Andhra Pradesh State Seed Certification Agency v Chief CIT (2013) 212 Taxman 493(AP) (High Court)

S.10(23C): Exempt income-Educational institution-Object of general public utility-Petitioner had not rendered

its services directly to farmers but was rendering its services directly to its clients/agents who were engaged in

tradinghence rejection of exemption was valid.[S.2(15)]

Petitioner is registered under Andhra Pradesh (Telangana Area) Public Societies Registration Act, 1350 Fasli. It was

carrying on functions of certification agency under Seeds Act, 1966.Seed growers were entering into contract with a society/agent, which approached petitioner for certification of seeds and after securing certification, they were selling certified seeds to farmers at a market price determined by them. Petitioner was also collecting fee for providingcertification. Its application for approval under section 10(23C) (iv) was rejected by Chief Commissioner. The court held that thepetitioner had not rendered its services directly to farmers but was rendering its services directly to its clients/agents who were engaged in trading of certified seeds with profit motive and, therefore, its activities were not for 'advancement of any other object of general public utility' and hence not for 'charitable purpose' in view of second limb of first proviso to section 2(15). Therefore, its application for approval under section 10(23C) (iv) was rightly rejected. In favour of revenue. (A.Y.2010-11)