TaxTMI 
TaxTMI 
2022 (3) TMI 379
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....tion on the raison d'etre that it failed to obtain registration u/s.12A of the Act. Without prejudice to that, the AO also observed that even if the assessee's contention of registration was accepted, it did not fulfill the conditions laid down in section 11 of the Act. He jotted down the Objects of the assessee-trust, running into 15 in number, from its Trust-deed and observed that certain objects were of the nature of 'advancement of any other object of general public utility' as per section 2(15) of the Act. On a perusal of the Income and expenditure account, the AO observed that the assessee had shown income of Rs. 33.26 lakh from Cultural hall rent; Other income of Rs. 88.34 lakh and Interest from fixed deposits in banks and others at Rs. 1.09 crore. He noticed that the assessee had two halls which were let out by it from time to time on which rental income was earned totaling to Rs. 1.09 crore. He noted that the assessee had shown certain receipts of Rs. 93.95 lakh towards Amenity charges, DG set receipts, Electricity charges received etc. Invoking the mandate of the first proviso to section 2(15), the AO held that the assessee-trust was carrying out objects of general public....
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.... a condition of not carrying on 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, applies only to advancement of any other object of general public utility, that is (d) above. In other words, the proviso has no application to (a) to (c) above. To put it simply, if a charitable trust is providing Relief to the poor or Education or providing Medical relief and for funding such activities, it is carrying on activity in the nature of trade, commerce or business etc., for which a cess or fees etc. is charged, the `charitable purpose' will remain intact and the case will not be hit by the proviso and ex consequenti, the exemption will continue. It is only when the (d) category of section 2(15) as discussed above about advancement of any other object of general public utility is pursued that the disability enshrined in the proviso gets magnetized. 6. Now, we turn to examine the objects of the assessee-trust, as have been extracted in para 9 of the assessment order, reading as under: "1. to work for the social, educational, physical, cu....
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....ncing the objects of the category (a) to (d). Which of the objects of a trust are actually pursued during the year can be deduced by examining the expenses incurred and having an eye on the Expenditure side of the Income & Expenditure of the trust. 8. The ld. AR contended that the assessee was engaged in providing Medical help, Relief to the poor and Education only and no other object was pursued. He attempted to fortify his view by showing that major items of expenses in the assessee's Income & Expenditure account were for Medical help of Rs. 50.54 lakh; Education help of Rs. 62.25 lakh; Relief to the poor covered under the head 'Education and Charity expenses' of Rs. 3.46 lakh. In order to examine the true nature of such activities recorded as such by the assessee, the ld. AR was directed to place on record necessary evidence to show as to how the assessee was extending Medical help, Relief to the poor and Education. The relevant material has been placed on record. 9. First of all, we take up the expenses incurred on Education help. The assessee spent Rs. 62.25 lakh on education help to the deserving sections of the society. The break-up of such an amount has been given at ....
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....view and after finding the case to be genuine, a scholarship in the shape of lump sum amount of Rs. 10,000/- or Rs. 15,000/-, Rs. 5,000/- was given by means of cheque in favour of the concerned student. 10. Now we turn to the head of `Medical help' amounting to Rs. 50.54 lakh. The medical help was extended to the deserving patients on the basis of either recommendation by concerned hospital or on the application given by patient or his family members, showing the disease from which the patient was suffering; the estimated amount of expenditure on medical treatment; family income etc. Item-wise details of such expenses are given at page 45 onwards of the paper book, giving the date on which the amount was paid, cheque number and the amount of medical help. After evaluating the necessary details, the assesseetrust extended help by means of a lump sum payment of Rs. 3,000/- or Rs. 5,000/- or Rs. 7,000/- or Rs. 10,000/- or Rs. 15,000/- or Rs. 19,000/- or the maximum of Rs. 20,000/-. These amounts have been directly deposited in the bank account of the concerned hospital through banking channel. 11. The last item is `Relief to the poor'. Ledger account of `Charity expenses' has be....
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....s of Rs. 4.98 lakh; Electricity charges of Rs. 5.26 lakh; DG set expenses of Rs. 6.37 lakh etc. Such expenses are mostly in the nature of the amounts spent by the assessee against which specific recoveries were obtained from the users of the Building and Cultural halls. Thus, these costs are identifiable with the receipts and included in the income side of Income and Expenditure Account. Total of such costs, which have no connection with the activities for advancement of any other object of general public utility, comes to Rs. 52.82 lakh. If this amount is added to expenditure incurred on Medical help; Education; and Food/relief to the poor, the total comes to Rs. 169.03 lakh, as against total expenses booked on the Expenditure side at Rs. 192 lakh. Remaining expenses are of usual running of the trust, such as, Depreciation amounting to Rs. 7.78 lakh; Salaries of Rs. 4.19 lakh; and other Administrative expenses, such as, Printing and stationery; Audit fee; Professional charges, Postage etc., leaving hardly any amount for pursuing 'advancement of any other object of general public utility'. 14. From the above discussion, it is discernible that albeit the assessee has the objects ....