AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 837
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....tion 11 of the Income-tax Act, 1961 to the tune of Rs. 1,91,28,250/-, without properly appreciating that the assessee earned Rs. 5,67,58,699/- from letting out of its auditorium, which constituted 53.73% of its total receipts during the year and reflected a regular and organised commercial activity become its dominant source of income, as more than half of the total receipts arose from this activity, thereby clearly attracting the proviso to section 2(15) of the Act." 2. On the facts and the circumstances of the case and in law, the Ld Commissioner of Income Tax (Appeals) erred in concluding that the assessee was primarily engaged in charitable activities of education and medical relief, without considering the scale, frequency and profitability of the auditorium letting activity, which demonstrated a clear engagement in trade, commerce or business thereby clearly attracting the proviso to section 2(15) of the Act." 3. On the facts and the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) failed to appreciate the fact that the assessee earned a gross profit of 65.64% from auditorium letting out after incurring expenditure of only R....
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.... the tune of Rs. 1,91,49,191/-, without properly appreciating that the assessee earned Rs. 6,12,42,452/- from letting out of its auditorium, which constituted 51.24% of its total receipts during the year and reflected a regular and organised commercial activity become its dominant source of income, as more than half of the total receipts arose from this activity, thereby clearly attracting the proviso to section 2(15) of the Act." 2. "On the facts and the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) erred in concluding that the assessee was primarily engaged in charitable activities of education and medical relief, without considering the scale, frequency and profitability of the auditorium letting activity, which demonstrated a clear engagement in trade, commerce or business thereby clearly attracting the proviso to section 2(15) of the Act." 3. "On the facts and the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) failed to appreciate the fact that the assessee earned a gross profit of 57.49% from auditorium letting out after incurring expenditure of only Rs. 2,60,29,930/- against receipts o....
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....n of music, dance and cultural programmes. The assessee filed its return of income for the year under consideration declaring total income at Rs. Nil after claiming exemption u/s 11 of the Act. The assessee carried out its activities through three main divisions, namely, Music School, Medical Wing and Fine Arts Wing (Sabha Main), and also maintained an auditorium which was used for conducting programmes and was also given on hire on certain occasions. The case was selected for scrutiny and assessment was completed u/s 143(3) of the Act. 4.1. The Ld. AO, on perusal of the financials, observed that the assessee earned substantial receipts from letting out of its auditorium and premises amounting to Rs. 5,67,58,699/-, constituting about 53.73% of the total receipts. The Ld.AO noted that the auditorium was regularly given on hire for conducting programmes, including ticketed shows and commercial events, and such activity was carried out in a systematic and organized manner. It was further observed that the assessee was collecting service tax and entertainment tax on such receipts, thereby indicating the commercial nature of the activity. The Ld.AO further recorded that against recei....
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....ide medical relief, health services and yoga to general public, to establish medical centres/ hospitals for providing medical services(Claus 3),that DIT(E),Mumbai had withdrawn the registration granted to it, that the Tribunal reversed the order of the DIT, that the Hon'ble Bombay High Court confirmed the order of the Tribunal. In our opinion, during the continuation of registration, it is not permissible to the departmental authorities to challenge the charitable nature of the objects of a Trust. We would like to refer to the case of Ahmedabad Urban Development Authority(335 ITR 575)wherein the Hon'ble Gujarat High Court has held as under: "Section 12AA of the Income-tax Act, 1961, lays down the procedure for registration in relation to the conditions for applicability of sections 11 and 12 as provided in section 12A. Therefore, once the procedure is complete as pro-vided in subsection (1) of section 12AA and a certificate is issued granting registration to the trust or institution the certificate is a document evidencing satisfaction about : (i) the genuineness of the activities of the trust or institution, and (ii) about the objects of the trust or institution. Section ....
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.... 4,46,088. The assessee pointed out that this nursing training provided at the centre of the assessee at Panvel was free of cost. The charge was levied for the mess but accommodation and other facilities were free of cost and apart from community development programmes, which were undertaken to educate rural women, they were taught various skills and made aware of how to live honourably. The Tribunal found that this was not an activity which would fall within the proviso to section 2(15). The Tribunal referred to two letters addressed by the trustees of the assessee-trust clarifying that in the past, such activities had been found to be incidental to the objects of the trust. Secondly, the donation received during the year had been utilised in the assessment year 2009-10 for achieving the object of the trust. However, the bank interest received was continued and, then, there was a deficit. It was in these circumstances that the argument was canvassed that the fees collected for training women were only to meet the cost of expenses for providing them food items. Their accommodation and other facilities were free of cost. The Tribunal found that the trust maybe set up for advancement....
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....he nature of the activities. The letting out of SH, during the period when it was not required by the trust, was not considered a commercial activity in the earlier years. It is true that principles of res judicata are not applicable to the income tax proceedings. But, at the same time it is also true that principles of consistency have to be followed while deciding the tax matters. In the case of International tractors Ltd., the Hon'ble Delhi High Court(397 ITR 696)has held that deductions allowed in the earlier assessment years should not be withdrawn unless the circumstances have changed. The Hon'ble Allahabad High Court in the matter of Zazsons export Ltd.(397 ITR 400) has held as under: "In order to maintain consistency, a view, which had been accepted in an earlier order ought not to be disturbed unless there was any material to justify the Department to take a different view of the matter." While deciding the appeal, the Hon'ble Court had taken note of the proceedings of the earlier AY.s. As the rule of consistency has not followed without bringing distinguishing features of the year under appeal, as compared to the facts of the earlier years, so, in our op....
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.... those institutions, which had the advancement of the objects of general public utility at their hearts and were charity institutions. The expressions trade, commerce and business as occurring in the first proviso to section 2(15) must be read in the context of the intent and purport of section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organised manner. The purport of the first proviso to section 2(15) of the Act is not to exclude entities which are essentially for charitable purposes but are conducting some activities for a consideration or a fee. The test which has, therefore, now to be applied is whether the predominant object of the activity involved in carrying out the object of general public utility is to subserve the charitable purpose or to earn profit. Where profit making is the predominant object of the activity, the purpose, though an object of general public utility would cease to be a charitable purpose. But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity.....