AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (6) TMI 333
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....d: "1. The order of rejection of the application seeking approval under section 80G of the Income-tax Act in respect of donations to be received by the appellant-Trust passed by the Director of Income-tax (Exemptions), Chennai is arbitrary and erroneous and have been based on wrong interpretation and classification of the activities of the Trust. 2. The Learned Director of Income-tax (Exemptions) has erred in refusing to grant of approval to the Trust in respect of donations to be received by the Trust on the mistaken conclusion that the activity involving the appellant-Trust providing lodging to its members and the public is in the nature of trading. 3. The Learned Director of Income-tax (Exemptions) has failed to appreciate that the activities involving providing of accommodation etc. for nominal charges only was only a means to an end and not the end itself. In other words, the appellant-Trust had been earning income from providing accommodation to the public visiting Chennai for nominal charges only to carry out the objects of the Trust, which is not prohibited. 4. The Learned Director of Income-tax has fu....
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....funds collected from the activities in so many years which is approved under section 10(23C)(vi) of the Income-tax Act and he failed to appreciate that any charitable purpose cannot be carried out without finding some means of funds other than donations which cannot always be ensured and the appellant has to find some on regular income for carrying out the objects of the Trust. For these grounds and any other ground that may be adduced during the appeal proceedings, it is prayed that the impugned order rejecting the renewal of approval of donations under section 80G to the appellant-trust be quashed and the Director of Income-tax (Exemptions) be directed to grant approval under section 80G of the Income-tax Act." 3. We have considered the rival submissions and have carefully examined the entire records available before us. It is an undisputed and accepted case that the assessee-society continued to be registered under section 12AA of the Act and its registration has not been withdrawn under section 12AA(3) of the Act. Section 80G deals with "deduction in respect of donations to certain funds, charitable institutions, etc.". If the trust is recognized under section 80G(5), the don....
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.... wholly or in part by the Government or a local authority; (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules15 made in this behalf; and (vii) where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been,- (a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009." 4. This trust is established in India and fulfils the above requisite conditions. The DIT(E) has mainly relied on lodge receipts to deny the benefit of section 80G(5). The receipts of the assessee-society during the year are of rent from hall and shop be....
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....he common parlance by applying common sense alone. It was stated that the society did not sell any flowers but the word 'flowers' used in the statement of accounts relates to the Golden Jubilee Souvenir which in Tamil is called "Malar" which means flower also. All these things have not been discussed by the DIT(E) in his order. Before us, reliance was placed on the Circular No.11 of 2008, dated 19-12-2008 in which 'charitable purposes' are enlisted. "Section 2(15) of the Act defines "charitable purpose" to include the following: (i) Relief of the poor (ii) Education (iii) Medical relief, and (iv) The advancement of any other object of general public utility. An entity with a charitable object of the above nature was eligible for exemption from tax under section 11 or alternatively under section 10(23C) of the Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility in terms of the fourth limb of the definition of 'charitable purpose'. Therefore, section 2(15) was amended vide Fin....
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....yon commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1. There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2(15) owing to the p....