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SUPREME COURT OF INDIA
Uday Umesh Lalit, CJI., S. Ravindra Bhat, Pamidighantam Sri Narasimha, JJ.
Assistant Commissioner of Income Tax (Exemptions) – Appellant
Versus
Ahmedabad Urban Development Authority – Respondent
Civil Appeal No. 21762 of 2017 with C.A. No. 8193/2012; C.A. No. 5057/2012; C.A. No. 5058/2014; C.A. No. 9974/2018; C.A. No. 5056/2012; C.A. No. 4196/2015; C.A. No. 4374/2015; C.A. No. 9380/2017; C.A. No. 13071/2017; C.A. No. 12058/2017; C.A. No. 16375/2017; C.A. No. 12869/2017; C.A. No. 17527/2017; C.A. No. 21845/2017; C.A. No. 5719/2018; C.A. No. 9886/2018; C.A. No. 9200/2018; C.A. No. 9860/2018; C.A. No. 10114/2018; C.A. No. 1643/2019; C.A. No. 3596/2018; C.A. No. 6762/2018; C.A. No. 3972/2018; C.A. No. 3343/2018; C.A. No. 3359/2018; C.A. No. 3971/2018; C.A. No. 3347/2018; C.A. No. 6489/2018; C.A. No. 10598/2018; C.A. No. 7643/2018; C.A. No. 8321/2018; C.A. No. 8554/2018; C.A. No. 9172/2018; C.A. No. 10406/2018; C.A. No. 11259/2018; C.A. No. 11884/2018; C.A. No. 226/2019; C.A. No. 170/2019; C.A. No. 2047/2019; C.A. No. 2335/2019; C.A. No. 3971/2019; C.A. No. 4449/2019; C.A. No. 4957/2019; C.A. No. 213/2020; C.A. No. 783/2020; C.A. No. 4430/2021; C.A. No. 2477/2021; C.A. No. 2478/2021; C.A. No. 2022 @ SLP(C) No. 23975/2012; C.A. No. 2022 @ SLP(C) No. 15547/2013; C.A. No. _2022 @ SLP(C) No. 15040/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 39525/2017; C.A. No. 2022 @ SLP(C) No. 14574/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 16597/2020; C.A. No. 2022 @ SLP(C) No. 10912/2018; C.A. No. 2022 @ SLP(C) No. 12304/2018; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 44856/2018; C.A. No. 2022 @ SLP(C) No. 6553/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 15525/2019; C.A. No. 2022 @ SLP(C) No. 30597/2018; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 5683/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 15488/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 15489/2019; C.A. No. 2022 @ SLP(C) No. 15055/2019; C.A. No. 2022 @ SLP(C) No. 15079/2019; C.A. No. 2022 @ SLP(C) No. 14995/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 21237/2019; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 17255/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 17316/2020; C.A. No. 2022 @ SLP(C) No. 1404/2021; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 19394/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 19399/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 19403/2020; C.A. No. 2022 @ SLP(C) No. 11486/2020; C.A. No. 2022 @ SLP(C) No. 11124/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 19449/2020; C.A. No. 2022 @ SLP(C) No. 12206/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 20986/2020; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 23310/2020; C.A. No. 2022 @ SLP(C) No. 3759/2021; C.A. No. 2022 @ SLP(C) No. 4612/2021; C.A. No. 2022 @ SLP(C) No. 5167/2021; C.A. No. 2022 @ SLP(C) No. 6253/2021; C.A. No. 2022 @ SLP(C) No. 5709/2021; C.A. No. 2022 @ SLP(C) No. 6005/2021; C.A. No. 2022 @ SLP(C) No. 7166/2021; C.A. No. 2022 @ SLP(C) No. 7003/2021; C.A. No. 2022 @ SLP(C) No. 7011/2021; C.A. No. 2022 @ SLP(C) No. 6917/2021; C.A. No. 2022 @ SLP(C) No. 7510/2021; C.A. No. 2022 @ SLP(C) No. 19044/2021; C.A. No. 2022 @ SLP(C) No. 7779/2018; C.A. No. 2022 @ SLP(C) No. 4678/2021; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 5806/2021; C.A. No. 2022 @ SLP(C) No. 4636/2021; C.A. No. 2022 @ SLP(C) No. 4723/2021; C.A. No. 2022 @ SLP (C) No. 2022 @ Diary No(s). 6662/2021; C.A. No. 2022 @ SLP(C) No. 10490/2021; C.A. No. 2022 @ SLP(C) No. 6686/2021; C.A. No. 2022 @ SLP(C) No. 7302/2021; C.A. No. 2022 @ SLP(C) No. 6580/2021; C.A. No. 2022 @ SLP(C) No. 7290/2021; C.A. No. 2022 @ SLP(C) No. 7606/2021; C.A. No. 2022 @ SLP(C) No. 8364/2021; C.A. No. 2022 @ SLP(C) No. 10908/2021; C.A. No. 2022 @ SLP(C) No. 7854/2021; C.A. No. 2022 @ SLP(C) No. 7789/2021; C.A. No. 2022 @ SLP(C) No. 11072/2021; C.A. No. 2022 @ SLP(C) No. 11683/2021
Decided On : 19-10-2022
JUDGMENT :
S. Ravindra Bhat, J.
Index
I. Brief history of legislative changes and this court’s interpretation
A. Provisions of the Income Tax Act, 1922
B. The new law: Income Tax Act, 1961
C. The judgment in Surat Art Silk
D. Relevant changes brought about to the IT Act, 1961 (Finance Act, 1983 and 1991)
E. The judgment in Thanthi Trust
F. Deletion of certain exemptions: Section 10 (20A) and Section 10 (23)
G. Amendments to Section 2 (15) by Finance Act, 2008 (w.e.f. 01.04.2009)
II. Submissions of parties
A. Arguments on behalf of the revenue
B. Arguments of the assessee-organizations
C. Revenue’s rebuttal arguments
III. Analysis and reasoning
A. Aids to interpretation
(i) History of the legislation
(ii) Other extrinsic aids to construction of the statute
B. Interpretation of Section 2(15), the definition clause
Summation of interpretation of Section 2(15)
C. Sections 10, 11, 12, 12A, 12AA and 13 of the IT Act
Distinction between business held under Trust [Section 11(4)] and Trust carrying on business [Section 11(4A)]
D. What kinds of income or receipts may not be characterized as derived from trade, commerce, business or in relation to such activities, for a consideration
(i) Statutory corporations, authorities or bodies
(ii) Statutory regulatory bodies/authorities
(iii) Trade Promotion bodies, councils, associations or organizations
(iv) Non-statutory bodies - ERNET, NIXI and GS1 India
(v) State Cricket Associations
(vi) Private trusts
IV. Summation of conclusions
A. General test under Section 2(15)
B. Authorities, corporations, or bodies established by statute
C. Statutory regulators
D. Trade promotion bodies
E. Non-statutory bodies
F. Sports associations
G. Private Trusts
H. Application of interpretation
1. Leave granted in all matters where leave has not already been granted. C.A. No. 21762/2017 (Assistant Commission of Income Tax, Exemptions v. Ahmedabad Urban Development Authority) is taken as the lead matter.
2. Religious and charitable trusts have existed in one form or the other, tracing their origins to the instinct of benevolence, which is part of human nature. Indian philanthropy has enriched its cultural heritage, particularly in catering to the educational, medical, socio-economic, and religious needs of the people. Here its role has been supplementary to the efforts of the State, which has recognized the public utility of this impulse, and granted tax exemptions. Indian income-tax laws have favoured charities, even granted preferential treatment since 1886. The law, while granting exemption to income from religious and charitable trusts has taken effective measures to minimise misuse of trust funds. As a result, a charitable trust loses tax exemption if certain provisions are not complied with, and if its activities do not fall under Section 10 of the Act. Such trusts also have to apply their income to the charitable objects within a specified period, maintain proper audited accounts, and invest or utilise funds in a manner so that no benefit is derived by the settlor, trustees, their relatives, or other persons1[Sections 11, 12, 12-A and 13 of the Income-tax Act, 1961]
3. The scope and amplitude of the definition “charitable purpose” under the Income Tax Act, 1961 (hereafter “Income Tax Act” or “the IT Act”) has engaged the courts’ (including that of this court) attention on myriad occasions. The expression “not involving the carrying on of any activity for profit” in the last limb of the definition [Section 2(15) prior to amendment by Finance Act, 1983] was the subject of debate in no less than five judgments of this court (including that of a five-member bench).
4. In these batch of appeals and special leave petitions, the primary question which falls for consideration is the correct interpretation of the proviso to Section 2(15) 2[“charitable purpose” includes relief of the poor, education, medical relief, preservation of environment (i
Statutory urban development authorities' activities qualify as charitable under section 2(15) if advancing general public utility without profit motive or significant mark-up over costs, eligible for....
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