ITO, Exemptions-2, Hyderabad, Hyderabad V. Kalinga Cultural Trust, Hyderabad, Hyderabad

ITA 332/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2408 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Charitable institution
• Section: 40A(3); 142(1); 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 332HYD/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER (EXEMPTIONS) 2, HYDERABAD. VS. KALINGA CULTURAL TRUST, HYDERABAD. PAN AAATK3517C (APPELLANT) (RESPONDENT) REVENUE BY : SHRI V. SREEKAR ASSESSEE BY : SHRI V. SIVAKUMAR DATE OF HEARING 24-10-2017 DATE OF PRONOUNCEMENT 10-11-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)- 9, HYDERABAD, DATED 18 TH NOVEMBER, 2016 RELATING TO AY 2012-13. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS REGISTERED U/S12A OF THE ACT, FILED ITS RETURN OF INCOME FOR T HE AY 2012-13 ON 18/09/2012 DECLARING TOTAL INCOME OF RS. NIL AFTER CLAIMING EXEMPTION U/S 11 OF THE ACT TO THE EXTENT OF RS. 1,16,38,669/ -. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, S TATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED, AGAINST WHICH, T HE AR OF THE ASSESSEE SUBMITTED THE INFORMATION, AS CALLED FOR. 2 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. 2.1 THE AO OBSERVED THAT THE ASSESSEE TRUST WAS REG ISTERED U/S 12A OF THE ACT ON 23/11/1995 AND CERTAIN AMENDMENTS OF THE AIMS AND OBJECTIVES WERE MADE WITH EFFECT FROM 01/04/200 8. FURTHER, AO OBSERVED THAT SINCE BY THIS AMENDMENT, THE ORIGINAL CHARACTER OF THE TRUST UNDERGONE A DISTINCT CHANGE, THE TRUST REQUIR ED FRESH REGISTRATION U/S 12AA, BUT, ASSESSEE DID NOT APPLY FOR FRESH REGISTRATION U/S 12AA. ACCORDING TO THE AO, THE ASS ESSEE DOES NOT HAVE REGISTRATION FOR THE PY 2011-12 RELEVANT TO AY 2012-13 AND, THEREFORE, IT IS NOT ENTITLED FOR THE BENEFIT OF SE CTION 11. 2.2 THE AO NOTED THAT THE ASSESSEE IS MAINTAINING A FUNCTION HALL WHICH WAS LET OUT ON RENT FOR VARIOUS ACTIVITIES IN CLUDING MARRIAGE FUNCTION , CULTURAL FUNCTIONS ETC., AND RECEIVED RS . 47,45,479/- FROM THE FUNCTION HALL. THE AO OPINED THAT THE NATURE OF ACTIVITY OF LETTING OF THE FUNCTION HALL ON RENT IS IN THE NATURE OF TRADE , COMMERCE OR BUSINESS WITHIN THE MEANING OF THE PROVISO TO SECTI ON 2(15) OF THE ACT AND AS THE RECEIPT FROM THIS ACTIVITY EXCEEDS RS. 1 0 LAKHS THE ASSESSEES ACTIVITIES CANNOT BE TERMED AS CHARITABL E ACTIVITIES AS PER THE PROVISIONS OF SECTION 2(15). ACCORDINGLY, HE HE LD THAT THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT OF SECTION 11 OF THE ACT. 2.3 FURTHER, THE AO OBSERVED THAT AS THE ASSESSEE L OST THE BENEFIT OF SECTION 11, THE STATUS OF THE ASSESSEE IS TO BE TREATED AS AN AOP AND THE INCOME OF THE ASSESSEE IS TO BE TREATED AS PER COMMERCIAL PRINCIPLES. ON VERIFICATION OF THE BOOKS OF ACCOUNT , HE FOUND THAT THE ASSESSEE HAD FAILED TO MAKE TDS ON TOTAL SECURITY C HARGES OF RS. 20,29,067/- AND HE DISALLOWED THE SAME FOR VIOLATIO N OF SECTION 40(A)(IA) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). 3 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. 4. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE S UBMITTED THAT THE ISSUE OF DENIAL OF EXEMPTION U/S 11 IS SQUARELY COVERED BY IN ITS FAVOUR BY THE CIT(A)-9 FOR AY 2011-12 AND ALSO THE ORDER OF ITAT IN ITA NO. 913/HYD/2015, DATED 04/11/2015. THE CIT(A), THEREFORE, CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND DIRE CTED AO TO ALLOW EXEMPTION U/S 11 AND RECOMPUTE THE INCOME AS PER TH E PROVISIONS OF THE ACT. BY TREATING THE ASSESSEE IS ELIGIBLE FOR E XEMPTION U/S 11, THE DISALLOWANCE U/S 40(A)(IA) IS DELETED AS PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE TO THIS CONCERN. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH O N FACTS AND IN LAW. 2. THE ID. CIT(A) ERRED IN ALLOWING EXEMPTION TO TH E ASSESSEE TRUST FOR THE A.Y. 2012-13, WHEN THE ASSESSEE IS NO T ELIGIBLE FOR EXEMPTION OF ITS INCOME U/S 11 OF THE IT ACT, 1961, IN VIEW OF THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT, PARTICULARLY, IN VIEW OF THE PROVISIONS OF THE FIRST PROVISO TO S ECTION 2(15) OF THE ACT, INSERTED VIDE FINANCE ACT, 2008, WITH EFFE CT FROM 01-04- 2009 WHICH IS ATTRACTED IN THE CASE OF THE ASSESSEE FOR THE A Y 2012-13. 3. THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E PROVISIONS OF THE FIRST PROVISO TO SECTION 2(15) OF THE IT ACT , 1961 IS ATTRACTED TO THE SURPLUS RECEIPTS OF RS. 47,45,479/ - DERIVED BY THE ASSESSEE TOWARDS RENTAL INCOME FROM THE CULTURA L HALL DURING THE PREVIOUS YEAR 2011-12, RELEVANT TO A Y 2012-13 AND THUS NOT ELIGIBLE FOR EXEMPTION OF INCOME U/S 11 OF THE ACT. 4. THE ID. CIT(A) ERRED IN DELETING THE DISALLOWANC E OF RS. 20,29,067/-, MADE BY THE AO, U/S. 40(A)(IA) OF THE ACT, IN THE ASSESSMENT, WHEN THE ASSESSEE IS NOT ELIGIBLE FOR E XEMPTION U/S.T I OF THE ACT, FOR THE AY 201213. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING OF THE CASE. 6. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WE FIND THAT SIMILAR ISSUE CAME UP FOR C ONSIDERATION BEFORE 4 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. THE TRIBUNAL IN ASSESSEES OWN CASES FOR EARLIER YE ARS. IN AY 2011- 12, THE TRIBUNAL VIDE ITA NO. 913/HYD/2015, ORDER D ATED 04/11/2015 HAS HELD AS UNDER: 5. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL ON RECORD, WE FIND THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.11 OF T HE ACT HAS BEEN DENIED ON THE GROUND THAT THE ACTIVITY OF THE ASSES SEE IN RUNNING THE FUNCTION HALL AND DERIVING RENTAL INCOME IS OF A CO MMERCIAL NATURE IN TERMS OF PROVISO TO S.2(15) OF THE ACT, AND ALSO TH AT CONSTRUCTING AND MAINTAINING A TEMPLE IS NOT AMONGST THE AIMS AND OB JECTS OF THE SOCIETY AND IS NOT A CHARITABLE ACTIVITY. AS CAN BE SEEN FROM THE FACTS OF THE CASE NARRATED ABOVE, IMPUGNED ORDER OF THE L EARNED CIT(A) IN KALINGA CULTURAL TRUST, HYDERABAD ACCEPTING THE CLAIM OF THE ASSESSEE FOR EXEMPTION IS BASED ON THE CONSISTENT V IEW TAKEN BY THE LEARNED CIT(A) IN ASSESSEE'S OWN CASE FOR EARLIER Y EARS. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ISSUE RELATING TO AS SESSEE'S CLAIM FOR EXEMPTION UNDER S.11, IS ALSO COVERED IN FAVOUR OF THE ASSESSEE, BY THE DECISIONS OF THE TRIBUNAL DATED 6.6.2014 IN ITA NOS .894, 895/HYD/2013 AND 1067/HYD/2012 FOR ASSESSMENT YEARS 2006-07 TO 2008-09; AND DATED 3.7.2015 IN ITA NOS.33 AND 339/H YD/2015 FOR ASSESSMENT YEARS 2009-10 AND 2010-11 RESPECTIVELY. A COPY EACH OF BOTH THESE ORDERS HAVE BEEN FURNISHED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE ALONGWITH THE WRITTEN SUBM ISSIONS FILED BY HIM. 6. IN ITS RECENT DECISION DATED 3.7.2015 IN ASSESSE E'S OWN CASES FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11, THE TRIBUNAL, BESIDES TAKING NOTE OF THE EARLIER ORDER OF THE TRIBUNAL DATED 6.6 .2014 ON THIS ISSUE FOR ASSESSMENT YEARS 2006-07 TO 2008-09 (SUPRA), AF TER DUE CONSIDERATION OF THE NATURE OF THE ACTIVITIES OF TH E ASSESSEE IN CONSTRUCTING JAGANNADHA TEMPLE AS WELL AS LETTING O UT OF THE FUNCTION HALL HELD THAT THE ASSESSEE IS ENTITLED FO R EXEMPTION UNDER S.11 OF THE ACT FOR THE ELABORATE REASONS DISCUSSED IN PARAS 8, 8.1 AND 8.2 OF THE ORDER, WHICH ARE REPRODUCED BELOW- '8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF REV ENUE AUTHORITIES. AS COULD BE SEEN FROM THE ASSESSMENT ORDER, AO HAS DENIED EXEMPTION U/S 11 TO ASSESSEE PRIMARILY ON TWO REASO NS, FIRSTLY, BECAUSE ASSESSEE IS CONSTRUCTING JAGANNADHA TEMPLE, WHICH, ACCORDING TO AO, IS NEITHER IN ACCORDANCE WITH THE AIMS AND OBJECTS NOR A CHARITABLE ACTIVITY. THE SECOND REASON IS, AF TER INTRODUCTION OF PROVISO TO SECTION 2(15) OF THE ACT, ASSESSEE LOOSE S ITS CHARACTER OF TRUST HAVING BEEN ESTABLISHED FOR CHARITABLE PURPOS E AS IT HAS EARNED INCOME BY ENGAGING IN COMMERCIAL ACTIVITIES. AS FAR AS ALLEGATION OF AO THAT CONSTRUCTION OF TEMPLE BY ASSESSEE IS NEITH ER IN ACCORDANCE 5 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. WITH AIMS AND OBJECTS OF ASSESSEE NOR CHARITABLE A CTIVITY IS CONCERNED, IT HAS TO BE REJECTED AT THE THRESHOLD I N VIEW OF THE DECISION OF THE COORDINATE BENCH IN ASSESSEE'S OWN CASE IN AYS 2006- 07, 2007-08 AND 2008-09 IN ITA NOS. 894 & 895/HYD/1 3 AND 1067/HYD/12, DATED 06/06/14 WHEREIN THE COORDINATE BENCH AGREED WITH THE LD. CIT(A) THAT CONSTRUCTION OF JAGANNADHA TEMPLE IS NOT ONLY IN FURTHERANCE OF THE AIMS AND OBJECTS OF ASSE SSEE SOCIETY BUT, IS ALSO A CHARITABLE ACTIVITY. IN VIEW OF THE AFORESAI D, WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LD. DR THAT CON STRUCTION OF JAGANNADHA TEMPLE IS NOT A CHARITABLE ACTIVITY. AS FAR AS THE SECOND REASON FOR DENYING EXEMPTION U/S 11 IS CONCERNED, I T IS THE ALLEGATION OF AO THAT AS ASSESSEE WAS INVOLVED IN COMMERCIAL A CTIVITY BY GENERATING INCOME BY LETTING OUT FUNCTION HALL, SEL LING SOUVENIR, ETC, IT IS NOT ELIGIBLE FOR EXEMPTION IN VIEW OF THE PRO VISO TO SECTION 2(15) OF THE ACT, WE ARE OF THE VIEW THAT THE SAME REQUIR ES DEEPER ANALYSIS. HOWEVER, BEFORE DECIDING THE ISSUE, IT IS NECESSARY TO OBSERVE THAT THERE CANNOT BE ANY DISPUTE TO THE FACT THAT ASSESS EE'S OBJECTS ARE CHARITABLE IN NATURE, AS LD. DIT(E) HAS GRANTED REG ISTRATION TO ASSESSEE U/S 12 A OF THE ACT SINCE THE YEAR 1995 AND WHICH IS CONTINUE TILL DATE. 8.1. FURTHER, THERE IS NOTHING ON RECORD TO SUGGEST THAT IN THE INTERVENING PERIOD THERE IS ANY SUBSTANTIAL CHANGE IN THE AIMS AND OBJECTS OF ASSESSEE. THEREFORE, KEEPING IN VIEW THE AFORESAID FACTS, IT HAS TO BE DECIDED WHETHER THE INTRODUCTION OF FIRST PROVISO TO SECTION 2(15) BY THE FINANCE ACT , 2008 W.E.F. 01/04/09 WOULD AUTOMATICALLY DISENTITLE THE ASSESSEE FROM BEING CONSIDERED AS HA VING BEEN ESTABLISHED FOR CHARITABLE PURPOSE AND THEREBY DEPR IVING IT FROM CLAIMING EXEMPTION U/S 11 OF THE ACT. A PLAIN READI NG OF SECTION 2(15) OF THE ACT, ALSO MAKES IT CLEAR THAT THE PROVISO A PPLIES ONLY TO THE LAST LIMB OF 'CHARITABLE PURPOSE' I.E. ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THE INTENTION OF THE LEGISLATURE IN INTRODUCING THE PROVISO TO SECTION 2(15) AS COULD BE GATHERED FROM THE SPEECH OF THE HON'BLE FINANCE MINISTER ON THE F LOOR OF PARLIAMENT, EXPLANATORY NOTES, DEPARTMENTAL CIRCULARS, IS TO DE NY EXEMPTION TO TRUSTS OR INSTITUTIONS WHO IN THE GARB OF CHARITY A RE PURELY ENGAGED IN COMMERCIAL OR BUSINESS ACTIVITIES AND WHOSE MAIN INTENTION IS TO EARN PROFIT. THE PROVISO IS NEVER MEANT TO DEPRIVE GENUINE TRUSTS AND INSTITUTIONS WHOSE MAIN OBJECT IS CHARITY BUT IN P ROCESS OF ACHIEVING THE MAIN OBJECT THEY UNDERTAKE SOME INCOME GENERATI NG ACTIVITY WHICH IS ANCILLARY AND INCIDENTAL TO THE MAIN OBJEC T. FURTHER, INCOME GENERATED FROM SUCH ACTIVITY IS ALSO UTILIZED FOR A CHIEVING THE MAIN CHARITABLE OBJECT. THE TRUE IMPORT AND EFFECT OF PR OVISO TO SECTION 2(15) OF THE ACT CAME UP FOR SCRUTINY BEFORE A NUMBER OF HIGH COURTS. THE UNANIMOUS VIEW OF JUDICIARY IN THIS REGARD IS, PROVISO TO SECTION 2(15) HAS TO BE APPLIED KEEPING IN MIND THE DOMINANT OBJ ECT/PURPOSE OF THE TRUSTS OR INSTITUTIONS. THEREFORE, IT HAS TO BE SEEN WHETHER THE DOMINANT OBJECT OF THE TRUST IS OF CHARITABLE NATUR E IN CARRYING OUT 6 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. THE OBJECT OF GENERAL PUBLIC UTILITY OR MAIN INTENT ION OF THE ASSESSEE IS TO EARN PROFIT. FURTHER, DEFINITION OF 'CHARITABLE PURPOSE' AS DEFINED U/S 2(15) OF THE ACT CANNOT BE READ IN VACUUM, BUT, HAS TO BE READ ALONG WITH THE EXEMPTION PROVISIONS. THAT BEING THE CASE, A LITERAL INTERPRETATION TO THE PROVISO TO SECTION 2(15) CANNOT BE GIVEN IF THE OBJECTS OF THE EXEMPTION PROVISIONS ARE TO BE GIVEN FULL EFFECT. THE HON'BLE DELHI HIGH COURT IN CASE OF INDIAN TRADE PR OMOTION ORGANISATION VS. DIRECTOR GENERAL OF INCOME-TAX (E) , 371 ITR 333 WHILE INTERPRETING THE EFFECT OF PROVISO TO SECTION 2(15) OF THE ACT, AFTER ANALYZING A NUMBER OF DECISIONS OF THE HON'BL E SUPREME COURT AS WELL AS DIFFERENT HIGH COURTS OBSERVED THAT THE ONLY THING WHICH IS REQUIRED TO BE EXAMINED IS WHETHER THE TRUST OR INS TITUTION HAS BEEN ESTABLISHED FOR CHARITABLE PURPOSES. THE FACT THAT IT DERIVES INCOME DOES NOT IN ANY WAY DETRACT FROM THE POSITION THAT IT IS NOT AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. TH E HON'BLE HIGH COURT OBSERVED THAT MERELY BECAUSE ASSESSEE DERIVES RENTAL INCOME, INCOME OUT OF SALE OF TICKETS AND SALE OF PUBLICATI ONS AND INCOME OUT OF LEASING OUT FOOD AND BEVERAGES OUTLETS IN THE EX HIBITION GROUNDS DOES NOT, IN ANY WAY, AFFECT THE NATURE OF TRUST AS A CHARITABLE INSTITUTION, IF, IT OTHERWISE QUALIFIES FOR SUCH A CHARACTER. IT WAS FURTHER OBSERVED BY THE HON'BLE HIGH COURT THAT IF A MEANING IS GIVEN TO THE EXPRESSION 'CHARITABLE PURPOSE' SO AS TO SUGGEST THAT IN CASE OF AN INSTITUTION HAVING AN OBJECT OF ADVANCEM ENT OF GENERAL PUBLIC UTILITY IF DERIVES INCOME IT WOULD BE FALLIN G WITHIN THE EXCEPTION CARVED OUT IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, THEN, THERE WOULD BE NO INSTITUTION WHATSOEVER WHIC H WOULD QUALIFY FOR EXEMPTION AND THE EXEMPTION PROVISION WOULD BE RENDERED REDUNDANT. THE HON'BLE DELHI HIGH COURT REFERRED TO ITS OWN DECISION IN CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF IN DIA AND ANOTHER VS. DIRECTOR GENERAL OF INCOME-TAX (E), 358 ITR 91 WHEREIN WHILE INTERPRETING EXPRESSIONS 'TRADE, COMMERCE AND BUSIN ESS', AS FIND PLACE IN THE FIRST PROVISO TO SECTION 2(15) , THE COURT HELD THAT MERELY BECAUSE FEES OR SOME OTHER CONSIDERATION IS COLLECT ED OR RECEIVED BY AN INSTITUTION, IT WOULD NOT LOSE ITS CHARACTER OF HAVING BEEN ESTABLISHED FOR CHARITABLE PURPOSE. THE COURT OBSER VED, IN THIS CONTEXT, THE DOMINANT ACTIVITY OF THE INSTITUTION H AS TO BE LOOKED INTO. IF THE DOMINANT ACTIVITY OF THE INSTITUTION IS NOT BUSINESS, TRADE OR COMMERCE, THEN, ANY SUCH INCIDENTAL OR ANCILLARY AC TIVITY WOULD ALSO NOT FALL WITHIN THE CATEGORIES OF TRADE OR COMMERCE OR BUSINESS. THE DRIVING FORCE OF THE TRUST OR INSTITUTION SHOULD NO T BE A DESIRE TO EARN PROFIT, BUT, UTILIZE THE SAME FOR ACHIEVING THE CHA RITABLE OBJECTS FOR WHICH IT IS ESTABLISHED. THE HON'BE HIGH COURT LAYI NG DOWN THE PRINCIPLE AS TO HOW THE PROVISO TO SECTION 2(15) SHOULD BE CONSTRUED, HELD AS UNDER: '58. IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION II 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 7 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLEAR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION 2(15) OF THE SAID ACT THEN THE PROVISO WOULD BE AT RISK OF RUNNI NG FOWL OF THE PRINCIPLE OF EQUALITY ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION OF INDIA. IN ORDER TO SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SECTION 10(23C)(IV) BECAUSE, IN OUR VIEW, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECT INTERPRETATION OF TH E PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE THAT IT CARVES OUT AN EXC EPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJE CT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACT IVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF R ENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVIT IES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND THE PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSIN ESS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRA DE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM IT S OBJECT TO BE A 'CHARITABLE PURPOSE'. ON THE FLIP SIDE, WHERE AN IN STITUTION IS NOT DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROF ITS BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJECT OF GEN ERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTIO N ESTABLISHED FOR CHARITABLE PURPOSES.' 8.2 IF WE APPLY THE AFORESAID PRINCIPLES TO THE FAC TS OF THE PRESENT CASE, IT IS TO BE SEEN THAT AS HELD BY THE COORDINA TE BENCH IN ASSESSEE'S OWN CASE IN THE PRECEDING AYS, ASSESSEE IS PURSUING CHARITABLE ACTIVITY IN ACCORDANCE WITH ITS AIMS AND OBJECTS WH ILE CONSTRUCTING THE JAGANNADHA TEMPLE. IN FACT, THE AO HIMSELF IN A SSESSMENT ORDER HAS ADMITTED THAT INCOME/FUND OF ASSESSEE IS UTILIZ ED IN CONSTRUCTION OF THE TEMPLE. FURTHER, THE COORDINATE BENCH IN THE SAID ORDER HELD, BY LETTING OUT FUNCTION HALL ASSESSEE IS NOT INVOLVED IN COMMERCIAL ACTIVITY SO AS TO DISENTITLE IT FROM CLAIMING EXEMP TION U/S 11. THEREFORE, CONSIDERED IN THE AFORESAID PERSPECTIVE, THERE BEING NO DISPUTE TO THE FACT THAT DOMINANT OBJECT OF ASSESSE E IS CHARITABLE IN NATURE, PROVISO TO SECTION 2(15) CANNOT BE APPLIED TO DENY EXEMPTION TO ASSESSEE U/S 11 OF THE ACT. IN OUR VIEW, AO WITH OUT EXAMINING THE ISSUE IN PROPER PERSPECTIVE HAS ABRUPTLY CONCLUDED THAT ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 11 OF THE ACT ONLY BE CAUSE PROVISO TO SECTION 2(15) WAS INTRODUCED W.E.F. 01/04/09. IN OUR VIEW, PROVI SO TO SECTION 2(15) OF THE ACT WILL NOT APPLY AUTOMATICALLY TO EVERY T RUST OR INSTITUTION IRRESPECTIVE OF THE FACT, WHETHER TH E DOMINANT OBJECT OF THE TRUST OR INSTITUTION IS CHARITABLE PURPOSE OR E ARNING PROFIT. WHEN IN THE PRESENT CASE ASSESSEE IS REGISTERED AS CHARI TABLE INSTITUTION AND 8 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. THERE IS NO CHANGE IN THE AIMS AND OBJECTS OF ASSES SEE IN THE IMPUGNED AY AND THE ACTIVITIES OF ASSESSEE OVER THE YEARS REMAINS THE SAME, THE PROVISO TO SECTION 2(15) CANNOT BE APPLIED TO ASSESSEE TO DENY EXEMPTION U/S 11 OF THE ACT. IN VIEW OF THE AF ORESAID, WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LD. DR SO AS TO DISTURB THE FINDING OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGL Y, WE UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING THE GROUNDS RAISE D. ' 7. FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UNDER APPEAL, VIZ. ASSESSMENT YEAR 2011-12, BEING SIMILAR TO THOSE CON SIDERED BY THE COORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEE'S OW N CASE FOR EARLIER YEARS NOTED ABOVE AND IN THE ABSENCE OF ANYTHING TO THE CONTRARY BROUGHT ON RECORD BY THE LEARNED DEPARTMENTAL REPRE SENTATIVE, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE IMPUGNE D ORDER OF THE CIT(A) ON THIS ISSUE, WHICH IS ACCORDINGLY CONFIRME D. 8. AS FOR THE GRIEVANCE OF THE REVENUE ON THE ISSUE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER INVOKING THE PROVISIO NS OF S.40A(3), AS CORRECTLY OBSERVED BY THE LEARNED CIT(A), ONCE THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER S.11 HAS BEEN ACCEPTED , THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER S. 40A(3) HAS NO LEGS TO STAND, AND THE GROUND OF THE ASSESSEE BEFOR E THE LEARNED CIT(A) BECOMES INFRUCTUOUS. WE ACCORDINGLY FIND NO MERIT IN THE GROUND OF THE REVENUE ON THIS ISSUE AS WELL. THE ISSUES RAISED BY THE AO IN HIS ORDER ARE MATER IALLY IDENTICAL TO THAT OF AY 2011-12, RESPECTFULLY FOLLOWING THE DECI SION OF TRIBUNAL, WE UPHOLD THE ORDER OF THE CIT(A) AS THE DECISION OF T HE CIT(A) IS IN CONSONANCE WITH THE DECISION OF THE TRIBUNAL AND AC CORDINGLY, DISMISS THE GROUND NOS. 2 & 3 RAISED BY THE REVENUE. 7. AS REGARDS GROUND NO. 3 DELETION OF DISALLOWANCE OF RS. 20,29,067/- MADE BY THE AO U/S 40(A)(IA), WE CONFIR M THE FINDING OF THE CIT(A) THAT AS EXEMPTION U/S 11 IS ALLOWED THE DISALLOWANCE WOULD CONSEQUENTLY GET DELETED AND ACCORDINGLY, THIS GRO UND OF APPEAL IS ALSO DISMISSED. 9 ITA NO. 332 /HYD/2017 KALINGA CULTURAL TRUST, HYD. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT A CCOUNTANT MEMBER HYDERABAD, DATED: 10 TH NOVEMBER, 2017 KV COPY TO:- 1) IT) (E) 2, 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004 2) KALINGA CULTURAL TRUST, PLOT NO. 1269, ROAD NO. 12, BANJARA HILLS, HYDERABAD 34. 3) CIT(A) 9, HYD. 4) PR. CIT (E), HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE