Trust's Cafeteria Surplus Deemed Incidental to Charitable Activities, Department's Appeal Dismissed

The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO, ruling that the trust's activities were charitable, with the surplus from the cafeteria considered incidental to its main charitable objectives. The department's appeal was dismissed.

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Issues Involved:
1. Deletion of addition of Rs. 46,43,003/- made by the AO on account of surplus generated from Premwati Cafeteria.
2. Applicability of the amended provisions of Section 2(15) of the Income Tax Act.
3. Whether running of the cafeteria is incidental to the main object of providing relief to the poor.

Detailed Analysis:

1. Deletion of Addition of Rs. 46,43,003/-:
The primary issue in this appeal is the deletion of the addition of Rs. 46,43,003/- made by the Assessing Officer (AO) due to surplus generated from Premwati Cafeteria. The AO considered this surplus as commercial income and not charitable. The CIT(A) deleted the addition, holding that the activities of the trust fell under the first and third limbs of Section 2(15) of the Act, i.e., relief of the poor and medical relief.

2. Applicability of Amended Provisions of Section 2(15):
The AO argued that the activities of the trust, specifically running the cafeteria, fell under the fourth limb of Section 2(15) of the Act, which pertains to the advancement of any other object of general public utility. The AO contended that since the cafeteria generated income, it should be considered a commercial activity. However, the CIT(A) and the Tribunal found that the trust's activities were primarily for the relief of the poor and medical relief, which are explicitly charitable purposes under the first three limbs of Section 2(15). The Tribunal referenced Circular No. 11/2008, which clarifies that the proviso to Section 2(15) does not apply to trusts engaged in relief of the poor, education, or medical relief, even if they incidentally involve commercial activities.

3. Running of Cafeteria as Incidental to Main Object:
The trust argued that running the cafeteria was incidental to its main charitable objectives, specifically providing medical relief to the poor. The cafeteria was established to provide hygienic vegetarian food to visitors of the Akshardham complex, with surplus funds used exclusively for the trust's charitable activities. The Tribunal noted that the trust maintained separate books of accounts for the cafeteria, as required under Section 11(4A) of the Act. The Tribunal held that the cafeteria's operations were incidental to the trust's primary charitable objectives and that the income generated was used for charitable purposes, thus qualifying for exemption under Section 11.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO, concluding that the trust's activities were charitable in nature and that the surplus generated from the cafeteria was incidental to its main charitable objectives. The appeal by the department was dismissed.

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