TaxTMI 
TaxTMI 
2022 (11) TMI 236
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the nature of "commerce" or "business". It has been so held in CIT v. Halai Nemon Association 243 ITR 439 (Mad.) and also in assessee's own case reported in DIT(E) v. Willington Charitable Trust 330 ITR 24 (MAD). Ground No:3: 3.1 The Id. CIT (A) erred in holding that the running of working women's hostel amount to "Relief of poor". 3.2 The Id. CIT (A) ought to have appreciated that the running of hostels are also on commercial lines where accommodation is given both with A.C. facilities and non A.C. facilities on collection of exorbitant fees and in the absence of an educational institution attached to such hostels, running of such hostels cannot be termed as "incidental activities" u/s 11 (4A) of the I.T. Act. In any case, the incentive sections of 11 & 12 of the I.T. Act do not apply to this case, as it fails to pass the test of a "charitable" entity in view of application of 1st and 2nd provisos to Sec.2(15) of the I.T. Act, 1961. Ground No.4: 4.1 The Id. CIT (A) erred in holding that the Service Tax Act has been enacted for a different purpose, whereas, in. reality, payment of service tax by the assessee, under the category of "mandap-keeper services"....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ited Vs CIT 314 ITR 314.* (ii) M/s. J.K Synthetics Limited (65 Taxman 420) (iii) Lissie Medical Institutions Vs CIT 348 ITR 344 (Ker). (iv) DIT Vs. Ms/. Charanjiv Charitable Trust (2014) 43 taxmann.com 300(Del). 8.3 The Ld CIT (A) ought to have placed reliance on the decision of jurisdictional High Court in the case of CIT Vs Rao Bahadur Cunnan Chetty Charities 135 ITR 485 (Mad) in this regard. Ground No.9: 9.1 The Id. CIT (A) ought to have appreciated that when the assessee looses the eligibility for claiming exemption u/s 11, the provision of section 14 comes into play and the amount of Rs.1,25,05,000/- paid as donation and Rs.20,60,384/- debited towards "income tax paid" in the "Income & Expenditure A/c.," requires to be disallowed. Ground No.10 10.1 The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. Facts are, in brief, that the assessee is a trust, registered under section 12AA of the Income Tax Act, 1961 ["Act" in short] dated 10.04.1974. The assessee filed its return of income for the assessment year 2011-12 on 30.09.2011 admitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s may be necessary or incidental and conducive to the attainment of the above aims and objects or any of them." 2.1 In the assessment order, the Assessing Officer has noted that the assessee has not carried out any charitable activity and no activity in respect of the objects were carried and treated the assessee as AOP and assessed entire income for the following reasons: (i) The activities carried by the assessee are running two Kalyana Mandapams viz., Rajah Muthiah Hall and Rani Meyyammai Hall utilized for conducting marriages, social functions, corporate meetings and other assemblies. (ii) The assessee was running hostels for students and working women, where accommodation is provided both with A/C facilities and non A/C facilities on collection of prescribed fees. The beneficiaries are the students from various economic strata but definitely not the poor. (iii) the assessee was receiving receipts by way of rent from letting out the new commercial complex Sigapi Aachi, Indian Bank Zonal Office, marriage halls and other corporate organizations goes to show that by the exploitation of the above properties exceed the threshold limit as prescribed interest in the 1st and 2n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eversed the order of the Assessing Officer. 4. Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the assessee was running kalyana mandapams and women's hostel, letting out building for commercial purposes and submitted that no charitable activity has been carried out by the assessee and not entitled for claiming exemption under section 11 of the Act. He further submitted that the ld. CIT(A), without examining the objects of the assessee, simply allowed exemption under section 11 of the Act, without considering the assessment order, is not correct and the same has to be reversed. 5. On the other hand, the ld. Counsel for the assessee has strongly supported the order of the ld. CIT(A). He further submitted that the assessee is in existence since 1974 and on that point itself, the assessee is carrying charitable activities and therefore, denying exemption under section 11 of the Act are not correct. He also submitted that providing hostel facilities to poof students, who are coming from village background, is charitable in nature and therefore, the assessee is entitled for exemption under section 11 of the Act. 6. We have heard both the sides, p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... objects, no where it is mentioned that running of kalyana mandapams, letting out working women's hostel as an object of the assessee trust and also construction and letting out of building also not the object of the assessee trust. We find that the assessee trust claiming relief for which no object is provided in the assessee trust deed, it means, the activities carried out by the assessee are not in accordance with the trust deed of the assessee. Therefore, we are of the considered opinion that the assessee is not entitled for the benefit of claiming exemption under section 11 of the Act. 6.4 One of the objects needs to be examined for the reason that the ld. Counsel for the assessee has submitted that object No. (x) has been carried out by the assessee. The object No. (x) is extracted as under: (x) To construct and maintain any buildings or works necessary or convenient for the purpose of the trust. This object has to be considered in the light of all other objects. We have examined all other objects and the above object pointed out by the ld. Counsel for the assessee i.e., object No. (x) comes into operation only when the assessee constructs the building for the purpose of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....260A of the Income-tax Act. Further, we are of the opinion that no prejudice would be caused to the assessee by remanding the matter to the Assessing Officer to find out the actual entitlement of exemption by considering the materials placed before him. Therefore, we deem it at to remand all the matters to the file of the Assessing Officer to go through the returns filed by the assessee for the relevant years and then consider the question of exemption under section 11 of the Act, in the light of the observations made above. 14. Accordingly, the substantial questions of law raised are answered in favour of the Revenue. However, in view of our reasoning that a business income if utilized towards the achievement of the object of the assessee trust the same would be incidental to the achievement of the object, we deem it fit to remand the assessment files to the Assessing Officer to decide as to whether such business income is used for the attainment of the object and thereafter proceed in accordance with law. The entire exercise is to be done by the Assessing Officer within a period of three months from the date of receipt of a copy of this order. In fine, the orders passed by ....