TaxTMI 
TaxTMI 
2025 (10) TMI 472
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....cts, a notice was issued through ITBA portal on 08.08.2024 requesting the assessee to upload certain information / clarification. From the details furnished by the assessee in response to the said notice, the Ld. CIT(E) noticed various discrepancies for which he issued another notice to the assessee on 25.09.2024 communicating the discrepancies. The assessee in response to the same filed various details. The Ld. CIT(E) noticed still certain discrepancies for which he issued another notice to the assessee on 28.11.2024. From the reply so received from the assessee the Ld. CIT(E) noticed that the assessee has received rental income of Rs. 6,66,400/- on account of renting of shop spaces within its premises. The assessee in response to the query raised by the Ld. CIT(E) submitted that the shops were established as part of the trust's premises which later on were rented and used as source to generate a sustainable source of income, which would help fund its core educational and philanthropic activities. It was submitted that every rupee of the rental income is directed towards fulfilling the trust's objectives such as subsidizing costs for library members to keep access affordable for f....
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....ibunal by raising the following grounds: 1. On facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be kindly held that the order passed by the Commissioner of Income Tax Exemptions ['CIT (E)'], Pune, rejecting the Appellants application for seeking registration u/s 12AB of the Act is against the provisions of the Act. Accordingly, the order passed by the Ld. CIT (E) be held as not tenable in law and be set aside directing the Ld. CIT(E) to grant registration. The appellant be granted just and proper relief in this respect. 2. On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be kindly held that Ld. CIT(E) erred in passing the rejection order without perusing the material available on record. Accordingly, the order passed by the Ld. CIT (E) be set aside and Ld. CIT(E) be kindly directed to grant registration. The appellant be granted just and proper relief in this respect. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing. 5. The Ld. Counsel for the....
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....Tribunal in the case of Oswal Bandhu Samaj vs. ITO (2022) 195 ITD 200 (Pune-Trib.), he submitted that the Tribunal in the said decision has held that where the assessee trust, registered under section 12A and engaged in providing medical help, education help and relief to poor had let out its halls and buildings for earning rental income so as to fund its charitable objects, proviso to section 2(15) would not be attracted and the assessee could not be denied exemption under section 11. He accordingly submitted that merely because the assessee has earned certain income by letting out certain shops inside the premises of the assessee trust, the income of which has been utilized for the purpose of attaining the main objects of the trust, cannot be a ground to disentitle the assessee to claim the exemption u/s 11 of the Act. 9. So far as the allegation of the Ld. CIT(E) that the assessee has incurred only an amount of Rs. 50,000/- for charitable purposes as against the income of Rs. 20.33 lakhs is concerned, the Ld. Counsel for the assessee submitted that the same is factually incorrect since the assessee has spent an amount of Rs. 5,59,099.50 out of the total income of Rs. 20,33,64....
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....ses. There may be some surplus generated which itself is applied towards the attainment of the object of the educational institute. The separate books of account cannot be insisted upon because once this programme is part and parcel of the activities undertaken and carried out by the Narsee Moonjee Institute of Management Studies, then the condition precedent set out in sub-section (4A) of section 11 of the Income-tax Act, 1961, is completely satisfied. Such finding of fact cannot be termed as perverse and it is in consonance with the factual aspect regarding the activities of the trust and the object that it is seeking to achieve. Similarly, in regard to income from the hiring of the premises and advertisement rights, the said question is also not substantial question of law. Letting out of halls for marriages, sale and advertisement rights has not been found to be a regular activity undertaken as a part of business. The educational institutions require funds. The income is generated from giving various halls and properties of the institution on rentals only on Saturdays and Sundays and on public holidays when they are not required for educational activities, then this cannot be s....
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....there would be no need for the exemption provision. It is only on the postulate of profits being there, that any exemption provision would find a place in the statute. The effect of the contention of the learned counsel for the revenue is to show that when once there was a profit, the exemption was taken away. This, in our opinion, could not be the intention of Parliament which has granted the exemption on the profits earned. A reading of section 2(15) and section 11 together shows that what is frowned upon is an activity for profit by a charity established for general objects of public utility in the course of accomplishing its objects. There is no activity here. The activity spoken of by the provision is not a mere act of purchase of a building or making an investment and getting income therefrom, but something more substantial and continuous. We are, therefore, of the opinion that the Tribunal rightly granted the exemption to the present assessee even after the definition was amended under the 1961 Act. This would answer question No. 2. The answer is in the affirmative and in favour of the assessee." 14. We find when the Revenue challenged the above decision, the Hon'ble Supr....
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....viso to section 2(15) would not be attracted and the assessee could not be denied exemption under section 11. The relevant observations of the Tribunal read as under: "13. In order to ascertain as to which activities of the nature as given under (d) above, hit by the proviso to section 2(15), were pursued by the assessee, we proceeded to examine the Income and Expenditure Account of the assssee. Total of the Expenditure side for the year ending 31-03-2010 on page 2 of the Paper book in Income and Expenditure Account is Rs. 1.92 crore. Expenditure on Medical help of Rs. 50.54 lakh; Education help of Rs. 62.25 lakh; and Relief to the poor covered under the head 'Education and Charity expenses of Rs. 3.46 lakh, totals up to Rs. 1.16 crore. There is no dispute that the assessee let out its Cultural halls and Building from time to time for earning revenue so as to fund its charitable objects. Income from such revenue generating activities has been recognized on the Income side of the Income and Expenditure account. In addition to Cultural hall receipts and Building rent, the assessee expressly recovered Amenity charges of Rs. 20.93 lakh; Furniture and municipal taxes of Rs. 56.....
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....viz., advancement of any other object of general public utility. Once this is the position, it becomes explicitly clear that the proviso to section 2(15), which attracts only when objects of the category (d) above are pursued, did not trigger in the instant case. The sequitur is that the assessee is entitled to exemption. It is pertinent to mention that the AO did not dispute the fulfillment of any other requirements for claiming exemption u/s 11 of the Act. We, therefore, hold that the assessee is entitled to exemption. The impugned order is, therefore, set-aside." 16. So far as the allegation of Ld. CIT(E) that the assessee has spent a meagre amount of Rs. 50,000/- only on account of charitable activities as per the Income & Expenditure account is concerned, we find the same is factually incorrect. A perusal of the Income & Expenditure account shows that the assessee has spent an amount of Rs. 5,59,099.50 towards its objects, the details of which are as under: 17. In the light of the above discussion and relying on the decisions cited (supra), we are of the considered opinion that the proviso to section 2(15) of the Act would not be attracted for earning rental income by le....