AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 714
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.... welfare, amenity, contact, mutual help, co-operation, social and cultural development among Koota Brahmin Communities of 14 Villages and to construct Kalyan Mantap and other infrastructure facilities for their religious necessity besides rendering assistance and facility to promote education among the poor students of "the' community and therefore, the main object in constructing the kalyan mantap is not to construct and operate the kalyan mantap on commercial lines and mere realization of some income from such buildings without anything more done or efforts made in an organized and systematic manner to earn any such income and the same is essentially to help poor and would not imprint such receipts with the character of receipts from an activity in the nature of business, commerce or trade and therefore, the construction placed on fourth limb of definition "charitable purpose" as enshrined u/s.2[15] of the Act, disentitling the appellant from the benefits of section 11 of the Act, is misconceived and consequential finding is on erroneous appreciation of facts and law and requires to be vacated. 3. The learned CIT[A] failed to appreciate the income derived by the appellant ....
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....tration u/s. 12AA vide order dated 21.12.2011 w.e.f. AY 2009-10. Having noted that the registration was cancelled, the AO has not allowed any exemption u/s. 11 of the Act and computed the income of the assessee in the status of AOP. An appeal was preferred before the CIT(Appeals). 3. During the pendency of the appeal before the CIT(Appeals), an appeal was filed by the assessee before the Tribunal against the order of cancellation of registration granted u/s. 12AA of the Act and the Tribunal vide its order dated 4.1.2013 allowed the appeal of the assessee against the order u/s. 12AA(3) cancelling the registration to the assessee. It was argued before the CIT(Appeals) that since the Tribunal has taken into account all the relevant facts while allowing the appeal of the assessee and set aside the order of DIT(E) cancelling registration to the assessee, no contrary view can be taken in this appeal and the assessee be allowed the exemption from the activities undertaken by it. 4. The CIT(Appeals) re-examined the entire claim of the assessee and the definition of 'charitable purpose' as defined in section 2(15) of the act in the light of the amendments and has come to the conclusio....
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....ing to the CBDT notification dated 14.09.2001 granting jurisdiction to the DIT(E) Bangalore. FACTS OF THE CASE:- 9. As per the Memorandum of association of assessee society, it has been formed by fourteen villages of South Kanara for friendly contact, social development and other objects mentioned belowITA (a) to construct buildings for religious activities and marriage halls with the close friendship and support of Koota Brahmana Society and to maintain the same properly, (b) to collect the funds and help the poor students to get education and to extend all other necessary help and support to them, (c) to undertake and maintain cultural, social and religious activities of the society, (d) to utilize the properties and funds collected in the name of the societies as charities, for the improvement and development of the society, (e) to maintain good friendship and integrity among the members of the society. 9.2 As per the bye-laws the membership of the society is limited to Koota Brahmins residing within the Bangalore Mahanagar Palike and other places. 9.3 As per the income and expenditure account of the appellant society for the year ended on 31.3.2009, i....
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....ned in S. 2(15), i.e. 'relief for the poor', However, the same is not born out of the stated objects in the Memorandum of Association. As mentioned earlier in Para 9 above, the construction of buildings and marriage halls and their maintenance with support of the members of koota Brahmin society, is to achieve the main object of friendly contact, social development of such koota Brahmins. Thus construction of such building is an object and purpose of the appellant society by itself. There is nothing in the objects of the assessee to show that relief to the poor through Kalyan Mandaps or other buildings, is one of its objects, at all. Even the other object of helping the poor students has not been pursued. In fact the objects at clause (c) to (e) extracted in Para 9 above is to use the constructed properties for the cultural, social and religious activities of the members of the society, i.e Koota Brahmins. 10.3 There is nothing to show that Koota Brahmins of Kanara are poor or under-privileged. In fact, all the founding members are owners of businesses in Bangalore. Even the internet sites boast of rich and famous from the community. The concession rates charged from mem....
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....#39;ble High Court that decision of the Court reported in 243 ITR 439 (Madras) which held that letting of kalyana mandapas for marriage and other functions would be business activity and not rental income, cannot be ignored. It also considered that in the earlier order (66 DTR 211) the Court was examining the issue with regard to S. 13(1)(bb) and not S.11(4A). It was held by the Hon'ble High Court (182 CTR 380) that whether the income from letting out the marriage halls would be business income or income from house property would depend on the intention of the assessee and whether it was carried out systematically to make profits out of the assets. It also held that the Tribunal erred in applying the wrong test to hold that objects of the trust was general public utility and not to earn profit, and hence letting out of marriage hall was not business activity. Para 6-10 of the order (182 CTR 380) is reproduced below:- 6. The second mistake committed by the Tribunal was that the Tribunal has considered the question whether the activities carried on by the assessee-trust in letting out the Kalyanamandapam would be business or not by applying the tests which are meant to d....
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....-tracked because this Court considered the question with reference to the assessability of income from letting out of Kalyanamandapam. This Court has considered the question with reference to the head of income under which the income from letting out the Kalyanamandapam would fall. We are of the view that the decision is relevant in considering the question whether the letting out of Kalyanamandapam would amount to business activity or not. 8. As far as the decision of this Court in Samyuktha Gowda Saraswatha Sabha's case (supra) are the unreported decision of this Court in A.V.M. Charities" case (supra) are concerned, learned counsel for the Revenue would contend that this Court has held that the income derived from letting out Kalyanamandapam was not a business income and it was an income from house property with reference to the provisions of s. 13(l)(bb) of the Act and not with reference to the provisions of the s. 11( 4A) of the Act. However, we are of the opinion that it is not necessary to express any opinion on the question as to whether the letting out of Kalyanamandapam was a business of the assessee as it would depend upon the intention of the assessee and w....
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....he lower authorities for fresh consideration. 11.3 The decision referred above have been rendered with regard to the application of section 11 (4A), to examine whether the activities of the trust was charitable within the meaning of Section 2(15) or a business activity the profits of which would not be exempt u/s 11. The distinction between 'business' held as property under trust as contemplated in Section 11(4) and that which is not held as property under trust but is carried out to meet the charitable objects of the trust as in S. 11 (4A) has been dealt as length by the Hon'ble Apex Court in Thanthi Trust case (2001) 247 ITR 785 (SC), which held that in view of substituted sub-s. (4A) of s. 11 w.e.f. 1st April, 1992, assessee-trust was entitled to exemption under s. 11 for asst. yr. 1992- 93 and thereafter in respect of its income of newspaper business which was employed to achieve its charitable objects. The Apex Court also cited a hypothetical example of a trust having 'relief to the poor' as its object, engaged in providing employment to weavers, hand looms and purchasing raw materials and selling the produce, which could be said to be an activity for ch....
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....as undertaken by it. The ld. DR has also invited our attention to the definition of 'charitable purpose' as given in section 2(15) of the Act with the submission that since the assessee is not engaged in charitable activities, exemption u/s. 11 cannot be allowed to it. 6. Having carefully examined the orders of lower authorities in the light of rival submissions, I find that against the order of cancellation of registration u/s. 12AA of the Act, an appeal was filed before the Tribunal and the Tribunal set aside the order of cancellation against which an appeal was filed before the Hon'ble High Court of Karnataka and the Hon'ble High Court has confirmed the order of Tribunal. While dealing with the issue of cancellation of registration, the Hon'ble High Court has observed that registration can only be cancelled if the activities of such trust or institution are not being carried out in accordance with the objects of the trust/institution. They have not gone into the merits of the case as to whether letting out of kalyana mantapa is a charitable activity or in the nature of business activity. But, while granting exemption u/s. 11 of the Act, the AO is competent to examine the stat....