NEIA TRUST, MUMBAI V. JDIT (E) II, MUMBAI

ITA 544/MUM/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5900 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 142(1); 12AA; 10B; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 544 / MUM/ 2014 ( / ASSESSMENT YEAR: 2010 - 11 ) NEIA TRUST C/O ECGC OF INDIA LTD, 10 TH FLOOR, EXPRESS TOWERS, NARIMAN POINT, MUMBAI - 400021. / VS. THE JOINT DIRECTOR OF INCOME TAX (EXEMPTION) II, LALBAUG MUMBAI - 12. ./ ./ PAN/GIR NO. : AAATN 9999 F ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 26.10.2018 / DATE OF PRONOUNCEMENT : 18.01. 2019 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 22.11.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2010 - 11. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. RE: GRANTING OF EXEMPTION CLAIMED UIS.11(1)(A) OF THE INCOME TAX ACT 1961 (THE ACT): THE LD. CIT (APPEALS) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW OUGHT TO HAVE HELD THAT THE LD. A. 0. ERRE D IN - (A) NOT HOLDING THAT OBJECTS OF THE APPELLANT ARE 'CHARITABLE PURPOSE' AS DEFINED IN SECTION 2(15) OF THE ACT (B) HOLDING THAT THE OBJECTS OF THE APPELLANT FALL IN THE LAST LIMB OF ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY' AND THE FIRST PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT, 1961 IS APPLICABLE TO THE ACTIVITIES CARRIED ON BY THE APPELLANT. (C) NOT APPLYING THE PROVISIONS OF SECTION 11 OF THE ACT IN ASSESSING THE INCOME FOR THE YEAR REVENUE BY : SHRI RAJORE SATISH CHANDRA (DR) ASSESSEE BY: SHRI ARATI VISSANJI 2. APPLICABILITY OF SECTION 11 OF THE ACT: THE LD. C.I.T. (APPEALS) OUGHT TO HAVE HELD THAT THE LD. A.O. ERRED IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT AS IT IS HOLDING REGISTRATION UNDER SECTION 12AA OF THE ACT, THE PROVISIONS OF SECTION 11 OF THE ACT HAVE TO BE APPLIED IN ASSESSMENT OF ITS INCOME. 3. RE. RS.190 CRORES RECEIVED DURING THE YEAR FROM THE CENTRAL GOVERNMENT OF INDIA ACCOUNTED AS CORPUS CONTRIBUTION: THE LEARNED C.I.T. (APPEALS) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW OUGHT TO HAVE HELD THAT THE LEARNED AO ERRED IN - (A) ASSESSING RS.190 CRORES, RECEIVED FROM THE CENTRAL GOVERNMENT OF INDIA AS INCOME. WITHOUT PREJUDICE TO THE ABOVE AND IN ALTERNATE THE FOLLOWING GROUNDS: (B) ASSESSING RECEIPT OF RS. 190 CRORES FROM THE CENTRAL GOVERNMENT AS INCOME BY RESORTING TO THE DEFINITION OF INCOME AS CONTAINED IN SECTION 2(24)(IIA) OF THE ACT (WRONGLY MENTIONED IN ORDER OF ASSESSMENT AS SECTION 24(IIA) OF THE ACT) NOTWITHSTANDING THE FACT THAT IN ASSESSING THE INCOME THE OBJECTS OF THE TRUST ARE NOT CONSIDERED AS 'CHARITABLE PURPOSE'. (C) RECEIPT OF RS. 190 CRORES, IN ANY VIEW OF THE MATTER CANNOT BE ASSESSED AS INCOME U/S.56(2)(VII) OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE AND IN ALTERNATE 4. THE LD. CIT(A) OUGHT TO HA VE HELD THAT RECEIPT OF RS.190 CRORE CANNOT BE ASSESSED AS INCOME IN VIEW OF HAVING NOTED FINDING VIDE PAGE NO. 16 AND 17 AND PARA NO. 8.1 AND 8.2 OF HIS ORDER UNDER APPEAL TO THE EFFECT THAT THE SAID RECEIPT REPRESENTS GRANT - IN - AID AND IS LIABLE TO BE SUR RENDERED TO THE EXTENT NOT UTILIZED AND HENCE REPRESENTS LIABILITY AND NOT CORPUS CONTRIBUTION. 5. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED FOR HEREINABOVE AND/OR SUCH OTHER RELIEFS AS MAY BE JUSTIFIED BY THE FACTS AND CIRCUMSTANCES OF THE CASE AND A S MAY MEET THE ENDS OF JUSTICE SHOULD BE GRANTED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND, OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 01.10.2010 ALONG WITH THE INCOME & EXPENDITURE ACCOUNT, BALANCE SHEET AND AUDIT REPORT IN FORM 10B OF THE ACT CLAIMING EXEMPTION U/S 11 & DECLARING TOTAL INCOME TO THE TUNE OF RS. NIL. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE I SSUED AND SERVED UPON THE ASSESSEE. THE CLAIM OF THE ASSESSEE WAS EXAMINED IN VIEW OF THE FIRST PROVISO OF SECTION 2(15) OF THE ACT AND WAS NOT FOUND ELIGIBLE, THEREFORE, EXEMPTION U/S 11 & 12 OF THE ACT WAS DECLINED AND THE INCOME IN SUM OF RS.45,59,75,53 4/ - WAS ADDED TO THE INCOME OF THE ASSESSEE AND CORPUS FUND IN SUM OF RS.1,90,00,00,000/ - WAS ALSO NOT FOUND ELIGIBLE U/S 11 & 12 OF THE ACT, THEREFORE, THE CORPUS FUND WAS ALSO ADDED TO THE INCOME OF ASSESSEE AND THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.2,35,59,75,534/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALSO DECLINED THE CLAIM OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4 . WE HAVE HEARD THE ARGUMENT ADVAN CED BY THE LD. REPRESENTATIVE OF THE PARTIES AND BY PERUSING THE RECORD. WE NOTICED THAT THE AO APPLIED THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, 1961 AND DECLINED THE CLAIM OF THE ASSESSEE U/S 11/12 OF THE ACT. THE OBJECT OF THE ASSESSEE HAS BEEN GIV EN IN PARA NO. 5 OF THE TRUST DEED AT PAGE NO. 11 WHICH IS HEREBY MENTIONED BELOW: - (I) TO IMPLEMENT THE NEIA SCHEME THROUGH ECGC (EXPORT CREDIT GUARANTEE CORPORATION OF INDIA) FOR THE BENEFIT OF MEDIUM AND LONG TERM EXPORTERS (B) TO IMPLEMENT SUCH OTHER SCHEMES AND PROGRAMMES FOR THE BENEFIT OF MEDIUM AND LONG TERM EXPORTERS AS THE GOVERNMENT OF INDIA MAINFRAME FROM TIME TO TIME AND DIRECT THE TRUST IMPLEMENT. 5. THE ASSESSEE TRUST RECEIVED POLICY PREMIUM PAYMENTS FROM THE FOLLOWING PARTIES (I) APAR INDUSTRIES LTD. RS.1,86,12,015/ - (II) ONGC VIDESH LTD RS.2,06,32,870/ - (III) HINDUSTAN AERONAUTICS LTD. BANGALORE RS.17,34,159/ - TOTAL TO THE TUNE OF RS.4,09,79,044/ - . THE ASSESSEE ALSO PAID THE CLAIM OF VARIOUS EXPORTERS UNDER THE SCHEME IN SUM OF RS .32,12,724/ - DURING THE YEAR. THE CLAIM OF THE ASSESSEE WAS DECLINED IN VIEW OF THE EXCEPTION OF PROVISION U/S 2(15) OF THE ACT SPECIFICALLY ON THE GROUNDS OF THAT THE OBJECT OF THE ASSESSEE IS IN NATURE OF BUSINESS, TRADE AND COMMERCE. NO DOUBT, THE SAID PROVISION WAS INTRODUCED. THE ASSESSEE TRUST WAS FORMED WITH A VIEW TO FACILITATE IMMEDIATE AND LONG TERM EXPORTS AND TO CONSIDER THE LIMITATIONS OF EXPORT CREDIT GUARANTEE CORPORATION IN PROVIDING ADEQUATE COVER ON ITS OWN AND NON AVAILABILITY OF RE - INSU RANCE COVER TO SUCH EXPORTERS. THE GOVERNMENT OF INDIA MINISTRY OF COMMERCE AND INDUSTRIES DEPARTMENT OF COMMERCE VIDE THE RESOLUTION DATED 7.03.2006 DECIDED TO ESTABLISH THE NATIONAL EXPORTER INSURANCE ACCOUNT (NEIA) SCHEME TO BE MAINTAINED AND OPERATED B Y A PUBLIC TRUST. NEIA TRUST WAS, THUS, SET UP IN TERMS OF THIS GOVERNMENT RESOLUTION VIDE THE TRUST DEED DATED 21.3.2006, THE PRESIDENT OF INDIA, ACTING THROUGH THE JOINT SECRETARY, DEPARTMENT OF COMMERCE, MINISTRY OF COMMERCE & INDUSTRY, GOVERNMENT OF IN DIA BEING THE SETTLER OF THE TRUST. THE OBJECT OF THE ASSESSEE TRUST WAS THE SAME WHICH IS FOR THE BENEFIT OF MEDIUM AND LONG TERM EXPORTERS. THERE IS NO CHANGE IN THE OBJECT OF THE TRUST. HERE IT IS IMPORTANT TO MENTION THAT THE ASSESSEE TRUST WAS REGISTE RED U/S 12AA OF THE ACT WHICH WAS NOT WITHDRAWN BY AUTHORITY WHO GRANTED THE REGISTRATION. THE LD REPRESENTATIVE OF THE ASSESSEE HAS CONTENTED THAT AO HAS NO RIGHT TO WITHDRAW THE CLAIM OF EXEMPTION BY DISCUSSING THE PROVISIONS OF SECTION 2(15) OF THE ACT. SECTION 2(15) IS HEREBY REPRODUCED AS UNDER: - CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTI STIC OR HISTORIC INTEREST, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OF APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY 6. SUBSEQUENTLY, THE SAID AMENDMENT WAS EXPLAINED AND INTERPRETED BY THE CBDT CIRCULAR NO.11/2018 DATED 19.12.2008 IN WHICH TRADE, COMMERCE AND BUSINESS IS REQUIRED TO BE DECIDED ON THE BASIS OF THE NATURE, SCOPE, EXTENT, FREQUENCY OF ACTIVITIES. ACCORDINGLY, THE NATURE OF THE TRUST IS HEREBY SPECIFIED THAT THE TRUST IS TO PROVIDE CREDIT INSURANCE COVER TO INDIAN EXPORTERS KEEPING IN VIEW THE NATIONAL INTEREST. THE TRUST IS SPONSORED AND THE NATURE OF ACTIVITIES OF THE TRUST IS TO PR OVIDE CREDIT INSURANCE COVER TO INDIAN EXPORTERS KEEPING IN VIEW OF THE NATIONAL INTEREST. THE TRUST IS SPONSORED BY GOVT. OF INDIA WITH THE OBJECTIVE TO PROMOTE EXPORTS, IMPROVE COMPETITIVENESS OF INDIAN EXPORTS AND TO IMPLEMENT SCHEMES FORMULATED BY THE GOVT. OF INDIA FOR THE BENEFITS OF MEDIUM AND LONG TERM EXPORTERS IN NATIONAL INTEREST. CERTAINLY, NONE OF THE ABOVE OBJECTIVES ARE TAINTED WITH MOTIVE OF TRADE, COMMERCE OR BUSINESS AS GOVT. OF INDIA IS NOT INTO BUSINESS OF PROVIDING CREDIT INSURANCE. WHEREVER, IT HAS INTENDED TO DO SO, IT HAS BEEN DONE THROUGH CORPORATE STRUCTURE E.G. ECGC OF INDIA LTD. (EXPORT CREDIT GUARANTEE CORPORATION) WHICH DOES THE CREDIT INSURANCE ACTIVITY ON COMMERCIAL BASIS WITH GOVT. OF INDIA AS THE SOLE SHAREHOLDER WITH A P REMIUM AND OTHER INCOME OF RS.1020 CRORES (APPX) AND A NET SURPLUS OF RS.171 (APPROX) FOR FY 2012 - 13. ON THE BASIS OF THE ABOVE, NEIAS ACTIVITY CANNOT AND SHOULD NOT BE CONSIDERED TO BE IN NATURE OF TRADE, COMMERCE OR BUSINESS. 7. THE TRUST SCOPE OF ACTI VITY IS PRIMARILY TO IMPLEMENT SCHEMES FORMULATED BY GOVT OF INDIA. MINISTRY OF COMMERCE, GOVT. OF INDIA, IS THE SETTLER OF THE TRUST AND THE TRUST IS NOT EMPOWERED TO CARRY OUT ANY OTHER ACTIVITY. 8. FURTHER, EVEN THE PROJECT / EXPORTS WHICH REQUIRE CRED IT INSURANCE HAS TO MEET THE CRITERIA STIPULATED IN CLAUSE 12 OF THE TRUST DEED. CRITERIA NO.(IX) AND (XI) SPECIFICALLY REQUIRE THE PROJECT TO BE OF IMPORTANCE OF SUCH PROJECT EXPORT FROM NATIONAL POINT OF VIEW AND OTHER FACTORS LIKE THE CURRENT ECONOM IC DEVELOPMENT IN THE PROJECT COUNTRY AND RELATED ISSUES. THEREFORE, THE TRUST DOES NOT EVEN EVALUATE THE PROJECT FROM THE PERSPECTIVE OF PREMIUM VIABILITY OR PROFITABILITY. ONCE THE PROJECT EXPORT FULFILLS THE CRITERIA MENTIONED IN CLAUSE 12, THE TRUST WILL PROVIDE CREDIT COVER. IN VIEW OF THE ABOVE SAID ACTIVITIES WE NOTICED THAT THERE IS NO INTENSION OF THE ASSESSEE TO EARN THE PROFIT. UNDOUBTEDLY THE DOMINANT AND PRIME OBJECT IS REQUIRED TO BE SEEN. THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS R ELIED UPON THE LAW SETTLED BY THE DELHI HIGH COURT IN CASE TITLED AS INDIA TRADE PROMOTION ORGAIZATION VS. DGIT(E), 2015 TAXMAN.COM 404 DELHI. IT IS SETTLED IN THE SAID LAW THAT THE DOMINANT AND PRIME OBJECT IS REQUIRED TO BE SEEN TO OBSERVE THE NATURE OF TRADE, COMMERCE AND BUSINESS. THE RELEVANT PARA IN CASE OF INDIA TRADE PROMOTION ORGAIZATION (SUPRA) IS 58 WHICH IS REPRODUCED AS UNDER 58. IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION CHARITABLE PURPOSE, AS DEFINED IN SECTION 2(15) CANNOT BE CONSTRU ED LITERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOR AND BE CONSIDERED IN THE 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 PROVI SO WOULD BE AT RISK OF RUNNING 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 SECTI ON 10(23C)(IV) BECAUSE, IN OUR VIEW, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CORRECTION INTERPRETATION OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHE R OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DOMINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSE, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERI NG OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN IT WOULD NOT BE ENTITLED TO CLAIM ITS OBJECT TO BE A CHARITABLE PURPOSE. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. 9. THE FACTS OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE TITLED AS INDIA TRADE PRO MOTION ORGAIZATION (SUPRA). THEREFORE FINDING OF THE SAID CASES IS QUITE APPLICABLE TO THE FACTS OF THE PRESENT CASE. SINCE THE DOMINANT AND PRIME OBJECT OF THE ASSESSEE IS NOT TO EARN THE PROFIT IN RELATION TO TRADE, COMMERCE AND BUSINESS, THEREFORE, T HE EXEMPTION U/S.11 & 12 IS NOT LIABLE TO BE DECLINED. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) IN THIS ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE. ISSUE NO. 2 10. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE IN SUM OF RS.190 CRORES RECEIVED DURING THE YEAR FROM CENTRAL GOVERNMENT OF INDIA ACCOUNTED AS CORPUS CONTRIBUTION. IT IS ARGUED THAT THE LD. REPRESENTATIVE OF THE ASSESSEE T HAT THIS ISSUE HAS DULY BEEN COVERED BY HONBLE MUMBAI IN THE CASE OF IN ITA. NO.3250/M/2016 DATED 26.02.2018 TITLED AS CREDIT GUARANTEE FUND TRUST VS. ITO (EXEMPTION). BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE HONBLE ITAT ON THIS ISSUE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS MENTIONED HEREINBEFORE, THE LD. CIT(A) HAS FOLLOWED THE ORDER OF HIS PREDECESSOR - IN - OFFICE FOR THE AY 2010 - 11 WHILE DISMISSING THE APPEAL FILED BY THE ASSESSEE. WE FIND THAT THE ITAT C BENCH MUMBAI IN ASSESSEES OWN CASE FOR THE AY 2010 - 11 (ITA NO. 6282/MUM/2014) HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THAT: 5.10 IN VIEW OF THE LEGAL POSITION EXPLAINED IN THE AFORESAID JUDGMENTS, IT CAN BE SAFELY DEDUCED THAT IN THE CONTEXT OF THE APPLICATION OF THE PROVISO TO SECTION 2(15) OF THE ACT, WHAT IS CRITICAL IS TO EXAMINE AS TO WHETHER THE ASSESSEE TRUST HAS BEEN ES TABLISHED FOR CHARITABLE PURPOSE OR NOT; AND, THE FACT THAT IT EARNS SOME INCOME, BY ITSELF, WOULD NOT BE FATAL AND CONCLUSIVE TO DETERMINE THAT THE ASSESSEE TRUST IS NOT ESTABLISHED FOR CHARITABLE PURPOSE. IN OTHER WORDS, THE EXISTENCE OR OTHERWISE OF THE PROFIT MOTIVE IN THE ACTIVITIES CARRIED OUT BY THE ASSESSEE TRUST WOULD BE CRUCIAL TO DETERMINE THE APPLICABILITY OF THE PROVISO TO SECTION 2(15) OF THE ACT; MAY IT BE TO EXAMINE WHETHER ITS ACTIVITIES ARE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR W HETHER IT IS RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, AS PRESCRIBED IN THE PROVISO TO SECTION 2(15) OF THE ACT. 5.11 IN THIS BACKGROUND, NOW WE MAY GO BACK TO THE FACTS OF THE PRESENT CASE. IN THE INSTANT CASE, THE OBJECT AND PURPOSE OF THE ASSESSEE TRUST IS TENABLE THE SMALL SCALE INDUSTRIES AND MICRO ENTERPRISES TO PURSUE THEIR INCOME GENERATION ACTIVITIES. THE SAID OBJECT IS SOUGHT TO BE ACHIEVED BY PROVIDING GUARANTEES OR COUNTER GUARANTEES TO THE LENDING INSTITUTIONS WHO D ISBURSE LOANS OR PROVIDE OTHER CREDIT FACILITIES TO THE SMALL SCALE INDUSTRIES AND MICRO ENTERPRISES. WE MAY AGAIN EMPHASIZE THAT THE OBJECT AND PURPOSE OF THE ASSESSEE TRUST IS TO HELP THE SMALL SCALE INDUSTRIES AND MICRO ENTERPRISES BY ENSURING THAT THEY GET ABILITY TO OBTAIN LOANS FROM LENDING INSTITUTIONS. NO DOUBT, THERE IS AN ELEMENT OF FEE OR CHARGES LEVIED BY THE ASSESSEE TRUST, BUT THE POINT IS, IS THERE A PROFIT MOTIVE WHICH WOULD ENABLE SUCH ACTIVITY TO BE CHARACTERIZED AS A TRADE, COMMERCE OR BU SINESS. IN THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS BEFORE US, THERE IS NO CHARGE MADE BY THE REVENUE THAT THE QUANTUM OR OBJECT OF FEE CHARGED BY THE ASSESSEE TRUST BETRAYS ANY PROFIT MOTIVE. IN FACT, THE INCOME - TAX AUTHORITIES DO NOT DISPUTE THE FA CT THAT THE PURPOSE AND OBJECT BEHIND THE ASSESSEE TRUST IS NOT TO CARRY ON TRADE, COMMERCE OR BUSINESS, BUT THE ONLY POINT MADE IS THAT CERTAIN FEE/CHARGES HAVE BEEN LEVIED FOR ACTIVITIES RENDERED TO THE BENEFICIARIES, AND THEREFORE, IT SHOULD BE SEEN AS TRADE, COMMERCE OR BUSINESS. AS WE HAVE SEEN EARLIER, MERE ACTION OF CHARGING FEE FOR SERVICES, BY ITSELF, WOULD NOT JUSTIFY INVOKING OF THE PROVISO TO SECTION 2(15) OF THE ACT UNLESS IT IS ESTABLISHED THAT THE PURPOSE AND OBJECT IS PROFIT MOTIVE. CONSID ERING THE ENTIRETY OF CIRCUMSTANCES WE ARE UNABLE TO FIND ANY CREDIBLE REASONING TAKEN BY THE REVENUE TO SAY THAT THE PURPOSE AND OBJECT OF THE ASSESSEE TRUST FALLS WITHIN THE MEANING OF EXPRESSION TRADE, COMMERCE OR BUSINESS USED IN THE PROVISO TO SECTI ON 2(15) OF THE ACT. IN FACT, AS WE HAD NOTED EARLIER, THE ASSESSEE TRUST HAS BEEN SETTLED ON 27/07/2000 BY THE GOVERNMENT OF INDIA AND SIDBI. THE TRUST DEED BRINGS OUT THE OBJECTS AND PURPOSE FOR WHICH THE ASSESSEE TRUST HAS BEEN SET UP, NAMELY, TO MITIGA TE THE DIFFICULTIES FACED BY THE SMALL SCALE INDUSTRIES AND MICRO ENTERPRISES IN AVAILING CREDIT FACILITIES FROM VARIOUS LENDING INSTITUTIONS. IT IS ALSO TO BE NOTED THAT THE OBJECT AND PURPOSE OF THE TRUST IS FOCUSSED ON SMALL SCALE INDUSTRIES AND MICRO E NTERPRISES AND IS NOT AVAILABLE TO ENTREPRENEURS AT LARGE. APART THERE - FROM, IT IS ALSO PRESCRIBED IN THE SCHEME OPERATIONALIZED BY THE TRUST THAT THE BENEFITS ARE TO BE MADE AVAILABLE ONLY TO CREDIT FACILITIES AGGREGATING UPTO RS.10.00 LACS SANCTIONED AND DISBURSED BY THE LENDING INSTITUTIONS. THEREFORE, CONSIDERING THE FOCUSED AREA OF THE TRUST, IT COULD NOT BE INFERRED THAT THERE IS ANY PROFIT MOTIVE SO AS TO VIEW THE ACTIVITIES TO BE TRADE, COMMERCE OR BUSINESS AS UNDERSTOOD FOR THE PURPOSES OF PROVIS O TO SECTION 2(15) OF THE ACT. THEREFORE, IN OUR CONSIDERED OPINION, ON FACTS, IT IS NOT POSSIBLE TO INFER THAT ASSESSEE TRUST IS CARRYING ON ANY REGULAR TRADE, COMMERCE OR BUSINESS AND ON THE CONTRARY IT IS AN ENTITY WHICH IS ESSENTIALLY EXISTING FOR CH ARITABLE PURPOSES BUT CONDUCTING SOME ACTIVITIES FOR CONSIDERATION OR FEE. IN THIS BACKGROUND, THE PROVISO TO SECTION 2(15) OF THE ACT CANNOT BE INVOKED TO EXCLUDE ASSESSEE TRUST FROM THE PURVIEW OF SECTION 2(15) OF THE ACT SINCE THE SAID PROVISO ONLY SEEK S TO EXCLUDE INSTITUTIONS WHICH ARE CARRYING ON REGULAR BUSINESS, AS INFERRED BY US FOLLOWING THE LEGAL POSITION EXPLAINED BY THE HONBLE DELHI HIGH COURT IN THE CASES REFERRED HEREIN ABOVE. 5.12 IN CONCLUSION, WE THEREFORE, SET - ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. 6. TO SUM UP, THE ORDER OF THE ASSESSMENT YEAR 2010 - 11 FOLLOWED BY THE LD. CIT(A), HAS NOW BEEN SET ASIDE BY THE TRIBUNAL IN THE ABOVE C ASE. THE AO HAS BEEN DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 11 & 12 OF THE ACT. FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 11. THE FACTS OF THE ABO VE MENTIONED CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE CREDIT GUARANTEE FUND TRUST (SUPRA), THEREFORE, IN THE SAID CIRCUMSTANCES, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 18. 01.2019 SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 18. 01.2019 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI