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- No exemptions to charitable institutions are available if there is an industry in the enterprise considering the nature of the activity, and the employer-employee basis bears resemblance to what is found in trade or business.
- This takes into the fold of industry, undertakings, callings, services and adventures analogous to the carrying on of trade or business. Absence of profit motive or gainful objective is irrelevant for “industry”, be the venture in the public, joint, private or other sector. The true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations.
- If the organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking e.g. NGOs
- Charitable institutions fall into three categories: (a) those that yield profit but the profits are siphoned off for altruistic purposes; (b) those that make no profit but hire the services of employees as in any other business, but the goods and services which are the output, are made available at a low or at no cost to the indigent poor; and (c) those that are oriented on a humane mission fulfilled by men who work, not because they are paid wages, but because they share the passion for the cause and derive job satisfaction from their contribution.
- Which of these three do you think are industries, and why?
- The first two are industries but not the third, on the assumption that they all involve co-operation between employers and employees.
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