We Find Reference Of The Judgment Rendered By A Coordinatebench Of This Court In The Case Of Ahmedabad Urbandevelopment Authority, In The Judgment Rendered By A v. Gujarat Industrial Development Corporation (Taxappeal

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 273 of 2011 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE J.B.PARDIWALASd/-andHONOURABLE MR. JUSTICE BHARGAV D. KARIASd/-================================================================1Whether Reporters of Local Papers may be allowedNOto see the judgment ?2To be referred to the Reporter or not ?NO3Whether their Lordships wish to see the fair copyNOof the judgment ?4Whether this case involves a substantial questionNOof law as to the interpretation of the Constitutionof India or any order made thereunder ?================================================================DY. DIRECTOR OF INCOME TAX (EXEMPTION) VersusAHMEDABAD URBAN DEVELOPMENT AUTHORITY ================================================================ Appearance:MRS MAUNA M BHATT for the Appellant(s) No. 1MR B S SOPARKAR for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 17/02/2020 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1.This Tax Appeal under Section 260A of the Income Tax Act,1961, is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, 'A'Bench, Ahmedabad, dated 5[th] August 2010, in the ITANo.1835/Ahd/2010 for the Assessment Year 2007-08. 2.This Tax Appeal came to be admitted on the followingsubstantial questions of law : “Whether the Tribunal below committed substantial error oflaw in cancelling the order of Director of Income Tax(Exemption) passed under Section 12-AA(3) of the IncomeTax Act, by totally overlooking the amendment effected inthe nature of first proviso to Section 2(15) of the Act, witheffect from April 01, 2009.” 3.In view of the judgment rendered by a coordinate bench ofthis Court in the case of the very same assessee in the TaxAppeal No.423 of 2016 and allied Tax Appeals, this Tax Appealshould fail and is liable to be dismissed. 4.We find reference of the judgment rendered by a coordinatebench of this Court in the case of Ahmedabad UrbanDevelopment Authority, in the judgment rendered by acoordinate bench of this Court in the case of Commissioner ofIncome Tax v. Gujarat Industrial Development Corporation (TaxAppeal No.380 of 2017 with Tax Appeal No.381 of 2017 to TaxAppeal No.382 of 2017, decided on 28[th] June 2017). We quotepara-16 of the said judgment thus : “16.1 In para 12.2 to 15.1 of the said decision, the DivisionBench of this Court has observed and held as under :- “12.2 Whether the activities of the appellant AUDAcan be said to be in the nature of trade, commerce orbusiness as occurring in the first proviso to Section2(15) of the Act, few decisions of the Hon'ble SupremeCourt as well as other High Courts are required to bereferred to at this stage. 12.3 In the case of Khoday Distilleries Ltd & Ors.vs. State of Karnataka & Ors., reported in (1995) 1SCC 574, the Hon'ble Supreme Court had an occasionto consider the word "trade". In the said decision, theHon'ble Supreme Court has held that "the primarymeaning of the word "trade" is the exchange of goodsfor goods or goods for money". 12.4 In the case of State of Andhra Pradesh vs.Abdul Bakhi & Bros., reported in 1964(5) STC 644(SC) while considering the word "business", theHon'ble Supreme Court has held that "the word"business" was of indefinite import and in a taxingstatute, it is used in sense of an occupation, orprofession which occupies time, attention or labour ofa person, and is clearly associated with the object ofmarking profit". 12.5 In the case of Institute of Chartered Accountantsof India (supra) while considering the whetheractivities of Indian Trade promotion organization canbe said to be in the nature of "business", despite the 12.4 In the case of State of Andhra Pradesh vs.Abdul Bakhi & Bros., reported in 1964(5) STC 644(SC) while considering the word "business", theHon'ble Supreme Court has held that "the word"business" was of indefinite import and in a taxingstatute, it is used in sense of an occupation, orprofession which occupies time, attention or labour ofa person, and is clearly associated with the object ofmarking profit". 12.5 In the case of Institute of Chartered Accountantsof India (supra) while considering the whetheractivities of Indian Trade promotion organization canbe said to be in the nature of "business", despite the fact that the said organization was collecting rent forproviding the space at trade, fair and exhibitions andthough was receiving income by way of sale of ticketsand income from tickets and sale in Pragati Maidanetc., after considering the various decisions of theHon'ble Supreme Court as well as decisions of theother High Courts, it is held that activities of the saidorganization cannot be considered as "business".While holding so, Delhi High Court has observed andheld as under: “An activity would be considered 'business' if itis undertaken with a profit motive, but in somecases, this may not be determinative. Normally,the profit motive test should be satisfied, but ina given case activity may be regarded as abusiness even when profit motive cannot beestablished/proved. In such cases, there shouldbe evidence and material to show that theactivity has continued on sound and recognizedbusiness principles and pursued withreasonable continuity. There should be factsand other circumstances which justify and showthat the activity undertaken is in fact in thenature of business.” 12.6. In the aforesaid decision, after considering thedecision of the Hon'ble Supreme Court in the case ofCommissioner of Sales Tax vs. Sai PublicationFund reported in (2002) 258 ITR 70(SC), it is held by the Delhi High Court that "thus, if the dominantactivity of the assessee was not business, then anyincidental or ancillary activity would also not fallwithin the definition of business." In para 64, 67, 69,70, 71 and 72 the Delhi High Court has observed andheld as under: “64. It is not necessary that a person should givesomething for free or at a concessional rate toqualify as being established for a charitablepurpose. If the object and purpose of theinstitution is charitable, the fact that theinstitution collects certain charges, does not alterthe character of the institution. 67. The expressions trade, commerce and-business as occurring in the first proviso tosection 2(15) of the Act must be read in thecontext of the intent and purport of section 2(15)of the Act and cannot be interpreted to mean anyactivity which is carried on in an organizedmanner. The purpose and the dominant objectfor which an institution carries on its activities ismaterial to determine whether the same isbusiness or not. The purport of the first provisoto section 2(15) of the Act is not to excludeentities which are essentially for charitablepurpose but are conducting some activities for aconsideration or a fee. The object of introducingthe first proviso is to exclude organizations which are carrying on regular business from thescope of charitable purpose. The purpose ofintroducing the proviso to Section 2(15) of the Actcan be understood from the Budget Speech of theFinance Minister while introducing the FinanceBill 2008. The relevant extract to the Speech isas under : which are carrying on regular business from thescope of charitable purpose. The purpose ofintroducing the proviso to Section 2(15) of the Actcan be understood from the Budget Speech of theFinance Minister while introducing the FinanceBill 2008. The relevant extract to the Speech isas under : Charitable purpose includes relief of the poor,education, medical relief and any other object ofgeneral public utility. These activities are taxexempt, as they should be. However, someentities carrying on regular trade, commerce orbusiness or providing services in relation to anytrade, commerce or business and earningincomes have sought to claim that their purposeswould also fall under charitable purpose.Obviously, this was not the intention ofParliament and, hence, I propose to amend thelaw to exclude the aforesaid cases. Genuinecharitable organizations will not in any way beaffected.' The expressions business, trade orcommerce as used in the first proviso must, thus,be interpreted restrictively and where thedominant object of an organization is charitableany incidental activity for furtherance of theobject would not fall within the expressionsbusiness, trade or commerce. 69. In the case of Addl. Commissioner of Income Tax v. Surat Art Silk ClothManufacturers : [1980] 121 ITR 1 (SC), theSupreme Court held as under: The test which has, therefore, now to be appliedis whether the predominant object of the activityinvolved in carrying out the object of generalpublic utility is to sub-serve the charitablepurpose or to earn profit. Where profit making isthe predominant object of the activity, thepurpose, though an object of general publicutility would cease to be a charitable purpose. But where the predominant object of the activityis to any out the charitable purpose and not toearn profit, it would not lose its character of acharitable purpose merely be cause some profitarises from the activity. 70. Although in that case the statutoryprovisions being considered by the SupremeCourt were different and the utilization of incomeearned is, now, not a relevant consideration inview of the express words of the first proviso toSection 2 [15] of the Act, nonetheless the test ofdominant object of an entity would be relevant todetermine whether the entity is carrying onbusiness or not. In the present case, there is littledoubt that the objects of the activities of thepetitioner are entirely for charitable purposes. WP(C) 1872/13 Page 48 of 55 Finally in ICAI(II)(supra), this court, with reference to H. AbdulBakhi and Bros (supra) observed as under : 71. Although, it is not essential that an activitybe carried on for profit motive in order to beconsidered as business, but existence of profitmotive would be a vital indicator in determiningwhether an organisation is carrying on businessor not. In the present case, the petitioner hassubmitted figures to indicate that expenditure onsalaries and depreciation exceeds the surplus asgenerated from holding coaching classes. Inaddition, the petitioner institute provides studymaterial and other academic support such asfacilities of a library without any materialadditional costs. The Supreme Court in the caseof State of Andhra Pradesh v. H. Abdul Bakhiand Bros. (supra) held as under: The expression "business" though extensivelyused a word of indefinite import, in taxingstatutes it is used in the sense of an occupation,or profession which occupies the time, attentionand labour of a person, normally with the objectof making profit. To regard an activity asbusiness there must be a course of dealings,either actually continued or contemplated to becontinued with a profit motive, and not for sportor pleasure. The expression "business" though extensivelyused a word of indefinite import, in taxingstatutes it is used in the sense of an occupation,or profession which occupies the time, attentionand labour of a person, normally with the objectof making profit. To regard an activity asbusiness there must be a course of dealings,either actually continued or contemplated to becontinued with a profit motive, and not for sportor pleasure. 72. There is nothing on record to indicate theassertion of the petitioner that its activities arenot fuelled by profit motive is incorrect. Absenceof profit motive, though not conclusive, doesindicate that the petitioner is not carrying on anybusiness.” 12.7. Identical question came to be considered by theDelhi High Court in the case of Bureau of IndiaStandard vs. Director General of Income Tax(Exemptions) reported in (2013) 212 Taxman 210(Delhi). In the said decision, the Delhi High Court wasconsidering whether the activities of the Bureau ofIndian Standards (supra) in granting licenses andtrading certificates and charging amounted to carryingon business, trade or commerce and while consideringthe said question, it is observed as under: “In these circumstances,rendering any service inrelation to trade, commerce or business cannot,in the opinion of the Court, receive such a wideconstruction as to enfold regulatory andsovereign authorities, set up under statutoryenactments, and tasked to act as agencies of theState in public duties which cannot bedischarged by private bodies. Often, apart fromthe controlling or parent statutes, like the BISAct, these statutory bodies (including BIS) areempowered to frame rules or regulations, exercise coercive powers, including inspection,raids; they possess search and seizure powersand are invariably subjected to Parliamentary orlegislative oversight. The primary object forsetting up such regulatory bodies would be toensure general public utility. The prescribing ofstandards, and enforcing those standards,through accreditation and continuing supervisionthrough inspection etc., cannot be considered astrade, business or commercial activity, merelybecause the testing procedures, or accreditationinvolves charging of such fees. It cannot be saidthat the public utility activity of evolving,prescribing and enforcing standards, involvesthe carrying on of trade or commercial activity.” 12.8 Circular No.11 of 2008 issued by the CBDT fellfor consideration by the Delhi High Court in the case ofM/s G.S. 1 India v. Director General of Income-tax(Exemption) and Another : WP(C) 7797/2009, decidedon 26.09.2013 (2013) 219 Taxman 205. It is held thateven as per the said circular, proviso to Section 2(15)of the Act is applicable to assessee, who are engagedin commercial activities i.e. carrying on business, tradeor commerce, in the garb of 'public utilities' to avoid taxliability as it was noticed that the object 'general publicutility' was sometimes used as a mask or device tohide the true purpose, which was 'trade, commerce orbusiness'. Thus, it is evident that introduction ofproviso to Section 2(15) by virtue of the Finance Act, 2008 was directed to prevent the unholy practice ofpure trade, commerce and business entities frommasking their activities and portraying them in thegarb of an activity with the object of a general publicutility. It is not designed to hit at those institutions,which had the advancement of the objects of generalpublic utility at their hearts and were charityinstitutions. The attempt was to remove the masksfrom the entities, which were purely trade, commerceor business entities, and to expose their true identities. In the case of M/s G.S. 1 India (Supra), in para 21, 22and 27, the Delhi High Court has observed and held asunder : 2008 was directed to prevent the unholy practice ofpure trade, commerce and business entities frommasking their activities and portraying them in thegarb of an activity with the object of a general publicutility. It is not designed to hit at those institutions,which had the advancement of the objects of generalpublic utility at their hearts and were charityinstitutions. The attempt was to remove the masksfrom the entities, which were purely trade, commerceor business entities, and to expose their true identities. In the case of M/s G.S. 1 India (Supra), in para 21, 22and 27, the Delhi High Court has observed and held asunder : "21. ... As observed above, legal terms, trade,commerce or business in Section 2(15), meanactivity undertaken with a view to make or earnprofit. Profit motive is determinative and a criticalfactor to discern whether an activity is business,trade or commerce. The court further held : 22. Business activity has an important pervadingelement of self interest, though fair dealingshould and can be present, whilst charity orcharitable activity is antithesis of activityundertaken with profit motive or activityundertaken on sound or recognized businessprinciples. Charity is driven by altruism anddesire to serve others, though element of self preservation may be present. For charity,benevolence should be omnipresent anddemonstrable but it is not equivalent toself-sacrifice and abnegation. The antiquateddefinition of charity, which entails giving andreceiving nothing in return is outdated. Amandatory feature would be; charitable activityshould be devoid of selfishness or illiberal spirit.Enrichment of oneself or self-gain should bemissing and the predominant purpose of theactivity WP(C) 1872/13 Page 52 of 55 should beto serve and benefit others. A small contributionby way of fee that the beneficiary pays wouldnot convert charitable activity into business,commerce or trade in the absence of contraryevidence. Quantum of fee charged, economicstatus of the beneficiaries who pay, commercialvalue of benefits in comparison to the fee,purpose and object behind the fee etc. areseveral factors which will decide the seminalquestion, is it business ? 27. As observed above, fee charged andquantum of income earned can be indicative ofthe fact that the person is carrying on businessor commerce and not charity, but we must keepin mind that charitable activities requireoperational/running expenses as well as capitalexpenses to be able to sustain and continue inlong run. The petitioner has to be substantially self-sustaining in long term and should notdepend upon government, in other wordstaxpayers should not subsidize the saidactivities, which nevertheless are charitable andfall under WP(C) 1872/13 Page 53 of 55 theresiduary clause general public utility. Theimpugned order does not refer to any statutorymandate that a charitable institution fallingunder the last clause should be wholly,substantially or in part must be funded byvoluntary contributions. No such requirement hasbeen pointed out or argued. A practical andpragmatic view is required when we examine thedata, which should be analyzed objectively anda narrow and coloured view will becounter-productive and contrary to the languageof Section 2(15) of the Act.” 12.9 While upholding the constitutional validity of theproviso to Section 2(15) of the Act, the Division Benchof the Delhi High Court in the case of Indian TradePromotion Organization vs. Director of Income Tax(Exemption) in WP(C) No.1872 of 2013 decided on22.01.2015 has observed in para 58 as under: "As defined in Section 2(15) cannot be construedliterally and in absolute terms. It has to takecolour and be considered in the context ofSection 10(23C)(iv) of the said Act. It is also clearthat if the literal interpretation is given to the 12.9 While upholding the constitutional validity of theproviso to Section 2(15) of the Act, the Division Benchof the Delhi High Court in the case of Indian TradePromotion Organization vs. Director of Income Tax(Exemption) in WP(C) No.1872 of 2013 decided on22.01.2015 has observed in para 58 as under: "As defined in Section 2(15) cannot be construedliterally and in absolute terms. It has to takecolour and be considered in the context ofSection 10(23C)(iv) of the said Act. It is also clearthat if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then theproviso would be at risk of running fowl of theprinciple of equality enshrined in Article 14 of theConstitution India. In order to save theConstitutional validity of the proviso, the samewould have to be read down and interpreted inthe context of Section 10(23C)(iv) because, in ourview, the context requires such an interpretation.The correct interpretation of the proviso toSection 2(15) of the said Act would be that itcarves out an exception from the charitablepurpose of advancement of any other object ofgeneral public utility and that exception islimited to activities in the nature of trade,commerce or business or any activity ofrendering any service in relation to any trade,commerce or business for a cess or fee or anyother consideration. In both the activities, in thenature of trade, commerce or business or theactivity of rendering any service in relation toany trade, commerce or business, the dominantand the prime objective has to be seen. If thedominant and prime objective of the WP(C)1872/13 Page 54 of 55 institution, which claimsto have been established for charitablepurposes, is profit making, whether its activitiesare directly in the nature of trade, commerce orbusiness or indirectly in the rendering of anyservice in relation to any trade, commerce orbusiness, then it would not be entitled to claim its object to be a 'charitable purpose'. On the flipside, where an institution is not driven primarilyby a desire or motive to earn profits, but to docharity through the advancement of an object ofgeneral public utility, it cannot but be regardedas an institution established for charitablepurposes. 13. Applying the aforesaid decisions to the facts of thecase on hand and with respect to the activities of theAUDA Ahmedabad Urban Development Authorityunder the provisions of the Gujarat Town Planning Actby no stretch of imagination, it can be said that theactivities of the assessee (AUDA) can be said to be inthe nature of trade, commerce or business and/or itsobject and purpose is profiteering. Merely becauseunder the statutory provisions and to meet with theexpenditure of Town Planning Scheme and/orproviding various services under the Town PlanningScheme, such as road, drainage, electricity, watersupply etc. if the assessee is permitted to sale theplots (land) to the extent of 15% of the total area underthe Town Planning Scheme and while selling the saidplots they are sold by holding the public auction, itcannot be said that activities of the assessee isprofiteering, to be in the nature of trade, commerce andbusiness. 13.1 In the case of Lucknow Development Authority,Gomti Nagar (supra), it is held by the Allahabad High Court that the activities of the authority cannot be saidto be in the nature of trade, commerce or businessand/or profiteering and therefore, proviso to Section2(15) of the Act shall not be applicable. 13.2 Similar, view has been expressed by theRajasthan High Court in the case of Commissioner ofIncome Tax-I, Jodhpur vs. Jodhpur DevelopmentAuthority, Jodhpur Tax Appeal No. 63 of 2012 decidedon 5.7.2016. 13.1 In the case of Lucknow Development Authority,Gomti Nagar (supra), it is held by the Allahabad High Court that the activities of the authority cannot be saidto be in the nature of trade, commerce or businessand/or profiteering and therefore, proviso to Section2(15) of the Act shall not be applicable. 13.2 Similar, view has been expressed by theRajasthan High Court in the case of Commissioner ofIncome Tax-I, Jodhpur vs. Jodhpur DevelopmentAuthority, Jodhpur Tax Appeal No. 63 of 2012 decidedon 5.7.2016. 14.Considering the aforesaid facts andcircumstances and more particularly, considering thefact that the assessee is a statutory body UrbanDevelopment Authority constituted under theprovisions of the Act, constituted to carry out the objectand purpose of Town Planning Act and collectsregulatory fees for the object of the Acts; no servicesare rendered to any particular trade, commerce orbusiness; whatever the income is earned / received bythe assessee even while selling the plots (to the extentof 15% of the total area covered under the TownPlanning Scheme) is required to be used only for thepurpose to carry out the object and purpose of TownPlanning Act and to meet with expenditure whileproviding general utility service to the public such aselectricity, road, drainage, water etc. and even theentire control is with State Government and evenaccounts are also subjected to audit and there is noelement of profiteering at all, the activities of the assessee cannot be said to be in the nature of trade,commerce and business and therefore, proviso toSection 2(15)of the Act shall not be applicable so far asassessee is concerned and therefore, the assessee isentitled to exemption under Section 11 of the IncomeTax Act. Therefore, the question no.1 is to be held infavour of the assessee and against the revenue. 15. Now, so far as another question which is posed forthe consideration of this Court i.e. whether whilecollecting the cess or fees, activities of the assesseecan be said to be rendering any services in relation toany trade, commerce or business is concerned, for thereasons stated above, merely because the assessee iscollecting cess or fees which is regulatory in nature,the proviso to Section 2(15)of the Act shall not beapplicable. As observed herein above neither there iselement of profiteering nor the same can be said to bein the nature of trade, commerce or business. At thisstage, decision of the Division Bench of this Court inthe case of Sabarmati Ashram Gaushala Trust (supra)is required to be referred to. In the case before theDivision Bench, the assessee Trust Sabarmati AshramGaushala Trust was engaged in the activity ofbreeding milk cattle; to improve the quality of cowsand oxen and other related activities. The AssessingOfficer denied the exemption to the trust under Section11 of the Act on the ground that considerable incomewas generated from the activities of milk productionand sale and therefore, considering the proviso to Section 2(15) of the Act, the said Trust-assessee wasdenied the exemption under Section 11 of the Act.While holding that the activities of the assessee truststill can be said to be for charitable purpose within themeaning of Section 2(15) of the Act and same cannotbe said to be in the nature of trade, commerce orbusiness for which proviso to Section 2(15) of the Act isrequired to be applied. In para 6, 7, 8 and 12, it isobserved and held as under : Section 2(15) of the Act, the said Trust-assessee wasdenied the exemption under Section 11 of the Act.While holding that the activities of the assessee truststill can be said to be for charitable purpose within themeaning of Section 2(15) of the Act and same cannotbe said to be in the nature of trade, commerce orbusiness for which proviso to Section 2(15) of the Act isrequired to be applied. In para 6, 7, 8 and 12, it isobserved and held as under : “6. The legal controversy in the present TaxAppeal centers around the first proviso. In theplain terms, the proviso provides for exclusionfrom the main object of the definition of the termCharitable purposes and applies only to cases ofadvancement of any other of general generalpublic utility. If the conditions provided under theproviso are satisfied, any entity, even if involvedin advancement of any other object of generalpublic utility by virtue to proviso, would beexcluded from the definition of charitable trust.However, for the application of the proviso, whatis necessary is that the entity should be involvedin carrying on activities in the nature of trade,commerce or business, or any activity ofrendering services in relation to any trade,commerce or business, for a cess or fee or anyother consideration. In such a situation, thenature, use or application, or retention of incomefrom such activities would not be relevant. Under the circumstances, the important elements ofapplication of proviso are that the entity shouldbe involved in carrying on the activities of anytrade, commerce or business or any activities ofrendering service in relation to any trade,commerce or business, for a cess or fee or anyother consideration. Such statutory amendmentwas explained by the Finance Ministers speechin the Parliament. Relevant portion of whichreads as under : “I once again assure the House that genuinecharitable organizations will not in any way beaffected. The CBDT will, following the usualpractice, issue an explanatory circular containingguidelines for determining whether any entity iscarrying on any activity in the nature of trade,commerce or business or any activity ofrendering any service in relation to any trade,commerce or business. Whether the purpose is acharitable purpose will depend on the totality ofthe facts of the case. Ordinarily, Chambers ofCommerce and similar organizations renderingservices to their members would not be affectedby the amendment and their activities wouldcontinue to be regarded as advancement of anyother object of general public utility.” 7. In consonance with such assurance given bythe Finance Minister on the floor of the House, CBDT issued a Circular No. 11 of 2008 dated19th December 2008 explaining the amendmentas under : “3. The newly inserted proviso to section 2 (15)will apply only to entities whose purpose isadvancement of any other object of generalpublic utility ie., the fourth limb of the definitionof charitable purpose contained in section 2 (15).Hence, such entities will not be eligible forexemption under section 11 or under section 10(23C) of the Act if they carry on commercialactivities. Whether such an entity is carrying onany activity in the nature of trade, commerce orbusiness is a question of fact which will bedecided based on the nature, scope, extent andfrequency of the activity. 3.1 There are industry and trade associationswho claim exemption from tax under section 11on the ground that their objects are for charitablepurpose as these are covered under any otherobject of general public utility. Under theprinciple of mutuality, if trading takes placebetween persons who are associated togetherand contribute to a common fund for thefinancing of some venture or object and in thisrespect have no dealings or relations with anyoutside body, then any surplus returned to thepersons forming such association is not 3.1 There are industry and trade associationswho claim exemption from tax under section 11on the ground that their objects are for charitablepurpose as these are covered under any otherobject of general public utility. Under theprinciple of mutuality, if trading takes placebetween persons who are associated togetherand contribute to a common fund for thefinancing of some venture or object and in thisrespect have no dealings or relations with anyoutside body, then any surplus returned to thepersons forming such association is not chargeable to tax. In such cases, there must becomplete identity between the contributors andthe participants. Therefore, where industry ortrade associations claim both to be charitableinstitutions as well as mutual organizations andtheir activities are restricted to contributions fromand participation of only their members, thesewould not fall under the purview of the proviso tosection 2 (15) owing to the principle of mutuality.However, if such organizations have dealingswith non members, their claim to be chargeableorganizations would now be governed by theadditional conditions stipulated in the proviso tosection 2 (15). 3.2 In the final analysis, however, whether theassessee has for its object the advancement ofany other object of general public utility is aquestion of fact. If such assessee is engaged inany activity in the nature of trade, commerce orbusiness or renders any service in relation totrade, commerce or business, it would not beentitled to claim that its object is charitablepurpose. In such a case, the object of generalpublic utility will be only a mask or a device tohide the true purpose which is trade, commerceor business or the rendering of any service inrelation to trade, commerce or business. Eachcase would, therefore, be decided on its ownfacts and no generalization is possible. Assessees, who claim that their object ischaritable purpose within the meaning of section2(15), would be well advised to eschew anyactivity which is in the nature of trade, commerceor business or the rendering of any service inrelation to any trade, commerce or business.” 8. What thus emerges from the statutoryprovisions, as explained in the speech of FinanceMinister and the CBDT Circular, is that theactivity of a trust would be excluded from theterm charitable purpose if it is engaged in anyactivity in the nature of trade, commerce orbusiness or renders any service in relation totrade, commerce or business for a cess, feeand/or any other consideration. It is not aimedat excluding the genuine charitable trusts ofgeneral public utility but is aimed at excludingactivities in the nature of trade, commerce orbusiness which are masked as charitablepurpose. 12. All these were the objects of the generalpublic utility and would squarely fall undersection 2 (15) of the Act. Profit making wasneither the aim nor object of the Trust. It was notthe principal activity. Merely because whilecarrying out the activities for the purpose ofachieving the objects of the Trust, certainincidental surpluses were generated, would not render the activity in the nature of trade,commerce or business. As clarified by the CBDTin its Circular No. 11/2008 dated 19th December2008 the proviso aims to attract those activitieswhich are truly in the nature of trade, commerceor business but are carried out under the guise ofactivities in the nature of public utility.” 15.1. Applying the aforesaid decision to the facts ofthe case on hand and the object and purpose forwhich the assessee is established/constituted underthe provisions of the Gujarat Town Planning Act andcollection of fees and cess is incidental to the objectand purpose of the Act, even the case would not fallunder second part of proviso to Section 2(15) of theAct. render the activity in the nature of trade,commerce or business. As clarified by the CBDTin its Circular No. 11/2008 dated 19th December2008 the proviso aims to attract those activitieswhich are truly in the nature of trade, commerceor business but are carried out under the guise ofactivities in the nature of public utility.” 15.1. Applying the aforesaid decision to the facts ofthe case on hand and the object and purpose forwhich the assessee is established/constituted underthe provisions of the Gujarat Town Planning Act andcollection of fees and cess is incidental to the objectand purpose of the Act, even the case would not fallunder second part of proviso to Section 2(15) of theAct. 15.2 Considering the aforesaid facts andcircumstances of the case, we are of opinion that thelearned Tribunal has committed a grave error inholding the activities of the assessee in the nature oftrade, commerce or business and consequentlyholding that the proviso to Section 2(15) of the Actshall be applicable and therefore, the assessee is notentitled to exemption under Section 11 of the Act. Forthe reasons stated above, it is held that the proviso toSection 2(15) of the Act shall not be applicable so faras assessee-AUDA is concerned and as the activitiesof the assessee can be said to be providing generalpublic utility services, the assessee is entitled to exemption under Section 11 of the Act. Both thequestions are therefore, answered in favour of theassessee and against the revenue.” 5.The Appeal is accordingly dismissed. The substantialquestion of law is answered in favour of the assessee and againstthe Revenue. (J. B. PARDIWALA, J.) /MOINUDDIN (BHARGAV D. KARIA, J.)