TaxTMI 
TaxTMI 
2023 (1) TMI 611
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....ut of auditorium was a commercial activity contradicting proviso to section 2(15) of the Act as against the assessee trust being falling in the category of Education u/s 2(15) of the Act. For this, assessee has raised common and identical grounds in all these four years and facts are also identical, as admitted by ld.AR for the assessee. Hence, we will take the facts from assessment year 2010-11 in ITA No.976/Chny/2019 and will decide the issue. For this, assessee has raised the following four grounds:- "1. CIT(A) erred both in law and on the facts of case in holding that letting-out auditorium was a commercial activity, attracting proviso to Sec.2(15) of the Income-tax Act. 2. He failed to appreciate that the auditorium is used only for educational purposes for the students during school houses and it was let-out, beyond school hours for educational purposes and promotion of fine-arts, etc., in order to augment the income to be used for educational purposes. 3. He erred in holding that letting-out of auditorium is service in the nature of trade, commerce or business. 4.The decisions relied upon the CIT(A) are distinguishable on facts. 3. Brief facts are that the assessee'....
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....itten submissions dated 25.03.2013 stating that the auditorium is located inside the premises of school and predominantly utilized by school for promotion of cultural and extracurricular activities. The assessee contended that the main purpose of auditorium is to provide facilities for the school in exhibiting the student's artistic talents. The auditorium was let out to outside parties only when the same was not needed by school and the proceeds received from letting out of auditorium hall was utilized in promotion of education and hence, it would not lose character of charitable purpose merely because some profit arises from the activity. The assessee objected to the proposal of AO and argued that the trust has not carried out any business / trade / commerce as provided in the proviso to section 2(15) of the Act. It was claimed that the income from this activity is only incidental and not business in nature and thus, letting out of auditorium hall for rent is not carrying on business and the income of the trust so received by way of rent would continue to enjoy exemption u/s.11 of the Act. The AO examined the submissions of the assessee and relying on the proviso to section 2(15)....
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....e overheads, the assessee had let out the auditorium for educational purposes for conducting lecture meetings, conferences and to promote find-arts such as music, dance, etc. This is also part of the education and not connected with any trade or commerce or business activity. The assessee does not carry any activity related to trade, commerce or business. It was further argued that the assessee's activities are covered by CBDT circular No.11/2008 dated 19.12.2008, wherein it is specifically mentioned as under:- "The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of Section 2(15) ie, relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities." The CIT(A) noted that in the present case, assessee let out auditorium for 227 days during the financial year 2009-10 and earned substantial amount of Rs.40,84,433/- from such let out during the year. Hence, he concluded that the assessee earned substantial receipts from letting out of t....
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....st. Year No. of days 2010-11 134 2011-12 144 2012-13 140 2013-14 141 It was occupied only on holidays and non-school working hours and that only for few hours. (b) There is a separate gate and exclusive car parking for private access to outsiders and general public This is factually incorrect. It is having only one gate for "in" and one gate for "out". It does not have a separate gate for Auditorium. The Auditorium is between two divisions of the school. The parking area is used by the school students during working hours and by outsiders during non-working hours (Copy of site plan is enclosed separately) (c) The Auditorium is let-out for dance programmes, music programmes, corporate meetings, corporate conferences, get-together and family functions. It is let-out mostly for music, dance, etc. The break-up is as under: 2010-11 2011-12 2012-13 2013-14 Music, Dance, etc. 83 95 112 106 Meeting connected with Academics 23 15 8 8 School Annual Day 6 15 14 16 Corporate Meetings 2 2 3 - Corporate Conferences - - - - Gettogether - - - - Family Function 1 - - - Chief Minister Function 1 - - - Others 18 17 3 11 ....
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.... present case, there is a clear finding given by the AO and the CIT(A) and from the details filed by assessee before Tribunal even in its paper-book, it clearly reveals that the auditorium is let out to like example, on 20.05.2009 Bharathi Airtel Ltd., on 01.06.2009 Metropolis Entertainment and on 02.07.2000 Chemplast Sanmar Ltd., etc. It means that the assessee is letting out auditorium to general public and therefore it is clearly hit by proviso to section 2(15) of the Act and the issue is squarely covered in favour of Revenue by the decision of Hon'ble Supreme Court in the case of Ahmedabad Urban Development Authority, supra. 6. We have heard rival contentions and gone through facts and circumstances of the case. We have gone through the indenture created this trust vide dated 28.12.1971 which has the object of running school and relevant clause of the trust reads as under:- "WHEREAS the three Trusts are desirous of (a) establishing and maintaining a hospital and a school to be constructed in the property known as "Rama vilas", situated in Luz Church Road, Mylapore, Madras, which has recently been purchased by the Thirupani Trust for this purpose and (b) repairing, renovati....
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....hospital and school as aforesaid and manage the hospital and the school. The property tax and other outgoings in respect of the Rama vilas property shall be paid by the Board of Trustees out of the funds available with them. 7. Admittedly, the assessee is running a Matriculation School and it is also having an auditorium in its campus which is let out to various people for conducting meetings for school purpose or dance competition, music programme, etc., as contended by ld.AR for the assessee. From the records produced before us by the assessee in its paper-book and the details noted by the AO of list of parties from whom the assessee has received rent clearly reveals that the auditorium has been let out to general public also for conduct of dance programme, music programme, corporate meetings, corporate conference, corporate get together, etc. From the details filed by assessee before Tribunal even in its paper-book, it clearly reveals that the auditorium is let out to like example, on 20.05.2009 Bharathi Airtel Ltd., on 01.06.2009 Metropolis Entertainment and on 02.07.2000 Chemplast Sanmar Ltd., etc on the days whenever the auditorium is not in use by or for the purposes of sch....
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...., 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, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;" 7.1 From the facts of the case and above stated provisions, it is clear that the assessee is a trust running a school and existed for the purpose of education and falling under the category of education as provided u/s.2(15) of the Act. From the facts it is clear that the school campus includes an auditorium for conducting conferences, lecture meeting etc., for its students. The auditorium is also used for letting out to institutions for promotion of fine arts, educational purposes....