Appeal Details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 85892 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
11 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-01-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
08-12-2014
Assessment Year
2010-2011
Appeal Filed On
28-01-2014
Judgement Text
IN THE INCOME TAX APPE LLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. A.D. JAIN, HONBLE JUDICIAL MEMBER, AND SH. B.P. JAIN, HONBLE ACCOUNTANT MEMBER I.T.A. NO.45/ASR/2014 (ASSESSMENT YEAR: 2007-08) SUKHMANI SOCIETY FOR CITIZEN SERVICES, KAPURTHALA, DISTT. COURTS, KAPURTHALA PAN:AAGTS1390H(APPELLANT) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX OFFICER, CIRCLE IV, JALANDHAR. (RESPONDENT) APPELLANT BY: SH. PADAM BAHL, CA. RESPONDENT BY: SH. T ARSEM LAL, DR. DATE OF HEARIN G: 8.12.2014 DATE OF PRONOUN CEMENT: 27.01.2015 ORDER PER: B.P. JAIN (AM): THIS APPEAL OF THE ASSESSEE IS ARISING FROM THE ORDER OF LEARNED CIT(A), JALANDHAR, DATED 12.11.2013 FOR THE ASSESSM ENT YEAR 2010-11. 2. THE ASSESSES HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) JALANDHAR HAS GROSSLY ERRED IN CONFIRMING THE ACTIO N OF THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE IV, JA LANDHAR IN DENYING EXEMPTION U/S 11 OF INCOME TAX ACT,1961 ON RS.3,76,761/- BEING SURPLUS GENERATED BY THE SOCIETY. 2. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX( APPEALS), JALANDHAR & ASSISTANT COMMISSIONER OF INCOME TAX, C IRCLE IV, JALANDHAR HAVE FAILED TO APPRECIATE THAT THE SOCIET Y HAS DULY COMPLIED WITH THE PROVISIONS OF SECTION 2(15) OF IN COME TAX ACT, 1961. 2 3. THAT BOTH THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JALANDHAR & ASSISTANT COMMISSIONER OF INCOME TAX, C IRCLE IV, JALANDHAR HAVE FAILED TO APPRECIATE THE REAL IMPORT OF THE PREVIOUS OF SEC.2(15) OF INCOME TAX ACT, 1961. 3. THE BRIEF FACTS OF THE CASE ARISING FROM THE ORD ER OF THE AO PASSED U/S. 143(3) DATED 03.01.2013 IN PARA 2 TO 9 AT PAGES 1 TO 15 AR E REPRODUCED FOR THE SAME OF CONVENIENCE AS UNDER: 2. THE ASSESSEE THE SUKHMANI SOCIETY FOR CITIZEN S ERVICES (SUWIDHA CENTRE) D.C. OFFICE, KAPURTHALA IS ENGAGED IN PROVIDING CITIZEN SERVICES ENTER THROUGH OUT THE DISTRICT FOR AND HAS SHOWN SURPLUS/INCOME OF RS.3,7 6,761/- OUT OF TOTAL RECEIPTS OF RS.78,22,625/- THEREBY FOLLOWING NET PROFIT AT 4.81 %. THE ASSESSEE HAS CLAIMED THE EXEMPTION OF THIS PROFIT UNDER SECTION 11 OF TH E I.T.ACT.1961. 3. THE OBJECTIVE AND FUNCTIONS OF THE SOCIETY ARE A S UNDER: A) TO ESTABLISH, MANAGE OPERATE, MAINTAIN AND CONT ROL THE SERVICE CENTRES, NAMELY, THE SUKHMANI CENTERS THROUGHOUT THE DISTRIC T FOR PROVIDING CITIZEN SERVICES IN AN INTEGRATED MANNER TO THE PUBLIC IN A N EFFICIENT, TRANSPARENT, CONVENIENT, FRIENDLY AND COST EFFECTIVE MANNER THRO UGH THE USE OF IT OR OTHERWISE IN ALL OR ANY ASPECTS OF CITIZEN SERVICES TO MAXIMI ZE SPEED, ACCOUNTABILITY, OBJECTIVITY, AFFORDABILITY AND ACCESSIBILITY FROM T HE PERSPECTIVE OF THE CITIZENS. B) TO IDENTIFY AND RECOMMEND THE CITIZEN SERVICES WHICH CAN BE PROVIDED IN CONSULTATION AND CO-ORDINATION WITH THE CONCERNED D EPARTMENTS ON PRIORITY BY VARIOUS DEPARTMENTS/ORGANIZATIONS. C) TO WORKOUT AND IMPLEMENT THE ACTION PLAN FOR TH E ESTABLISHMENT OF CITIZENS SERVICE CENTRES IN THE DISTRICT ON A SELF SUSTAINING REVENUE MODEL IN COLLABORATION WITH THE PRIVATE SECTOR, NGOS OR OTHE R INNOVATIVE METHODS AS PER THE REQUIREMENTS OF THE SPECIFIC AREAS. 3 D) TO ENSURE AND MAINTAIN THE STANDARD OF SERVICE A S PER THE SERVICE LEVEL AGREEMENTS BETWEEN DEPARTMENTS, PUNJAB STATE E-GOVE RNANCE SOCIETY, SUKHMANI SERVICE CENRES, FRANCHISEES, FINANCIAL INSTITUTIONS AND THE GOVERNMENT. E) TO WORKOUT AND RECOMMEND THE SERVICE FEE OR USER CHARGES THAT COULD BE CHARGED FROM THE END CUSTOMERS FOR THE APPROVAL OF THE COMPETENT AUTHORITY AND CONCERNED DEPARTMENTS/ ORGANIZATIONS OVER AND ABOVE THE PRESCRIBED BILL AMOUNT/FEE/STATUTORY FEE FOR PROVIDING THE SERVICES THROUGH SUKHMANI CENTRES/ FINANCIAL INSTITUTIONS OR FRANCHISEES. F) TO COLLECT THE REVENUE/PAYMENTS/SERVICE CHARGE O N BEHALF OF PUNJAB STATE E-GOVERNANCE SOCIETY, VARIOUS GOVERNMENT DEPARTMENT S AND ORGANIZATIONS AND TO ISSUE RECEIPTS ON BEHALF OF THE PUNJAB E-GOVERNANCE SOCIETY AND CONCERNED DEPARTMENTS AND ORGANISATIONS. G) TO CHALK OUT DETAILED PROCEDURE FOR THE COLLECTI ON OF REVENUE FOR VARIOUS SERVICES PROVIDED BY THE SUKHMANI CENTRES AND TO TR ANSFER THE REVENUE IN TO THE ACCOUNTS OF THE PUNJAB STATE E-GOVERNANCE SOCIETY A ND TO THE CONCERNED DEPARTMENTS AND ORGANIZATIONS AS PER THE POLICY GUI DELINES OF PUNJAB STATE E- GOVERNANCE SOCIETY. TO KEEP DETAILED ACCOUNT OF THE REVENUE COLLECTED AND THE TRANSACTIONS. REGULAR RECONCILIATION OF BANK ACCOUNTS BETWEEN ALL STAKEHOLDERS INCLUDING THE CONCERNED DEPARTMENTS, THE FINANCIAL INSTITUTIONS, THE SUKHMANI CENTRE AND THE PUNJAB E-GOVERNANCE SOCIEITY. I) TO BUY, SELL, LET ON HIRE, LEASE, TRADE, IMPORT, EXPORT, REPAIR OR OTHERWISE DEAL WITH IT RESOURCES, SERVICES & SUPPORT ON THE T URKEY BASIS LIKE HARDWARE, SOFTWARE, CONNECTIVITY, NETWORKING, TRAINING, STATI ONARY, CONSUMABLES ETC. INCLUDING OPERATIONAL & MANAGERIAL MANPOWER, HIRING OF PROFESSIONALS, CONSULTANCY SERVICES BY FOLLOWING THE PROCEDURE PRE SCRIBED. TO ENSURE THE OTHER INFRASTRUCTURE REQUIREMENTS INCLUDING SITE PREPARAT ION AND TIMELY AVAILABILITY OF THE NECESSARY RESOURCES FOR THE VARIOUS ACTIVITIES UNDER THE PROJECT. 4 J) TO LIASON WITH THE ASSOCIATED IT COMPANIES FOR T HE ANALYSIS, DESIGN, DEVELOPMENT, TESTING AND THE IMPLEMENTATION OF THE APPLICATION SOFTWARE, NETWORKING, CONNECTIVITY AND OTHER SOLUTIONS NECESS ARY FOR PROVIDING CITIZENS SERVICES THROUGH THE USE OF INFORMATION TECHNOLOGY. K) TO ENTER INTO COLLABORATIONS, PARTNERSHIPS, AGRE EMENTS AND CONTRACTS WITH INDIAN OR FOREIGN INDIVIDUALS, COMPANIES OR ORGANIZ ATIONS FOR ESTABLISHMENT OF SUKHMANI CENTRES IN THE DISTRICT. L) TO ENTER INTO ANY AGREEMENT WITH ANY GOVERNMENT OR OTHER AUTHORITIES OR ANY CORPORATIONS/ COMPANIES, OR PERSONS WHICH MAY S EEM CONDUCIVE TO THESOCIETYS OBJECTS OR ANY OF THEM AND TO OBTAIN F ROM ANY SUCH GOVERNMENT AUTHORITIES, CORPORATIONS, COMPANIES, SOCIETIES OR PERSONS ANY CONTRACTS, RIGHTS, PRIVILEGES AND CONCESSIONS WHICH THE SOCIETY MANY T HINK DESIRABLE AND TO CARRY OUT, EXERCISE AND COMPLY WITH ANY SUCH CONTRCTS RIG HTS, PRIVILEGES AND CONCESSIONS. M) TO CREATE, MAINTAIN, UPDATE, COMMON DATABASES AT THE DISTRICT LEVEL AS PER THE GUIDELINES OF THE DEPARTMENT OF INFORMATION TEC HNOLOGY IN COLLABORATION WITH THE CONCERNED THE DEPARTMENTS AND TO MONITOR, ADMIN ISTER AND CONTROL THE FLOW OF THE DATE AND INFORMATION BETWEEN THE SUKHMANI CENT RES AND THE CONCERNED AGENCIES. N) TO RECRUIT AND DEPLOY THE OPERATIONAL AND MANAGE RIAL STAFF AND OTHER HUMAN RESOURCES, PURELY ON A SELF SUSTAINING AND CO NTRACT BASIS, FOR OPERAION, MAINTENANCE AND RUNNING OF THE CITIZEN SERVICE CENT RES AS PER THE REQUIREMENT / NORMS FIXED BY THE SOCIETY FROM TIME TO TIME. O) TO TAKE ALL PUBLICITY MEASURES AND CAMPAIGNING T HROUGH MEDIA LIKE TV, RADIO, NEWSPAPER, CONFERENCES, SEMINARS, PUBLIC MEE TINGS, BANNERS AND POSTERS ETC FOR CREATING AWARENESS ABOUT THE SERVICES OF TH E SUKHMANI CENTRES FOR THE BENEFIT OF THE COMMON MAN, SPECIALLY THE RURAL MASS ES. 5 P) TO INTERACT WITH THE VARIOUS AGENCIES ASSOCIATED WITH THE SERVICES TO BE RENDERED THROUGH THE SUKHMANI CENERS AND TO FACILIT ATE INTER-DEPARTMENTAL COORDINATION IN ALL IT RELATED MATTERS. Q) TO RECOMMEND THE NECESSARY ADMINISTRATIVE REFORM S OR PROCESSES REENGINEERING REQUIRED TO ACCOMPLISH THE OBJECTIVES OF GOOD GOVERNANCE THROUGH IT OR OTHERWISE TO TEST AND RECOMMEND MODIFICATIONS TO BE MADE IN THE SYSTEM OR THE PROCESS INVOLVED. R) TO TAKE NECESSARY STEPS TO ENSURE SECURITY, SAFE TY, BACKUP, DISASTER RECOVERY AND PROTECTION OF THE GOVERNMENT ELECTRONI C DATE, BOTH ON-LINE AND OFF- LINE, AS WELL AS PHYSICAL RECORDS OF VARIOUS DEPART MENTS, AGENCIES AND ORGANIZATIONS. S) TO SET PROCEDURES FOR TAKING ROUTINE BACKUPS RE GULARLY; GENERATING VARIOUS MANAGEMENT INFORMATION SYSTEM REPORTS OF THE REVENU E, PAYMENTS AND OPERATION AND MAINTENANCE RELATED INFORMATION OF SUKHAMANI CE NTRES WITH ALL THE STAKE HOLDERS LIKE FINANCIAL INSTITUTION CONCERNED, CONCE RNED DEPARTMENTS, AGENCIES AND THE PUNJAB E-GOVERNANCE SOCIETY. T) TO ESTABLISH AND IMPLEMENT A SYSTEM OF REGULAR DETAILED REVIEW AND MONITORING MECHANISM FOR CONSTANTLY EVALUATING THE PROGRESS, PERFORMANCE, CONSISTENCY AND QUALITY OF THE CITIZEN SERVICES GIV EN BY VARIOUS FRANCHISES AND OTHER CENTRES WITH RESPECT TO THE AGREED QUALITY IN THE SERVICE LEVEL AGREEMENTS. U) TO FACILITATE AND ASSIST IN IMPLEMENTATION OF C ITIZEN CHARTERS FRAMED BY THE OTHER DEPARTMENTS THROUGH THE USE OF E-GOVERNAN CE AND IT AS A TOOL. ALSO ASSIST THE CONCERNED DEPARTMENTS IN MEASURING THE P ERFORMANCE OF CITIZEN CHARTERS WITH RESPECT TO THE AGREED QUALITY. V) TO TAKE ALL STEPS NECESSARY TO PROMOTE EFFICIENC Y, REDUCE DELAYS, ENHANCE ACCOUNTABILITY, TRANSPARENCY AND OBJECTIVITY IN THE FUNCTIONING OF THE CONCERNED GOVERNMENT DEPARTMENTS PARTICIPATING IN THE SUKHMAN I CENTRES, DIRECTLY OR INDIRECTLY. 6 W) TO MAKE ALL OTHER EXPENDITURES IN CONNECTION WIT H PROVIDING CITIZEN SERVICES THROUGH THE CITIZEN SERVICES CENTRE INCLUD ING SALARIES, CONNECTIVITY COSTS, COST OF POWER, COST OF MAINTENANCE AND CONSUMABLE, COST OF UP-GRADATION OF EQUIPMENT, OTHER FACILITIES TO CITIZENS ETC. X) TO LEND OR DEPOSIT MONEYS BELONGING TO OR ENTRUS TED TO OR AT THE DISPOSAL OF THE SOCIETY OR FRANCHISEES AND OTHER HAVING DEAL INGS WITH THE SOCIETY WITH OR WITHOUT SECURITY, UPON SUCH TERMS AS MAY BE THOUGHT PROPER AND TO GUARANTEE THE PERFORMANCE OF CONTRACTS BY SUCH PERSONS OR COMPANY PROVIDED THAT THE SOCIETY SHALL NOT CARRY ON BANKING BUSINESS AS DEFINED IN B ANKING COMPANIES REGULATIONS ACT 1949. TO BORROW AND RAISE MONEY WITH OR WITHOUT SECURITY OR TO RECEIVE MONEY AND DEPOSIT ON INTEREST OR OTHERWISE IN SUCH MANNER AS THE SOCIETY MAY DEEM FIT. Y) TO DRAW, ISSUE, ACCEPT AND ENDORSE DISCOUNT AND NEGOTIATE PROMISSORY NOTES, BILLS OF EXCHANGE, DELIVERY ORDERS, WARRANTS , WAREHOUSE, CERTIFICATES AND OTHER NEGOTIABLE OR COMMERCIAL OR MERCANTILE INSTRU MENTS CONNECTED WITH THE BUSINESS OF THE SOCIETY. Z) TO ESTABLISH AND MAINTAIN ANY AGENCIES AND FRANC HISES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS OF THE SOCIETY. AA) TO IMPROVE, MANGE, WORK, DEVELOP, ALTER, EXCHA NGE, LEASE, MORTGAGE, TURN TO ACCOUNT, ABANDON OR OTHERWISE DEAL WITH ALL OR A NY PART TO THE PROPERTY RIGHTS AND CONCESSIONS OF SOCIETY. TO LET OUT ON HIRE ALL OR ANY OF THE PROPERTIES OF THE SOCIETY INCLUDING EVERY DESCRIPTION OF APPARATUS AP PLIANCES OF THE SOCIETY. BB) TO CREATE ANY DEPRECIATION FUND, RESERVE FUND, SINKING FUND, INSURANCE FUND OR ANY SPECIAL OR OTHER FUND WHETHER FOR DEPRE CIATION OR FOR REPAIRING IMPROVING, EXTENDING OR MAINTAINING ANY OF THE PROP ERTIES OF THE SOCIETY AND TO TRANSFER ANY SUCH FUND OR PART THEREOF TO ANY OF TH E OTHER FUNDS HEREIN MENTIONED. CC) TO DO ALL SUCH OTHER LAWFUL THINGS AS MAY BE NECESS ARY, INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS. 7 4. ON PERUSAL OF MEMORANDUM AND ARTICLES OF ASSOCIA TION OF M/S. SUKHMANI SOCIETY FOR CITIZEN SERVICES, KAPURTHALA, IT HAS BE EN FOUND THAT THERE ARE TWENTY NINE OBJECTIVES AND FUNCTIONS OF THE SOCIETY, THE M AIN OBJECT OF THE SOCIETY SHALL BE TO PROVIDE CITIZEN SERVICES IN AN INTEGRATED MANNER . THE SOCIETY IS REGISTERED WITH THE ADDL. REGISTRAR OF SOCIEIIES KAPURTHALA. PERUSA L OF THE OBJECTS AND FUNCTIONS OF THE SOCIETY REVEALS THAT THE ACTIVITIES OF THE S OCIETY ARE IN COMMERCIAL NATURE RATHER THAN CHARITABLE IN NATURE AND THE SOCIETY HA S BEEN EARNING HUGE PROFIT AND THEREFORE, THE ACTIVITIES OF THE SOCIETIES ARE OF C OMMERCIAL IN NATURE AND AIMED AT DERIVING PROFIT AND NOT FOR CHARITABLE PURPOSE. THE MAIN OBJECT OF THE SOCIETY TO PROVIDE CITIZENS SERVICES TO THE COMMON PEOPLE FOR THEIR CONVENIENCE AND THE SOCIETY ALSO EXPLAINED THAT THE SOCIETY RECEIVES AP PLICATION FROM THE COMMON CITIZEN FOR VARIOUS SERVICES ON BEHALF OF THE DEPAR TMENTS OF STATE GOVERNMENT, FORWARDS THE SAME TO THE CONCERNED DEPARTMENTS AND DELIVER BACK THE SAME TO THE CITIZEN WITHIN A SPECIFIED TIME FRAME. THE SOCIETY IS CHARGING PRESCRIBED FEE FROM THE CITIZEN FOR PROVIDING SERVICES. THE SOCIETY CHA RGES AS MUCH AS RS.1000/- FOR ISSUING NOC FOR PETROL PUMP, RS.500/- FOR REGISTRAT ION OF MARRIAGE, RS.500/- APPLICATION FOR NEW ARMS LICENSE AND SO ON. IT IS A LSO NOTICED THAT THESE CHARGES ARE IN ADDITION TO THE STATUTORY FEES CHARGED BY TH E STATE GOVT. DEPARTMENT. THESE CHARGES/FEES ARE CHARGED BY THE SOCIETY FOR PROVIDI NG ALLEGED CITIZEN SERVICES. THE ACTIVITY OF THE SOCIETY IS IN THE NATURE OF TRADING , COMMERCE OR BUSINESS AND ACTIVITY OF RENDING SERVICE IN RELATION TO THE TRAD E, COMMERCE OR BUSINESS FOR A FEE. THE SOCIETY PROVIDES CERTAIN SERVICES TO THE TRADE, . COMMERCE OR BUSINESS FOR A FEE. THE SOCIETY PROVIDES CERTAIN SERVICES TO THE C OMMON MAN AND CHARGES FEE FOR THE SAME AND THIS ACT OF THE SOCIETY HARDLY GO TO E STABLISH ANY CHARITABLE PURPOSE. THE SOCIETY IS DOING ALL WORK AND RENDERING SERVICE S TO THE CITIZENS WHICH THE STATE GOVT. WAS SUPPOSED TO PERFORM WITHOUT CHARGIN G ANY SUCH ADDITIONAL FEES. THEREFORE, THE ACTIVITIES OF THE SOCIETY ARE NOT CH ARITABLE IN NATURE WITHIN THE MEANING OF PROVISO TO SECTION 2(15) OF THE ACT AND IT DOES NOT QUALITY TO BE TREATED AS A CHARITABLE SOCIETY. 5. THUS, THE SOCIETY HAS NUMBER OF OBJECTS, NOT ALL OF THEM CHARITABLE AS EVIDENT FROM THE ABOVE LIKE TO WORKOUT AND RECOMMEN D THE SERVICE FEE OR USER 8 CHARGES THAT COULD BE CHARGED FROM THE END CUSTOMER S FOR THE APPROVAL OF THE COMPETENT AUTHORITY AND CONCERNED DEPARTMENTS / ORG ANIZATIONS OVER AND ABOVE THE PRESCRIBED BILL AMOUNT / FEE / STATUTORY FEE FO R PROVIDING THE SERVICES THROUGH SUKHMANI CENTRES/ FINANCIAL INSTITUTIONS OR FRANCHI SEES. IN EAST INDIA INDUSTRIES (MADRAS)(P) LTD V. CIT(19 67) 65 ITR 611(SC)], AND YOGIRAJ CHARITY TRUST V CIT(1976) 103 ITR 777(S C)] THE HONBLE SUPREME COURT HAD HELD THAT, WHERE THE MAIN OR PRIMARY OBJE CTS OF A TRUST ARE DISTRIBUTIVE, EACH AND EVERY ONE OF THE OBJECTIONS MUST BE CHARIT ABLE IF THE TRUST IS TO BE UPHELD AS A VALID CHARITABLE. WHOLLY FOR RELIGIOUS OR CHARITABLE PURPOSES THE WORDS WHOLLY FOR RELIGIOUS OR CHARITABLE PURPOSES AS MENTIONED IN S ECTION 11(1) OF THE I.T. ACT SHOW THAT THE INCOME FROM TRUST PROPERTY WOULD BE E XEMPT ONLY IF ALL THE OBJECTIS OF A TRUST ARE OF A CHARITABLE OR RELIGIOUS PURPOSE . POWER TO APPLY INCOME TO NON-CHARITABLE OBJ ECT - JEOPARDIZES THE EXEMPTION- IN CASE A TRUST HAS TEN DISTINCT OBJECTS AND NINE O F THEM ARE OF A RELIGIOUS OR CHARITABLE NATURE BUT THE TENTH IS NOT, AND THERE I S NOTHING TO PREVENT THE TRUSTEES FROM APPLYING THE PROPERTY TO THE TRUST IN CARRYING OUT ANY OF THE OBJECTS OF THE TRUST INCLUDING THE OBJECT WHICH IS NOT A RELIGIOUS OR CHARITABLE NATURE THE INCOME DERIVED FROM THE PROPERTY OF THE TRUST WOULD NOT BE EXEMPT. THE REASON IS THAT THE TRUSTEES IN SUCH AN EVEN CAN APPLY THE PROPERTY OF THE TRUST EXCLUSIVELY FOR THAT PURPOSE WHICH IS NOT OF A RELIGIOUS OR CHARITABLE N ATURE. [CIT V. JAIPUR CHARITABLE TRUST, (1971) 81 ITR 1,9 (DELHI), AFFIRM ED, (1976) 103 ITR 777 (SC); ZENITH TIN WORKS CHARITABLE TRUST V. CIT, (1976) 10 2 ITR 119(BOM). IN THE CASE OF KEDIA JATIA SAHAYAK SABHA AND FUND V CIT(1963) 49 ITR 74 (CAL), THE DIVISION BENCH OF THE HIGH COURT IN T HEIR JUDGMENT AND ORDER DATED MARCH 2, 1962, HELD THAT IN THE CASE OF SOCIETY HAV ING MORE THAN ONE OBJECT AND REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 18 60 AND THE ASSOCIATION OR ITS EXECUTIVE COMMITTEE WAS ENTITLED TO SPEND THE AMOUN TS UNDER ANY OF THE CLAUSES OF THE OBJECTS CLAUSES, SOME OF WHICH WERE CHARITABLE IN NATURE AND OTHERS NOT , THE 9 INCOME DERIVED BY THE SOCIETY CANNOT BE EXEMPT UNDE R THE PROVISIONS OF SECTION 4(3)(I) OF THE ACT OF 1922 IN RESPECT OF ASSESSMENT YEAR 1951-52. 6. THUS, THE SOCIETY HAVING NUMBER OF OBJECTS, NOT ALL OF THEM ARE OF CHARITABLE NATURE, IS NOT ELIGIBLE FOR ITS INCOME DERIVED BY SOCIETY EXEMPTED UNDER SECTION 11 OF THE I.T. ACT. THIS CLAIM OF THE ASSESSEE OF RUNNING CITIZ EN SERVICES SOCIETY FOR NO PROFIT IS PATENTLY WRONGLY AND CONTRARY TO ACTUAL FACTS. T HE SOCIETY HAS BEEN EARNING HUGE PROFIT AND EARNED SURPLUS OF RS.3,76,761/- DUR ING THE YEAR. THIS SURPLUS AND PROFITS, THE SOCIETY HAS EARNED OUT OF VARIOUS ACTI VITIES AND OBJECTS AS MENTIONED ABOVE GIVES THE NATURE OF ALL THE RECEIPTS. SINCE THE ASSESSEE HAS NUMEROUS OBJECTS, AND ACTIVITIES, NOT ALL OF THEM CAN BE CHARITABLE BY ANY ANGLE, IT IS NOT ELIGIBLE FOR ITS INCOME TO BE EXEMPTED UNDER SECTION 11 OF THE INCOME TAX ACT AS PER THE JUDGMEN T OF THE HIGH COURT AND THE HONBLE APEX COURT IN THIS REGARD AS MENTIONED IN P ARA ABOVE. 7. MEMBERS OF THE SOCIETY: SR. NO. NAME & DESIGNATION ADDRESS EX-OFFICIO MEMBERS 1. MR. SAMIR KUMAR, IAS DEPUTY COMMISSIONER KAPURTHALA. D.C. KAPURTHALA. CHAIRMAN & C.E.O 2. MRS. BHAWAN GARG, IAS A.D.C.(GEN.)KAPURTHALA. A.D.C.(GEN)., KAPURTHALA. MEMBER SECRETARY 3. MRS. RANJIT KAUR, PCS A.C. (GEN.) KAPURTHALA. AC(GEN)., KAPURTHALA JOINT MEMBER SECRETARY 4. MR. H.S.GARCHA, A.D.C. (DEV), KAPURTHALA; A.D.C.(DEV)., KAPURTHALA. MEMBER 5. MR. B.S.DHALIWAL, PCS S.D.M; KAPURTHAL S.D.M; PHAGWARA MEMBER 6. MR. A.K. SIKKA, PCS S.D.M; KAPURTHALA. S.D.M. KAPURTHALA. MEMBER 10 7. MR. IQBAL SINGH SANDHU, PCS A.C. (GRI), KAPURTHALA. A.C.(GRI) KAPURTHALA MEMBER 8. MR. SHASHI KUMAR CHANDHA D.R.O, KAPURTHAL. D.R.O. KAPURTHALA. MEMBER 9. MR. MANJIT SINGH, TEHSILDAR, KAPURTHAL. TEHSILDAR, KAPURTHALA. MEMBER 10. MR.BALARAJ DHINGRA, DIO, NIC, KAPURTHALA. NIC, KAPURTHALA. MEMBER 11. MR. R.K. MITTAL E.O., M.C; KAPURTHAL. E.O., M.C; KAPURTHALA MEMBER 12. MR. V.K. MAKOL, SECRETARY, RED CROSS, KAPURTHALA SECRETARY, RED CROSS, KAPURTHALA. FINANCE-CUM OFFICE SECRETARY 13. THREE IT EXPERTS TO BE NOMINATED BY THE GOVT. IN THE DEPT. OF I.T. MEMBER. I.T. MEMBER 14. THREE EMINENT CITIZENS TO BE NOMINATED BY THE GOVT. IN THE DEPT. OF I.T. MEMBER. MEMBER 15. ANY OTHER MEMBER WHICH THE BOARD OF GOVERNORS OR BY THE GOVT. IN THE DEPTT. OF I.T. DECIDE TO CO-OPT CO- OPTED MEMBERS. CO-OPTED MEMBER A) THE SOCIETY SHALL CONSIST OF THE FOLLOWING:- I) ALL THE EX-OFFICIO MEMBERS AS PER THE PROVISION AT SR. NO.1 TO 12 OF PARA 5 IN THE CONSTITUTION OF THE BOARD OF GOVERNORS. II) THE MEMBERS NOMINATED BY THE GOVERNMENT AS PER THE PROVISION AT SR. NO.13-14 OF PARA 5 IN THE CONSTITUTIN OF THE BOARD OF GOVERNORS. 11 III) OTHER INDIVIDUALS, INSTITUTIONS, ORGANIZATION AND CORPORATE BODIES TO BE ACCEPTED IN FUTURE AS CO-OPTED MEMBERS AS PER TERMS AND CONDITIONS OF ELIGIBILITY AS MAY BE LAID DOWN AND APPROVED BY THE BOARD OF GO VERNORS FROM TIME TO TIME AS PER THE PROVISION AT SR. NO.15 OF PARA 5 IN THE CONSTITUTION OF THE BOARD OF GOVERNORS. B) THE SOCIETY SHALL KEEP A ROLL OF NOMINATED AND C O-OPTED MEMBERS AND EVERY SUCH MEMBERS OF THE SOCIETY SHALL SIGN THE RO LL AND STATE THEREIN HIS NAME, OCCUPATION AND ADDRESS. C) IF A NOMINATED AND CO-OPTED MEMBER OF THE SOCIET Y CHANGES HIS ADDRESS, HE SHALL INFORM HIS NEW ADDRESS TO THE MEMBER SECRE TARY WHO SHALL THEREUPON ENTER HIS NEW ADDRESS IN THE ROLL OF SUCH MEMBERS. BUT IF HE FAILS TO INFORM HIS NEW ADDRESS, THE ADDRESS IN THE ROLL OF MEMBERS SHA LL BE DEEMED TO BE HIS ADDRESS. MEMBERSHIP TO THE SOCIETY IS NOT OPEN, AS PER THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE SOCIETY. 8. ON PERUSAL OF THE INCOME AND EXPENSES ACCOUNT OF THE SOCIETY, IT REVEALED THAT SOCIETY HAS BEEN EARNING PROFIT THAT WILL EVEN PUT THE MOST PROFITABLE COMPANY OR PROFESSIONALLY MANGED MULTINATIONAL COMP ANY, A DISTANT SECOND. DURING THE LAST THREE YEAR THE SOCIETY HAS BEEN SHOWING HUGE SURPLUS, AND THE SURPLUS, AS SUBMITTED BEING DEPLOYED FOR FURTHE R EXPANSION OF THE BUSINESS OF EDUCATION . FIN. YEAR 2006-07 2007-08 2008-09 2009-10 RECEIPTS 84,83,787 85,11,918 76,14,717 78,22,625 EXPENDITURE 53,80,114 56,37,090 78,82,234 74,45,863 INCOME/SURPLUS OF RECEIPTS OVER EXP. 31,03,672 28,74,827 -2,67,517 3,76,761 12 SINCE THE ASSESSEE HAS SHOWN RECEIPTS OF RS.78,22, 625/- IT WAS IMPORTANT TO GO THROUGH THE NATURE OF RECEIPTS SHOWN BY THE A SSESSEE. ON PERUSAL OF THE NATURE OF RECEIPTS, IT IS FOUND THAT IT INCLUDES: SR. NO. PARTICULARS RATE 1. APPLICATION FOR NEW ARMS LICENSE 500 2. APPLICATION FOR DUPLICATE ARMS LICENSE 200 3. NO OBJECTION CERTIFICATE FOR PETROL PUMP 1000 4. COUNTER SIGNING OF DOCUMENTS 100 5. DEPENDENT CERTIFICATE TO WARDS OF FREEDOM FIGHTERS 0 6. ISSUE PASSES TO HANDICAPPED PEOPLE 0 7. ISSUE OF NEW PASSPORT 100 8. COPY OF DOCUMENTS 50 9. REGISTRATION OF MARRIAGE UNDER SPECIAL MARRIAGE ACT 500 10. RATIO CARDS 20 11. AFFIDAVIT ATTESTATION 20 12. INDEMNITY BOND 20 13. SURETY BOND 50 14. ISSUE FOR IDENTITY CARD 20 15. ADDITION OF NAME IN BIRTH RECORD 50 16. LATE BIRTH REGISTRATION 50 17. LATE DEATH REGISTRATION 50 18. PERMISSION FOR SHOWERING FLOWERS THROUGH AEROPLANE 200 19. CASTE CERTIFICATE 50 20. DOCTOR FEE AND BLOOD CHECKUP FEE (COMBINED FEE) 35 13 21. ISSUE OF LICENSE AGRICULTURE 50 22. RENEWAL OF LICENSE AGRICULTURE 20 23. APPLICATION UNDER RIGHT TO INFORMATION ACT 0 24. ISSUANCE OF BIRTH CERTIFICATE 50 25. ISSUANCE OF DEATH CERTIFICATE 50 26. PERMISSION TO USE LOUD SPEAKERS ETC. 50 27. ISSUE OF MARRIAGE ABILITY CERTIFICATE 200 28. CDPO: OLD AGE PENSION 0 29. CDPO: WIDOW & DEPENDENT WOMEN PENSION 0 30. CDPO: DEPENDENT CHILDREN BELOW 21 YEAR 0 31. CDPO: HANDICAPPED PEOPLE 0 A PERUSAL OF THE ABOVE SAID CHART SHOWS THAT APPLI CANT CHARGES AS MUCH AS RS. 1000/- FOR ISSUING NOC FOR PETROL PUMP, RS.500/ - FOR REGISTRATION OF MARRIAGE, RS.500/- FOR APPLICATION FOR NEW ARMS LICENSE AND S O ON. IT IS PERTINENT TO MENTION HERE THAT THESE CHARGES ARE IN ADDITION TO THE STATUTORY FEES CHARGED BY THE STATE GOVT. DEPARTMENTS. THESE CHARGES/FEES ARE CHARGED BY THE APPLICANT FOR PROVIDING THE ALLEGED CITIZENS SERVICES. IN FACT LO OKING INTO THE NATURE OF INCOME AND FEES & OTHER CHARGES, IT MAKES ONE TO SIT-BACK AND PONDERS WHETHER THE SOCIETY HAS NOT BEEN EXPLOITING THE PUBLIC BY CHARG ING EXORBITANTLY, IN THE GUISE OF PROVIDING SERVICES & AT THE SAME TIME CLAIMING C HARITABLE ACTIVITY. IN THE FIRST INSTANCE, ON GOING THROUGH TH E RECEIPTS AND EXPENDITURE ACCOUNTS OF THE SOCIETY SINCE FINANCIAL YEAR 2006-07, IT HAS BEEN FOUND THAT THE SOCIETY HAS BEEN SHOWING SURPLUS EVEN AFTER PROVIDING CLAIM OF DEPRECIATION ON THE FIXED ASSETS. THE AMOUNT OF RS.3,76,761/- IS SURPLUS OUT OF THE RECEIPTS OF RS.78,22,625/- DURING THE YEAR, SHOWING PROFIT OF 4.81% IN FACT FEES AND CHARGES OF THE SOCIETY ARE EX ORBITANT WHICH HAS RESULTED IN HEFTY SURPLUS OF RECEIPT OVER EXPENDITURE. THE AIM AND OBJECTS OF THE SOCIETY ALSO MENTIONS OF CHARGING MODERATE FEES FROM THE PUBLIC. MODERATE IS NO WAY 14 CHARITABLE OR CONCESSIONAL. IN THE CURRENT YEAR THE SUCH SURPLUS IS 4.81% WHICH IS BY ANY STANDARD HEFTY AND CANNOT BE SAID TO BE DOIN G CHARITABLE ACTIVITY. HUGE SURPLUS EARNED AND EXTRACTED FROM THE PUBLIC THROUG HOUT, SINCE INCEPTION PROVES THAT THE PREDOMINATE OBJECT OF THE ASSESSEE IS TO E ARN MORE AND MORE PROFIT. THE CASE WHERE PROFIT MAKING IS THE END TO WHICH T HE ACTIVITY OF THE TRUST IS DIRECTED OR WHERE THE PREDOMINANT OBJECT OF THE ACT IVITY IS THE MAKING OF PROFIT. WHERE AN ACTIVITY IS NOT PERVADED BY PROFIT MOTIVE BUT IS CARRIED ON PRIMARILY FOR SERVING THE DOMINANT CHARITABLE PURPOSES, IT WOULD NOT BE CORRECT TO DESCRIBE IT AS AN ACTIVITY FOR PROFIT. BUT WHERE, ON THE OTHER HAN D, AN ACTIVITY IS CARRIED ON WITH THE PREDOMINANT OBJECT OF EARNING PROFIT IT WOULD B E AN ACTIVITY FOR PROFITS THOUGH IT MAY BE CARRIED ON IN THE ADVANCEMENT OF THE CHAR ITABLE PURPOSE OF THE SOCIETY- IN THIS VIEW, WHEN APPLYING SECTION 11, IT IS OPEN IN AN APPROPRIATE CASE TO PIERCE THE VEIL OF WHAT IS PROCLAIMED ON THE SURFACE BY TH E DOCUMENT OF THE TRUE PROPOSE OF THE SOCIETY. THE TRUE PURPOSE MUST BE GENUINELY AND ESSENTIALLY CHARITABLE . PREDOMINANT OBJECT OF THE ACTIVITY IS THE TEST- IT IS NOW FIRMLY ESTABLISHED BY THE DECISION OF THE SUPREME COURT IN ADDL. V. SU RAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [(1980) 121 ITR 1(SC)] AN D CIT V. BAR COUNCIL OF MAHARASHTRA [(1981) 130 ITR 28(SC),] THAT THE TEST IS WHAT IS THE PREDOMINANT OBJECT OF THE ACTIVITY WHETHER IT IS TO CARRY OUT A CHARITABLE PURPOSE OR TO EARN PROFIT [CIT V. ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION, (1986) 159 ITR 1, 10(SC). THIAGARAJAR CHARITIES V. ADDL. CIT, (1997) 225 ITR 1010, 1026 (SC); CIRIRAJ CO-OPERATIVE CORPORATION LTD. V. CIT, (1989) 178 ITR 359, 364 (AP)]. THUS, THE ASSESSEE HAS SNOT BEEN FOUND ENGAGED IN THE CHARITABLE ACTIVITIES AS PER DEFINITION OF THE CHARITABLE PURPOSE UNDER S ECTION 2(15) OF THE I.T. ACT AND HELD BY THE HONBLE APEX COURT AS DISCUSSED ABOVE. PENALTY PROCEEDINGS INITIATED UNDER SECTION271(1)(C) OF THE I.T.ACT FOR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME FOR CLAIMING OF EXEMPTION U/S 11 OF THE INCO ME TAX ACT. 15 SECTION 2(15): CHARITABLE PURPOSE INCLUDES RELI EF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRON MENT [INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IN THE CASE OF THE ASSESSEE THERE IS NO RELIEF AS SUCH TO THE CITIZEN ADDITION TO FEE, ALL OTHER POSSIBLE CHARGES AT EXORBITANT RA TE ARE ALSO BEING COLLECTED. SINCE THE BASIC AND PRIMARY CONDITION FOR APPLICATION OF SE. 11(1) (A) OF THE ACT IS THAT THE SOCIETY SHOULD BE WHOLLY CHARITABLE IS NOT FULF ILLED, AND ACCORDINGLY INCOME, IF ANY, OF THE SOCIETY WILL BE OUT OF THE AMBIT OF THE PROVISION OF SEC.11 OF THE I.T. ACT. THE MERE FACT THAT THE TRUST HAS BEEN GRANTED REGI STRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 DOES NOT CONFER ANY RIGHT OR ENTITLEMENT UPON THE ASSESSEE/APPLICANT REGARDING THE OPERATION OF SECTI ON 11,12 AND 13 OR ANY OTHER PROVISION OF THE INCOME TAX ACT, 1961. THE ASSESSEE TRUST IS TO FILE RETURNS OF INCOME REGULARLY AND THE OPERATION OF SECTION 11,12 AND 13 OR ANY OTHER PROVISION OF THE I.T. ACT 1961 IS TO BE DECIDED BY THE A.O. DEPENDING UPON THE MERITS OF THE CASE FOR EACH SUCH YEAR UNDER CONSIDE RATION. HENCE THE AVAILABILITY OF THE BENEFIT OF REGISTRATION IS STRICTLY SUBJECT TO THE PROVISIONS OF THE INCOME TAX ACT, 1961 READ WITH THE INCOME TAX RULES 1962 AND I N PARTICULAR THE PROVISIONS IN THE LIGHT OF WHICH THE INCOME QUALIFIES TO BE CO NSIDERED AS EXEMPT AND THE PROVISIONS PERTAINING TO THE UTILIZATION/INVESTMENT /MANNER OF DEPOSIT OF THE FUNDS. ANY EXISTING OR SUBSEQUENTLY FRAMED RULES AND REGUL ATIONS AND LAW AND BYE-LAWS GOVERNING THE TRUST, CONTRARY TO THE PROVISIONS OF THE INCOME TAX ACT,1961 READ WITH THE INCOME TAX RULES, 1962 SHALL RENDER THIS O RDER NULL AND VOID. THE LD. ITAT AMRITSAR BENCH, AMRITSAR IN A PPEAL NO.551(ASR)/2011 DATED 26.09.2012 IN THE CASE OF SUKHMANI SOCIETY FOR CITI ZEN SERVICES, MANSA VS. COMMISSIONER OF INCOME TAX, BATHINDA DISMISSED THE ASSESSEES APPEAL ON THE ISSUE OF REGISTRATION UNDER SECTION 12AA OF THE INC OME TAX ACT,1961 WHICH IS HELD AS UNDER:- 16 KEEPING IN VIEW THE AFORESAID DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE ACTIVITIES OF THE ASSESSEE-SOCIETY ARE NOT CHARITABLE IN NATURE WITHIN THE MEANING OF PROVISIONS OF SECTION2(15) OF THE ACT AND IT DOES NOT QUALIFY TO TREAT AS CHARITABLE INSTITUTION. SINCE T HE ASSESSEE HAS NOT ESTABLISHED THAT ITS SOCIETY IS FORMED WITH OBJECTS OF ANY CHARITABLE PURPOSE, THEN THE QUESTION OF DISCUSSION OF CITATIO NS RELIED UPON BY THE SOCIETY DOES NOT ARISE, EVEN OTHERWISE THESE JUDGME NTS ARE DIFFERENT FROM THE FACTS OF PRESENT CASE AND ARE NOT HELPFUL THE S OCIETY. THE PRESENT SOCIETY IS DOING ITS BUSINESS AND CHARGING HUGE FEE S FROM THE PUBLIC WHICH IS IN ADDITION TO THE PRESCRIBED FEE OF THE PUNJAB GOVT. EVEN OTHERWISE, THE FEES CHARGED BY THE PRESENT SOCIETY IS IN ADDITION TO THE BURDEN FORCED UPON THE COMMON-MAN. BECAUSE OF THIS SERVICE HAS TO BE RENDERED BY THE PUNJAB GOVT. FREE OF COST TO THE PUBLIC AGAINST THE FEE PRESCRIBED IN THE CHART AS REPRODUCED IN THE FOREGOING PARAGRAPHS. WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED F OR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT, BATHINAD. THEREFORE, W E UPHOLD THE IMPUGNED ORDER DATED 26.09.2011 BY DISMISSING THE P RESENT APPEAL FILED BY THE ASSESSEE-SOCIETY. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE-SO CIETY IS DISMISSED. 9. KEEPING IN VIEW THE AFORESAID DISCUSSIONS, THE A CTIVITIES OF THE ASSESSEE- SOCIETY ARE NOT CHARITABLE IN NATURE WITHIN THE MEA NING OF PROVISIONS OF SECTION 2(15) OF THE ACT AND IT DOES NOT QUALIFY TO TREAT A S CHARITABLE SOCIETY. SINCE THE ASSESSEE HAS NOT ESTABLISHED THAT ITS SOCIETY IS FO RMED WITH OBJECTS OF ANY CHARITABLE PURPOSE, THE SOCIETY IS DOING ITS BUSINE SS AND CHARGING HUGE FEES FROM THE PUBLIC WHICH IS IN ADDITION TO THE PRESCRIBED F EE OF THE PUNJAB GOVT. EVEN OTHERWISE, THE FEES CHARGED BY THE PRESENT SOCIETY IS IN ADDITION TO THE BURDEN FORCED UPON THE COMMON-MAN. BECAUSE OF THIS SERVICE HAS TO BE RENDERED BY THE PUNJAB GOVT. FREE OF COST TO THE PUBLIC AGAINST THE FEE PRESCRIBED IN THE CHART AS REPRODUCED IN THE FOREGOING PARAGRAPHS, THUS IT IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 11 OF THE I.T.ACT. THEREFORE, EXEMPTI ON CLAIMED U/S 11(1) AMOUNTING 17 TO RS.3,76,761/- IS DISALLOWED AND ADDED BACK TO TH E INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS INITIATED UNDER SECTION 271(1)( C) OF THE I.T. ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR CLAIMING OF EXEMPTION U/S 11 OF THE INCOME TAX ACT,1961. 10. BEFORE THE LEARNED CIT(A) THE ASSESSEE MADE THE SUBMISSIONS AND AFTER CONSIDERING THE SUBMISSIONS, THE LEARNED CIT(A) REJ ECTED THE APPEAL OF THE ASSESSEE AND RELEVANT FINDINGS IN PARA 6.2, 6.3 AND 6.4 OF THE L EARNED CIT(A)S ORDER ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: 6.2 DURING THE COURSE OF APPELLANT PROCEEDINGS, TH E APPELLANT SOCIETY WAS ASKED TO FURNISH FURTHER COMMENTS TAKING INTO A CCOUNT THE DECISION OF THE HONBLE ITAT, AMRITSAR IN THE CASE M/S SUKHMANI SOCIETY FOR CITIZENS SERVICES, MANSA (2012) 27. TAXMAN.COM 199 (ASR)[(20 13) 153 ITJ 235 (AMRITSAR)] WHEREIN IT WAS HELD THAT THE SOCIETY IS NOT ENGAGED IN ANY TYPE OF CHARITABLE ACTIVITY. IN THIS CASE, ORDER REGARDI NG DENIAL OF EXEMPTION TO THE SOCIETY U/S. 12AA OF THE INCOME TAX ACT, 1961 W AS UPHELD BY THE HONBLE ITAT, AMRITSAR. IN RESPONSE TO THIS, HOWEVE R, NO FURTHER SUBMISSIONS WERE FILED. IN FACT, IT WAS FAIRLY CONC EDED THAT THE DECISION OF HONBLE ITAT IS AGAINST THE ASSESSEE SOCIETY ON TH E ISSUE UNDER REFERENCE. 6.3. I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSE SSING OFFICER ON THE ISSUE UNDER REFERENCE AS MADE IN THE ASSESSMENT ORD ER. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS OF THE ASSESSEE SOCIETY FILED DURING APPELLATE PROCEEDINGS. I HAVE FURTHER CONSIDE RED THE OTHER MATERIAL BROUGHT ON RECORD WITH REGARD TO THE ISSUE UNDER REFERENCE. AFTER CAREFUL CONSIDERATION OF THE MATERIAL BROUGHT ON RECO RD, ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE ASSESSEE SOCIETY, I AM O F THE CONSIDERED OPINION THAT THE ASSESSING OFFICER IS JUSTIFIED IN DENYING EXEMPTION TO THE ASSESSEE SOCIETY U/S 11 OF THE INCOME TAX ACT, 1961 BY HOLDING THAT THE ASSESSEE IS NOT ENGAGED IN ANY TYPE OF CHARITABLE A CTIVITY BUT IS AN PROFIT 18 EARNING BODY AND IS NOT ENTITLED TO ANY EXEMPTION U /S. 11 OF THE INCOME TAX ACT,1961. THE DECISION OF THE HONBLE JURISDICT IONAL ITAT IS ALSO AGAINST THE ASSESSEE SOCIETY AS THE ISSUE UNDER REF ERENCE IS SQUARELY COVERED AGAINST THE ASSESSEE SOCIETY BY THE ORDER O F HONBLE ITAT(SUPRA) 6.4. IN THE ABOVE STATED FACTS AND IN THE CIRCU MSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICE R IS JUSTIFIED IN DENYING EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE SOCIETY AND BRINGING TO TAX EXCESS OF INCOME OVER EXPENDITURE O F RS.3,76,761/-. THE ADDITION MADE BY THE ASSESSING OFFICER IS, THEREFOR E, CONFIRMED ON THE ISSUE UNDER REFERENCE. IN THE RESULT, GROUND OF APP EAL NO.2 TAKEN BY THE ASSESSEE IS, THEREFORE, DISMISSED. 3. LEARNED COUNSEL FOR THE ASSESSEE MR. PADAM BAHL ,CA AT THE OUTSET SUBMITTED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO FACT S IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICES, D.C. OFFICES, MANSA VS. THE CIT, BATHINDA BY ITAT, AMRITSAR IN ITA NO.551/ASR/2011 DATED 26.09.2012 WHERE THE ITAT AMRITSAR BENCH VIDE PARA 7 TO 8 OF ITS ORDER HAVE HELD THAT ACTIVITIES OF THE SUK HMANI SOCIETY FOR CITIZENS SERVICES, MANSA ARE NOT CHARITABLE IN NATURE WITHIN THE M EANING OF PROVISIONS OF SECTION 2(15) OF THE ACT AND IT DOES NOT QUALIFY TO BE TRE ATED AS CHARITABLE INSTITUTION AND THE SOCIETY IS DOING BUSINESS AND CHARGING HUGE FEES F ROM THE PUBLIC WHICH IS IN ADDITION TO THE PRESCRIBED FEES OF THE PUNJAB GOVT. AND THE ORD ER OF THE LEARNED CIT(A) WAS CONFIRMED BY THE ITAT, AMRITSAR BENCH VIDE ORDER DA TED 26.09.2012(SUPRA). MR. PADAM BAHL, CA ARGUED THAT THE FACTS IN THE CASE OF M/S SUKHMANI SOCIETY FOR CITIZENS SERVICES, MANSA ARE IDENTICAL TO THE FACTS IN THE P RESENT CASE. BUT THAT THE ORDER OF THE ITAT, AMRITSAR BENCH IN ITA NO.551/ASR/2011 DATED 2 6.09.2012 IS A WRONG ORDER AND IN FACT THE ASSESSEE TRUST DOES NOT CARRY ANY BUSINESS ACTIVITY AND IF AT ALL THE ITAT, AMRITSAR 19 BENCH HOLDS IN THE PRESENT CASE THAT THE ASSESSEE I S RUNNING THE BUSINESS THEN THE ASSESSEE DOES NOT HAVE ANY CASE. HE RELIED UPON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX(EXEMPTION) VS. SABAR MATI ASHRAM GAUSHALA TRUST IN TAX APPEAL NO.1162 OF 2013 DATED 15.01.2014 AND DECISIO N IN THE CASE OF GSI INDIA VS. DGIT (EXEMPTIONS) 2013 [262 CTR 585] (DEL.) 4. ON THE OTHER HAND, LEARNED DR MR.TARSEM LAL RELI ED UPON THE ORDER OF THE CIT(A) AND AO AND THE DECISION OF ITAT AMRITSAR BENCH IN T HE CASE OF SUKHMANI SOCIETY FOR CITIZENS SERVICES, MANSA (SUPRA). HE ARGUED THAT TH E STATE GOVT. HAS LAUNCHED THESE SOCIETIES IN EVERY DISTRICT SQUARELY WITH A VIEW TO GATHER/MAKE PROFITS OR GATHER INCOME WHICH THE STATE GOVT. IS OTHERWISE UNDER OBLIGATION TO SUPPLY SUCH SERVICES TO ITS CITIZENS WITHOUT CHARGING ANY FEE AND ALSO WITH A VIEW TO CIRCUMVENTING THE PROV ISION OF RTI ACT WHERE DOCUMENTS ARE PROVIDED WITH A NOMINAL COST OF RS 1/- PER PHOTOCO PY OF DOCUMENT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. ON READING THE PROVISIONS OF SECTION 11(1) CERTAIN INCOMES AR E NOT INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON I.E. SUCH INCOME DE RIVED FROM THE PROPERTY UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA AND WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION OF SUCH PURPOSES IN INDIA, TO THE EXTEN T TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEEN PERCENT OF THE INCOME OF SUCH PROPERTY. ACCORDINGLY WE HAVE TO PERUSE THE WHETHER INCOME DERIVED BY THE ASSESSEE TRUST IS INCOME WHOLLY FOR CHARITABLE PURPOSE TO THE EXTENT TO WHICH SUCH INCO ME IS APPLIED. ON PERUSAL OF THE MAIN 20 OBJECTS OF THE SOCIETY REPRODUCED HEREIN ABOVE AND THE BALANCE SHEET AND INCOME AND EXPENDITURE ACCOUNT WHICH ARE PART OF THE PAPER BOO K, NONE OF THE EXPENDITURE WAS FOUND TO BE OF CHARITABLE IN NATURE. THE LEARNED COUNSEL FOR THE ASSESSEE HAVE NOT BEEN ABLE TO POINT OUT ANY EXPENDITURE INCURRED BY THE ASSESSEE TRUST AS THAT OF CHARITABLE IN NATURE OF HAVING BEEN INCURRED FOR CHARITABLE PURPOSE OR FOR THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. AS SUBSTITUTED BY THE F INANCE ACT 2008 W.E.F. 1.4.2009 IN SECTION 2(15) IN FIRST PROVISO WHICH READS THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PU RPOSE IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSIN ESS FOR A CESS OF FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICABLE OR RETENTION IF THE INCOME FROM SUCH ACTIVITY. SECOND PROVISO TO SEC.2(15) IN THE PRESENT CASE IS NOT APPLICABLE SINCE THE RECEIPT IN THE IMPUGNED YEAR ARE EXCEEDING RS.2 5 LACS. THEREFORE, IN THE PRESENT CIRCUMSTANCES AND FACTS OF THE CASE AND KEEPING IN VIEW THE PROVISIONS CONTAINED IN SECTION 11(1), WE HAVE PERUSED THAT WHETHER THE ASS ESSEE TRUST HAS DERIVED THE INCOME WHOLLY FOR CHARITABLE PURPOSE DURING THE IMPUGNED Y EAR, IN VIEW OF SECTION 2(15) SPECIFICALLY WITH REFERENCE TO THE FIRST PROVISO. T HE LEARNED COUNSEL FOR THE ASSESSE MR. BADAM BAHL CA AT THE OUT SET HAS ARGUED THAT THE FA CTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SUKHMANI SOCIETY FOR CITIZ EN SERVICES, MANSA(SUPRA) WHERE THE ACTIVITIES OF THE SOCIETY HAVE BEEN HELD OF NOT CHA RITABLE IN NATURE AND ASSESSEE HAS BEEN HELD OF DOING BUSINESS IN THAT CASE. ON THE OTHER H AND, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ARGUED THAT THE ORDER OF THE ITAT, AMR ITSAR BENCH IN THE CASE OF SUKHMANI SOCIETY FOR CITIZENS SERVICES, MANSA (SUPRA) IS A W RONG ORDER. POINTING OUT OF THE 21 PERVERSITY IN THE CASE OF SUKHMANI SOCIETY FOR CITI ZEN SERVICES, MANSA(SUPRA) BEFORE US IS NOT A RIGHT FORUM WHICH IN FACT IS THE JURISDICT IONAL HIGH COURT. AS REGARDS ARGUMENTS BY LD. AR THAT THE ASSESSEE DOES NOT CARRY ON BUSIN ESS ACTIVITIES, THE FACT IS UNDISPUTED THAT THE SOCIETY IS CHARGING THE FEES FROM CITIZENS FOR PROVIDING THE SERVICES AS MUCH AS RS.1,000/- FOR GETTING NOC FOR PETROL PUMP, RS. 500 FOR REGISTRATION OF MARRIAGE, RS.500 FOR NEW ARMS LICENSE AND SO ON AS PER DETAILS AVAIL ABLE AT AO PAGE 10 & 11. FEES CHARGED BY ASSESSEE ARE IN ADDITION TO THE STATUTORY FEES I F ANY CHARGED BY THE STATE GOVT. DEPARTMENTS. THE CHARGES/FEES ARE CHARGED BY THE SO CIETY FOR PROVIDING ALLEGED CITIZEN SERVICES FOR WHICH IN FACT THE STATE GOVERNMENT IS OBLIGED TO PROVIDE SUCH SERVICES WITHOUT ANY CHARGES/FEES OR BY CHARGING SOME NOMINA L/STATUTORY FEES. THE CHARGING OF ADDITIONAL CHARGES IN ADDITION TO CHARGING OF STATU TORY FEES FOR GETTING THE WORK DONE FROM STATE GOVT. DEPARTMENTS IS PURELY AN ACTIVITY OF CO MMERCIAL IN NATURE AND WITH AN INTENT TO EARN PROFIT AND SUCH ACTIVITIES SHALL BE TERMED AS ACTIVITIES IN THE NATURE OF COMMERCE, TRADE OR BUSINESS AND SUCH ACTIVITIES CANNOT BE SAI D TO BE THE ACTIVITIES FOR CHARITABLE PURPOSE IN VIEW OF FIRST PROVISO TO SECTION 2(15) O F THE ACT. ON THE PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT OF THE IMPUGNED YEAR, WE DO NOT FIND THAT THE ASSESSEE HAS INCURRED ANY EXPENSES OF CHARITABLE IN NATURE. FROM THE PERUSAL OF OBJECTS OF TRUST AND THE ACTIVITIES CARRIED OUT BY THE TRUST, WE HAVE FOUND OUT THAT THE ASSESSEE IS FREE TO TAKE UNCONTROLLED DECISION TO SPEND THE WHOLE OF THE TRU ST FUND IN THE MANNER IT LIKES. AT PAGE 5 OF AOS ORDER, THE ASSESSEE IN ITS OBJECT HAS THE POWER TO ESTABLISH AND MAINTAIN ANY AGENCIES AND FRANCHISES IN THE DISTRICT FOR THE CON DUCT OF THE BUSINESS OF THE SOCIETY AND OTHERWISE ALSO THE ASSESSEE HAS NOT BEEN ABLE TO ES TABLISH ANY OF THE EXPENDITURE INCURRED FOR THE CHARITABLE PURPOSE. THOUGH WE ARE AWARE THA T SURPLUS OF ANY INSTITUTION CANNOT BE 22 AN INDICATOR TO HOLD THE INSTITUTION AS OF NON-CHAR ITABLE IN NATURE, UNLESS CORROBORATED BY NON-CHARITABLE ACTIVITIES. THE ASSESSEE HAS DERIVED THE SURPLUS OF RS.31,03,672/-, RS.28,74,827/- AND RS.3,76,761 AS AGAINST RECEIPTS OF RS. 84,83,787, RS.85,11,918 AND RS. 78,22,625 FOR THE ASSESSMENT YEAR 2006-07, 2007 -08 AND 2009-10 EXCEPT IN THE ASSESSMENT YEAR 2008-09 THERE IS A NEGATIVE SURPLU S OF RS.2,67,517/- AS AGAINST RECEIPTS OF RS.76,14,717/-. AS PER OUR FINDINGS HEREINABOVE, THE REASON FOR SUCH SURPLUS IS CHARGES ON ACCOUNT OF ADDITIONAL CHARGES FEES CHARGED FROM CUSTOMERS WHICH ACTIVITIES ARE TERMED AS COMMERCIAL ACTIVITIES. IN FACT, PROVIDING OF SU CH FACILITIES OR SERVICES IS A CONCERN OF STATE GOVT. AND ITS DEPARTMENTS FREE OF COST OR BY CHARGING STATUTORY FEES ONLY. WHEREAS CHARGING THE PUBLIC SO EXORBITANTLY CANNOT BE GIVEN A NAME OF CHARGING THE MODERATE FEE. EVEN IF FEES SO CHARGED IS NAMED AS MODERATE FEES STILL IT DOES NOT LOOSE ITS CHARACTER OF BEING COMMERCIAL, TRADE OR BUSINESS IN NATURE IN VI EW OF OUR FINDINGS HEREINABOVE, WHICH IN FACT IS A CONTINUOUS AND SYSTEMATIC ACTIVITY HAV ING A CHARACTER OF PROFIT MOTIVE AND IS HAVING THE ESSENTIAL CHARACTER OF THAT OF BUSINESS I.E. THE TRANSACTION IS CARRIED OUT BETWEEN TWO PERSONS WHICH INVOLVES RECIPROCITY WHICH IS AN ESSENCE OF A BUSINESS AND NOT A UNILATERAL ACT. THE BUSINESS IS BEING CARRIED ON SO UND BUSINESS PRINCIPLES WITH REASONABLE CONTINUITY. THE LEARNED COUNSEL FOR THE ASSESSEE HA S MAINLY RELIED UPON THE DECISION IN THE CASE OF SABARMATI ASHARAM GAUSHALA (SUPRA) WHER E THE ASSESSEE CARRIED THE MATTER IN APPEAL. CIT(A) REJECTED THE APPEAL AND CONFIRMED TH E ORDER OF THE ASSESSING OFFICER. THE ASSESSEE, THEREFORE, APPROACHED THE TRIBUNAL IN SEC OND APPEAL. TRIBUNAL REVERSED THE DECISION OF THE REVENUE AUTHORITIES HOLDING THAT TH E ASSESSEE IS A CHARITABLE TRUST AND PROVISO TO SECTION 2(15) OF THE ACT WILL NOT APPLY. THE TRIBUNAL RELIED ON THE FINANCE MINISTERS SPEECH IN THE PARLIAMENT EXPLAINING PROV ISO TO SECTION 2(15) AS ALSO THE CBDT 23 CIRCULAR NO.11/2008 OF 19 TH DECEMBER, 2008. THE TRIBUNAL TOOK NOTE OF THE OBJE CTS OF THE TRUST AND CAME TO THE CONCLUSION THAT THE TRUST WAS CARRYING ON ITS ACTIVITIES ON NON- COMMERCIAL BASIS WITH NO MOTIVE TO EARN PROFIT. THE AIMS AND OBJECTS OF THE TRUST WERE CHARITABLE IN NATURE. WHILE IMPLEMENTING SUCH OBJEC TS, IF THERE WAS ANY PROFIT, INCIDENTALLY GENERATED, THE SAME WOULD NOT BE HIT B Y PROVISO THE SECTION 2(15) OF THE ACT. IN THE CONCLUSION, THE TRIBUNAL CLARIFIED THAT THE DECISION WAS DELIVERED IN PECULIAR FACTS OF THE CASE. ON APPEAL BY REVENUE THE HONBLE HIGH COURT OF GUJRAT REFERRED TO THE FINANCE MINISTERS SPEECH:- I ONCE AGAIN ASSURE THE HOUSE THAT GENUINE CHARIT ABLE ORGANIZATIONS WILL NOT IN ANY WAY BE AFFECTED. THE CBDT WILL, FOLLOWING THE U SUAL PRACTICE, ISSUE AN EXPLANATORY CIRCULAR CONTAINING GUIDELINES FOR DETE RMINING WHETHER ANY ENTITY IS CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS. WHETHER THE PURPOSE IS A CHARITABLE PURPOSE WILL DE PEND ON THE TOTALITY OF THE FACTS OF THE CASE. ORDINARILY, CHAMBERS OF COMMERCE AND SIMILAR ORGANIZATIONS RENDERING SERVICES TO THEIR MEMBERS WOULD NOT BE AF FECTED BY THE AMENDMENT AND THEIR ACTIVITIES WOULD CONTINUE TO BE REGARDED AS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. INTERPRETING THE SAID SPEECH, THE HONBLE HIGH COUR T OF GUJRAT INTERPRETED THE STATUTORY PROVISIONS AS EXPLAINED IN THE SPEECH OF FINANCE MI NISTER AND CBDT CIRCULAR NO.11 OF 2008 DATED 19.12.2008 THAT ACTIVITY OF THE TRUST WO ULD BE EXCLUDED FROM THE TERM CHARITABLE PURPOSE IF IT IS ENGAGED IN ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR RECORDS ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR ACCESS FEE OR ANY OTHER CONSIDERATION. IT IS NOT AIMED A T EXCLUDING THE GENUINE CHARITABLE TRUST OF GENERAL PUBLIC UTILITY BUT IS AIMED AT EXCLUDIN G ACTIVITIES IN THE NATURE OF TRADE, 24 COMMERCE OR BUSINESS WHICH ARE MASKED AS CHARITABL E PURPOSE. THE HONBLE GURJAT HIGH COURT IN FACT CONFIRMED THE ORDER OF THE TRIBU NAL. KEEPING IN VIEW THE OBJECTS OF THAT TRUST WHICH ARE TO BREED THE CATTLE AND ENDEA VOR TO IMPROVE THE QUALITY OF THE COWS AND OXEN IN VIEW OF THE NEED OF GOOD OXEN AS INDIA IS PROMINENT AGRICULTURAL COUNTRY AND THE COW MILK AS FOOD IS BOTH CONDUCIVE TO AND REQU ISITE FOR GOOD HEALTH AND LONGEVITY OF HUMAN LIFE. IN ORDER TO IMPROVE THE QUALITY OF THE CATTLE, IT IS VERY ESSENTIAL TO USE A HIGH QUALITY BULLS AND TO PRODUCE AND TO GET PRODUCED TH E BEST PEDIGREED BULLS AND TO CASTRATE THE SCRUB BULLS AND PROPAGATE THE WORK TO PREPARE B ULLOCKS BY CASTRATING THE BULLS WHICH DO NOT BECOME GOOD BULLS AND TO POPULARIZE THE USE OF COW MILK AND TO HOLD AND CULTIVATE OR GET CULTIVATED AGRICULTURAL LANDS TO KEEP GRAZIN G LANDS ETC. THE NECESSARY OR DESIRABLE FOR CATTLE KEEPING AND BREEDING THE IMPROVEMENT IN AGRICULTURE. ALSO TO MAKE NECESSARY ARRANGEMENTS FOR GETTING SCIENTIFIC KNOWLEDGE AND T O DO SCIENTIFIC RESEARCH WITH REGARD TO KEEPING AND BREEDING OF THE CATTLE, AGRICULTURE, US E OF MILK ETC. IT WAS WITH THIS VIEW THE ACTIVITIES WERE TREATED AS CHARITABLE IN NATURE AND THE TRIBUNAL HELD THAT PROVISO TO SECTION 2(15) OF THE ACT WAS NOT APPLICABLE IN SUCH CASE AN D ACCORDINGLY THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL THAT FIRST PROV ISO TO SECTION 2(15) IS NOT APPLICABLE. WHEREAS FACTS IN THE PRESENT CASE ARE QUITE DIFFERE NT AND ACCORDINGLY THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF SABARMATI ASHRAM GAUSHALA TRUST (SUPRA) IS NOT APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES O F THE CASE. FURTHER, THE HONBLE COURT HAS MAINLY RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. VS. DIRECT OR GENERAL OF INCOME TAX[EXEMPTIONS] & ORS. REPORTED IN [2012] 347 ITR 9 9 (DELHI) WHERE APPLICATION U/S 10(23C)(IV) WAS REJECTED. THE HONBLE COURT HELD TH E FUNDAMENTAL OR DOMINANT FUNCTION 25 OF THE INSTITUTE WAS TO EXERCISE OVERALL CONTROL AN D REGULATE THE ACTIVITIES OF THE MEMBERS/ENROLLED CHARTERED ACCOUNTANTS. A VERY NAR ROW VIEW HAD BEEN TAKEN THAT THE INSTITUTE WAS HOLDING COACHING CLASSES AND THAT THI S AMOUNTED TO BUSINESS. THE INSTITUTE HAD FRAMED THE CHARTERED ACCOUNTANTS REGULATIONS, 1 988, AND THE REGULATIONS PROVIDED FOR TRAINING OF STUDENTS, THEIR EXAMINATION, AWARD OF DEGREES AND MEMBERSHIPS OF THE INSTITUTE. THERE WAS A CLEAR DISTINCTION BETWEEN C OACHING CLASSES CONDUCTED BY PRIVATE COACHING INSTITUTIONS AND THE COURSES AND EXAMINATI ONS WHICH WERE HELD BY THE INSTITUTE. THE QUESTION WHETHER THE INSTITUTE CARRIED ON BUSI NESS HAD NOT BEEN EXAMINED WITH PROPER PERSPECTIVE. THE INSTITUTE MAINTAINED THAT IT NEVER GRANTED ANY LOAN AND/OR ADVANCE TO THE INSTITUTE OF CHARTERED ACCOUNTANTS O F INDIA ACCOUNTING RESEARCH FOUNDATION. THE FACTS REGARDING THIS QUESTION HAD N OT BEEN CONSIDERED. THE ORDER DENYING THE EXEMPTION WAS NOT VALID. IT IS WITH THESE PECUL IAR FACTS THE DENYING OF EXEMPTION WAS HELD TO BE NOT VALID, WHEREAS FACTS IN THE PRESENT CASE ARE QUITE DIFFERENT AS DISCUSSED HEREINABOVE. FURTHER, THE HONBLE GUJRAT HIGH COURT RELIED UPON THE TEST AS PRESCRIBED IN RAIPUR MANUFACTURING COMPANY [1967] 19 STC 1(SC) AN D DECISION IN THE CASE OF HONBLE SUPREME COURT, IN THE CASE OF SAI PUBLICAT ION FUND (2002) 258 ITR70 (SC); [2002] 126 STC 288(SC). THE FACTS AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SAI PUBLICATION FUND (SUPRA) IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: THE RESPONDENT WAS A TRUST CREATED BY FOUR DEVOTE ES OF SAIBABA OF SHIRIDI WITH THE OBJECT OF SPREADING THE MESSAGE OF SAIBAB. IN F URTHERANCE OF AND TO ACCOMPLISH THAT OBJECT, THE TRUST PUBLISHED BOOKS, PAMPHLETS AND OTHER LITERATURE CONTAINING THE MESSAGE OF SAIBABA, WHICH WERE MADE AVAILABLE TO DEVOTEES ON NOMINAL CHARGES TO MEET THE COST. THE SALE PROCEEDS OF SUCH PUBLICATIONS WENT TO THE TRUST AND FORMED PART OF THE PROPERTY OF THE TR UST. THERE WAS A SPECIFIC PROVISION IN THE TRUST DEED THAT IN THE EVENT OF FA ILURE OF THE TRUST TO CARRY ON ITS 26 AIMS AND OBJECTS THE REMAINING FUND IN ITS HANDS WO ULD BE HANDED OVER TO THE SANSTHANAM OF SHIRIDI. ON AN APPLICATION MADE BY TH E TRUST UNDER SECTION 52(1)(A) OF THE BOMBAY SALES TAX ACT, 1959, SEEKING DETERMINATION OF THE QUESTIONS WHETHER THE TRUST COULD BE SAID TO BE CAR RYING ON BUSINESS AS DEFINED IN SECTION 2(5A) AND WHETHER IT WAS A DEALER UNDE R SECTION 2(11) OF THE ACT, THE DEPUTY COMMISSIONER HELD THAT THE ACTIVITY OF PUBLI CATION AN SALE OF BOOKS, ETC., AMOUNTED TO BUSINESS AND THE TRUST WAS A DEALER, AN D, THEREFORE, THE TRUST WAS LIABLE TO SALES TAX ON THE VALUE OF THE PUBLICATION S SOLD. THE SALES TAX TRIBUNAL, ON APPEAL, HELD THAT THE TRUST WAS NOT A DELAER W ITHIN THE MEANING OF SECTION 2(11) AS IT WAS NOT ENGAGED IN ACTIVITY WHICH AMOUN TED TO BUSINESS IN VIEW OF ITS OBJECT AND ACTIVITIES. ON A REFERENCE, THE HIGH COURT AFFIRMED THE DECISION OF THE TRIBUNAL. ON APPEAL TO THE SUPREME COURT: HELD, AFFIRMING THE DECISION OF THE HIGH COURT, (I) THAT A PERSON WOULD NOT BE A DEALER UNDER SECTION 2(11) IN RESPECT OF THE GOOD S SOLD OR PURCHASED BY HIM UNLESS HE CARRIED ON THE BUSINESS OF BUYING AND SEL LING OF SUCH GOODS; (II) THAT UNDER SECTION 3 THE LIABILITY TO PAY SALE S TAX WAS ONLY ON DEALERS; (III) THAT ON A COMBINED READING OF SECTIONS 3,2(5A ) AND 2(11), THE TAX UNDER THE ACT WAS LEVIABLE ON THE SALES OR PURCHASES OF GOODS BY A DEALER AND NOT EVERY PERSON; AND (IV) THAT, SINCE THE SOLE OBJECT OF THE TRUST WAS T O SPREAD THE MESSAGE OF SAIBABA OF SHIRIDI AND THE BOOKS, LITERATURE, ETC., CONTAIN ING THE MESSAGE OF SAIBABA WERE DISTRIBUTED BY THE TRUST TO DEVOTEES AT COST PRICE, THE PRIMARY OBJECT OF THE TRUST WAS TO SPREAD THE MESSAGE OF SAIBABA AND ITS MAIN A CTIVITY DID NOT AMOUNT TO BUSINESS. THE ACTIVITY OF PUBLISHING AND SELLING BOOKS AND LITERATURE WAS INCIDENTAL OR ANCILLARY TO THE MAIN ACTIVITY OF SPR EADING THE MESSAGE OF SAIBABA AND NOT ANY BUSINESS AS SUCH. THE TRUST WAS NOT EST ABLISHED WITH AN INTENTION OF CARRYING ON BUSINESS OF SELLING OR SUPPLYING GOODS. THE TRUST DID NOT CARRY ON THE BUSINESS OF SELLING AND SUPPLYING GOODS SO AS TO FA LL WITHIN THE MEANING OF DEALER UNDER SECTION 2(II). 27 THE QUESTION OF PROFIT MOTIVE OR NO PROFIT MOTIVE IS RELEVANT ONLY WHERE THE PERSON CARRIED ON A TRADE, COMMERCE, MANUFACTURE OR ADVENTURE IN THE NATURE OF TRADE, COMMERCE, ETC. UNDER SECTION 2(5A), IF THE MAIN ACTIVITY IS NOT B USINESS, THEN ANY TRANSACTION INCIDENTAL OR ANCILLARY WOULD NOT NORMA LLY AMOUNT TO BUSINESS UNLESS AN INDEPENDENT INTENTION TO CARRY ON BUSINE SS IN THE INCIDENTAL OR ANCILLARY ACTIVITY IS ESTABLISHED. IN SUCH CASES, T HE ONUS OF PROOF OF AN INDEPENDENT INTENTION TO CARRY ON BUSINESS IN THE INCIDENTAL OR ANCILLARY ACTIVITY OF SALES RESTS ON THE DEPARTMENT. THE INCL USION OF INCIDENTAL OR ANCILLARY ACTIVITY IN THE DEFINITION OF BUSINESS CONTAINED IN SECTION 2(11) PRE-SUPPOSES THE EXISTENCE OF TRADE OR COMMERCE, ETC. THE DEFINITION OF DEALER IN SECTION 2(11) CLEARL Y INDICATES THAT IN ORDER TO HOLD A PERSON TO BE A DEALER, HE MUST CARRY ON BUSINESS AND THEN ONLY HE MAY ALSO BE DEEMED TO BE CARRYING ON BUSINESS IN RE SPECT OF TRANSACTIONS INCIDENTAL OR ANCILLARY THERETO. THE DECISION OF HONBLE SUPREME COURT IN FACT WAS W ITH REFERENCE TO THE OBJECT TO MESSAGE OF SAIBABA OF SHIRDI AND THE BOOKS, LITERAT URE ETC. CONTAINING THE MESSAGE OF SAIBABA WHICH WERE DISTRIBUTED BY THE TRUST TO DEVO TEES AT COST PRICE AND THE PRIMARY OBJECT WAS TO SPREAD MESSAGE OF SAIBABA AND IT IS W ITH THIS BACKGROUND, THE HONBLE SUPREME COURT HELD THAT TRUST WAS NOT ESTABLISHED W ITH AN INTENTION OF CARRYING ON BUSINESS OF SELLING OR SUPPLYING GOODS. THE QUESTIO N AROSE WHETHER THE TRUST WAS A DEALER U/S 2(11) OF BOMBAY SALES TAX ACT, 1969, IT WAS HEL D BY HONBLE COURT THAT A PERSON WOULD NOT BE A DEALER IN RESPECT OF GOOD SOLD OR UN LESS HE CARRIED BUSINESS OF BUYING OR SELLING OF SUCH GOODS . UNDER SECTION 3, THE LIABIL ITY TO PAY SALES TAX WAS ONLY ON DEALERS; AND NOT EVERY PERSON. IT WAS FURTHER HELD THAT, SIN CE THE SOLE OBJECT OF THE TRUST WAS TO SPREAD THE MESSAGE OF SAIBABA OF SHIRDI AND THE BOO KS, LITERATURE, ETC, CONTAINING THE 28 MESSAGE OF SAIBABA WERE DISTRIBUTED BY THE TRUST TO DEVOTEES AT COST PRICE, THE PRIMARY OBJECT OF THE TRUST WAS TO SPREAD THE MESSAGE OF SA IBABA AND ITS MAIN ACTIVITY DID NOT AMOUNT TO BUSINESS. SINCE FACTS IN THE CASE OF SA IBABA PUBLICATION FUND (SUPRA) ARE PECULIAR TO THE CIRCUMSTANCES OF THAT CASE WHICH AR E QUITE DIFFERENT TO THE FACT IN THE PRESENT CASE SINCE IN THE PRESENT THE PREDOMINATE O BJECT AND INTENTION OF THE ASSESSEE IS TO EARN PROFIT AND THEREFORE, THE ASSESSEE IS CHARG ING FEES OVER AND ABOVE COSTS I.E., THE STATUTORY CHARGES AND THEREFORE, THE CASE OF SAI P UBLICATION FUND (SUPRA) IS NOT AT ALL APPLICABLE IN THE PRESENT CIRCUMSTANCES AND FACTS O F THE CASE. THEREFORE, THE DECISION OF SABARMATI ASHRAM GAUSHLA TRUST RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANC ES OF THE CASE. 5.1. THE LD. COUNSEL FOR THE ASSESSEE FURTHER RELIED UPO N THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GSI INDIA V S. DCIT (2014) 360 ITR 138 WHERE THE FACTS OF THE CASE AND THE DECISION OF HONBLE C OURT WAS THAT ASSESSEE WAS A NOT-FOR- PROFIT SOCIETY PROMOTED BY MINISTRY OF COMMERCE AN D INDIA INDUSTRY, DULY REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860. IT ACQUIRED INTELLECTUAL PROPERTY RIGHTS QUA BAR CODING SYSTEM FROM GSI GLOBAL OFFICE, BELGIUM. IT P ERMITTED USE OF THESE INTELLECTUAL PROPERTY RIGHTS BY THIRD PARTIES UNDER LICENSE AGRE EMENTS FOR INITIAL REGISTRATION FEE AND SUBSEQUENT ANNUAL REGISTRATION FEE FROM FINANCIAL Y EAR 2006-07 ONWARDS. REGISTRATION U/S 10(23C) WAS DENIED TO ASSESSEE HOLDING THAT NO CHAR ITABLE ACTIVITY WAS INVOLVED IN PERMITTING USE OF INTELLECTUAL PROPERTY RIGHT FOR C ONSIDERATION WHICH IS NOTHING BUT ROYALTY INCOME AND ACTIVITY OF ASSESSEE WAS IN NATURE OF TR ADE, COMMERCE OR BUSINESS. HELD BY THE HONBLE COURT THAT THE ASSESSEE IS NOT ENGAGED IN ACTIVITIES WHICH CONSTITUTE BUSINESS, COMMERCE OR TRADE. UNDERLYING AND PROPELLING MOTIVE OF ASSESSEE WAS NOT TO EARN PROFITS 29 OR COMMERCIALLY EXPLOIT BUT GENERAL PUBLIC GOOD I .E. TO PROMOTE AND MAKE GSI CODING SYSTEM AVAILABLE TO INDIA TRADERS, MANUFACTURERS, G OVERNMENT ETC. ASSESSEE DOES NOT CATER TO LOWEST OR MARGINALIZED SECTION OF SOCIETY. NO FE E IS CHARGED FROM USERS AND BENEFICIARIES LIKE STOCKIEST, WHOLE SELLERS, GOVERN MENT DEPARTMENT ETC., WHILE A NOMINAL FEE IS ONLY PAID BY MANUFACTURER OR MARKETING AGENC IES. FEE IS FIXED AND NOT PRODUCT SPECIFIC OR QUANTITY. REGISTRATION AND ANNUAL FEE E NTITLES PERSON CONCERNED TO USE GSI IDENTIFICATION ON ALL THEIR PRODUCTS. CHARGING A NO MINAL FEE TO USE CODING SYSTEM AND TO AVAIL ADVANTAGES AND BENEFITS WAS NEITHER REFLECTIV E OF BUSINESS APTITUDE NOR INDICATIVE OF PROFIT ORIENTED INTENT. CHARITABLE ACTIVITIES REQUI RE OPERATIONAL/RUNNING EXPENSES AS WELL AS CAPITAL EXPENSES TO BE ABLE TO SUSTAIN AND CONT INUE IN LONG RUN. ASSESSEE HAS TO BE SUBSTANTIALLY SELF SUSTAINING IN LONG-TERM. ACCUMU LATION OF MONEY/FUNDS OVER A PERIOD OF 2-3 YEARS MAY NOT BE RELEVANT IN DETERMINING NAT URE AND CHARACTER OF ACTIVITY AND WHETHER SAME SHOULD BE TREATED AS INDICATIVE OF PR OFIT MOTIVE. CHARITABLE ACTIVITY UNDERTAKEN AND PERFORMED BY ASSESSEE RELATES TO PRO MOTION, DISSEMINATION OF KNOWLEDGE AND ISSUE OF UNIQUE IDENTIFICATION AMONGST THIRD PA RTIES ETC. BUSINESS ACTIVITY UNDERTAKEN BY ASSESSEE IS INTEGRAL TO CHARITY/CHARITABLE ACTIV ITIES. ASSESSEE WAS NOT REQUIRED TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS. SECOND PROVISO WHICH REFERS TO AGGREGATE VALUE OF RECEIPT OF ACTIVITIES OF RS.10 LACS (NOW ENHANCED RS.25 LACS VIDE FINANCE ACT 2011 WITH EFFECT FROM 1.4.2012) OR LESS IN A PREVIOUS YEAR, C ANNOT BE INVOKED. ASSESSEE CANNOT BE DENIED BENEFIT OF REGISTRATION/NOTIFICATION U/S 10 (23C)(IV). ASSESSEES WRITTEN PETITION WAS ALLOWED. 5.2. IN THE SAID CASE, THE ASSESSEE IS NOT SUBJECTI NG TO MARKET MECHANISM/DYNAMICS RATHER IT IS MOTIVATED AND PROMOTED TO SERVE THE BE NEFICIARIES. IT DOES NOT CATER TO LOWEST 30 OR MARGINALIZED SECTION OF SOCIETY BUT THE GOVERNME NT, PUBLIC AND PRIVATE SECTOR. NO FEES IS CHARGED FROM USERS AND BENEFICIARIES LIKE STOCKI ST, WHOLE-SELLERS, GOVERNMENT DEPARTMENT ETC. THE FEES IS FIXED AND NOT QUANTITY RELATED. IT JUSTIFIES THE TEST OF CHARITABLE ACTIVITY AND THE INTENTION BEHIND THE ENTIRE ACTIVI TIES IS PHILANTHROPIC. ELEMENT OF GIVE AND TAKE IS MISSING. IN CONTRACT, IN THE PRESENT CASE T HE ASSESSEE IS OPEN IN THE MARKET MECHANISM TO SERVE ANY PERSON FOR MONEY I.E., THE E LEMENT OF GIVE AND TAKE RATHER IS THE ESSENCE IN THE PRESENT CASE. THE FEES IS NOT THE ON E BUT IS FIXED AS PER WORK TO BE DONE BY THE ASSESSEE. THE INTENT AND PURPOSE OF ASSESSEE TR UST IS PURELY A COMMERCIAL IN NATURE TO EARN PROFIT. THE PRESENT ASSESSEE FAILS THE TEST OF CHARITABLE OR PHILANTHROPIC INSTITUTION. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE PR ESENT CASE, THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GSI INDIA (SUPRA) I S NOT APPLICABLE. 5.3. ACCORDINGLY, IN THE PRESENT CASE THE ACTIVITIE S OF THE ASSESSEE TRUST ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS WITHIN THE ME ANING OF PROVISION OF SECTION 2(15) OF THE INCOME TAX ACT AND IT FAILS THE TEST OF A CHARI TABLE INSTITUTION AND ACCORDINGLY IS NOT ELIGIBLE FOR EXEMPTION AS CLAIMED U/S 11(1) OF THE ACT IN VIEW OF OUR FINDINGS HEREINABOVE. 5.4. THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMI LAR TO THE FACTS AS IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN SERVICES, MANSA, WHICH WAS DECIDED BY THIS BENCH OF ITAT, AMRITSAR ON 26.09.2012, IN ITA NO. 551(ASR)/2 011 THOUGH THE ISSUE IN THE SAID CASE WAS WITH REFERENCE TO REGISTRATION U/S 12AA O F THE ACT, WHICH WAS DENIED BY THE LD. CIT AND CONFIRMED BY US. THE FACTS OF THE SAID CASE AND RELEVANT FINDINGS OF ITAT AMRITSAR BENCH VIDE ORDER DATED 26.09.2012 ARE VERY RELEVANT AND SUPPORT THE PRESENT CASE AND ACCORDINGLY FOR THE SAKE OF CONVENIENCE TH E SAME IS REPRODUCED HEREINBELOW: 31 THE SUKHMANI SOCIETY FOR CITIZEN SERVICES (SUWIDHA CENTRE) D.C. OFFICE, DISTT. ADMINISTRATIVE COMPLEX MANSA (HEREINAFTER CALLED TH E SOCIETY) FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 ( IN SHORT THE ACT), ON 30.03.2011 IN THE PRESCRIBED F ORM TO THE LD. COMMISSIONER OF INCOME TAX, BATHINDA. IN ORDER TO VERIFY THE GENUIN ENESS OF THE ACTIVITIES OF THE ASSESSEE-SOCIETY, THE LD. CIT, BATHINDA CALLED THE SOCIETY ALONWITH COMPLETE SET OF BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTS FOR T HE LAST THREE YEARS FOR 21.04.2011. IN COMPLIANCE OF THE SAME, THE AUTHORIS ED REPRESENTATIVE OF THE SOCIETY ATTENDED THE PROCEEDINGS AND FURNISHED THE REQUISITE INFORMATION. THE APPLICATION OF THE SOCIETY WAS REFERRED TO THE ITO WARD 1(4), MANSA, TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY, IN CO MPLIANCE OF THE SAME, THE ASSESSING OFFICE VIDE HIS REPORT DATED 05.09.2011 S TATED THAT THE SOCIETY HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT IN ABSENCE O F WHICH, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF ACTIVITIES OF THE SOCIETY AND KEEPING IN VIEW ALL THESE FACTS, THE AO DID NOT RECOMMEND THE CASE OF THE ASS ESSEE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE JT. C.I.T. RANGE-1, A LSO ENDORSED THE FINDINGS OF THE A.O. THE LD. CIT BATHINDA FIXED THE CASE FOR HEARIN G IN HIS OFFICE ON 27.03.2011 AND AUTHORISED REPRESENTATIVE OF THE SOCIETY ATTEND ED THE PROCEEDINGS AND ALSO FILED THE REQUISITE INFORMATION ALONGWITH THE DETAI LS OF ACTIVITIES AND OTHER DOCUMENTS. 2. THE SOCIETY IS REGISTERED WITH THE ADDITIONAL RE GISTRAR OF SOCIETIES, MANSA VIDE NO.44 OF 22.03.2004. THE AIMS AND OBJECTS OF T HE SOCIETIES ARE CONTAINED IN MEMORANDUM OF ASSOCIATION OF THE SOCIETY. AFTER PER USING THE OBJECTS AND FUNCTIONS OF THE SOCIETY, THE LD. CIT BATHINDA IS OF THE VIEW THAT THE ACTIVITIES OF THE SOCIETY ARE IN COMMERCIAL NATURE RATHER THAN CH ARITABLE IN NATURE. THE LD. CIT, BATHINDA HAS ALSO PERUSED THE INCOME AND EXPEN DITURE OF THE SOCIETY WHICH REVEALS THAT THE SOCIETY HAS BEEN EARNING HUGE PROF IT AND, THEREFORE, HE WAS OF THE VIEW THAT THE ACTIVITIES OF THE SOCIETY ARE OF COM MERCIAL IN NATURE AND AIMED AT DERIVING PROFIT AND NOT FOR CHARITABLE PURPOSE. 3. THE LD. CIT, BATHINDA CONFRONTED THE ABOVE SAID FACTS TO THE SOCIETY AND THE SOCIETY CONTENDED THAT THE MAIN OBJECT OF THE S OCIETY IS TO PROVIDE CITIZENS SERVICES TO THE COMMON PEOPLE FOR THEIR CONVENIENCE AND THE SOCIETY ALSO EXPLAINED THAT THE SOCIETY RECEIVES APPLICATION FRO M THE COMMON CITIZEN FOR VARIOUS SERVICES ON BEHALF OF THE DEPARTMENTS OF ST ATE GOVT, FORWARDS THE SAME TO THE CONCERNED DEPARTMENT AND DELIVER BACK THE SAME TO THE CITIZEN WITHIN A SPECIFIED TIME FRAME. THE SOCIETY IS CHARGING PRESC RIBED FEE FROM THE CITIZEN FOR PROVIDING SERVICES. THE LD. CIT, BATHINDA PERUSED THE CHART PRODUCED BY THE SOCIETY SHOWING CHARGES RECEIVED BY THE SOCIETY AND HE IS OF THE VIEW THAT THE SOCIETY CHARGES AS MUCH AS RS.1000/- FOR ISSUING N OC FOR PETROL PUMP, RS.500 FOR REGISTRATION OF MARRIAGE, RS.500 FOR NOC ON BUI LDING PLAN AND SO ON. HE IS ALSO OF THE VIEW THAT THESE CHARGES ARE IN ADDITION TO THE STATUTORY FEES CHARGED BY THE STATE GOVT. DEPARTMENTS. THESE CHARGES/FEES AR E CHARGED BY THE SOCIETY FOR 32 PROVIDING ALLEGED CITIZEN SERVICES. THE LD. CIT, BA THINDA FINALLY HELD THAT THE ACTIVITY OF THE SOCIETY IS IN THE NATURE OF TRADING , COMMERCE OR BUSINESS AND ACTIVITY OF RENDERING SERVICE IN RELATION TO THE TR ADE, COMMERCE OR BUSINESS FOR A FEE. THE SOCIETY PROVIDES CERTAIN SERVICES TO THE C OMMON MAN AND CHARGES FEE FOR THE SAME AND THIS ACT OF THE SOCIETY HARDLY GO TO E STABLISH ANY CHARITABLE PURPOSE. FINALLY, THE LD. CIT ALSO HELD THAT THE SOCIETY IS DOING ALL WORK AND RENDERING SERVICES TO THE CITIZENS WHICH THE STATE GOVT. WAS SUPPOSED TO PERFORM WITHOUT CHARGING ANY SUCH ADDITIONAL FEES. THEREFORE, HE IS SATISFIED THAT THE ACTIVITIES OF THE SOCIETY/INSTITUTIONS NOT CHARITABLE IN NATURE W ITHIN THE MEANING OF PROVISO TO SECTION 2(15) OF THE ACT AND IT DOES NOT QUALIFY TO BE TREATED AS A CHARITABLE INSTITUTION. HENCE, HE REJECTED THE REQUEST OF THE ASSESSEE FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, VIDE IMPUGNED ORDER DATED 26.09.2011. 4. THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 26.09.2011 PASSED BY THE LD. CIT, BATHINDA AND FILED THE PRESENT APPE AL. 5. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE SOCIETY WAS REGISTERED ON 22.0.30004 WITH THE ADDITIONAL REGISTRAR OFFICE, MA NSA AND FORMATION OF THE SOCIETY WAS ON INITIATION AND INSTRUCTIONS OF GOVER NMENT OF PUNJAB TO IMPLEMENT SUWIDHA (SINGLE USERS FRIENDLY WINDOW DISPOSAL H ELPLINE FOR APPLICANTS) AND IS A PROJECT OF THE STATE GOVERNMENT. THE STATE GO VT. HAD INSTRUCTED ALL THE DISTRICT OFFICES TO FORM SOCIETIES ON A SIMILAR PA TTERN, WITH OFFICIAL WEBSITE SUWIDHA.NIC.IN. THE MAIN OBJECT OF THE SOCIETY IS T O PROVIDE SINGLE WINDOW SERVICES TO THE CITIZENS AGAINST A MINIMUM FEES FO R THEIR SERVICES AND TO PROVIDE SERVICES WITHIN SCHEDULED TIME. HE FURTHER STATED T HAT THE ORGANISATION OF THE SOCIETY WAS FRAMED AND DEPUTY COMMISSIONER, MANSA IS AN EX-OFFICIO MEMBER ALOGWITH VARIOUS OTHER ADDITIONAL COMMISSIONERS AS WELL AS SUB-DIVISIONAL MAGISTRATES AND OTHER OFFICERS OF THE DISTRICT MANS A, AS THE OFFICE BEARERS FOR THE COMPLETION OF THE SOCIETY. HE FURTHER STATED THAT T HE D.C. MANSA IS THE CHAIRMAN OF THE PRESENT SOCIETY AND THE ADDITIONAL DEPUTY CO MMISSIONER (GENERAL) IS A MEMBER/SECRETARY, ADDITIONAL DEPUTY COMMISSIONER (D EVELOPMENT) MEMBER, SDM, MANSA AND EXECUTIVE ENGINEER, PWD, B&R, MANSA, ARE THE MEMBERS OF THE SOCIETY. HE STATED THAT THE MOTIVE OF THE SOCIE TY IS TO PROVIDE SERVICES FROM A SINGLE WINDOW, TAKING UP MINIMUM POSSIBLE CHARGES A S PER CHART OF FACILITATION CHARGES, WHICH ARE FIXED BY THE STATE GOVERNMENT. H E HAS ALSO PRODUCED COPY OF CHART SHOWING SERVICE-WISE CHARGES TAKEN BY THE SOC IETY FROM THE CITIZENS FOR RENDERING ITS SERVICES. HE HAS ALSO DREW OUR ATTENT ION TOWARDS THE OBJECT OF THE SOCIETY WHICH ARE MENTIONED IN THE MEMORANDUM OF AS SOCIATION I.E. ABOUT 29 OBJECTS. HE HAS ALSO DREW OUR ATTENTION TOWARDS PRE SENT BOARD OF GOVERNORS AND STATED THAT ALMOST ALL THE BOARD MEMBERS ARE HIGH O FFICIALS OF THE PUNJAB GOVERNMENT. FINALLY, HE STATED THAT THE SOCIETY IS WORKING FOR CHARITABLE PURPOSES AS WELL AS FOR PUBLIC UTILITY PURPOSES AND HE REQUESTED THAT THE SOCIETY DESERVES REGISTRATION UNDER SECTION 12AA OF THE ACT . BUT THE LD. CIT, BHATINDA HAS WRONGLY REJECTED THE REQUEST OF THE ASSESSEE VI DE IMPUGNED ORDER DATED 26.09.2011. IN SUPPORT OF HIS CONTENTION HE HAS PLA CED RELIANCE ON THE FOLLOWING DECISIONS: 33 I) COMMISSIONER OF INCOME TAX, PANCHKULA VS. HARYAN A WAREHOUSING (2011) 196 TAXMAN 260 (P&H). II) COMMISSIONER OF INCOME TAX, PANCHKULA VS. HARYA NA BUILDING OTHER CONSTRUCTION WORKS WELFARE BOARD 196 TAXMAN 255 (P& H). III) COMMISSIONER OF INCOME TAX VS. GUJARAT MARITIME BOA RD (2007) 289 ITR 139 (GUJ.) IV) COMMISSIONER OF INCOME TAX VS. AGGARWAL SABHA MAHAJ ARAJ AGGARSAIN BHAWAN (2011) 198 TAXMANN 172 (P&H) V) SANJEEVAMMA HANUMAN THE GOWDA CHARITABLE TRUST VS. DIRECTOR OF INCOMETAX (EXEMPTIONS) (2006) 285 ITR 327 (KAR). VI) BAR COUNCIL OF MAHARASHTRA VS. CIT 126 ITR 27. VII) COMMISSIONER OF INCOME TAX VS. DREDGING CORPORATION OF INDIA (1988) 174 ITR 682 (AP). 6. ON THE CONTRARY, THE LD. DR, SH. AMRIK CHAND, RE LIED UPON THE ORDER PASSED BY THE LD. CIT, BATHINDA AND STATED THAT THE SOCIETY HAS NOT DONE ANY CHARITABLE AS WELL AS PUBLIC UTILITY WORK TILL DATE . THE LD. DR FURTHER STATED THAT THE ASSESSEE IS CHARGING A VERY HUGE FEES FROM THE PUBLIC FOR RENDERING ITS SERVICES TO THE SOCIETY, WHICH IS IN ADDITION TO THE CHARGES LEVIED BY THE PUNJAB GOVERNMENT AND IS ADDITIONAL BURDEN UPON THE COMMON MAN. LASTLY, HE STATED THAT THE ACTIVITIES OF THE SOCIETY ARE NOT CHARITAB LE IN NATURE WITHIN THE MEANING OF PROVISO TO SECTION 2(15) OF THE ACT, BECAUSE THE AS SESSEE IS DOING ITS BUSINESS AND GAINING A HUGE PROFIT BY DOING THE WORK OF PUBLIC A ND HAS NOT DONE ANY SINGLE CHARITABLE WORK TILL DATE. THEREFORE, THE REQUEST O F THE ASSESSEE FOR REGISTRATION OF THE SOCIETY U/S 12AA OF THE ACT, HAS RIGHTLY BEEN R EJECTED BY THE LD. CIT, BATHINDA. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US. THE LD. COUNSEL FOR THE ASSESSEE FILED A C HART OF SERVICES AND CHARGES AGAINST THE SERVICES RENDERED BY THE SOCIETY THAT A RE ABOUT 36 IN NUMBER. FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE 17 SERVICES R ENDERED BY THE SOCIETY AND THE CHARGES TAKEN BY THE SOCIETY, WHICH ARE AS UNDE R: SUKHMANI SOCIETY FOR CITIZEN SERVICES VS. CIT. BATHINDA I.T.A. NO. 551/ASR-2011 SERVICE FACILI. CHARG ES TIME FRAME FINANCIAL YEAR 2008-09 FINANCIAL YEAR 2009-10 FINANCIAL YEAR 2010-11 (RS.) DAYS NO. OF CASES %AGE OF NO. OF CASES %AGE OF TOTAL NO. OF CASES %AGE OF TOTAL 34 TOTAL 1 ISSUANCE OF NATIONALITY CERTIFICATE 20 15 0 0 0 0.00% 11856 24.70% 2 ISSUANCE OF BIRTH CERTIFICATE 20 7 5001 32.46% 5419 11.62% 7462 15.55% 3 DRIVING LICENCES RELATED SERVICES 20 7 0 0.00% 20041 42.96% 7326 15.26% 4 ARM LICENCES RELATED SERVESS 500 45 4282 27.79% 5855 12.55% 5173 10.78% 5 ISSUANCE OF AFFIDAVITS 20 SAME DAY 1036 6.72% 4258 9.13% 5011 10.44% 6 REGISTRATION OF VEHICLE SERVICES 100 5 0 0.00% 6096 13.07% 4675 9.74% 7 ISSUANCE OF COPY OF A DOCUMENT 30 7 1473 9.56% 1257 2.69% 1904 3.97% 8 ISSUANCE OF DEATH CERTIFICATE 20 7 975 6.33% 951 2.04% 1577 3.29% 9 SUBMISSION OF PASSPORT APPLICATIONS 100 20 2101 13.63% 1654 3.55% 1282 2.67% 10 AGRICULTURE RELATED 100 30 274 1.78% 779 1.67% 614 1.28% 11 NON-ENCUMBERENCE CERTIFICATE 20 0 0 0.00% 0 0.00% 374 0.78% 12 FORM SEELING 0 0 0 0.00% 0 0.00% 160 0.33% 13 ISSUANCE OF SURETY BONDS 50 SAME DAY 5 0.03% 29 0.06% 151 0.31% 14 REGISTRATION OF MARRIAGE 500 SAME DAY 60 0.39% 88 0.19% 63 0.13% 15 OTHERS 0 0 202 1.31% 218 0.47% 373 0.78% 16 NOC OF PETROL PUMP 1000 40 0 0.00% 0 0.00% 0 0.00% 17 NOC FOR BUILDING PLAN 500 30 0 0.00% 0 0.00% 0 0.00% TOTAL 15409 46645 48001 (COUNSEL FOR THE ASSESSEE (APPELLANT) 35 7.1. THE LD. CIT, BATHINDA HAS ALSO MENTIONED IN PA RA 3.3 AT PAGE 3 & 4 IN THE IMPUGNED ORDER THAT THE APPLICANT HAS FURNISHED A C HART SHOWING FEE CHARGEABLE FOR PROVIDING VARIOUS SERVICES TO THE CITIZENS. A P ERUSAL OF THE CHART SHOWS THAT THE APPLICANT CHARGES AS MUCH AS RS.1000/- FOR ISSUING NOC FOR PETROL PUMP, RS.500 FOR REGISTRATION OF MARRIAGE, RS.500 FOR NOC ON BUI LDING PLAN AND SO ON. IT IS PERTINENT TO MENTION HERE THAT THESE CHARGES ARE IN ADDITION TO THE STATUTORY FEES CHARGED BY THE STATE GOVT. DEPARTMENTS. THESE CHARG ES/FEES ARE CHARGED BY THE APPLICANT FOR PROVIDING THE ALLEGED CITIZENS SERVIC ES. 7.2. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED BAL ANCE SHEET AS ON 31.03.2009 IN WHICH THE SOCIETY HAS SHOWN LIABILITIES AND ASSE TS AS WELL AS INCOME & EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.3.2009. F OR THE SAKE OF CONVENIENCE, THE BALANCE SHEET AS ON 31.03.2009 AS WELL AS INCOM E & EXPENDITURE FOR THE PERIOD ENDED 31.03.2009 OF THE SOCIETY ARE REPRODUC ED AS UNDER: SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA BALANCE SHEET AS ON 31.03.2009 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1452088.00 O. BALANCE- 3389932.99 (DETAILS ATTACHED) LESS: OLD DEP 1028849.00 ADD : TFD FROM 1344307.50 TELEPHONE SECURITY 500.00 I & E A/C _____________3705391.49 LOAN TO DISTT.NA ZAR 143150.00 STATE GOVT. 500000.00 RECEIVABLE FROM EX. 77860.00 CLERK CUM ACCOUNTANT SH. ASHOK KUMAR. SECURITY FROM COMPUTER 10000.00 BANK BALANCES: S.B.O.P., MANSA 1573840.99 AMOUNT MORE DEPOSITED IN 270.0 SBOP, MANSA ( I/A) 371818.00 BANK ACCOUNT PNB, BUDHLADA 334408.50 SBOP, SARDULGARH 257726.00 36 CASH IN HEAD 4270.00 --------------- ---------------- 4215661.49 4215661.49 ---------------- ---------------- REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCONTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 18.08.2009 M. NO. 500277 SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA INCOME & EXPENDITUE ACCOUNT FOR THE PERIOD ENDING 3 1.03.2009 EXPENDITURE AMOUNT (RS) INCOME AMOUNT AMOUNT(RS) TO PB. STATE E-GOVERANCE 381533.50 BY RECEIPTS 25 92150.00 SOCIETY, CHD BY BANK INTEREST48843.00 TO PRINTING & STATIONERY 29907.00 TO SALARY 539204.00 TO BANK EXP. 490.00 TO COMPUTER REPAIR 27735.00 TO AUDIT FEE 11000.00 TO ELECTRICITY BILL 34028.00 TO TELEPHONE 5727.00 TO SMS EXP. 945.00 TO PHOTOSTATE 1035.00 TO ELECTRIC REPAIR 225.00 TO TRAVELLING 5150.00 TO DEPRECIATION 259706.00 37 TO INCOME OVER EXP. 1344307.50 --------------- -------------- - 2640933.00 2640933.00 ---------------- ---------------- REPORT :- SUBJECT TO OUR SEPARATE FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCUONTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 18.08.2009 M. NO. 500277 7.3. SIMILARLY, THE BALANCE SHEET AS ON 31.03.2010 AS WELL AS THE INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD ENDING 31.03.201 0 ARE ALSO REPRODUCED AS UNDER: SUKHMANI SOCIETY FOR CITIZEN SERVICES (D.C. OFFICE) , MANSA BALANCE SHEET AS ON 31.03.2010 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1431952.00 O. BALANCE- 3705391.49 (DETAILS ATTACHED) ADD : TFD FROM 1487573.50 TELEPHONE SECURITY 500.00 I & E A/C _____________5192964.99 LOAN TO DISTT.NA ZAR 15000.00 SECURITY FROM COMPUTER 10000.00. SDM BUDHLA DA. 3000.00 SUPPLIER CH. ISSUED NOT PRESENTED 16356.00 S.B.O.P.(S WEEP IN) 2784690.00 38 BANK BALANCE : S.B.O.P, MANSA 50281.00 SBOP, MANSA ( I/A) 377866.00 PNB, BUDHLADA 9349.00 SBOP, BUDHLALDA 296960.00 SBOP, SARDULGARH 429722.00 --------------- ---------------- 5219320.99 5219320. ---------------- ---------------- REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANT S PLACE : MANSA (SANJEEV KUMAR) DATED : 22.06.2010 M. NO. 500277 INCOME & EXPENDITURE ACCOUNT FORTHE PERIOLD ENDING ON 31.3.2010 EXPENDITURE AMOUNT INCOME AMOUNT TO PB. STATE E-GOVERNANCE 486084.50 BY RECEIPTS 3 420275.00 SOCEITY CHD. TO PRINTING & STATIONERY 146145.00 BY BANK INTERES T 86517.00 TO SALARY 917004.00 BY EXCESS DEPOSIT 250. 00 TO BANK EXP. 911.00 BY EXCESS CREDIT BANK 10.00 TO COMPUTER REPAIR 64880.00 TO AUDIT FEE 7000.00 TO ELECTRICITY BILL 49702.00 39 TO TELEPHONE 10590.00 TO SMS EXP. 1122.00 TO ADVERTISEMENT 13113.00 TO ELECTRIC REPAIR 4969.00 TO TRAVELLING 2346.00 TO MISC. EXP. 670.00 TO POSTAGE 500.00 TO DEPRECIATION 314442.00 TO INCOME OVER EXP. 1487573.00 ---------------------------- 3507052.00 3507052.00 REPORT :- SUBJECT TO OUR SEPARATE FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANT S PLACE : MANSA (SANJEEV KUMAR) DATED : 22.06.2010 M. NO. 500277 7.4. LASTLY, THE BALANCE SHEET AS ON 31.03.2011 AS WELL AS INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD ENDING 31.03.20 11 ARE REPRODUCED AS UNDER: BALANCE SHEET AS ON 31.03.2011 LIABILITIES AMOUNT (RS) ASSETS AMOAUNT GENERAL FUNDS FIXED ASSETS 1285660.00 O. BALANCE- 5192964.99 (DETAILS ATTACHED) ADD : TFD FROM 901085.93 TELEPHONE SECURITY 500.00 I & E A/C _____________6094050.92 LOAN TO DISTT.NA ZAR 15000.00 40 SECURITY FROM COMPUTER 10000.00. SDM BUDHLA DA. 3000.00 SUPPLIER SALARY PAYABLE 114120.00 STAMP PAPER AND STA MPS 40147.00 PSEGS PAYABLE 63697.00 TDS 45253.00 CH. ISSUED NOT PRESENTED 358996.00 NICI, DELHI 352000.00 S.B.O.P(SWEEP IN) 4807579.58 BANK BALANCES : SBOP, MANSA 3088.00 SBOP, BUDHLADA 8547.50 SBOP, SARDULGARH 3590.00 SBOP, (NCC) MANSA 75589.84 CASH IN HAND 909.00 --------------- ---- ------- 6640863.92 6640863.92 ---------------- ------------ - REPORT :- SUBJECT TO OUR SEPARATE AUDITED FOR REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANTS PLACE : MANSA (SANJEEV KUMAR) DATED : 05.09.2011 M. NO. 500277 INCOME & EXPENDITURE ACCOUNT FORTHE PERIOLD ENDING ON 31.3.2011 EXPENDITURE AMOUNT INCOME AMOUNT TO PB. STATE E-GOVERNANCE 478259.50 BY RECEIPTS 3 132591.00 SOCIETY CHD. TO PRINTING 154873.00 BY BANK INTEREST 327855. 43 41 TO SALARY 1413932.00 BY EXCESS DEPOSIT 1969.00 TO BANK EXP. 350.00 BY EXCESS CREDIT BANK 10.00 TO STATIONERY 74842.00 TO COMPUTER REPAIR 67450.00 TO AUDIT FEE 7000.00 TO ELECTRICITY BILL 62279.00 TO TELEPHONE 14659.00 TO SMS EXP. 279.00 TO ADVERTISEMENT 13084.00 TO ELECTRIC REPAIR 8806.00 TO TRAVELLING 12760.00 TO MISC. EXP. 3135.00 TO DEPRECIATION 223130.00 TO INCOME OVER EXP. 901085.93 --------------------------- 3462515.43. 3462515.43 REPORT :- SUBJECT TO OUR SEPARATE REPORT OF EVEN DATE FOR SANJEEV AMAR & ASSOCIATES CHARTERED ACCOUNTANT PLACE : MANSA (SANJEEV KUMAR) DATED : 05.09.2011 M. NO. 500277 7.5. AFTER GOING THROUGH THE AFORESAID BALANCE SHEE TS AS WELL AS INCOME & EXPENDITURE ACCOUNTS OF THE ASSESSEE FOR THE LAST T HREE YEAS, WE HAVE NOT FOUND ANY EXPENDITURE INCURRED BY THE SOCIETY ON CHARITAB LE AS WELL AS PUBLIC UTILITY WORK. ALMOST ALL THE EXPENDITURE HAS BEEN INCURRED BY THE SOCIETY ON PRINTING AND STATIONERY, SALARY TO THEIR EMPLOYEES, BANK EXPENDI TURE, COMPUTER REPAIR, AUDIT FEE, ELECTRICITY BILL, TELEPHONE, ELECTRIC REPAIR, TRAVELING, MISC. EXPENDITURE, POSTAGE ETC. 7.6. THE PRESENT SOCIETY HAS FILED AN APPLICATION T O THE LD. CIT, BATHINDA FOR REGISTRATION. AS PER SECTION 12AA OF THE ACT, THE L D. CIT, BATHINDA ON RECEIPT OF AN APPLICATION FOR REGISTRATION CAN CALL FOR SUCH DOCUMENTS OR INFORMATION FROM 42 THE PRESENT SOCIETY AS HE THINKS NECESSARY IN ORDER SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY AND MA Y ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. IF THE LD. CIT, BATHINDA IS SATISFIED HIMSELF OF THE OBJECTS OF THE TRUST OF THIS SOCIETY AND GENUIN ENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING REGISTERING THE PRESENT SO CIETY AND IF HE IS NOT SATISFIED THEN HE SHALL PASS ORDER IN WRITING REFUSING TO RE GISTER THE SOCIETY AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD. IN THE PRES ENT CASE ALSO, THE LD. CIT, BATHNDA REFERRED THE APPLICATION OF THE SOCIETY TO THE ITO WARD 1(4), MANSA TO VERIFY THE GENUINENESS OF ACTIVITIES OF THE PRESENT SOCIETY AND IN COMPLIANCE OF THE SAME, THE AO VIDE HIS REPORT DATED 05.09.2011 HAS S TATED THAT THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNT BEFORE HIM AND I N THE ABSENCE OF WHICH, IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIV ITIES OF THE PRESENT SOCIETY AND LASTLY THE AO HAS NOT RECOMMENDED THE CASE OF THE A SSESSEE FOR REGISTRATION U/S 12AA OF THE ACT, THROUGH THE JT. CIT, BATHINDA. AFT ER RECEIVING THE SAID REPORT DATED 05.09.2011 FROM THE AO, THE LD. CIT, BATHINDA FIXED THE CASE FOR HEARING ON 27.03.2011. AFTER HEARING THE AUTHORIZED REPRESE NTATIVE OF THE ASSESSEE, THE LD. CIT EXAMINED THE DOCUMENTARY EVIDENCE AVAILABLE WIT H HIM AND STATED THAT THE ACTIVITIES OF THE SOCIETY ARE COMMERCIAL IN NATURE. HE HAS ALSO REPRODUCED THE SAME OBJECTS OF THE PRESENT SOCIETY AT PAGES 2 & 3 IN PARA 3.1(I) TO PARA 3(III). FOR THE SAKE OF CONVENIENCE, THE OBJECTS OF THE SOC IETY ARE REPRODUCED HEREUNDER: 3.1. THE APPLICANT SOCIETY IS REGISTERED WITH THE ADDL. REGISTRAR OF SOCIETIES, MANSA VIDE NO. 44 OF 22.03.2004.THE AIMS AND OBJECT IVES OF THE SOCIETIES ARE CONTAINED IN MEMORANDUM OF ASSOCIATION OF THE SOCIE TY, A COPY OF WHICH HAS BEEN OBTAINED AND IS PLACED ON FILE. AS MANY AS 29 OBJEC TIVES HAVE BEEN MENTIONED IN THE LIST IN PARA 4 UNDER THE TITLE OBJECTIVES AND F UNCTIONS OF THE SOCIETY. SOME OF THE OBJECTIVES ARE SUCH THAT ACTIVITIES OF THE SOCI ETY SEEM TO BE OF COMMERCIAL NATURE RATHER THAN OF CHARITABLE NATURE. THE OBJECT IVES OF SUCH NATURE ARE AS UNDER: (I) TO WORKOUT AND RECOMMEND THE SERVICE FEE OR USER CH ARGE THAT COULD BE CHARGED FROM THE END CUSTOMERS FOR THE APP ROVAL OF THE COMPETENT AUTHORITY AND CONCERNED DEPARTMENTS/ORGAN IZATIONS OVER THE ABOVE AND THE PRESCRIBED BILL AMOUNT/FEE/ STATUTORY FEE FOR PROVIDING THE SERVICES THROUGH SUKHMANI CENTRES/FIN ANCIAL INSTITUTIONS OR FRANCHISEES. (II) TO BUY, SELL, LET ON HIRE, LEASE, TRADE, IMPORT, RE PAIR OR OTHERWISE DEAL WITH IT RESOURCES, SERVICES & SUPPORT ON TURKE Y BASIS LIKE HARDWARE, SOFTWARE, CONNECTIVITY, NETWORKING, TRAIN ING, STATIONERY, CONSUMABLES ETC. INCLUDING OPERATIONAL & MANAGERIAL MANPOWER, HIRING OF PROFESSIONALS, CONSULTANCY SERVICES BY FO LLOWING THE PROCEDURE PRESCRIBED. TO ENSURE THE OTHER INFRASTRU CTURE REQUIREMENTS INCLUDING SITE PREPARATION AND TIMELY AVAILABILITY OF THE NECESSARY RESOURCES FOR THE VARIOUS ACTIVITIES UNDER THE PROJECT. 43 (III) TO ESTABLISH AND MAINTAIN ANY AGENCIES AND FRANCHIS ES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS OF THE SOC IETY. THE LD. CIT ALSO PERUSED THE INCOME AND EXPENDITURE ACCOUNTS, WHICH WE HAVE REPRODUCED HEREINABOVE AND FINALLY CONCLUDED THAT THE ABOVE FACTS CLEARLY REVEALS THAT THE ACTIVITIES OF THE SOCIETY ARE OF C OMMERCIAL IN NATURE AIMED AT DERIVING PROFIT AND NOT FOR CHARITY. 7.7. WE HAVE ALSO PERUSED THE INCOME & EXPENDITURE ACCOUNTS, WHICH WE HAVE REPRODUCED HEREINABOVE AS WELL AS THE IMPUGNED ORDE R ALONGWITH RELEVANT PROVISIONS OF SECTION 12AA OF THE ACT AND SECTION 2 (15) OF THE ACT. FOR THE SAKE OF CONVENIENCE, PROVISIONS OF SECTION 12AA AND SECTION 2(15) OF THE ACT ARE REPRODUCED AS UNDER: SECTION 12AA.(1) THE COMMISSIONER, ON RECEIPT OF A N APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) [ OR CLAUSE (AA) OF SUB SECTION(1) OF SECTION 12A, SHALL A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEMED NECESSARY IN THIS BEHALF; AND B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND COPY OF THE SUCH ORDER SHALL BE SENT TO THE APP LICANT. SECTION 2(15): CHARITABLE PURPOSE INCLUDES RELIE F OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES O R OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 7.8. KEEPING IN VIEW THE AFORESAID DISCUSSIONS AS P ER RECORDS AS WELL AS PER DOCUMENTARY EVIDENCE GIVEN BY THE ASSESSEE, WE FIND THAT THE MAIN PROJECT WAS INITIATED BY THE GOVT. OF PUNJAB IN THE MONTH OF AU GUST, 2002 AT FATEHGARH SAHIB. IT WAS INAUGURATED BY THE CHIEF MINISTER OF PUNJAB ON 31.10.2002. THE PROJECT WAS FOUNDED BY THE GOVT. OF INDIA, DEPARTMENT OF C OMMUNICATION & INFORMATION TECHNOLOGY. THE GOVT. OF PUNJAB HAS DECIDED TO IMP LEMENT THIS PROJECT IN ALL DISTRICTS OF PUNJAB ALONGWITH SUWIDHA BACK-END S ERVICES (SUBS) OF THE DEPUTY COMMISSIONER BRANCHES IN DECEMBER, 2004. THE PROJECT REPLICATION STARTED IN ALL DISTRICTS WITH TECHNICAL SUPPORT OF NIC-DISTRICT CENTRES. AS OF NOW, THE PROJECT IS BEING EXECUTED IN ALL DEPUTY COMMISS IONERS OFFICES. THE APPELLANT SOCIETY IS REGISTERED WITH THE ADDITIONAL REGISTRAR OF SOCIETIES, MANSA VIDE NO.44 OF 22.03.2004 AND ITS AIMS AND OBJECTS ARE CONTAIN ED IN MEMORANDUM OF ASSOCIATION OF THE SOCIETY WHICH WE HAVE ALREADY ME NTIONED IN THE FORE-GOING 44 PARAGRAPHS. AFTER PERUSING THE OBJECTS OF THE SOCIE TY, WE FIND THAT THE LD. CIT, BATHINDA, HAS REPRODUCED SOME IMPORTANT OBJECTS OF THE SOCIETY IN PARA 3.1 (PAGES 2 & 3) OF THE IMPUGNED ORDER WHICH SHOWS THA T THIS SOCIETY HAS BEEN ESTABLISHED FOR MAINTAINING THE AGENCIES AND FRANCH ISES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS OF THE SOCIETY, WHICH CLEAR LY ESTABLISHES THAT THE PRESENT SOCIETY IS DOING BUSINESS WITH OTHER AGENCIES AND F RANCHISES IN THE DISTRICT FOR THE CONDUCT OF THE BUSINESS. WE HAVE NOT SEEN ANY OBJEC T OF THE SOCIETY WHICH SHOWS THAT THE PRESENT SOCIETY IS DOING ANY CHARITABLE AC TIVITIES FOR THE GENERAL PUBLIC UTILITY. THE LD. CIT, BATHINDA HAS ALSO REFERRED TH E MATTER TO THE ITO WARD 1(4), MANSA TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE PRESENT SOCIETY WHO VIDE HIS REPORTED DATED 05.09.2011 HAS STATED THAT THE A SSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNT IN THE ABSENCE OF WHICH IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY AND TH E AO HAS NOT RECOMMENDED THE CASE OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF T HE ACT. EVEN OTHERWISE, THE ASSESSEE HAS FAILED TO ESTABLISH BEFORE THE LD. CI T(A) THAT THE SOCIETY IS DOING ANY CHARITABLE WORK KEEPING IN VIEW ITS OBJECTS. MEREL Y, MENTIONING ABOUT VARIOUS OBJECTS IN THE NATURE OF CHARITABLE ACTIVITIES IN T HE MEMORANDUM OF ASSOCIATION, DOES NOT MEAN THAT THE SOCIETY IS DOING ANY CHARIT ABLE ACTIVITIES FOR THE GENERAL PUBLIC UTILITY AND IS ENTITLED FOR REGISTRATION U NDER SECTION 12AA OF THE ACT. ACCORDING TO SECTION 12AA OF THE ACT, THE COMMISSIO NER ON RECEIPT OF APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON. IN THE PRESENT CASE, THE LD. CIT, BATHINDA HAS MADE THE INQUIRY FROM THE CONCERN ED ITO, WHO HAS NOT RECOMMENDED THE CASE OF THE SOCIETY FOR REGISTRATIO N . EVEN OTHERWISE, THE ASSESSEE HAS ALSO FAILED TO ESTABLISH THAT THE OBJE CTS OF THE SOCIETY ARE CHARITABLE IN NATURE. 7.9. KEEPING IN VIEW THE AFORESAID DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ACTIVITIES OF THE ASSESSEE-SOCIETY ARE NOT CHARITABLE IN NATURE WITHIN THE MEANING OF PROVISIONS OF SECTION 2(15) OF THE ACT A ND IT DOES NOT QUALIFY TO TREAT AS CHARITABLE INSTITUTION. SINCE THE ASSESSEE HAS NOT ESTABLISHED THAT ITS SOCIETY IS FORMED WITH OBJECTS OF ANY CHARITABLE PURPOSE, THE N THE QUESTION OF DISCUSSION OF CITATIONS RELIED UPON BY THE SOCIETY DOES NOT ARISE , EVEN OTHERWISE THESE JUDGMENTS ARE DIFFERENT FROM THE FACTS OF PRESENT C ASE AND ARE NOT HELPFUL THE SOCIETY. THE PRESENT SOCIETY IS DOING ITS BUSINESS AND CHARGING HUGE FEES FROM THE PUBLIC WHICH IS IN ADDITION TO THE PRESCRIBED FEE O F THE PUNJAB GOVT. EVEN OTHERWISE, THE FEES CHARGED BY THE PRESENT SOCIETY IS IN ADDITION TO THE BURDEN FORCED UPON THE COMMON-MAN. BECAUSE OF THIS SERVIC E HAS TO BE RENDERED BY THE PUNJAB GOVT. FREE OF COST TO THE PUBLIC AGAINST THE FEE PRESCRIBED IN THE CHART AS REPRODUCED IN THE FORE-GOING PARAGRAPHS. WE ARE O F THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT, BATHINDA.. THEREFORE, WE UPHOLD THE IMPUGNED ORDER DATED 26.09.2011 BY DISMISSING THE PRESENT APPEAL FILED BY THE ASSESSEE -SOCIETY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE -SOCIETY IS DISMISSED. 45 6. IN VIEW OF THE FINDINGS HEREINABOVE AND OUR DECI SION IN THE CASE OF SUKHMANI SOCIETY FOR CITIZEN & SERVICES, MANSA (SUPRA) AND D ECISION OF VARIOUS COURT OF LAW RELIED UPON BY THE AUTHORITIES BELOW, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD. CIT(A). THUS, ALL THE GROUNDS OF ASSESSEE ARE DISMI SSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.45(ASR)/2014 FOR THE A.Y. 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JANUARY,2015. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH JANUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SUKHMANI SOCIETY FOR CITIZEN SERVICE S, KAPURTHALA. 2. THE ITO.ACIT, CIR.IV, JALANDHAR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER
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