TaxTMI 
TaxTMI 
2011 (3) TMI 867
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....r identical worded separate orders of even date, i.e., 31-8-2009. The reason(s) for same, as ascertained therefrom, are as:- (a) the only activity of the Trust, as found by the Assessing Officer (AO), is the running of a nursery-cum-primary school up to Class IV (which started functioning in October, 2007), with a present strength of 300 students; (b) no information regarding the socio-economic background, educational qualifications or the professional competence of the Trustees, to be able to run the charitable Trust, stood supplied; (c) there is no mention of beneficiaries whatsoever, i.e., the same are not identifiable, even as there was a separate clause (in the Trust Deed for providing assistance in cash and/or in kind to poor and destitute people; (d) the amount settled in Trust is only Rs. 1000 so that it is not understood as to how it was able to achieve its lofty objects with that meagre sum; (e) the accounts for the year ending 31-3-2009 reflect a surplus of Rs. 3.62 lakhs on a gross receipt of Rs. 10.21 lakhs ; (f) no case of free or subsidized education or provision of scholarship, stands reported....
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.... deliberation on the subject, held of it as qualifying only the residuary activity, i.e., relating to the advancement of any object of public general utility. This view stands further affirmed by it per its subsequent decisions, as in the case of Dharmadeepti v. CIT [1978] 114 ITR 454 (SC) and Dharmaposhanam Co. v. CIT [1978] 114 ITR 463 (SC). The matter, thus, stands judicially settled. In fact, the matter stands clarified by the statute itself, i.e., after insertion of the proviso to the provision w.e.f. 1-4-2009; the proviso excluding from the purview of the section 'the advancement of any object of general public utility' where it involved carrying on of an activity in the nature of trade; commerce or business, etc. That being the legal position, i.e., in apparent contradiction to what the ld. CIT states to be the purport and import of the decision in the case of Sole Trustee, Loka Shikshana Trust (supra), relied upon by him, with no rebuttal thereto by the assessee, the matter was posted for hearing the parties, on the same. 3.2 The ld. DR, in these proceedings, relied on the decision in the case of CIT v. National Institute of Aeronautical Engineering Educational Society (20....
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....ional institutions, including a University, where approved by the Government, or by the prescribed authority, or otherwise have a turnover less than the prescribed limit, as the case may be. Surely, the same considerations should inform the exemption to the object of 'education' being pursued by a charitable institution/trust as well. This is as different parameters could not possibly attend the same object, which as a matter of public policy has been considered by the Legislature as itself constituting charity; our country having the legacy where 'education' has always been regarded as pious. 3.4 At the same time, the Revenue's stand is not without merit. Where the profit making is incidental, it shall not exclude the business activity being carried on for the fulfilment of a primary object of charitable nature, as education, i.e., from being considered as toward a charitable purpose. However, where profit making becomes the dominant object, and education a means toward the same, could it be said that the enterprise is charitable or that charitable purpose informs and imbues it. Clearly, not. The principle or law involved stands explained by the Apex Court in the case of Addl. CI....
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....that profit is utilized only for charitable purposes, yet it cannot be said that it could claim exemption. If, merely qualitative test is applied to section, even schools which are run on commercial basis making profit would go out of the purview of taxation and demand exemption.' We may conclude this discussion with the following observations by the Apex Court in the case of Aditanar Educational Institutions (supra): '...The decisive or acid test is whether on an overall view of the matter, the object is to make profit. In evaluating or appraising the above, one should also bear in mind the distinction between the corpus, the objects and powers of the concerned entity.' 3.5 Having examined the law, and culled out the principles involved in applying it, we may now address the factual issue arising for determination, i.e., whether the applicant-trust in the present case is existing for profit or for charitable purposes. In other words, whether the profit making is incidental to its activities of running a School, through which the charitable purpose of education is sought to be fulfilled, or a means or medium to earn profits. It is only on this factual inference, drawn on a consi....
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...., i.e., of it being able to generate surplus sufficient to meet the liability arising out of the loan(s), and which it must be therefore be regarded as having satisfied. No doubt, the last clause of the Trust Deed as made on 12-3-2008, reads as :‑ 'Whereas the Trust will not run any business and the Trust will not function for the purpose of profit.'' ... However, it would be of no avail when the financing and the running of the Trust is patently on commercial basis. Rather, if at all, it leads to another disability for the grant of registration inasmuch as the activities of the Trust, as being carried out, are inconsistent with its avowed objects. In fact, the appellant nowhere disputes the same; its only contention is that the business and the concomitant profit making is no bar for registration as a public charitable trust, i.e., under the Act. Here it may also be pertinent to state that section 20(e) of the Indian Trust Act, 1882, i.e., the law under which the Trust is formed and is governed by, precludes any Trust to raise money on first mortgage of property, where in relation to any building, in excess of 50% of the value of the building. In the instant case, as the a....