TaxTMI 
TaxTMI 
2019 (12) TMI 439
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....eing disposed of by this common order. 3. The facts of the case are that the assessment was completed u/s. 143(3) of the Income Tax Act, 1961 on 21.07.2016 assessing the total income at Rs. 1,81,050/-. On examination of records, it was noticed that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue for the reason that the Assessing Officer, while completing the assessment has not gone into the following issues: 3.1 It was found that the assessee's main source of income was by way of Kuri business. During the Assessment Years 2014-2015 and 2015-16, the assessee's income from Kuri business was Rs. 24,52,012/- and Rs. 36,41,592/- respectively. The assessments were made....
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....ecord that the main object of the trust is relief of the poor. For this purpose, the Ld. AR relied on the ratio of the decision in the case of Asstt. CIT v. Thanthi Trust reported in 247 ITR 785 (SC) wherein it was held that a business whose income is utilized by the trust for the purpose of achievement of object of the trust would be incidental to the object of the trust. It was submitted that the then Assessing Officer found that the income generated from kuri business had been utilized for charitable purpose and assessments were completed allowing the application of income u/s. 11 of the Act. According to the Ld. AR, as per Section 11(4A) states that "Sub-section (1) or Sub-section (2) Sub-Section (3) or Sub-Section (3A) shall not apply ....
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....purpose is 'advancement of any other object of general public utility', i.e. the fourth limb of the definition of 'charitable purpose' contained in Section 2(15). Hence, it was submitted that such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities and whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extend and frequency of the activity. 4. The CIT(E) observed that amendments made by the Finance (No.2) Act, 1991 w e.f. 1992 prohibits the carrying on of business, unless the business is incidental to the attainment of the obj....
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....ects of the Trust. It was observed that even if the profit/surplus from the Kuri business are entirely utilized for the objects of the Trust, however, running of Kuri business itself comes either under the category of business which is not incidental to its activities or qualifies to be "advancement of any public utility". 4.3 Now coming to the question of "incidental" business, for an educational trust, the CIT(E) was of the view that receivable incidental business could be running of stationery store, canteen, or even running school buses. Thus, if an educational institution runs these businesses, then it would not be treated as a business income, though they may run on commercial lines, in consonance with the provisions of section 11(....
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....assessee. The ld. AR filed written submissions stating that the Commissioner of Income Tax either ignored or misapplied the ratio decidendi of the Supreme Court decision in the case of Thanti Trust (supra) wherein it was held that a business whose income is utilized by the Trust for the purpose or the objectives of the Trust, the business is to be held as incidental to the attainment of the objects of the Trust. It was submitted that the CIT had no dispute that the assessee's main object was relief to poor. Secondly, he had also found that, the entire income from bad been utilized for the purpose of relief to poor. Reliance was placed on the following judgments of the Supreme Court and High Court: 1. Parashuram Pottery Works Co....
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.... manner as contemplated by Sub-section (1) of Section 143. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. The Assessing Officer should protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what the assessee claims before him. It is his duty to ascertain the truth of the facts stated and the genuineness of the claims made in the return. The order passed by the Assessing Officer becomes erroneous when an enquiry has not been made before accepting the genuineness of the claim which res....