Case Law Details
RELEVANT PARAGRAPH
14. From the nature of activities being pursued by the petitioners, particularly as contained in the ‘memorandum of association’ extracted by the respondent in the statement filed in WP(C) 6899/2009 (stated as more or Jess similar in the other case as well), it is very much evident that the derivation of income by the petitioner cannot be held as merely the income from property, so as to oust the involvement of ‘trade, commerce or business’ or any service in connection with trade commerce or business as contemplated under the statute,which requires to be exempted and appreciated in detail by the departmental authorities at the time of assessment. For the very same reason, the petitioner cannot nave a short cut, to have an automatic declaration of exemption, by seeking for issuance of a Certificated under Section 197(1); particularly when there is substantial variation in the statutory position as it existed earlier when the petitioners were given exemption under Section 11 and the position as available after the amendment to Section 2(15) brought into effect from 01.04.2009. All the decisions cited by the learned Senior Counsel for the petitioners are in respect of the position as it existed earlier and the position as it now exists does not form the subject matter of consideration in any such cases. Further, the petitioners have not chosen to challenge the amendment to Section 2(51) and Union of India is not impleaded in the party array, so as to answer the scope and extent of amendment.
15. Yet another important aspect to be noted in this context is that, “after the amendment by incorporating proviso to Section 2(15), the 4th limb as to the advancement “any other object of general public utility” will no longer remain as charitable purpose, if it involves carrying on of:
(a) any activity in the nature of trade, commerce or business
(b) any activity of rendering any service in relation to any trade, commerce or business for a cess or a fee or any other consideration, irrespective of the nature of use or application or retention of the income from such activity.
The first limb of exclusion from charitable purpose under clause (a) will be attracted, if the activity pursued by the institution involves anv trade commerce or business. But the situation contemplated under the second limb [clause (b) stands entirely on a different pedestal, with regard to the service in relation to the: trade, commerce or business mentioned therein. To put it more dear, when the matter comes to the service in relation to the trade, commerce or business, it has to be examined whether the words “any trade, commerce or business” as they appear in the second limb of clause (b) are in connection with the service referred to the trade, commerce or business pursued by the institutions to which the service is given by the assessee. If the said words are actually in respect of the trade commerce or business of the assessee itself the said clause (second limb or the stipulation under clause (b) is rather otiose. Since the activity of the assessee involving any trade commerce or business, is already excluded from the charitable purpose bv virtue of the first limb (clause (a)) itself there is ho necessity to stipulate further, by way of clause (b), adding the words “or any activity of rendering any service in relation to any trade/commence or business. As it stands so, giving a. purposive interpretation to the statute, it may have to be read and understood that the second limb of exclusion under clause (b) in relation to the service rendered by the assessee. the terms “any trade, commerce or business refer to the trade, commerce or business pursued by the recipient to whom the service is rendered (as there may be a situation involving letting out the premises for purposes other than involving trade, commerce or business as well). Since the petitioners have not chosen to implead the Union Government in the party array, to consider and finalise the scope and amendment in this regard, this Court is not in a position to lay down the law on this aspect for the time being and hence it is left open.
16. As stated hereinbefore, whether the petitioners are entitled to get the benefit of exemption in view of the activity being pursued by them, in respect of the period after the amendment of Section 2(15) with effect from 01.04.2009, is a matter to be looked into and decided by the departmental authorities in the course of adjudication, at the time of assessment, for the very same reason, Ext.P5 issued by the respondents in WP(C) 6899/2009 and Ext.P7 issued in WP(C) 6900/2009 refusing to issue any certificate under Section 197 (1) of the Act are perfectly within the four walls of the taw and not assailable under any circumstance. No interference is called for. Both the Writ Petitions fail and are dismissed accordingly.
