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| The Tax Publishers2019 TaxPub(DT) 7619 (Chen-Trib) INCOME TAX ACT, 1961
Section 2(15)
Where proviso to section 2(15) was applicable to assessee as it charged fees from the business organizations for the services rendered by it then the assessee was not entitled to exemption under section 11. Even the State Corporation Societies cannot be equated with State Government though it is instrumentality of the State.
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Charitable Trust - Exemption under section 11 - Assessee covered by proviso to section 2(15) -
Assessee performed the function of processing the application submitted by business organizations and verifying whether the application was in conformity with the rules relating to environment, local authority, fire protection, water, forest, police etc., and then submitted same to the Government. Assessee collected consideration for rendering this service as processing fee prescribed by Government and claimed exemption under section 11. AO brought to tax excess of income over expenditure and the corpus donation while denying the exemption under section 11 by holding that activities of assessee trust was not charitable in nature as it is rendering services to the business organizations. The whole case of the assessee was premised on the argument that it was instrumentality of the State coming within the meaning of Article 12 of the constitution and therefore it was not an assessable entity. Held:It was not the case of assessee that it falls within the preview of first three limbs, i.e., relief for poor, education and health but under public general utility. Therefore provisions of section 2(15) were squarely applicable. According to AO, proviso to section 2(15) were applicable as it charges fees from the business organizations for the services rendered by it. The whole case of the assessee was premised on the argument that it was instrumentality of the State coming within the meaning of Article 12 of the constitution and therefore it was not an assessable entity.
Followed: Arun Kumar & Ors. v. UOI & Ors. (2006) 286 ITR 89 (SC) : 2006 TaxPub(DT) 1866 (SC); Pradeep Kumar Biswas & Ors. v. Indian Institute of Chemical Biology & Ors. (2002) 5 SCR 111; Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1925) 3 SCR 619; Rajasthan State Electricity Board v. Mohan Lal 1967 (3) SCR 377 and National Dairy Research Institute v. Asstt. CIT (2018) 171 ITD 271 (Bang) : 2018 TaxPub(DT) 2824 (Bang-Trib).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2012-13
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