TaxTMI 
TaxTMI 
2016 (1) TMI 316
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....ief facts of the case are that the assessee is a Trust registered under section 12A(a) of the I.T. Act, 1961. It has filed return of income on 20.09.2010 declaring NIL income for the year under consideration. The case was scrutinized under section 143(3) of the IT Act. The activities of the trust are performed within the Municipal Limits of Jaipur. The assessee is engaged in charitable activity of running a Dharamshala and receipt of rent is in the nature of maintenance charges and is incidental to the main activity of trust. During assessment proceedings, the AO noted that the activities of the assessee trust, its charitable purpose is that of advancement of general public utility. The AO placing reliance on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Paramhans Ashram Trust (2009) 184 Taxman 204 (Raj.) observed that the charitable purpose of the assessee society is that of advancement of general public utility. Thus, the AO vide order sheet entry dated 31.01.2013 required the assessee to explain as to why in view of the amended provisions of section 2(15), appropriate action u/s 13(8) be not taken. In response, the ld. Counsel of the assessee vide his ....
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....hat the society is registered under the Societies Registration Act, 1860 and is now governed by the Rajasthan Society Registration Act, 1958. Sec. 14A of this Act provides that upon dissolution of the society all the assets shall go to the State Government. Apart from this, it may also be noted that the terms of the society clearly provide that all the moveable and immovable property, in present or in future, shall belong to the society and all the savings of income and expenditure account shall be utilized for the developmental work of the society. Clause 4(c) of the Society's constitution reads as under :- The ld. CIT (A) observed that there does not appear to be any profit motive in the case of the assessee as the excess of income over expenditure cannot be distributed amongst its members either in the course of its activity or in the event of its dissolution. Therefore, one of the important ingredients for treating the activity of the appellant as business i.e. , profit motive is missing in this case. Since there is no profit motive involved, the activities carried out by the appellant cannot be described as business. In such a situation, as explained by CBDT vide its Circul....
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....ment of general public utility. The AO placing reliance on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Paramhans Ashram Trust (2009) 184 Taxman 204 (Raj.) observed that the charitable purpose of the assessee society is that of advancement of general public utility. Thus, the assessee was required to explain as to why in view of the amended provisions of section 2(15), appropriate action u/s 13(8) be not taken. On the explanation furnished by the assessee, the AO was not satisfied. Therefore, he forfeited the exemption allowable to the assessee trust u/s 11 & 12 of the IT Act by applying first proviso to section 2(15) read with section 13(8) of the IT Act, 1961. The AO has also not allowed capital expenditure on the ground that since he has forfeited the exemption. The ld. CIT (A) allowed the claim of the assessee for the reasons given in para 4 to 4.3 of his order as under :- "4. I have considered submissions of the appellant and have also gone through the assessment order. It is seen that the AO has disallowed the exemption on the ground that maintaining of Dharamshala was an activity of advancement of general public utility and was, therefore....
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....ject 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is 'charitable purpose' within the meaning of Section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business." It is, thus, clear from this Circular that exemption shall not be available to the entities who are engaged in commercial activities in the garb of charity. The issue, therefore, is as to whether the appellant is engaged in commercial activities or not. 4.2. As exp....
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..... The activities of the assessee, therefore, cannot be characterized as business activities. Hence, proviso to section 2(15) is not attracted in this case and, therefore, the disallowance of exemption u/s 11 & 12 is unjustified. The AO is, accordingly, directed to assess the society as per the provisions of section 11 & 12, and grant the requisite exemption." After analyzing the various details furnished and considering the various judgments of Hon'ble Supreme Court and Hon'ble High Courts made available on record and the factual position, we do not find any infirmity in the order of ld. CIT (A). Therefore, while confirming the order of ld. CIT (A), we dismiss the revenue's appeal. 6. In the result, appeal of revenue is dismissed. Order pronounced in the open court on 01/01/2016. ============= Document 1 " (ग) इस संसà¥à¤¥à¤¾ की चल-अचल संपतà¥à¤¤à¤¿ जो इस समय मौजूद है और à¤à¤µà¤¿à¤·à¥à¤¯ में होगी, वो ....