Bhartiya Shiksha Samiti Paschim Uttar Pradesh, Ghaziabad V. Addl. CIT, Ghaziabad

ITA 816/DEL/2015

• Counselvise Citation: 81620114 RSA 2015
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 14-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RAKHI VIMAL
• Assessee Lawyers: J P JAIN
• Keywords: Business income; Charitable institution; Retrospective amendment
• Section: 143(3); 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 816/DEL/2015 AY: 2010-11 BHARTIYA SHIKSHA SAMITI VS. ADDL. COMM ISSIONER OF PASCHIM UTTAR PRADESH INCOME TAX, RANGE-1, SARASWATI KUNJ, NEHRU NAGAR-III, GHAZIABAD GHAZIABAD UP 201 001 PAN: AAATB8095N (APPELLANT) (RESPONDENT) APPELLANT BY : SH.J.P. JAIN, CA RESPONDENT BY : MRS. RAKHI VIMAL, JCIT ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER DT. 25.11.2014 OF LD.CIT(A), GHAZIABAD FOR ASSESSMENT YEAR 2010-1 1. 2. THE FACTS IN BRIEF ARE THAT THE SOCIETY IS REGI STERED WITH THE REGISTRAR OF SOCITIES, MEERUT VIDE REGISTRATION NO. 2206 DATED 5 .1.1013 AND IT WAS GRANTED REGISTRATION U/S. 12A OF THE INCOME TAX ACT, 1961 V IDE LETTER NO. 36/GZB/97- 98 DATED 20.4.1998 DATED 20.4.1998 BY THE COMMISSIO NER OF INCOME TAX, GHAZIABAD. THE EXEMPTION CERTIFICATE U/.S. 80G WAS ALSO GRANTED U/S. 80G ON 14.9.2011. THE ASSESSEE FILED ITS RETURN OF INCOM E ON 17.8.2010 FOR THE ASSESSMENT YEAR 2010-11 CLAIMING EXEMPTION U/S. 11 OF THE INCOME TAX ACT, 1961. THE AO IN HIS ORDER PASSED U/S. 143(3) ON 6.2.2013 HELD THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT COVERED UNDER T HE PROVISIONS OF THE ACT AFTER THE AMENDMENT TO SECTION 2(15) AND HENCE, EXEMPTION U/S. 11 CANNOT BE ITA 816/DEL/2015 A.Y. 2010-11 2 GRANTED. HE FURTHER HELD THAT MERE GRANT OF REGIS TRATION U/S. 12A DOES NOT ENTITLE THE ASSESSEE FOR EXEMPTION U/S. 11 AND THAT THE REAL ACTIVITY OF THE SOCIETY HAS TO BE LOOKED INTO. 3. THE ALTERNATIVE CLAIM OF THE SOCIETY THAT THE S OCIETY IS GOVERNED BY THE PRINCIPLE OF MUTUALITY, AND ALSO BY SECTION 10(23C ) WAS REJECTED. THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 2,37,819/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN THE APPEAL. THE LD. FIRST APPELLATE AUTHORITY HAS HELD THAT THE ASSESSEE WAS NOT ENGAGED IN EDUCATION, IN VIEW OF THE INTERPRETATION TO THE TERM EDUCATIO N IN THE JUDGMENT OF SUPREME COURT IN CASE OF TRUSTEE LOKA SHIKSHANA TRUST VS. C IT 101 ITR 234 AND OTHER DECISIONS. . THE LD. CIT(A) HELD THAT THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF PROVIDING EDUCATION AS DEFINED U/S. 2(15) OF THE I.T. ACT AND THEREFORE, THE AIMS AND OBJECTIVES OF THE TRUST FALL UNDER THE CAT EGORY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THAT T HE PROVISO TO 2(15) IS ATTRACTED. IN VIEW OF THE FACT THAT THE RECEIPT OF THE ASSESSE E ARE ABOVE RS. 10 LACS FROM THE ACTIVITIES WHICH ARE IN NATURE OF BUSINESS, THE PROFITS WERE HELD TO BE TAXABLE. 5. ON THE CLAIM OF THE ASSESSEE FOR EXEMPTION ON T HE PRINCIPLE OF MUTUALITY OR U/S. 10(23C)(VIA), LD. CIT(A) HELD THAT THESE CL AIMS CANNOT BE ENTERTAINED, AS THEY WERE NOT MADE IN THE RETURN OF INCOME. HE F URTHER HELD THAT THE RECEIPTS FROM AFFILIATED SCHOOLS ARE IN THE NATURE OF FEES AND THAT THE SCHOOLS ARE NOT SHOWN TO BE THE MEMBERS OF THE SOCIETY AND THUS THE PRINCIPLE OF MUTUALITY DO NOT APPLY. HE UPHELD THE ORDER OF THE AO. 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE ME ON THE FOLLOWING GROUNDS:- 1. THAT THE ASSESSMENT ORDER PASSED BY LD. ASSESSI NG OFFICER IS BAD IN LAW AND IS NOT BASED ON FACTS. 2. THAT TREATMENT OF THE ACTIVITIES OF THE SOCIETY AS BUSINESS ACTIVITY INSTEAD OF ACTIVITIES COVERED U/S 2(15) IS BAD IN L AW AND IS NOT BASED ON FACTS. ITA 816/DEL/2015 A.Y. 2010-11 3 3. THAT LD. ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN NOT TREATING THE ACTIVITIES OF THE SOCIETY AS EDUCATIONAL ACTIVI TIES AND ACTIVITIES FOR EDUCATIONAL PURPOSES COVERED U/S 10(23C)(IIIAD). 4. THAT LD. ASSESSING OFFICER HAS NOT CONSIDERED TH E ALTERNATIVE SUBMISSION OF THE SOCIETY THAT ITS ACTIVITIES ARE C OVERED UNDER THE PRINCIPLE OF MUTUALITY AND ITS INCOME IS NOT TAXABL E. 5. THAT LD. AO ERRED IN LAW IN HOLDING THAT ACTIVIT IES OF THE SAMITI ARE NOT FOR CHARITABLE PURPOSE EVEN WHEN THE REGISTRATION U /S 12A IS STILL VALID. 6. THAT THE CIT (APPEAL) HAS NOT CONSIDERED THE SUB MISSIONS MADE BY THE SOCIETY. 7. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND O N FACTS WHILE. DISMISSING THE APPEAL. 7. I HAVE HEARD SH. J.P. JAIN, LD. COUNSEL FOR THE ASSESSEE AND MRS. RAKHI VIMAL, LD. DR ON BEHALF OF THE REVENUE. ON A CAREFU L CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE DOCUMENTS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED, I HOLD AS FOLLOWS. 8. THE ASSESSEE-SOCIETY AFFILIATES SCHOOLS, THROUG H WHICH IT PURSUES ITS OBJECTS. 65 SCHOOLS ARE AFFILIATED WITH THE SOCIET Y. A LIST OF SUCH SCHOOLS WITH DETAILS ARE FILED BY THE ASSESSEE BEFORE US. 9. THE OBJECTS OF THE ASSESSEE-SOCIETY ARE AS FOLLO WS:- A) TO DEVELOP THE FORM AND SYSTEM OF EDUCATION BY COORDINATING THE ACHIEVEMENTS IN THE FIELD OF EDUCATION WITH THE IND IAN CULTURE, IN SUCH A WAY THAT IT IS IN ACCORDANCE WITH THE ECONOMIC, SO CIAL AND CULTURAL NEEDS OF THE NATION. B) TO ESTABLISH SCHOOLS AT DIFFERENT PLACES WITH TH E OBJECT OF EDUCATION WITH INDIAN IDEALS TOWARDS LIFE AND TO BRING OTHER SCHOOLS UNDER ITS GUIDANCE AND TO GUIDE, TAKE CARE AND CONTROL IN ORD ER TO BRING HOMOGENEITY IN THEIR ACTIVITIES AND IMPROVEMENTS WI TH COORDINATION. ITA 816/DEL/2015 A.Y. 2010-11 4 C) TO INCULCATE PATRIOTISM, DISCIPLINE, SELF-RELIAN CE AND DIGNITY TOWARDS LABOUR AMONG THE STUDENTS AND TO DO ALL NEC ESSARY ACTIVITIES FOR THEIR MORAL DEVELOPMENT. D) TO DO ALL NECESSARY ACTIVITIES TO ACHIEVE THE OB JECTIVES OF THE SOCIETY AND COMPILE, DISTRIBUTE AND PUBLISH NECESSA RY LITERATURE AND MATERIAL AND TO FORM SUB-COMMITTEES. E) TO TAKE DONATIONS AND COLLECT FUNDS AND PROVIDE ASSISTANCE FOR THE FULFILLMENT OF THE OBJECTIVES OF THE SOCIETY. F) ACTIVITIES OF THE SOCIETY WILL BE PUBLIC AND FOR GENERAL WELFARE AND ALL INDIANS, IRRESPECTIVE OF RELIGION, CAST, SECTIO N, LANGUAGE OR STATE, WILL BE THE BENEFICIARIES OF THE SOCIETY. 10. THE ACTIVITIES OF THE SOCIETY ARE LISTED OUT AS FOLLOWS:- 1) PRINCIPALS CONFERENCE:- . PRINCIPALS CONFERENCE OF THE AFFILIATED INSTITUTION S WAS HELD FROM 24TH JULY 2009 TO 16TH JULY 2009 AT BALERAM BRIJBHUSHAN SARAS WATI SHISHU MANDIR INTER COLLEGE, D BLOCK, SHASTRI NAGAR, MEERUT. LIST OF PARTICIPANTS ENCLOSED. (PAGE NO. 6 TO 7OF PAPER BOOK) 2) SANSKRITI GYAN PARIKSHA:- SANSKRITI GYAN PARIKSHA CONDUCTED BY VIDYA BHARTI S ANSKRITI SHIKSHA SANSTHA' KURUKSHETRA WAS CONDUCTED ON 24TH DECEMBER IN WHICH 27040 STUDENTS TOOK PART FROM CLASS 6 TH TO 12TYH FROM 59 AFFILIATED SCHOOLS. LIST OF SCHOOL WISE/CLASS WISE STUDENTS PARTICIPANTS ENC LOSED. (PAGE NO. 8 TO 13 OF PAPER BOOK) 3) APPOINTMENT AND TRANSFER OF PRINCIPALS:- DURING THE YEAR EIGHT PRINCIPALS WERE APPOINTED AND SIX WERE TRANSFERRED TO MEET THE REQUIREMENTS OF THE AFFILIATED SCHOOLS . LIST ENCLOSED. (PAGE NO. 14 TO 15 OF PAPER BOOK) 4) FIXATION OF PAY SCALES OFTEACHERS AND PRINCIPALS :- ITA 816/DEL/2015 A.Y. 2010-11 5 PAY SCALES OF TEACHERS AND PRINCIPALS AFFILIATED WI TH THE SOCIETY ARE FIXED BY THE SOCIETY. SAMPLE SALARY APPROVAL SHEET AND CI RCULAR DT. 25-04-2011 FOR ONE AFFILIATED SCHOOL IS ENCLOSED. (PAGE NO. 16 TO 19 OF PAPER BOOK) 5) PUBLICATION OF MAGAZINE:- SOCIETY PUBLISHES ONE MAGAZINE, 'DARPAN', EVERY YEA R IN WHICH EDUCATLVE-MOTLVATLNG, INNOVATIVE AND IMAGINATIVE EN TRIES ARE CONTRIBUTED BY STUDENTS AND TEACHERS. MAGAZINE ALSO CONTAIN STA TISTICS PERTAINING TO AFFILIATED INSTITUTIONS AND ACTIVITIES OF THE SOCIE TVAND AFFILIATED SCHOOLS. (PAGE NO. 20 OF PAPER BOOK) 6) SETTING AND PREPARATION OF EXAMINATION PAPERS:- THE SOCIETY PROVIDES EXAMINATION PAPERS TO THE AFFI LIATED INSTITUTIONS TWICE IN A YEAR FOR WHICH A WORKSHOP OF SELECTED PR INCIPALS AND TEACHERS IS CONDUCTED. DURING THE YEAR THE WORKSHOP WAS HELD ON 21ST SEPTEMBER, 2009. SAMPLE COPY OF EXAMINATION PAPER IS ENCLOSED. (PAGE NO. 21 TO 22 OF PAPER BOOK) 7) SPORTS ACTIVITY:- SOCIETY ORGANIZES A SPORTS MEET EVERY YEAR AT STATE LEVEL. DURING THE YEAR IT WAS HELD FROM IS OCTOBER, 2009 TO 17TH OCTOBER, 2009 AT SARASWATI VIDYA MANDIR INTER COLLEGE SHAMLI, MUZAFFARNAGAR (U P), IN WHICH 536 STUDENTS PARTICIPATED (PAGE NO. 23 TO 24 OF PAPER B OOK), A) SAMPLE LIST OF WINNERS AS DECLARED BY UMPIRES IS ENCLOSED (PAGE NO-25 OF PAPER BOOK) B) THE WINNERS OFTHE STATE SPORTS MEET PARTICIPATE IN REGIONAL SPORTS MEET ORGANIZED BY VIDHYA BHARTI AKHIL BHARTIYA SHIKSHA S ANSTHAN, LUCKNOW. 89 STUDENTS PARTICIPATED IN REGIONAL SPORTS MEET OR GANISED AT KRISHNA BAL VIDYA MANDIR INTER COLLEGE MANGUPURA DISTT. MURADAB AD (PAGE NO. 26). C) ONE STUDENT SUDHIR KUMAR OF CLASS XI FROM SURAJB HAN SARASWATI VIDYA MANDIR INTER COLLEGE, SHIKARPUR, DISTT. BULANDSHAHR PARTICIPATED IN ITA 816/DEL/2015 A.Y. 2010-11 6 NATIONAL SPORTS MEET ORGANIZED BY SCHOOL GAMES FEDE RATION OF INDIA. D) A FEW PHOTOGRAPHS OF EVENTS ARE ENCLOSED. (PAGE NO. 27 OF PAPER BOOK) 8) PERSONALITY DEVELOPMENT CAMP:- A PERSONALITY DEVELOPMENT CAMP OF STUDENTS FROM CLA SS 6 TH TO 8 TH FROM THE AFFILIATED INSTITUTIONS WAS ORGANIZED AT LALA JADIS H PRASAD SARASWATI VIDYA MANDIR INTER COLLEGE 'JANSATH ROAD, MUZZAFFAR NAGAR (UP) FROM IH JUNE, 2009 TO 21ST JUNE 2009. THE CAMP WAS CONDUCTE D IN ASSOCIATION WITH SURYA FOUNDATION, NEW DELHI. 9) SCIENCE FAIR AND QUIZ PROGRAMME:- A) SOCIETY ANNUALLY ORGANIZES A SCIENCE FAIR AND QU IZ PROGRAMME FOR THE STUDENTS OF AFFILIATED INSTITUTIONS. B) DURING THE YEAR IT WAS ORGANIZED AT DAYAWATI DEE WAN SINGH SHUKL SARASWATI VIDYA MANDIR, INTER COLLEGE, GULAWATI ROA D, SIKANDRABAD, DISTRICT BULANSHAHAR (UP), FROM 31ST O CTOBER, 2009 TO 1ST OF NOVEMBER, 2009 IN WHICH 483 STUDENTS PART ICIPATED AND 31ST OCTOBER, 2009 TO 1ST OF NOVEMBER, 2009 IN WHIC H 483 STUDENTS PARTICIPATED AND 66 STUDENTS WERE SELECTED FOR REGIONAL COMPETITION. C) THE SELECTED STUDENTS WERE TAKEN TO REGIONAL/NAT IONAL SCIENCE FAIR AND QUIZ PROGRAMME ORGANIZED BY VIDHYA BHARTI AKHIL BHARTIYA SHIKSHA SANSTHAN. LIST OF CATEGORY WISE PARTICIPANT S ENCLOSED (PAGE NO. 28 TO 34 OF PAPER BOOK) 10) SCHOLARSHIP TO MERITORIOUS STUDENTS:- A) SOCIETY CONDUCTS A SCHOLARSHIP EXAMINATION TO ID ENTIFY THE MERITORIOUS STUDENTS FROM THE AFFILIATED INSTITUTIO NS. 10 STUDENTS FROM CLASS 8 TH ARE SELECTED EVERY YEAR AND GIVEN SCHOLARSHIP IN TWO INSTALLMENTS. LIST OF MERITORIOUS STUDENTS ALONGWIT H THE SCHOLARSHIP ITA 816/DEL/2015 A.Y. 2010-11 7 ELIGIBILITY TEST PAPERS TO WHOM SCHOLARSHIP WAS GIV EN IS ENCLOSED (PAGE NO. 35 TO 43 OF PAPER BOOK) 11) FINANCIAL ASSISTANCE TO EDUCATIONAL INSTITUTION S:- DURING THE YEAR SOCIETY PROVIDED FINANCIAL ASSISTAN CE TO TWO INSTITUTIONS. LIST IS ENCLOSED (PAGE NO. 44 OF PAPE R BOOK) 12) GROUP INSURANCE:- THE SOCIETY ARRANGES GROUP INSURANCE FROM L1C FOR T HE WILLING TEACHERS AND PRINCIPALS. PART OF THE PREMIUM IS PAID BY THE SOCIETY. LIST OF BENEFICIARIES OF GROUP INSURANCE IS ENCLOSED. (PAGE NO. 45 TO 46 OF PAPER BOOK) 13) JAN SHIKSHA NIDHI:- SOCIETY COLLECTS RS. 2 FROM EACH STUDENT AFFILIATED TO THE SOCIETY FOR THE BENEFIT OF JAN SHIKSHA SAMITI (A SOCIETY RUNNING ED UCATIONAL INSTITUTIONS IN RURAL AREAS), DURING THE YEAR THE SOCIETY HAS CO LLECTED AND PAID RS. 33,824/-. CERTIFICATE ENCLOSED (PAGE NO. 47 OF PAPE R BOOK) 14) INSPECTION OF SCHOOLS:- EVERY YEAR SOCIETY COORDINATES AND MONITORS THE INS PECTION OF SCHOOLS WITH RESPECT TO THE STANDARD OF EDUCATION, FINANCIA L MANAGEMENT, GENERAL ADMINISTRATION AND INFRASTRUCTURE. ON THE BASIS OF INSPECTION REPORT THE SUGGESTIONS FOR IMPROVEMENT ARE GIVEN BY THE INSPEC TION TEAM TO THE PRINCIPAL OF THE INSTITUTION AND THE MANAGEMENT OF THE INSTITUTION. A SAMPLE INSPECTION REPORT IS ENCLOSED. (PAGE NO. 48 TO 74 OF PAPER BOOK) 15) OTHER ACTIVITIES:- IN ADDITION TO THE ABOVE ACTIVITIES OF THE SOCIETY, THE OFFICE BEARERS OF THE SOCIETY AND SENIOR OFFICIALS FROM VIDHYA BHARTI AKH IL BHARTIYA SHIKSHA SANSTHAN, VISITS THE SCHOOL FREQUENTLY FOR THE PURP OSE OF BETTER COORDINATION AND OVERSEEING THE ACTIVITIES OF THE A FFILIATED SCHOOLS IN ORDER TO ACHIEVE THE OBJECTIVES OF THE SOCIETY. THE OFFICE BEARERS FREQUENTLY INTERACT WITH DIGNITARIES IN VARIOUS FIE LDS AND ARRANGE THEIR ITA 816/DEL/2015 A.Y. 2010-11 8 INTERACTION WITH THE STUDENTS AND TEACHERS AFFILIAT ED TO THE SOCIETY FROM TIME TO TIME. 11. THE ISSUE THAT IS TO BE ADJUDICATED IS WHETHER THESE ACTIVITIES OF THE SOCIETY WOULD FALL WITHIN THE TERM OF EDUCATION F OR THE PURPOSE OF SECTION 2(15) OF THE ACT. 12. THE TERM EDUCATION AS INTERPRETED BY THE VARI OUS COURTS INCLUDING THE HONBLE SUPREME COURT OF INDIA IS DISCUSSED BELOW. THE EXPRESSION EDUCATION HAS NOT BEEN DEFINED U NDER THE PROVISIONS OF INCOME TAX ACT. THE HONBLE SUPREME COURT IN THE CA SE OF LOK SHIKSHANA TRUST (SUPRA), HAS BEEN PLEASED TO EXPLAIN THE MEAN ING OF THE WORD EDUCATION IN THE CONTEXT OF SECTION 2(15) OF THE ACT. AS PER THIS DECISION EDUCATION IS THE PROCESS OF TRAINING AND DEVELOPING THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS BY SCHOOLING BY WAY OF SYSTEMATIC INSTRUCT ION, SCHOOLING OR TRAINING. THE HONBLE DELHI HIGH COURT IN THE CASE OF DELHI M USIC SOCIETY VS. DGIT (SUPRA) HAS BEEN PLEASED TO HOLD THAT SINCE THE ASS ESSEE SOCIETY WAS TEACHING AND PROMOTING ALL FORMS OF MUSIC AND DANCE , WESTERN, I NDIAN OR ANY OTHER AND WAS RUN LIKE ANY SCHOOL OR EDUCATIONAL INSTITUTION IN A SYSTEMIC MANNER WITH REGULAR CLASSES, THE SAME THEREFORE MEET THE REQUIREMENT OF AN EDUCATIONAL INSTITUTION WITHIN THE MEANING OF SECTION 10(23C)(VI) OF THE AC T. IN THE CASE OF ITO VS. SRM FOUNDATION OF INDIA (SUPRA) THE DELHI BENCH OF THE TRIBUNAL, WHERE THE ASSESSEE WAS ENGAGED IN SPREADING THE SYSTEM OF TRA NSCENDENTAL MEDITATION (TM) HAS HELD THAT IRRESPECTIVE OF THE FACT THAT TH E ASSESSEE HAS ITS OWN PRESCRIBED SYLLABUS, TRAINED TEACHERS, BRANCHES ALL OVER INDIA TO SPREAD SYSTEM OF TRANSCENDENTAL DEEP MEDITATION AMONG PEOPLE IN ALL WALKS OF LIFE, THE SAME CONSTITUTED IMPARTING OF EDUCATION AND THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S 10(22) OF THE ACT. WE THUS COME TO THE CONCLUSI ON THAT ANY FORM OF EDUCATIONAL ACTIVITY INVOLVING IMPARTING OF SYSTEMA TIC TRAINING IN ORDER TO ITA 816/DEL/2015 A.Y. 2010-11 9 DEVELOP THE KNOWLEDGE, SKILL, MIND AND CHARACTER OF STUDENTS, IS TO BE REGARDED AS EDUCATION COVERED U/S 2(15) OF THE ACT. 13. IN MY VIEW THE ACTIVITIES CARRIED OUT BY THE AS SESSEE FALL WITHIN THE TERM EDUCATION. THE REVENUE WAS WRONG COMING TO THE C ONCLUSION THAT, ONLY WHEN ASSESSEE RUNS SCHOOLS DIRECTLY, IT CAN BE HELD TO I MPART EDUCATION. IN MY VIEW, THE EDUCATION CAN BE IMPARTED, EVEN THROUGH AFFILI ATED SCHOOLS ALSO. A PERUSAL OF THE ACTIVITIES LISTED ABOVE DEMONSTRATES THE SA ME. THE ACITIVTY OF THE ASSESSEE-SOCIETY IN MY VIEW IS EDUCATIONAL ACITVITY . 14. EVEN OTHERWISE, WE FIND THAT LD. CIT(A), GHA ZIABAD HAS RECORDED THAT THE AO HAS CONCLUDED THAT THE AIMS AND OBJECTS OF T HE SOCIETY-TRUST FALLS UNDER THE C ATEGORY ADVANCEMENT OF ANY OTHER OBJECTS OF GENER AL PUBLIC UTILITY. THE EXEMPTION WAS DENIED ONLY ON THE GROUND THAT TH E PROVISO TO SECTION 2(15) OF THE ACT WAS ATTRACTED. THE LAW ON THIS ASPECT H AS BEEN LAID DOWN BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF M/S GSI INDIA VS. DIT, DELHI REPORTED IN 360 ITR 138 WHEREIN IT HAS BEEN H ELD THAT : SECTION 2(15) OF THE INCOME-TAX ACT, 1961, WAS AME NDED BY THE FINANCE ACT, 2008, WITH EFFECT FROM APRIL 1, 2009, AND A PROVISO WAS ADDED TO IT. A SECOND PROVISO WAS INSERTED TO SECTION 2(15) BY THE FINANC E ACT, 2010, WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2009. THERE ARE FOUR MAIN FACTORS THAT NEED TO BE TAKEN INTO CONSIDERATION BEFORE CLASSIFYING T HE ACTIVITY OF THE ASSESSEEE AS 'CHARITABLE' UNDER THE RESIDUARY CATEGORY, I.E.,' A DVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' UNDER SECTION 2(1 5) OF THE ACT. THE FOUR FACTORS ARE (I) THE ACTIVITY SHOULD BE FOR ADVANCE MENT OF GENERAL PUBLIC UTILITY; (II) THE ACTIVITY SHOULD NOT INVOLVE ANY ACTIVITY I N THE NATURE OF TRADE, COMMERCE AND BUSINESS; (III) THE ACTIVITY SHOULD NO T INVOLVE RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE, OR BUSI NESS; AND (IV) THE ACTIVITIES IN CLAUSES (II) AND (III) SHOULD NOT BE FOR FEE, CE SS OR OTHER CONSIDERATION AND IF FOR FEE, CESS OR CONSIDERATION THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ITA 816/DEL/2015 A.Y. 2010-11 10 ACTIVITIES UNDER (II) AND (III) SHOULD NOT EXCEED T HE AMOUNT SPECIFIED IN THE SECOND PROVISO. THE EARLIER TEST OF BUSINESS FEEDIN G OR APPLICATION OF INCOME EARNED TOWARDS CHARITY BECAUSE OF THE STATUTORY AME NDMENT IS NO LONGER RELEVANT AND APPOSITE. IT IS EVIDENT FROM CIRCULAR NO. 11 OF2008 THAT A NEW PROVISO TO SECTION 2(15) OF THE ACT IS APPLICABLE T O ASSESSEES WHO ARE ENGAGED IN COMMERCIAL ACTIVITIES, I.E., CARRYING ON BUSINES S, TRADE OR COMMERCE, IN THE GARB OF 'PUBLIC UTILITY' TO AVOID TAX LIABILITY. TH E LEGAL TERMS 'TRADE, COMMERCE, OR BUSINESS' IN SECTION 2(15) MEAN ACTIVITY UNDERTA KEN WITH A VIEW TO MAKE OR EARN PROFIT. PROFIT MOTIVE IS DETERMINATIVE AND A C RITICAL FACTOR TO DISCERN WHETHER AN ACTIVITY IS BUSINESS, TRADE OR COMMERCE. BUSINESS ACTIVITY HAS AN IMPORTANT PERVADING ELEMENT OF SELF-INTEREST, THOUG H FAIR DEALING SHOULD AND CAN BE PRESENT, WHILST CHARITY OR CHARITABLE ACTIVI TY IS THE ANTI-THESIS OF ACTIVITY UNDERTAKEN WITH PROFIT MOTIVE OR ACTIVITY UNDERTAKE N ON SOUND OR RECOGNISED BUSINESS PRINCIPLES . THE QUANTUM OF FEE CHARGED, THE ECONOMIC STATUS O F THE BENEFICIARIES WHO PAY COMMERCIAL VALUE OF BENEFITS, IN COMPARISON TO THE FEE, THE PURPOSE AND OBJECT BEHIND THE FEE, ETC., ARE SE VERAL FACTORS WHICH WILL DECIDE THE SEMINAL QUESTION, IS IT BUSINESS? CHARI TABLE ACTIVITIES REQUIRE OPERATIONAL/RUNNING EXPENSES AS WELL AS CAPITAL EXP ENSES TO BE ABLE TO SUSTAIN AND CONTINUE IN THE LONG RUN. THERE IS NO STATUTORY MANDATE THAT A CHARITABLE INSTITUTION FALLING UNDER THE LAST CLAUSE SHOULD BE WHOLLY, SUBSTANTIALLY OR IN PART MUST BE FUNDED BY VOLUNTARY CONTRIBUTIONS. A P RACTICAL AND PRAGMATIC VIEW IS REQUIRED TO EXAMINE THE DATA, WHICH SHOULD BE ANALYSED OBJECTIVELY AND A NARROW AND COLOURED VIEW WILL BE COUNTER-PRODUCTI VE AND CONTRARY TO THE LANGUAGE OF SECTION 2(15). THE SECOND PROVISO APPLIES WHEN BUSINESS WAS/IS CONDUCTED AND THE QUANTUM OF RECEIPTS EXCEEDS THE S PECIFIED SUM. THE PROVISO DOES NOT SEEK TO DISQUALIFY A CHARITABLE ORGANIZATI ON COVERED BY THE LAST LIMB, WHEN A TOKEN FEE IS COLLECTED FROM THE BENEFICIARIE S IN THE COURSE OF ACTIVITY WHICH IS NOT A BUSINESS BUT CLEARLY CHARITY FOR WHI CH IT IS ESTABLISHED AND IT ITA 816/DEL/2015 A.Y. 2010-11 11 UNDERTAKES. 15. THE PROPOSITIONS LAID DOWN, THIS JUDGMENTS, WH EN APPLIED TO THE FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE EXEMP TION CANNOT BE DENIED TO THE ASSESSEE U/S. 11 OF THE I.T. ACT, 1961. THE ASSESSE E IS NOT ENGAGED IN ANY COMMERCIAL ACITVITY. IT DOES NOT CARRY ON ANY BUSIN ESS, TRADE OR COMMERCE. THE FEE CHARGED CANNOT BE CALLED A BUSINESS RECEIPT OR FEE TAKEN FOR BUSINESS ACTIVITY OR FOR SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. THERE IS NO PROFIT MOTIVE IN THE CASE OF THE ASSESSEEN, HENCE, THE PRO VISO IN QUESTION IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE. HENCE, I DI RECT THE ASSESSING OFFICER TO GRANT EXEMPTION U/S. 11 OF THE I.T. ACT. 16. AS RELIEF HAS BEEN GRANTED TO THE ASSESSEE ON T HIS GROUND, I DO NOT DEAL WITH THE ARGUMENTS OF THE ASSESSEE ON THE ISSUE OF PRINCIPAL OF MUTUALITY OR ON THE CLAIM OF EXEMPTION U/S. 10(23C)(VIA) OF THE ACT . 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2015. SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED: THE 16 TH OCTOBER, 2015 *SR BHATNAGAR* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT(A); 5. DR; 6. GUARD FILE BY ORDER ASSTT. REGIST RAR