TaxTMI 
TaxTMI 
2015 (11) TMI 114
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....1-12. 2. The Revenue has raised six grounds in its appeal, however the crux of the issue is that the Ld. CIT(A) has erred in law by allowing the claim of the assessee for granting the benefit U/s.11 of the Act thereby not taxing the profit arising out of the sale of land since the proceeds were utilized for charitable activities of the Trust as per the provisions of sections 11, 12 & 13 of the Act. 3. The brief facts of the case are that the assessee is a trust, registered u/s 12A(a) of the Act by the Ld.CIT, TN-III, vide registration No. C.No.1146-111(72)/86 dated 08.09.1986, filed its return of income for the assessment year 2010-11 on 21.09.2010 and for the assessment year 2011-12 on 12.09.2012 admitting Nil income. The case was ta....
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....n the layout from the F.Y 1994-95 and utilized the same for the charitable activities of the Trust. It is therefore submitted that (there were no business motive when the assessee acquired the land and sale of land in the form of plots is only to make the land better saleable and also to realize better price. It may not be out of context to submit that this aspect had been thoroughly scrutinized in the assessment of earlier years and the assessee passed the test convincingly. 3. Section 11A of the income tax Act refers to Capital Asset being property held under trust wholly for charitable or religious purposes. As explained in the para 2 above, the land originally purchased for setting up medical colleges and old age homes ceased to be a....
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..... Assessing Officer rejected the contentions of the assessee for the following reasons:- (i) Merely because the purpose for which the property was purchased, ceased to materialize, the characteristic of the property cannot change as not held for charitable purpose. (ii) The assessee had itself admitted profit on sale of such land as income derived from property of the trust and claimed exemption. Thus, the contention of the assessee that the land for sale is not the property of the trust cannot be accepted. (iii) The assessee had purchased 71.89 acres of land and at the time of sale of the property the assessee had obtained necessary permission from the Town Planning Authority to divide the land into smaller plots. (iv) The asse....
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.... for which the trust is formed. (iii) The newly inserted proviso to Section-2(15) of the Act will not be applicable to the case of the assessee, since the main activities of the assessee is education. (iv) The Ld. Assessing Officer has herself recognized the charitable nature of the trust and its genuineness. (v) The predominant object and purpose of the trust were charitable in nature and not for earning profit; however such characteristic of the trust will not alter merely because some profit is derived by the trust while pursuing its charitable activities. (vi) In the case of the assessee trust the land which was sold were no longer required by the trust and therefore it was disposed off over a period of time in such a manner....
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....ad to face issues pertaining to encroachment of lands. After holding the land for a substantial period of 15 years the assessee therefore decided to part with the land and utilize the proceeds of the same to run the existing education institution and for purposes for which the trust was established. e) In view of the enormous size of land the assessee was unable to get buyers and was therefore constrained to form layout in the year 1995-96 and utilize the same for charitable activities of the trust. f) The moot point in the case is that it was a solitary instance of purchase of land and that the land was purchased only for the purpose of running medical college and the same remains undisputed. g) With respect to the activity of run....
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....Ld. CIT (A), the transaction of the sale of the land by the assessee in a wise manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee. Therefore, the view of the Ld. CIT (A) that the proviso of Section-2(15) will not be applicable to the facts of the assessee's case is appropriate and justified considering the facts and circumstances of the case. Therefore, we hereby confirm the order of the Ld. CIT (A). 10. In the result, the appeals of the Revenue are dismissed. Order pronounced on 29th September, 2015 at Chennai. Normal 0 false false false EN-US X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tsty....