TaxTMI 
TaxTMI 
2023 (8) TMI 1107
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....sdiction due to invalid service of notice renders no jurisdiction to assess the total income. 3. The Ld. CIT (Appeal) erred in not accepting that the trust has carried on charitable activities. 4. The Ld. CIT (Appeal) erred in upholding the Assessment Order though the reasons for selection of the case for scrutiny was not conveyed to assessee. 5. The Ld. CIT (Appeal) erred in upholding the Assessment Order passed by the AO determining the total income at Rs. 2,20,250/-. 6. The order passed by the Ld. CIT (Appeal) is arbitrary, perverse and bad in law. 7. The Appellant reserves the right to add, amend, alter or withdraw any of the grounds of appeal at the time of hearing." Also, the assessee has raised an additional ground in the form of "revised ground No.1," which reads as under: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in identify the exemption claimed u/s. 11(2) of Rs. 2,20,247/-by applying first proviso to section 2(1%) on the premise that the assessee trust had involved in commercial activities (i.e. nature of trade, commerce/business) while, the assessee trust is engaged....
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....agencies, business concerns, and shops. He further observed that many persons who had booked "Dharmashala" were well-to-do persons of the society. Because no material on record would suggest that any of those persons were in the category of a poor or needy person; therefore, the A.O. was of the view that it could safely be concluded that the activities of the assessee trust were being carried on commercial lines. Accordingly, the CIT(Appeals), based on his observations mentioned above, finding no infirmity in the view taken by the A.O., upheld the same. For the sake of clarity, the relevant observations of the CIT(Appeals) are culled out as under: "2.3 Facts being as above, the benefit of section 11 has been withdrawn in view of the proviso to section 2(15) as per which if the trust undertakes activities of "advancement of any other object of general public utility" and its receipt during the year are more than Rs. 10 lakhs, then the activities will not be treated for charitable purposes for that year. As seen in para 2.2 the appellant trust has claimed that it has provided dhramshala bhawan to needy persons free of charge. It is only receiving charges like cleaning, elect....
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....table trust u/s. 12A of the Act dated 31.03.1998 with the Commissioner of Income Tax, Raipur. The objects of the assessee trust are culled out as under (Pages 72 to 74 of the APB): "Objects of Trust are :- To establish, maintain, Dharamshalas, Temples, homes orphanages or other establishments for relief of and to give help to poor and destitute people, orphans, widows, cripples and old aged persons and otherwise provide them, rehabilitation aid for self earnings. (b) To establish maintain and grant aid or other financial assistance to hospitals, nursing homes, Maternity Homes, clinics, charitable dispensaries sanitoriums and health camps, other establishments for giving medical relief to the poor, sick and infirm persons, also to give financial or other aid to sick and needy persons. (c) To grant relief during natural calamities, such as earthquake, cyclone, flood, fire, draught, pestilence and other occasions of calamities of similar nature and to give donations, subscriptions or contributions to institutions, establishments or persons doing such relief works. (d) To establish, support, maintain and grant in aid in kind and cash or othe....
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....se of carrying out and furthering any of the objects of this trust. (q) Any generally advancement of any other object of general public utility as the law any regard as public charitable purposes as the trustees may think fit and in such manner as the trustees may think and for one or more of such charitable purpose to the exclusion of other or others as the trustees may think fit." 8. Although the assessee trust was, inter alia, set up with the objects of establishing/managing "Dharamshala" to facilitate relief to poor people, orphans, widows, and old aged persons and otherwise provide them rehabilitation, it was observed by the lower authorities, that the assessee trust had by renting the "Dharmashala" to the public at large, had ventured into commercial activities. I, say so, for the reason that a perusal of the assessment records as produced in the course of hearing of the appeal reveals that the assessee vide its reply dated 05.12.2013 had categorically admitted that the assessee had rented the aforesaid "Dharmashala"/premises to 170 persons for multi-facet purposes (Page 47 of APB), i.e. marriage function, political, religious and other social functions, etc. The ....
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....out "Dharmashala" to the public at large for multi-facet purposes, i.e., marriage functions, political, religious, and other social functions, etc., therefore, it was in substance carrying on a business. As the gross receipts of the assessee trust during the year under consideration amounted to Rs. 15,89,163/- which was more than the threshold amount of Rs. 10 lacs as contemplated in the "Second Proviso" to Section 2(15) of the Act, therefore, the activities of the assessee and surplus therein generated were hit by the provisions of Section 2(15) of the Act. 10. As regards the reliance laced by the Ld. AR on the judgment of the Hon'ble Supreme Court in the case of Pr. Commissioner of Income Tax (Exemptions) Vs. Servants of People Society (2023) 330 CTR (SC) 617, we find that the same being distinguishable on facts would not assist the case of the assessee trust before us. The Hon'ble Apex Court observed that in a case where charging of any amount towards consideration for such an activity (advancing general public utility) which is on a cost-basis or nominally above cost, then the same cannot be considered to be 'trade, commerce, or business' or any services in relation to it. T....