 12A TO OTHER SIMILAR FUNCTIONING SKILL DEVELOPMENT COUNCILS AND SUBMITTE D THAT SINCE THESE SKILL DEVELOPMENT COUNCILS HAVE BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT, THE ASSESSEE COMPANY SHOULD ALSO BE GRANTED REGISTRATIO N ON A SIMILAR FOOTING. 6. LD. DR, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE COMPANY WORKS ON A COMMERCIAL BUSINESS MODEL AND IS NOT CHARITABLE PER SE. SHE SUBMITTED THAT THE AFFILIATION FEE BEING CHARGED BY THE ASSESSEE IS AL SO NOT REGULATED AND IS DETERMINED BY THE MARKET FORCES. SHE ALSO SUBMITTED THAT IN TH E CASE LAWS REFERRED TO BY THE LD. AR THE ASSESSEE WAS ITSELF IMPARTING THE TRAINING W HEREAS IN THE PRESENT CASE THE ASSESSEE HAS ONLY OUTSOURCED THE TRAINING ACTIVITY AND HAS JUST ACTED AS A FACILITATOR. ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 6 20X5 SHE SUBMITTED THAT THE DIT (EXEMPTIONS) HAS RIGHTLY DENIED THE GRANT OF REGISTRATION AND THAT NO INTERFERENCE WAS CALLED FOR IN THE SAID ORDER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE LD. DIT (EXEMPTIONS) AS WELL AS OTHER MATERIAL ON RECORD. I T IS CLEAR FROM THE ORDER OF THE LD. DIT (EXEMPTIONS) THAT HE HAS CONSIDERED THE ASSESSE E AS A NON CHARITABLE INSTITUTION BECAUSE AS PER HIM THE ACTIVITIES OF THE ASSESSEE A RE COMMERCIAL IN NATURE AND HENCE NOT ELIGIBLE FOR REGISTRATION U/S12A OF THE A CT. ON A CURSORY LOOK AT THE OBJECTS OF THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE IS EN GAGED IN DEVELOPMENT OF SKILLS SPECIFICALLY FOR THE RUBBER INDUSTRY WHICH CAN SAFE LY BE CALLED TO BE AN ACTIVITY IN THE FIELD OF EDUCATION. ALL OTHER OBJECTS ARE ANCILLARY AND INCIDENTAL TO THE SAID MAIN OBJECTS. A PLAIN READING OF THE DEFINITION OF CHARI TABLE PURPOSE AS PROVIDED U/S 2(15) OF THE INCOME TAX ACT, 1961 WOULD MAKE IT CLEAR THA T THE RESTRICTION IMPOSED UNDER THE PROVISO TO THE SAID SECTION APPLIES ONLY TO THE LAST LIMB I.E ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. THERE IS NO EXPRESS PROVISION U/S 2(15) OF THE ACT WHICH RESTRICTS AN INSTITUTION FROM UNDERTAKING ANY COMMERCIAL ACTIVITY IF IT COMES UNDER OTHER LIMB OF CHARITABLE PURPOSES. ONLY REQUI REMENT IS THAT THE ASSESSEE MUST NOT HAVE PROFIT MOTIVE AND THE INCOME GENERATED FRO M COMMERCIAL ACTIVITY IS UTILISED FOR ACHIEVING THE CHARITABLE OBJECT. EVEN ASSUMING THAT THE ASSESSEES OBJECTS / ACTIVITIES COME UNDER ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY, THE PROVISO TO SECTION 2(15) WILL NOT AUTOMATICALLY DIS QUALIFY THE ASSESSEE FROM BEING CONSIDERED AS A SOCIETY ESTABLISHED FOR CHARITABLE PURPOSES ONLY BECAUSE IT HAS RECEIPTS IN THE FORM OF GRANTS, TRAINING FEE OR AFF ILIATION FEE, ETC. WHAT HAS TO BE SEEN IS WHETHER THE PRIMARY OR THE DOMINANT PURPOSE OR O BJECT OF THE ASSESSEE IS TO CARRY ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 7 20X5 OUT OBJECT OF GENERAL PUBLIC UTILITY OR ANY OTHER A CTIVITY WITH A PROFIT MOTIVE. IF FOR ACHIEVING ITS PRIMARY OR DOMINANT OBJECT OF EDUCATI ON OR EVEN ADVANCEMENT OF ANY OTHER OBJECT OF PUBLIC UTILITY, THE ASSESEE COMPANY HAS EARNED SOME INCOME FROM FEE ETC., IT CANNOT BE SAID THAT THE ASSESSEE HAS CARRI ED ON A BUSINESS ACTIVITY WITH A PROFIT MOTIVE. CHARITABLE ACTIVITIES ALSO REQUIRE OPERATIONAL/RUNNING EXPENSES AS WELL AS CAPITAL EXPENSE FOR BEING ABLE TO SUSTAIN ITSELF AND CONTINUE IN THE LONG RUN. THERE IS NO SUCH STATUTORY MANDATE THAT A CHARITABLE INST ITUTION FALLING UNDER THE RESIDUARY CLAUSE SHOULD BE WHOLLY, SUBSTANTIALLY OR IN PART B E FUNDED BY VOLUNTARY CONTRIBUTIONS ONLY. THE HONBLE SUPREME COURT IN THE CASE OF ADDL . CIT V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION (1980) 121 ITR 1 (SC) HA S HELD AS UNDER (PAGE 25): THE TEST WHICH HAS, THEREFORE, NOW TO BE APPLIED I S WHETHER THE PREDOMINANT OBJECT OF THE ACTIVITY INVOLVED IN CARR YING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO SUB SERVE THE CHARITABLE PURPO SE OR TO EARN PROFIT. WHERE PROFIT- MAKING IS THE PREDOMINANT OBJECT OF THE ACTIVITY, T HE PURPOSE, THOUGH AN OBJECT OF GENERAL PUBLIC UTILITY WOULD CEASE TO BE A CHARITAB LE PURPOSE. BUT WHERE THE PREDOMINANT OBJECT OF THE ACTIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A C HARITABLE PURPOSE MERELY, BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. THE EXCLUSION ARY CLAUSE DOES NOT REQUIRE THAT THE ACTIVITY MUST BE CARRIED ON IN SUCH A MANNER TH AT IT DOES NOT RESULT IN ANY PROFIT. IT WOULD INDEED BE DIFFICULT FOR PERSONS IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EXPENDITURE BALANCES THE I NCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFICULT OF PRACTIC AL REALISATION BUT WOULD ALSO REFLECT UNSOUND PRINCIPLE OF MANAGEMENT. 8. IN OUR OPINION, THE AFORESAID PRINCIPLE LAI D DOWN BY THE HON'BLE APEX COURT STILL HOLDS GOOD EVEN AFTER THE INTRODUCTION OF PROVISO T O SECTION 2(15) BY THE FINANCE ACT, 2008 WITH EFFECT FROM APRIL 1, 2009 . THE WORDS 'ANY ACTIVITY IN THE NATURE OF ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 8 20X5 TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION' WAS CONSIDERED AND INTERPRETED BY THE HONBLE DELHI HIG H COURT IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA V . DGIT (EXEMPTIONS) 347 ITR 99 (DELHI), AS UNDER (PAGE 123): 'SECTION 2(15) DEFINES THE TERM 'CHARITABLE PURPOSE '. 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 INTE NDED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO SECT ION 2(15) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FEE OR MONEY. AN ACTI VITY WOULD BE CONSIDERED 'BUSINESS' IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE , BUT IN SOME CASES THIS MAY NOT BE DETERMINATIVE. NORMALLY, THE PROFIT MOTIVE T EST SHOULD BE SATISFIED BUT IN A GIVEN CASE ACTIVITY MAY BE REGARDED AS BUSINES S EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABLISHED/ PROVED. IN SUCH CASES , THERE SHOULD BE EVIDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNISED BUSINESS PRINCIPLES, AND PURSUED WITH RE ASONABLE CONTINUITY. THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHOW THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. THE TEST AS PRESCRIBED IN STATE OF GUJARAT V. RAIPUR MANUFACTURING CO. LTD. [1967] 19 STC 1 SC AND CST V. SAI PUBLICATION FUND [2002] 258 ITR 70 SC ; [2002] 126 STC 288 SC CAN BE APPLIED. THE SIX INDICIA STIPULAT ED IN CUSTOMS AND EXCISE COMMISSIONERS V. LORD FISHER [1981] S. T. C. 238 ARE ALSO RELEVANT. EACH CASE, THEREFORE, HAS TO BE EXAMINED ON ITS OWN FACT S,' 9. THUS, THE PRINCIPLE OF LAW WHICH EMERGES FRO M THE JUDICIAL PRONOUNCEMENTS IS THAT IF THE PREDOMINANT OBJECT OF A TRUST OR INSTIT UTION IS CHARITABLE AND IN THE PROCESS OF ACHIEVING THAT OBJECT SOME ACTIVITY OF COMMERCIA L NATURE GENERATING INCOME IS CARRIED OUT, WHICH AGAIN IS UTILISED FOR THE ADVANC EMENT OF ITS CHARITABLE OBJECTS, IT ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 9 20X5 CANNOT BE INFERRED THAT THE TRUST OR INSTITUTION IS NOT ESTABLISHED FOR CHARITABLE PURPOSES. MOREOVER, THE ISSUE OF APPLICABILITY OF T HE PROVISO TO SECTION 2(15) HAS TO BE EXAMINED AT THE STAGE OF ASSESSMENT WHILE ADJUDI CATING THE ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT, 1 961 AND HENCE IT IS NOT GERMANE AT THE TIME OF CONSIDERING THE ISSUE OF GRA NTING REGISTRATION UNDER SECTION 12AA. THIS IS SO BECAUSE, THOUGH, THE FIRST PROVISO TO SECTION 2(15) OF THE ACT EXCLUDES ANY ACTIVITY OF THE NATURE OF TRADE, COMME RCE OR BUSINESS FROM BEING CONSIDERED TO BE A CHARITABLE PURPOSE, BUT, THE SEC OND PROVISO TO SECTION 2(15) RESTRICTS THE APPLICATION OF FIRST PROVISO ONLY TO SUCH TRUSTS AND INSTITUTIONS HAVING RECEIPTS FROM COMMERCIAL ACTIVITY EXCEEDING A PRESC RIBED LIMIT IN A PARTICULAR PREVIOUS YEAR. THEREFORE, THE APPLICATION OF THE PROVISO TO SECTION 2(15) HAS TO BE LOOKED INTO IN EVERY ASSESSMENT YEAR. 10. DURING THE COURSE OF HEARING, IT WAS ALSO BRO UGHT TO OUR NOTICE THAT SOME SIMILAR INSTITUTIONS HAVING SIMILAR OBJECTS AS THAT OF THE ASSESSEE COMPANY HAVE BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT AND COPIES OF THEIR REGISTRATION CERTIFICATES WERE AVAILABLE IN THE PAP ER BOOK. IN OUR VIEW IF SIMILAR INSTITUTIONS HAVING SIMILAR OBJECTS HAVE BEEN GRANT ED REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961, THERE IS NO JUSTI FIABLE REASON AS TO WHY THE ASSESSEE SHOULD BE DEPRIVED FROM AVAILING OF SUCH BENEFIT. I N THE AFORESAID FACTS AND CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) AND REMIT THE MATTER TO THE LD. DIT (EXEMPTIONS) TO VERIFY THIS ASPECT AND IF IT IS FOUND THAT SIMILAR INSTITUTIONS IN OTHER PLACES HAVING SIMILAR OBJECTS HAVE BEEN GRANTED REGISTRATION UNDE R SECTION 12AA, HE MAY CONSIDER ITA NO. 3216/DEL/2014 RUBBER SKILL DE VELOPMENT COUNCIL VS DIT(E) 10 20X5 GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE. THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS) MUST AFFORD REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. 11. IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 2 7 TH NOVEMBER, 2015. . SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: THE 27. 11. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 19.11.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 20.11. 2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER