ASST. COMMISSIONER OF INCOME TAX, (EXEMPTIONS), HYDERABAD vs. ANDHRA PRADESH STATE CIVIL SUPPLIES CORPORATION LIMITED, HYDERABAD

Ld. CIT(A) erred in deleting the addition made by the A.O. on account of denial of exemption claimed by the assessee u/s 11 amounting to Rs. 7,71,85,211/- by relying on the decision of ITAT in the assessee’s own case for the A.Y. 2009-10, 2010-11 & 2012-13. 3. Ld. CIT(A) is erred in concluding that the assessee has not carried out any activity in the nature of trade commerce and business or any activity of rendering any service in relation to trade as stated in proviso to section 2(15) of the Act in spite of admitted facts that the activities of assessee consist of purchase and sale of various commodities. 4. CIT(A) ought not to have considered the submissions of the assessee that the activities of the assessee of purchase and sale of various commodities do not constitute trade, commerce and business or / and for service rendered in connection with it and proviso to section 2(15) of the Act are not applicable to assessee on mere fact that the assessee was constituted as State Government Corporation and it sells the commodities at predetermined price and gets subsidy from Government. 5. CIT(A) is not justified in treating the assessee as charitable organization eligible for deduction u/s 11, 12, 12A of the Act on the basis of decision of Hon’ble AP High Court in the case of appeal of Revenue in CR. No. 59/1992 dated 04/03/2003, decision of Apex Court in Surat Art Silk Cloth Mfrs Association 130 ITGR 28 (SC) and other decisions without appreciating the fact that all these decisions were rendered before introduction of provision to section 2(15) of IT Act w.e.f 01.04.2009 and hence, distinguishable from the facts and circumstances of assessee’s case and not applicable? 6. CIT(A) ought to have considered the fact that the assessee society involved in purchase and sale of essential commodities at the prices fixed by the Government and in turn gets subsidy and commission from the Government and therefore, it is in the trading business with a motive to earn profit and hence does not fall within the ambit of section 2(15) of the Act.” 3. Brief facts of the case are that the assessee-company, owned by the Government of Andhra Pradesh, engaged in the business of ‘supply of essential commodities’ to the people in general and to those below poverty line in particular under the Public Distribution System (PDS), filed its return of income on 30.08.3013 claiming exemption u/s 11 of the entire income of Rs. 7,71,85,211/-. During the assessment proceedings u/s 143(3) of the Act, the A.O. observed that the term ‘charitable purpose’ u/s 2(15) of the Act has undergone amendment wherein any other object of general public utility, if it involves the carrying on of any activity in the nature of trade, commerce or business,