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TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 673
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....ental to the attainment of the objective of the Trust". This observation was also made in the case of Commissioner of Income-tax v/s Janaki Ammal Ayyandar Trust 277 ITR 274 (Mad.)- 3) Because, the learned Commissioner of Income-tax (Appeals) did not consider the fact that the activity done by the assesse was accepted by the learned Assessing Officer in the earlier year and granted exemptions, since conducting chitty is one of the objective incidental to the main object as per Memorandum of Association. 4) Because, the learned Commissioner of Income-tax (Appeals) was wrong in concluding that in chit business, only the subscribers are benefited and not the assessee. The assesse being the foreman derives income as foreman commission and GST is attracted. In any business, the customers will be benefited by way of supply of goods or by way of receipt of services. 5) Because, the learned Commissioner of Income-tax (Appeals) ignored the fact that section 13(1)(bb) was omitted by the statute with effect from 01- 04-1984. 6) Because, the learned ITO was wrong in concluding that explanation to section 2(15) is applicable for the assesse who is imparting medical aid ignoring the circu....
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....the decision of the Cochin Bench of the ITAT in the case of Dharmodayam Co. (2003) 84 ITD 259 is misplaced because the decision pertains to cases prior to 1-4-1992 when section 11 (4A) was not on statute. In fact, the Tribunal observed as follows: "The above findings have to be understood in the light of the law as it stood before the amendment brought in by the Finance (No.2) Act, 1991 with effect from 1-4-1992. The amendment has brought in a blanket prohibition. It prohibits the carrying on of business, unless the business is incidental to the attainment of the objects of the trust, for which separate books are to be maintained. The case laws considered in this order and a/so the Rule in Dharmodayam Co.'s case (supra) (assessee's own case) have to be read in the context of the law as it stood then. There was no total prohibition against the business in the old law. It was possible to carry on business, subject to specified exceptions and restrictions. The dividing line was that there should be no activity for profit. But the position has been changed with effect from 1-4-1992. Therefore, caution may have to be exercised in the application of the Rule in Dharmodayam Co....
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....ducation or medical relief. As an example, a public charitable trust for the relief of the poor, education and medical relief that carries on the business of weaving cloth and stitching clothing by employing indigent women carries on the business in the course of actually accomplishing its primary object of affording relief to the poor and it would qualify for the exemption under section 11." "Another fitting example would be the business in selling milk and cow-dung manure by the Goshala. Many such instances which are incidental to the primary object of the charities can be illustrated to drivei home the point but certainly the assessee's activity would never fit in any one of them." 4.4 Thus, the CIT(A) brought out the following points: 1. Business should be carried out in the course of actual carrying out of primary purpose, or accomplishment of primary objective. 2. Every case has to be analysed based on its own peculiar facts. Kuri business cannot be said to be carried out in course of accomplishing primary purpose of a religious/charitable trust. It is nowhere comparable to activities or business which the Supreme Court had held to be incidental to primary purpose.....
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....venth proviso to section 10(23C) which are that : (i) the business should be incidental to the attainment of the objectives of the entity, and (ii) separate books of account should be maintained in respect of such business. Similarly, entities whose object is education or medical relief would also continue to be eligible for exemption as charitable institutions even if they incidentally carry on a commercial activity subject to the conditions mentioned above. 3. The newly inserted proviso to section 2(15) will apply only to entities whose 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, 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. 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, extent and frequency of the activity. 3.1 There are industry and trade associations who claim exemption from tax under section 11 on the ground that their objects are f....
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....s case, the question which arose was whether the income from business of conducting kuries carried on by the assessee was exempt from tax. The Revenue's contention was that since the institution, though established for promoting an object of general public utility, sought to achieve its purpose out of the income of the business of conducting kuries and hence, in view of the concluding words in section 2(15) the assessee's income was not exempt. The Supreme Court, departing from the view taken in Indian Chamber of Commerce (1975) 101 ITR 796 and notwithstanding the specific observation of Krishna lyer, J. in that case to the effect that the Dharmodayam's case was incorrectly decided by the High Court, affirmed the Kerala High Court's decision in CIT vs. Dharmodayam Company (1974) 94 ITR 113. The Supreme Court clearly held that if a business is held under a trust or legal obligation to apply its income for promotion of an object of general public utility or it is carried on for the purpose of earning profit to be utilised exclusively for carrying out such charitable purpose, the last words in section 2(15) would have no application and the trust would be entitled to e....
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.... Act, 1983 w.e.f. 1-4-1984 reads as follows: "charitable purpose" includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility." 7.2 Section 2(15) was amended by Finance Act, 2008 w.e.f. 1-4-2009 which reads as follows: "charitable purpose includes relief of the poor, education, medical relief, (preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest And the advancement of any other object of general public utility. Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakhs rupees or less in....