899 ASSISTANT COMMISSIONER OF INCOME TAX A (EXEMPTIONS) v. AHMEDABAD URBAN DEVELOPMENT AUTHORITY

A in ShriRamtanu Cooperative Housing Society (supra) and Gujarat Industrial Development Corporation (supra) have declared that these bodies are involved in ‘development’ and are not essentially engaged in trading. In ShriRamtanu Cooperative Housing Society (supra) this court, by a five judge bench, held that the Maharashtra Industrial Development Corporation is not a trading concern, and observed as follows: “These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation. Ordinarily, a Corporation is established by shareholders with their capital. The shareholders have their Directors for the regulation and management of the Corporation Such a Corporation set up by the shareholders carries on business and is intended for making profits. When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds. In the present case, these attributes of a trading Corporation are absent. The Corporation is established by the Act for carrying out the purposes of the Act. The purposes of the Act are development of industries in the State. The Corporation consists of nominees of the State Government, State Electricity E Board and the Housing Board. The functions and powers of the Corporation indicate that the Corporation is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings. It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate cases. Receipts of these moneys arise not out of any business or trade but out of sole purpose of establishment, growth and development of industries.

17. The Corporation has to provide amenities and facilities in industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are within the programme of work of the H

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1023 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

Corporation. The found of the Corporation consists of moneys A received from the State Government, all fees, costs and charges received by the Corporation, all moneys received by the Corporation from the disposal of lands, buildings and other properties and all moneys received by the Corporation by way of rents and profits or in any other manner. The B Corporation shall have the authority to spend such sums out of the general funds of the Corporation or from reserve and other funds. The Corporation is to make provision for reserve and other specially denominated funds as the State Government may direct. The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings, or sheds is made or is likely to be made in furtherance of the object of the Act. A budget is prepared showing the estimated receipts and expenditure. The accounts of the Corporation are audited by an auditor appointed by the State Government. These provisions in regard to the finance of the Corporation indicate the real role of the Corporation viz. the agency of the Government in carrying out the purpose and object of the Act which is the development of industries. If in the ultimate analysis there is excess of income over expenditure that will not establish the trading character of the Corporation. There are various departments of the Government which may have excess of income over expenditure. ************** ******** *********

20. The underlying concept of a trading Corporation is buying and selling. There is no aspect of buying or selling by the F Corporation in the present case. The Corporation carries out the purposes of the Act, namely, development of industries in this State. The construction of buildings, the establishment of industries by letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial G estate or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent in setting up industries in the State. The Act aims at building an industrial H

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A town and the Corporation carries out the objects of the Act. The hard core of a trading Corporation is its commercial character. Commerce connotes transactions of purchase and sale of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling. The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas. We are of opinion that the Corporation is not a trading one.”

186Copy pinpoint186. In Shri Ramtanu Cooperative Housing Society (supra) no doubt, this court did not have to decide whether the Maharashtra Industrial Development Corporation was entitled to tax exemption. However, it examined the provisions of the Act, and the ratio, that such industrial development corporations are not engaged in trading, is binding. Like in that case, here too, the concerned state Acts (Gujarat Industrial D Development Act, 1962 and the Karnataka Industrial Areas Development Act, 1966) tasked the boards with planning and development of industrial areas. Their personnel are appointed under the enactments and are deemed to be public servants. The state government is empowered to acquire land, in exercise of eminent domain power, for their purposes; their audits are by the Accountant General of the concerned state, or E auditors appointed by the state. They are authorized by law, to levy rates and charges, for the services they provide, on pre-determined basis. In the light of these provisions, clearly, these boards and authorities perform objects of general public utility; and they are not driven by profit motive.

187Copy pinpoint187. There is a two-fold distinction between the now-deleted F Section 10(20A) and the newly added Section 10(46) (w.e.f. 01.06.2011). Firstly, that the erstwhile Section 10(20A) applied to a limited class of undertaking i.e., the bodies, or corporations, constituted by or under any law-confined to the planning and development of housing infrastructure. However, the newly added Section 10(46) is wider in comparison and G the activities of any body or authority or board constituted by or under any central or State Act with “the object of regulating or administering any activity for the benefit of the general public”, has broader import. In a sense, the newly added Section 10(46), resembles a GPU category charity classified under Section 2(15). The second distinction is that Section 10(20A) did not bar any board, or corporations, etc. from indulging H

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1025 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

in commercial activities. However, sub-clause (b) of Section 10(46) A imposes such a bar, and the concerned body cannot claim tax exemption if it engages in commercial activity.

188Copy pinpoint188. The manner in which GPU charities has been dealt with under the definition clause, i.e., Section 2(15), indicates that even though trading or commercial activity or service in relation to trade, commerce B or business appears to be barred– nevertheless the ban is lifted somewhat by the proviso which enables such activities to be carried out if they are intrinsically part of the activity of achieving the object of general public utility. Furthermore, in the case of GPU charities there is a quantified limit of the overall receipts, which is permissible from such commercial activity. In the case of local authorities and corporations covered by C Section 10(46) no such activities are seemingly permitted.

189Copy pinpoint189. As was observed in the earlier part of this judgment – while considering whether for the period 01.0.2003 - 31.05.2011, statutory boards, corporations, etc. could have lawfully claimed to be GPU charities, this court has observed that the nature of such corporations is not to generate profit but to make available goods and other services for the benefit of public weal. If such corporations (falling within the description of Section 10(46)) applied to the Central Government for exemption, the treatment of their receipts, should be no different than how such receipts can and should have been treated for the purposes of determining whether they are GPU charities, during the period when Section 10(46) was not in existence. Furthermore, this court is of the opinion that having regard to the observations in Gujarat Maritime Board case (supra), the denial of exemption under one category cannot debar such corporations from claiming income exempt status under another category. F

(b) Summary in relation to statutory authorities/corporations

190Copy pinpoint190. In light of the above discussion, this court is of the opinion that: (i) The fact that bodies which carry on statutory functions G whose income was eligible to be considered for exemption under Section 10(20A) ceased to enjoy that benefit after deletion of that provision w.e.f. 01.04.2003, does not ipso facto preclude their claim for consideration for benefit as H

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A GPU category charities, under Section 11 read with Section 2(15) of the Act. (ii) Statutory Corporations, Boards, Authorities, Commissions, etc. (by whatsoever names called) in the housing development, town planning, industrial development sectors are involved in the advancement of objects of general public utility, therefore are entitled to be considered as charities in the GPU categories. (iii) Such statutory corporations, boards, trusts authorities, etc. may be involved in promoting public objects and also in the course of their pursuing their objects, involved or engaged in activities in the nature of trade, commerce or business. (iv) The determinative tests to consider when determining whether such statutory bodies, boards, authorities, corporations, autonomous or self-governing government sponsored bodies, are GPU category charities: (a) Does the state or central law, or the memorandum of association, constitution, etc. advance any GPU object, such as development of housing, town planning, development of industrial areas, or regulation of any activity in the general public interest, supply of essential goods or services - such as water supply, sewage service, distributing medicines, of foodgrains (PDS entities), etc.; (b) While carrying on of such activities to achieve such objects (which are to be discerned from the objects and policy of the enactment; or in terms of the controlling instrument, such as memorandum of association etc.), the purpose for which such public GPU charity, is set-up -whether for furthering the development or a charitable object or for carrying on trade, business or commerce or service in relation to such trade, etc.; G (c) Rendition of service or providing any article or goods, by such boards, authority, corporation, etc., on cost or nominal mark-up basis would ipso facto not be activities in the nature of business, trade or commerce or service in relation to such business, trade or commerce; H

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1027 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

(d) where the controlling instrument, particularly a statute imposes certain responsibilities or duties upon the concerned body, such as fixation of rates on pre-determined statutory basis, or based on formulae regulated by law, or rules having the force of law, setting apart amenities for the purposes of development, charging fixed rates towards supply of water, providing sewage services, providing food-grains, medicines, and/or retaining monies in deposits or government securities and drawing interest therefrom or charging lease rent, ground rent, etc., per se, recovery of such charges, fee, interest, etc. cannot be characterized as “fee, cess or other consideration” for engaging in activities in the nature of trade, commerce, or business, or for providing service in relation in relation thereto; (e) Does the statute or controlling instrument set out the policy or scheme, for how the goods and services are to be distributed; in what proportion the surpluses, or profits, can be permissively garnered; are there are limits within which plots, rates or costs are to be worked out; whether the function in which the body is engaged in, is normally something a government or state is expected to engage in, having regard to provisions of the Constitution and the enacted laws, and the observations of this court in NDMC; E whether in case surplus or gains accrue, the corporation, body or authority is permitted to distribute it, and if so, only to the government or state; the extent to which the state or its instrumentalities have control over the corporation or its bodies, and whether it is subject to directions by the concerned government, etc.; (f) As long as the concerned statutory body, corporation, authority, etc. while actually furthering a GPU object, carries out activities that entail some trade, commerce or business,which generates profit (i.e., amounts that are significantly higher than the cost), and the quantum of such receipts are within the prescribed limit (20% as mandated by the second proviso to Section 2(15)) – the concerned statutory or government organisations can be characterized as GPU charities. It goes without saying that the other H

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A conditions imposed by the seventh proviso to Section 10(23C) and by Section 11 have to necessarily be fulfilled. (v) As a consequence, it is necessary in each case, having regard to the first proviso and seventeenth proviso (the latter introduced in 2012, w.r.e.f 01.04.2009) to Section 10(23C), B that the authority considering granting exemption, takes into account the objects of the enactment or instrument concerned, its underlying policy, and the nature of the functions, and activities, of the entity claiming to be a GPU charity. If in the course of its functioning it collects fees, or any consideration that merely cover its expenditure C (including administrative and other costs plus a small proportion for provision) - such amounts are not consideration towards trade, commerce or business, or service in relation thereto. However, amounts which are significantly higher than recovery of costs, have to be treated D as receipts from trade, commerce or business. It is for those amounts, that the quantitative limit in proviso (ii) to Section 2(15) applies, and for which separate books of account will have to be maintained under other provisions of the IT Act. (ii) Statutory regulatory bodies/authorities

191Copy pinpoint191. During the hearings, rival contentions were made in regard to the facial nature of the public utility character of regulatory bodies. A sample special case was that of the Institute of Chartered Accountants of India (ICAI). In respect of some years, the revenue has preferred appeals and in respect of some others, the Institute has preferred appeals. F Reliance was placed upon the provisions of the ICAI Act and detailed submissions were made to emphasise that it plays a pivotal role in regulating the entire universe of vocation of Chartered Accountants – i.e., selecting candidates that can undergo the educational course, setting the syllabus for the Chartered Accountancy examination; holding classes, training sessions and imparting education; conducting exams, etc. It was highlighted that the membership of the institute, i.e., those who are enrolled as Chartered Accounts has grown significantly. Whereas in the end of financial year 2005, the membership was 1.23 lakhs, it had increased to 1,86,440 on 31.03.2012. Likewise, there was an exponential growth in the students appearing in the examination - in 2005, it was 2,96,294, and on 31.03.2012, it had increased to 10,70,839. Apparently, the Institute

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1029 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

conducts distance education courses and also conducts classroom instruction facilities. These are integrated with the course curriculum. Additionally, it was urged that no commercial motive was involved; coaching and revisional classes conducted are very nominally priced- ranging from 1500 to 2500 for one group, and from 4000 to 6000 for both groups, depending on cities where the classes are held. B

192Copy pinpoint192. During the submissions on behalf of the Institute, the financials for different years were provided. It was revealed that the total outflow towards salaries for 2003-04 was 55.27 lakhs and depreciation for the same was 51.64 lakhs. The total expenditure for that year was 1.0691 lakhs. As against that, the Revenue earned from generation of fees for the corresponding year which was 1.78 crores and the corresponding expenditure was 96.93 lakhs. The corresponding figures for FY 2011-12 for salaries was 2.94 crores. The depreciation was Rs.4.05 crores. The total expenditure thus was 6.9 crores. As against this, the amount received towards fees was 6.36 crores and expenditure incurred towards coaching, including salaries,provisions of course material, etc. was 4.34 crores. The surplus (without including administrative expenditure) for that year was 2.01 crores. The Institute apparently cannot distribute the surplus or utilise it for any activity other than what is set out under the controlling statute and its rules.

193Copy pinpoint193. The Revenue highlighted that conducting courses leading to E a professional qualification and charging fees for it is in the nature of a ‘service’, and all services in relation to trade, commerce or business squarely falls within the mischief of Section 2(15),which has to preclude the institute’s claim for exemption as a GPU charity.

194Copy pinpoint194. The Institute is a creature of the Institute of Chartered F Accountants Act, 1949. By Section 4 of this Act, every person who qualifies in the examination conducted by the Institute has to seek registration as a Chartered Accountant. Only when members obtain certificates issued by the Council of the Institute under Section 6 can they be known as a ‘Chartered Accountant’ and be entitled to practice that profession (Sections 6 and 7). The Council of the Institute is G constituted under Section 9 which defines such constitution and the manner for holding elections, etc. The functions of the Council by Section 15(2A) include approving the academic courses and their contents, examining the candidates, regulation and articleship assistance, prescribing qualification for entry of persons in the register, collection of fees from H

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A members; the regulation and maintenance and status of the professional qualifications of the members of the Institute, etc. By Section 15A, universitiesare enabled to impart education on subjects covered by the academic courses of the Institute. However, by Section 15A(2) while awarding degrees or diplomas, their designation should not resemble or be identical to what is awarded by the Institute. The finances are regulated by Section 18. The Council is enjoined to maintain the register under Section 19 and has disciplinary powers by virtue of Section 21A, 21B and 21C of the Act.

195Copy pinpoint195. These provisions of the Act clarify beyond a doubt that the Institute performs statutory functions in the larger public interest of regulating the standards of education, leading up to the profession of Chartered Accountancy and also prescribing standards of professional etiquette, behaviour, and discipline of its members. No other entity or body has the authority in law to perform the functions that the Institute does. Although the Act regulating Chartered Accountancy came into force prior to the Constitution of India, the subject (of regulating professions, etc.) appears to be relatable to the exercise of legislative power under Entry 25 and 26 of the Concurrent List149. Furthermore, they also appear to conform to Entry 65 of the Union List150 (which has been adverted to in Entry 25 of the Concurrent List). As things stand, the Institute is the only body which prescribes the contents of professional education and entirely regulates the profession of Chartered Accountancy. There is no other body authorised to perform any other duties which it performs. It, therefore, clearly falls in the description of a charity advancing general public utility. Having regard to the previous discussion on the nature of charities and what constitutes activities in the ‘nature of trade, business or commerce’, the functions of the Institute 149 In List III of the Seventh Schedule to the Constitution of India, “25. Education, including technical education, medical education and universities, subject to the provisions of entries 63, 64, 65 and 66 of List I; vocational and technical training of labour.

26. Legal, medical and other professions”. G 150 In List I of the Seventh Schedule to the Constitution of India, “65. Union agencies and institutions for— (a) professional, vocational or technical training, including the training of police officers; or (b) the promotion of special studies or research; or (c) scientific or technical assistance in the investigation or detection of crime.” H

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1031 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

ipso facto does not fall within the description of such ‘prohibited A activities’. The fees charged by the Institute and the manner of its utilisation are entirely controlled by law. Furthermore, the material on record shows that the amounts received by it are not towards providing any commercial service or business but are essential for the providing of service to the society and the general public. B

196Copy pinpoint196. Similarly, there are several other regulatory bodies that discharge functions which are otherwise within the domain of the State. A singular characteristic of ICAI and other statutory bodies which can be said to regulate specific functions and professions (including the profession of Cost and Work Accountants, and Company Secretary, etc.) is the powers conferred upon them by the statutes to prescribe standards and enforce them through disciplinary sanctions. Therefore, it is held that bodies which regulate professions and are created by or under statutes which are enjoined to prescribe compulsory courses to be undergone before the individuals concerned is entitled to claim entry into the profession or vocation, and also continuously monitor the conduct of its members do not ipso facto carry on activities in the nature of trade, commerce or business, or services in relation thereto.

197Copy pinpoint197. At the same time, this court would sound a note of caution. It is important, at times, while considering the nature of activities (which may be part of a statutory mandate) that regulatory bodies may perform, whether the kind of consideration charged is vastly or significantly higher than the costs it incurs. For instance, there can be in given situations, regulatory fees which may have to be paid annually, or the body may require candidates, or professionals to purchase and fill forms, for entry into the profession, or towards examinations. If the level of such fees or collection towards forms, brochures, or exams are significantly higher than the cost, such income would attract the mischief of proviso to Section 2(15), and would have to be within the limits prescribed by sub-clause (ii) of the proviso to Section 2(15).

198Copy pinpoint198. The next set of ‘statutory regulatory authorities’ among the present batch are those related to authorities set up under the Seeds G Act, 1966 (i.e, the Andhra Pradesh State Seeds Certification Authority and the Rajasthan State Seeds and Organic Production certification Agency). These two entities are set up as societies under Section 8 of the Seeds Act, and comprise of farmers, farmers co-operatives’ representatives, seed certification authorities, etc. The task of these H

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A agencies and authorities is certification of seeds, to decide whether to certify supply of seeds of “any notified kind or variety”, by applicants who may wish to offer them for trade. These agencies/authorities scrutinize the samples to ensure they conform to the requisite standard notified under Section 6. These decisions are subject to appeal under Section 11. B

199Copy pinpoint199. The functioning of the seed certification agency, is a crucial one, in those only seeds conforming to prescribed standards, are permitted to be traded and used, by farmers. Such standards are - in the context of the fact that agriculture is one of the mainstays of the economy, and furthermore, pivotal for food security - essential as they ensure efficacy C of seeds and guarantee to the farmers that they can be relied upon. The essential nature of the regulatory function performed by these certification agencies is obvious. The nature of their activities is not by way of trade, commerce or business, nor service in relation to trade commerce, business, for some form of consideration. D (iii) Trade Promotion bodies, councils, associations or organizations

200Copy pinpoint200. Surat Art Silk (supra) and other decisions, had ruled that as long as the objects of trade promotion bodies were for general public utility - wherein ‘trade promotion’in itself, was held to be a GPU - the fact that incidentally these bodies carried on some commercial activity, leading to profit, did not preclude them from claiming to be driven by charitable purpose. As observed earlier, the enunciation of those principles were in the context of the unamended Section 2(15).

201Copy pinpoint201. The question that arises is whether the change in definition impacts the claims of trade promotion bodies, federations of commerce, or such organizations, that they are GPU charities . The judgment in Surat Art Silk (supra) proceeded on the assumption that trade promotion was the pre-dominant object of the GPU charity before the court, and that other objects – including procuring licences, trade etc. were incidental. G The assessee in Surat Silk had clear trading objects: “(b) To carry on all and any of the business of Art Silk Yarn, Raw Silk, Cotton Yarn as well as Art Silk f loth, Silk Cloth and Cotton Cloth belonging to and on behalf of the members. ********* ********** H

ASST. COMM’R OF INCOME TAX (EXEMPTIONS) v. AHMEDABAD 1033 URBAN DEVELOPMENT AUTHORITY [S. RAVINDRA BHAT, J.]

(e) To buy and sell and deal in all kinds of cloth and other goods and fabrics belonging to and on behalf of the Members.” This court, nevertheless, held that since the predominant object of the assessee was trade promotion, while furthering it, the fact that some trading occurred, leading to income, did not preclude the assessee from claiming tax exemption.

202Copy pinpoint202. In the opinion of this court, the change in definition in Section 2(15) and the negative phraseology - excluding from consideration, trusts or institutions which provide services in relation to trade, commerce or business, for fee or other consideration - has made a difference. C Organizing meetings, disseminating information through publications, holding awareness camps and events, would be broadly covered by trade promotion. However, when a trade promotion body provides individualized or specialized services- such as conducting paid workshops, training courses, skill development courses certified by it, and hires venues which are then let out to industrial, trading or business organizations, to D promote and advertise their respective businesses, the claim for GPU status needs to be scrutinised more closely. Such activities are in the nature of services “in relation to” trade, commerce or business. These activities, and the facility of consultation, or skill development courses, are meant to improve business activities, and make them more efficient. E The receipts from such activities clearly are ‘fee or other consideration’ for providing service “in relation to” trade, commerce or business.

203Copy pinpoint203. The revenue has appealed to this court, in respect of two assessment years, in the case of Apparel Export Promotion Council (AEPC). The objects of AEPC, which was set up in 1978 – include F promotion of ready-made garment export. To achieve that end, its objects include providing training to instil skills in the workforce, to improve skills in the industry; guide in sourcing machinery; to serve as a body advising, providing information on market or technical intelligence; assisting the concerned industry in obtaining import licenses; showcase the best capabilities of Indian garment exports through the prestigious “India G International Garment Fair” organised twice a year by AEPC, etc. These fairs host over 350 participants who exhibit their garment designs and patterns. Other functions are to provide information, and to provide market research. AEPC also assists in developing new design patterns and garments and to perform promotional activities in individual foreign H

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A markets. Further, AEPC sends missions and trade delegations abroad, who participate in international fairs; and conducts surveys to gather information on potential export of ready-made garments.

204Copy pinpoint204. As part of its functioning, it also books bulk space, which is then rented out to individual Indian exporters, who showcase their products and services, and ultimately secure export orders. Towards these services, i.e., booking and providing space, AEPC charges rentals. Now, these rents are not towards fixed assets owned by it. They are in fact charges, or fees, towards services in relation to business; likewise, the skill development and diploma courses conducted by it, for which fees are charged, are to improve business functioning of garment exporters. Furthermore, market surveys and market intelligence, especially country specific activities, aimed at catering to specified exporters, or specified class of exporters, is also service in relation to trade, commerce or business.

205Copy pinpoint205. In the circumstances, it cannot be said that AEPC’s D functioning does not involve any element of trade, commerce or business, or service in relation thereto. Though in some instances, the recipient may be an individual business house or exporter, there is no doubt that these activities, performed by a trade bodycontinue to be trade promotion. Therefore, they are in the “actual course of carrying on” E the GPU activity. In such a case, for each year, the question would be whether the quantum from these receipts, and other such receipts are within the limit prescribed by the sub-clause (ii) to proviso to Section 2(15). If they are within the limits, AEPC would be – for that year, entitled to claim benefit as a GPU charity.

F (iv) Non-statutory bodies - ERNET, NIXI and GS1 India

206Copy pinpoint206. ERNET is a not-for profit society, set up under the aegis of the Union Government. At one time, government functionaries, including the late President, APJ Abdul Kalam, were members, on account of their ex officiocapacity. The objects of this assessee are to G “ 3.1.1 To advance the cause of computer communication in the country in all its aspects and dimensions with a view to provide rapid nationwide development of the sector and technological and economic growth of the county. 3.1.2 To develop, design, setup and operate nationwide state of the art computer communication infrastructure with

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international connectivity directed towards research and development, advancement of high quality education, create and host content, express creative and academic potential via intranet and intranet peer to peer connectivity among educational and research institutions in the country and the world and make available the communication infrastructure to users in academic, research and development institutions, Govt organizations in line with national priorities.”

207Copy pinpoint207. ERNET’s networks are a mix of terrestrial and satellite- based wide-area network. It provides services through its 15 Points of Presence (PoPs) located across the country. All those are equipped to provide access to Intranet, Internet and Digital Library through trial leased circuits and radio links to the user institutions. The PoP at STPI Bengaluru provides Intranet and Internet access through Satellite.ERNET provides, services, namely, Network Access Services, Network Applications Services, Hosting Services, Operations Support Services und Domain Registration Services under srnet.in, ac.in, edu.in & res.in domains. D Funded through government grants, its projects support educational networks and development of internet infrastructure in numerous other segments of society.

208Copy pinpoint208. Having regard to the nature of ERNET’s activities, it cannot be said that they are in the nature of trade, commerce or business, or service, towards trade, commerce or business. It has to receive fees, to reimburse its costs. The materials on record nowhere suggest that its receipts (in the nature of membership fee, connectivity charges, data transfer differential charges, and registration charges) are of such nature as to be called as fees or consideration towards business, trade or commerce, or service in relation to it. The functions ERNET performs are vital to the development of online educational and research platforms. For these reasons, it is held that the impugned judgment, which upheld the ITAT’s order, does not call for interference.

209Copy pinpoint209. The Revenue has appealed the decision of Delhi High Court in which the National Internet Exchange of India (NIXI) was held to be G a GPU category charity. The materials on record show that NIXI was established in 2003 under the aegis of the Ministry of Information Technology of the Union Government for the promotion and growth of internet services in India, to regulate the internet traffic, act as an internet exchange, and undertake “.in” domain name registration. Concededly, H

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A NIXI, is a not for profit, and is barred from undertaking any commercial or business activity. Its object is to promote the interests of internet service providers and internet consumers in India, improve quality of internet service, save foreign exchange, and carryon domain name operations. It is bound by licensing conditions – which include the prohibition from altering its memorandum, without the prior consent of B the Union Government. According to the submissions made on NIXI’s behalf, it charges annual membership fee of 1000/- and registration of second and third level domain names at 500/- and 250/-. The finding of the ITAT and the High Court are that NIXI’s objects and functioning are by way of general public utility and thus it is a GPU category charity.

210Copy pinpoint210. Having regard to the findings on record and the materials placed by the parties, it is evident that NIXI carries on the essential – crucial purpose of promoting internet services and more importantly, regulating domain name registration which is extremely essential for internet users in India. A country’s need to have a domestic internet D exchange, rather than depend on an international one, cannot be overemphasized. The Union Government’s object of setting up of internet exchange is part of its essential function as a government to regulate certain segment of the communication networks. In the absence of a single entity authorized to register “.in” domain names, there is bound to be chaos or confusion. E

211Copy pinpoint211. In view of the foregoing discussion, this Court is of the opinion that the revenue’s contention that NIXI does not merely carry-on public purpose of regulatory activity but is involved in trade, commerce, or business or in providing service in relation thereto, cannot be accepted.

212Copy pinpoint212. The next assessee under consideration – is GS1 India. GS1 codes were developed and created by GS1 International, Belgium (an international not-for-profit under Belgium tax law). This coding system has been in use worldwide and is even mandatory for some services/ goods, or adopted for significant advantages being a singular identification system, recognized and accepted all over the world. The code promotes G universal standard in Electronic Data Inter-exchanged (EDI) and other services. This system of coding has been accorded priority by the Government of India as it is a compulsory requirement on products exported from India. Government of India had set up non-profit organizations EAN India, now known as GS1 India (the assessee). H

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213Copy pinpoint213. Counsel on behalf of GS1 India, submitted that GS1 is affiliated and conferred exclusive rights relating to GS1 coding in India. The GS1 code on a product, provides a unique identification to it with wide ranging benefits and advantages which facilitate tracking, tracing of the product, product recalls, counterfeit detection, user safety due to accuracy, wastage control through accurate monitoring and stock levels for commodities, security and safety of supply chains, detection of illegal trade, etc. The unique identification or coding system developed and operated by GS1 International or GS1 India is recognized and accepted globally. Additionally, the unique identification code can be enabled with RFID chip and other electronic technology. Being one of its kinds globally, only a GS1 registered organization can set up and promote the said system/standard within a country. These can be used for several fields including public distribution system, agriculture, health products, etc. and has been successfully used for product package labels. The utility and benefits of a universal coding system assessable by anyone across the globe, for the consumers, government, manufacturers, traders, exporters, etc. are enormous and significant. Initial registration fee of 20,000/- is charged by GS1, plus annual fee of 4,000/- (enhanced to 5,000/- from financial year 2006-07 onwards) from third parties, who become subscribing members, and are entitled to use the GS1 coding system.

214Copy pinpoint214. It was submitted on behalf of GS1 that it was set up as society in 1996 and sponsored by the Union Government. The Union E Government representatives and the representatives of the trade bodies are its members. The activities of GS1 are extremely important and have to be characterized as involving general public utility. It was submitted that having regard to the fact that GS1 provides services to all organizations regardless of whether they carry on business, trade or other commercial activity, a narrow interpretation confining the expression “service in relation to” should not be adopted. It was urged, that there is no dispute about the fact that GS1 was directed to be granted registration under the IT Act, and that GS1 Belgium, the parent organization, so to say, which owns the technology, has been granted the status of not for profit charity. GS1 urges that it is not dealing or treating the prized rights as a right be exploited commercially to earn or generate profits.Itis not directly or indirectly subjecting their activity to market mechanism/ dynamics (i.e., demand and supply), rather it is motivated and prompted to serve the beneficiaries. Therefore, this is not a case of commercial exploitation of intellectual property rights to earn profits (as contended H

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A by the Revenue), but rather a case where a token fee has been fixed and payable by the user of the global identification system. Clause 44 of GSI’s Memorandum of Association of the petitioner stipulates that it is a “Not-for-Profit” society and the funds/receipts are to only be used for promotion of objects of the society for which it is established, including sustenance and expansion. B

215Copy pinpoint215. The revenue contended that although GS1 India has a monopoly, the mere fact that it is stated to be a Not for Profit Society with some governmental involvement in its management would not detract from its essential nature; which is to sub-serve the interest of the business community. It was elaborated in this context that GS1 by providing bar codes and the coding systemsecured by license, not only exploits the intellectual property rights but is in fact engaged in services in relation to trade, commerce or business. Counsel pointed to the fact that the revenues of GS1 has steadily increased over the years. It was pointed out that according to the balance sheet the aggregate registration fees receipt for the year ending 31.03.2007 was 1,80,80,760/- whereas for the year ending 31.03.2008 which had increased to 4,85,47,170/-. Likewise, membership fees had increased from 44,40,000/- as on 31.03.2007 to 93,42,500/-. Furthermore, renewal fees for the year ending 2007 was 1,68,57,200/- whereas for the next year i.e., as on 31.03.2008 it was 1,90,50,650/-. The Revenue submitted that even where income and interest were to be excluded, the increase on a yearly basis was exponential. Likewise, it was pointed out that registration fees as on 31.03.2011 was 4,24,69,850/- whereas as on 31.03.2012 it was 6,07,58,100/-; subscription fee as on 31.03.2011 was 1,02,06,720/-; for the next year i.e., on 31.03.2012 it was 1,01,69,850/-. Likewise, the subscription renewal fees as on 31.03.2011 was 4,18,62,804/- and the same head as on 31.03.2012 was 4,46,71,134/-.

216Copy pinpoint216. The Revenue emphasises the fact that GS1 is a monopolist organization, has exclusive licenses in relation to bar coding technology which it admittedly uses for fee or other consideration. It is highlighted that these services are provided mostly to business, trade purpose, manufacturing, etc.On the other hand, GS1 urges that it performs the important public function which enables not merely manufactures but others involved in supplies of various articles by packaging, etc., to regulate and ensure their identity.

217Copy pinpoint217. In the opinion of this Court, GS1’s functions no doubt is of general public utility. However,equally the services it performs are to aid

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businesses manufactures, tradesmen and commercial establishments. A Bar coding packaged articles and goods assists their consignersto identify them; helps manufactures, and marketing organizations (especially in the context of contemporary times, online platforms which serve as market places). The objective of GS1 is therefore, to provide service in relation to business, trade or commerce - for a fee or other consideration. B It is also true, that the coding system it possesses and the facilities it provides, is capable of and perhaps is being used, by other sectors, in the welfare or public interest fields. However, in the absence of any figures, showing the contribution of GS1’s revenues from those segments, and whether it charges lower amounts, from such organizations, no inference can be drawn in that regard. The materials on record show that the coding services are used for commercial or business purposes. Having regard to these circumstances, the Court is of the opinion that the impugned judgment and order calls for interference. (v) State Cricket Associations

218Copy pinpoint218. The revenue has preferred appeals against the decision of the Gujarat High Court in respect of orders made in the cases of the Gujarat Cricket Association, the Saurashtra Cricket Association, Baroda and Rajkot Cricket Associations and the decision of the Rajasthan High Court, in respect of the Rajasthan Cricket Association. The main facts, relevant for deciding the questions involved are set out in the order of the ITAT151 against which the Gujarat High Court rendered the impugned judgment152. Since the legal issues are common in relation to all these matters, the facts relating to the Gujarat Cricket Association (GCA) may be considered for convenience.

219Copy pinpoint219. The objects of GCA (and other associations) are to control, supervise, regulate, promote or encourage, and develop the game of cricket in the area under its jurisdiction. The association can also undertake any other and all activities which may be beneficial to it. GCA’s objects include activities aimed at creating, fostering and maintaining friendly and cordial relationship through sports tournaments and competitions, to create a healthy spirit through the medium of sports in general, and cricket G 151 ITA Nos: 1257/Ahd/13, 3303/Ahd/16, 3304/Ahd/16, 408/Ahd/17 Assessment years: 2009-10, 2010-11, 2011-12 and 2012-13. 152 SLP (D) No. 16597/2020 against a common judgment dated 27.9.2019, which relate to the Gujarat Cricket Association, Saurashtra, Baroda and Rajkot Cricket Association Cricket Association. H

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A in particular. The other objects include: to instil the spirit of sportsmanship in school and college students, members of other institutions, and other citizens; instil the ideals of cricket and educate them in the same; to select teams to represent the association in any competitive forum; to arrange, supervise, hold, encourage and finance visits of teams; to arrange or manage league and/or any other tournaments; to promote persons, meetings, competitions and matches in relation to sports; and to offer, give/distribute or contribute towards prizes, medals and awards; to lay out grounds for playing the game; and to provide pavilion, stadia, other conveniences and amenities in connection therewith. The GCA also includes within its objects, providing coaching to deserving persons in the various departments of the game of cricket; engaging professional cricketers, coaches, umpires, groundsmen, and other employees, and to pay remuneration or honorarium to them; and to start, sponsor and/or to subscribe to any fund for the benefit of such persons or their families. The GCA can collect funds for the purpose of the Association and utilise it in such manner as its Managing Committee considers desirable for the fulfilment of its objects.

220Copy pinpoint220. The assessing authorities denied GCA’s claim and that of the other associations, that they were charities. Before the ITAT, it was contended, on behalf of the revenue, inter alia, that looking at the nature of the relationship of these state cricket associations with the Board of E Cricket Control of India (BCCI), the amounts received by these associations from BCCI were in the nature of consideration or fees, for granting media rights, and collecting their share, among other things. This amounted to a business or commercial activity. It would, in this context, be useful to quote the observations set out in the ITAT’s order F (which were part of the commissioner’s order). The Commissioner had taken note of assessment proceedings in relation to BCCI, and set out its submissions: “9.7.2 The AO of BCCI, based on the communication of DIT(E), Mumbai, has not granted benefit of section 11 & 12 G of the Act to BCCI. The stand taken by BCCI during its assessment proceedings is mentioned below. The BCCI vide its submission dated 03/12/2012 to the AO has explained its relationship with State Cricket Association as follows:- “1. BCCI is society registered under the Tamil Nadu Societies H Registration Act. It was formed in the year 1929 with the object

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of promotion and development of cricket in India and is a A member of the International Cricket Council (ICC) the regulatory body for world cricket. As a member of ICC, BCCI represents India in bilateral tours between member countries and in ICC tournaments such as the World Cup.

2. BCCI has 30 members out of whom 25 are state cricket associations, 2 are private clubs and 3 are Central Government Institutions. BCCI does not own or manage the infrastructure and facilities that are required for cricket. It encourages and oversees the various state associations to promote the game, build the required infrastructure organize tournaments, leagues, coaching camps etc. in their respective states. Whenever a foreign team visits India, the international matches such as Test and ODI are allotted by BCCI to the State Cricket Associations by a rotation policy. The matches are conducted and managed by the respective state associations and over time, arrangements have evolved about the respective responsibilities, rights, shares of revenue etc. These have evolved in order to promote co-operation and unity among the member associations and by applying the principles of equity and fairness, for which the sport of cricket is renowned.” E 9.7.3 The BCCI in its submission dated 21/1/2013 earned subsidy paid to SCAs and TV Subvention as stated as follows:- “13.2 PAYMENTS TO STATE ASSOCIATIONS F During the year, BCCI has paid amounts to the state associations under the head “TV, Subventions to Associations”. This represents payment of 70% of the revenue from sale of media rights to the state associations”. Whenever a foreign team visits India, the international matches G such as Test and ODI are allotted by BCCI to the state cricket associations by a rotation policy. The matches are conducted and managed by the respective state associations. It is not possible for BCCI to conduct all these matches with its own limited personnel. It is dependent on the state associations, H

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A their office bearers, their employees and their network and resources at the local centre to conduct the matches. The association manage the entire match right from provision of security to players, spectators in coordination with respective state police personnel, taking other security measures like fire prevention etc. The association incurs a good chunk of expenditure in conducting an International Test/ODI/T20/IPL/CL T20 Matches. In order to have fair and equitable sharing of the revenues, arrangements have evolved over time, about the respective responsibilities, rights, shares of revenue etc. of BCCI and the state associations. The state association is entitled to the ticket revenue and ground sponsorship revenues. Expenses on account of security for players and spectators, temporary stands, operation of floodlights, Score Boards, management of crowd. Insurance for the match, electricity charges, catering etc are met by the state associations. On the other had expenditure on transportation of players and other match officials, boarding and lodging, expenses on food for players and officials, tour fee, match fee, etc are met by BCCI and revenues from sponsorship belong to BCCI. In respect of revenues from sale of media rights, an arrangement has evolved over time. Until 1991-92 the income from media rights was meager. With the growth in income from media rights, it became necessary to optimize the arrangement for sale of media rights. For a Test series or ODI series conducted in multiple centers and organised by BCCI and multiple state associations, it was found that if each state association were to negotiate the sale of rights to events in its centre, its negotiating strength would be low. It was, therefore, agreed that BCCI would negotiate the sale of media rights for the entire country to optimize the income under this head. It was further decided that out of the receipts from the sale of media rights 70% of the gross revenue less production cost would belong to the state associations. Every year, BCCI has paid out exactly 70% of its receipts from media rights (less- production cost) to the state associations. This amount has been utilized by the respective associations to build H

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infrastructure and promote cricket, making the game more A popular, nurturing and encouraging cricket talent, and leading to higher revenues from media rights. ************* **************** Even in the event that exemption under section 11 is denied, the payments to state associations must be allowed as a B deduction, as expenditure laid out or expended wholly and exclusively for the purpose of earning such income, it must be appreciated that in order to earn revenues, BCCI was and continues to be highly dependent on the state associations. BCCI does not have the infrastructure and the resources to conduct the matches by itself and is dependent on the state associations to conduct the matches. The income from media rights is dependent on the efforts of the state associations in conducting the matches from which the media rights accrue. The division of revenues and expenditure is a matter of arrangement between the parties. Certain incomes such as sale of ticket revenues belong to the state associations, who meet the expenditure on the matches such as security for players and spectators temporary stands, operation of floodlights, Score Boards, management of crowd, insurance for the match, electricity charges, catering etc. Whereas with regard to the income from sale of media rights, the arrangement between BCCI and the State Associations has been that 70% of the revenue would belong to the State Associations. As shown, this has been the arrangement between the parties for the twenty years. The State Associations are entitled by virtue of established practice to 70% of the media right fee. F It is in expectation of this revenue that the various state associations take an active part and cooperate in the conduct of the matches. This payment is therefore made only with a view to earn the income from media rights.”

221Copy pinpoint221. The ITAT accepted the assessee’s contentions, and held that G the associations were GPU charities: “35. Let us take a pause here and examine as to what are the activities of the assessee cricket associations so as to be brought within the ambit of trade, commerce or business. We H

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A have seen objects of the association, which are reproduced earlier in our order, and it is not even the case of the revenue that these objects have anything to do with any trade, commerce or business; these objects are simply to promote cricket. The trigger for invoking proviso to Section 2(15), as Shri Soparkar rightly contends, has to an activity of the B assessee which is in the nature of trade, commerce or business. However, the case of the revenue authorities hinges on the allegation that the way and manner in which cricket matches are being organized, particularly the IPL matches, the activity of organizing cricket matches is nothing but brute commerce. C Undoubtedly, it would appear that right from the time Kerry Packer started his World Series Cricket in 1977, there has been no looking back in commercialization of cricket and the impact of this commercialization has not left Indian cricket intact. The Indian Premier League and the rules of the game being governed by the dictates of commercial considerations D may seem to be one such example of commercialization of Indian cricket. The difficulty for the case of the revenue before us, however, is that these matches are not being organized by the local cricket associations. We are told that the matches are being organized by the Board of Cricket Control of India, E but then, if we are to accept this claim and invoke the proviso to Section 2(15) for this reason, it will amount to a situation in which proviso to Section 2(15) is being invoked on account of activities of an entity other than the assessees- something which law does not permit. We are not really concerned, at this stage, whether the allegations about commercialization F of cricket by the BCCI are correct or not, because that aspect of the matter would be relevant only for the purpose of proviso to Section 2(15) being invoked in the hands of the BCCI. We do not wish to deal with that aspect of the matter or to make any observations which would prejudge the case of the BCCI. G Suffice to say that the very foundation of revenue’s case is devoid of legally sustainable basis for the short reason that the commercialization of cricket by the BCCI, even if that be so, cannot be reason enough to invoke the proviso to Section 2(15). We are alive o learned Commissioner (DR)’s suggestion that the cricket associations cannot be seen on standalone H

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basis as the BCCI is nothing but an apex body of these cricket A associations at a collective level and whatever BCCI does is at the behest of or with the connivance of the local cricket associations, and that it is not the case that anyone can become a Member of the BCCI because only a recognized cricket association can become a Member of the BCCI. We B are also alive to learned Commissioner’s argument that what is being sought to be protected by the charitable status of these associations is the share of these cricket associations from the commercial profits earned by the BCCI by organizing the cricket matches. The problem, however, is that the activities of the apex body, as we have explained earlier, cannot be reason enough to trigger proviso to Section 2(15) in these cases. Whether these cricket associations collectively constitute BCCI or not, in the event of BCCI being involved in commercial activities, the taxability of such commercial profits will arise in the hands of the BCCI and not the end beneficiaries. Even in such a case the point of taxability of these profits is the BCCI and not the cricket associations, because, even going by learned Commissioner’s arguments, these receipts in the hands of the cricket associations is nothing but appropriation of profits. What can be taxed is accrual of profits and not appropriation of profits. In any event, distinction between the cricket associations and the BCCI cannot be ignored for the purposes of tax treatment. There is no dispute that the matches were organized by the BCCI, and the assessee cannot thus be faulted for the commercial considerations said to be inherent in planning the matches. As we make these observations, and as we do not have the benefit of hearing the perspective of the BCCI, we make it clear that these observations will have no bearing on any adjudication in the hands of the BCCI. Suffice to say that so far as the cricket associations are concerned, the allegations of the revenue authorities have no bearing on the denial of the status of ‘charitable activities’ in the hands of the cricket associations before us- particularly as learned Commissioner has not been able to point out a single object of the assessee cricket associations which is in the nature of trade, commerce or business, and, as it is not even in dispute H

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A that the objects being pursued by the assessee cricket associations are “objects of general public utility” under section 2(15). All the objects of the assessee cricket associations, as reproduced earlier in this order, unambiguously seek to promote the cricket, and this object, as has been all along accepted by the CBDT itself, an object B of general public utility.”

222Copy pinpoint222. In granting relief, the ITAT was persuaded by the decision of the Madras High Court, in Tamil Nadu Cricket Association v. Director of Income Tax (Exemptions) &Ors.153, and held C “54. The assessee is a member of the Board of Control for Cricket in India (BCCI), which in turn is a member of ICC (International Cricket Council). BCCI allots test matches with visiting foreign team and one day international matches to various member cricket associations which organise the matches in their stadia. The franchisees conduct matches in the stadia belonging to the State cricket association. The State association is entitled to all in-stadia sponsorship advertisement and beverage revenue and it incurs expenses for the conduct of the matches. BCCI earns revenue by way of sponsorship and media rights as well as franchisee revenue for IPL and it distributes 70 per cent, of the revenue to the member cricket association. Thus, the assessee is also the recipient of the revenue. Thus, for invoking section 12AA read with section 2(15) of the Act, the Revenue has to show that the activities are not fitting with the objects of the association and that the dominant activities are in the nature of trade, commerce and business. We do not think that by the volume of receipt one can draw the inference that the activity is commercial. The Income-tax Appellate Tribunal’s view that it is an entertainment and, hence, offended section 2(15) of the Act does not appear to be correct and the same is based on its own impression on free ticket, payment of entertainment tax and presence of cheer group and given the irrelevant consideration. These considerations are not germane in considering the question as to whether the activities are genuine or carried on in accordance with the objects of the 153 H [2014] 360 ITR 633 (Mad)

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association. We can only say that the Income-tax Appellate A Tribunal rested its decision on consideration which are not relevant for considering the test specified under section 12AA(3) to impose commercial character to the activity of the association. In the circumstances, we agree with the assessee that the Revenue has not made out any ground to cancel the registration under section 12AA(3) of the Act.

55. As regards the observation of the Income-tax Appellate Tribunal that IPL matches and Celebrity cricket matches are also being held by the association and hence, it is an entertainment industry, we need not go into these aspects for the order of the Director of Income-tax (Exemptions) casts no doubt on the genuineness of the objects of the trust. Hence, it is for the Assessing Officer to take note of all facts, while considering the same under section 11 of the Income-tax Act,

1961. We disapprove the approach of the Tribunal in this regard. In the above said circumstances, we set aside the order of the Income-tax Appellate Tribunal.”

223Copy pinpoint223. The ITAT agreed with the assessees that TV subsidy amounts received by the associations were “corpus donations” in furtherance of the BCCI’s resolution dated 05.09.2001. It accordingly held that these amounts were in the capital field, irrespective of whether they were fully utilized by the state association, or whether some part of it, was given to district associations. Thus, for AY 2009-2010, the sum of 3,52,86,521 paid by BCCI to GCA was subsidy, falling in the capital field.

224Copy pinpoint224. It was urged on behalf of the Revenue that the cricket associations are not carrying on any charitable activity; reliance was placed on the facts to say that substantial amounts were received by the state associations, towards their share of sale of media rights (as constituents or members of BCCI), which are commercial receipts. Although the sale of those rights was by the BCCI, the lion’s share of those amounts was that of the respective state associations. Furthermore, G the state associations owned the stadia, and actually conducted the matches, in respect of which stadium advertisements and sponsorship amounts were received: these, too, were in the nature of business or commercial activities. The assessees on the other hand, submitted that they are distinct from the BCCI. It was sought to be urged that the H

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A activity of sports and sport promotion is basically education, and hence, per se exempt. Realizing the value of inculcating sportsmanship and fostering the culture of sport, Parliament had introduced Section 10(23), to exempt income received by sports bodies. However, that was deleted w.e.f. 01.04.2003. It was argued that this does not preclude sports bodies, like cricket associations from claiming to be charities. It was urged that even if the court were not to consider the cricket associations to be education-related charities, they cannot be denied the status of GPU charities, having regard to the sports promotional nature of their objects. It was submitted that these bodies are primarily responsible for fostering the sport, talent spotting, nurturing it, and providing opportunities to those who have the aptitude and passion for the game of cricket. All these are objects of general public utility. It was submitted that the amounts which BCCI collects may or may not be in the course of commerce; however, what is given to the associations is subsidy, which cannot be termed as consideration for carrying on any commercial activity.

225Copy pinpoint225. At the outset, the contention that sports promotion is ‘education’ and hence, per se exempt, has to be dealt with. In Lok Shikshana Trust (supra) this court has comprehensively addressed the scope of the term, and conclude that it would entail “scholastic” education: “5. The sense in which the word “education” has been used in Section 2(15) is the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. The word “education” has not been used in that wide and extended sense, according to which every acquisition of further knowledge constitutes education. According to this wide and extended sense, travelling is education, because as a result of travelling you acquire fresh knowledge. Likewise, if you read newspapers and magazines, see pictures, visit art galleries, museums and zoos, you thereby add to your knowledge. Again, when you grow up and have dealings with other people, some of whom are not straight, you learn by experience and thus add to your knowledge of the ways of the world. If you are not careful, your wallet is liable to be stolen or you are liable to be cheated by some unscrupulous person. The thief who removes your wallet and the swindler who cheats you teach H

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you a lesson and in the process make you wiser though poorer. A If you visit a night club, you get acquainted with and add to your knowledge about some of the not much revealed realities and mysteries of life. All this in a way is education in the great school of life. But that is not the sense in which the word “education” is used in clause (15) of Section 2. What B education connotes in that clause is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.” Therefore, there is no doubt that the claim of the present sport associations will not fall within ‘education’ and will have to be examined under the fourth limb of Section 2(15) – i.e., GPU category, if it is to make a case for tax exemption.

226Copy pinpoint226. BCCI is the body which regulates cricket and represents the country. Within the country it organizes and conducts the Ranji Trophy, the Irani Trophy, the Duleep Singh Trophy, the Deodar Trophy and the NKP Salve Challenge Trophy. These are domestic events, yet only those who are members of the Board and/or recognized by it can take part in these events. The members of the Board (entitled to vote in its election) are the state cricket associations.154 The BCCI is the country-level cricket regulator both off and on the fields, and its functions include selection of players and umpires. The International Cricket Council (of which BCCI, E as the representative body of the country, is a member) possesses and exercises all the powers to regulate international competitive cricket. It also exercises disciplinary power – in case of violation of the rules, a country member or the player may be derecognized. The ICC exercises a monopoly over the sports at the international level whereas BCCI does so at the country level. BCCI recognizes bodies which are entitled F to participate in the nominated tournaments. Players and umpires also are to be registered with it.

227Copy pinpoint227. The game of competitive cricket, at the organizational level is structured in such a manner that BCCI has umbilical ties with the state associations. Not only are the latter, the members who constitute G BCCI and elect its governing bodies, they also own vital infrastructure necessary to play cricket: such as stadia, and all related facilities. BCCI does not own those facilities or infrastructure and depends on them. 154 Rule 3 (a) (ii) (B) of the latest BCCI Memorandum of Association and the Rules and Regulations H

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A Furthermore, the state associations are the channels through which players are mostly selected, and get opportunities to participate in state, national and international level cricket.

228Copy pinpoint228. As things stand, therefore, the state associations and BCCI are linked closely. The management of the game of cricket is structured in such a way that this link is apparent at every match or fixture of significance. In the course of conducting matches (which are scheduled by the BCCI as the national co-ordinating body), apart from amounts received towards sale of entry tickets, the state associations also receive advertisement money, sponsorship fee, etc. from the BCCI. Aside from these, media rights - i.e., broadcasting rights to each national or international event conducted at various locales owned by the state associations, and digital rights (all of which are exclusive, in nature) - are auctioned by BCCI. As noticed above, the BCCI, by its own admission, negotiates the terms on which media rights are sold, on behalf of the state associations: D “For a Test series or ODI series conducted in multiple centers and organised by BCCI and multiple state associations, it was found that if each state association were to negotiate the sale of rights to events in its centre, its negotiating strength would be low. It was, therefore, agreed that BCCI would negotiate the sale of media rights for the entire country to optimize the income under this head. It was further decided that out of the receipts from the sale of media rights 70% of the gross revenue less production cost would belong to the state associations. Every year, BCCI has paid out exactly 70% of its receipts from media rights (less- production cost) to the state associations. This amount has been utilized by the respective associations to build infrastructure and promote cricket, making the game more popular, nurturing and encouraging cricket talent, and leading to higher revenues from media rights.”

229Copy pinpoint229. These media, or broadcasting rights, are in the nature of intellectual property rights: under Section 37 to 40 of the Copyrights Act,

1957. These rights- especially television and digital rights enable the licensee or the successful bidder to exploit the telecast or broadcast commercially, by carrying advertisements of various products and H services, in the media. Given that (i) BCCI does not own the stadia, and

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uses the entire physical infrastructure of the state associations (ii) A expressly negotiates on their behalf for the sale of such rights (which appear to be purely commercial contracts), the associations’ assertions that they only received subsidy from BCCI, needed closer examination.

230Copy pinpoint230. The income and expenditure account for the year ending on 31.03.2009 shows that the total income of the GCA was 4,03,98,736.81. B Of these sponsorship money was 20,00,000/-; bank interest was 2,21,88,527.05 and as against the head ‘India v. South Africa test match’, the sum of 1,51,97,741/- has been shown. Of the total of 2,21,02,441.45 shown as income, 32,24,591.25 is shown as expenditure, only a fraction appears to have been expended towards promotion of cricket. This is apparent from the following: C

231Copy pinpoint231. The details of the subsidy amounts received from BCCI for every match has been shown. This aggregates to over 41 lakhs. Furthermore, the details received towards the India-South Africa test D fixture paid between 03.04.2008-04.04.2008 has been shown. GCA received 1,57,00,000/- towards sale of space; ticket sales yielded 27,57,700 and towards the head screen income, a sum of 3 lakhs was received. After deducting the expenditure, the excess income received for the year was 1,51,97,741/-. E

232Copy pinpoint232. In the case of Saurashtra Cricket Association, for the year ended on 31.03.2012, various heads of income have been disclosed. These include entry fees which is 5200 onwards. Interest of income received from Fixed Deposits was to the tune of 8,85,67,418/-; total amount of subsidy received from BCCI is 17,56,72,490/-. Of these, the overwhelming share is towards the IPL money collected by the BCCI – F wherein Saurashtra Cricket Association’s share worked out to a total of 17,16,32,490/-.

233Copy pinpoint233. Apart from this, the BCCI also reimbursed to Saurashtra Cricket Association the sum of 73,73,911/-. The income and expenditure account shows a head titled “subvention income from BCCI” to the G extent of 8,14,53,834/-. After deducting the heads of expenditure, excess of income over expenditure for the AY was 69,96,537/-. The Cricket Association showed in the expenditure column that the sum of 24,00,00,000/- was transferred to the Cricket infrastructure fund. For the previous year, a sum of 21,21,00,000/- was transferred to the stadium H

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A fund.

234Copy pinpoint234. It is quite evident that the activities of the cricket associations are run on business lines. The associations own physical and other infrastructure, maintain them, have arrangements for permanent manpower and have well-organised supply chains to cater to the several B matches they host. Many such matches are not at national level and are under-16 or under-18 matches at the regional level. However, these activities are not to be seen in isolation but are to be regarded as part of the overall scheme, and ecosystem in which the game of cricket is organized in India. Talent is spotted, at local levels and dependent on the promise shown, given appropriate exposure. C

235Copy pinpoint235. On a close scrutiny of the expenses borne, having regard to the nature of receipts, the expenditure incurred by Cricket Associations does not disclose that any significant proportion is expended towards sustained or organized coaching camps or academies. Therefore, in the opinion of this court, the ITAT fell into error in not considering the nature D of receipts flowing from the BCCI into the corpus of GCA and SCA – as well as other associations that are before this court- to determine their true character. The ITAT appears to have been swayed by the submission that the amount given by the BCCI were towards capital subsidy.

236Copy pinpoint236. To determine whether a given receipt is to be characterized as falling in the revenue or capital stream, the objective for which it is given as well as the manner in which it is utilized has to be scrutinized. This aspect has been highlighted in Sahney Steel & Press Works Ltd v. Commissioner of Income Tax155 in the following terms: F “It is not the source from which the amount is paid to the assessee which is determinative of the question whether the subsidy payments are of revenue or capital nature. The first proposition stated by Viscount Simon in Ostime case [28 TC 261 : (1946) 1 All ER 668] is that if payments in the nature of G subsidy from public funds are made to the assessee to assist him in carrying on his trade or business, they are trade receipts.” This has later been followed inCommissioner of Income Tax v. Ponni Sugars 156. 155 1997 (Supp 4) SCR 189 H

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237Copy pinpoint237. Recent trends have shown that media rights, especially A broadcasting and digital media rights have yielded colossal revenues to the BCCI. The model adopted in the last 10 years or so has been to auction media rights in respect of events over a 3 or 5-year period. As discussed previously, these media rights are not per se owned by BCCI, which is but an association of persons or agglomerate of all the State B Cricket Association. The stadia which form the venue for these cricket matches (in relation to which media rights are transferred or licensed) are owned by the State Cricket Associations. According to the BCCI itself, the State Associations can well bargain and enter into arrangements for the sale of such media rights. However, to obtain better terms, and gain bargaining leverage a centralized form of sale of such rights has been agreed and adopted by which the BCCI auctions these rights on behalf of the State Associations. All State Associations put together are entitled to 70% of the revenue – i.e., the proceeds of sale of the media rights. This may or may not be in proportion to the events hosted by each or some of the cricket associations. Yet, this forms part of the arrangement by which the consideration flowing from such commercial rights has been agreed to be shared amongst all members of the BCCI. These rights are apparently commercial.

238Copy pinpoint238. In the light of these, the Court is of the opinion that the ITAT – as well as the High Court fell into error in accepting at face value the submission that the amounts made over by BCCI to the cricket associations were in the nature of infrastructure subsidy. In each case, and for every year, the tax authorities are under an obligation to carefully examine and see the pattern of receipts and expenditure. Whilst doing so, the nature of rights conveyed by the BCCI to the successful bidders, in other words, the content of broadcast rights as well as the arrangement with respect to state associations (either in the form of master documents, resolutions or individual agreements with state associations) have to be examined. It goes without saying that there need not be an exact correlation or a proportionate division between the receipt and the actual expenditure. This is in line with the principle that what is an adequate consideration for something which is agreed upon by parties is a matter best left to them. These observations are not however, to be treated as final; the parties’ contentions in this regard are to be considered on their merit.

156 2008 (9) SCC 337 H

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A (vi) Private trusts (a) Tribune Trust

239Copy pinpoint239. The Tribune Trust was constituted pursuant to a will executed by late Sardar Dial Singh Majithia. In clause (xxi) of his Will – after nominating three trustees, the testator directed that they ought to maintain B a press and a newspaper; in clause (xx) the testator directed that his property in the Tribune Press and newspaper would vest permanently in a Committee of Trustees who would thereafter maintain them and “keep up the liberal policy of the newspaper and activity and the excess income after current expenses in improving the said newspaper and C place it on a footing of permanency”.

240Copy pinpoint240. Under the old Act, a question arose as to whether the activity of running a newspaper was one of general public utility; the revenue disallowed the exemption for AY 1932-33. This was affirmed by the Lahore High Court. The Privy Council by its decision in In Re: Trustees D of Tribune (supra) allowed the trust’s appeal and held that the trust was neither constituted for private profit either to the testator nor to any other private person, and that the object of the paper could be described as one “supplying the province with an organ of educated public opinion”. The Privy Council, therefore, reasoned that the Trust was established as a GPU charity. E

241Copy pinpoint241. Apparently, the trust was continuously treated as a GPU category charity and exempted under Section 10(23C)(iv) from 1984-85 onwards. For AY 2009-10, after considering the revised return of the trust, the Revenue was of the opinion that it was not entitled to claim exemption under Section 10(23C). The Punjab and Haryana High Court F which dealt with the Trust’s present appeal was of the opinion that in Surat Art Silk (supra), this court had considered the judgment of the Privy Council. In that judgment, this Court had made some observations that even though the activity of the publication of newspaper was carried on commercial lines with the object of earning profit, it was an activity G engaged by the Trust for the purposes of carrying out its charitable objects. The High Court upheld the revenue’s contention and based upon its analysis of Section 2(15) concluded that the Trust’s income derived from its activities were based on profit motive. In doing so, it was noticed that 85% of the trust’s revenue was from advertisements and interest. The total revenue was 161 crores out of which 124.87 crores was received H

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from advertisements and 11.38 crores from interest on FDRs; 17.49 A crores was from sale of newspapers and 3.74 crores from subscriptions of the dailies.

242Copy pinpoint242. It was argued on behalf of the trust that it was never intended and in fact, not run on profitable basis. No part of its income was ever disbursed to any private individual through profit sharing or otherwise, nor distributed for any purpose other than the activities of the Trust. It was submitted that the High Court’s surmise that the accumulation of large profits and its assumption that the Trust could utilize them for non- charitable purposes in future, was unfounded. In this regard, it was submitted that till 2008-09 all assessments were completed, since the Revenue was satisfied that more than 85% had been ploughed back to feed the main charitable activity.

243Copy pinpoint243. It is noticed from the impugned judgment that the High Court concedes to the fact that the trust’s activities were held by the Privy Council to constitute financing of objects of ‘general public utility’; further that merely because thousands of newspapers were being published made no difference. It still continues to be a GPU charity.

244Copy pinpoint244. The question then is whether the nature of receipts and income garnered by the Trust, in the course of actually carrying out its activity of publishing newspaper, can be characterized as “in the nature of trade, commerce or business” or “service in relation to trade, commerce or business”, for any consideration. During the course of submissions, it was urged that advertisement revenue should not be treated as business or commercial receipts since that virtually is the lifeblood which sustains the activity of publication of newspapers. It was highlighted that the object of maintaining the activity of publishing and distribution of newspaper remains the advancement of general public utility, as it has the effect of both notifying and educating the general public about the current affairs and developments. The inclusion of advertisements also serves as information to the general public, especially in areas of employment, availability of resources, etc. Therefore, publication of advertisement is intrinsically connected with the activity of printing and publishing of newspapers.

245Copy pinpoint245. The publication of advertisements for consideration, in the opinion of the court, by the newspaper, cannot but be termed as an activity in the nature of carrying on business, trade or commerce for a H

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A fee or consideration. That the newspaper published by the trust (“the Tribune”) in this case is funded mainly through advertisement is no basis for holding that publishing such advertisements by the Trust does not constitute business. The object of the trust to involve or engage in publication of newspapers. Publishing advertisements is obviously to garner receipts which are in the nature of profit. Now, by virtue of the amended definition of Section 2(15), GPU charities can engage themselves in business or commercial activity or profit, only if the receipts from such activities do not exceed the quantitative limit of the overall receipts earned in a given year. While the assessee’s contention that publication of advertisement is intrinsically linked with newspaper activity (thereby fulfilling sub-clause (i) of the proviso to Section 2(15), i.e. an activity in the course of actual carrying on of the activity towards advancement of the object) is acceptable, nevertheless, the condition imposed by sub-clause (ii) of the proviso to Section 2(15) has to also be fulfilled. In the present case, that percentage had been exceeded, as evident from the record. D

246Copy pinpoint246. In the light of the foregoing discussion, this court is of the opinion that the impugned judgment and order of the Punjab and Haryana High Court cannot be sustained, to the extent it holds that the Tribune trust is not a GPU charity. However, having regard to the factual analysis, the judgment needs no interference. E (b) Shri Balaji Samaj Vikas Samiti

247Copy pinpoint247. The revenue appeals a decision of the Allahabad High Court157 affirming the order of the ITAT which had directed the CIT to grant registration under Section 12AA of the Income Tax Act.

248Copy pinpoint248. The assessee is a registered society which was formed with the object of establishing and running a health club, Arogya Kendra; its object included organization of emergency relief centres, etc. Other objects, included promotion of moral values, eradication of child labour, dowry, etc. The assessee had entered into arrangements with the state G agencies to supply mid-day meals to students of primary schools in different villages through contracts entered into with the Basic Shiksha Adhikari, District Meerut. It is a matter of record that the materials for preparation of mid-day meal was supplied by the government. The assessee society claimed that it only obtains nominal charges for 157 Dated 09.02.2018 in ITA 49/2014. H

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preparation of mid-day meals. The assessee’s claim for registration was rejected on the ground that it was involved in commercial activity. Upon appeal, the ITAT agreed with the assessee that supply of mid-day meals did not constitute business or commerce and that it promoted the objects of general public utility.

249Copy pinpoint249. The revenue in its appeal contends that the assessee’s only activity for the relevant year was supply of mid-day meals to primary schools. This was not relatable to any object of the society. The assessee’s contention is that the state ordinarily would have carried on the activity of supply of mid-day meals. Yet, nevertheless it outsourced its activity to an outside agency like the assessee which performed it for nominal charges. C

250Copy pinpoint250. This court is of the opinion that there is no clarity with respect to whether the activity of supplying mid-day meals falls within the objects clause of the assessee society. The order of the ITAT as well as the High Court disclosed that the assessee’s objects involved maintenance of health clubs, Arogya Kendra, promotion of moral values and provision of emergency relief. These do not however include the activity which it actually performed, i.e., entering into contracts for supply of mid-day meals and the activity of cooking and supply of mid-day meals. In the absence of fuller material, it would not be possible for the court to assess the activity with which the assessee was engaged, and determine whether it could be said to legitimately fall within the description of GPU.

251Copy pinpoint251. The first consideration would be whether the activity concerned was or is in any manner covered by the objects clause. Secondly, the revenue authorities should also consider the express terms of the contract or contracts entered into by the assessee with the State F or its agencies. If on the basis of such contracts, the accounts disclose that the amounts paid are nominal mark-up over and above the cost incurred towards supplying the services, the activity may fall within the description of one advancing the general public utility. If on the other hand, there is a significant mark-up over the actual cost of service, the next step would be ascertain whether the quantitative limit in the proviso G to Section 2(15) is adhered to. It is only in the event of the trust actually carrying on an activity in the course of achieving one of its objects, and earning income which should not exceed the quantitative limit prescribed at the relevant time, that it can be said to be driven by charitable purpose. H

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252Copy pinpoint252. This court, in the normal circumstances, having regard to the above discussion, would have remitted the matter for consideration. However, it is apparent from the records that the tax effect is less than Rs.10 lakhs. It is apparent that the receipt from the activities in the present case did not exceed the quantitative limit of Rs.10 lakhs prescribed at the relevant time. In the circumstances, the impugned order of the High Court does not call for interference. IV. Summation of conclusions

253Copy pinpoint253. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of “charitable purpose” (w.e.f. 01.04.2009), as well as the later amendments, and other related provisions of the IT Act. A. General test under Section 2(15) A.1. It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration (“cess, or fee, or any other consideration”); A.2. However, in the course of achieving the object of general public utility, the concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) the activities of trade, commerce or business are connected (“actual carrying out…” inserted w.e.f. 01.04.2016) to the achievement of its objects of GPU; and (ii) the receipt from such business or commercial activity or service in relation thereto, does not exceed the quantified limit, as amended over the years (Rs. 10 lakhs w.e.f. 01.04.2009; then Rs. 25 lakhs w.e.f. 01.04.2012; and now 20% of total receipts of the previous year, w.e.f. 01.04.2016); F A.3. Generally, the charging of any amount towards consideration for such an activity (advancing general public utility), which is on cost- basis or nominally above cost, cannot be considered to be “trade, commerce, or business” or any services in relation thereto. It is only when the charges are markedly or significantly above the cost incurred by the assessee in question, that they would fall within the mischief of “cess, or fee, or any other consideration” towards “trade, commerce or business”. In this regard, the Court has clarified through illustrations what kind of services or goods provided on cost or nominal basis would normally be excluded from the mischief of trade, commerce, or business, in the body of the judgment.

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A.4. Section 11(4A) must be interpreted harmoniously with A Section 2(15), with which there is no conflict. Carrying out activity in the nature of trade, commerce or business, or service in relation to such activities, should be conducted in the course of achieving the GPU object, and the income, profit or surplus or gains must, therefore, be incidental. The requirement in Section 11(4A) of maintaining separate books of B account is also in line with the necessity of demonstrating that the quantitative limit prescribed in the proviso to Section 2(15), has not been breached. Similarly, the insertion of Section 13(8), seventeenth proviso to Section 10(23C) and third proviso to Section 143(3) (all w.r.e.f. 01.04.2009), reaffirm this interpretation and bring uniformity across the statutory provisions. C B. Authorities, corporations, or bodies established by statute B.1. The amounts or any money whatsoever charged by a statutory corporation, board or any other body set up by the state government or central governments, for achieving what are essentially D ‘public functions/services’ (such as housing, industrial development, supply of water, sewage management, supply of food grain, development and town planning, etc.) may resemble trade, commercial, or business activities. However, since their objects are essential for advancement of public purposes/functions (and are accordingly restrained by way of statutory provisions), such receipts are prima facie to be excluded from the mischief of business or commercial receipts. This is in line with the larger bench judgments of this court in Ramtanu Cooperative Housing Societyand NDMC (supra). B.2. However, at the same time, in every case, the assessing authorities would have to apply their minds and scrutinize the records, to determine if, and to what extent, the consideration or amounts charged are significantly higher than the cost and a nominal mark-up. If such is the case, then the receipts would indicate that the activities are in fact in the nature of “trade, commerce or business” and as a result, would have to comply with the quantified limit (as amended from time to time) in the proviso to Section 2(15) of the IT Act. B.3. In clause (b) of Section 10(46) of the IT Act, “commercial” has the same meaning as “trade, commerce, business” in Section 2(15) of the IT Act. Therefore, sums charged by such notified body, authority, Board, Trust or Commission (by whatever name called) will require H

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A similar consideration – i.e., whether it is at cost with a nominal mark-up or significantly higher, to determine if it falls within the mischief of “commercial activity”. However, in the case of such notified bodies, there is no quantified limit in Section 10(46). Therefore, the Central Government would have to decide on a case-by-case basis whether and to what extent, exemption can be awarded to bodies that are notified B under Section 10(46). B.4. For the period 01.04.2003 to 01.04.2011, a statutory corporation could claim the benefit of Section 2(15) having regard to the judgment of this Court in the Gujarat Maritime Board case (supra). Likewise, the denial of benefit under Section 10(46) after 01.04.2011 C does not preclude a statutory corporation, board, or whatever such body may be called, from claiming that it is set up for a charitable purpose and seeking exemption under Section 10(23C) or other provisions of the Act. C. Statutory regulators D C.1. The income and receipts of statutory regulatory bodies which are for instance, tasked with exclusive duties of prescribing curriculum, disciplining professionals and prescribing standards of professional conduct, are prima facie not business or commercial receipts. However, this is subject to the caveat that if the assessing authorities discern that certain kinds of activities carried out by such regulatory body involved charging of fees that are significantly higher than the cost incurred (with a nominal mark-up) or providing other facilities or services such as admission forms, coaching classes, registration processing fees, etc., at markedly higher prices, those would constitute commercial or business receipts. In that event, the overall quantitative limit prescribed in the proviso to Section 2(15) (as amended from time to time) has to be complied with, if the regulatory body is to be considered as one with ‘charitable purpose’ eligible for exemption under the IT Act. C.2. Like statutory authorities which regulate professions, statutory bodies which certify products (such as seeds) based on standards for qualification, etc. will also be treated similarly. D. Trade promotion bodies Bodies involved in trade promotion (such as AEPC), or set up with the objects of purely advocating for, coordinating and assisting trading organisations, can be said to be involved in advancement of objects of

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general public utility. However, if such organisations provide additional services such as courses meant to skill personnel, providing private rental spaces in fairs or trade shows, consulting services, etc. then income or receipts from such activities, would be business or commercial in nature. In that event, the claim for tax exemption would have to be again subjected to the rigors of the proviso to Section 2(15) of the IT Act. B E. Non-statutory bodies E.1. In the present batch of cases, non-statutory bodies performing public functions, such as ERNET and NIXI are engaged in important public purposes. The materials on record show that fees or consideration charged by them for the purposes provided are nominal. In the circumstances, it is held that the said two assessees are driven by charitable purposes. However, the claims of such non-statutory organisations performing public functions, will have to be ascertained on a yearly basis, and the tax authorities must discern from the records, whether the fees charged are nominally above the cost, or have been increased to much higher levels. E.2. It is held that though GS1 India is in fact, involved in 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). However, the Court does not rule out any future claim made and being independently assessed, if GS1 is able to satisfy that what it provides to its customers is charged on cost-basis with at the most, a nominal markup. F. Sports associations F So far as the state cricket associations are concerned (Saurashtra, Gujarat, Rajasthan, Baroda, and Rajkot), this Court is of the opinion that the matter requires further scrutiny, in light of the discussion in paragraphs 228-238 of the judgment. Accordingly, a direction is issued that the AO shall adjudicate the matter afresh after issuing notice to the concerned G assessees and examining the relevant material indicated in the previous paragraphs of this judgment. Furthermore, if any consequential order needs to be issued, the same shall be done and resulting actions, including assessment orders shall be passed in accordance with the law under relevant provisions of the IT Act. H

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