2015 (10) TMI 8

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... in by the assessee and found that the assessee trust does not qualify for registration under sec. 12AA of the Act. Accordingly, the Director of Incometax( Exemptions) rejected the application filed by the assessee through his order dated 30th August, 2013. 2. The assessee trust is aggrieved by the rejection order passed by the Director of Income-tax(Exemptions) and, therefore, the present appeal, filed before the Tribunal. 3. The grounds of appeal raised by the assessee trust read as below : "1. In order of the learned Director of Income Tax (Exemptions) [DIT(E)], is opposed to law and facts. 2. The learned DIT(E) erred in stating that the trust deed of appellant trust contained so many objects and that it would be next to impossible t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....meration of objects is vague that the objects could not be considered as real and practical. The second ground is that certain objects mentioned in the trust deed of the assessee, are of commercial in nature and, therefore could not be treated as activities for charitable purpose as per the proviso to sec.2(15) of the Act. 6. Regarding the verbosity of the objects mentioned in the trust deed, the Director of Income-tax(Exemptions) observed that the objects of the assessee trust run into six pages encompassing of all the activities contemplated in the field of education, medical relief, relief of the poor and so many other idealistic propositions. The Director of Income-tax(Exemptions) concludes that there is conglomeration of objects which....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Therefore, stating a large number of objects in the trust deed does not disentitle the assessee from claiming the status of a charitable trust. It is only sufficient to look into whether the actual activities carried on by the assessee trust are coming under any of the objects stated in its trust deed. We find that the first ground raised by the Director of Income-tax(Exemptions) may not be sustainable in law. 8. The second ground pointed out by the Director of Incometax( Exemptions) is that certain objects stated by the assessee trust are commercial in nature impermissible under the proviso to sec.2(15) of the Act. Such objects pointed out by the Director of Income-tax(Exemptions) are "to organize milk societies for facilitating sale of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ry essential to generate income, which is again essential to ensure a sustainable growth for the poor people in villages. Therefore, carrying on of economic activities for generating income for the poor people in villages cannot be treated as activities in the nature of trade, commerce or business. The activities in the nature of trade, commerce or business have essentially an underlying objective of earning profit by assuming risk. There is also a necessity of introducing capital into business. As far as the present case is concerned, the assessee trust contemplates to help rural poor women to set up milk societies and factories for giving fruitful employment to such rural women-folk. In these cases, huge capital investments are not contem....