2024 (1) TMI 407

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.... Tax Act, 1961. Prayed that the Appellant is entitled for registration U/S 12AA rws 11 & 12 of the Income Tax Act, 1961 and be registered. 2. That the learned Commissioner of Income Tax (Exemption) also erred in observing that the Appellant was engaged in the activities similar to "any activity in the nature of trade, commerce or business ". Prayed that the Appellant is not engaged in any activity in the nature of trade, commerce or business. Prayed to grant registration U/S 12AA rws 11 & 12 of the Income Tax Act, 1961. 2. Brief facts of the case are that the assessee has applied for registration u/s. 12AA of the Act in Form No.10A, however, the CIT(E) rejected the application of the assessee stating t....

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.... that the activities of the trust are in the nature of advancement of any other object of general public utility shall not be a charitable purpose, the same 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 cess or fee or consideration, irrespective of the nature of use or application, or retention of income from such activity. It was the Ld AR's submission that trust was formed for 'No profit motive'. The activity of the trust in running a dharmshala charging a nominal room charge as compared to any other hotel, the same should not be treated as an activity in the nature of trade or commerce. Moreover, it was th....

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....ts of the Trust. 5. Ld AR further submitted that the major income of the trust was from interest on FDR, the amount of interest for the year under consideration i.e. AY 2016-17 was Rs. 5.98 Lac out of total surplus of Rs. 13.13 Lac, thus, the finding of Ld CIT(E) that the trust has high surplus from its activities was not based on correct appreciation of facts. Regarding observation of the Ld CIT(E) that there is no dissolution clause in the trust deed the assessee had submitted an undertaking dated 26.08.2016 before the Ld CIT(E) that "in the event of dissolution or winding up of the Trust, "Shri Agrasen Jan Kalyan Trust", the assets remaining as on the date of dissolution shall under no circumstances be distributed among the trustees b....

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....ny 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. In view of the above definition of business and charitable purpose, it is the plea of the Ld AR that activity of running a Dharmashala for public at large can not be treated as an activity in the nature of trade, commerce or business, specially when the objects of trust are for No profit motive. 8. It was the further submission by Ld AR that the assessee trust has filed another application seeking registration u/s 12AA on 06.10.2020, on the same fac....