BUILDERS ASSOCIATION INDIA, MUMBAI V. DIT (E), MUMBAI

ITA 550/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87901 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Assessee Lawyers: A H DALAL
• Keywords: Business income; Charitable institution; Cancellation of registration
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 550/MUM/2012 ASSESSMENT YEAR: 2009-10 BUILDERS ASSOCIATION OF INDIA G-1/G-20, COMMERCE CENTRE, 7 TH FLOOR, J DADAJEE ROAD, TARDEO MUMBAI- 400 034 PAN:AAATB 0212 F VS. DCIT (EXEMPTION), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A. H. DALAL REVENUE BY : SHRI S.J. SINGH DATE O F HEARING : 10 . 12 . 2014 DATE OF ORDER : 12 . 01 .201 5 PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE , AGAINST ORDER DATED 08.12.2011, PASSED BY THE DIRECTOR OF I NCOME TAX [EXEMPTION] MUMBAI, U/S 12AA(3) FOR WITHDRAWAL/CANC ELLATION OF REGISTRATION GRANTED U/S 12A, W.E.F. A.Y. 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE BU ILDERS OF ASSOCIATION OF INDIA IS A PAN-INDIA TRADE ORGANIZATION FOR CIVI L AND CONSTRUCTION INDUSTRY. IT IS REGISTERED AS AN ASSOCIATION UNDER SOCIETIES REGISTRATION ACT, 1860, AS WELL AS UNDER THE BOMBAY PUBLIC TRUST ACT, 1950. THE MAIN OBJECTS FOR WHICH THE ASSESSEES SOCIETY WAS C ONSTITUTED WERE AS UNDER: (A)TO PROMOTE AND FOSTER FEELINGS OF UNITY, CO-OPERATION AND MUTUAL HELP AND TO ELIMINATE UNHEALTHY COMPETITION AND UNFAIR TRADE PRACTICES AMONG THE CONTRACTORS. (B) TO ENCOURAGE THE TRADE, INDUSTRY AND PROFESSION OF CONSTRUCTION WORKS AND ALL OTHER ANCILLARY AND ALLIED TRADES AN INDUSTRIES. (C) TO ADVISE AND ASSIST THE MEMBERS IN TECHNICAL, NON-TECHNICAL AND LEGAL MATTERS. (D) TO ENCOURAGE ADOPTION AND PROMOTION OF CORRECT BUSINESS PRACTICES ACCORDING TO ETHICAL CODE OF CORRECT BUSINESS PRACTICES AS ENUMERATED IN APPENDIX C TO THE RULES AND REGULATIONS OF THE ASSOCIATION AND MAINTAIN EFFICIENCY, DIGNITY AND INTEGRITY OF THE PROFESSION. (E) TO SET UP ARBITRATION MACHINERY INDEPENDENTLY OR JOINTLY WITH OTHER OR OTHERS FOR SETTLEMENT OF DISPUTES BETWEEN MEMBERS AND/OR MEMBERS AND NON- MEMBERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR TOUCHING THE TRADE AND/OR SERVICES RENDERED BY SUCH TRADE AND INDUSTRY. (F)TO PROMOTE SCIENCE OF BUILDING AND/OR CONSTRUCTION INDUSTRY AND WITH THAT END IN VIEW TO COLLECT AND DISSEMINATE AMONGST MEMBERS, STATISTICAL AND TECHNICAL INFORMATION AFFECTING THE INTERESTS OF THE TRADE IN GENERAL AND CONSTRUCTION INDUSTRY, TRADE AND PROFESSION IN PARTICULAR AND FOR THAT PURPOSE TO PRINT, PUBLISH, ISSUE AND CIRCULATE PAPERS, PERIODICALS, BOOKS CIRCULARS AND OTHER LITERATURE AND HOLD SEMINARS, MEETINGS, CONFERENCES, DISCUSSIONS ETC, AND TO PRODUCE FILMS ETC. (G) TO ENCOURAGE AND CONDUCT RESEARCH FOR PROGRESS IN BUILDING AND CONSTRUCTION TRADE AND INDUSTRY AND ANY OTHER PROFESSION CONNECTED THEREWITH AND FOR THAT PURPOSE TO ESTABLISH, CONSTRUCT, PROMOTE FORM AND MAINTAIN TESTING INTUITIONS, LABORATORIES, BUILDINGS, TEST HOUSES, LIBRARIES, COLLECTION OF MODELS, DESIGNS, DRAWINGS, ARTICLES OF INTEREST AND SUCH OTHER INFORMATION. (H) TO IMPROVE AND ELEVATE THE TECHNICAL AND GENERAL KNOWLEDGE OF PERSONS ENGAGED IN OR ABOUT TO BE ENGAGED IN THE BUILDING TRADE OR IN ANY EMPLOYMENT IN CONNECTI9ON THEREWITH BY ARRANGING LECTURES, CONDUCTING CLASSES, EXHIBITIONS, MEETINGS, SEMINARS, ETC AND TO AWARD CERTIFICATES OF DISTINCTION AND MEDALS, TROPHIES AND PRIZES AND ALSO INSTITUTE AND ESTABLISH OR TO HELP IN ESTABLISHING FUNDS FOR SCHOLARSHIPS, REWARDS AND OTHER BENEFACTIONS. (I) TO PROVIDE MEANS FOR ENABLING PERSONS ENGAGED IN BUILDING TRADE AND INDUSTRY AND PROFESSION ;TO TAKE COLLECTIVE ACTION IN ALL MATTERS CONCERNING THE DIGNITY AND INTEREST OF THE BUILDING TRADE AND INDUSTRY AND TO INITIATE AND ASSIST ALL SUCH ACTIONS TO PROTECT AND SAFEGUARD THE PROFESSION OF CONSTRUCTION INDUSTRY AND SUCH OTHER TRADES CONNECTED WITH BUILDING MATERIALS. (J) TO PROVIDE FIRST HAND TRAINING OR SKILLED TRAINING TO CONSTRUCTION WORKERS. (K) TO NOMINATE REPRESENTATIVES OF ASSOCIATION OR INSTITUTION HAVING SIMILAR OR ALLIED OBJECTS ON THE COMMITTEE OR THE BOARD OF OR COMMITTEE OR GOVERNING BODY OF OTHER ASSOCIATIONS AND INSTITUTIONS WHENEVER INVITED TO DO SO IN THE INTEREST OF THE TRADE OR INDUSTRY. (L) TO ORGANIZE CONFERENCES, EXHIBITIONS, FILM SHOWS, SEMINARS, TOURS, DELEGATIONS, ETC. IN INDIA OR ABROAD AND TO NOMINATE DELEGATES AND ADVISERS AND TO TAKE STEPS WHICH MAY PROMOTE AND SUPPORT THE BUILDING TRADE AND INDUSTRY AND PROFESSION. (M) TO ESTABLISH OR ENCOURAGE ESTABLISHMENT OF BANKING AND/OR INSURANCE INSTITUTIONS FOR FINANCING OR ASSISTING IN ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 3 ANY MANNER THE ACTIVITIES OF THE MEMBER S OF THE ASSOCIATIONS OR OTHER AFFILIATED ORGANIZATIONS. (N) TO ENCOURAGE EXPORTS OF BUILDING AND CONSTRUCTION INDUSTRY AND SERVICES AND TO HELP SOLVING THE PROBLEMS RELATING TO EXPORT PROMOTION IN ALL POSSIBLE MANNERS. (O) TO HELD AND PROMOTE THE PRODUCTION AND DISTRIBUTION OF BASIC MATERIALS IN SHORT SUPPLY, PARTICULARLY WITH REGARD TO CONSTRUCTION INDUSTRY. (P) TO OPEN AND CONDUCT BRANCHES AND CENTRES AND TO UNDERTAKE SUCH OTHER ACTIVITIES FOR FURTHERANCE OF ALL OR ANY OF THE OBJECTS OF THE ASSOCIATION IN ACCORDANCE WITH THE PROVISIONS MADE IN THE RULES AND REGULATIONS OF THE ASSOCIATION. (Q) TO DO ALL OTHER LAWFUL ACTS AND THINGS AS MAY BE INCIDENTAL OR CONDUCIVE TO THE REALIZATION OR ATTAINMENT OF ALL OR ANY OF THE AFORESAID OBJECTS OF THE ASSOCIATION DIRECTLY OR INDIRECTLY AND TO INCUR REQUISITE EXPENDITURE THEREON. (R) TO SURPLUS OF THE ASSOCIATION SHALL BE UTILIZED FOR FURTHERANCE OF ALL OR ANY OF THE OBJECTS HEREINABOVE MENTIONED AND SHALL NOT BE DISTRIBUTED AMONGST THE MEMBERS. LOOKING TO THE AFORESAID OBJECTS, IT WAS GRANTED RE GISTRATION UNDER 12A VIDE CERTIFICATE DATED 24.04.1989 BY THE DIT (E). T HUS ALL ITS INCOME AND EXPENDITURE ACCOUNT WAS SUBJECT TO COMPUTATION AND EXEMPTION UNDER SECTIONS 11 TO 13. 3. A PROPOSAL WAS RECEIVED FROM ITO(E)1(1), MUMBAI FOR CANCELLATION OF REGISTRATION GRANTED TO THE ASSESSEE, ON THE GRO UND THAT ASSESSEE HAS BEEN CARRYING ON ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, ETC. AND ITS GROSS RECEIPTS FROM SUCH ACTIVITIES AR E IN EXCESS OF RS.10 LAKHS AND THEREFORE UNDER PROVISO TO SECTION 2(15), THE ASSESSEE IS CARRYING OUT COMMERCIAL ACTIVITIES. ACCORDINGLY A S HOW CAUSE NOTICE DATED 31.10.2011 WAS ISSUED BY THE LD. DIT(E) TO TH E ASSESSEE, AS TO WHY REGISTRATION GRANTED EARLIER SHOULD NOT BE WITH DRAWN U/S 12AA(3) W.E.F. A.Y. 2009-10, IN VIEW OF PROVISO TO SECTION 2(15). THE LD.DIT OBSERVED IN HIS SHOW CAUSE NOTICE THAT, INCOME AND EXPENDITURE ACCOUNT REVEALED THAT THE ASSESSEE HAD EARNED FOLLOWING THE INCOME:- (I) MEMBERSHIP SUBSCRIPTION RS.115.37 LAKHS (II) RENT AND MAINTENANCE RS.8.89 LAKHS ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 4 (III) CONTRIBUTION BY CENTRE FOR HOLDING EXHIBITION AND CONFERENCE RS.42.22 LAKHS (IV) CONTRIBUTION RECEIVED TOWARDS CALENDAR, DIARY, JOURNAL RS.37.76 LAKHS (V) CONTRIBUTION FOR PROGRAMS, SEMINARS, AWARDS RS.38.01 LAKHS (VI) SPONSORSHIP AND TRAINING RS.19.30 LAKHS (VII) HOSPITALITY CHARGES RS.3.46 LAKHS (VIII) MISCELLANEOUS CHARGES RS.4.12 LAKHS IN RESPONSE, THE ASSESSEE AFTER EXPLAINING THE BACK GROUND OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE AND ITS OBJE CTS SUBMITTED:- FIRSTLY, REGARDING MEMBERSHIP SUBSCRIPTION, ASSOCIATION IN CURS CERTAIN EXPENDITURE FOR ADMINISTRATIVE AND ESTABLISHMENT C OST FOR ITS FUNCTIONING TO ACHIEVE ITS OBJECTS FOR WHICH IT IS FORMED. SUCH AN EXPENDITURE IS CONTRIBUTED BY ITS MEMBERS IN THE FORM OF ANNUAL SU BSCRIPTION. IT IS A NATIONAL LEVEL ORGANIZATION HAVING 93 CENTERS AND A HEAD OFFICE FOR WHICH IT REQUIRES SUBSTANTIAL EXPENSES TO MEET THE COST T HEREFORE, SUBSCRIPTION MONEY IS RECEIVED FROM THE MEMBERS. SECONDLY, REGARDING EXHIBITION AND CONFERENCE, IT WAS SUBMI TTED THAT IT HELD EXHIBITIONS, CONFERENCES AND SEMINARS FOR THE BENEFIT OF ITS MEMBERS, WHICH IS ONE OF THE MAIN OBJECTS OF THE AS SESSEE. DETAILS OF SUCH EXHIBITION AND CONFERENCE EVENTS AND HOW IT IS RELEVANT FOR ATTAINING ITS OBJECTS WAS EXPLAINED. TO MEET OUT SU CH EXPENSES, THE MEMBERS USED TO CONTRIBUTE FOR HOLDING SUCH CONFERE NCES. THUS, THERE IS NO COMMERCIAL ACTIVITY IN SUCH CONTRIBUTION FROM IT S MEMBERS FOR HOLDING EXHIBITIONS, CONFERENCE AND SEMINARS WHICH WAS FOR THEIR BENEFIT AND INFORMATION. ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 5 THIRDLY, REGARDING CALENDAR, DIARY AND JOURNAL, IT WAS SUBMI TTED THAT IT WAS FOR THE BENEFIT OF ITS MEMBERS TO EDUCATE ITS M EMBERS AND TO MAKE THEM AWARE OF THE LATEST TRENDS AND HAPPENINGS IN T HE CONSTRUCTION INDUSTRIES. PUBLISHING CALENDAR, DIARY AND JOURNAL IS ONE OF THE OBJECTS OF THE ASSOCIATION. DETAILED EXPLANATION AND JUSTIFICA TION FOR SUCH PUBLICATION WAS MADE BEFORE THE DIT TO SHOW THAT IT WAS NOT A COMMERCIAL ACTIVITY, BUT ONLY FOR THE BENEFIT AND C IRCULATION FOR THE MEMBERS. FOURTHLY, REGARDING THE PROGRAMS, SEMINARS, AWARDS AND TRAINI NG AND SPONSORSHIP THE ASSESSEE SUBMITTED THAT THEY WERE C ONDUCTED TO EDUCATE THE MEMBERS AND APPRAISE THE LATEST DEVELOP MENT IN THE GOVERNMENT LAWS AND UP-GRADATION IN THE SYSTEM OF O VERALL FUNCTIONING OF THE CONSTRUCTION INDUSTRY. THIS IS ALSO ONE OF T HE OBJECTS OF THE ASSESSEE TO CONDUCT SUCH PROGRAMS FOR ITS MEMBERS. FOR CONDUCTING THESE PROGRAMS THE ASSESSEE RECEIVED CONTRIBUTION F ROM ITS MEMBERS, HENCE THERE IS NO COMMERCIAL ACTIVITY INVOLVED. LASTLY, REGARDING OTHER MISCELLANEOUS CHARGES AND RENT RECE IVED, IT WAS SUBMITTED THAT THEY WERE NOT IN THE NATURE OF ANY A CTIVITY CARRIED OUT BY THE ASSESSEE BUT MERELY ON ANCILLARY ACTIVITY TO AT TAIN MAIN OBJECT OF THE ASSOCIATION. RENTING OF SOME PREMISES FOR CERTAIN O CCASIONS WAS MERELY TO AUGMENT FINANCIAL RESOURCES TO MEET ITS EXPENDIT URE AND THE OFFICE SPACE WAS MAINLY GIVEN TO NON-PROFIT TRADE ORGANIZA TIONS. THUS NEITHER OF THE ABOVE ACTIVITIES OR RECEIPTS WE RE OUTSIDE THE SCOPE OF OBJECTS, NOR IT WAS FOR CARRYING OUT ANY COMMERCIAL ACTIVITY AS STIPULATED IN PROVISO TO SECTION 2(15). ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 6 4. THE LD.DIT HOWEVER REJECTED THE ASSESSEES CONTE NTION AND HELD THAT THE PROVISO TO SECTION 2(15) MAKES IT VERY CLE AR THAT, WHILE CARRYING OUT THE OBJECTS OF ADVANCEMENT OF GENERAL PUBLIC UT ILITY, IF IT IS IN THE NATURE OF ANY TRADE, COMMERCE OR BUSINESS FOR ANY F EES OR CONSIDERATION, THEN IT DOES NOT FALL WITHIN THE DEF INITION OF CHARITABLE PURPOSES. HE FURTHER OBSERVED THAT ASSESSEES ACTI VITIES AS STATED IN THE FOREGOING PARAGRAPH ARE IN THE NATURE OF BUSINESS I NCOME AND HENCE IN VIOLATION OF PROVISO TO SECTION 2(15). ONCE A CHARI TABLE TRUST/INSTITUTION IS HIT BY PROVISO, THEN SUCH AN ENTITY IS NOT FOR CHAR ITABLE PURPOSE AND THE TRUST ITSELF BECOME NON GENUINE FOR THE PURPOSE OF SECTION 11 AND THE REGISTRATION CAN BE CANCELLED U/S 12AA(3). ACCORDIN GLY HE CANCELLED THE REGISTRATION W.E.F. A.Y. 2009-10. 5. BEFORE US, LEARNED COUNSEL, SHRI A.H. DALAL AFTE R REFERRING TO THE OBJECTS OF THE ASSESSEE TRUST AND THE ACTIVITIES CA RRIED OUT BY IT, SUBMITTED THAT NONE OF THE ACTIVITIES OF THE ASSESS EE CAN BE SAID TO BE IN THE NATURE OF TRADE OR BUSINESS. THE RECEIPTS OF TH E ASSESSEE IS FROM THE MEMBERS ONLY AND THE SAME HAS BEEN UTILIZED FOR THE BENEFIT OF THE MEMBERS FOR WHICH ASSESSEE TRUST CAME INTO EXISTENC E. THE CONDITIONS MENTIONED IN 12AA(3) FOR CANCELLING THE REGISTRATIO N CANNOT BE SAID TO BE FULFILLED, AS IT HAS NOT BEEN FOUND BY THE LD. DIT( E) THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IN SUPPORT OF HIS CONTENT ION HE HAS RELIED UPON CATENA OF TRIBUNAL DECISIONS, THE COMPILATION OF 30 SUCH CASES HAVE BEEN FILED BEFORE US. ALTERNATIVELY, HE SUBMITTED THAT, IF THE DEPARTMENT IS OF THE VIEW THAT ANY PARTICULAR ACTIVITY IS FOR ANY CO MMERCIAL PURPOSE, THEN INCOME IS TO BE TAXED FOR THAT YEAR ONLY AND REGIST RATION GRANTED CANNOT BE CANCELLED U/S 12AA(3). ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 7 6. ON THE OTHER HAND, LD. DR SUBMITTED THAT, EVEN I F THERE IS ONE COMMERCIAL ACTIVITY THEN THE GENUINENESS OF THE TRU ST FOR WHICH REGISTRATION WAS GRANTED CANNOT BE ACCEPTED. IF THE GROSS RECEIPTS FROM ANY SUCH ACTIVITY CARRIED OUT BY THE ASSESSEE, WHIC H ARE IN THE NATURE OF BUSINESS OR TRADE, EXCEEDS RS.10 LAKHS, THEN THE EN TIRE ACTIVITY OF THE TRUST CANNOT BE HELD FOR CHARITABLE PURPOSES. THUS, HE STRONGLY RELIED UPON THE ORDER OF THE DIT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, AND PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AND THE MATERIA L PLACED ON RECORD. ASSESSEE IS AN ASSOCIATION OF BUILDERS WHICH HAS BE EN REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 AND ALSO UNDER BOMBAY PUBLIC TRUST ACT, 1950. LOOKING TO ITS OBJECT, WHICH WERE MAINLY FOR ADVANCEMENT OF GENERAL PUBLIC UTILITY, IT WAS GRANTED REGISTRATION U/S 12, VIDE CERTIFICATE DATED 24.04.1989. THE SOLITARY REASON FOR CANCELLIN G THE REGISTRATION U/S 12AA(3) BY THE LD. DIT IS THAT, IN VIEW OF PROVISO TO SECTION 2(15) BROUGHT IN THE STATUTE W.E.F. A.Y. 2009-10, THE REG ISTRATION GRANTED EARLIER SHOULD BE CANCELLED, BECAUSE SOME OF THE RE CEIPTS OF THE ASSESSEE ARE IN THE NATURE OF TRADE, COMMERCE, OR B USINESS. UNDER THE PROVISIONS OF SECTION 12AA(3), REGISTRATION GRANTED EARLIER U/S 12A OR U/S 12AA CAN BE CANCELLED ONLY IF THE CIT OR DIT IS SAT ISFIED THAT FIRSTLY, THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR SECONDLY, ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THUS, POWER TO CANCEL REGISTRATION CAN BE EXERCISED ONLY UNDER THESE TWO CONDITIONS. FROM THE PERUSAL OF THE IMPUGNED ORDER, IT IS SEEN THAT LD. DIT HAS NOT RECORDED ANY SATISFACT ION THAT ASSESSEE ACTIVITIES IS EITHER NO GENUINE OR ARE NOT BEING CA RRIED OUT IN ACCORDANCE WITH THE OBJECTS FOR WHICH IT WAS GRANTED REGISTRAT ION U/S 12A. THE ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 8 NATURE OF RECEIPTS AS HIGHLIGHTED BY THE LD. DIT, T HAT IS, MEMBERSHIP SUBSCRIPTION, CONTRIBUTION BY MEMBERS FOR HOLDING E XHIBITION AND CONFERENCE CONTRIBUTION FOR PROGRAMS , SEMINARS AND AWARDS, ETC., SPONSORSHIP AND TRAINING, DISTRIBUTION OF CALENDAR, DIARY AND JOURNAL AND OTHERS, IT IS SEEN THAT THE ASSESSEE HAS CARRIED OU T THESE ACTIVITIES AS PER ITS OBJECTS ONLY WHICH IS EVIDENT FROM THE OBJECTS INCORPORATED ABOVE. MOST OF THE RECEIPTS HAVE BEEN RECEIVED FROM THE ME MBERS EITHER IN THE WAY OF SUBSCRIPTION OR CONTRIBUTION FOR HOLDING EXH IBITION, CONFERENCES, SEMINARS, TRAINING AND SPONSORSHIP PROGRAMS ETC. IT IS NOT THE CASE OF THE LD. DIT THAT THESE ACTIVITIES WERE CARRIED OUT FOR THE OUTSIDERS AND THAT TO BE FOR THE COMMERCIAL PURPOSE SOLELY TO EAR N BUSINESS RECEIPTS. EVEN THE SMALL AMOUNT OF RENTAL INCOME IS MAINLY TO AUGMENT THE FINANCIAL RESOURCES TO MEET THE COST OF THE ASSESSE E. TO BE HIT BY PROVISO TO SECTION 2(15), THE DOMINANT OBJECT OF GE NERAL PUBLIC UTILITY SHOULD BE IN THE NATURE OF TRADE, COMMERCE OR BUSI NESS. HEREIN THIS CASE, NONE OF THE ACTIVITIES LIKE HOLDING CONFERENC ES, SEMINARS, PUBLISHING JOURNALS FOR ITS MEMBER ETC. CAN BE HELD TO BE IN THE NATURE OF BUSINESS TRADE OR COMMERCE. ALL ITS ACTIVITIES ARE FOR ITS MEMBERS ONLY AS A PART OF ITS OBJECTS. 8. THE EFFECT OF PROVISO TO SECTION 2(15) INSERTED W.E.F. 01.04.2009 HAS BEEN SUBJECT MATTER OF JUDICIAL SCRUTINY BY VAR IOUS TRIBUNALS. THE HONBLE DELHI HIGH COURT IN THE CASE OF INSTITUTE O F CHARTERED ACCOUNTANTS OF INDIA VS. DGIT (E) REPORTED IN (2011) 245 CTR (DEL) 541 HAS DISCUSSED AND ANALYZED THE EFFECT OF PROVISO TO SECTION 2(15) IN GREAT DETAIL, WHEREIN IT WAS HELD AND OBSERVED AS U NDER:- ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 9 2. AS THE FIRST PROVISO WAS INTRODUCED WITH EFFECT FROM I' APRIL, 2009, THE SCOPE AND AMBIT OF THE SAID PROVISO TO SECTION 2(15 ) OF THE ACT HAS TO BE EXAMINED AND CONSIDERED. EARLIER ORDERS UNDER SECTI ON 10(23C)(IV) ARE NOT RELEVANT AND ARE INCONSEQUENTIAL, AS THEY HAVE NOT EXAMINED THE SCOPE AND AMBIT OF THE FIRST PROVISO. THE PROVISO APPLIES ONL Y IF AN INSTITUTION IS ENGAGED IN ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLI C UTILITY AND POSTULATES THAT SUCH AN INSTITUTE IS NOT 'CHARITABLE' IF IT IS INVOLVED IN CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS. THE SECOND PART, 'ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS' OBVIOUSLY INTENDS TO EXPAND T HE SCOPE OF THE PROVISO TO INCLUDE SERVICES, WHICH ARE RENDERED IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. THE PROVISO FURTHER STIPULATES THAT THE A CTIVITY MUST BE FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. THE LAST PART STATE S THAT THE PROVISO WILL APPLY EVEN IF THE CESS OR FEE OR ANY OTHER CONSIDERATION IS APPLIED FOR A CHARITABLE ACTIVITY/PURPOSE. THE PROVISO HAS TO BE GIVEN FULL EFFECT TO. THUS, EVEN IF CESS, FEE OR CONSIDERATION IS USED OR UTILIZED FOR CHARIT ABLE PURPOSES THE PROVISO AND THE BAR WILL APPLY. AN INSTITUTION NOT BE REGARDED AS ESTABLISHED FOR CHARITABLE PURPOSE/ACTIVITY UNDER THE LAST LIMB, IF CESS, FEE OR CONSIDERATION IS RECEIVED FOR CARRYING ON ANY ACTIVITY IN NATURE OF TRADE, CO MMERCE OR BUSINESS OR FOR ANY ACTIVITY OF RENDERING OF ANY SERVICE IN RELATIO N TO ANY TRADE, COMMERCE OR BUSINESS, EVEN IF THE CONSIDERATION OR THE MONEY RE CEIVED IS USED IN FURTHERANCE OF THE CHARITABLE PURPOSES/ACTIVITIES. IN VIEW OF THE FIRST PROVISO, THE DECISIONS THAT THE APPLICATION OF MONEY/PROFIT IS. RELEVANT FOR DETERMINING WHETHER OR NOT A PERSON IS CARRYING ON' CHARITABLE ACTIVITY, ARE NO LONGER RELEVANT AND APPOSITE. EVEN IF THE PROFITS EARNED A RE USED FOR CHARITABLE PURPOSES, BUT FEE, CESS OR CONSIDERATION IS CHARGED BY A PERSON FOR CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING OF ANY SERVICE IN ADDITION TO ANY TRADE, COMMERCE OR BUSINESS, IT WOULD BE COVERED UNDER THE PROVISO AND THE BAR/PROH IBITION WILL APPLY. 14. THE MOST MATERIAL AND RELEVANT WORDS IN THE PRO VISO ARE 'TRADE, BUSINESS OR COMMERCE '. THE ACTIVITIES WHICH ARE UNDERTAKEN BY THE AN ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS. ' THEREAFTER THE HON'BLE HIGH COURT REFERRED AND ANAL YZED THE MEANING OF TRADE, BUSINESS, COMMERCE WHICH HAVE BEEN ELABORATE D BY THE CONSTITUTIONAL BENCH OF HON'BLE SUPREME COURT IN THE CASE OF ADDL. CIT VS. SURAT ART AND SILK MANUFACTURERS ASSOCIATION 121 ITR 1, AND OTHER SUPREME COURT DECISIONS; SOLE TRUSTEE LOKA SHIKSHAN TRUST 101. IT R 234, STATE OF PUNJAB VS. BAJAJ ELECTRICAL LTD. (1968) 2 SEE 536, KHODEY DIST ILLARY LTD. VS. STATE OF KERALA (1975) 1 SEE 574 AND CST VS. SAI PUBLICATION FUND (2002) 4 SEE 57 AND ALSO REFERRED TO VARIOUS OTHER DICTIONARY MEANI NG AND COMMENTARY AND HELD THAT: '18. THE WORD 'BUSINESS' IS THE BROADEST TERM AND I T ENCOMPASSES TRADE, COMMERCE AND OTHER ACTIVITIES. SEC. 2(13) OF THE IT ACT DEFINES THE TERM 'BUSINESS' AS UNDER '2 DEFINITION- '(13) 'BUSINESS' INCLUDES ANY TRADE, COMMERCE OR MA NUFACTURE OR ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMER CE OR MANUFACTURE. ' ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 10 19. THE WORD 'BUSINESS' IS A WORD OF LARGE AND INDE FINITE IMPORT. SEC. 2(13) DEFINES BUSINESS TO INCLUDE ANY TRADE, COMMERCE OR MANUFACTURE OR NAY ADVENTURE OR CONCERN IN THE NATURE OF TRADE COMMERC E OR MANUFACTURE. THE INTENTION OF THE LEGISLATURE IS TO MAKE THE DEFINIT ION EXTENSIVE AS THE TERM 'INCLUSIVE' HAS BEEN USED. THE LEGISLATURE HAS DELI BERATELY DEPARTED FROM GIVING A DEFINITE IMPORT TO THE TERM 'BUSINESS' HUT MADE REFERENCE TO SEVERAL OTHER GENERAL TERMS LIKE '.'TRADE '. 'COMMERCE '. ' MANUFACTURE' AND 'ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMME RCE AND MANUFACTURE. ' 29. IT MAY BE, HOWEVER, POINTED OUT THAT THE TERM ' PROFIT MOTIVE' IS NOT ONLY THE SOLE OR RELEVANT CONSIDERATION THAT HAS TO BE K EPT IN MIND. IT IS ONE OF THE ASPECTS. NORMALLY INTENTION TO EARN PROFIT IS REQUI RED. EMPHASIS, HOWEVER, IT DOES APPEAR, HAS SHIFTED AND THE CONCEPT AND PRINCI PLE OF 'ECONOMIC ACTIVITY' HAS GAINED ACCEPTABILITY. THE DEFINITION OF THE TER M 'BUSINESS ' MAY ALSO VARY WHEN WE ARE EXAMINING TAXABILITY UNDER SALES-TAX, E XCISE DUTY, VALUE ADDED TAX, ETC. BECAUSE THESE ARE NOT TAXES ON INCOME BUT THE TAXABLE EVEN OCCURS BECAUSE OF THE 'ECONOMIC ACTIVITY' INVOLVED. EVEN I F A PERSON/AN ORGANIZATION IS CARRYING ON TRADING ON THE PRINCIPLE OF 'NO LOSS NO PROFIT ', IT MAY BE LIABLE TO PAY TAXES OR COMPLY WITH THE STATUTE WHEN THE CH ARGE AND INCIDENCE OF TAX, IS ON THE ECONOMIC ACTIVITY'. THIS CONCEPT IS TODAY WELL RECOGNIZED IN EUROPEAN UNION AND ENGLAND [SEE RIVERSIDE HOUSING A SSOCIATION LTD. VS. REVENUE CUSTOMS COMMR. (2006) EWHC 2383 (CH AND TH E CASE LAW CITED THEREIN). IT MAY ALSO BE ALSO APPROPRIATE HERE TO R EFER THE DECISION OF THE HOUSE OF LORDS IN TOWN INVESTMENTS LTD. & ORS. VS. DEPARTMENT OF THE ENVIRONMENT (1977) 1 ALL ER 813. IN THIS CASE, A GO VERNMENT DEPARTMENT WAS' CLAIMING BENEFIT UNDER A LEGISLATION THAT PROT ECTED 'BUSINESS TENANCIES' FROM INCREASE IN RENT. THE TERM _IN !~E SAID -CASE BY A MAJORITY DECISION WAS HELD TO INCLUDE CHAMELEON; IT SUITS ITS MEANING TO THE CONTEXT IN WHICH IT IS FOUND. IT IS NOT THE TERM OF LEGAL ART BUT IN ITS D ICTIONARY MEANING IT INCLUDES ANYTHING WHICH IS AN OCCUPATION, AS DISTINGUISHED F ROM PLEASURE-ANYTHING WHICH IS AN OCCUPATION OR A DUTY WHICH REQUIRES ATT ENTION IS BUSINESS. IT WAS ALSO OBSERVED THAT BUSINESS CONVEYS IN ORDINARY MEA NING THE NOTION OF A DISTINCT ENTERPRISE (NOT NECESSARILY FOR PROFIT) HA VING ITS DISTINCT OBJECT, DISTINCT MANAGEMENT AND DISTINCT ASSETS AND LIABILITIES. SECTION 2(15) DEFINES THE TERM 'CHARITABLE PURPOSE ', THEREFORE, WHILE CONSTRUING THE TERM 'BUSINESS' FOR THE SAID SECTION , THE OBJECT AND PURPOSE OF THE SECTION HAS TO BE KEPT IN MIND. WE DO NOT THINK THAT A VERY BROAD AND EXTENDED DEFINITION OF THE TERM 'BUSINESS' IS INTE NDED FOR THE PURPOSE OF INTERPRETING AND APPLYING THE FIRST PROVISO TO SECT ION 2(15) OF THE ACT TO INCLUDE ANY TRANSACTION FOR A FEE OR MONEY. AN ACTI VITY WOULD BE CONSIDERED 'BUSINESS' IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE , BUT IN SOME CASES THIS MAY NOT BE DETERMINATIVE. NORMALLY THE PROFIT MOTIVE TE ST SHOULD BE SATISFIED BUT IN A GIVEN CASE ACTIVITY MAY BE REGARDED AS BUSINES S EVEN WHEN PROFIT MOTIVE CANNOT BE ESTABLISHED/PROVED. IN SUCH CASES, THERE SHOULD BE EVIDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES, AND PURSUED WITH REASONABLE CO NTINUITY. THERE SHOULD BE FACTS AND OTHER CIRCUMSTANCES WHICH JUSTIFY AND SHO W THAT THE ACTIVITY UNDERTAKEN IS IN FACT IN THE NATURE OF BUSINESS. TH E TEST AS PRESCRIBE IN RAIPUR MFRS. CO. 'S CASE (SUPRA) AND SAI PUBLICATIONS FUND 'S CASE (SUPRA) CAN BE APPLIED. THE SIX INDICIA STIPULATED IN LORD FISH; E ACH CASE, THEREFORE, HAS TO BE EXAMINED ON ITS OWN FACTS. ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 11 IF THE PRINCIPLE AND RATIO LAID DOWN BY THE HONBLE HIGH COURT IS APPLIED IN THE INSTANT CASE, IT WOULD BE SEEN THAT NONE OF ITS RECEIPTS CAN BE SAID TO BE ARISING OR ACCRUING FROM THE ACTIVITIES WHICH CAN BE SAID TO BE FOR THE PURPOSE OF BUSINESS OR IN THE NATURE OF TRADE O R COMMERCE. HERE IN THIS CASE ALL THE ACTIVITIES ARE CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS AND NONE OF ITS ACTIVITIES HAVE BEEN FOUND TO BE NO N GENUINE. THE ASSESSEES EXPLANATION BEFORE THE DIT REGARDING NAT URE OF RECEIPTS CLEARLY SHOWS THAT THEY HAVE BEEN RECEIVED FROM THE MEMBERS WHILE PURSUING OBJECTS OF THE SOCIETY, SPECIFICALLY MENTI ONED IN THE OBJECTS FOR WHICH IT WAS GRANTED REGISTRATION U/S 12A. 9. OTHERWISE ALSO, IF ANY TRANSACTION OF THE TRUST WHICH ARE INCIDENTAL OR ANCILLARY TOWARDS FULFILLMENT OF THE OBJECTS OF OTHER GENERAL PUBLIC UTILITY, WILL NOT NORMALLY AMOUNT TO BUSINESS TRADE OR COMMERCE, UNLESS THERE IS SOME INTENTION TO CARRY OUT BUSINESS, TRAD E OR COMMERCE ON A PERMANENT BASIS OR FOR A REASONABLE CONTINUITY. THE LD. DIT HAS NOT BROUGHT ANY EVIDENCE OR MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE WAS CARRYING OUT THE ACTIVITIES ON BUSINESS OR COMM ERCIAL PRINCIPLE OR OUTSIDE ITS OBJECTS. THUS ON THE FACTS OF THE PRESE NT CASE IT CANNOT BE HELD THAT ASSESSEES CASE IS HIT BY PROVISO TO SECT ION 2(15) OR THE REGISTRATION GRANTED EARLIER CAN BE CANCELED WITHIN THE AMBIT OF SECTION 12AA(3). IN VIEW OF OUR AFORESAID FINDINGS, WE ARE NOT ADJUDICATING THE ALTERNATIVE PLEA RAISED BY THE ASSESSEE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 550/MUM/2012 BUILDERS ASSOCIATION OF INDIA ASSESSMENT YEAR: 2009-10 12 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY JANUARY, 2015. SD/- SD/- (N.K. BILLAIYA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.01.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.