TaxTMI 
TaxTMI 
2006 (6) TMI 64
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....essee society was entitled to exemption u/s. 11 of the Income Tax Act merely on the ground that the registration u/s.12AA has been granted with effect from 1.4.1990, without noticing that no charitable activities have been conducted and the income from the letting out of Kalyana Mandapam assessable under the head business has not been applied for any charitable purposes like education or any other object of general public utility?" 2. The assessee is a Society registered under the Tamil Nadu Societies Registration Act. The relevant assessment years are 1994-95, 1 995-96, 1996-97, 1997-98 and 1998-1999 respectively. Admittedly, the Society was allotted a l....
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.... Act for the assessment years 1990-91 to 1997-98, since the assessee itself admitted the income for the assessment year 1998-99 and 1999-2000, as income from the business, which was also accepted under Section 143(1)(a) of the Act. Therefore, the assessing officer issued notice under Section 148 of the Act. However, the assessee filed nil returns for all the years on 30.3.2001. 4. According to the assessee Society, it is a registered one established for charitable purpose and its income was exempted under Section 11/12 of the Act. But, the revenue rejected the explan....
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....p; would not lose the benefit of exemption. That apart, the Commissioner, applying the ratio laid down in ADDL. CIT v. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [1980] (121 ITR 1) wherein it is held that it is sufficient to take into consideration the dominant and primary object of the Trust to decide its character whether it is for charitable purpose or not, allowed the appeals preferred by the assessee and granted exemption under Sections 11 and 12AA of the Act, which was confirmed by the Income Tax Appellate Tribunal, on appeal at the instance of the revenue. Hence, the above appeals. 6. The learned&....
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....sp; The grant also provides for collecting nominal rent for the building to meet out maintenance, repairs and renovation expenses. It is not in dispute that the assessee used to let out Kalyana Mandapam for social and charitable activities collecting nominal rent. Based on these undisputed facts, the Commissioner and the Tribunal rendered a concurrent finding that the very activity of constructing the Kalyana Mandapam and letting out to the local people, mainly weavers and agriculturists, satisfied the charitable object, even though the assessee had not diverted the accumulated fun....
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....nto effect from 1.4.1997 inserted by Finance Act 2/96, enabling the Chief Commissioner or Commissioner to satisfy himself about the genuineness of the Trust or Institution and to grant registration, by exercising such power conferred under Section 12AA of the Act. The above fact cannot be lightly disregarded under the facts and circumstances of the case, inasmuch as the same has got persuasive effect to the case of the assessee. 11. Therefore, in view of the above concurrent finding of the Commissioner that the construction of Kalyana Mandapam and letting out itself is a charitable activity, the ....
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.... other social and charitable activities, which is one of the dominant and primary object of the Trust. As per the ratio laid down in ADDL. CIT v. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION [1980] (121 ITR 1), the assessee satisfies the dominant and primary object of the Trust by putting up construction and letting the same by collecting nominal rent, which would not defeat the right of exemption under Section 11 of the Act, merely on account of the fact that the accumulated funds had not been spent for other charitable activities, viz. for upliftment of the poor, education and other social activities,....