Chambers of Commerce and similar organisations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as "advancement of any other object of general public utility”.

“Exemption for any commercial activity of any charitable institution engaged in objects of general public utility has been withdrawn from April 1, 2008. It is understood that the Finance Minister has assured that genuine trusts and institutions will not be affected by the same and that explanatory circular will be forthcoming. No circular has yet been received. We have some clients being public charitable institutions engaged in promotion of handicrafts, development of language and arts, undertaking some activities, which feed the objects and are also incidental to their objects. Since the withdrawal of exemption is already effective from April 1, as it is applicable for assessment year (AY) 2009-10 and some of the institutions are companies registered under Sec. 25 of the Companies Act, 1956, requiring the first instalment of advance tax even by June 15 and for others by September 15, earlier clarification would be required. Could we be content with the assurance of genuine institutions not being affected, since some of these institutions are decades old with a track record giving least room for doubt about their genuineness.”

The assurance referred by the reader given by the Finance Minister in Parliament reads as under:

“I once again assure the House that genuine charitable organisations will not in any way be affected. The CBDT will, following the usual practice, issue an explanatory circular containing guidelines for determining whether an entity is carrying on any activity in the nature of commerce or business. Whether the purpose is a charitable one will depend on the totality of the facts of the case. Ordinarily, chambers of commerce and similar organisations rendering services to their members would not be affected by the amendment and their activities would continue to be regarded as ‘advancement of any other object of general public utility”.

The assurance relating to chambers of commerce or similar organisations, as is clear from the above statement, is based on the fact that they are already exempt as mutual associations in their dealings with members. At any rate, the assurance that genuine organisations will not be affected does not inspire confidence in the light of the fact that the amendment leaves no discretion and is in absolute terms withdrawing the exemption, which even before the amendment was limited only to what is incidental to the attainment to the objects. What is referred as an explanatory circular is only a circular, which is annually issued in the later part of the year. The Board itself does not have any power to override the law though it may relax the conditions not by a circular but by notification under Sec. 119.

The annual explanatory circular normally paraphrases the amendments. But then, because of the assurance, the charitable institutions are expecting a different circular, which will spare them from liability and avoid the loss of recognition of relief to donors under Sec. 80G. At present, suspense continues.