{Arising Out Of Order Dated 21-8-2023 Passed By The Income Taxappellate Tribunal, Raipur Bench “Smc”, Raipur, In Itano.242/Rpr/2017} v. The Deputy Commissioner Of Income Tax-1(1), Raipur (C.g

(Tax Case No.180/2023) Digitallysigned bySISTASISTASOMAYAJULUSOMAYAJULUDate:2025.05.1310:33:30+0530HIGH COURT OF CHHATTISGARH AT BILASPUR 2025:CGHC:21530-DB AFR TAXC No. 180 of 2023 {Arising out of order dated 21-8-2023 passed by the Income TaxAppellate Tribunal, Raipur Bench “SMC”, Raipur, in ITANo.242/RPR/2017} --Order reserved on: 1642025 --Order delivered on: 952025 Ramswaroop Das Niranjanlal Charitable Trust, Vandana Bhawan,M.G. Road, Raipur (C.G.) PAN: , Through its TrusteeSubhash Chand Agrawal, Aged about 66 years, S/o Shri NiranjanLal Agrawal, R/o House No.27/607, M.G. Road, Vandana Building,Raipur, District Raipur, Chhattisgarh-492001 ... Appellant versus The Deputy Commissioner of Income Tax-1(1), Raipur (C.G.) ... Respondent :For Appellant Mr. Ankur Agrawal, Advocate. :For Respondent Mr. Ajay Kumrani, Advocate on behalf of Mr.Amit Chaudhari, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Deepak Kumar Tiwari, JJ. (Tax Case No.180/2023) C.A.V. Order Sanjay K. Agrawal, J. 1. This tax appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) was admitted for hearing by formulating the following substantial questions of law: - “1.Whether the Tribunal erred in upholding the orderof the assessing officer dated 30.03.2014 as upheld byCommissioner of Income Tax (Appeals)-1, Raipur andsequitur addition of Rs.2,20,250/- to income of theappellant trust sans consideration of the ground no.2raised before it i.e. since notice under Section 143(2) ofthe Income Tax Act, 1961 for assessment year 2011-12issued to appellant trust was invalid consequential/sequitur assessment for assessment year 2011-12 is alsoinvalid/nullity in eyes of law?of the assessing officer dated 30.03.2014 as upheld byCommissioner of Income Tax (Appeals)-1, Raipur andsequitur addition of Rs.2,20,250/- to income of theappellant trust sans consideration of the ground no.2raised before it i.e. since notice under Section 143(2) ofthe Income Tax Act, 1961 for assessment year 2011-12issued to appellant trust was invalid consequential/sequitur assessment for assessment year 2011-12 is alsoinvalid/nullity in eyes of law? 2.Whether the Tribunal erred in upholding that 2[nd]proviso to Section 2(15) [as it stood at the relevantjuncture of time] would be applicable in the case ofappellant trust for assessment year 2011-12 and makingsequitur addition of Rs.2,20,250/- to income ofappellant trust in teeth with law laid down by theHon’ble Apex Court in Assistant CIT vs. AhmedabadUrban Development Authority 2023 (7) SCC 249reiterated in CIT vs. Servants of People Society 2023SCC OnLine SC 104.”proviso to Section 2(15) [as it stood at the relevantjuncture of time] would be applicable in the case ofappellant trust for assessment year 2011-12 and makingsequitur addition of Rs.2,20,250/- to income ofappellant trust in teeth with law laid down by theHon’ble Apex Court in Assistant CIT vs. AhmedabadUrban Development Authority 2023 (7) SCC 249reiterated in CIT vs. Servants of People Society 2023SCC OnLine SC 104.” 2. The aforesaid questions of law arise for consideration on the following factual backdrop: - 3. The appellant herein / assessee filed return of income for theassessment year 2011-12 on 30-9-2011 declaring total incomeas NIL. Its case was selected for scrutiny under compulsoryassessment year 2011-12 on 30-9-2011 declaring total incomeas NIL. Its case was selected for scrutiny under compulsory (Tax Case No.180/2023) 2. The aforesaid questions of law arise for consideration on the following factual backdrop: - 3. The appellant herein / assessee filed return of income for theassessment year 2011-12 on 30-9-2011 declaring total incomeas NIL. Its case was selected for scrutiny under compulsoryassessment year 2011-12 on 30-9-2011 declaring total incomeas NIL. Its case was selected for scrutiny under compulsory (Tax Case No.180/2023) selection criteria with the prior approval of the ChiefCommissioner of Income Tax, Raipur and accordingly, noticeunder Section 143(2) of the Act was issued on 26-9-2012which was served to the assessee on 1-10-2012 by registeredpost and thereafter, assessment was completed under Section143(3) of the Act and assessment order was passed by theDeputy Commissioner of Income Tax-1(1), Raipur on 30-3-2014 assessing total income at ₹ 2,20,250/-. During theassessment proceedings and while making assessment, theAssessing Officer observed that the assessee Trust had receivedan amount of 15,89,163/- from the business of running a₹Dharamshala and the Assessing Officer was further of theopinion that since the assessee was registered as a charitabletrust and was carrying out activities which were in the natureof “the advancement of any other object of general publicutility” within the meaning of 2[nd] proviso to Section 2(15) ofthe Act, and had garnered business receipts of 15,89,163/-₹which was more than the prescribed amount of ten lakhrupees (as was applicable during the year underconsideration) as contemplated in 2[nd] proviso to Section 2(15)of the Act, therefore, its activities cannot be held as havingbeen carried out solely for charitable purposes. Finally, the (Tax Case No.180/2023) Assessing Officer referring to the provisions contained inSection 2(15) read with Section 13(8) of the Act declined theassessee’s claim for exemption under Section 11 of the Act andbrought its surplus of 2,20,247/- to tax. ₹ 4. Feeling aggrieved and dissatisfied with the order of theAssessing Officer, the assessee preferred appeal before theCommissioner of Income Tax (Appeals)-I, Raipur whodismissed the appeal holding that since the trust’s activitiesare being conducted on commercial lines and receipt duringthe year has exceeded ₹ 10 lakhs, the Assessing Officer isjustified in declining the assessee's claim and as such upheldthe order of assessment passed by the AO. Questioning thatorder, the appellant/assessee has preferred an appeal beforethe Income Tax Appellate Tribunal which has also affirmed theorder of assessment as also the order of the CIT (Appeals)affirming the view taken by the two authorities leading tofiling of this appeal under Section 260A of the Act. Assessing Officer, the assessee preferred appeal before theCommissioner of Income Tax (Appeals)-I, Raipur whodismissed the appeal holding that since the trust’s activitiesare being conducted on commercial lines and receipt duringthe year has exceeded ₹ 10 lakhs, the Assessing Officer isjustified in declining the assessee's claim and as such upheldthe order of assessment passed by the AO. Questioning thatorder, the appellant/assessee has preferred an appeal beforethe Income Tax Appellate Tribunal which has also affirmed theorder of assessment as also the order of the CIT (Appeals)affirming the view taken by the two authorities leading tofiling of this appeal under Section 260A of the Act. 5. Mr. Ankur Agrawal, learned counsel appearing for theappellant/assessee Trust, would make two fold submissions: - Mr. Ankur Agrawal, learned counsel appearing for theappellant/assessee Trust, would make two fold submissions: - 1. Notice under Section 143(2) of the Act was issued to theappellant / assessee on 26-9-2012 and served to theappellant / assessee on 26-9-2012 and served to the (Tax Case No.180/2023) 5. Mr. Ankur Agrawal, learned counsel appearing for theappellant/assessee Trust, would make two fold submissions: - Mr. Ankur Agrawal, learned counsel appearing for theappellant/assessee Trust, would make two fold submissions: - 1. Notice under Section 143(2) of the Act was issued to theappellant / assessee on 26-9-2012 and served to theappellant / assessee on 26-9-2012 and served to the (Tax Case No.180/2023) appellant on 1-10-2012, whereas Section 143(2), asapplicable, mandates that notice must be issued withinsix months from the end of the financial year in whichthe return is furnished i.e. 2011-12 and thus it ought tohave been served on or before 30-9-2012, whereas it wasserved on 1-10-2012 and as such, the notice so issuedunder Section 143(2) was barred by one day andtherefore the impugned order deserves to be set asideand the instant appeal deserves to be allowed. 2. The second proviso to Section 2(15) of the Act wouldnot be applicable because the services provided by theappellant Trust are charitable in nature and not profitdriven. He would rely upon the decision of the SupremeCourt in the matter of Assistant Commissioner of IncomeTax (Exemptions) v. Ahmedabad Urban DevelopmentAuthority1 (paragraphs 190 & 272).not be applicable because the services provided by theappellant Trust are charitable in nature and not profitdriven. He would rely upon the decision of the SupremeCourt in the matter of Assistant Commissioner of IncomeTax (Exemptions) v. Ahmedabad Urban DevelopmentAuthority1 (paragraphs 190 & 272). 6. Mr. Ajay Kumrani, learned counsel appearing for therespondent/Revenue, would submit as under: -respondent/Revenue, would submit as under: - 1. Notice under Section 143(2) of the Act was issued on26-9-2012 and since last day of the month of September,2012 was Sunday, therefore, it has rightly been served26-9-2012 and since last day of the month of September,2012 was Sunday, therefore, it has rightly been served1(2023) 4 SCC 561 (Tax Case No.180/2023) on 1-10-2012 by registered post as such, the servicemade is in accordance with law, as Section 10 of theGeneral Clauses Act, 1897 would apply and since lastday of the month was holiday and as per the PostalDepartment it was a non-working day, therefore, byvirtue of Section 10 of the General Clauses Act, 1897,last day would be excluded in computing the period ofsix months and as such, the notice issued and served byregistered post is within time and therefore theproceeding initiated for scrutiny assessment wasmaintainable. 2. The Assessing Officer has rightly disallowed the grossreceipt of the Trust to the tune of ₹ 15.89 lakhs onaccount of running Dharamshala having threshold limitof only 10 lakhs for charitable purposes for the year₹under consideration. Therefore, the action of dis-allowance by the AO confirmed by the CIT (Appeals) aswell as by the ITAT, is well merited and the appealdeserves to be dismissed by answering the substantialquestions of law in favour of the Revenue and againstthe assessee Trust. (Tax Case No.180/2023) 7. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. Answer to the first substantial question of law 8. Section 143(2) of the Act as applicable at the relevant point oftime, states as under: -time, states as under: - “143. Assessment.—(1) xxx xxxxxx (2) Where a return has been furnished undersection 139, or in response to a notice under sub-section(1) of section 142, the Assessing Officer shall,— (Tax Case No.180/2023) 7. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. Answer to the first substantial question of law 8. Section 143(2) of the Act as applicable at the relevant point oftime, states as under: -time, states as under: - “143. Assessment.—(1) xxx xxxxxx (2) Where a return has been furnished undersection 139, or in response to a notice under sub-section(1) of section 142, the Assessing Officer shall,— (i) where he has reason to believe that any claim ofloss, exemption, deduction, allowance or relief madein the return is inadmissible, serve on the assessee anotice specifying particulars of such claim of loss,exemption, deduction, allowance or relief andrequire him, on a date to be specified therein toproduce, or cause to be produced, any evidence orparticulars specified therein or on which the assesseemay rely, in support of such claim: Provided that no notice under this clause shallbe served on the assessee on or after the 1[st] day ofJune, 2003; (ii) notwithstanding anything contained in clause (i),if he considers it necessary or expedient to ensurethat the assessee has not under-stated the income orhas not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee anotice requiring him, on a date to be specifiedtherein, either to attend his office or to produce, orcause to be produced, any evidence on which theassessee may rely in support of the return: (Tax Case No.180/2023) Provided that no notice under clause (ii) shallbe served on the assessee after the expiry of sixmonths from the end of the financial year in whichthe return is furnished.” 9. The proviso appended to clause (ii) of sub-section (2) ofSection 143 of the Act clearly states that no notice underSection 143(2) shall be served on the assessee after the expiryof six months from the end of the financial year in which thereturn is furnished and the proviso to clause (ii) of Section143(2) of the Act is mandatory. Section 143 of the Act clearly states that no notice underSection 143(2) shall be served on the assessee after the expiryof six months from the end of the financial year in which thereturn is furnished and the proviso to clause (ii) of Section143(2) of the Act is mandatory. 10.The dispute is of the assessment year 2011-12 relevant tofinancial year 2010-11 and notice under Section 143(2) of theAct, dispatched by registered post, was issued on 26-9-2012,which was said to be served on the assessee / appellant Truston 1-10-2012. financial year 2010-11 and notice under Section 143(2) of theAct, dispatched by registered post, was issued on 26-9-2012,which was said to be served on the assessee / appellant Truston 1-10-2012. 11.At this stage, Rules and Regulations relating to the Inland Postas enumerated in the Post Office Guide Part I issued by theDirector-General of Posts may be noticed herein of whichclause 7 relates to Business done on Sundays and P.O.holidays, which states as under: -as enumerated in the Post Office Guide Part I issued by theDirector-General of Posts may be noticed herein of whichclause 7 relates to Business done on Sundays and P.O.holidays, which states as under: - “7. Business done on Sundays and P.O. holidays (a) Except the Night Post Offices all post officesMobile Post Offices are generally closed on Sundays andPO Holidays and no business transacted with the public. (Tax Case No.180/2023) There is also no clearance of street letter post boxesdelivery of mails on such days. “7. Business done on Sundays and P.O. holidays (a) Except the Night Post Offices all post officesMobile Post Offices are generally closed on Sundays andPO Holidays and no business transacted with the public. (Tax Case No.180/2023) There is also no clearance of street letter post boxesdelivery of mails on such days. (b) Facilities are provided for the posting of letterson which the prescribed late fee is paid during certainspecific hours in the letter boxes at RMS offices and atselected offices. Such postings can also, be made in theletters boxes of the mail vans of R.M.S. Sections,Machined franked articles should not be posted either inthe Post office letter box or the mail van letter box. (c) Registered newspapers and packets ofregistered news papers are accepted on Sundays and POholidays without payment of any late fee in PressSorting Offices, R.M.S. offices and at Night Post Offices. (d) Generally, all RMS offices stamps and postalstationary and grant certificates of posting and bookregistered articles on payment of usual late fee duringspecified hours on Sundays and PO holidays. Note 1 :- Postage stamps, postcards, inland letters,and envelopes are also sold at the telegraph branchesof the combined post and telegraph offices the hoursthey are open to public.” 12.In the instant case, admittedly, as per the statement of theRevenue, notice under Section 143(2) of the Act was issuedby the Assessing Officer on 26-9-2012 dispatched byregistered post. 30-9-2012 was admittedly, Sunday. As perthe Postal Regulations, post office is closed on Sunday and nobusiness is transacted with the public on that day. Therefore,the notice came to be served to the assessee / appellant hereinon 1-10-2012. However, as per the mandate provided in the (Tax Case No.180/2023) proviso appended to Section 143(2) of the Act as applicable,no notice was required to be served on the assessee after theexpiry of six months from the end of the financial year inwhich the return is furnished and thus it was required to beserved on 30-9-2012 and 30-9-2012 being Sunday, nobusiness is to be transacted with the public in the post office,it came to be served on 1-10-2012 and therefore the shortquestion would be, whether notice served on 1-10-2012 onaccount of post office having been closed on 30-9-2012 beingSunday and no business is transacted on that day, can be saidto be duly served on the assessee within the meaning ofSection 143(2) of the Act? In response to this question, theRevenue has placed reliance on Section 10 of the GeneralClauses Act, 1897, which states as under: - “10. Computation of time.—(1) Where, by any CentralAct or Regulation made after the commencement of thisAct, any act or proceeding is directed or allowed to bedone or taken in any Court or office on a certain day orwithin a prescribed period, then, if the Court or office isclosed on that day or the last day of the prescribedperiod, the act or proceeding shall be considered asdone or taken in due time if it is done or taken on thenext day afterwards on which the Court or office isopen: Provided that nothing in this section shall apply toany act or proceeding to which the Indian LimitationAct, 1877 (15 of 1877), applies. (Tax Case No.180/2023) (2) This section applies also to all Central Acts andRegulations made on or after the fourteenth day ofJanuary, 1887.” 13.A careful perusal of Section 10 of the General Clauses Act, Provided that nothing in this section shall apply toany act or proceeding to which the Indian LimitationAct, 1877 (15 of 1877), applies. (Tax Case No.180/2023) (2) This section applies also to all Central Acts andRegulations made on or after the fourteenth day ofJanuary, 1887.” 13.A careful perusal of Section 10 of the General Clauses Act, 1897 would show that it embodies the general principlesenshrined in two maxims – (i) lex non cogit ad impossibiliaand (the law does not compel a man to do the impossible) (ii)actus curiae reminem gravabit (the act of court shall prejudiceno man). The principle underlying Section 10 is that the actto Court shall prejudice no man. There is the generalprinciple that a party prevented from doing an act by somecircumstances beyond his control, can do so at the firstsubsequent opportunity. The main object of the aboveprinciple is to enable a person to do what he could have doneon a holiday, on the next working day. Where, therefore, aperiod is prescribed for the performance of an act in a court oroffice, and that period expires on a holiday, then the actshould be considered to have been done within that period ifit is done on the next day on which the court or office is open.The reason is that law does not compel the performance of animpossibility. (See H.H. Raja Harinder Singh v. S. KarnailSingh and others2.) (Tax Case No.180/2023) 14.Similarly, in the matter of Chaganti Satyanarayana and others v. State of Andhra Pradesh3, their Lordships of the SupremeCourt relied upon the decision in the matter of N. SureyaReddy v. State of Orissa, 1985 Cri LJ 939 (Ori), in which it hasbeen held that Section 10 of the General Clauses Act would beattracted for interpreting the proviso if the last day happens tobe a Sunday or holiday and even otherwise the principleenunciated therein should be invoked on considerations ofjustice and expediency. 15.In the matter of HUDA and another v. Dr. Babeswar Kanharand another4, it has been held by their Lordships of theSupreme Court that a party prevented from doing an act bysome circumstances beyond his control, can do so at the firstsubsequent opportunity. It has further been held that everyconsideration of justice and expediency would require that theaccepted principle which underlies Section 10 of the GeneralClauses Act should be applied in cases where it does nototherwise in terms apply. Paragraph 5 of the report states asunder: -and another4, it has been held by their Lordships of theSupreme Court that a party prevented from doing an act bysome circumstances beyond his control, can do so at the firstsubsequent opportunity. It has further been held that everyconsideration of justice and expediency would require that theaccepted principle which underlies Section 10 of the GeneralClauses Act should be applied in cases where it does nototherwise in terms apply. Paragraph 5 of the report states asunder: - “5.What is stipulated in clause 4 of the letter dated30-10-2001 is a communication regarding refusal toaccept the allotment. This was done on 28-11-2001.Respondent 1 cannot be put to loss for the closure of theoffice of HUDA on 1-12-2001 and 2-12-2001 and thepostal holiday on 30-11-2001. In fact he had no control30-10-2001 is a communication regarding refusal toaccept the allotment. This was done on 28-11-2001.Respondent 1 cannot be put to loss for the closure of theoffice of HUDA on 1-12-2001 and 2-12-2001 and thepostal holiday on 30-11-2001. In fact he had no control 3(1986) 3 SCC 1414(2005) 1 SCC 1914(2005) 1 SCC 191 “5.What is stipulated in clause 4 of the letter dated30-10-2001 is a communication regarding refusal toaccept the allotment. This was done on 28-11-2001.Respondent 1 cannot be put to loss for the closure of theoffice of HUDA on 1-12-2001 and 2-12-2001 and thepostal holiday on 30-11-2001. In fact he had no control30-10-2001 is a communication regarding refusal toaccept the allotment. This was done on 28-11-2001.Respondent 1 cannot be put to loss for the closure of theoffice of HUDA on 1-12-2001 and 2-12-2001 and thepostal holiday on 30-11-2001. In fact he had no control 3(1986) 3 SCC 1414(2005) 1 SCC 1914(2005) 1 SCC 191 over these matters. Even the logic of Section 10 of theGeneral Clauses Act, 1897 can be pressed into service.Apart from the said section and various provisions invarious other Acts, there is the general principle that aparty prevented from doing an act by somecircumstances beyond his control, can do so at the firstsubsequent opportunity (see Sambasiva Chari v.Ramasami Reddi[5]). The underlying object of theprinciple is to enable a person to do what he could havedone on a holiday, on the next working day. Where,therefore, a period is prescribed for the performance ofan act in a court or office, and that period expires on aholiday, then the act should be considered to have beendone within that period if it is done on the next day onwhich the court or office is open. The reason is that lawdoes not compel the performance of an impossibility.(See Hossein Ally v. Donzelle[6].) Every consideration ofjustice and expediency would require that the acceptedprinciple which underlies Section 10 of the GeneralClauses Act should be applied in cases where it does nototherwise in terms apply. The principles underlying arelex non cogit ad impossibilia (the law does not compel aman to do the impossible) and actus curiae neminemgravabit (the act of court shall prejudice no man).Above being the position, there is nothing infirm in theorders passed by the forums below. However, the rate ofinterest fixed appears to be slightly on the higher sideand is reduced to 9% to be paid with effect from 3-12-2001 i.e. the date on which the letter was received byHUDA.” 16.Finally, in the matter of Mohd. Ayub v. State of Uttar Pradesh Through Principal Secretary and others7, where the last date of submitting the application along with medical certificate was 14-4-2003, which was a gazetted holiday on account of 5(1898) 8 MLJ 265 : ILR 22 Mad 179 6ILR (1880) 5 Cal 906 : 6 CLR 239 7(2009) 17 SCC 70 Ambedkar Jayanti, it has been held by their Lordships of theSupreme Court that the last date being a gazetted holiday, hisapplication should have been considered on merit in view ofthe principles laid down in Section 10 of the General ClausesAct and observed as under: - “8.Section 10 of the General Clauses Act hascome up for consideration in various cases before thisCourt and also different High Courts. In Harinder Singhv. S. Karnail Singh a four-JudgeBench of this Court explained the object of Section 10very lucidly. The learned Judges have held as under:(AIR p. 273, para 5) “5.… Where, therefore, a period is prescribed forthe performance of an act in a court or office, andthat period expires on a holiday, then according tothe section the act should be considered to have beendone within that period, if it is done on the next dayon which the court or office is open. For that sectionto apply, therefore, all that is requisite is that thereshould be a period prescribed, and that periodshould expire on a holiday.” The decision in Harinder Singh wasrendered in the context of an election dispute but thegeneral principles explained therein apply to all cases. “5.… Where, therefore, a period is prescribed forthe performance of an act in a court or office, andthat period expires on a holiday, then according tothe section the act should be considered to have beendone within that period, if it is done on the next dayon which the court or office is open. For that sectionto apply, therefore, all that is requisite is that thereshould be a period prescribed, and that periodshould expire on a holiday.” The decision in Harinder Singh wasrendered in the context of an election dispute but thegeneral principles explained therein apply to all cases. 9.Even while construing the provisions ofSection 167 of the Criminal Procedure Code, 1973, thisCourt accepted the same interpretation in respect ofSection 10 of the General Clauses Act. [See ChagantiSatyanarayana v. State of A.P. [(1986) 3 SCC 141 : 1986SCC (Cri) 321] (SCC p. 154, para 30 of the Report).]” Page 15 of 29 (Tax Case No.180/2023) 17.Turning to the facts of the case in light of the principles of law laid down in the aforesaid judgments in Dr. BabeswarKanhar’s case (supra) and Mohd. Ayub(supra), in the instantcase, notice under Section 143(2) of the Act was issued wellwithin the time prescribed for issuance of notice on 26-9-2012, it was required to be served as per the provisionscontained in Section 143 of the Act on or before 30-9-2012and 30-9-2012 was Sunday being a holiday as per the PostOffice Regulations noticed herein-above, therefore, notice wascame to be served on 1-10-2012 on Monday. In ourconsidered opinion, such service of notice under Section143(2) of the Act on the assessee on 1-10-2012 is the validservice of notice in view of Section 10 of the General ClausesAct and the principles of law laid down by their Lordships ofthe Supreme Court in the above-noticed judgments (supra)and thus the assessee was timely served and as such, both theappellate authorities are absolutely justified in holding thatnotice served was within the period of limitation prescribedunder Section 143(2). We accordingly answer the firstsubstantial question in favour of the Revenue and against theassessee. (Tax Case No.180/2023) Answer to the second substantial question of law 18.In order to consider the plea raised at the Bar, it would beappropriate to notice Section 2(15) of the Act. Section 2(15) – which had been amended last, in 1983[8], was againamended, by the Finance Act, 2008, w.e.f. 1-4-2009. Someother amendments too were made, with effect from the samedate by the Finance Act, 2009 and Finance Act, 2010. Withthe said amendments, as on 1-4-2009, the provision read as follows: - “2. (15) “charitable purpose” includes relief of the poor,education, medical relief, preservation of environment(including watersheds, forest and wildlife) andpreservation of monuments or places or objects ofartistic or historic interest, and the advancement of anyother object of general public utility; Provided that the advancement of any other objectof general public utility shall not be a charitablepurpose, if it involves the carrying on of any activity inthe nature of trade, commerce or business, or anyactivity of rendering any service in relation to any trade,commerce or business, for a cess or fee or any otherconsideration, irrespective of the nature of use orapplication, or retention, of the income from suchactivity; Provided further that the first proviso shall not 8Deletion of the expression “not involving the carrying on of any activity for profit”and the resulting Section 2(15) read as follows: -and the resulting Section 2(15) read as follows: - “2. (15) “charitable purpose” includes relief of the poor, education,medical relief, and the advancement of any other object of general public utility;” (Tax Case No.180/2023) apply if the aggregate value of the receipts from theactivities referred to therein is ten lakh rupees or less inthe previous year;” Provided further that the first proviso shall not 8Deletion of the expression “not involving the carrying on of any activity for profit”and the resulting Section 2(15) read as follows: -and the resulting Section 2(15) read as follows: - “2. (15) “charitable purpose” includes relief of the poor, education,medical relief, and the advancement of any other object of general public utility;” (Tax Case No.180/2023) apply if the aggregate value of the receipts from theactivities referred to therein is ten lakh rupees or less inthe previous year;” 19.In the second proviso, the reference to ten lakhs was substituted, and the figure of rupees twenty-five lakhs, was inserted, by the Finance Act, 2011 (w.e.f. 1-4-2012). By the Finance Act, 2015 (w.e.f. 1-4-2016), the first two provisos to Section 2(15) were deleted, and instead, the following proviso was inserted:- “Provided that the advancement of any otherobject of general public utility shall not be a charitablepurpose, if it involves the carrying on of any activity inthe nature of trade, commerce or business, or anyactivity of rendering any service in relation to any trade,commerce or business, for a cess or fee or any otherconsideration, irrespective of the nature of use orapplication, or retention, of the income from suchactivity, unless— (i) such activity is undertaken in the course of actualcarrying out of such advancement of any other objectof general public utility; and (ii) the aggregate receipts from such activity oractivities during the previous year, do not exceedtwenty per cent of the total receipts, of the trust orinstitution undertaking such activity or activities, ofthat previous year;” Additionally, the same amendment also inserted “yoga” (after “education”) as a listed category of charitable activity, in thesubstantive provision. (Tax Case No.180/2023) 20.A careful perusal of Section 2(15) of the Act would reveal thatthe expression “charitable purpose” has been defined by wayof an inclusive definition so as to include relief to the poor,education, yoga, medical relief, preservation of environment(including watersheds, forest and wildlife) and preservation ofmonuments or places or objects of artistic or historic interest,and the advancement of any other object of general publicutility. The expression “advancement of any other object ofgeneral public utility” has been considered by the SupremeCourt in number of judgments. the expression “charitable purpose” has been defined by wayof an inclusive definition so as to include relief to the poor,education, yoga, medical relief, preservation of environment(including watersheds, forest and wildlife) and preservation ofmonuments or places or objects of artistic or historic interest,and the advancement of any other object of general publicutility. The expression “advancement of any other object ofgeneral public utility” has been considered by the SupremeCourt in number of judgments. 21.In the matter of Commissioner of Income Tax v. GujaratMaritime Board9, the words in Section 2(15) of the Act,namely, “any other object of general public utility” have beenconsidered by their Lordships of the Supreme Court and it hasbeen held that the said expression would prima facie includeall objects which promote the welfare of the general public.Their Lordships further held that if the primary purpose andthe predominant object are to promote the welfare of thegeneral public the purpose would be charitable purpose. Ithas been observed by their Lordships of the Supreme Court asunder: -Maritime Board9, the words in Section 2(15) of the Act,namely, “any other object of general public utility” have beenconsidered by their Lordships of the Supreme Court and it hasbeen held that the said expression would prima facie includeall objects which promote the welfare of the general public.Their Lordships further held that if the primary purpose andthe predominant object are to promote the welfare of thegeneral public the purpose would be charitable purpose. Ithas been observed by their Lordships of the Supreme Court asunder: - “13. We have perused number of decisions of this Courtwhich have interpreted the words in Section 2(15),namely, “any other object of general public utility”.From the said decisions it emerges that the saidexpression is of the widest connotation. The word“general” in the said expression means pertaining to awhole class. Therefore, advancement of any object ofbenefit to the public or a section of the public asdistinguished from benefit to an individual or a group ofindividuals would be a charitable purpose (CIT v.Ahmedabad Rana Caste Assn.[10]). The said expressionwould prima facie include all objects which promote thewelfare of the general public. It cannot be said that apurpose would cease to be charitable even if publicwelfare is intended to be served. If the primary purposeand the predominant object are to promote the welfareof the general public the purpose would be charitablepurpose. When an object is to promote or protect theinterest of a particular trade or industry that objectbecomes an object of public utility, but not so if it seeksto promote the interest of those who conduct the saidtrade or industry (CIT v. Andhra Chamber ofCommerce[11]). If the primary or predominant object ofan institution is charitable, any other object which mightnot be charitable but which is ancillary or incidental tothe dominant purpose, would not prevent the institutionfrom being a valid charity (CIT v. Surat Art Silk ClothManufacturers' Assn.[12]).” 22.Furthermore, a three-Judge Bench of the Supreme Court in ’sAhmedabad Urban Development Authority case (supra) has considered all its earlier judgments qua Section 2(15) of theAct and summed up the conclusions as under: - “IV. Summation of conclusions 10 (1982) 2 SCC 542 : 1982 SCC (Tax) 151 : (1983) 140 ITR 1 11 (1965) 55 ITR 722 12 (1980) 2 SCC 31 : 1980 SCC (Tax) 170 : (1980) 121 ITR 1 (Tax Case No.180/2023) 269. In view of the foregoing discussion and analysis,the following conclusions are recorded regarding theinterpretation of the changed definition of “charitablepurpose” (w.e.f. 1-4-2009), as well as the lateramendments, and other related provisions of the IT Act. A. General test under Section 2(15) 270. It is clarified that an assessee advancing generalpublic utility cannot engage itself in any trade,commerce or business, or provide service in relationthereto for any consideration (“cess, or fee, or any otherconsideration”). “IV. Summation of conclusions 10 (1982) 2 SCC 542 : 1982 SCC (Tax) 151 : (1983) 140 ITR 1 11 (1965) 55 ITR 722 12 (1980) 2 SCC 31 : 1980 SCC (Tax) 170 : (1980) 121 ITR 1 (Tax Case No.180/2023) 269. In view of the foregoing discussion and analysis,the following conclusions are recorded regarding theinterpretation of the changed definition of “charitablepurpose” (w.e.f. 1-4-2009), as well as the lateramendments, and other related provisions of the IT Act. A. General test under Section 2(15) 270. It is clarified that an assessee advancing generalpublic utility cannot engage itself in any trade,commerce or business, or provide service in relationthereto for any consideration (“cess, or fee, or any otherconsideration”). 271. However, in the course of achieving the object ofgeneral public utility, the trust, society, or other suchorganisation concerned, can carry on trade, commerceor business or provide services in relation thereto forconsideration, provided that (i) the activities of trade,commerce or business are connected (“actual carryingout …” inserted w.e.f. 1-4-2016) to the achievement ofits objects of GPU; and (ii) the receipt from suchbusiness or commercial activity or service in relationthereto, does not exceed the quantified limit, asamended over the years (Rs 10 lakhs w.e.f. 1-4-2009;then Rs 25 lakhs w.e.f. 1-4-2012; and now 20% of totalreceipts of the previous year, w.e.f. 1-4-2016). 272. Generally, the charging of any amount towardsconsideration for such an activity (advancing generalpublic utility), which is on cost-basis or nominally abovecost, cannot be considered to be “trade, commerce, orbusiness” or any services in relation thereto. It is onlywhen the charges are markedly or significantly abovethe cost incurred by the assessee in question, that theywould fall within the mischief of “cess, or fee, or anyother consideration” towards “trade, commerce orbusiness”. In this regard, the Court has clarified throughillustrations what kind of services or goods provided oncost or nominal basis would normally be excluded fromthe mischief of trade, commerce, or business, in the (Tax Case No.180/2023) body of the judgment. 273. Section 11(4-A) must be interpreted harmoniouslywith Section 2(15), with which there is no conflict.Carrying out activity in the nature of trade, commerce orbusiness, or service in relation to such activities, shouldbe conducted in the course of achieving the GPU object,and the income, profit or surplus or gains must,therefore, be incidental. The requirement in Section11(4-A) of maintaining separate books of account is alsoin line with the necessity of demonstrating that thequantitative limit prescribed in the proviso to Section2(15), has not been breached. Similarly, the insertion ofSection 13(8), seventeenth proviso to Section 10(23-C)and third proviso to Section 143(3) (all w.r.e.f. 1-4-2009), reaffirm this interpretation and bring uniformityacross the statutory provisions. xxxxxxxxx” 23.Further, their Lordships of the Supreme Court in Ahmedabad ’Urban Development Authoritys case (supra) observed asunder: - xxxxxxxxx” 23.Further, their Lordships of the Supreme Court in Ahmedabad ’Urban Development Authoritys case (supra) observed asunder: - “190. It may be useful to conclude this section oninterpretation with some illustrations. The example ofGandhi Peace Foundation disseminating MahatmaGandhi's philosophy (in Surat Art Silk[13]) throughmuseums and exhibitions and publishing his works, fornominal cost, ipso facto is not business. Likewise,providing access to low-cost hostels to weaker segmentsof society, where the fee or charges recovered cover thecosts (including administrative expenditure) plusnominal markup; or renting marriage halls for lowamounts, again with a fee meant to cover costs; or bloodbank services, again with fee to cover costs, are notactivities in the nature of business. Yet, when the entityconcerned charges substantial amounts—over and above13 CIT v. Surat Art Silk Cloth Manufacturers' Assn., (1980) 2 SCC 31 : 1980 SCC (Tax) 170 (Tax Case No.180/2023) the cost it incurs for doing the same work, or workwhich is part of its object (i.e. publishing an expensivecoffee table book on Gandhi, or in the case of themarriage hall, charging significant amounts from thosewho can afford to pay, by providing extra services, farabove the cost plus nominal markup) such activities arein the nature of trade, commerce, business or service inrelation to them. In such case, the receipts from suchlatter kind of activities where higher amounts arecharged, should not exceed the limit indicated byproviso (ii) to Section 2(15). H. Application of interpretation 285. At the cost of repetition, it may be noted that theconclusions arrived at by way of this judgment, neitherprecludes any of the assessees (whether statutory, ornon-statutory) advancing objects of general publicutility, from claiming exemption, nor the TaxingAuthorities from denying exemption, in the future, if thereceipts of the relevant year exceed the quantitativelimit. The assessing authorities must on a yearly basis,scrutinise the record to discern whether the nature ofthe assessee's activities amount to “trade, commerce orbusiness” based on its receipts and income (i.e. whetherthe amounts charged are on cost-basis, or significantlyhigher). If it is found that they are in the nature of“trade, commerce or business”, then it must beexamined whether the quantified limit (as amendedfrom time to time) in the proviso to Section 2(15), hasbeen breached, thus disentitling them to exemption.” 24.Coming to the facts of the case in light of the principles of law laid down by their Lordships of the Supreme Court in Gujarat Maritime Board’s case (supra) followed in Ahmedabad Urban’sDevelopment Authority case (supra), it is quite vivid that inthe instant case, it is not in dispute that the assessee Trust was (Tax Case No.180/2023) 24.Coming to the facts of the case in light of the principles of law laid down by their Lordships of the Supreme Court in Gujarat Maritime Board’s case (supra) followed in Ahmedabad Urban’sDevelopment Authority case (supra), it is quite vivid that inthe instant case, it is not in dispute that the assessee Trust was (Tax Case No.180/2023) set up with the objects of establishing/managing“Dharamshala” to facilitate relief to poor people, orphans,widows, and old aged persons and otherwise provide themrehabilitation, which are charitable in nature. However, allthe three authorities were greatly influenced with the fact thatthe assessee trust had rented out the “Dharamshala” to thepublic at large and thereby had ventured into commercialactivities relying upon the reply dated 5-12-2013 in which theassessee had admitted the fact that it had rented the“Dharamshala”/premises to 170 persons for multi-facetedpurposes i.e. marriage function, political, religious and othersocial functions, etc. and the assessee had generated receiptsfrom booking and cancellation charges, repairing charges,electricity charges, etc., which were collected/deduction fromsecurity deposits from the persons who booked the“Dharamshala” for the above-mentioned activities and therebyall the three authorities came to the conclusion that theassessee was carrying out commercial activities of letting out“Dharamshala” to the public at large for multi-facet purposes,i.e. marriage functions, political, religious and other socialfunctions, etc., therefore, it was in substance carrying on abusiness. It was further held that since the gross receipts of Page 24 of 29 (Tax Case No.180/2023) the assessee Trust during the year under considerationamounted to ₹ 15,89,163/- which was more than thethreshold amount of 10 lakhs as contemplated in the second₹proviso to Section 2(15) of the Act, therefore, the activities ofthe assessee and surplus therein generated were hit by theprovisions of Section 2(15) of the Act. 25.It is the contention of learned counsel for the appellant/assessee Trust that all the three authorities have ignored thenotional expenditure of depreciation of 8.55 lakhs which is₹against the well settled principle of law and which has to beallowed to be debited to the expenditure amount of the Trustin light of the decision of the M.P. High Court in the matter of-14assessee Trust that all the three authorities have ignored thenotional expenditure of depreciation of 8.55 lakhs which is₹against the well settled principle of law and which has to beallowed to be debited to the expenditure amount of the Trustin light of the decision of the M.P. High Court in the matter of-14Commissioner of IncomeTax v. Raipur Pallottine Society inwhich it has been held that if depreciation is not allowed as anecessary deduction for computing the income of a charitableinstitution, then there would be no way to preserve the