Proviso to s. 2(15) does not apply to incidental services rendered without profit motive

The assessee, a statutory Board, was set up for prevention of pollution of streams and wells in the State and other allied activities. It derived income from various testing charges etc. The CIT granted registration u/s 12AA of the Act on the basis that the activities of the assessee constituted a “charitable purpose” u/s 2 (15) and that its’ income was eligible for exemption u/s 11. S. 2 (15) was amended by the FA 2008 w.e.f AY 2009-2010 to provide that the term ‘advancement of any object of general public utility’ would not constitute a “charitable purpose” if “it involves the carrying out of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to such trade, commerce or business, for a cess or fees or any other consideration, irrespective of nature of use or application of the income from such an activity”. Pursuant thereto, the CIT withdrew the registration granted u/s 12AA on the ground that (i) the assessee was a ‘regulatory agency’ and not engaged in a ‘charitable activity’ and (ii) the activities were carried out in a commercial manner with a view to earn profits and so were excepted from the definition of the term “charitable purpose”. On appeal by the assessee, HELD reversing the CIT: