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of <h1>High Court rules trust activities charitable, qualifies for tax exemption</h1> <h3>Commissioner of Income-tax Versus Rajasthan Jain Charitable Trust</h3> Commissioner of Income-tax Versus Rajasthan Jain Charitable Trust - [2013] 351 ITR 354 Issues involved:1. Interpretation of section 2(15) of the Income-tax Act, 1961 regarding the classification of activities as charitable purposes.2. Consideration of the Commissioner's authority to withdraw recognition under section 80G(5) based on an application for renewal.Issue 1: Interpretation of section 2(15) of the Income-tax Act, 1961The case involved a registered trust engaged in charitable activities seeking renewal of exemption certificate under section 80G of the Income-tax Act. The Commissioner, while rejecting the renewal application, also withdrew the exemption granted to the trust under section 80G, stating that the activities did not fall under section 2(15) of the Act. The trust's activities included running a blood bank, providing medical help to the poor, and other charitable endeavors. The Tribunal noted that the trust's audited accounts showed that its receipts were below the threshold specified in the Act and that its expenses exceeded the receipts, indicating a lack of profit motive. Consequently, the Tribunal held that the trust's activities qualified as charitable purposes under section 2(15). The High Court upheld this decision, ruling in favor of the trust and against the Revenue.Issue 2: Commissioner's authority to withdraw recognition under section 80G(5)The Commissioner had canceled the trust's exemption certificate under section 80G based on the belief that the trust's activities were not charitable in nature. However, it was found that the Commissioner did not issue a notice to the trust regarding the alleged violation before canceling the exemption certificate. Additionally, the trust's audited accounts demonstrated that its receipts were below the specified threshold and its expenses exceeded the receipts, indicating a lack of profit-making intention. The Tribunal, considering these factors, set aside the Commissioner's decision. The High Court agreed with the Tribunal's reasoning, holding that the Commissioner's action was unlawful and that the trust's activities indeed qualified as charitable purposes under the Income-tax Act. Consequently, the second question of law was decided in favor of the trust and against the Revenue.In conclusion, the High Court's judgment clarified the interpretation of section 2(15) of the Income-tax Act, emphasizing that activities conducted for charitable purposes must meet specific criteria outlined in the Act. The Court also underscored the importance of procedural fairness in administrative decisions, highlighting the need for proper notice and consideration of relevant financial information.
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