S. 2(15) — Provisions of proviso to S. 2(15) are prospective and not retrospective — not applicable to donations received up to 31-3-2009.

The assessee-was registered under the provisions of Andhra
Pradesh (Telangana Area) Public Societies Registration Act in 1982. It was
established for promotion of trade and commerce and some other charitable
objects. It was granted registration u/s.12A and was also granted recognition
u/s.80G.

It’s application dated 8-3-2008 for renewal of recognition
u/s.80G was rejected by DIT on the ground that the Finance Act, 2008 has w.e.f.
1-4-2009 amended the definition of the term ‘charitable purpose’ by adding a
proviso to S. 2(15), which specifically lays down that advancement of any other
objects of general public utility shall not be ‘charitable purpose’ if it
involves carrying on of any activity in the nature of trade, commerce or
business for a cess or fee or any other consideration, irrespective of the
nature of use of application, or retention, of the income from such activity.

The assesee preferred an appeal to the Tribunal.

The Tribunal noted that :

(a) there was no violation of S. 80G(5) by the assessee;

(b) the decision of the Tribunal, relied upon by the D.R.,
in Andhra Pradesh Federation of Textile Association (ITA No. 88/Hyd./08, dated
30-1-2009) is not applicable to the facts of this case, as in that case, it
was found that the element of charity in the activities of the assessee was
absent, and held that the association could not be considered as a charitable
association within the meaning of S. 2(15) of the Act;

(c) the issue is covered by the decision of the Tribunal in
DDIT v. Indian Electrical and Electronics Manufacturers Association, (2009) 31
SOT 346 (Mum.) where it has been held that the proviso to S. 2(15) is not
clarificatory in nature and would not apply retrospectively;

(d) Legislature has specified the date from which proviso
to S. 2(15) is applicable;

(e) the provisions of S. 80G allowing certain deductions to
the donors apply to specific act of donation made on particular date.

Held that, the provisions of proviso to S. 2(15) shall not
apply to donations received by the assessee up to 31-3-2009. In the absence of
any violation of provisions of S. 80G(5), the assessee is entitled for approval
u/s. 80G in respect of donations received up till 31-3-2009. The Tribunal
directed the DDIT accordingly and allowed the appeal of the assessee.