ACIT, New Delhi V. Association of State Road Transport Undertakings, New Delhi

ITA 643/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4157 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANAND SINGH
• Keywords: Charitable institution
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA. NO.643/DEL/2017 ASSESSMENT YEAR 2012-13 ASSTT. COMMISSIONER OF INCOME TAX (E), CIRCLE-1(1), NEW DELHI. V. ASSOCIATION OF STATE ROAD TRANSPORT UNDERTAKINGS, PLOT NO.4A, PSP BLOCK, POCKET-14, SECTOR-8, DWARKA, NEW DELHI. TAN/PAN: AAAAA0233A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJESH KUMAR, SR.D.R. RESPONDENT BY: SHRI TARANDEEP SINGH, ADV. & SHRI ANAND SINGH, CA. DATE OF HEARING: 18 02 2020 DATE OF PRONOUNCEMENT: 25 02 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 04.11.2016, PASSED BY LD. CIT (APPEALS)-XL, DELHI FOR THE QUANTUM OF ASSESSMENT P ASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2012-13. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISED FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED I ALLOWING THE APPEAL OF THE ASSESSEE BY IGNORING THE FACT THAT THE ACTIVITY OF THE ASSESSEE DOES NOT FALL UNDER RELIEF OF THE POOR, ED UCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUD ING ITA NO.643/DEL/2017 2 WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST AND THAT THE ASSESSEE HAD RECEIPTS UNDER THE HEADS REVENUE FROM TEST LABORATORY AND CONSULTANCY RECE IPTS' WHICH WERE COMMERCIAL IN NATURE AND THEIR AGGREGATE VALUE EXCEEDED RS.10 LAC. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT, THIS PRECISE ISSUE HAD COME UP FOR CONSIDERATION BE FORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009- 10, WHEREIN THIS ISSUE HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE. 3. THE FACTS IN BRIEF ARE THAT ASSESSEE-SOCIETY IS AN APEX COORDINATING BODY OF ALL NATIONALIZED STATE ROAD TR ANSPORT CORPORATION WORKING UNDER THE AEGIS OF MINISTRY OF ROAD TRANSPORT AND HIGHWAYS, GOI. THE ASSESSEE WAS ESTAB LISHED WITH THE MAIN OBJECT OF IMPROVING PUBLIC TRANSPORT SYSTEM IN THE COUNTRY AND TO ASSIST ITS MEMBERS STATE TRANSPORT U NDERTAKINGS BY PROVIDING AUTOMOBILE PARTS AT THE MOST ECONOMICA L AND COMPETITIVE RATES SO THAT THE MEMBERS COULD RUN ITS PASSENGER BUSES AT ECONOMICAL COST. IT HAS ESTABLISHED A UNIT , NAMED CENTRAL INSTITUTE OF ROAD TRANSPORT AT PUNE IN 1967 ON THE JOINT INITIATIVE WITH MINISTRY OF ROAD TRANSPORT AND HIGH WAYS, GOVERNMENT OF INDIA WITH THE MAIN OBJECT TO IMPROVE THE EFFICIENCY AND PRODUCTIVITY OF THE TRANSPORT SECTOR WITH PARTICULAR EMPHASIS ON STATE TRANSPORT UNDERTAKINGS . THE CIRT HAS BEEN GIVEN RECOGNITION UNDER THE SCHEME OF RECO GNITIONS OF SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION (SI ROS). LOOKING ITA NO.643/DEL/2017 3 TO ITS CHARITABLE OBJECT OR GENERAL PUBLIC UTILITY THE ASSESSEE WAS GRANTED REGISTRATION U/S.12A WHICH WAS ALSO NOTIFIE D U/S.10(23C)(VI) FOR THE ASSESSMENT YEAR 2007-08 ONW ARDS. THE RECEIPT AND PAYMENT INCLUDES REVENUE FROM TEST LABO RATORY AND CONSULTANCY RECEIPTS. THE LD. ASSESSING OFFICER HEL D THAT VARIOUS SOURCES OF RECEIPTS WHICH HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER IS DERIVED FROM COMMERCIAL ACTIVIT IES AND HELD THAT IN VIEW OF THE AMENDED PROVISO TO SECTION 2(15), APPLICABLE FROM 01.04.2009, ASSESSEES ACTIVITIES FALL IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. ACCORDINGLY, HE HAS DISALLOWE D THE EXCESS INCOME AS DECLARED IN THE INCOME AND EXPENDI TURE ACCOUNT OF RS.4,46,74,925/-. 4. LD. CIT (A) FOLLOWING THE ITAT ORDER FOR THE ASS ESSMENT YEAR 2009-10 HAS ALLOWED THE ASSESSEES APPEAL, WHE REIN THE TRIBUNAL FOLLOWING THE RATIO AND PRINCIPLE LAID DOW N BY THE HONBLE DELHI HIGH COURT IN THE CASE OF INDIAN TRADE PROMOTION ORGANIZATION VS. DIT (E), [2015-TIOL-227- HC- DEL-IT] AND IN THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA VS. DGIT, 347 ITR 99 (DEL), HELD THAT ASSESSEES ACTIVITIES ARE NOT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS AND ASSESSEE SOCIETY IS ELIGIBLE FOR BENEFIT OF SEC TION 11. 5. LD. DR ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 6. FROM THE PERUSAL OF THE IMPUGNED ORDERS AND MATE RIAL PLACED ON RECORD, WE FIND THAT THE OBJECTS OF THE A SSESSEE WAS FOUND TO BE CHARITABLE IN NATURE, FOR WHICH IT WAS GRANTED REGISTRATION U/S.12A AND ALSO RECOGNIZED U/S. 10(23 C)(VI) VIDE ITA NO.643/DEL/2017 4 NOTIFICATION NO. 1348 DATED 31.10.2007. LD. ASSESSI NG OFFICER WITHOUT EVEN PIN POINTING AS TO WHICH OF THE ACTIVI TIES AND THE RECEIPT ARE IN THE NATURE OF TRADE AND COMMERCE HAS BLINDLY INVOKED THE AMENDED PROVISO TO SECTION 2(15) TO DENY THE BENEFIT OF SECTION 11. NOWHERE HE HAS POINTED OUT THAT THE MOTIVE OF THE ASSESSEE-SOCIETY WAS TO EARN PROFIT AND EVEN IGNORE D THE FACT THAT ASSESSEE SOCIETY WAS UNDERTAKING OF GOVERNMENT OF INDIA AND ALL THE TRUSTEES ARE GOVERNMENT OFFICIALS AND I T WAS CONSTITUTED TO DISCHARGE LEGAL OBLIGATION SET FORTH FOR THE PURPOSE SET OUT IN THE MEMORANDUM. THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10, WHEREIN T HE LD. ASSESSING OFFICER HAS PASSED SIMILAR ORDER AND HAS INVOKED PROVISO TO SECTION 2(15) TO DENY THE BENEFIT HAS ALLOWED T HE ASSESSEES APPEAL AFTER OBSERVING AND HOLDING AS UN DER:- 25. A CAREFUL CONSIDERATION ON ABOVE SUBMISSIONS A T THE VERY OUTSET, WE RESPECTFULLY TAKE GUIDANCE FROM THE RECE NT JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT DELHI IN THE CASE OF ICAI VS. DGIT (E) 358 ITR 91 (DELHI) WHEREIN THEIR LORDSHIP PROVI DED A LANDMARK INTERPRETATION TO SECTION 2(15) OF THE ACT AS WELL AS NEWLY INSERTED PROVISO TO THIS SECTION AFTER CONSIDERING THE RATIO AND PREPOSITIONS LAID DOWN BY VARIOUS JUDGMENTS AND ORDERS OF HON'BL E SUPREME COURT AND HIGH COURT THE RELEVANT OPERATIVE PART OF THIS ORDER AT PAGE 122 PARA 67 READS AS UNDER :- '67. THE EXPRESSIONS 'TRADE', 'COMMERCE' AND 'B USINESS', AS OCCURRING IN THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, MUST BE READ IN THE CONTEXT OF THE INTENT AND PURPORT OF SE CTION 2(15) OF THE ACT AND CANNOT BE INTERPRETED TO MEAN ANY ACTIVITY WHICH IS CARRIED ON IN AN ORGANIZED MANNER. THE PURPOSE AND THE DOMI NANT OBJECT FOR WHICH AN INSTITUTION CARRIES ON ITS ACTIVITIES IS MATERIAL TO ITA NO.643/DEL/2017 5 DETERMINE WHETHER THE SAME IS BUSINESS OR NOT. THE PURPORT OF THE FIRST PROVISO TO SECTION 2(15) OF THE ACT IS NOT TO EXCLUDE ENTITIES WHICH ARE ESSENTIALLY FOR CHARITABLE PURPOSE BUT AR E CONDUCTING SOME ACTIVITIES FOR A CONSIDERATION OR A FEE. THE O BJECT OF INTRODUCING THE FIRST PROVISO IS TO EXCLUDE ORGANIZ ATIONS WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF 'CHA RITABLE PURPOSE'. THE PURPOSE OF INTRODUCING THE PROVISO TO SECTION 2 (15) OF THE ACT CAN BE UNDERSTOOD FROM THE BUDGET SPEECH OF THE FIN ANCE MINISTER WHILE INTRODUCING THE FINANCE BILL, 2008. THE RELEV ANT EXTRACT TO THE SPEECH IS AS UNDER (SEE [2008] 298 ITR (ST.) 33, 65 ) : ... 'CHARITABLE PURPOSE' INCLUDES RELI8EF OF T HE POOR, EDUCATION, MEDICAL RELIEF AND ANY OTHER OBJECT OF GENERAL PUBL IC UTILITY. THESE ACTIVITIES ARE TAX EXEMPT, AS THEY SHOULD BE. HOWEV ER, SOME ENTITIES CARRYING ON REGULAR TRADE, COMMERCE OR BUS INESS OR PROVIDING SERVICES IN RELATION TO ANY TRADE, COMMER CE OR BUSINESS AND EARNING INCOMES HAVE SOUGHT TO CLAIM THAT THEIR PURPOSES WOULD ALSO FALL UNDER 'CHARITABLE PURPOSE' OBVIOUSL Y, THIS WAS NOT THE INTENTION OF PARLIAMENT AND, HENCE, I PROPOSE T O AMEND THE LAW TO EXCLUDE THE AFORESAID CASES. GENUINE CHARITABLE ORGANIZATIONS WILL NOT IN ANY WAY BE AFFECTED.' THE EXPRESSIONS ' BUSINESS', 'TRADE' OR 'COMMERCE' AS USED IN THE FIRST PROVISO MUST, THUS, BE INTERPRETED RESTRICTIVELY AND WHERE THE DOMINANT OB JECT OF AN ORGANIZATION IS CHARITABLE ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FALL WITHIN THE EXPRESSIONS 'B USINESS', 'TRADE' OR 'COMMERCE'. 26. IT WOULD BE ALSO APPROPRIATE TO CONSIDER THE RA TIO OF THE DECISION OF HON'BLE PUNJAB AND HARYANA COURT IN THE CASE OF CIT VS. TRUCK OPERATOR ASSOCIATION (SUPRA), AS RELIED BY THE LD. DR, WHEREIN FACTS OF THAT CASE AND OBSERVATIONS OF HON'BLE HIGH COURT READS AS UNDER:- ITA NO.643/DEL/2017 6 'ON EXAMINATION OF THE OBJECTS AND THE PURPOSE OF THE ASSOCIATION IN THE PRESENT CASE, IT EMERGES THAT TH E RESPONDENT- ASSOCIATION IS UNION OF TRUCK OPERATORS CONSTITUTED FOR FACILITATING ITS MEMBERS TO CARRY ON THE TRADE OF TRANSPORTATION AND NOT TO ALLOW THE OUTSIDER OR NON-MEMBER TO UNDERTAKE ANY BUSINES S ACTIVITY WITHIN THE PRECINCTS OF HANSI TOWN/VILLAGE. THE ASS OCIATION CHARGES FEES FROM ITS MEMBERS BEFORE THE TRANSPORTATION ON THE BASIS OF THE DISTANCE INVOLVED. THE MEMBERSHIP AND PAYMENT OF FE ES ARE MANDATORY AND THE ELEMENT OF VOLUNTARY CONTRIBUTION IS MISSING. THE ASSOCIATION IS VIGOROUSLY PURSUING TRANSPORTATI ON BUSINESS BY RECEIVING FREIGHT CHARGES ON BEHALF OF ITS MEMBERS. THE WELFARE ACTIVITIES ADOPTED FOR THE TRUCK DRIVERS, CLEANERS AND MECHANICS OF THE TRUCK OWNERS ARE IN THE NATURE OF STAFF WELFARE ACTIVITIES, AS ARE COMMON IN OTHER BUSINESS ORGANIZATION WHICH CANNOT BE TERMED FOR GENERAL PUBLIC UTILITY.' 27. IN VIEW OF ABOVE, WE HAVE NOT HESITATION OF HOL D THAT THE FACTS OF THE PRESENT CASE CLEARLY DISTINGUISHABLE. WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE FROM THIS CASE OF TRUCK OPERATORS ASSOCIATION (SUPRA) AS IN THAT CASE THE ASSESSEE AS SOCIATION WAS VIGOROUSLY PURSUING TRANSPORTATION WITH THIS BY REC EIVING FREIGHT CHARGES ON BEHALF OF ITS MEMBER AND THE SO CALLED W ELFARE ACTIVITIES ADOPTED FOR THE TRUCK DRIVERS, CLEANERS, MECHANICS OF THE TRUCK OWNERS WERE IN THE NATURE OF STAFF WELFARE ACTIVITI ES WHICH WERE SIMILAR AND COMMON IN THE OTHER TRANSPORT BUSINESS ORGANIZATIONS WHICH COULD NOT BE TERMED FOR GENERAL PUBLIC UTILIT Y. IN THE PRESENT CASE, THE CIT(A) HAVE NOT CONCLUSIVELY HELD THAT TH E ASSESSEE ASSOCIATION WAS CARRYING ON LABORATORY TEST AND CON SULTANCY SERVICES WITH THE MAIN OBJECT OF EARNING PROFIT IN THE LINE OF 'BUSINESS', 'TRADE' OR 'COMMERCE'. ACCORDINGLY WE R ESPECTFULLY HELD ITA NO.643/DEL/2017 7 THAT THE BENEFIT OF THE RATIO OF THE DECISION OF HO N'BLE PUNJAB & HARYANA HIGH COURT (SUPRA) IS NOT AVAILABLE FOR THE REVENUE AS THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHAB LE FROM THAT CASE. 28. TURNING TO THE FACTS OF THE PRESENT CASE, WE NO TE THAT THE ASSESSEE ASSOCIATION IS AN ASSOCIATION OF APEX GOVE RNING BODY OF STATE ROAD TRANSPORT UNDERTAKINGS (STU) REGISTERED AS A SOCIETY UNDER THE SOCIETY'S REGISTRATION ACT WHICH IS WHOLL Y PATRONIZED BY THE CENTRAL GOVERNMENT FOR WORKING UNDER THE MINIST RY OF ROAD TRANSPORT AND HIGHWAYS AND THE SECRETARY TO THE GOV ERNMENT OF INDIA, MINISTRY OF ROAD TRANSPORT AND HIGHWAYS IS T HE EX-OFFICIO PRESIDENT OF THE ASSESSEE ASSOCIATION AND THE GOVER NING BODY OF THE ASSESSEE ASSOCIATION INCLUDES REPRESENTATIVES F ROM ALL THE STATE ROAD TRANSPORT UNDERTAKINGS. 29. WE ALSO NOTE THAT THE ASSESSEE ASSOCIATION WAS ESTABLISHED WITH THE MAIN OBJECT OF IMPROVING PUBLIC TRANSPORT SYSTEM IN THE COUNTRY AND ITS OBJECTS AS PER MEMORANDUM OF ASSOCI ATION AS REPRODUCED HEREINABOVE IN PARA 9 OF THIS ORDER CLEA RLY REVEALS THAT THE OBJECTS OF THE ASSESSEE ASSOCIATION ARE DEDICAT ED TOWARDS IMPROVING ROAD SAFETY STANDARDS AND TO PROMOTE FACI LITIES FOR ADVANCING THE SKILL OF EMPLOYEES OF STATE TRANSPORT UNDERTAKINGS 25 ITA NO. 3271/ DEL/2014 THROUGH REGULAR TRAINING AND RESEARCH WHICH CANNOT BE HELD AS BUSINESS ACTIVITIES. IT IS ALSO PERTINENT TO NOTE THAT THE LD. DR HAS NOT DISPUTED THIS FACT THA T THE ASSESSEE ASSOCIATION WAS PROVIDED EXEMPTION U/S 11 OF THE AC T IN THE EARLIER ASSESSMENT ORDERS ON THE REVENUE RECEIPTS FROM TEST LABORATORY CHARGES AND CONSULTANCY CHARGES. 30. NOW WE CONSIDER THE EFFECT OF INSERTION OF PROV ISO TO SECTION 2(15) OF THE ACT. AS PER RECENT JUDGMENT OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF ICAI VS. DGIT (SUPRA). WE RESP ECTFULLY NOTE THAT THEIR LORDSHIP HAS EXPLICITLY HELD THAT THE FIRST P ROVISO TO SECTION ITA NO.643/DEL/2017 8 2(15) OF THE ACT CARVES OUT AND EXCEPTION WHICH EXC LUDES ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY FROM THE SCOPE OF CHARITABLE PURPOSE TO THE EXTENT THAT IT INVOLVE S CARRYING ON ANY ACTIVITY IN THE NATURE OF 'TRADE', 'COMMERCE' OR 'B USINESS' OR ANY ACTIVITY OF RENDERING CERTAIN SERVICES IN RELATION TO ANY 'TRADE', 'COMMERCE' OR 'BUSINESS' FOR A CESS OR FEE OR ANY O THER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF THE US E OR OBLIGATION OR RETENTION OF INCOME FROM SUCH ACTIVITY. THEIR LORDS HIP ALSO HELD THAT THE EXPRESSION 'TRADE', 'COMMERCE' OR 'BUSINESS', A S OCCURRING IN THE FIRST PROVISO OF SECTION 2(15) OF THE ACT, MUST BE READ IN THE CONTEXT OF THE INTENT IN PURPORTED OF SECTION 2(15) OF THE ACT AND CANNOT BE INTERPRETED TO MEAN ANY ACTIVITY WHICH IS CARRIED ON IN AN ORGANIZED MANNER. 31. EXPLAINING THE DOMINANT OF OBJECT OF NEWLY INSE RTED PROVISO TO SECTION 2(15) OF THE ACT, SPEAKING FOR JURISDICTION AL HIGH COURT OF DELHI, THEIR LORDSHIP ALSO HELD THAT THE FIRST PROV ISO TO SECTION 2(15) OF THE ACT DOES NOT PURPORTED TO EXCLUDE ENTITIES W HICH ARE ESSENTIALLY FOR CHARITABLE PURPOSE BUT ARE CONDUCTI NG SOME ACTIVITIES FOR A CONSIDERATION OR A FEE AND THE OBJ ECT OF INTRODUCING FIRST PROVISO IS TO EXCLUDE ORGANIZATIONS WHICH ARE CARRYING ON REGULAR BUSINESS FROM THE SCOPE OF CHARITABLE PURPO SE. IT WAS ALSO HELD THAT EXPRESSION 'BUSINESS' 'TRADE' OR 'COMMERC E' AS USED IN FIRST PROVISO MUST, THUS, WE INTERPRETED RESTRICTIV ELY AND WHERE THE DOMINANT OBJECT AND ORGANIZATION IS CHARITABLE ANY INCIDENTAL ACTIVITY FOR FURTHERANCE OF THE OBJECT WOULD NOT FA LL WITHIN THE EXPRESSION 'BUSINESS', 'TRADE' OR 'COMMERCE'. 32. IN VIEW OF THE RATIO OF THE JUDGMENT OF HON'BLE HIGH COURT OF DELHI IF WE ANALYSIS THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AT THE OUTSET WE NOTE THAT THE ACTIVITY LABORA TORY TESTING AND CONSULTANCY IS CERTAINLY BRINGING REVENUE FOR THE A SSESSEE ITA NO.643/DEL/2017 9 ASSOCIATION BUT THE CIT HAS NOT CONTROVERTED OR DEM OLITION THIS FACT THAT THE MAIN OBJECT FOR WHICH ASSESSEE ASSOCIATION WAS CREATED BY GOVERNMENT OF INDIA IS TO IMPART SERVICES TO THE ST ATE ROAD TRANSPORT UNDERTAKINGS AND FROM CAREFUL READING OF THE OBJECTS OF THE ASSESSEE ASSOCIATION AS REPRODUCED HEREINABOVE CLEARLY MANDATES ITS CHARITABLE OBJECTS AND PURPOSE. THE CO NTENTION OF THE ASSESSEE ASSOCIATION ALSO SUPPORT FROM THIS FACT TH AT THE ASSESSEE ASSOCIATION HAVE NOT REVISED ITS LABORATORY TEST CH ARGES SINCE 2001 AND THE SERVICES ARE PROVIDED ON THE SIMILAR LINE B Y CHARGING REASONABLE FEES WITHOUT ANY PROFIT EARNING OBJECT. 33. AFTER GOING THROUGH THE OBJECTS AND ACTIVITIES OF THE ASSESSEE ASSOCIATION IT IS CLEAR THAT THE ASSESSEE ASSOCIATI ON DID NOT CARRY ON ANY 'BUSINESS', 'TRADE' OR 'COMMERCE' WITH THE MAIN OBJECT OF EARNING PROFIT. THE ACTIVITY OF IMPARTING SUPPORT S ERVICES TO STATE ROAD TRANSPORT UNDERTAKINGS WITHOUT ANY PROFIT MOTI VE ARE BEING CONDUCTED IN FURTHERANCE OF THE OBJECT FOR WHICH AS SESSEE ASSOCIATION HAD NOT CONSTITUTED BY THE GOVERNMENT O F INDIA. THE ACTIVITIES OF PROVIDING LABORATORY TEST SERVICES AN D CONSULTANCY TO THE STATE ROAD TRANSPORT UNDERTAKINGS OF ALL OVER I NDIA CANNOT BE HELD TO BE 'TRADE', 'BUSINESS' OR 'COMMERCE' MERELY BECAUSE SOME FEE OR CHARGES ARE BEING RECEIVED BY THE ASSESSEE A SSOCIATION. ACCORDINGLY, EVEN IF SOME FEES OR CHARGES ARE BEING CHARGED BY THE ASSESSEE ASSOCIATION FOR PROVIDING LABORATORY TEST SERVICES AND CONSULTANCY SERVICES IN ACCORDANCE WITH ITS CHARITA BLE OBJECTS, THE ACTIVITIES CANNOT BE HELD TO BE RENDERED IN RELATIO N TO ANY 'TRADE' , 'COMMERCE' OR 'BUSINESS' AS SUCH ACTIVITIES ARE UND ERTAKEN BY THE ASSESSEE ASSOCIATION IN FURTHERANCE OF ITS MAIN OBJ ECTS WHICH ARE UNDISPUTEDLY OF CHARITABLE NATURE AND WHICH IS NOT AN ACTIVITY OF 'TRADE', 'COMMERCE' OR 'BUSINESS' WITH MAIN OBJECT OF EARNING PROFIT. 34. WE ARE UNABLE TO AGREE WITH THE REASONING OF DG IE THAT THERE IS ITA NO.643/DEL/2017 10 EVIDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY WER E CARRIED OUT ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES AND PERSUA DED WITH REASONABLE CONTINUITY THEN IT WOULD CONSTITUTE BUSI NESS EVEN IF THERE IS NO PROFIT MOTIVE AS WE HAVE ALREADY NOTED THAT IN ASSESSEE'S OWN CASE FOR A.Y. 1989-90, 1990-91 AND 1 993-94, ASRTU VS. DDIT(E) (SUPRA) IT WAS HELD THAT THE AIMS AND OBJECTS OF THE ASSESSEE WERE TO RENDER COMMON SERVICES TO MEMB ERS AND ASSIST THEM IN SUCH MATTERS AS STANDARDIZATION OF E QUIPMENT, PURCHASE OF MATERIALS FOR THEREON USE AT ECONOMICAL PRICES, PROMOTIONAL EFFICIENCY OF ROAD TRANSPORT SERVICES A ND DEDUCTION IS OPERATIONAL COST OF MEMBER STATE ROAD TRANSPORT UND ERTAKINGS ARE THE ACTIVITIES OF CHARITABLE PURPOSE TOWARDS PROMOT ION OF MAIN OBJECTS SET OUT IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE ASSOCIATION, THUS, IN ABSENCE OF ANY SUBSTANTIAL AL LEGATION OR INCRIMINATING MATERIAL. WE ARE UNABLE TO ACCEPT VIE W OF THE CIT THAT THE ASSESSEE ASSOCIATION IS CONDUCTING THESE ACTIVI TIES WITH THE MAIN OBJECT OF EARNING PROFITS. IN THE PRESENT CASE , THE ACTIVITIES OF THE ASSESSEE'S ASSOCIATION CANNOT BE TERMED EITHER 'TRADE' , 'COMMERCE' OR 'BUSINESS' SIMPLY BECAUSE THE ASSESSE E ASSOCIATION IS RECEIVING SOME CHARGES OR FEES FOR RENDERING SER VICES ON NON- COMMERCIAL PRINCIPLES TO STATE ROAD TRANSPORT UNDER TAKINGS AND OTHER CONCERN MEMBERS FOR A FEE OR CHARGES. 35. AT THIS JUNCTURE, WE ALSO RESPECTFULLY FOLLOW T HE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDI AN TRADE PROMOTION ORGANISATION VS. DGIT (SUPRA) WHEREIN IT WAS HELD THAT THUS, FIRST PROVISO TO SECTION 2(15) OF THE ACT WOU LD HAVE BEEN TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SECTION 10 (23C) (IV) OF THE ACT AS THE CONTEXT REQUIRES SUCH INTERPRETATION WHERE ASSESSEE IS NOT DRIVING PRIMARILY BY DESIRED OR MOTIVE TO EA RN PROFIT BUT TO PURSUE ACTIVITIES IN FURTHERANCE OF ITS OBJECTS OF GENERAL PUBLIC UTILITY ITA NO.643/DEL/2017 11 THEN IT MUST BE RECOGNIZED AS AN INSTITUTION ESTABL ISHED FOR CHARITABLE PURPOSES. THE HON'BLE DELHI HIGH COURT I N THE CASE OF INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA VS. DGI 347 ITR 99 (DELHI) HELD THAT THE OBJECT OF THE FIRST PROVISO T O SECTION 2(15) OF THE ACT IS TO INCLUDE ANY TRANSACTION FOR A FEE OR MONE Y AND THE ACTIVITY WOULD BE BUSINESS IF IT IS UNDERTAKEN WITH THE PROF IT MOTIVE BUT IN SOME CASES THIS FACT MUST BE DETERMINATIVE AND THE PROFIT MOTIVE TEST SHOULD BE SPECIFIED AND VIEWED IN THE CONTEXT OF SECTION 10 (23C) (IV) OF THE ACT. 7. THUS, RESPECTFULLY FOLLOWING THE EARLIER YEAR PR ECEDENT WHICH IS APPLICABLE MUTATIS MUTANDIS FOR THIS YEAR ALSO, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY, 2020. SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH FEBRUARY, 2020 PKK: