Manna Trust Vs CIT (Exemption) (ITAT Jodhpur)
The issue under consideration is whether the Mid Day Meal supply to the poor students of the schools as per the programme of State Government is considered as commercial activity?
In the present case, the assessee is a is a Public Charitable Trust registered u/s 12AA of the Act. The Trust is mainly engaged in providing nutritional status and reduce the drop out of student from school by implementing mid-day meal scheme. The assessee Trust is providing Mid Day meal in Govt. Schools in the State of Andhra Pradesh, Telangana, Odisha and Madhya Pradesh.
ITAT states that it is apparent that merely because consideration is collected or received by an Institution, it would not lose its character of having been established for a charitable purpose. It is also important to note that we must examine as to what is the dominant activity of the Institution in question. If the dominant activity of the Institution was not business of trade or commerce then they such incidental or ancillary activity would also not fall within the categories of the trade, commerce or business. It is clear from the facts of the present case that the driving force is not the desire to earn profit, but the object is to provide nutritional status and reduce the drop out of student from school by implementing mid-day meal scheme. In view of the above ITAT safely conclude that the nature of activities carried out by the assessee trust is charitable in nature and hence proviso to section 2(15) would not be applicable.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal filed by assessee against the order of CIT(E) dated 01/01/2020 for A.Y. 2016-17 in the matter of order passed u/s 263 of IT Act.
2. Only grievance of assessee revolves around treating the Mid Day Meal supply to the poor students of the schools as per the programme of State Government as commercial activity.
3. Rival contentions have been heard and record perused.
4. Facts in brief are that are that Manna Trust is a Public Charitable Trust registered u/s 12AA of the Act by the Id. CIT, Udaipur vide order No. 1261 dated 08/07/2013. The trust is mainly engaged in providing nutritional status and reduce the drop out of student from school by implementing mid-day meal scheme. The assessee Trust is providing Mid Day Meal in Govt. Schools in the State of Andhra Prades, Telangana, Odisha and Madhya Pradesh. For the year under consideration assessee filed its return of income on 17/10/2016 which was selected for complete scrutiny through CASS and assessment u/s 143(3) of the I.T. Act was completed on 01.09.2018 by accepting the income returned by the assessee after allowing the claim of exemption u/s 11 of the 1.T. Act. Thereafter, show-cause notice dated 05/11/2019 was issued u/s 263 on the issues identified therein. After giving opportunities the CIT(E) held that the applicability of provisions of section 2(15) along with its proviso have not been examined during assessment, rendering the order erroneous insofar as it is prejudicial to the interest of the revenue. The order is passed by allowing relief due to non-application of the said proviso, without inquiring into the veracity of claim of exemption and is, therefore, erroneous and prejudicial to the interest of revenue in accordance with Explanation 2(b) to Section 263. The assessment order dated 01.09.2018 is, therefore, set-aside with a direction to assessee the income afresh.
5. Assessee is in further appeal before Income Tax Appellate Tribunal.
6. It was argued by Id. A.R. that Id. CIT Exemption not accepting the Mid Day Mill Programme as Charitable activity but CBDT granting 12A and 80G and also allowing certificate 35AC exemption to the following Trust for exclusively Mid Day Meal programme.
1. Akshya Patra Foundation (Project cost Rs. 400.00 crore to 00 crore).
2. Isckon Food Relief Foundation (Project cost Rs. 10.55 crore)
3. Maria Seva Sangh Mumbai.
7. As per A.R. the assessee is doing same project of Mid Day Meal programme then why Id. CIT Exemption is not accepting our project as charitable activity.
8. The ld. A.R. also invited our attention to section 35AC, real with.explanation (b) thereto, of the Income Tax Act, 1961-eligible projects or scheme, expenditure on-notified eligible projects or schemes-Akshayapatra Foundation Bangalore. Notification No. SO 1488(E) [No. 163/2015 (F.No.V.27015/1/2015-50(NAT.COM))] Dated 04/06/2015, according to which the Central Government had notified at serial number 3, “Mid Day Meal program run by the Akshayapatra Foundation, Hare Krishna Hills, Wet of Chort Road, Rajajinagar Bangalore-560010”, as an eligible project or scheme for a period of three years ending with assessment year 2005-2006, which was extended further vide notification number S.O. 1008(E) dated the 5th July, 2006 for a period of three years beginning with financial year 2006-2007, which was extended further vide notification number S.O. 856(E) dated 25th March, 2009 for a period of three years beginning with financial year 2009-10 and which was extended further vide notification number S.O. 481(E) dated 16th March, 2012 for a period of three years beginning with financial year 2012-13. He further submitted that as per this notification the Central Government notifies the scheme or project “Mid Day Meal Programme run by the Akshayapatra Foundation”, which is being carried out by “Akshayapatra Foundation, Hare Krishna Hills, West of Chrot Road, Rajajinagar, Bangalore -560010”, for a further period of three years commencing with the financial year 2015-16 i.e. 2015-16, 2016-17 & 2017-18.
9. As per Id. A.R. that The id. CIT(E) has not understood the nature of services actually carried out by the assessed trust, Following literature would clarify the actual nature of work:
Mid-Day Meal
On November 28th, 2001 the Supreme Court of India passed an order stating: “We direct the State Governments/Union Territories to implement the Mid-Day Meal Scherne by providing every child in every Government and Government assisted Primary School with a prepared mid-day meal.”
Mid-Day Meal Scheme aimed to:
