DIRECTOR OF INCOME TAX Vs. WOMENS INDIA TRUST

JUDGEMENT

(1.) This is an appeal by the Revenue challenging the order passed by the Tribunal dt. 26th Sept., 2012 allowing the appeal of the trust-assessee. Mr. Malhotra appearing on behalf of the Revenue invites our attention to s. 2(15) of the IT Act, 1961 which defines the term "charitable purpose" and the proviso thereto and thus urges that this appeal raises substantial question of law. In his submission, the proviso emphasises that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration irrespective of the nature of use or application, or retention, of the income from such activity. In other words, the proviso applies if the activity is in the nature of trade or business generating income. In such circumstances, the appeal be admitted.

(2.) On the other hand, Mr. Dastur, the learned senior counsel appearing on behalf of the assessee submits that the view taken by the Tribunal cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. Sub-s. (3) of s. 12AA of the IT Act, 1961 could not have been invoked and assuming without admitting that the matter could have been decided by the Tribunal by taking into account the proviso and it indeed was decided since the requirement of the proviso is not satisfied in this case. The requirement is that the purpose has to be charitable and cannot be termed as such, if the same involves advancement of any other object of general public utility. Mr. Dastur submits that it will not be treated as a charitable purpose if it involves advancement of any activity in the nature of trade, commerce or business, or any other activity of rendering any service in relation to the trade, commerce or business, for a cess or fee or any other consideration. Then and then alone, irrespective of the nature of use or application, or retention, of the income from such activities, that will come within the proviso and not otherwise. In this case, the Tribunal found that the activity undertaken by the assessee is not in the nature of trade, commerce or business. The Tribunal has found that the income and expenditure account discloses a sum of Rs. 47,15,249 as surplus from trading account. The Director of IT held that the assessee trust has shown sales to the tune of Rs. 69,72,052, besides the bank interest on fixed deposit' and savings bank account is shown as Rs. 56,73,160. However, the trust's activity will not fall in the proviso as the sales are only of the items made by the ladies who are attached to the assessee trust. Hence the sales are not in the nature of trading activity of the assessee trust. The reasons assigned by the Tribunal, therefore, indicate that in the facts and circumstances of the present case, the provision will not be attracted. Therefore, the appeal does not raise any substantial questions of law and must be dismissed.

(3.) We have with the assistance of Mr. Malhotra and Mr. Dastur perused the order passed by the Director of IT. In his order, he has held that the proviso is applicable. That the proviso is applicable for the reasons that he has assigned at the internal p. 4 of the order passed by him.