TaxTMI 
TaxTMI 
2016 (4) TMI 641
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....see brushing aside the provisions of Section 11 (4A) of the Income Tax Act, 1961 ?" 3. The facts lie in a narrow compass. The assessee is a trust founded under a Trust Deed dated 10th April, 1959. The assessee claimed that the object for the establishment of the assessee-trust was "advancement of education" which fell within charitable purpose as defined under section 2 (15) of the Act. On 29th June 1973, the assessee had made an application seeking registration under section 12A of the Act. The Commissioner of Income Tax, Mumbai City IV approved the assessee-trust as a charitable trust and granted registration under section 12A (a) of the Act. Thereafter, the trust deed was amended, however the main object of the trust deed did not change. The objects were to promote, support, establish and conduct college or colleges, schools, institutions etc for advancement of education and give scholarship or other assistance to students prosecuting studies. One of the objects was also to pay some part of income to any of the institutions which are carrying out the said objects. Thus, it was submitted that the main object of the trust was always promotion of education. 4. The assessee owns ....
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....cess or any other consideration was excluded to be a charitable purpose. 7. Invoking proviso to section 2 (15) a show cause notice was issued to the assessee as to why registration under section 12A shall not be withdrawn in exercise of the powers under section 12AA (3) of the Act, as according to the DIT (E), activities of letting out the building as carried out by the assessee were in the nature of trade, commerce, commercial business etc. The main thrust of the revenue's case in issuing the show cause notice was that the assessee has received service charge of Rs. 12 lacs for renting out the premises for running the institution of Management. Further, the assessee had earned an income of Rs. 15,02,182/for letting out of the auditorium. The assessee's objects were of "advancement of education" and thus receiving rent would fall in the category of "any other object of general public utility " attracting the first proviso to section 2 (15) of the Act as applicable from the year 2009-10. 8. The assessee responded to the show cause notice interalia explaining that the trust was being conducted as per the main object namely 'promotion of education' and such letting o....
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....he assessee ceased to be charitable thereby resulting in the assessee loosing its charitable character no longer being entitled to the benefits of section 11. The Director of Income Tax (Exemption) accordingly held that section 12AA (3) was attracted and cancelled the registration of the assessee granted under section 12A of the Act with effect from Assessment year 2009-10. 10. The assessee preferred an appeal before the Tribunal assailing the above order and findings of the DIT (E). The assessee interalia contended that the activities of the assessee were "advancement of education only" and secondly the activities of the trust were a charitable purpose as defined under section 2 (15) of the Act and the proviso in the facts of the case was clearly inapplicable. 11. In the impugned order, the tribunal examining the facts has come to a conclusion that the main object of the asseessetrust assesseewas to promote educational activities. It is in the course of this activity the premises were let out to Lala Lajpatrai Institute. The tribunal has observed that letting out of the premises to the said Institute was for educational purposes. As regards the letting out of the auditorium it w....
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.... assessee has relied on the Division bench decision of this Court in Director of Income Tax (Exemptions) Mumbai vs. M/s Shri Vile Parle Kelavani Mandal as also a Circular no.11 of 2008 dated 19th December 2008 issued by the CBDT. 14. We have heard learned counsel for the parties and with their assistance we have perused the order passed by the DIT (E) and the impugned order of the tribunal and other documents as placed in the paper book. The admitted position is that the assessee-trust being founded on 10th April 1959 had applied for registration under section 12A of the Act on 29th June 1973 and was granted registration under section 12A of the Act, considering the object of the trust to be charitable. Even after amendment of the Trust Deed the main object of the trust was to promote education and conduct colleges or schools, institutions etc for advancement of education, giving scholarship or assistance to students prosecuting studies. Further one of the object was also to pay some part of income to any other institutions which are carrying out the said objects. In furtherance of these objects, the building of the assessee-trust which consist of ground floor and class rooms from....
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....er than the Management Institution or for any other purpose which is not an educational purpose. First Proviso to section 2 (15) of the Act would also not be attracted in this situation. As regards the auditorium the same was also part of the building housing these colleges conducted by Lala Lajpatrai Institute which was used by the colleges for 209 days and it was vacant for 76 days and was let out only for 80 days only when it was not needed by the colleges. In the course of this letting out the assessee had incurred expenses for electricity and Air-Conditioners. Letting out of the auditorium was not the dominant object of the trust and admittedly the auditorium was incidentally let out to outsiders for commercial purpose. It thus cannot be said that such letting out would fall within the first proviso to section 2 (15) of the Act. 16. It is well settled principle of law that the test to determine as to what would be a charitable purpose within the meaning of section 2 (15) of the Act, is to ascertain what is the dominant object of the activity; whether it is to carry out a charitable purpose or to earn profit. If the predominant object is to carry-out a charitable purpose and n....
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.... condition precedent set out in subsection (4A) of section 11 of the I.T. Act is completely satisfied. Such finding of fact cannot be termed as perverse and it is in consonance with the factual aspect regarding activities of the trust and the object that it is seeking to achieve. Similarly, in regard to income from the hiring of the premises and advertisement rights, the said question is also not substantial question of law. Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then, this cannot be said to be a business which is not incidental to attain the objects of the trust. This being merely an incidental activity and the income derived from it is used for the educational institute and not for any particular person, separate books of account are also maintained, then, this income cannot be brought to tax. This conclusion is also not perverse and ....