Exemption claim u/s 2(15) of Income Tax Act not allowable on Services provided by GS1 India as it was for Benefit of Trade and Business: Delhi HC [Read Order]

The Delhi High Court has held that an exemption claim under section  2(15) of the Income Tax Act is not allowable on services provided by GS1 India as it was for the benefit of trade and business.

 The appellant/revenue challenged the order passed by the Income Tax Appellate Tribunal [“Tribunal”].  Mr Sancheti says that Supreme Court has considered whether the activities carried out by the respondent/assessee fall within the ambit of the proviso to Section 2(15) of the Income Tax Act, 1961 [“Act”].

 The respondent-assessee, GS1 India involved in the advancement of general public utility, its services are for the benefit of trade and business, from which they receive significantly high receipts. In the circumstances, its claim for exemption cannot succeed having regard to amended Section 2(15).

Section 2(15)​ of the Act defines “charitable purpose" to include relief of the poor, education, medical relief, preservation of the environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity like trade, commerce or business, or any activity of rendering any service about any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.

 Further, provided that the above-said activity falls under section 2(5) unless such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and the aggregate receipts from such activity or activities during the previous year, do not exceed 20% of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year.

A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia has set aside the impugned order passed by the Tribunal, in light of the observation of the Supreme Court in Ahmedabad Urban Development Authority.

To Read the full text of the Order CLICK HERE

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