M/s Madhya Pradesh Madhyam, Bhopal V. THE ACIT, Bhopal

ITA 692/IND/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8434 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Keywords: Business income; Charitable institution; Benefit of exemption; Revenue expenditure
• Section: 153A; 12A; 147; 12; 144; 154; 11

Judgement Text

ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 280/IND/2014 & ITA NO.692/IND/2013 A.YS. 2009-10 & 2010-11 M/S. MADHYA PRADESH MADHYAM, BHOPAL PAN AAAJM 0294 J :: APPELLANT VS ACIT-1(2), BHOPAL & ACIT-1(1), BHOPAL :: RESPONDEN TS FOR ASSESSEE SHRI SUMIT NEMA, SR. ADV. WITH SHRI GAGAN TIWARI, ADV. FOR REVENUE SHRI R.P. MAURYA, SR. DR DATE OF HEARING 06.11.2018 DATE OF PRONOUNCEMENT 03 .01.2019 PER SHRI KUL BHARAT, JM VIDE COMMON & CONSOLIDATED ORDER DATED 19.7.2018, T HREE APPEALS BEARING ITA NO.454/IND/2012 (A.Y. 2007-08), ITA NO. 280/IND/2014 (A.Y. 2009-10) & ITA NO.692/IND/2013 (A.Y. 2010-11) IN CA SE OF PRESENT ASSESSEE WERE DECIDED. FROM THE PERUSAL OF ORDER, WE OBSERVE D THAT GROUNDS AND FINDINGS THEREOF IN ITA NO.280/IND/2014 (A.Y. 2009- 10) & ITA NO.692/IND/2013 (A.Y. 2010-11) REQUIRED RE-ADJUDICA TION AS SOME GROUNDS INADVERTENTLY LEFT ADJUDICATION. WE, THEREFORE, ISS UED CORRIGENDUM DATED 10.10.2018 DIRECTING THAT BOTH THE ABOVE APPEALS I. E. ITA NO.280/IND/2014 ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 2 (A.Y. 2009-10) & ITA NO.692/IND/2013 (A.Y. 2010-11) BE RE-FIXED FOR HEARING ON 06.11.2018. ACCORDINGLY, WE HEARD BOTH THE PARTI ES ON 06.11.2018. ITA NO.280/IND/2014 (A.Y. 2009-10) 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)/AO ERRED AND NOT JUSTIFIED IN H IS FINDINGS THAT IN THE CASE OF ASSESSEE, THE FIRST PROVISO TO SECTION 2(15) ARE APPLICABLE AND, THEREFORE, IT IS NOT ENTITLED FOR T HE BENEFITS U/S. 11 & 12 OF THE ACT. SUCH FINDINGS OF THE LD. CIT(A)/AO ARE WHOLLY WRONG, INJUDICIOUS & UNLAWFUL FINDINGS BE QUASHED AND IT BE HELD THAT THE SAID PROVISO IS NOT APPLICABLE IN THE CASE OF ASSESSEE AND THEREFORE, IT IS FULLY ELIGIBLE FOR TH E DEDUCTION/EXEMPTION CLAIMED IN THE RETURN U/S 11 & 12 OF THE I.T. ACT HENCE ALL SUCH CLAIMS AS MADE IN THE RETURN BE ALLOWED. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JU STIFIED IN HOLDING THAT THE ASSESSEE IS INVOLVED IN CARRYING O N ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR NAY AC TIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS FOR A CESS OR FEE OR NAY OTHER CONSIDERATI ON. SUCH FINDINGS OF THE AO ARE WHOLLY UNJUSTIFIED AND UNLAW FUL AND, THEREFORE, BE QUASHED AND IT BE HELD THAT THE ACTIV ITIES OF THE ASSESSEE ARE FOR CHARITABLE PURPOSES WITHIN THE MEA NING OF SECTION 2(15) AND THEREFORE, IT IS ELIGIBLE FOR ASS ESSMENT OF INCOME UNDER THE PROVISIONS OF SECTION 11 OF THE I. T. ACT. 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN LAW AND NOT JUSTIFIED IN THEIR FINDINGS THAT THE OPERATING RECEIPTS AND TREATING T HE EXCESS OF ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 3 INCOME OVER EXPENDITURE SHOWN AT RS.12693882 AS THE BUSINESS INCOME. SUCH INJUDICIOUS AND UNLAWFUL FINDINGS, THE REFORE, BE QUASHED. 4. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED AND NOT JUSTIFIED IN NOT ALLO WING THE DEDUCTION OF RS.5826598/- U/S 11(1)(A) AS AN APPLIC ATION OF INCOME. THE SAID DEDUCTION AS CLAIMED IN THE RETURN , THEREFORE, BE KINDLY ALLOWED. 5. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED AND NOT JUSTIFIED IN NOT ALLO WING THE DEDUCTION OF RS.6867284/- BEING THE COST OF ASSETS ACQUIRED DURING THE YEAR AS AN APPLICATION OF INCOME. THE SA ID DEDUCTION AS CLAIMED IN THE RETURN, THEREFORE, BE KINDLY ALLO WED. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN NOT ALLOWED THE FULL CREDIT OF TDS AT R S.4152136/-. 7. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEVY OF INTEREST U/S. 220(2) AT RS.60080/ - IS UNLAWFUL AND THE SAID LEVY BE KINDLY CANCELLED. 3. GROUND NOS.1 TO 5 RELATE TO CONFIRMATION OF DISA LLOWANCE OF THE ASSESSEES CLAIM BY THE ASSESSING OFFICER FOR DEDUC TION U/S 11 HOLDING THAT THE ASSESSEES ACTIVITIES WERE NOT FOR CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 2(15) OF THE I.T. ACT. 4. FACTS, IN BRIEF, AS NARRATED IN THE IMPUGNED ORD ER, ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED ON 01.10.1983 UNDE R SOCIETIES REGISTRATION ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 4 ACT. THE ASSESSEE FURNISHED ITS RETURN OF INCOME ON 29.9.2009 DECLARING NIL INCOME AFTER CLAIMING THE BENEFIT OF SECTION 11 OF THE I.T. ACT. THE ASSESSEE WAS REGISTERED U/S 12A W.E.F. 29.1.1986. THE ASSESS ING OFFICER NOTICED THE ASSESSEE IS ENGAGED IN ACTIVITIES OF PUBLICATION OF NEWSPAPER KNOWN AS ROZGAR AUR NIRMAN, PRODUCTION OF DOCUMENTARY FILM S, TV REPORTS ETC. FOR THE STATE GOVT. AND PUBLIC SECTOR UNDERTAKINGS AND ALSO ACTING AS AN ADVERTISING AGENCY FOR VARIOUS STATE GOVT. DEPARTME NTS AND PSUS. THE OBJECTIVES OF THE ASSESSEE ARE AS UNDER: 1. PUBLICATION OF WEEKLY NEWSPAPER UNDER THE NAME O F ROZGAR AUR `NIRNAM. 2. COMPLEMENTARY PUBLICATION FOR THE PUBLICITY OF W ELFARE ACTIVITIES OF M.P. GOVT. AND ITS ENTERPRISES AND PR ODUCTION AND DISTRIBUTION OF OTHER MATERIALS. 3. MAKING ALL THE EFFORTS, WHICH ARE NEEDED, NECESS ARY AND COMPLEMENTARY FOR THE FULFILLMENT OF ABOVE MENTIONE D OBJECTIVES. THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.7,65,69 ,670/- AND REVENUE EXPENDITURE OF RS.6,38,75,788/- RESULTING INTO A SU RPLUS OF INCOME OVER EXPENDITURE OF RS.1,26,93,882/-. HOWEVER, THE ASSES SEE HAD CLAIMED THE BENEFIT U/S 11 OF THE I.T. ACT BY CONSIDERING THE C APITAL EXPENDITURE OF RS.68,67,284/- AS APPLICATION OF FUNDS FOR CHARITAB LE PURPOSES. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS CONSIDERED AS CHARITABLE INSTITUTION ON ACCOUNT OF ADVANCEMENT OF ANY OTHER OBJECT OF GENE RAL PUBLIC UTILITY. THE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 5 ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS EN GAGED IN THE NATURE OF TRADE, COMMERCE AND BUSINESS AND ALSO RENDERING THE SERVICES IN RELATION TO ITS BUSINESS BY CHARGING A FEE AND OTHER CONSIDERAT ION FOR THE SERVICES RENDERED. THE ASSESSEE HAD SHOWN OPERATING RECEIPTS OF RS.6,89,35,834/- BY SALE OF NEWSPAPER AND ADVERTISEMENT IN NEWSPAPER, S ALE OF BOOKS, DTP AND DESIGNED WORK AND COMMISSION ON OTHER ADVERTISEMENT ETC. FOR STATE GOVT. DEPARTMENTS AND PSUS AS WELL AS OTHER RECEIPTS OF R S.76,33,836/- IN THE FORM OF INTEREST ON FDRS, INTEREST ON LOANS ETC. FR OM THE NATURE OF THE RECEIPTS, IT WAS NOTICED THAT THE ASSESSEE WAS EARN ING INCOME FROM SELLING BOOKS AND NEWSPAPER AND FROM ADVERTISEMENTS. THE AS SESSING OFFICER AFTER CONSIDERING THE AMENDED PROVISIONS OF SECTION 2(15) BY THE FINANCE ACT, 2008 W.E.F. 01.4.2009 HELD THAT THE ASSESSEES CASE FALLS UNDER FIRST PROVISO TO SECTION 2(15) OF THE I.T. ACT AND, THEREFORE, TH E ACTIVITIES OF THE ASSESSEE OF SELLING NEWSPAPER, BOOKS AND PROVIDING OTHER SER VICES BY CHARGING FEES WAS UNDOUBTEDLY A COMMERCIAL ACTIVITY WHICH COULD N OT BE CONSIDERED FOR CHARITABLE PURPOSES IN VIEW OF FIRST PROVISO TO SEC TION 2(15) OF THE I.T. ACT. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSE SSEE SOCIETY HAD BEEN GENERATING SURPLUS INCOME FROM YEAR TO YEAR AND POS ITION OF INCOME IN THE LAST FOUR YEARS WAS AS UNDER: F.Y. SURPLUS/INCOME (RS.) 2008 - 09 1 , 26 , 93 , 882.15 2007 - 08 1 , 28 , 74 , 410.75 2006 - 07 1 , 05 , 45 , 492.00 2005 - 06 1 , 01 , 42 , 024.52 ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 6 IN VIEW OF THE ABOVE FACTS, THE ASSESSING OFFICER H ELD THAT THE NATURE OF ACTIVITIES CARRIED OUT BY THE ASSESSEE CAN AT BEST BE TERMED AS COMMERCIAL IN NATURE. THEREFORE, THE ASSESSING OFFICER HELD TH AT THE ASSESSEE WAS NOT COVERED IN THE DEFINITION OF CHARITABLE PURPOSE WIT HIN THE MEANING OF SECTION 2(15) OF THE I.T. ACT AND, THEREFORE, THE A SSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 11 OF THE I.T. ACT. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THE EXCESS OF INCOME OVER EXPENDITURE OF RS.1,26,93 ,882/- AS BUSINESS INCOME. AGGRIEVED WITH THE ACTION OF THE ASSESSEE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL. 5. THE LD. CIT(A), AFTER DISCUSSING THE SUBMISSIONS AND MATERIAL ON RECORD, CONFIRMED THE ACTION OF THE ASSESSING OFFIC ER. THE RELEVANT FINDINGS OF THE ORDER OF THE LD. CIT(A) ARE REPRODUCED HEREU NDER: IN THE LIGHT OF THE ABOVE DISCUSSION, IF THE PROVIS IONS OF SECTION 2(15) AS AMENDED BY THE FINANCE ACT, 2008 AND RATIO OF VA RIOUS DECISIONS ARE APPLIED TO THE FACTS OF THE APPELLANT SOCIETY, IT W ILL BE CLEAR THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT SOCIETY CAN NOT BE SAID TO BE FOR CHARITABLE PURPOSES WITHIN THE MEANING OF SECTION 2 (15) OF THE ACT. THIS FACT IS EVIDENTLY CLEAR FROM THE DETAILS OF OPERATI NG RECEIPTS OF RS.6,89,35,834/- SHOWN BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION AS UNDER: OPERATING RECEIPTS S.NO. PARTICULARS AMOUNT (RS.) 1 ADVERTISEMENT (ROZGAR AUR NIRMAN) 23680953 2 SALE OF NEWPAPER (ROZGAR AUR NIRMAN) 15536473 ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 7 3 SALE OF BOOKS: R.K. LAXMAN RS.13440 IMAGES OF MP RS. 14175 CORPORATE BOOK RS. 4500 MP FOREST RS. 1440 33555 4 SERVICE CHARGES ON ADVERTISING 19303750 5 SERVICE CHARGES ON PRINTING 4773991 6 SERVICE CHARGES ON FILM 1074082 7 SERVICE CHARGES ON PROJECT WORK 4475506 8 INCOME FROM DTP & DESIGN 5618 9 RECOVERY OF COMMERCIAL TAX 51906 TOTAL: 68935834 THE APPELLANT SOCIETY IS EARNING INCOME ON ADVERTIS EMENT AS WELL AS SALE OF NEWS PAPER ROZGAR AUR NIRMAN PUBLISHED BY IT S IMILAR TO A BUSINESS ORGANIZATION ENGAGED IN THE BUSINESS OF PU BLISHING A NEWSPAPER. THE APPELLANT ALSO CHARGED 15% SERVICE C HARGES ON THE PRINTING WORK, ADVERTISEMENT, PRODUCTION OF FILMS A ND OTHER PROJECT WORK UNDERTAKEN BY THE APPELLANT FOR THE STATE GOVERNMEN T AND PUBLIC SECTOR UNDERTAKINGS AS ARE NORMALLY CHARGED BY AN ASSESSEE ENGAGED IN THE BUSINESS AS ADVERTISING AGENCY. THUS, THE ACTIVIT IES OF THE APPELLANT WERE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE APPELLANT WAS ALSO ENGAGED IN THE ACTIVITIES OF RENDERING SERVICE S IN RELATION TO TRADE, COMMERCE, OR BUSINESS FOR FEE, AS THE APPELLANT HAD CHARGED 15% COMMISSION/SERVICE CHARGES FOR THE SERVICES RENDERE D BY IT ON THE TOTAL AMOUNT OF BILL FOR PRINTING, HOARDINGS, ADVERTISEME NT, FILMS, OTHER PROJECTS ETC. UNDERTAKEN BY THE APPELLANT FOR STATE GOVERNMENT DEPARTMENTS AND PUBLIC UNDERTAKINGS. THUS, FROM THE ACTIVITIES OF THE ASSESSEE SOCIETY, IT IS EVIDENTLY CLEAR THAT THE PROVISIONS OF THE FIRST PROVISO TO SECTION 2(15 ) ARE APPLICABLE IN THIS CASE AND, HENCE, THE ACTIVITY OF THE APPELLANT SOCI ETY CANNOT BE SAID TO BE FOR CHARITABLE PURPOSES WITHIN THE MEANING OF AMEND ED SECTION OF 2(15) OF THE ACT. HERE IT WOULD BE RELEVANT TO REPRODUCE THE PROVISIONS OF SECTION 13(8) OF THE ACT, WHICH READS AS UNDER: ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 8 (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROV ISO TO CLAUSE (15) OF SECTION 2 BECOME APPLICABLE IN THE C ASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. IN VIEW OF THE PROVISIONS OF SECTION 13(8), SINCE P ROVISIONS OF FIRST PROVISO TO SECTION 2(15) ARE APPLICABLE IN TH E CASE OF THE APPELLANT, IT WAS NOT ENTITLED FOR THE BENEFITS OF SECTION 11 & 12 OF THE ACT. THEREFORE, I AM OF THE CONSIDERED VI EW THAT THE A.O. HAD RIGHTLY DISALLOWED THE APPELLANTS CLAIM F OR DEDUCTION U/S 11 & 12 OF THE ACT AND ASSESSED THE I NCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PRO FESSION. THEREFORE, NO INTERFERENCE IS WARRANTED IN THE ACTI ON OF THE A.O. ON THIS ISSUE. HENCE, THESE GROUNDS OF APPEAL ARE DISMISSED. BEING AGGRIEVED, THE ASSESSEE IS BEFORE US. 6. BEFORE US, THE LEARNED SR. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE REVENUE AUTHORITIES AND SUB MITTED THAT THE ASSESSEE SOCIETY WAS CONSTITUTED BY THE STATE GOVT. FOR THE BENEFIT OF GENERAL PUBLIC TO PROVIDE THEM INFORMATION REGARDIN G EMPLOYMENTS, EDUCATION INSTITUTIONS AND OTHER INFORMATION OF THE GOVT. SCHEMES. ASSESSEES ACTIVITIES HAVE NOT BEEN CHANGED AT ALL SINCE THE DATE OF ITS INCEPTION AND THE ASSESSEE WAS FULLY ELIGIBLE FOR E XEMPTION U/S 11 & 12 OF THE I.T. ACT, THEREFORE, THE REVENUE AUTHORITIES AR E NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS INVOLVED IN CARRYING ON THE A CTIVITY IN THE NATURE OF ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 9 TRADE, COMMERCE OR BUSINESS. LD. COUNSEL FOR THE AS SESSEE DREW OUR ATTENTION TO BYLAWS OF THE ASSESSEE SOCIETY ENCLOSE D AT PAPER BOOK. HE SUBMITTED THAT THE OBJECTIVES OF THE ASSESSEE SOCIE TY ARE PUBLICATION OF WEEKLY NEWSPAPER NAMELY ROZGAR AUR NIRMAN TO SUP PLY THE MATERIAL RELATED TO ADVERTISEMENT OF PUBLIC WELFARE SCHEMES OF GOVERNMENT OF MADHYA PRADESH AND ITS UNDERTAKING AND DO SUCH ALL OTHER ACTS THAT ARE NECESSARY FOR ACHIEVEMENT OF THE OBJECTIVES OF THE SOCIETY. HE SUBMITTED THAT ON THE BASIS OF A MINISCULE PART OF INCOME, TH E EXEMPTION CANNOT BE DECLINED. PRIOR TO THE INTRODUCTION OF THE PROVISO TO SECTION 2(15), THERE WAS NO DISPUTE THAT THE ASSESSEE WAS ESTABLISHED FOR CH ARITABLE PURPOSES AND, THEREFORE, ITS INCOME WAS NOT TO BE INCLUDED IN THE TOTAL INCOME AND WAS, THEREFORE, GRANTED THE BENEFIT OF EXEMPTION. THE DO MINANT AND MAIN OBJECT OF THE ASSESSEE IS FOR THE BENEFIT OF GENERAL PUBLI C TO PROVIDE THEM INFORMATION REGARDING EMPLOYMENTS, EDUCATION INSTIT UTIONS AND OTHER INFORMATION OF THE GOVT. SCHEMES, THEREFORE, PROFIT MAKING IS NOT THE DRIVING FORCE OR OBJECTIVE OF THE ASSESSEE AND INCOME GENER ATED BY THE ASSESSEE DOES NOT FIND ITS WAY INTO THE POCKETS OF ANY INDIV IDUALS OR ENTITIES. IT IS TO BE UTILIZED FULLY FOR THE PURPOSES OF THE OBJECTS O F THE ASSESSEE AND IN DECIDING WHETHER ANY ACTIVITY IS IN THE NATURE OF T RADE, COMMERCE OR BUSINESS, IT HAS TO BE EXAMINED WHETHER THERE IS AN ELEMENT OF PROFIT MAKING OR NOT. THE PROVISO TO SECTION 2(15) DOES NO T MAKE ANY DISTINCTION BETWEEN ENTITIES CARRYING ON REGULAR TRADE, COMMERC E OR BUSINESS OR PROVIDING SERVICES IN RELATION TO ANY TRADE, COMMER CE OR BUSINESS ON THE ONE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 10 HAND AND GENUINE CHARITABLE ORGANIZATIONS ON THE OT HER. THE EXPRESSION 'CHARITABLE PURPOSE' SHOULD BE CONSTRUED NOT IN A V ACUUM, BUT IN THE SPECIFIC CONTEXT OF DOMINANT OBJECT. SECTION 10 DEALS WITH T HE INCOMES NOT INCLUDED IN TOTAL INCOME AND SECTION 10(23C)(IV) SPECIFICALL Y DEALS WITH THE INCOME RECEIVED BY ANY PERSON ON BEHALF OF, INTER ALIA , AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. THEREFORE, THE MEANING OF THE EXPRESSION 'CHARITABLE PURPOSES' HAS TO BE EXAMINED IN THE CONTEXT OF SECT ION 10(23C)(IV). THE ONLY THING THAT IS TO BE EXAMINED IS WHETHER THE PETITIO NER HAD BEEN ESTABLISHED FOR CHARITABLE PURPOSES? THE FACT THAT IT DERIVES I NCOME DOES NOT, IN ANY WAY, DETRACT FROM THE POSITION THAT IT IS AN INSTIT UTION ESTABLISHED FOR CHARITABLE PURPOSES. IT IS CLEAR FROM THE FACTS OF THE PRESENT CASE THAT THE DRIVING FORCE IS NOT THE DESIRE TO EARN PROFITS BUT , THE OBJECT OF PROMOTING EMPLOYMENTS/EDUCATIONAL INSTITUTIONS/GOVT. SCHEMES ETC. NOT FOR ITSELF, BUT FOR THE GENERAL PUBLIC. THIS IS A CHARITABLE PURPOS E, WHICH HAS AS ITS MOTIVE THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTIL ITY TO WHICH THE EXCEPTION CARVED OUT IN THE FIRST PROVISO TO SECTIO N 2(15) WOULD NOT APPLY. THUS, THE EXPRESSION 'CHARITABLE PURPOSE', AS DEFIN ED IN SECTION 2(15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HA S TO TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT OF SECTION 10(23C)(IV). IN SUPPORT OF THE CONTENTION, THE LD. SENIOR COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE CATENA OF JUDGMENTS: 1. INDIA TRADE PROMOTION ORGANIZATION VS. DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) [2015] 53 TAXMANN.COM 404 ( DELHI); ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 11 2. GS1 INDIA VS. DIRECTOR GENERAL OF INCOME TAX (EX EMPTIONS) [2013] 38 TAXMANN.COM 365 (DELHI); 3. NATIONAL HORTICULTURE BOARD VS. ACIT [2015] 53 T AXMANN.COM 343 (DELHI TRIBUNAL); 4. INSTITUTE FOR DEVELOPMENT & RESEARCH IN BANKING TECHNOLOGY VS. ADIT [2015] 63 TAXMANN.COM 297; AND 5. DIT (EXEMPTION) VS. AHMEDABAD MANAGEMENT ASSOCIA TION [2014] 366 ITR 85 (GUJ). LD. COUNSEL SUBMITTED IN THE LIGHT OF THE ABOVE CAS E LAWS, THE DISALLOWANCE OF THE EXEMPTION BY THE AUTHORITIES BELOW CANNOT BE SUSTAINED AND DESERVES TO BE DELETED. 7. ON THE OTHER HAND, LD. SR. DR RELIED ON THE ORDE RS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT FIRST PROVISO TO SEC TION 2(15) ARE APPLICABLE IN THE CASE OF THE ASSESSEE AND AS SUCH, IT WAS NO T ENTITLED FOR THE BENEFITS OF SECTION 11 & 12 OF THE ACT. THEREFORE, THE A.O./ LD. CIT(A) HAD RIGHTLY DISALLOWED/CONFIRMED THE ASSESSEES CLAIM FOR DEDUC TION U/S 11 & 12 OF THE ACT AND ASSESSED THE INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE. WE FIN D THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF INDIA TRADE PROMOTION ORG ANIZATION VS. DGIT(E) [2015] 53 TAXMANN.COM 404 (DEL) HAS HELD AS UNDER: 54 . IT WOULD BE PERTINENT TO REITERATE THAT SECTION 2 (15) IS ONLY A DEFINITION CLAUSE. SECTION 2 BEGINS WITH THE WORDS, 'IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES'. THE EXPRESSION 'CHARIT ABLE PURPOSE' APPEARING IN SECTION 2(15) OF THE SAID ACT HAS TO B E SEEN IN THE CONTEXT OF ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 12 SECTION 10(23C)(IV). WHEN THE EXPRESSION 'CHARITABL E PURPOSE', AS DEFINED IN SECTION 2(15) OF THE SAID ACT, IS READ I N THE CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT, WE WOULD HAVE TO GIVE UP THE STRICT AND LITERAL INTERPRETATION SOUGHT TO BE GIVEN TO THE EX PRESSION 'CHARITABLE PURPOSE' BY THE REVENUE. WITH RESPECT, WE DO NOT AGREE WITH THE VIEWS OF THE KERALA AND ANDHRA PRADESH HIGH COURTS. 55 . IT WOULD BE APPROPRIATE TO ALSO EXAMINE THE OBSER VATIONS OF ANOTHER DIVISION BENCH OF THIS COURT IN G.S.1'S CASE ( SUPRA ). WHILE CONSIDERING CIRCULAR NO.11 OF 2008 ISSUED BY THE CBDT, TO WHICH A REFERENCE HAS BEEN MADE EARLIER IN THIS JUDGMENT, THE DIVISION BE NCH HELD THAT IT WAS EVIDENT FROM THE SAID CIRCULAR THAT THE NEW PROVISO TO SECTION 2(15) OF THE SAID ACT WAS 'APPLICABLE TO ASSESSES, WHO ARE ENGAG ED IN COMMERCIAL ACTIVITIES, I.E., CARRYING ON BUSINESS, TRADE OR CO MMERCE, IN THE GARB OF 'PUBLIC UTILITIES' TO AVOID TAX LIABILITY AS IT WAS NOTICED THAT THE OBJECT 'GENERAL PUBLIC UTILITY' WAS SOMETIMES USED AS A MA SK OR DEVICE TO HIDE THE TRUE PURPOSE, WHICH WAS 'TRADE, COMMERCE OR BUS INESS'.' FROM THIS, IT IS EVIDENT THAT THE INTRODUCTION OF THE PROVISO TO SECTION 2(15) BY VIRTUE OF THE FINANCE ACT, 2008 WAS DIRECTED TO PREVENT TH E UNHOLY PRACTICE OF PURE TRADE, COMMERCE AND BUSINESS ENTITIES FROM MAS KING THEIR ACTIVITIES AND PORTRAYING THEM IN THE GARB OF AN ACTIVITY WITH THE OBJECT OF A GENERAL PUBLIC UTILITY. IT WAS NOT DESIGNED TO HIT AT THOSE INSTITUTIONS, WHICH HAD THE ADVANCEMENT OF THE OBJECTS OF GENERAL PUBLIC UT ILITY AT THEIR HEARTS AND WERE CHARITY INSTITUTIONS. THE ATTEMPT WAS TO REMOV E THE MASKS FROM THE ENTITIES, WHICH WERE PURELY TRADE, COMMERCE OR BUSI NESS ENTITIES, AND TO EXPOSE THEIR TRUE IDENTITIES. THE OBJECT WAS NOT TO HURT GENUINE CHARITABLE ORGANIZATIONS. AND, THIS WAS ALSO THE ASSURANCE GIV EN BY THE FINANCE MINISTER WHILE INTRODUCING THE FINANCE BILL 2008. 56 . IN G.S. 1'S CASE ( SUPRA ) IT WAS CONTENDED BY THE REVENUE THAT GS1 (INDIA) HAD ACQUIRED INTELLECTUAL PROPERTY RIGHTS F ROM GS1 (BELGIUM) AND THEREAFTER RECEIVED REGISTRATION FEES FROM THIRD PA RTIES IN INDIA. THIS WAS SOUGHT TO BE EQUATED TO ROYALTY PAYMENTS. IT WAS AL SO CONTENDED THAT GS1 (INDIA) HAD HUGE SURPLUSES OF RECEIPTS OVER EXPENDI TURE AND THAT PAYMENTS WERE MADE TO GS1 (BELGIUM). ACCORDING TO T HE REVENUE, ALL THIS ENTAILED THAT GS1 (INDIA) WAS ENGAGED IN 'BUSI NESS, TRADE OR COMMERCE'. THE PETITIONER HEREIN REFUTED THIS. IN T HIS BACKDROP, THIS COURT ASKED THE QUESTION - CAN IT BE SAID THAT THE PETITI ONER IS ENGAGED IN ACTIVITIES WHICH CONSTITUTE BUSINESS, COMMERCE OR T RADE ? WHILE ANSWERING THE SAID QUESTION, THE COURT HELD AS UNDE R: '21. AS OBSERVED ABOVE, LEGAL TERMS, 'TRADE', 'CO MMERCE' OR 'BUSINESS' IN SECTION 2(15), MEAN ACTIVITY UNDERTAK EN WITH A VIEW TO MAKE OR EARN PROFIT. PROFIT MOTIVE IS DETERMINATIVE AND A CRITICAL FACTOR TO DISCERN WHETHER AN ACTIVITY IS BUSINESS, TRADE OR C OMMERCE.' THE COURT FURTHER HELD: '22. BUSINESS ACTIVITY HAS AN IMPORTANT PERVADING E LEMENT OF SELF- INTEREST, THOUGH FAIR DEALING SHOULD AND CAN BE PRE SENT, WHILST CHARITY OR ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 13 CHARITABLE ACTIVITY IS ANTI-THESIS OF ACTIVITY UNDE RTAKEN WITH PROFIT MOTIVE OR ACTIVITY UNDERTAKEN ON SOUND OR RECOGNIZED BUSIN ESS PRINCIPLES. CHARITY IS DRIVEN BY ALTRUISM AND DESIRE TO SERVE O THERS, THOUGH ELEMENT OF SELF-PRESERVATION MAY BE PRESENT. FOR CHARITY, B ENEVOLENCE SHOULD BE OMNIPRESENT AND DEMONSTRABLE BUT IT IS NOT EQUIVALE NT TO SELF-SACRIFICE AND ABNEGATION. THE ANTIQUATED DEFINITION OF CHARIT Y, WHICH ENTAILS GIVING AND RECEIVING NOTHING IN RETURN IS OUTDATED. A MAND ATORY FEATURE WOULD BE; CHARITABLE ACTIVITY SHOULD BE DEVOID OF SELFISH NESS OR ILLIBERAL SPIRIT. ENRICHMENT OF ONESELF OR SELF-GAIN SHOULD BE MISSIN G AND THE PREDOMINANT PURPOSE OF THE ACTIVITY SHOULD BE TO SE RVE AND BENEFIT OTHERS. A SMALL CONTRIBUTION BY WAY OF FEE THAT THE BENEFIC IARY PAYS WOULD NOT CONVERT CHARITABLE ACTIVITY INTO BUSINESS, COMMERCE OR TRADE IN THE ABSENCE OF CONTRARY EVIDENCE. QUANTUM OF FEE CHARGE D, ECONOMIC STATUS OF THE BENEFICIARIES WHO PAY, COMMERCIAL VALUE OF B ENEFITS IN COMPARISON TO THE FEE, PURPOSE AND OBJECT BEHIND THE FEE ETC. ARE SEVERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUESTION, IS IT BUSIN ESS?' 57 . ULTIMATELY, IN THE CONTEXT OF THE FACTUAL MATRIX OF THAT CASE, THIS COURT HELD THAT 'CHARGING A NOMINAL FEE TO USE THE CODING SYSTEM AND TO AVAIL THE ADVANTAGES AND BENEFITS THEREIN IS NEITHER REFL ECTIVE OF THE BUSINESS APTITUDE NOR INDICATIVE OF THE PROFIT ORIENTED INTE NT'. THE COURT FURTHER OBSERVED: 'THUS THE CONTENTION OF THE REVENUE THAT THE PETITI ONER CHARGES FEE AND, THEREFORE, IS CARRYING ON BUSINESS, HAS TO BE REJEC TED. THE INTENTION BEHIND THE ENTIRE ACTIVITY IS PHILANTHROPIC AND NOT TO RECOUP OR REIMBURSE IN MONETARY TERMS WHAT IS GIVEN TO THE BENEFICIARIE S. ELEMENT OF GIVE AND TAKE IS MISSING, BUT DECISIVE ELEMENT OF BEQUEATHIN G IS PRESENT. IN THE ABSENCE OF 'PROFIT MOTIVE' AND CHARITY BEING THE PR IMARY AND SOLE PURPOSE BEHIND THE ACTIVITIES OF THE PETITIONER IS PERSPICUOUSLY DISCERNIBLE AND PERCEPTIBLE.' THE COURT ALSO HELD: '27. AS OBSERVED ABOVE, FEE CHARGED AND QUANTUM OF INCOME EARNED CAN BE INDICATIVE OF THE FACT THAT THE PERSON IS CARRYI NG ON BUSINESS OR COMMERCE AND NOT CHARITY, BUT WE MUST KEEP IN MIND THAT CHARITABLE ACTIVITIES REQUIRE OPERATIONAL/RUNNING EXPENSES AS WELL AS CAPITAL EXPENSES TO BE ABLE TO SUSTAIN AND CONTINUE IN LONG RUN. THE PETITIONER HAS TO BE SUBSTANTIALLY SELF-SUSTAINING IN LONG-TER M AND SHOULD NOT DEPEND UPON GOVERNMENT, IN OTHER WORDS TAXPAYERS SHOULD NO T SUBSIDIZE THE SAID ACTIVITIES, WHICH NEVERTHELESS ARE CHARITABLE AND F ALL UNDER THE RESIDUARY CLAUSE GENERAL PUBLIC UTILITY. THE IMPUGNED ORDER DOES NOT REFER TO ANY STATUTORY MANDATE THAT A CHARITABLE INSTITUTION FAL LING UNDER THE LAST CLAUSE SHOULD BE WHOLLY, SUBSTANTIALLY OR IN PART MUST BE FUNDED BY VOLUNTARY CONTRIBUTIONS. NO SUCH REQUIREMENT HAS BEEN POINTED OUT OR ARGUED. A PRACTICAL AND PRAGMATIC VIEW IS REQUIRED WHEN WE EX AMINE THE DATA, WHICH SHOULD BE ANALYZED OBJECTIVELY AND A NARROW A ND COLOURED VIEW WILL BE COUNTER-PRODUCTIVE AND CONTRARY TO THE LANG UAGE OF SECTION 2(15) OF THE ACT.' ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 14 58 . IN CONCLUSION, WE MAY SAY THAT THE EXPRESSION 'CH ARITABLE PURPOSE', AS DEFINED IN SECTION 2(15) CANNOT BE CONSTRUED LIT ERALLY AND IN ABSOLUTE TERMS. IT HAS TO TAKE COLOUR AND BE CONSIDERED IN T HE CONTEXT OF SECTION 10(23C)(IV) OF THE SAID ACT. IT IS ALSO CLEAR THAT IF THE LITERAL INTERPRETATION IS GIVEN TO THE PROVISO TO SECTION 2(15) OF THE SAI D ACT, THEN THE PROVISO WOULD BE AT RISK OF RUNNING FOWL OF THE PRINCIPLE O F EQUALITY ENSHRINED IN ARTICLE 14 OF THE CONSTITUTION OF INDIA. IN ORDER T O SAVE THE CONSTITUTIONAL VALIDITY OF THE PROVISO, THE SAME WOULD HAVE TO BE READ DOWN AND INTERPRETED IN THE CONTEXT OF SECTION 10(23C)(IV) B ECAUSE, IN OUR VIEW, THE CONTEXT REQUIRES SUCH AN INTERPRETATION. THE CO RRECT INTERPRETATION OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT WOULD BE THAT IT CARVES OUT AN EXCEPTION FROM THE CHARITABLE PURPOSE OF ADVANCEMEN T OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT EXCEPTION IS LIMITED TO ACTIVITIES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR B USINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IN BOTH THE ACTIVIT IES, IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR THE ACTIVITY OF REND ERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, THE DO MINANT AND THE PRIME OBJECTIVE HAS TO BE SEEN. IF THE DOMINANT AND PRIME OBJECTIVE OF THE INSTITUTION, WHICH CLAIMS TO HAVE BEEN ESTABLISHED FOR CHARITABLE PURPOSES, IS PROFIT MAKING, WHETHER ITS ACTIVITIES ARE DIRECT LY 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 PURPOSE'. O N THE FLIP SIDE, WHERE AN INSTITUTION IS NOT DRIVEN PRIMARILY BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJ ECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTIO N ESTABLISHED FOR CHARITABLE PURPOSES. 59 . THUS, WHILE WE UPHOLD THE CONSTITUTIONAL VALIDITY OF THE PROVISO TO SECTION 2(15) OF THE SAID ACT, IT HAS TO BE READ DO WN IN THE MANNER INDICATED BY US. AS A CONSEQUENCE, THE IMPUGNED ORD ER DATED 23.01.2013 IS SET ASIDE AND A MANDAMUS IS ISSUED TO THE RESPON DENT TO GRANT APPROVAL TO THE PETITIONER UNDER SECTION 10(23C)(IV) OF THE SAID ACT WITHIN SIX WEEKS FROM THE DATE OF THIS JUDGMENT. THE WRIT PETI TION STANDS ALLOWED AS ABOVE. THE PARTIES ARE LEFT TO BEAR THEIR OWN COSTS . WE FIND THAT HONBLE DELHI HIGH COURT IN THE CASE O F GS1 INDIA VS. DGIT (E) [2013] 38 TAXMANN.COM 365 (DEL) HAS HELD HAS UNDER: 20. IN THE PRESENT CASE, THE BUSINESS IS NOT HELD IN TRUST AND N EITHER IS THE BUSINESS FEEDING THE CHARITY. THE VERY ACT O R ACTIVITY OF CHARITY AS CLAIMED BY THE PETITIONER IS REGARDED BY THE REV ENUE AS NOTHING BUT BUSINESS, TRADE OR COMMERCE. MONEY RECEIVED, OF COU RSE IS USED AND UTILIZED FOR THE CHARITABLE ACTIVITIES. FOUR REASON S ARE ELUCIDATED AND PROPOUND IN THE IMPUGNED ORDER TO STATE THAT THE PE TITIONER IS ENGAGED IN BUSINESS, TRADE OR COMMERCE AND AFORESAID ENCAPSULA TED IN THE IMPUGNED ORDER. PETITIONER HAS ACQUIRED INTELLECTUAL PROPERT Y RIGHTS, RECEIVES FEE FROM THIRD PARTIES, WHICH IS NOTHING BUT PAYMENT OF ROYALTY, THERE IS HUGE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 15 SURPLUS OF RECEIPTS OVER EXPENDITURE (REFER TABLE R EPRODUCED IN PARAGRAPH 7 ABOVE) AND PAYMENT IS MADE BY THE PETITIONER TO G S1 GLOBAL SERVICES, BELGIUM. 21. CAN IT BE SAID THAT THE PETITIONER IS ENGAGED I N ACTIVITIES WHICH CONSTITUTE BUSINESS, COMMERCE OR TRADE? AS OBSERVED ABOVE, LEGAL TERMS TRADE, COMMERCE, OR BUSINESS IN SECTION 2(15) , MEANS ACTIVITY UNDERTAKEN WITH A VIEW TO MAKE OR EARN PROFIT. PROF IT MOTIVE IS DETERMINATIVE AND A CRITICAL FACTOR TO DISCERN WHET HER AN ACTIVITY IS BUSINESS, TRADE OR COMMERCE. 22. BUSINESS ACTIVITY HAS AN IMPORTANT PERVADING EL EMENT OF SELF- INTEREST, THOUGH FAIR DEALING SHOULD AND CAN BE PRESENT, WHIL ST CHARITY OR CHARITABLE ACTIVITY IS ANTI-THESIS OF ACTIVITY UNDERTAKEN WITH PROFIT MOTIVE OR ACTIVITY UNDERTAKEN ON SOUND OR RECOGNIZED BUSINESS PRINCIPL ES. CHARITY IS DRIVEN BY ALTRUISM AND DESIRE TO SERVE OTHERS, THOUGH ELEM ENT OF SELF- PRESERVATION MAY BE PRESENT. FOR CHARITY, BENEVOLEN CE SHOULD BE OMNIPRESENT AND DEMONSTRABLE BUT IT IS NOT EQUIVALE NT TO SELF-SACRIFICE AND ABNEGATION. THE ANTIQUATED DEFINITION OF CHARIT Y, WHICH ENTAILS GIVING AND RECEIVING NOTHING IN RETURN IS OUTDATED. A MAND ATORY FEATURE WOULD BE; CHARITABLE ACTIVITY SHOULD BE DEVOID OF SELFISH NESS OR ILLIBERAL SPIRIT. ENRICHMENT OF ONESELF OR SELF- GAIN SHOULD BE MISSI NG AND THE PREDOMINANT PURPOSE OF THE ACTIVITY SHOULD BE TO SE RVE AND BENEFIT OTHERS. A SMALL CONTRIBUTION BY WAY OF FEE THAT THE BENEFIC IARY PAYS WOULD NOT CONVERT CHARITABLE ACTIVITY INTO BUSINESS, COMMERCE OR TRADE IN THE ABSENCE OF CONTRARY EVIDENCE. QUANTUM OF FEE CHARGE D, ECONOMIC STATUS OF THE BENEFICIARIES WHO PAY, COMMERCIAL VALUE OF B ENEFITS IN COMPARISON TO THE FEE, PURPOSE AND OBJECT BEHIND THE FEE ETC. ARE SEVERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUESTION, IS IT BUSIN ESS? 23. THE PETITIONER CHARGES AN INITIAL REGISTRATION FEE OF RS.20,000/- PLUS ANNUAL FEE OF RS.4,000/-, ENHANCED TO RS.5,000/- FR OM FINANCIAL YEAR 2006-07 ONWARDS FROM THIRD PARTIES, WHO BECOME SUBS CRIBING MEMBERS AND ARE ENTITLED TO USE THE CODING SYSTEM, GS1. REV ENUE ACKNOWLEDGES THAT THE PETITIONER ENJOYS MONOPOLY AND HAS EXCLUSI VE RIGHTS TO ISSUE GLOBAL BAR CODING SYSTEM GS1 IN INDIA. HOWEVER THE PETITIONER IS NOT DEALING OR TREATING THE PRIZED RIGHTS AS A RIGHT, W HICH IS TO BE EXPLOITED COMMERCIALLY TO EARN OR GENERATE PROFITS. A CODING SYSTEM OF THIS NATURE IF MARKETED ON COMMERCIAL LINES WITH PROFIT MOTIVE WOULD AMOUNT TO BUSINESS BUT WHEN THE UNDERLYING AND PROPELLING MOT IVE IS NOT TO EARN PROFITS OR COMMERCIALLY EXPLOIT THE RIGHTS BUT GEN ERAL PUBLIC GOOD I.E. TO PROMOTE AND MAKE GS1 CODING SYSTEM AVAILABLE TO INDIAN TRADERS, MANUFACTURERS, GOVERNMENT ETC, IT WILL FAIL THE TES T OF BUSINESS AND MEETS THE TOUCHSTONE OF CHARITY. THE PETITIONER IS NOT DI RECTLY OR INDIRECTLY SUBJECTING THEIR ACTIVITY TO MARKET MECHANISM/ DYNA MICS (I.E. DEMAND AND SUPPLY), RATHER IT IS MOTIVATED AND PROMPTED TO SERVE THE BENEFICIARIES. THIS IS NOT A CASE OF COMMERCIAL EXP LOITATION OF INTELLECTUAL PROPERTY RIGHTS TO EARN PROFITS BUT RATHER A CASE W HERE A TOKEN FEE HAS BEEN FIXED AND PAYABLE BY THE USER OF THE GLOBAL ID ENTIFICATION SYSTEM. ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 16 24. THE PETITIONER DOES NOT CATER TO THE LOWEST OR MARGINALIZED SECTION OF THE SOCIETY, BUT GOVERNMENT, PUBLIC SECTOR AND PRIV ATE SECTOR MANUFACTURERS AND TRADERS. NO FEE IS CHARGED FROM U SERS AND BENEFICIARIES LIKE STOCKIEST, WHOLE SELLERS, GOVERNMENT DEPARTMEN T ETC. WHILE A NOMINAL FEE IS ONLY PAID BY THE MANUFACTURER OR MARKETING A GENCIES I.E. THE FIRST PERSON WHO INSTALLS THE CODING SYSTEM WHICH IS NOT AT ALL EXORBITANT IN VIEW OF THE BENEFIT AND ADVANTAGE WHICH ARE OVERWHE LMING. ANY ONE FROM ANY PART OF THE WORLD CAN ACCESS THE DATABASE FOR IDENTIFICATION OF GOODS AND SERVICES USING GLOBAL STANDARD. THE FEE I S FIXED AND NOT PRODUCT SPECIFIC OR QUANTITY RELATED I.E. DEPENDENT UPON QUANTUM OF PRODUCTION. REGISTRATION AND ANNUAL FEE ENTITLES TH E PERSON CONCERNED TO USE GS1 IDENTIFICATION ON ALL THEIR PRODUCTS. NON L EVY OF FEE IN SUCH CASES MAY HAVE ITS OWN DISADVANTAGES AND PROBLEMS. CHARGI NG A NOMINAL FEE TO USE THE CODING SYSTEM AND TO AVAIL THE ADVANTAGES A ND BENEFITS THEREIN IS NEITHER REFLECTIVE OF BUSINESS APTITUDE NOR INDICAT IVE OF PROFIT ORIENTED INTENT. 25. HAVING APPLIED THE TEST MENTIONED ABOVE, INCLUD ING THE CRITERIA FOR DETERMINING WHETHER THE FEE IS COMMENSURATE AND IS BEING CHARGED ON COMMERCIAL OR BUSINESS PRINCIPLES, WE FIND THAT THE PETITIONER FULFILLS THE CHARITABLE ACTIVITY TEST. IT IS APPARENT TO US THAT REVENUE HAS TAKEN A CONTRADICTORY STAND AS THEY HAVE SUBMITTED AND ACCE PTED THAT THE PETITIONER CARRIES ON CHARITABLE ACTIVITY UNDER THE RESIDUARY HEAD GENERAL PUBLIC UTILITY BUT SIMULTANEOUSLY REGARDS THE SAID ACTIVITY AS BUSINESS. THUS THE CONTENTION OF THE REVENUE THAT T HE PETITIONER CHARGES FEE AND, THEREFORE, IS CARRYING ON BUSINESS, HAS TO BE REJECTED. THE INTENTION BEHIND THE ENTIRE ACTIVITY IS PHILANTHROP IC AND NOT TO RECOUP OR REIMBURSE IN MONETARY TERMS WHAT IS GIVEN TO THE BE NEFICIARIES. ELEMENT OF GIVE AND TAKE IS MISSING, BUT DECISIVE ELEMENT O F BEQUEATHING IS PRESENT. IN THE ABSENCE OF PROFIT MOTIVE AND CHAR ITY BEING THE PRIMARY AND SOLE PURPOSE BEHIND THE ACTIVITIES OF THE PETIT IONER IS PERSPICUOUSLY DISCERNIBLE AND PERCEPTIBLE. 26. TABLE RELIED ON BY THE RESPONDENT AND MENTIONED IN PARAGRAPH 7 ABOVE TELLS A PARTIAL STORY. ONLY DIRECT EXPENSES I NCURRED HAVE BEEN SET OFF FROM THE FEE EARNED FROM REGISTRATION AND RENEW AL. THE ACTIVITY OF THE PETITIONER INVOLVES PROMOTION, PROPAGATION AND SPRE ADING AWARENESS AND KNOWLEDGE ABOUT GLOBAL CODING IDENTIFICATION SYSTEM GS1. THE ENTIRE EXPENDITURE OF THE PETITIONER HAS TO BE TAKEN INTO CONSIDERATION AND CANNOT BE IGNORED. THERE ARE STIPULATIONS IN SECTIONS 11 , 13 ETC. OF THE ACT TO PREVENT MISUSE OF OR SIPHONING OF FUNDS, BAR /PROHIBIT GAINS TO RELATED PERSONS, STIPULATIONS OF TIME LIMITS FOR US E OF FUNDS, WHICH ARE EFFECTIVE CHECKS AND CURTAIL AND DENY BENEFIT IN CA SES OF ABUSE. THERE IS NO SUCH ALLEGATION OR CONTENTION OF THE REVENUE IN THE PRESENT CASE. 27. AS OBSERVED ABOVE, FEE CHARGED AND QUANTUM OF I NCOME EARNED CAN BE INDICATIVE OF THE FACT THAT THE PERSON IS CARRYI NG ON BUSINESS OR COMMERCE AND NOT CHARITY, BUT WE MUST KEEP IN MIND THAT CHARITABLE ACTIVITIES REQUIRE OPERATIONAL/RUNNING EXPENSES AS WELL AS CAPITAL EXPENSES TO BE ABLE TO SUSTAIN AND CONTINUE IN LONG RUN. THE PETITIONER ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 17 HAS TO BE SUBSTANTIALLY SELF-SUSTAINING IN LONG-TER M AND SHOULD NOT DEPEND UPON GOVERNMENT, IN OTHER WORDS TAXPAYERS SHOULD NO T SUBSIDIZE THE SAID ACTIVITIES, WHICH NEVERTHELESS ARE CHARITABLE AND F ALL UNDER THE RESIDUARY CLAUSE GENERAL PUBLIC UTILITY. THE IMPUGNED ORDER DOES NOT REFER TO ANY STATUTORY MANDATE THAT A CHARITABLE INSTITUTION FAL LING UNDER THE LAST CLAUSE SHOULD BE WHOLLY, SUBSTANTIALLY OR IN PART MUST BE FUNDED BY VOLUNTARY CONTRIBUTIONS. NO SUCH REQUIREMENT HAS BEEN POINTED OUT OR ARGUED. A PRACTICAL AND PRAGMATIC VIEW IS REQUIRED WHEN WE EX AMINE THE DATA, WHICH SHOULD BE ANALYZED OBJECTIVELY AND A NARROW A ND COLOURED VIEW WILL BE COUNTER-PRODUCTIVE AND CONTRARY TO THE LANG UAGE OF SECTION 2(15) OF THE ACT. 28. PETITIONER HAS INDICATED THAT THEY HAVE RECENTL Y PURCHASED OFFICE SPACE IN HUDCO COMPLEX, BHIKAJI CAMA PLACE AND THEY HAVE ACQUIRED PLOT AT NOIDA. THEY REQUIRE ACCUMULATED FUNDS FOR R UNNING BRANCH OFFICES AT CHENNAI AND MUMBAI. OFFICE AT CHENNAI IS ALREADY OPERATIONAL AND OPERATIONS AT MUMBAI ARE CONTEMPLATED SHORTLY FOR W HICH PROPOSALS ARE UNDER CONSIDERATION. ACCUMULATION OF MONEY/FUNDS OV ER A PERIOD OF 2-3 YEARS MAY NOT BE RELEVANT IN DETERMINING THE NATURE AND CHARACTER OF ACTIVITY AND WHETHER THE SAME SHOULD BE TREATED AS INDICATIVE OF PROFIT MOTIVE I.E. DESIRE OR INTENTION TO CARRY ON BUSINES S OR COMMERCE. IN MCD VS. CHILDREN BOOK TRUST 'S (1992) 3 SCC 390 A DECISION RELATING TO PROPERTY TAX, THE SUPREME COURT HELD THAT BOTH QUAL ITATIVE AND QUANTITATIVE TESTS SHOULD BE SATISFIED IN VIEW OF S PECIFIC LANGUAGE OF SECTION 115(4)(A) OF DELHI MUNICIPAL CORPORATION AC T 1957. NEVERTHELESS IT NEGATED AND REJECTED THE ARGUMENT T HAT DATA FOR ONE YEAR SHOULD BE TAKEN INTO CONSIDERATION. IT WAS OBSERVED THAT DATA FOR BLOCK PERIOD FOR FIVE YEARS MAY AND SHOULD BE TAKEN INTO CONSIDERATION. IT WAS HELD AS UNDER: IT CANNOT BE GAINSAID THAT THE MUNICIPAL GENERAL TA X IS AN ANNUAL TAX. THEREFORE, NORMALLY SPEAKING, THE LIABILITY FOR TAX ATION MUST BE DETERMINED WITH REFERENCE TO EACH YEAR. IN OTHER WO RDS, THE SOCIETY CLAIMING EXEMPTION WILL HAVE TO SHOW THAT IT FULFIL S THE CONDITIONS FOR EXEMPTION EACH YEAR. IF IT SHOWS, FOR EXAMPLE, THAT FOR ITS SUPPORT IT HAS TO DEPEND ON, EITHER WHOLLY OR IN PART, VOLUNTARY C ONTRIBUTIONS, IN THAT PARTICULAR YEAR, IT MAY BE EXEMPT. BUT WHERE IN THA T YEAR, FOR ITS SUPPORT, IT NEED NOT DEPEND ON VOLUNTARY CONTRIBUTIONS AT AL L OR AGAIN IF THE SOCIETY PRODUCES SURPLUS INCOME AND EXCLUDES THE DEPENDENCE ON VOLUNTARY CONTRIBUTIONS, IT MAY CEASE TO BE EXEMPT. OF COURSE , THE WORD SUPPORT WILL HAVE TO MEAN SUSTENANCE OR MAINTENANCE. ONLY T O GET OVER THIS DIFFICULTY THAT THE QUALITATIVE TEST IS PRESSED INT O SERVICE. WE WOULD CONSIDER THE REASONABLE WAY OF GIVING EFFECT TO THE EXEMPTION, WILL BE TO TAKE EACH CASE AND ASSESS FOR A PERIOD OF FIVE YEAR S AND FIND OUT WHETHER THE SOCIETY OR BODY DEPENDS ON VOLUNTARY CONTRIBUTI ONS. OF COURSE, AT THE END OF EACH FIVE-YEAR PERIOD THE ASSESSING AUTHORIT Y COULD REVIEW THE POSITION. 29. UNDER THE PROVISIONS OF THE ACT, A CHARITABLE I NSTITUTION/ ORGANIZATION IS TO UTILIZE SPECIFIC PERCENTAGE OF THEIR FUNDS/IN COME WITHIN THE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 18 ASSESSMENT YEAR IN QUESTION AND CARRY FORWARD IS AL LOWED SUBJECT TO STRICT STIPULATIONS. THERE IS NO ALLEGATION OR STATEMENT I N THE IMPUGNED ORDER DATED 17TH NOVEMBER, 2008 THAT THE PETITIONER HAS V IOLATED THE SAID CONDITION OR REQUIREMENTS OF THE STATUTE. NO DOUBT THAT THE PETITIONER HAS TO MAKE PAYMENT OF PART OF FEES COLLECTED TO GS1 GL OBAL SERVICES, BELGIUM BUT THIS IS NATURAL AS GS1 SYSTEM IS GLOBAL AND WORLDWIDE SYSTEM. PETITIONER HAS POINTED OUT THAT DURING PAST YEARS THEY HAVE BEEN RECEIVING AMOUNTS FROM GOVERNMENT OF INDIA FOR FURT HERANCE OF THEIR OBJECTIVES. A FACT WHICH IS NOT DENIED AND DISPUTED . THE PETITIONER IS NOT ONLY CONCERNED WITH ENROLLMENT OF MEMBERS WHO ARE E NTITLED TO GS1 IDENTIFICATION SYSTEM BUT INVOLVED IN PROMOTING AND SPREADING AWARENESS ABOUT GS1 IDENTIFICATION SYSTEM AND MAKING IT AVAIL ABLE TO INDIANS FOR A SMALL FEE. PETITIONER HAS TO ORGANIZE TRAINING CAMP S, WORKSHOPS AND SEMINARS ALL OVER INDIA AND AS WELL AS FOR GOVERNME NT DEPARTMENTS/BODIES AND HELP THEM ADOPT THE SYSTEM. THEY HAVE TO PUBLISH MATERIAL HIGHLIGHTING ADVANTAGES OF GS1 IDE NTIFICATION AND HOW THIS CAN BENEFIT THE MANUFACTURERS AND TRADERS. MAINTENANCE OF BOOKS OF ACCOUNTS 30. THE STATEMENT AND SUBMISSION OF THE RESPONDENTS THAT THE PETITIONER WAS NOT MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR C OMMERCIAL ACTIVITY AND, THEREFORE, DENIED REGISTRATION/ NOTIFICATION, HAS TO BE REJECTED AS FALLACIOUS AND DEVOID OF ANY MERIT. SIMILAR ALLEGAT ION IS OFTEN MADE IN CASES OF CHARITABLE ORGANIZATION/ ASSOCIATION WITHO UT TAKING INTO ACCOUNT THE ACTIVITY UNDERTAKEN BY THE ASSESSEE AND THE PRI MARY OBJECTIVE AND PURPOSE I.E. THE ACTIVITY AND CHARITY ACTIVITY ARE ONE AND THE SAME. THE CHARITABLE ACTIVITY UNDERTAKEN AND PERFORMED BY THE PETITIONER RELATES TO PROMOTION, DISSEMINATION OF KNOWLEDGE AND ISSUE OF UNIQUE IDENTIFICATION AMONGST THIRD PARTIES ETC. THE BUSINESS' ACTIVITY UNDERTAKEN BY THE PETITIONER IS INTEGRAL TO THE CHARITY/CHARITABLE AC TIVITIES. AS NOTED ABOVE, THE PETITIONER IS NOT CARRYING ON ANY INDEPENDENT, SEPARATE OR INCIDENTAL ACTIVITY, WHICH CAN BE CLASSIFIED AS BUSINESS TO FE ED AND PROMOTE CHARITABLE ACTIVITIES. THE ACT OR ACTIVITY OF THE P ETITIONER BEING ONE, THUS A SINGLE SET OF BOOKS OF ACCOUNT IS MAINTAINED, AS WH AT IS TREATED AND REGARDED BY THE REVENUE AS THE BUSINESS' IS NOTHING BUT INTRINSICALLY CONNECTED WITH ACTS FOR ATTAINMENT OF THE OBJECTS A ND GOALS OF THE PETITIONER. WE FAIL TO UNDERSTAND WHEN THE PETITION ER IS MAINTAINING THE BOOKS OF ACCOUNTS WITH REGARD TO THEIR RECEIPTS/INC OME AS WELL AS THE EXPENSES INCURRED FOR THEIR ENTIRE ACTIVITY THEN HO W IT CAN BE HELD THAT SEPARATE BOOKS OF ACCOUNTS HAVE NOT BEEN MAINTAINED FOR BUSINESS' ACTIVITIES. THE BUSINESS ACTIVITIES ARE INTRINSIC ALLY WOVEN INTO AND PART OF THE CHARITABLE ACTIVITY UNDERTAKEN. THE BUSINES S ACTIVITY IS NOT FEEDING CHARITABLE ACTIVITIES. IN ANY CASE, WHEN WE HOLD THAT THE PETITIONER IS NOT CARRYING ON ANY BUSINESS, TRADE OR COMMERCE, QUESTION OF REQUIREMENT OF SEPARATE BOOKS OF ACCOUNTS FOR THE B USINESS, TRADE OR COMMERCE IS REDUNDANT. OTHER ASPECTS ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 19 31. THERE IS ANOTHER CHALLENGE TO THE REGISTRATION, WHICH HAS NEITHER BEEN ADVERTED TO IN THE IMPUGNED ORDER NOR RAISED BY THE RESPONDENT DURING ARGUMENTS. FIRST PROVISO TO SECTION 2(15) OF THE ACT EQUALLY BARS RENDERING OF ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS WHEN IT GENERATES RECEIPTS FOR AN AMOUNT EXCEEDING THE FIGURE MENTIONED IN SECOND PROVISO. THE STIPULATION BROADENS AND WID ENS THE NEGATIVE STIPULATION [SEE THE INSTITUTE OF CHARTERED ACCOUNT ANTS OF INDIA CASE (SUPRA)].THE PETITIONER IS PROVIDING SERVICES TO PE RSONS ENGAGED IN TRADE, COMMERCE OR BUSINESS WHO ARE THE BENEFICIARIES. QUE STION IS WHETHER THE LEGISLATIVE INTENT IS TO EXCLUDE FROM DEFINITION OF CHARITABLE PURPOSE ANY ACTIVITY WHICH HAS THE AIM AND OBJECT OF PROVIDING SERVICES TO TRADE, COMMERCE OR BUSINESS. THE MATTER IS NOT FREE FROM D OUBT BUT THERE ARE GOOD REASONS TO HOLD THAT THE BAR OR PROBATION IS N OT WITH REFERENCE TO ACTIVITY OF THE BENEFICIARY BUT THE ACTIVITY OF THE ASSESSEE UNDER THE RESIDUARY CLAUSE. THE INTENT IS TO EXCLUDE AN ASSES SEE WHO CARRIES ON BUSINESS, TRADE OR COMMERCE TO FEED THE CHARITABLE ACTIVITIES UNDER THE LAST LIMB. APPLICATION OF INCOME EARNED FROM BUSINE SS IS NO LONGER RELEVANT AND CANNOT HELP AN ASSESSEE. CIRCULAR NO.1 1 OF 2008 IS TO THE SAID EFFECT AND DOES NOT PROMOTE CONTRARY INTERPRET ATION. THE SAID CIRCULAR CLEARLY STIPULATES THAT THE OBJECT OF GENERAL PUBL IC UTILITY SHOULD NOT BE A MASK OR A DEVICE TO HIDE THE TRUE PURPOSE, WHICH IS TRADE, COMMERCE OR BUSINESS OR RENDERING ANY SERVICE IN RELATION TO TR ADE, COMMERCE OR BUSINESS. DIRECTOR GENERAL (EXEMPTION) HAS NOT INTE RPRETED THE FIRST PROVISO IN THIS MANNER IN THIS CASE. EVEN IN THE CA SE OF BUREAU OF INDIAN STANDARDS (SUPRA) NO SUCH CONTENTION WAS RAISED. 7T H PROVISO TO SECTION 10(23C) OF THE ACT SUPPORTS OUR INTERPRETATION AND THE LEG ISLATURE HAS NOT OMITTED OR SUITABLY AMENDED THE SAID PROVISO TO SUP PORT THE CONTRARY INTERPRETATION. EVEN OTHERWISE, THE BENEFICIARIES O F GS1 SYSTEM ARE NOT CONFINED OR RESTRICTED TO PERSONS FROM TRADE, COMME RCE OR BUSINESS. THE BENEFICIARIES ARE PRESENT EVERYWHERE AND THE ADVANT AGES ARE PERMEATING AND UNIVERSAL AND WOULD INCLUDE CONSUMERS, GOVERNME NT, BENEFICIARIES OF PDS ETC. 32. THE SECOND PROVISO, WHICH REFERS TO THE AGGREGA TE VALUE OF RECEIPT OF ACTIVITIES OF RS.10 LACS (NOW ENHANCED RS.25 LACS V IDE FINANCE ACT 2011 WITH EFFECT FROM 1.4.2012) OR LESS IN A PREVIOUS YE AR, CANNOT BE INVOKED IN THE PRESENT CASE BECAUSE THE SAID PROVISION WILL APPLY ONLY IF THE INSTITUTION COVERED BY THE LAST/RESIDUARY CLAUSE IS INVOLVED OR CARRYING ON ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO TR ADE, COMMERCE OR BUSINESS. CONTENTION OF THE RESPONDENT, IF ACCEPTED , WOULD DENY CHARITABLE STATUS TO A FAINTLY MODERATE SIZE INSTIT UTION UNDER THE LAST/RESIDUARY LIMB, WHEN IT CHARGES EVEN A TOKEN O R INSIGNIFICANT AMOUNT FROM THE BENEFICIARIES, WHO GAIN SIGNIFICANTLY FROM THE ALTRUISM AND BENEVOLENCE. A SMALL CHARITABLE ORGANIZATION THAT R ECEIVES TOKEN FEE OF MORE THAN RS.80,000/- A MONTH OR NOW RS.2,00,000/- PER MONTH APPROXIMATELY, WOULD DISQUALIFY AND LOSE THEIR CHAR ITABLE STATUS. THE OBJECT OF THE PROVISO IS TO DRAW A DISTINCTION BETW EEN CHARITABLE INSTITUTIONS COVERED BY LAST LIMB WHICH CONDUCT BUS INESS OR OTHERWISE BUSINESS ACTIVITIES ARE UNDERTAKEN BY THEM TO FEED CHARITY. THE PROVISO APPLIES WHEN BUSINESS WAS/IS CONDUCTED AND THE QUAN TUM OF RECEIPTS ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 20 EXCEEDS THE SPECIFIED SUM. THE PROVISO DOES NOT SEE K TO DISQUALIFY CHARITABLE ORGANIZATION COVERED BY THE LAST LIMB, W HEN A TOKEN FEE IS COLLECTED FROM THE BENEFICIARIES IN THE COURSE OF A CTIVITY WHICH IS NOT A BUSINESS BUT CLEARLY CHARITY FOR WHICH THEY ARE EST ABLISHED AND THEY UNDERTAKE. 33. ON THE BASIS OF REASONING GIVEN IN THE IMPUGNED ORDER, WE DO NOT THINK THAT THE PETITIONER CAN BE DENIED BENEFIT OF REGISTRATION/NOTIFICATION UNDER SECTION 10(23C)(IV) . 34. IN VIEW OF THE AFORESAID DISCUSSION, WE ALLOW T HE PRESENT WRIT PETITION AND ISSUE WRIT OF CERTIORARI QUASHING THE ORDER DAT ED 17 TH NOVEMBER, 2008 AND MANDAMUS IS ISSUED DIRECTING THE RESPONDEN TS TO GRANT APPROVAL UNDER SECTION 10(23C)(IV) OF THE ACT AND THE SAME SHALL BE ISSUED WITHIN SIX WEEKS FROM THE DATE COPY OF THIS ORDER IS RECEI VED. THE WRIT PETITION STANDS DISPOSED OF. THERE WILL BE NO ORDERS AS TO C OST. FURTHER, LEARNED COUNSEL FOR THE ASSESSEE ALSO RELI ED ON THE RATIO LAID DOWN IN THE CASES OF DIT (E) VS. AHMEDABAD MANAGEME NT ASSOCIATION [2014] 366 ITR 85 (GUJ H.C.); NATIONAL HORTICULTURE BOARD VS. ACIT [2015] 53 TAXMANN.COM 343 (DELHI TRIB.) AND INSTITUTE FOR DEV ELOPMENT & RESEARCH IN BANKING TECHNOLOGY VS. ADIT(E-1) [2015] 63 TAXMANN. COM 297 (HYDERABAD TRIBUNAL.). 9. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FACTS OF THE PRESENT CASE AND THE CASE-LAWS RELIED UPON BY THE PARTIES. WE FIND THAT ASSESSEES ACTIVITIES HAVE NOT BEEN CHANGED AT ALL SINCE THE D ATE OF ITS INCEPTION AND THE ASSESSEE WAS FULLY ELIGIBLE FOR EXEMPTION U/S 1 1 & 12 OF THE I.T. ACT. THE ASSESSEE SOCIETY WAS CONSTITUTED BY THE STATE GOVT. FOR THE BENEFIT OF GENERAL PUBLIC TO PROVIDE THEM INFORMATION REGARDIN G EMPLOYMENTS, EDUCATION INSTITUTIONS AND OTHER INFORMATION OF THE GOVT. SCHEMES. THE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 21 OBJECTIVES OF THE ASSESSEE SOCIETY ARE PUBLICATION OF WEEKLY NEWSPAPER NAMELY ROZGAR AUR NIRMAN TO SUPPLY THE MATERIAL R ELATED TO ADVERTISEMENT OF PUBLIC WELFARE SCHEMES OF GOVERNME NT OF MADHYA PRADESH AND ITS UNDERTAKING AND DO SUCH ALL OTHER ACTS THAT ARE NECESSARY FOR ACHIEVEMENT OF THE OBJECTIVES OF THE SOCIETY. THERE FORE, THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN HOLDING THAT THE A SSESSEE WAS INVOLVED IN CARRYING ON THE ACTIVITY IN THE NATURE OF TRADE, CO MMERCE OR BUSINESS. WE FIND THAT PRIOR TO THE INTRODUCTION OF THE PROVISO TO SECTION 2(15), THERE WAS NO DISPUTE THAT THE ASSESSEE WAS ESTABLISHED FOR CH ARITABLE PURPOSES. THE MAIN OBJECT OF THE ASSESSEE IS FOR THE BENEFIT OF G ENERAL PUBLIC TO PROVIDE THEM INFORMATION REGARDING EMPLOYMENTS, EDUCATION I NSTITUTIONS AND OTHER INFORMATION OF THE GOVT. SCHEMES, THEREFORE, WE FIN D FORCE IN THE CONTENTION OF THE ASSESSEE THAT PROFIT MAKING IS NOT THE DRIVI NG FORCE OR OBJECTIVE OF THE ASSESSEE AND INCOME GENERATED BY THE ASSESSEE DOES NOT FIND ITS WAY INTO THE POCKETS OF ANY INDIVIDUALS OR ENTITIES. IT IS T O BE UTILIZED FULLY FOR THE PURPOSES OF THE OBJECTS OF THE ASSESSEE. FURTHER, T HE EXPRESSION 'CHARITABLE PURPOSE' SHOULD BE CONSTRUED NOT IN A VACUUM, BUT I N THE SPECIFIC CONTEXT OF SECTION 10(23C)(IV), WHICH SPECIFICALLY DEALS WITH THE INCOME RECEIVED BY ANY PERSON ON BEHALF OF, INTER ALIA , AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. THEREFORE, THE MEANING OF THE EXPRESSION 'CHARITABLE PURPOSES' HAS TO BE EXAMINED IN THE CONTEXT OF SECTION 10(23C)(IV ). WE ARE OF THE VIEW THAT SINCE THE OBJECT OF PROMOTING EMPLOYMENTS/EDUC ATIONAL INSTITUTIONS/GOVT. SCHEMES FOR THE GENERAL PUBLIC I S A CHARITABLE PURPOSE, THE ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 22 EXPRESSION 'CHARITABLE PURPOSE', AS DEFINED IN SECT ION 2(15) CANNOT BE CONSTRUED LITERALLY AND IN ABSOLUTE TERMS. IT HAS T O TAKE COLOUR AND BE CONSIDERED IN THE CONTEXT OF SECTION 10(23C)(IV) AS ALSO HELD IN THE ABOVE JUDICIAL PRONOUNCEMENTS. ON CONSIDERATION OF THESE FACTS IN THE LIGHT OF THE AFORESAID JUDGMENTS, WE ARE OF THE VIEW THAT THE AU THORITIES BELOW ARE NOT JUSTIFIED IN DISALLOWING THE ENTIRE EXEMPTION. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCES. THUS , GROUND NOS. 1 TO 5 ARE ALLOWED. 10. APROPOS GROUND NO.6, THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT LD. CIT(A) HAS NOT ADJUDICATED THIS GROUND, THEREFO RE, WE DEEM IT PROPER THAT THE ISSUE BE RESTORED TO THE AO TO VERIFY THE CLAIM OF THE ASSESSEE IN RESPECT OF CREDIT OF TDS. IN CASE THE TDS HAS BEEN DEDUCTED AND PAID IN ACCORDANCE WITH LAW THE AO WOULD GRANT THE CREDIT. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 11. GROUND NO.7 IS AGAINST LEVY OF INTEREST U/S 220 (2) AT RS.60080/-. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AUTHORITIES BELOW WERE NOT JUSTIFIED IN CHARGING U/S 220(2) OF THE ACT. 12. THE LD. DR OPPOSED THE SUBMISSIONS OF THE ASSES SEE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) HAS REJECTED THE GROUND BY O BSERVING AS UNDER: I MAY BE NOTED THAT INTEREST CHARGEABLE U/S 220(2) OF THE I.T. ACT IS COMPENSATORY AND MANDATORY IN NATURE. THE ISSUE REG ARDING CHARGING OF INTEREST U/S 220(2) IS NOT APPEALABLE. THEREFORE , THIS GROUND IS REJECTED. ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 23 WE DO NOT SEE ANY INFIRMITY IN THE FINDING OF LD. C IT(A). AS PER SECTION 246A(1) FOLLOWING ORDERS ARE APPEALABLE BEFORE HIM: (A) AN ORDER 77 [PASSED BY A JOINT COMMISSIONER UNDER CLAUSE (II) O F SUB- SECTION (3) OF SECTION 115VP OR AN ORDER] AGAINST THE ASSESSEE WHERE THE ASSESSEE DENIES HIS LIABILITY TO BE ASSESSED UN DER THIS ACT OR AN INTIMATION UNDER SUB-SECTION (1) OR SUB-SECTION (1B ) OF 78 [ SECTION 143 OR SUB-SECTION (1) OF SECTION 200A , WHERE THE ASSESSEE OR THE DEDUCTOR OBJECTS] TO THE MAKING OF ADJUSTMENTS, OR ANY ORDER OF ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 79 [[EXCEPT AN ORDER PASSED IN PURSUANCE OF DIRECTIONS OF THE DISPUTE RESOLUTION P ANEL 80 [***] 81 [OR AN ORDER REFERRED TO IN SUB-SECTION (12) OF SECTION 144BA ]]] OR SECTION 144 , TO THE INCOME ASSESSED, OR TO THE AMOUNT OF TAX DET ERMINED, OR TO THE AMOUNT OF LOSS COMPUTED, OR TO THE STATUS UNDER WHI CH HE IS ASSESSED; [(AA) AN ORDER OF ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 115WE OR SECTION 115WF , WHERE THE ASSESSEE, BEING AN EMPLOYER OBJECTS TO THE VALUE OF FRINGE BENEFITS ASSESSED; (AB) AN ORDER OF ASSESSMENT OR REASSESSMENT U NDER SECTION 115WG ;] (B) AN ORDER OF ASSESSMENT, REASSESSMENT OR RE COMPUTATION UNDER SECTION 147 83 [[EXCEPT AN ORDER PASSED IN PURSUANCE OF DIRECTIONS OF THE DISPUTE RESOLUTION PANEL 84 [***] 85 [OR AN ORDER REFERRED TO IN SUB- SECTION (12) OF SECTION 144BA ]]] OR SECTION 150 ; [(BA) AN ORDER OF ASSESSMENT OR REASSESSMEN T UNDER SECTION 153A 87 [[EXCEPT AN ORDER PASSED IN PURSUANCE OF DIRECTIONS OF THE DISPUTE RESOLUTION PANEL]] 88 [***] 89 [OR AN ORDER REFERRED TO IN SUB- SECTION (12) OF SECTION 144BA ];] [(BB) AN ORDER OF ASSESSMENT OR REASSESSMENT UN DER SUB-SECTION (3) OF SECTION 92CD ;] (C) AN ORDER MADE UNDER SECTION 154 OR SECTION 155 HAVING THE EFFECT OF ENHANCING THE ASSESSMENT OR REDUCING A REFUND OR AN ORDER REFUSING TO ALLOW THE CLAIM MADE BY THE ASSESSEE UNDER EITHER O F THE SAID SECTIONS 91 [***] 92 [EXCEPT AN ORDER REFERRED TO IN SUB-SECTION (12) OF SECTION 144BA ]; IN VIEW OF THE ABOVE PROVISION, WE ARE IN AGREEMENT WITH THE FINDING OF THE LD. CIT(A) THAT ORDER U/S 220(2) IS NOT APPEALABLE BEFORE THE LD. CIT(A). THIS GROUND OF THE ASSESSEES APPEAL IS DISMISSED. 14. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 24 15. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.692/ IND/2013 FOR A.Y. 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A)/AO ERRED AND NOT JUSTIFIED IN HIS FINDINGS T HAT IN THE CASE OF ASSESSEE, THE FIRST PROVISO TO SECTION 2(15) ARE APPLICABLE A ND, THEREFORE, IT IS NOT ENTITLED FOR THE BENEFITS U/S. 11 & 12 OF THE ACT. SUCH FIND INGS OF THE LD. CIT(A)/AO ARE WHOLLY WRONG, INJUDICIOUS & UNLAWFUL FINDINGS BE QUASHED AND IT BE HELD THAT THE SAID PROVISO IS NOT APPLICABLE IN THE CASE OF A SSESSEE AND THEREFORE, IT IS FULLY ELIGIBLE FOR THE DEDUCTION/EXEMPTION CLAIMED IN THE RETURN U/S 11 & 12 OF THE I.T. ACT HENCE ALL SUCH CLAIMS AS MADE IN THE R ETURN BE ALLOWED. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LOWER AUTHORITIES ERRED AND NOT JUSTIFIED IN HOLDIN G THAT THE ASSESSEE IS INVOLVED IN CARRYING ON ACTIVITIES IN THE NATURE OF TRADE, C OMMERCE OR BUSINESS OR NAY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS FOR A CESS OR FEE OR NAY OTHER CONSIDERATION. SUCH FINDINGS OF THE AO ARE WHOLLY UNJUSTIFIED AND UNLAWFUL AND, THEREFORE, BE QUASHED AND IT BE HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE FOR CHARITABLE PURPO SES WITHIN THE MEANING OF SECTION 2(15) AND THEREFORE, IT IS ELIGIBLE FOR ASS ESSMENT OF INCOME UNDER THE PROVISIONS OF SECTION 11 OF THE I.T. ACT. 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN LAW AND NOT JUSTIFIED IN THEIR FINDINGS THAT THE OPERATING RECEIPTS AND TREATING THE EXCESS OF INCOME OVER EXPENDITURE SHOWN AT RS.3307877 AS THE BUSINESS INCOME. SUCH INJUDICIOUS AND UNLAWFUL FIND INGS, THEREFORE, BE QUASHED. 4. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . AO ERRED AND NOT JUSTIFIED IN NOT ALLOWING THE DEDUCTI ON OF RS.4942380/- AS AN APPLICATION OF INCOME. THE SAID DEDUCTION AS CLAIME D IN THE RETURN, THEREFORE, BE KINDLY ALLOWED. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CREDIT OF TDS AT RS.3604217/- BE ALLOWED IN FULL AND THE AO I S NOT JUSTIFIED IN ALLOWING THE CREDIT ONLY AT RS.1858159/- 6. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEVY OF INTEREST U/S 234D AT RS.112545. THE SAID LEVY BE CA NCELLED. ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 25 16. GROUNDS NOS. 1 TO 4 ARE SAME AS IN ITANO.280/IN D/2014 (A.Y. 2009-10). BOTH REPRESENTATIVES OF THE PARTIES HAVE ADOPTED TH E SAME ARGUMENTS. FOR THE SAME REASONING, THESE GROUND OF THE ASSESSEES APPEAL ARE ALLOWED. 17. GROUND NO.5 WITH REGARD TO TDS IS SAME AS IN IT ANO.280/IND/2014. BOTH THE REPRESENTATIVES OF THE PARTIES HAVE ADOPTED THE SAME ARGUMENTS. WE HAVE DECIDED THE SIMILAR ISSUE AS UNDER: APROPOS GROUND NO.6, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT LD. CIT(A) HAS NOT ADJUDICATED THIS GROUND, TH EREFORE, WE DEEM IT PROPER THAT THE ISSUE BE RESTORED TO THE AO TO VERI FY THE CLAIM OF THE ASSESSEE IN RESPECT OF CREDIT OF TDS. IN CASE THE T DS HAS BEEN DEDUCTED AND PAID IN ACCORDANCE WITH LAW THE AO WOU LD GRANT THE CREDIT. THIS GROUND OF THE ASSESSEES APPEAL IS ALL OWED FOR STATISTICAL PURPOSES. 18. FOR THE SAME REASONING, THIS GROUND OF THE ASSE SSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 19. GROUND NO.6 WITH REGARD TO CHARGING OF INTEREST U/S 234D IS CONSEQUENTIAL IN NATURE AND, THEREFORE, SAME DOES N OT NEED ANY SEPARATE ADJUDICATION. 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE I.E. ITANO.280/IND/2014 & ITANO.692/IND/2013 ARE PARTLY ALLOWED. THE CONTENTS OF OUR EARLIER ORDER DATED 19.7.2018 R ELATING TO OTHER APPEAL WOULD FORM PART AND PARCEL OF THIS ORDER AS WELL. T HE CONTENTS ARE NOT REPEATED HEREIN TO AVOID REPETITION AND FOR THE SAK E OF BREVITY. ITA 280 OF 2014 AND ITA 692 OF 2013 MP MADHYAM 26 SD/ - ( MANISH BORAD) ACCOUNTANT MEMBER SD/ - (KUL BHARAT) JUDICIAL MEMBER DATED : 03 . 1.2019 !VYAS! COPY TO: APPELLANT/RESPONDENT/PR.CIT(A)/PR.CIT/DR, INDORE