TaxTMI 
TaxTMI 
1984 (7) TMI 136
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....income of Rs. 1,02,587 as income from various sources and Rs. 1,36,904 as amount applied for charitable purposes, thus, declaring a deficit of Rs. 34,317. For the assessment year 1974-75, the assessee showed a surplus of Rs. 48,445 in the income and 726 expenditure account. During the assessment year 1973-74, the assessee had spent Rs. 26,226 on the construction of a commercial complex. It had also paid Rs. 25,456 as subscriptions to chitties. The prize amount of the chitties had been used earlier for the purpose of the construction of the commercial complex. Similarly, in the year 1974-75 the assessee had spent Rs. 32,503 on the commercial complex. The ITO held that these amounts spent for acquiring capital assets for the church cannot be ....
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....ho come to Trivandrum on employment or for educational purposes. Similarly, it is also necessary to provide destitute homes, hostels and employment opportunities to offer relief to the weaker sections among the members of the church. It is then pointed out that the main impediment in carrying out the objects is the lack of funds. The pamphlet says that if modern buildings are constructed in the compound belonging to the church in the centre of the Trivandrum corporation and if these buildings are let out, the income can be utilised for the purposes mentioned earlier. It is then stated that plans have been finalised for construction of a three storeyed building in the church compound with facilities for shop rooms, office, hostels, etc. 4....
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....that the repayment of the loan originally taken to fulfil one of the objects of the trust will amount to an application of the income for charitable and religious purposes. On the strength of this circular, it can be held that no differentiation is necessary between the spending of the income directly on the construction of the complex and the income spent on repayment of loans taken for the purpose of the construction or for payment of subscriptions in the case of chitties, where the prize amount has been utilised for the construction of the complex. But, this circular is of no help in deciding the basic question that arises for consideration in the present case, namely, whether the spending of the income on the construction of a commercia....
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....rying on any activity of profit' occurring in section 2(15) of the Act. It was held that if the dominant or the primary purpose of the assessee did not involve the carrying on of any activity for profit, then, the assessee will be entitled to claim exemption with regard to its income and that the subsidiary objects, even if they involved some commercial activity, would not militate against the charitable character and the purpose of the assessee. This decision is of no help in deciding the issue involved in the present case. 7. The learned representative for the assessee then relied upon the decision in Satya Vijay Patel Hindu Dharamshala Trust v. CIT [1972] 86 ITR 683 (Guj.). In that case, a trust was created and certain immovable prope....
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....of the income for religious purposes. In the light of this decision, the disallowance of the claim by the ITO merely on the ground that the income has been spent for acquiring a capital asset will not stand. 8. We are still left with the question whether the utilisation of the income for the purpose of constructing a commercial complex for the purpose of producing income to be utilised for various religious purposes will amount to application of the income for religious purposes. Our attention was not drawn to any rulings dealing with this aspect. We find that this aspect has been considered at page 401 of Taxation of Charity by M. P. Agrawal, 1981 edition. The learned author states thus : " Expenditure on charities need not be in the....