Case Law Details
ACIT Vs National Accreditation Board for Testing and Calibration (ITAT Delhi)
Expression ‘charitable purpose’, as defined in section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to section 2(15) of the said Act then the proviso would be at risk of running fowl of the principle of equality enshrined in article 14 of the Constitution of India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities 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. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and the prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a “charitable purpose”. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes.”
Further, the Hon ‘ble Delhi High Court in appellant’s own case in ITA 284/2016 by the order dated 02.05.201 6 have held as under:
“3. The short question is whether the Respondent National Accreditation Board For Testing and Calibration Laboratories is entitled to exemption under Section 11 and 12 of the Income Tax Act, 1961.
4. The positive findings of the ITAT on facts is that the Assessee is not engaged in trade, commerce and business and its dominant and prime objective is charitable in nature in accordance with Section 2(15) of the 1. T. Act, 1961. The Court also notes that the Respondent is part of the central government. The Court is unable to be persuaded to hold that the findings of the [TAT are perverse. No substantial question of law arises. The appeal is dismissed.”
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