Principal CIT (Exemptions) Vs. Institute for Development and Research in Banking Technology (Andhra Pradesh High Court)
Held by ITAT
The circumstances under which the services rendered by the appellant society to the Banks make clear that there is no profit motive in such activities because these activities were entrusted to the appellant society by the Reserve Bank of India as a part of its supervisory role over the Banks in India. In our considered opinion, viewed from any angle, the objects, either main or ancillary, are not in the nature of business or trade or commerce. The banks merely used the expertise of appellant society in the banking operations. The question of the profit motive in undertaking such activities can not be imagined keeping in view the circumstances under which the appellant society is operated. The objects of the appellant society are totally charitable in nature and do not carry on any activity in the nature of trade, commerce or business. Therefore, the proviso to Section 2(15) of the Act cannot be applied to the Appellant society as clarified by the Circular No. 11 of 2008 issued by the CBDT. It is worthwhile to mention here that the Hon’ble Finance Minister had also clarified, during the course of the debate in the Parliament, that the proviso to Section 2(15) of the Act is not intended to apply to genuine charitable organizations. It was further clarified by the Hon’ble Finance Minister that the Chambers of Commerce and similar organizations rendering services to their members would not be affected by introduction of this proviso. It is fairly settled law now that reference can be made to the speech made by the Hon’ble Finance Minister at the time of piloting the bill in the Parliament in order to ascertain the true meaning of the words and the language employed in the Statute.
Held by High Court
In the light of the categorical finding recorded by the Tribunal, we are of the considered view that though the assessee has been found by the Tribunal to be an institution established for the advancement of any other object of general public utility, the assessee does not fall under the category of such an institution, which is carrying on an activity in the nature of trade, commerce or business so as to attract the proviso to Section 2 (15) at all. Hence, the first question of law arising in both cases has to be answered against the appellant/Revenue.
Full Text of the High Court Judgment / Order is as follows:-
