BODH SHIKSHA SAMITI, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTIONS), JAIPUR

ITA 590/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3710 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Charitable institution; Maximum Marginal Rate; Rule of consistency; Retrospective amendment; Set aside
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 590, 591 & 592/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13, 2013-14 & 2014-15 BODH SHIKSHA SAMITI AA-1, ANITA COLONY, BAJAJ NAGAR, JAIPUR CUKE VS. ACIT (EXEMPTIONS) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATB0742J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K. C. GUPTA (JCIT) S HRI A.S NEHRA (ADD. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 24/05/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 29/05/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE THREE APPEALS FILED BY THE ASSESSEE AGAI NST THE RESPECTIVE ORDERS OF LD. CIT(A)-3, JAIPUR DATED 13. 03.2017 & 13.03.2018 FOR THE ASSESSMENT YEAR 2012-13, 2013-14 & 2014-15. SINCE THE COMMON ISSUES ARE INVOLVED, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2. FOR THE PURPOSES OF PRESENT DISCUSSION, WITH THE CONSENT OF BOTH THE PARTIES, THE ASSESSEES APPEAL IN NO. 590/JP/20 18 IS TAKEN AS A LEAD CASE WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING G ROUNDS OF APPEAL: ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 2 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN ASSESSING THE SURPLUS AS PER IN COME & EXPENDITURE A/C OF RS. 11,50,736/- UNDER THE HEAD I NCOME FROM BUSINESS & PROFESSION BY INVOKING PROVISO TO SECTIO N 2(15) AND DENYING THE CLAIM OF APPLICATION OF SURPLUS U/S 11 OF THE ACT. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE SURPLUS ARISING TO T HE ASSESSEE OUT OF INSTITUTIONAL & CONSULTANCY CHARGES ARE INCIDENT AL AND INTEGRAL TO THE MAIN OBJECT OF THE ASSESSEE WITHOUT ANY PROF IT MOTIVE AND THEREFORE, PROVISO TO SECTION 2(15) IS NOT APPLICAB LE TO SUCH SURPLUS. HE HAS FURTHER ERRED IN UPHOLDING THE ORDE R OF AO BY SIMPLY REPRODUCING HIS ORDER WITHOUT CONSIDERING TH E PROVISION OF SECTION 11(4A), CONTENTIONS OF THE ASSESSEE AND VAR IOUS INCORRECT OBSERVATIONS MADE BY THE AO. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN TAXING THE SURPLUS AT MMR INSTE AD OF THE TAX RATE APPLICABLE TO AOP (GENERAL) AS PER SECTION 164 (2) OF THE ACT BY IGNORING THAT THE CASE OF ASSESSEE DO NOT FALL I N PROVISO TO SECTION 164(2). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SOCIETY IS REGISTERED U/S 12A(A) OF THE ACT AND HAS FILED I TS RETURN OF INCOME DISCLOSING TOTAL INCOME AT RS. NIL CLAIMING EXEMPTI ON U/S 11 AND 12 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER OBSERVED THAT THE AUDITORS IN THEIR AUDIT R EPORT HAVE STATED IN FORM 3CD, THE NATURE OF BUSINESS/ PROFESSION AS CO NSULTANCY, MESS, ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 3 ACCOMMODATION. FURTHER, THE DETAILS OF ACTIVITIES CARRIED OUT BY THE ASSESSEE SOCIETY HAVE ALSO REVEALED THAT THE ASSESS EE HAS GOT GRANTS-IN- AID FROM NUMBER OF AGENCIES FOR SPECIFIED PROJECTS AND HAS UTILIZED THESE GRANTS. THE ASSESSEE HAS ALSO SHOWN INCOME ON ACCOUNT OF INSTITUTIONAL CHARGES OF RS. 25,73,793/- IN ADDITIO N TO OTHER RECEIPTS ON ACCOUNT OF VOLUNTARY CONTRIBUTION AND OTHER RECEIPT S. AS PER ASSESSING OFFICER, THE ASSESSEE IS NOT ENGAGED IN EDUCATION B UT THE ASSESSEES CASE COMES IN THE CLAUSE OF GENERAL PUBLIC UTILITY AND THE ASSESSEE WAS ISSUED A SHOW-CAUSE TO EXPLAIN AS TO WHY THE EX EMPTION U/S 11 SHOULD NOT BE WITHDRAWN DUE TO APPLICATION OF PROVI SO TO SECTION 2(15) OF THE ACT. 4. IN RESPONSE, THE ASSESSEE SOCIETY SUBMITTED THAT IT IS WORKING SOLELY IN THE FIELD OF EDUCATION FOR THE DEPRIVED A ND UNDER-PRIVILEGED CHILDREN SINCE ITS INCEPTION IN 1987. IT WAS FURTH ER SUBMITTED THAT THE INSTITUTIONAL CHARGES ARE LUMPSUM FUNDS RECEIVED FR OM SOME OF THE FUNDING AGENCIES TO MEET THE ADMINISTRATIVE EXPENSE S AGREED AT THE TIME OF FINALIZATION OF ANNUAL BUDGETS AND GRANT LE TTERS. THE SUBMISSIONS SO FILED WERE CONSIDERED BUT NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. 5. AS PER THE ASSESSING OFFICER, THE TRUST IS REGIS TERED AS A CHARITABLE INSTITUTION U/S 12A OF THE ACT AND ITS OBJECTS FALL S IN THE LAST LIMB OF DEFINITION UNDER SECTION 2(15) I.E, ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY. FURTHER, REFERRING TO THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE SOCIETY AND UNICEF, THE ASSESSING OFFI CER HELD THAT THE ASSESSEE IS ENGAGED IN ANCILLARY ACTIVITIES WHICH A RE SUPPORTING OUT OF THE SCHOOL CHILDREN AND IT IS A STEP TOWARDS FORMAL EDUCATION AND SIMILAR ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 4 IS THE POSITION WITH REGARD TO OTHER PROJECTS. FURT HER, REFERRING TO ASSESSEES SUBMISSION REGARDING CONSULTANCY, MESS A ND ACCOMMODATION CHARGES TOWARDS INCIDENTAL AND ANCILLARY ACTIVITIES RELATING TO EDUCATION, THE ASSESSING OFFICER HELD THAT THE ABOVE ACTIVITIE S CLEARLY DEPICT THE NATURE OF ASSESSEES BUSINESS. ACCORDINGLY, PROVIS O TO SECTION 2(15) WAS INVOKED AND THE EXEMPTION CLAIMED U/S 11 WAS RE JECTED AND SURPLUS SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT OF RS. 11,50,736/- WAS BROUGHT TO TAX AS INCOME OF THE ASSESSEE SOCIETY AT MAXIMUM MARGINAL RATE (MMR) AS PER PROVISO TO SEC. 164(2) OF THE ACT. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE SAID AC TION OF THE ASSESSING OFFICER. AS PER THE LD. CIT(A), THE CASE LAWS CITED BY THE ASSESSEE IS NOT APPLICABLE AS THE OBJECTS OF THE AS SESSEE ARE THE ANCILLARY ACTIVITIES AND THE AUDITOR ALSO MENTIONED IN THE AUDIT REPORT THE NATURE OF THE BUSINESS AS CONSULTANCY, MESS AND ACCOMMODATION, THEREFORE, HE WAS OF THE VIEW THAT ASSESSING OFFICE R HAS RIGHTLY INVOKED THE PROVISO TO SECTION 2(15) OF THE ACT AND THE EXE MPTION CLAIMED U/S 11 WAS REJECTED. AGAINST THE SAID FINDING OF THE LD . CIT(A), THE ASSESSEE SOCIETY IS NOW IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE ASSESSEE SOCIETY WAS CONSTITUTED ON 06.10.1987 WITH THE MAIN OBJECT OF WORKING FOR THE EDUCATION OF SOCIALLY AND ECONOMICA LLY UNDER- PRIVILEGED CHILDREN OF THE SOCIETY. IT WAS REGISTERED WITH REG ISTRAR OF SOCIETIES RAJASTHAN, JAIPUR ON 22.12.1987 AND ALSO U/S 12AA O F THE IT ACT FROM 01.04.1992. IT WAS SUBMITTED THAT IN PURSUANCE TO T HE ABOVE OBJECT, OVER THE LAST 25 YEARS, IT HAS ESTABLISHED NUMBER O F BODHSHALAS ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 5 (SCHOOLS) AND REACHED OUT TO MORE THAN 9 MILLION CH ILDREN THROUGH ITS NETWORK OF BODHSHALAS, PARTNERSHIP WITH GOVERNMENT TO STRENGTHEN GOVERNMENT SCHOOLS AND PARTNERSHIP WITH OTHER CIVIL SOCIETIES ORGANIZATION. OVERALL, IT IS SOLELY INVOLVED IN PRO VIDING EDUCATION THROUGH DEVELOPING CURRICULUM AND APPROPRIATE MATERIAL FOR THE EDUCATION OF DEPRIVED, DIRECT PRACTICE BY MEANS OF SCHOOLS, TEAC HER TRAINING/ EDUCATION, RESEARCH & DOCUMENTATION, NETWORKING & P OLICY ADVOCACY. IT HAS SUPPORTED NUMBER OF SOCIETIES ACROSS THE COUNTR Y ENGAGED IN EDUCATION AND CARRIED OUT VARIOUS EDUCATION PROJECT S FROM THE GRANT PROVIDED BY VARIOUS NGOS/ STATE GOVERNMENT AND NATI ONAL/ INTERNATIONAL FUNDING INSTITUTIONS. 8. IT WAS FURTHER SUBMITTED THAT OVER THE PERIOD OF TIME, THE ASSESSEE SOCIETY HAS DEVELOPED ITS OWN INFRASTRUCTU RE FACILITY COMPRISING OF TRAINING CENTER, GIRLS SCHOOL NAMED MANAS GANGA UPTO XIITH STANDARD AFFILIATED WITH RAJASTHAN BOARD, GIRLS HOSTEL, ACCO MMODATION FACILITY FOR TEACHERS, MESS, ETC. AT KUKAS INSTITUTIONAL AREA, A MER, JAIPUR AND BODHGAON AT GARHBASAI, TEHSIL THANAGAZI, ALWAR. FRE E EDUCATION FACILITY IS PROVIDED AT ALL BODHSHALAS. AS ON DATE, THE SOCI ETY IS HAVING 32 BODHSHALAS AT ALWAR, 7 BODHSHALAS AT JAIPUR AND 1 B ODHSHALA AT TONK. OUT OF THESE 40 BODHSHALAS, 34 BODHSHALAS ARE RECOG NIZED WITH DISTRICT EDUCATION OFFICE, GOVERNMENT OF RAJASTHAN. THE REMA INING 6 BODHSHALAS ARE LEARNING CENTERS UPTO CLASS II. THE DETAILS OF THESE BODHSHALAS ALONG WITH THE NUMBER OF STUDENTS STUDYI NG THERE AND THEIR AFFILIATION WERE ALSO PLACED ON RECORD. 9. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE SOCIE TY RECEIVES FUNDS FROM VARIOUS FUNDING AGENCIES FOR IMPARTING EDUCATI ON TO THE CHILDREN, ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 6 TRAINING TO THE TEACHERS, AWARENESS PROGRAMME, INFR ASTRUCTURE DEVELOPMENT, CURRICULUM AND MATERIAL DEVELOPMENT, R ESEARCH ETC. THESE FUNDING AGENCIES PROVIDE EARMARKED BUDGET FOR THE ACTIVITIES TO BE CONDUCTED UNDER THE MUTUALLY AGREED PROGRAMME. A PART FROM THIS, THEY PROVIDE SPECIFIC BUDGET FOR TRAINING OF THE TE ACHERS AND ALSO INSTITUTIONAL CHARGES TO MEET THE ADMINISTRATIVE CO ST. THE SPECIFIC EXPENDITURE FOR CARRYING OUT THE ACTIVITY IS CHARGE D TO THE AMOUNT RECEIVED IN THAT PROJECT AND THE INDIRECT EXPENDITU RE BY WAY OF ACCOMMODATION, MESS, TRANSPORTATION, ACADEMIC SUPPO RT COST AND ADMINISTRATIVE COST IS CREDITED SEPARATELY IN THE I NCOME & EXPENDITURE A/C BY DEBITING TO THAT PROJECT. ACCORDINGLY, THE I NCOME & EXPENDITURE A/C IS PREPARED IN TWO PARTS. THE FIRST PART IS IN RESPECT OF THE FUND RECEIVED FOR A PARTICULAR PROJECT AND THE DIRECT EX PENDITURE INCURRED IN RELATION THERETO AND THE SECOND PART IS IN RESPECT OF INDIRECT EXPENDITURE DEBITED TO THAT PROJECT BY CREDITING TO THE INCOME & EXPENDITURE A/C AGAINST WHICH THE VARIOUS EXPENDITURE INCURRED ON P ROVIDING ACCOMMODATION FACILITY, MESS FACILITY, TRANSPORTATI ON FACILITY AND OTHER ADMINISTRATIVE COST IS DEBITED. AFTER CONSIDERING T HE SAME, THE SOCIETY HAS DECLARED A SURPLUS OF RS.11,50,736/- IN THE YEA R UNDER CONSIDERATION. THIS SURPLUS IS CONSIDERED AS EXEMPT U/S 11 OF THE ACT AND ACCORDINGLY THE RETURN WAS FILED DECLARING NIL INCOME. 10. IT WAS FURTHER SUBMITTED THAT THE NATURE OF ACT IVITY AND MANNER OF MAINTENANCE OF ACCOUNTS REMAINS THE SAME AS IN EARL IER YEARS. IN ALL THESE YEARS, THE INCOME IS ASSESSED U/S 143(3) OF T HE ACT AT NIL INCOME HOLDING THAT ASSESSEE EXIST SOLELY FOR EDUCATION. I N SUPPORT, COPY OF THE ASSESSMENT ORDERS FOR AY 09-10 TO 11-12 WERE PLACED ON RECORD. 11. IT WAS FURTHER SUBMITTED THAT THE AO, IN THE YE AR UNDER ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 7 CONSIDERATION, OBSERVED THAT IN THE AUDIT REPORT, T HE ASSESSEE HAS STATED THE NATURE OF BUSINESS OR PROFESSION IN CLAU SE 8(A) OF FORM 3CD AS CONSULTANCY, MESS, ACCOMMODATION. IT HAS ALSO SHOWN INCOME ON ACCOUNT OF INSTITUTIONAL CHARGES. THE ASSESSEE WAS NOT CONSIDERED TO BE ENGAGED IN EDUCATIONAL BUT AS ENGAGED IN GENERAL PU BLIC ACTIVITIES AND THEREFORE, IN VIEW OF THE PROVISO TO SECTION 2(15), THE SURPLUS OF RS.11,50,736/- IS CONSIDERED AS INCOME OF THE SOCIE TY ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. FURTH ER, THE LD. CIT(A) AT PG 11-13 OF HIS ORDER WITHOUT MEETING WITH THE V ARIOUS CONTENTIONS AND THE CASE LAWS RELIED BY THE ASSESSEE, UPHELD TH E ORDER OF AO BY REPRODUCING PG 5-6 OF THE ASSESSMENT ORDER. 12. IT WAS FURTHER SUBMITTED THAT FROM THE OBJECT O F THE SOCIETY, IT CAN BE NOTED THAT IT IS EXISTING SOLELY FOR EDUCATI ON. THE ASSESSEE IMPARTS EDUCATION THROUGH THREE MODELS. FIRST IS DI RECT INTERVENTION WHERE IT HAS EVOLVED NETWORK OF 40 SCHOOLS NAMED BO DHSHALAS IN THREE DISTRICT OF RAJASTHAN, NAMELY, JAIPUR, ALWAR & TONK CATERING 12,000 CHILDREN AND RECOGNIZED BY GOVERNMENT. THESE SCHOOL S ARE RUN ON GRANT FUNDED BY VARIOUS ORGANIZATIONS. THE SECOND MODEL I S PARTNERSHIP WITH GOVERNMENT WHERE IT SUPPORT THE GOVERNMENT SCHOOLS IN CREATING TEXTBOOKS/ WORKBOOKS, CURRICULUM, TEACHING LEARNING MATERIAL, TEACHERS TRAINING FRAMEWORK AND CAPACITY BUILDING OF GOVERNM ENT TEACHERS AND SUPPORTING THE EDUCATION MANAGEMENT IN BETTER MANAG EMENT OF THE SCHOOLS AT THE STATE LEVEL. THIRDLY, IT PARTNERS WI TH OTHER EDUCATION NGOS WHO HAVE EITHER THEIR OWN SCHOOLS OR HAVE TEAM OF T EACHERS OR SUPPORTING TEAM BY BUILDING THEIR CAPACITY THROUGH CREATING TEXTBOOKS/ GUIDEBOOKS/ WORKBOOKS, ETC. THUS, ALL THE ACTIVITIE S OF THE SOCIETY ARE SOLELY FOR EDUCATION. ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 8 13. IT WAS FURTHER SUBMITTED THAT THE AO, BY REFERR ING TO THE FUNDING SUPPORT AGREEMENT BETWEEN THE ASSESSEE AND UNICEF A S REFERRED AT PG 5 OF THE ASSESSMENT ORDER, OBSERVED THAT ASSESSEE I S ENGAGED IN ANCILLARY ACTIVITIES WHICH ARE SUPPORTING OUT OF SC HOOL CHILDREN AND IN THE AUDIT REPORT IN FORM NO.3CD IN COLUMN NO. 8(A), THE NATURE OF ACTIVITY STATED TO BE CONSULTANCY, MESS AND ACCOMMODATION. T HIS APART, IT HAS SHOWN INCOME ON ACCOUNT OF INSTITUTIONAL CHARGES AN D THUS THE ASSESSEES ACTIVITIES ARE IN THE NATURE OF BUSINESS . THESE OBSERVATIONS OF THE AO ARE INCORRECT. FROM THE CLAUSES OF THE AGREE MENT WITH UNICEF AS MENTIONED AT PG 5 OF THE ASSESSMENT ORDER, IT CA N BE NOTED THAT ALL THE ACTIVITIES MENTIONED THEREIN ARE TO PROVIDE EDU CATION TO THOSE CHILDREN WHO HAVE LEFT THE SCHOOL. SIMILARLY THE RE CEIPT ON ACCOUNT OF CONSULTANCY, MESS, ACCOMMODATION AND THE INSTITUTIO NAL CHARGES ARE MAINLY FROM THE VARIOUS FUNDING AGENCIES WHO PROVID E FUND TO THE ASSESSEE TO CARRY OUT THE EDUCATIONAL ACTIVITIES OF WHICH A PART OF THE AMOUNT AS PROVIDED BY THEM IN THE BUDGET IS TRANSFE RRED TO THESE HEADS AGAINST WHICH THE ACTUAL EXPENDITURE INCURRED IS DE BITED AND THE BALANCE REMAINS AS SURPLUS OF THE SOCIETY. THIS CAN BE PERCEIVED FROM THE SAMPLE AGREEMENTS WITH VARIOUS FUNDING AGENCIES PLACED ON RECORD WHERE THEY PROVIDE CERTAIN FUNDS TOWARDS HEAD OFFIC E SUPPORT/ INSTITUTIONAL CHARGES, ACADEMIC SUPPORT AND FOR RES IDENTIAL TRAINING TO THE TEACHERS. SUCH AMOUNT IS REFLECTED IN THE ACCOU NTS TOWARDS INSTITUTIONAL CHARGES/ CONSULTANCY CHARGES/ ACCOMMO DATION, MESS AND TRANSPORTATION CHARGES. THUS, THESE RECEIPTS ARE IN CONNECTION WITH THE EDUCATION ONLY AND NOT A BUSINESS ACTIVITY OF THE S OCIETY. FROM THE DETAILS OF THE RECEIPTS BY WAY OF INSTITUTIONAL CHA RGES, MESS CHARGES, TRANSPORT CHARGES AND CONSULTANCY CHARGES VIS--VIS THE SAMPLE AGREEMENT AT THE FUNDED AGENCIES AND THE INCOME & E XPENDITURE A/C, IT ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 9 CAN BE NOTED THAT ALL THESE RECEIPTS ARE INCIDENTAL TO EDUCATION AND NOT ARISING FROM ANY ACTIVITY OF BUSINESS. THEREFORE, T HE LOWER AUTHORITIES HAVE INCORRECTLY APPLIED PROVISO TO SECTION 2(15) A ND THEREBY DENYING THE EXEMPTION U/S 11. IT MAY BE PERTINENT TO NOTE H ERE THAT IN ALL EARLIER YEARS, THE SAME ACTIVITIES HAS BEEN CONSIDERED BY T HE AO AS EDUCATIONAL ACTIVITIES AND EXEMPTION U/S 11 HAS BEEN ALLOWED. 14. IT WAS FURTHER SUBMITTED THAT IN VARIOUS CASES , IT HAS BEEN HELD THAT AN ACTIVITY INCIDENTAL TO EDUCATION IS ALSO ED UCATION. IN THIS CONNECTION REFERENCE CAN BE MADE TO THE FOLLOWING C ASES:- SHREE AHMEDABAD LOHANA VIDYATHI BHAVAN VS. ITO (201 8) 172 ITD 11 (AHD.) WHERE PROVIDING HOSTEL FACILITY TO STUDENTS IS HELD AS AN ESSENTIAL COMPONENT OF EDUCATIONAL INSTITUTIONS AND ALSO AN A ID FOR ATTAINING EDUCATIONAL OBJECT, AND THUS SAID ACTIVITY WOULD FA LL UNDER PURVIEW OF EDUCATION AS PROVIDED U/S 2(15). DELHI BUREAU OF TEXT BOOKS VS. DIT(E) (2017) 394 IT R 387 (DEL.) EXCLUSIVE ACTIVITY OF THE ASSESSEE IS THE PUBLICATI ON AND PRINTING OF TEXT BOOKS AND THEIR DISTRIBUTION TO GOVERNMENT SCHOOLS. FACT THAT THE ASSESSEE IS A NON-PROFIT ORGANISATION IS NOT IN DIS PUTE. ITS ESSENTIAL ACTIVITIES ARE ADMINISTERED BY THE BOARD OF DIRECTO RS COMPRISING OF OFFICERS OF THE GOVERNMENT. TEXT BOOKS ARE PROVIDED BY THE ASSESSEE TO THE STUDENTS AT SUBSIDIZED RATES. EVEN THE TEXT BOO KS, READING MATERIALS AND SCHOOL BAGS ARE BEING DISTRIBUTED FREE TO DESER VING STUDENTS. ESSENTIAL ACTIVITY OF THE ASSESSEE IS CONNECTED WIT H 'EDUCATION' AND NOTHING ELSE. TRIBUNAL ERRED IN HOLDING THAT THE AC TIVITIES CARRIED OUT BY THE ASSESSEE FELL UNDER THE 4TH LIMB OF S. 2(15), I .E., 'THE ADVANCEMENT ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 10 OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' AND THAT ITS ACTIVITIES WERE NOT SOLELY FOR PURPOSE OF ADVANCEMENT OF 'EDUCATION '. TRIBUNAL CAME TO THE ERRONEOUS CONCLUSION THAT MERELY BECAUSE THE AS SESSEE HAD GENERATED PROFITS OUT OF THE ACTIVITY OF PUBLISHING AND SELLING OF SCHOOL TEXT BOOKS IT CEASED CARRYING ON THE ACTIVITY OF 'E DUCATION'. FURTHER, HAVING ADOPTED A CONSISTENT STAND FOR OVER 34 YEARS , AND THERE BEING NO CHANGE IN THE CIRCUMSTANCES, THERE WAS NO JUSTIF ICATION FOR THE REVENUE TO TAKE A DIFFERENT VIEW IN THE MATTER ONLY BECAUSE IT WAS POSSIBLE TO DO SO. ACIT VS. THANTHI TRUST (2001) 247 ITR 785 (SC) ALL THAT THE SUBSTITUTED SUB-SEC. (4A) OF S. 11 W.E .F. 1ST APRIL, 1992 REQUIRES FOR THE BUSINESS INCOME OF A TRUST OR INST ITUTION TO BE EXEMPT IS THAT THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAI NMENT OF THE OBJECTIVES OF THE TRUST OR INSTITUTION. A BUSINESS WHOSE INCOME IS UTILIZED BY THE TRUST OR THE INSTITUTION FOR THE PURPOSES OF ACHIEVING THE OBJECTIVES OF THE TRUST OR THE INSTITUTION IS SUREL Y A BUSINESS WHICH IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF T HE TRUST. INCOME OF NEWSPAPER BUSINESS OF ASSESSEE-TRUST IS EMPLOYED TO ACHIEVE ITS OBJECTIVES OF EDUCATION AND RELIEF TO THE POOR. THE REFORE, IT IS ENTITLED TO EXEMPTION UNDER SEC. 11 FOR ASST. YR. 1992-93 AND T HEREAFTER. BAUN FOUNDATION TRUST VS. CCIT & ANR. (2012) 73 DTR 45 (BOM.) (HC) THE DOMINANT NATURE OF THE PURPOSE FOR WHICH THE TR UST EXISTS HAS TO BE CONSIDERED. THE CHIEF CIT HAS NOT DOUBTED THE GENUI NENESS OF THE TRUST OR THE FACT THAT IT IS CONDUCTING A HOSPITAL. EVEN IF THE FIGURES WHICH ARE TAKEN INTO ACCOUNT BY THE CHIEF CIT ARE TO BE HAD R EGARD TO, IT IS EVIDENT THAT THE ACTIVITY OF A CHEMIST SHOP IS AN A CTIVITY WHICH IS ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 11 INCIDENTAL OR ANCILLARY TO THE DOMINANT OBJECT AND PURPOSE WHICH IS TO RUN A HOSPITAL. THE CHIEF CIT HAS ACCEPTED THAT THE SURPLUS WHICH IS EARNED FROM THE OPERATION OF A CHEMIST SHOP IS UTIL IZED FOR THE PURPOSES OF THE HOSPITAL. A HOSPITAL MUST OF NECESSITY HAVE A SECTION OR DEPARTMENT WHERE MEDICINES CAN BE DISPENSED AND IT IS NOT UNCOMMON FOR A MEDICAL HOSPITAL WHICH EXISTS EVEN FOR PHILAN THROPIC PURPOSES TO HAVE A CHEMIST SHOP WHERE PHARMACEUTICAL PRODUCTS A RE SOLD. THIS IS A FACILITY WHICH IS INTENDED TO BE USED PREDOMINANTLY BY PATIENTS AND THEIR RELATIVES. THOUGH THE MEMBERS OF THE GENERAL PUBLIC ARE NOT PROHIBITED FROM USING THE FACILITY, THE CRUCIAL QUESTION TO AS K OR THE TEST TO ANSWER IS WHETHER THE ESTABLISHMENT OF A CHEMIST SHOP IS I NCIDENTAL OR ANCILLARY TO THE DOMINANT OBJECT AND PURPOSE WHICH IS TO SET UP AND CONDUCT A HOSPITAL FOR PHILANTHROPIC PURPOSES. AS A MATTER OF FACT, S. 10(23C) PERMITS THE ACCUMULATION OF INCOME UPTO A CERTAIN S TIPULATED AMOUNT OVER A STIPULATED PERIOD. IN THIS VIEW, THE CHIEF C IT HAS CLEARLY MISAPPLIED HIMSELF IN LAW BY HAVING REGARD TO A CLE ARLY ANCILLARY OR INCIDENTAL ACTIVITY AND ELEVATING IT TO THE STATUS OF THE DOMINANT PURPOSE FOR WHICH THE HOSPITAL HAS BEEN ESTABLISHED. RUNNIN G THE CHEMIST SHOP IN THE PRESENT CASE IS NOT THE DOMINANT OBJECT OR P URPOSE OF THE TRUST. NOR WOULD THE FIGURES AS DISCLOSED INDICATE THAT TH E NATURE OF THE ACTIVITY HAS ASSUMED SUCH A DOMINATING OR OVERWHELM ING IMPORTANCE SO AS TO CAST DOUBT ON THE TRUE NATURE AND CHARACTER O F THE HOSPITAL WHICH IS CONDUCTED BY THE PETITIONER. THE IMPUGNED ORDER OF THE CHIEF CIT IS SET ASIDE AND THE APPLICATION FILED BY THE PETITION ER UNDER THE PROVISIONS OF S. 10(23C)(VIA) SHALL BE CONSIDERED IN THE LIGHT OF THE OBSERVATIONS CONTAINED IN THIS JUDGMENT. 15. IT WAS SUBMITTED BY THE LD AR THAT FROM THE ABO VE DECISIONS, IT ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 12 CAN BE NOTED THAT ACTIVITIES INCIDENTAL TO EDUCATIO N IS ALSO EDUCATION. SEC. 11(4A) ALSO PROVIDES THAT PROFIT & GAINS OF BU SINESS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST/ INST ITUTION WHERE SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED IN RESPECT OF SUCH BUSINESS IS ENTITLED TO EXEMPTION U/S 11(1). THEREFORE, ONLY BY PRESUMIN G THAT RECEIPT BY WAY OF INSTITUTIONAL CHARGES, CONSULTANCY, ACCOMMOD ATION, MESS AND TRANSPORTATION IS IN THE NATURE OF BUSINESS ACTIVIT Y, EXEMPTION U/S 11 CANNOT BE DENIED. 16. IT WAS FURTHER SUBMITTED THAT PROVISO TO SECTIO N 2(15) APPLIES ONLY WHEN IT INVOLVES CARRYING ON OF ANY ACTIVITY OR REN DERING ANY SERVICES IN THE NATURE OF/ IN RELATION TO TRADE, COMMERCE OR BU SINESS. THUS, THE PROVISO IS APPLICABLE ONLY WHEN SUCH ACTIVITIES ARE CARRIED OUT WITH PROFIT OBJECTIVE AND THE ACTIVITIES OF THE TRUST OR INSTIT UTION IS FOR GENERAL PUBLIC UTILITY. IF NO PROFIT OBJECTIVE IS INVOLVED, THE SA ME CANNOT BE CONSIDERED AS NON CHARITABLE PURPOSE. THOUGH THIS PROVISO IS A PPLICABLE ONLY TO THOSE TRUST/ INSTITUTIONS WHO ARE INVOLVED IN ADVAN CEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THUS NOT APPLI CABLE TO ASSESSEE, BUT STILL IF IT IS HELD OTHERWISE, THEN ALSO THE PROVIS O CANNOT BE APPLIED TO THE ASSESSEE IN VIEW OF THE CBDT CIRCULAR NO.11/2008. D T. 19.12.2008 AND IN VIEW OF THE FOLLOWING DECISIONS:- INSTITUTE FOR DEVELOPMENT AND RESEARCH IN BANKING T ECHNOLOGY (IDRBT) VS. ADIT (EXEMPTIONS) (2015) 128 DTR 145 (H YD.) PROJECTS UNDERTAKEN AND THE RESEARCH ACTIVITIES CAR RIED OUT BY THE ASSESSEE SOCIETY AIMED AT IMPROVEMENT OF TECHNOLOGY IN BANKING AND FINANCIAL SECTORS. DEVELOPMENT IN THESE AREAS WOULD BENEFIT THE SOCIETY AT LARGE AND PROMOTE THE WELFARE OF GENERAL PUBLIC. THEREFORE, THE OBJECT CAN BE SAID TO BE DIRECTED TOWARDS ADVANCEME NT OF ANY OTHER ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 13 OBJECTS OF GENERAL PUBLIC UTILITY. QUESTION OF PRIV ATE GAIN OR PROFIT MOTIVE CANNOT BE ATTRIBUTED TO ASSESSEE SOCIETY AS IT HAS BEEN CREATED BY RBI. INTENTION OF THE PARLIAMENT IN INTRODUCING THE PROV ISO TO SEC. 2(15) IS TO DENY EXEMPTIONS TO THOSE ORGANIZATIONS OR ENTITIES WHICH ARE PURELY COMMERCIAL OR BUSINESS IN NATURE OR COMMERCIAL ENTI TIES WHICH WEAR THE MASK OF CHARITY. GENUINE CHARITABLE ORGANIZATIONS A RE NOT AFFECTED IN ANY WAY. ONCE THE PRIMARY OBJECTS OF AN INSTITUTION ARE ESTABLISHED TO BE IN THE NATURE OF CHARITY, THEN THE PROVISO TO SE C. 2(15) CANNOT BE MADE APPLICABLE. WHEN AN INSTITUTION IS CARRYING ON ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OBVIOUSLY IT WOULD BE CHARGING FEE, ETC. IT MIGHT BE CHARGING FEE EVEN WHEN IT IS RENDERING SERVICES AS PART OF CHARITABLE ACTIVITY IN ORDER TO SUPPLEMENT ITS INCOME FOR CARRYING ON CHARITABLE ACTIVITIES. IN THAT CASE, THE PROVISO WILL NOT HAVE ANY IMPLICATION AS THE ACTIVITIES WOULD NOT BE IN THE N ATURE OF TRADE, COMMERCE OR BUSINESS. OBJECTS OF THE ASSESSEE SOCIE TY ARE TOTALLY CHARITABLE IN NATURE AND DO NOT INVOLVE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THEREFORE, P ROVISO TO SEC. 2(15) IS NOT APPLICABLE TO THE ASSESSEE SOCIETY. MERE FAC T THAT THE ASSESSEE SOCIETY HAS GENERATED SURPLUS IN THE COURSE OF CARR YING ON ITS ANCILLARY OBJECTS SHALL NOT ALTER THE CHARACTER OF THE MAIN O BJECTS SO LONG AS THE PREDOMINANT OBJECT CONTINUES TO BE CHARITABLE AND N OT TO EARN PROFIT. THEREFORE, ASSESSEE SOCIETY IS ENTITLED TO EXEMPTIO N U/S 11. INDIA TRADE PROMOTION ORGANIZATION VS. DGIT (EXEMPT ION) & ORS. (2015) 114 DTR 329/ 229 TAXMAN 347 (DEL.) (HC) PROVISO TO SECTION 2(15) CARVES OUT AN EXCEPTION FR OM THE CHARITABLE PURPOSE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENER AL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATU RE OF TRADE, COMMERCE ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 14 OR BUSINESS OR ANY ACTIVITY OF RENDERING OF ANY SER VICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR AN Y OTHER CONSIDERATION. IN BOTH THE ACTIVITIES, THE DOMINANT AND PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABL E PURPOSE IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECTLY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR INDIRECTLY IN THE RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THEN I T WOULD NOT BE ENTITLED TO CLAIM ITS OBJECT TO BE A CHARITABLE PU RPOSE. ON THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A D ESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO THE CHARITY THROUGH THE ADVANCEM ENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED A S AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. IN THE PRESENT CASE THE DRIVING FORCE IS NOT THE DE SIRE TO EARN PROFITS BUT THE OBJECT OF PROMOTING TRADE AND COMMERCE NOT FOR ITSELF, BUT FOR THE NATION, BOTH WITHIN INDIA AND OUTSIDE INDIA. MERELY BECAUSE THE ASSESSEE DERIVES RENTAL INCOME, INCOME OUT OF SALE OF TICKETS AND SALE OF PUBLICATIONS OR INCOME OUT OF LEASING OUT FOOD AND BEVERAGES OUTLETS IN THE EXHIBITION GROUNDS DOES NOT IN ANY WAY EFFECT T HE NATURE OF THE ASSESSEE AS A CHARITABLE INSTITUTION IF IT OTHERWIS E QUALIFIES FOR SUCH A CHARACTER. THUS, WHILE UPHOLDING THE CONSTITUTIONAL VALIDITY OF THE PROVISO TO SEC. 2(15), IT HAS TO BE READ DOWN IN TH E MANNER INDICATED ABOVE. ICAI VS. DGIT (EXEMPTIONS) (2013) 90 DTR 161/ 358 I TR 91(DEL.) IF THE OBJECT OR PURPOSE OF AN INSTITUTION IS CHARI TABLE, THE FACT THAT IT COLLECTS CERTAIN CHARGES DOES NOT ALTER THE CHARACT ER OF THE INSTITUTION. THE EXPRESSION TRADE, COMMERCE AND BUSINESS A S OCCURRING IN THE ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 15 FIRST PROVISO TO SECTION 2(15) MUST BE READ IN THE CONTEXT OF THE INTENT AND PURPORT OF SECTION 2(15) AND CANT BE INTERPRET ED TO MEAN ANY ACTIVITY WHICH IS CARRIED ON IN AN ORGANISED MANNER . THE PURPOSE AND THE DOMINANT OBJECT FOR WHICH AN INSTITUTION CARRIE S ON ITS ACTIVITIES IS MATERIAL TO DETERMINE WHETHER THE SAME IS BUSINESS OR NOT. THE PURPORT OF THE FIRST PROVISO TO SECTION 2(15) IS NOT TO EXC LUDE ENTITIES WHICH ARE ESSENTIALLY FOR CHARITABLE PURPOSE BUT ARE CONDUCTI NG SOME ACTIVITIES FOR A CONSIDERATION OR FEE. THE OBJECT OF INTRODUCING T HE FIRST PROVISO IS TO EXCLUDE ORGANISATIONS WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF CHARITABLE PURPOSE. THE EXPRESSION BUSINE SS, TRADE OR COMMERCE AS USED IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIVELY AND WHERE THE DOMINANT OBJECT OF AN O RGANISATION IS CHARITABLE, ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FALL WITHIN THE EXPRESSION BUSINESS, TRADE OR COMMERCE(PARA 67). THE DOMINANT OBJECTIVE OF ASSESSEE INSTITUTE WAS TO REGULATE THE PROFESSION OF CHARTERED ACCOUNTANCY IN INDIA. THE F UNCTIONS PERFORMED BY THE ASSESSEE INSTITUTE ARE IN THE GENRE OF PUBLI C WELFARE AND NOT FOR ANY PRIVATE GAIN OR PROFIT AND IN THIS VIEW IT CAN T BE SAID THAT ASSESSEE IS INVOLVED IN CARRYING ON ANY BUSINESS, TRADE OR C OMMERCE. THE ACTIVITY OF IMPARTING EDUCATION IN THE FIELD OF ACCOUNTANCY AND CONDUCTING COURSES BOTH AT PRE-QUALIFICATION AS WELL AS POST Q UALIFICATION LEVEL ARE ACTIVITIES IN FURTHERANCE OF THE OBJECT FOR WHICH A SSESSEE HAS BEEN CONSTITUTED AND THEREFORE THE SAME CANT BE SAID TO BE TRADE, COMMERCE OR BUSINESS. ACCORDINGLY, EVEN THOUGH FEES ARE CHAR GED BY THE INSTITUTE FOR PROVIDING COACHING CLASSES AND FOR HOLDING INTE RVIEWS WITH RESPECT TO THE CAMPUS PLACEMENT, THE SAID ACTIVITIES CANNOT BE STATED TO BE RENDERING SERVICE IN RELATION TO TRADE, COMMERCE OR BUSINESS AS SUCH ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 16 ACTIVITIES ARE UNDERTAKEN BY THE INSTITUTE IN FURTH ERANCE OF ITS MAIN OBJECT WHICH ARE NOT TRADE, COMMERCE OR BUSINESS. ( PARA 73 & 77) DIRECTOR OF INCOME-TAX (EXEMPTION) V. SABARMATI ASH RAM GAUSHALA TRUST 362 ITR 539 (GUJ.) THE FIRST PROVISO TO SECTION 2(15) OF THE INCOME-TA X ACT, 1961, INSERTED WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2009, BY TH E FINANCE ACT, 2010, PROVIDES FOR EXCLUSION FROM THE MAIN OBJECT OF THE DEFINITION OF THE TERM 'CHARITABLE PURPOSES' AND APPLIES ONLY TO CASES OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IF THE COND ITIONS PROVIDED UNDER THE PROVISO ARE SATISFIED, ANY ENTITY, EVEN IF INVO LVED IN ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY BY VIRTU E OF THE PROVISO, WOULD BE EXCLUDED FROM THE DEFINITION OF 'CHARITABLE TRUS T'. THE STATUTORY PROVISIONS, AS EXPLAINED IN THE SPEECH OF THE FINAN CE MINISTER AND CIRCULAR NO. 11 OF 2008, ARE THAT THE ACTIVITY OF A TRUST WOULD BE EXCLUDED FROM THE TERM 'CHARITABLE PURPOSE' IF IT I S ENGAGED IN ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE, OR BUSIN ESS OR RENDERS ANY SERVICE IN RELATION TO TRADE, COMMERCE, OR BUSINESS FOR A CESS, FEE OR ANY OTHER CONSIDERATION. IT IS NOT AIMED AT EXCLUDI NG GENUINE CHARITABLE TRUSTS OF GENERAL PUBLIC UTILITY BUT IS AIMED AT EX CLUDING ACTIVITIES IN THE NATURE OF TRADE, COMMERCE, OR BUSINESS WHICH ARE MA SKED AS 'CHARITABLE PURPOSE'. MANY ACTIVITIES OF GENUINE CH ARITABLE PURPOSES WHICH ARE NOT IN THE NATURE OF TRADE, COMMERCE OR B USINESS MAY STILL GENERATE MARKETABLE PRODUCTS. AFTER SETTING OFF OF THE COST, FOR PRODUCTION OF SUCH MARKETABLE PRODUCTS FROM THE SAL E CONSIDERATION, THE ACTIVITY MAY LEAVE A SURPLUS. THE LAW DOES NOT EXPE CT THE TRUST TO DISPOSE OF ITS PRODUCE AT ANY CONSIDERATION LESS TH AN THE MARKET VALUE. IF THERE IS ANY SURPLUS GENERATED AT THE END OF THE YEAR, THAT BY ITSELF ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 17 WOULD NOT BE THE SOLE CONSIDERATION FOR JUDGING WHE THER ANY ACTIVITY IS TRADE, COMMERCE OR BUSINESS PARTICULARLY IF GENERAT ING 'SURPLUS' IS WHOLLY INCIDENTAL TO THE PRINCIPAL ACTIVITIES OF TH E TRUST ; WHICH IS OTHERWISE FOR GENERAL PUBLIC UTILITY, AND, THEREFOR E, OF CHARITABLE NATURE. IN THIS CASE THE ASSESSEE-TRUST WAS ENGAGED IN THE ACTIVITY OF BREEDING MILK CATTLE TO IMPROVE THE QUALITY OF COWS AND OXEN AND OTHER RELATED ACTIVITIES. THE ASSESSING OFFICER APPLIED THE PROVI SO TO SECTION 2(15) HOLDING THAT THE TRUST COULD NOT BE CONSIDERED AS O NE CREATED FOR CHARITABLE PURPOSES. HE ANALYSED THE ACCOUNTS OF TH E ASSESSEE AND CAME TO THE CONCLUSION THAT CONSIDERABLE INCOME WAS GENERATED FROM THE ACTIVITY OF MILK PRODUCTION AND SALE. THEREFORE , FOR THE ASSESSMENT YEAR 2009-10, HE DENIED THE BENEFIT OF SECTIONS 11 AND 12 TO THE ASSESSEE. THE TRIBUNAL NOTED THAT THE OBJECTS WERE ADMITTEDLY CHARITABLE IN NATURE. THE SURPLUS GENERATED WAS WHO LLY SECONDARY. THEREFORE, IT HELD THAT THE PROVISO TO SECTION 2(15 ) OF THE ACT WOULD NOT APPLY AND THE ASSESSEE WAS ENTITLED TO THE EXEMPTIO N. ON APPEAL TO THE HIGH COURT HELD THAT THE MAIN OBJECTIVES OF THE TRU ST WERE TO BREED CATTLE AND ENDEAVOR TO IMPROVE THE QUALITY OF THE C OWS AND OXEN IN VIEW OF THE NEED FOR GOOD OXEN AS INDIA IS PROMINENTLY A N AGRICULTURAL COUNTRY. ALL THESE WERE OBJECTS OF GENERAL PUBLIC U TILITY AND WOULD SQUARELY FALL UNDER SECTION 2(15) OF THE ACT. PROFI T MAKING WAS NEITHER THE AIM NOR OBJECT OF THE TRUST. IT WAS NOT THE PRI NCIPAL ACTIVITY. MERELY BECAUSE WHILE CARRYING OUT THE ACTIVITIES FOR THE P URPOSE OF ACHIEVING THE OBJECT OF THE TRUST, CERTAIN INCIDENTAL SURPLUS ES WERE GENERATED, THAT WOULD NOT RENDER THE ACTIVITY IN THE NATURE OF TRAD E, COMMERCE OR BUSINESS. THE ASSESSEE WAS ENTITLED TO EXEMPTION UN DER SECTION 11. ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 18 BUREAU OF INDIAN STANDARDS VS. DGIT (2013) 89 DTR 9 3/ 358 ITR 78 (DEL.) (HC) EXEMPTION GRANTED TO ASSESSEE U/S 10(23C)(IV) WAS W ITHDRAWN BY DIT (EXEMPTIONS) FOR THE REASON THAT ACTIVITIES OF ASSE SSEE FULFIL ALL THE ATTRIBUTES OF BUSINESS IN AS MUCH AS ASSESSEE AWARD S LICENSES UNDER VARIOUS PRODUCTS CERTIFICATION SCHEMES FOR WHICH A FEE OR CONSIDERATION IS CHARGED AND THUS ASSESSEE IS DIRECTLY HIT BY PRO VISO BELOW SEC. 2(15). IT WAS HELD THAT THE DESIGNATED FUNCTION OF ASSESSE E FALL UNDER THE CATEGORY OF ADVANCEMENT OF OBJECT OF GENERAL PUBLI C UTILITY. BIS PERFORMS SOVEREIGN AND REGULATORY FUNCTION, IN ITS CAPACITY OF AN INSTRUMENTALITY OF THE STATE. THEREFORE, IT IS NOT INVOLVED IN CARRYING ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINE SS. BIS RENDERS SERVICES IN RELATION TO TRADE, COMMERCE OR BUSINESS BY GRANTING CERTIFICATION/QUALITY MARKS IN RETURN OF LICENSE FE ES. HOWEVER, RENDERING ANY SERVICE IN RELATION TO TRADE, COMMERCE OR BUSIN ESS CANNOT RECEIVE SUCH A WIDE CONSTRUCTION AS TO ENFOLD REGULATORY AN D SOVEREIGN AUTHORITIES, SET UP UNDER STATUTORY ENACTMENTS, AND TASKED TO ACT AS AGENCIES OF THE STATE IN PUBLIC DUTIES WHICH CANT BE DISCHARGED BY THE PRIVATE BODIES. IF ANY PROFIT/REVENUE IS EARNED IT IS PURELY INCIDENTAL. IT WAS SUBMITTED THAT FROM THESE DECISIONS, IT CAN BE NOTED THAT OTHERWISE ALSO PROVISO TO SEC. 2(15) IS NOT APPLICA BLE TO THE ASSESSEE AS THERE IS NO PROFIT MOTIVE INVOLVED IN THE ACTIVITIE S OF THE ASSESSEE AND THE SURPLUS IS UTILIZED FOR ITS OBJECTS. 17. IT WAS FURTHER SUBMITTED THAT BEFORE THE LD. CI T(A) ALL THESE FACTS WERE EXPLAINED BUT HE HAS NOT CONSIDERED ANY OF THE CONTENTIONS RAISED ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 19 BY THE ASSESSEE AND BY SIMPLY PRODUCING THE ASSESSM ENT ORDER AT PG 11-13 OF HIS ORDER UPHELD THE FINDINGS OF AO. THERE FORE, THE ORDER OF LD. CIT(A) IS ERRONEOUS. IN VIEW OF ABOVE, IT WAS SUBMI TTED THAT ASSESSEE IS EXISTING SOLELY FOR EDUCATION AND THE AO BE DIRECTE D TO ALLOW THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. 18. THE LD DR IS HEARD WHO HAS RELIED HEAVILY ON T HE FINDINGS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD DR T HAT THE ASSESSEE SOCIETY HAS BEEN REGISTERED U/S 12A AS A CHARITABLE SOCIETY AND ITS OBJECTS AND ACTIVITIES FALLS IN THE LAST LIMB OF DE FINITION UNDER SECTION 2(15) I.E, ADVANCEMENT OF ANY OBJECT OF GENERAL PUB LIC UTILITY AS THE ASSESSEE SOCIETY IS ENGAGED IN ANCILLARY ACTIVITIES WHICH ARE SUPPORTING OUT OF THE SCHOOL CHILDREN AND IT IS A STEP TOWARDS FORMAL EDUCATION AND ANY ACTIVITY CONNECTED WITH EDUCATION CANNOT BE CLA SSIFIED AS EDUCATION ACTIVITY. THE LD DR FURTHER SUBMITTED THAT IN ASSE SSEES OWN FINANCIALS, IT HAS SHOWN CONSULTANCY, MESS AND ACCOMMODATION CH ARGES WHICH THE AUDITORS HAVE THEMSELVES CLASSIFIED AS BUSINESS ACT IVITIES OF THE ASSESSEE. IN VIEW OF THE SAME, IT WAS SUBMITTED TH AT THE AO HAS RIGHTLY INVOKED THE PROVISO TO SECTION 2(15) AND THE EXEMPT ION CLAIMED U/S 11 WAS DENIED AND SURPLUS BROUGHT TO TAX. 19. HEARD BOTH THE PARTIES AND GONE THROUGH THE MAT ERIAL AVAILABLE ON RECORD. 20. FIRSTLY, WE FIND THAT THE ASSESSEE SOCIETY WHIC H IS REGISTERED U/S 12A(A) OF THE ACT HAS BEEN REGULARLY ASSESSED IN TH E EARLIER YEARS AND IN ALL THOSE YEARS, IT HAS BEEN ASSESSED AT NIL INCOME ALLOWING THE EXEMPTION U/S 11 AND 12 OF THE ACT SO CLAIMED BY TH E ASSESSEE SOCIETY. ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 20 FOR INSTANCE, IN AY 2009-10, THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S 143(3) HAS HELD THAT THE MAIN OBJECT OF THE ASSESSEE IS TO IMPART EDUCATION FOR THE DEPRIVED AND WEAKER SECTIO N OF THE SOCIETY AND THE OBJECTS OF THE INSTITUTION IS PIOUS AND CHARITA BLE. THE SAMITI IS RUNNING 42 SCHOOLS IN VARIOUS PARTS OF RAJASTHAN MA INLY IN JAIPUR AND ALWAR DISTRICTS. THE INCOME OF THE SAMITI HAS BEEN UTILIZED FOR ACHIEVING THE OBJECTS FOR WHICH IT HAS BEEN CONSTITUTED. AFTE R SCRUTINY, ASSESSMENT IS COMPLETED AT NIL INCOME. AND SIMILAR FINDINGS H AVE BEEN GIVEN IN AY 2010-11. IN SUBSEQUENT AY 2011-12, THE ASSESSIN G OFFICER HAS HELD THAT THE OBJECT OF THE SOCIETY IS TO RUN EDUCATION AL PROGRAMS/PROJECTS FOR MARGINALIZED, DEPRIVED AND UNDERSERVED SECTIONS OF THE SOCIETY SUCH AS URBAN SLUMS IN JAIPUR CITY AND RURAL AREAS OF AL WAR DISTRICT. IT ALSO PROVIDES TRAINING TO TEACHERS FOR QUALITY ENHANCEME NT IN SCHOOLS RUN BY THE GOVERNMENT OF RAJASTHAN THROUGH SARVA SHIKSHA A BHIYAN. IN MY OPINION, THE ASSESSEES ACTIVITIES FALL UNDER THE A MBIT OF EDUCATION UNDER SECTION 2(15) AND THE ASSESSEE IS ALREADY REGISTERE D UNDER SECTION 12AA AND AS A RESULT, THE ASSESSEE IS ENTITLED TO EXEMPT ION U/S 11 AND 12 OF THE ACT. THEREFORE, IN VIEW OF THE WELL SETTLED L EGAL PROPOSITION, AS HAS BEEN LAID DOWN BY THE COURTS FROM TIME TO TIME AND WHICH HAS BEEN REITERATED IN THE DECISION OF HONBLE SUPREME COURT IN CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD . (394 ITR 449) THAT: WHILE IT IS TRUE THAT THE PRINCIPLE OF RES JUDICATA WOULD NOT APPLY TO ASSESSMENT PROCEEDINGS UNDER THE ACT, THE NEED FOR CONSISTENCY AND CERTAINTY AND EXISTENCE OF STRONG AND COMPELLING RE ASONS FOR A DEPARTURE FROM A SETTLED POSITION HAS TO BE SPELT O UT WHICH CONSPICUOUSLY IS ABSENT IN THE PRESENT CASE. IN THI S REGARD WE MAY REMIND OURSELVES OF WHAT HAS BEEN OBSERVED BY THIS COURT IN ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 21 RADHASOAMI SATSANG V. CIT [1992] 193 ITR 321/60 TAX MAN 248 (SC). 'WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RE S JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. AGAIN, EACH AS SESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT P ERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOU ND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR.' THERE HAS TO BE COMPELLING REASONS FOR A DEPARTURE FROM THE PAST SETTLED POSITION WHEREIN THE ASSESSEE SOCIETY HAS B EEN HELD TO BE ENGAGED IN THE FIELD OF EDUCATION ALL THESE YEARS A ND SUCH REASONS HAVE TO BE SPELT OUT CLEARLY BY THE ASSESSING OFFICER. I T HAS BEEN CONTENDED BY THE LD AR THAT THERE IS NO CHANGE IN THE NATURE OF ACTIVITIES AND THE ACTIVITIES ARE THE SAME AS CARRIED OUT BY THE ASSES SEE SOCIETY AS IN EARLIER YEARS. EVEN ON PERUSAL OF THE ASSESSMENT OR DER, WE NOTE THAT THERE IS NO FINDING RECORDED BY THE ASSESSING OFFIC ER THAT THE NATURE OF ACTIVITIES BEING CARRIED ON BY THE ASSESSEE SOCIETY HAS CHANGED SINCE LAST YEARS AND EVEN DURING THE COURSE OF HEARING, T HE LD DR HAS NOT SUBMITTED ANYTHING CONTRARY TO THE CONTENTIONS SO A DVANCED BY THE LD AR AND AS FOUND FROM THE PERUSAL OF PAST ASSESSMENT ORDERS. WE THEREFORE FIND THAT WHERE THE UNDISPUTED FACTS ARE THAT THESE ARE THE SAME ACTIVITIES WHICH THE ASSESSEE SOCIETY HAS BEEN CARRYING ON ALL THESE YEARS AND THEN ON WHAT BASIS, THE SAME ACTIVI TIES ARE TREATED AS EDUCATIONAL ACTIVITIES IN ALL THE PAST YEARS AND FO R THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER HOLD THAT THES E ARE NOT EDUCATIONAL ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 22 ACTIVITIES BUT ACTIVITIES ANCILLARY TO EDUCATION AC TIVITIES SUPPORTING OUT OF SCHOOL CHILDREN AND THEREFORE, FALL UNDER THE DEFIN ITION OF ADVANCEMENT OF ANY OTHER OBJECTS OF GENERAL PUBLIC UTILITY. O N THIS GROUND ALONE, WHERE THERE ARE NO CHANGES IN THE FACTS AND CIRCUMS TANCES OF THE CASE, FOLLOWING THE RULE OF CONSISTENCY AS UPHELD BY THE COURTS FROM TIME TO TIME, WE ARE OF THE CONSIDERED VIEW THAT THERE IS N O BASIS TO INTERFERE WITH THE CONSISTENT POSITION WHICH HAS BEEN ACCEPTE D IN THE EARLIER YEARS THAT IS, TO HOLD THAT THE ASSESSEE SOCIETY IS INVOLVED IN THE FIELD OF EDUCATION. 21. NOW, COMING TO SPECIFIC FINDINGS OF THE ASSESSI NG OFFICER IN THE IMPUGNED ASSESSMENT ORDER. THE ASSESSING OFFICER R EFERRING TO AN AGREEMENT ENTERED INTO BY THE ASSESSEE SOCIETY WITH UNICEF HAS STATED THAT THE ASSESSEE SOCIETY IS ENGAGED IN ANCILLARY A CTIVITIES WHICH ARE SUPPORTING OUT OF THE SCHOOL CHILDREN AND IT IS A S TEP TOWARDS FORMAL EDUCATION AND BASIS THE SAID SOLITARY AGREEMENT, HA S COME TO A CONCLUSION THAT THE MAIN OBJECTS OF THE ASSESSEE SO CIETY IS NOT EDUCATION BUT ADVANCEMENT OF OBJECT OF GENERAL PUBL IC UTILITY. WE THEREFORE FIND THAT THE ASSESSING OFFICER HAS NOT D ISPUTED THAT THE ASSESSEE SOCIETY IS ENGAGED IN THE FIELD OF EDUCATI ON, RATHER THE DISPUTE IS WHETHER THE ASSESSEE SOCIETY IS DIRECTLY INVOLVE D IN IMPARTING EDUCATION TO STUDENTS OR MERELY SUPPORTING SUCH EDU CATIONAL ACTIVITIES AND WHERE IT IS MERELY SUPPORTING THE EDUCATIONAL N EEDS OF THE CHILDREN, IT WILL CATER TO THE FIELD OF GENERAL PUBLIC UTILIT Y AND NOT EDUCATION. 22. TO OUR MIND, ONE NEEDS TO READ AND APPRECIATE T HE MEANING OF THE TERM EDUCATION NOT IN A STATIC MANNER RATHER THE SAME HAS TO BE READ IN THE CONTEXT OF HOW THE FIELD OF EDUCATION H AS EVOLVED OVER THE PERIOD OF TIME GIVEN THE SOCIO-ECONOMIC DYNAMICS OF OUR SOCIETY WHERE ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 23 A LARGE SECTION OF OUR SOCIETY FALL IN THE BROAD CA TEGORY OF FLOATING POPULATION OR MIGRATORY WORKERS WHO MOVE FROM ONE C ITY TO ANOTHER IN PURSUIT OF WORK AND EMPLOYMENT AND EDUCATIONAL NEED S OF CHILDREN OF SUCH MIGRATORY SECTION OF OUR SOCIETY. SECONDLY AN D EQUALLY IMPORTANT FACTOR IS THE ABILITY OF A LARGE SECTION OF OUR SOC IETY TO SEND THEIR CHILDREN TO FORMAL SCHOOLS GIVEN THE LACK OF FINANC IAL RESOURCES AT THEIR DISPOSAL. THIRDLY, EVEN WHERE THE GOVERNMENT IS PR OVIDING FREE EDUCATION UNDER THE RTE ACT, THE AVAILABILITY AND A CCESS TO GOVERNMENT SCHOOLS AND INFRASTRUCTURE AND GIVEN THE LACK OF AD EQUATE GOVERNMENT SCHOOLS, THE NECESSITY FOR THE CIVIL SOCIETY AND VA RIOUS NON-GOVERNMENT ORGANIZATIONS/AGENCIES TO STEP-IN IN THE FIELD OF E DUCATION. IN THIS BACKGROUND, IF WE LOOK AT THE FOLLOWING OBJECTS OF THE ASSESSEE SOCIETY, MNS'; & LFEFR DS FUEUFYF[KR MNS; GKSXS & D LKEKFTD ,OA VKFFKD N`F'V LS FINYS GQ, RCDKS DS CP PS DS FK{K.K ,OA LOKZXH.K FODKL DS FY;S DK;Z DJUKA BL DK;Z DKS LKEQNKF;D IGY] DEZ O FU ;A=.K DS VK/KKJ IJ DJUS DK IZ;KL FD;K TK,XKA [K FK{KK DS {KS= ESA ,SLS KKS/K O IZ;KXKS DK FODK L RFKK FOLRKKJ DJUK] FTUDS EK/;E LS ORZEKU FK{KK FUFR O IZ.KKYH DS NKS'KKAS ,OAA DFE;K SA DK O;KOGKFJR LEK/KKU IZLRQR FD;K TK LDSA X OSKKFUD N`F'VDKS.K ,OA LKLAD`FRD PSRUK DS FODKL L S FY;S DK;Z DJUKA ?K LEKU MNS;KS LS MRISZFJR LALFKKVKSA] LEQGKS O XF RFOF/K;KSA DS LKFK LG;KSX] LGDK;Z O LEUO;A M MIJKSDR MNS;KSA DH IWFRZ DS FY;S LK/KU O LALFKKV KSA DK FODKL DJUKA WE FIND THAT THE ASSESSEE SOCIETY OBJECTS ARE CLEAR LY IN THE FIELD OF EDUCATION WITH FOCUS ON SOCIALLY AND ECONOMICALLY UNDER-PRIVILEGED CHILDREN OF OUR SOCIETY. IN PURSUIT OF ITS OBJECTS , THE ASSESSEE SOCIETY HAS ESTABLISHED 40 BODHSHALAS, OUT OF WHICH 34 BODH SHALAS ARE ALSO RECOGNIZED BY THE DISTRICT EDUCATION OFFICE, GOVERN MENT OF RAJASTHAN, ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 24 WHERE FREE EDUCATION IS PROVIDED TO THE STUDENTS. THE OTHER 6 BODHSHALAS ARE ESTABLISHED AS LEARNING CENTRES FOR CHILDREN UPTO CLASS II LEVEL. THE ASSESSEE SOCIETY IS THUS DIRECTLY INVOL VED IN IMPARTING EDUCATION TO THE STUDENTS. BESIDES THE SAME, THE AS SESSEE SOCIETY IN PARTNERSHIP WITH GOVERNMENT SUPPORTS THE GOVERNMENT SCHOOLS IN CREATING TEXTBOOKS/ WORKBOOKS, CURRICULUM, TEACHING LEARNING MATERIAL, TEACHERS TRAINING FRAMEWORK AND CAPACITY BUILDING O F GOVERNMENT TEACHERS AND SUPPORTING THE EDUCATION MANAGEMENT IN BETTER MANAGEMENT OF THE SCHOOLS AT THE STATE LEVEL. THIRD LY, IT PARTNERS WITH OTHER EDUCATION NGOS WHO HAVE EITHER THEIR OWN SCHO OLS OR HAVE TEAM OF TEACHERS OR SUPPORTING TEAM BY BUILDING THEIR CA PACITY THROUGH CREATING TEXTBOOKS/ GUIDEBOOKS/ WORKBOOKS, ETC. 23. THE AGREEMENT WITH UNICEF WHICH IS AN INTERNATI ONAL UN ORGANIZATION WITH FOCUS ON EDUCATION OF CHILDREN AR OUND THE WORLD, FALLS IN THE AFORESAID THIRD CATEGORY. THE ACTIVITIES CO NTEMPLATED UNDER THE SAID AGREEMENT ARE REVISING THE SPECIAL TRAINING MA TERIAL FOR OUT OF SCHOOL CHILDREN, TO FINALISE THE MATERIAL DEVELOPED FOR UPPER PRIMARY SCHOOLS, TO CARRY OUT SITUATIONAL ANALYSIS OF THE W ORK ALREADY HAPPENING IN THE SCHOOLS AND RELATED CHALLENGES, TO CARRY OUT ANALYSIS OF EXISTING SPECIAL TRAINING MATERIAL FOR OUT OF SCHOOL CHILDRE N, ITS IMPACT ON THE LEARNING AND UNDERSTANDING THE GAPS AND REQUIREMENT TO MAKE THE TRAINING MATERIAL MORE APPROPRIATE, ETC. IN OUR CO NSIDERED VIEW, THESE ACTIVITIES ARE CLEARLY IN THE FIELD OF EDUCATION WI TH FOCUS ON OUT OF SCHOOL CHILDREN AND MAKE EFFORTS TO BRING THEM ONBOARD IN FORMAL SCHOOL SET- UP. EVEN THOUGH THE ASSESSEE SOCIETY IS NOT DIRECT LY IMPARTING EDUCATION IN THIS CASE AND SUCH ACTIVITIES ARE HELD TO BE ANCILLARY TO EDUCATION, TO OUR MIND, THERE IS CLEARLY A DIRECT A ND CLOSE NEXUS AND ARE ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 25 CLEARLY DIRECTED AT EDUCATION OF THE OUT OF SCHOOL CHILDREN. BY ENTERING IN SUCH AN AGREEMENT WITH UNICEF, THE DOMINANT OBJECTI VE AND PURPOSE FOR WHICH THE ASSESSEE SOCIETY HAS BEEN SETUP CANNO T BE SAID TO BE DILUTED IN ANY CASE, RATHER IT IS PART OF THE SAID OBJECTS AND ALSO STRENGTHEN AND RECOGNIZES THE FACT THAT THE ORGANIZ ATIONS SUCH AS UNICEF ARE APPRECIATING THE EFFORTS DONE BY THE ASS ESSEE SOCIETY AND WISHES TO COLLABORATE AND PARTNER WITH IT IN SUPPOR TING THE EDUCATION NEEDS OF SOCIALLY AND ECONOMICALLY UNDER-PRIVILEGED CHILDREN OF OUR SOCIETY AND NOT WITH A VIEW TO EARN PROFIT WHICH IS A PRIME MOTIVE OF ANY BUSINESS ACTIVITY. 24. AS THE COURTS HAVE HELD FROM TIME THAT WHERE TH E DOMINANT OBJECTIVE IS TO PROVIDE EDUCATION, THE FACT THAT IT MAKES A SURPLUS DOES NOT LEAD TO THE CONCLUSION THAT IT CEASES TO EXIST SOLELY FOR EDUCATION PURPOSES AND BECOMES AN INSTITUTION FOR THE PURPOSE OF MAKING PROFIT. THE PREDOMINANT OBJECT TEST MUST BE APPLIED - THE P URPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKING MOTIVE. A DISTINCTION MUST BE DRAWN BETWEEN THE MAKING OF A SURPLUS AND AN INS TITUTION BEING CARRIED ON 'FOR PROFIT'. NO INFERENCE ARISES THAT M ERELY BECAUSE IMPARTING EDUCATION RESULTS IN MAKING A PROFIT, IT BECOMES AN ACTIVITY FOR PROFIT. IF AFTER MEETING EXPENDITURE, A SURPLUS ARI SES INCIDENTALLY FROM THE ACTIVITY CARRIED ON BY THE EDUCATIONAL INSTITUT ION, IT WILL NOT BE CEASE TO BE ONE EXISTING SOLELY FOR EDUCATIONAL PURPOSES. THE ULTIMATE TEST IS WHETHER ON AN OVERALL VIEW OF THE MATTER, THE OBJEC T IS TO MAKE PROFIT AS OPPOSED TO EDUCATING PERSONS. 25. IN THIS REGARD, WE REFER TO THE FINDINGS OF THE ASSESSING OFFICER WHEREIN HE HAS REFERRED TO THE DETAILS OF ACTIVITIE S CARRIED OUT BY THE ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 26 THE ASSESSEE SOCIETY AND HAS STATED THAT THE ASSESS EE SOCIETY HAS GOT GRANTS-IN- AID FROM NUMBER OF AGENCIES FOR SPECIFIE D PROJECTS AND HAS UTILIZED THESE GRANTS, HOWEVER, AT THE SAME TIME, T HE ASSESSEE SOCIETY HAS ALSO SHOWN INCOME ON ACCOUNT OF INSTITUTIONAL C HARGES OF RS. 25,73,793/-. FURTHER, THE AUDITORS IN THEIR AUDIT R EPORT HAVE STATED IN FORM 3CD, THE NATURE OF BUSINESS/ PROFESSION AS CO NSULTANCY, MESS, ACCOMMODATION. IN VIEW OF THE SAME, IT WAS HELD TH AT THE PROVISO TO SECTION 2(15) IS APPLICABLE. IN ITS SUBMISSIONS, T HE ASSESSEE SOCIETY SUBMITTED THAT IT RECEIVES FUNDS FROM VARIOUS FUNDI NG AGENCIES FOR IMPARTING EDUCATION TO THE CHILDREN, TRAINING TO TH E TEACHERS, AWARENESS PROGRAMME, INFRASTRUCTURE DEVELOPMENT, CURRICULUM A ND MATERIAL DEVELOPMENT, RESEARCH ETC. THESE FUNDING AGENCIES P ROVIDE EARMARKED BUDGET FOR THE ACTIVITIES TO BE CONDUCTED UNDER THE MUTUALLY AGREED PROGRAMME. APART FROM THIS, THEY PROVIDE SPECIFIC B UDGET FOR TRAINING OF THE TEACHERS AND ALSO INSTITUTIONAL CHARGES TO MEET THE ADMINISTRATIVE COST. THE SPECIFIC EXPENDITURE FOR CARRYING OUT THE ACTIVITY IS CHARGED TO THE AMOUNT RECEIVED IN THAT PROJECT AND THE INDIREC T EXPENDITURE BY WAY OF ACCOMMODATION, MESS, TRANSPORTATION, ACADEMIC SU PPORT COST AND ADMINISTRATIVE COST IS CREDITED SEPARATELY IN THE I NCOME & EXPENDITURE A/C BY DEBITING TO THAT PROJECT. ACCORDINGLY, THE I NCOME & EXPENDITURE A/C IS PREPARED IN TWO PARTS. THE FIRST PART IS IN RESPECT OF THE FUND RECEIVED FOR A PARTICULAR PROJECT AND THE DIRECT EX PENDITURE INCURRED IN RELATION THERETO AND THE SECOND PART IS IN RESPECT OF INDIRECT EXPENDITURE DEBITED TO THAT PROJECT BY CREDITING TO THE INCOME & EXPENDITURE A/C AGAINST WHICH THE VARIOUS EXPENDITURE INCURRED ON P ROVIDING ACCOMMODATION FACILITY, MESS FACILITY, TRANSPORTATI ON FACILITY AND OTHER ADMINISTRATIVE COST IS DEBITED. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO SEPARATE SOURCE OF INSTITUTIONAL, CONSULTANCY, M ESS AND ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 27 ACCOMMODATION CHARGES AND THE SAME WERE PART OF FUN DING PROVIDED BY THE VARIOUS AGENCIES FOR ACTIVITIES IN THE FIELD OF EDUCATION AND ARE NOT SEPARATE BUSINESS ACTIVITY CARRIED BY THE ASSESSEE SOCIETY. 26. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE AB OVE FACTUAL MATRIX AND CONTENTIONS ADVANCED BY BOTH THE PARTIES. WE F IND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOCIETY HAS RECEIVED INSTITUTIONAL CHARGES OF RS 25,73,793 AND OTHER RECEIPTS TOWARDS ACCOMMODATION, MESS, TRANSPORTATION AND CONSULTANCY TOTALING TO RS 1,12,18,904 WHICH HAVE BEEN RECEIVED IN RESPECT OF VARIOUS EDUCATIONA L PROJECTS SUCH AS DIL SE FOUNDATION PROJECT, JAN PAHAL PROJECT, MISSI ON, SUNEHARAKAL, NIIT, SHIKSHAK PAHAL PROJECT, THE NABHA FOUNDATION, UNICEF AND OTHERS. THESE PROJECTS HAVE BEEN FUNDED THROUGH GR ANTS/FINANCIAL SUPPORT BY VARIOUS FUNDING AGENCIES AND THESE PARTI CULAR RECEIPTS ARE TOWARDS ADMINISTRATIVE AND OTHER OVERHEAD EXPENDITU RE OF THE ASSESSEE SOCIETY AND ARE NOT IN FORM OF ANY INDEPENDENT SOUR CE/EARNING OF THE ASSESSEE SOCIETY AND ARE PART OF THE OVERALL EDUCAT IONAL ACTIVITIES CARRIED OUT BY THE ASSESSEE SOCIETY. THE PURPOSE OF THESE G RANTS AND FUNDING BY VARIOUS AGENCIES IS TO CARRYING OUT SPECIFIC EDU CATIONAL PROJECTS AS CAN BE SEEN FROM THE FOLLOWING DETAILS WHICH WERE S PECIFICALLY CALLED BY THE BENCH AND SUBMITTED DURING THE COURSE OF HEARIN G: NAME OF PROJECT FUNDED AGENCY INSTITUTIONAL CHARGES CONSULTANCY CHARGES OBJECT OF PROJECT DIL SE FOUNDATION CENTRE FOR EQUITY STUDIES, NEW DELHI RS.15,841/- RS.80,000/- THIS PROJECT IS FOR DEVELOPMENT OF MODULES AND A TEAM OF RESOURCE TRAINER FOR THE EDUCATION OF STREET & HOMELESS CHILDREN. DURATION OF PROJECT IS FROM JUNE, 2010 TO MAY, 2011. ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 28 JAN PAHAL OXFAM NOVIB, NETHERLAND RS.8,29,233/ - RS.7,20,000/ - THE FUNDS WERE PROVIDED FOR DEVELOPING TEACHING LEARNING MATERIAL AND DEVELOPING RESOURCE PERSON FOR GOVERNMENTS' PANCHAYAT SCHOOLS AND MANAS GANGA SECONDARY SCHOOL. DURATION OF PROJECT IS FROM APRIL, 2009 TO MARCH, 2012. MISSION SUNEHARAKAL ITC LTD., KOLKATA RS.2,94,000/ - . RS.2,40,000/ - FOR IDENTIFICATION, MOBI LIZING AND INTEGRATING OUT OF SCHOOL CHILDREN BY SUPPORTING COMMUNITY AND SCHOOLS FOR FY 2011-12. NIIT NIIT INSTITUTE OF INFORMATION TECHNOLOGY, NEW DELHI RS.37,257/- SETTING UP CAREER DEVELOPMENT CENTRE IN BODH RESOURCE SCHOOL, AMAGARH, JAIPUR AND PROV IDING VOCATIONAL TRAINING TO UNPRIVILEGED YOUTH RESIDING IN SLUM AMAGARH AND ITS VICINITY. SHIKSHAK PAHAL GOODEARTH EDUCATION FOUNDATION, NEW DELHI RS.12,40,297/ - - FOR RUNNING, EVOLVING AND STRENGTHENING 35 COMMUNITY SCHOOLING FOR MARGINALISED CHILDREN. NABHA FOUNDATION NABHA FOUNDATION, NEW DELHI RS.1,36,165/ - RS.3,55,000/ - FOR CAPACITY BUILDING OF TEACHERS AND FOR CURRICULUM AND MATERIAL DEVELOPMENT. UNICEF UNITED NATIONS CHILDREN'S FUNDS, JAIPUR RS.21,000/- - ORIENTATION TRAINING TO TEACHERS OF GOVERNMENT SCHOOLS, DEVELOPING TEACHERS TRAINING MODULES AND PROVIDING ACADEMIC SUPPORT. ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 29 IRB PRIMARY SCHOOL MODEM ROAD MAKERS PVT. LTD., MUMBAI - RS.2,20,000/ - FOR PROVIDING FREE PRIMARY EDUCATION TO CHILDREN IN THE RURAL AREA NEAR THE PROJEC T OF IRB INFRASTRUCTURE DEVELOPERS LTD. IN THIS PROJECT, A PRIMARY SCHOOL IS OPENED A T TONK WHERE THE TEACHERS AND BOOKS ARE PROVIDED BY THE SOCIETY. DY DIRECTOR GIRLS EDUCATION GOVERNMENT OF RAJASTHAN - RS.1,38,000/ - IDENTIFICATION OF OUT OF SCHOOL CHILDREN, SETTING UP OF BODH SCHOOL AND UNDERTAKE CAPACITY BUILDING PROGRAMMES IN COLLABORATION WITH SARVA SHIKSHA ABHIYAN FOR GOVERNMENT OF RAJASTHAN. HOWEVER, THE WAY THE AFORESAID CHARGES HAS BEEN REF LECTED IN THE INCOME AND EXPENDITURE, THOUGH IT PRIMA FACIE GIVES AN IMPRESSION OF SEPARATE SOURCE OF INCOME, HOWEVER, IN SUBSTANCE, T HESE INSTITUTIONAL, CONSULTANCY, MESS AND ACCOMMODATION CHARGES ARE NOT HING BUT SPECIFIED AMOUNT RECEIVED AS PART OF OVERALL FUNDIN G PROVIDED BY VARIOUS AGENCIES TOWARDS CARRYING OUT VARIOUS EDUCATIONAL P ROJECTS/ACTIVITIES BY THE ASSESSEE SOCIETY. AT THE END OF THE YEAR, THERE IS SURPLUS OF RS 11,50,736 FROM SUCH EDUCATIONAL ACTIVITIES WHICH IS CARRIED FOREWARD TO THE SUBSEQUENT YEAR. AS WE HAVE STATED ABOVE, M ERELY HAVING A SURPLUS IS NOT AN INDICATOR OF CARRYING OUT BUSINES S ACTIVITIES, RATHER THE REAL TEST IS THE DOMINANT AND PURPOSIVE TEST WHICH HAS BEEN SATISFIED IN THE INSTANT CASE WHERE THE INTENTION IS NOT TO EARN SUCH SURPLUS/PROFITS BUT TO CARRY OUT EDUCATIONAL ACTIVITIES FOR THE BEN EFIT OF UNDERPRIVILEGED CHILDREN BELONGING TO SOCIALLY AND ECONOMIC WEAKER SECTIONS OF THE SOCIETY AND AS PART OF SUCH ACTIVITIES, WHERE SUCH SURPLUS IS GENERATED ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 30 AND USED FOR FURTHENCE OF SUCH EDUCATIONAL ACTIVITI ES, THE ASSESSEE SOCIETY DOESNT LOSES ITS CHARACTER OF BEING CHARIT ABLE SOCIETY ENGAGED IN EDUCATIONAL ACTIVITIES. 27. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE OBJECTS SO ENVISIONE D AND ACTIVITIES OF THE ASSESSEE SOCIETY ARE DIRECTED TOWARDS EDUCATION OF THE SOCIALLY AND ECONOMICALLY UNDER-PRIVILEGED CHILDREN EITHER DIREC TLY IMPARTING EDUCATION THROUGH ITS NETWORK OF BODHSHALAS OR BY W AY OF COLLABORATING/PARTNERING WITH THE GOVERNMENT AND OT HER NON- GOVERNMENTAL ORGANIZATIONS/INSTITUTIONS AND NOT TO EARN ANY PROFITS. IT WOULD THEREFORE BE INCORRECT TO CLASSIFY THE OBJECT S AND ACTIVITIES OF THE ASSESSEE SOCIETY AS OBJECTS AND ACTIVITIES IN NATUR E OF GENERAL PUBLIC UTILITY. THE PROVISO TO SECTION 2(15) WHICH CAN BE INVOKED IN CASE OF OBJECTS OF GENERAL PUBLIC UTILITY THEREFORE DOESNT APPLY AND THUS CANNOT BE INVOKED IN THE INSTANT CASE. THE CONSEQUENT ACT ION OF THE ASSESSING OFFICER IN WITHDRAWING THE EXEMPTION CLAIMED BY THE ASSESSEE SOCIETY U/S 11 & 12 IS HEREBY SET-ASIDE AND THE MATTER IS D ECIDED IN FAVOUR OF THE ASSESSEE SOCIETY AND AGAINST THE REVENUE. IN T HE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 591/JP/2018 & ITA NO. 592/JP/2018 28. IN ITA NO. 591/JP/2018 FOR A.Y 2013-14 AND IT A NO. 592/JP/2018 FOR A.Y 2014-15, BOTH THE PARTIES FAIRL Y SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE EXACTLY IDE NTICAL AND ON THE SAME LINES AS IN ITA NO. 590/JP/18, EXEMPTION U/S 1 1 HAS BEEN DENIED TO THE ASSESSEE SOCIETY. FOLLOWING OUR DETAILS DIS CUSSIONS IN ITA NO. 590/JP/18, THE FINDINGS AND DIRECTIONS CONTAINED TH EREIN SHALL EQUALLY ITA NO. 590, 591 & 592/JP/2018 BODH SHIKSHA SAMITI, JAIPUR VS. ACIT (EXEMPTIONS), JAIPUR 31 APPLY IN THESE TWO CASES AS WELL. IN RESULT, THE C ONSEQUENT ACTION OF THE ASSESSING OFFICER IN WITHDRAWING THE EXEMPTION CLAIMED BY THE ASSESSEE SOCIETY U/S 11 & 12 IS HEREBY SET-ASIDE AN D THE MATTER IS DECIDED IN FAVOUR OF THE ASSESSEE SOCIETY AND AGAIN ST THE REVENUE AND BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/05/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/05/2019. *GANESH KR VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- BODH SHIKSHA SAMITI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT(EXEMPTIONS), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 590, 591 & 592/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR