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2010 (2) TMI 983 - ITAT BANGALOREExemption u/s 11 - Recognition u/s 80G denied - Denial of application as assessee-trust has not carried out any charitable activity in tune with its proclaimed objects and the only activity carried on by the trust was to construct a building and let it out on rent and in such circumstances, it is to be held that the assessee has violated the provisions of law contained in section 80G(5)(ii). HELD THAT:- Assessee-trust was not successful before the Director of Income-tax (Exemptions), to convince him that the assessee had in fact carried out charitable activities during the relevant period. In fact, the crucial test of granting exemption u/s 11 as well as recognition u/s 80G is that the assessee should have been carrying on charitable and/or religious activities. As far as the assessee is concerned, even though it is established for the purpose of indulging in medical and educational charitable activities, no such activities were carried out during the relevant period. No medical activities have been carried out. The assessee has borrowed funds and constructed a building. The building was let out to another educational institution to carry on the educational activities of the latter. The relationship is that of a landlord and tenant. The rental income was earned by the assessee not as a part of its charitable activity but in its status as a landlord. The assessee having let out the building to another educational institution does not mean that the assessee is a partner in the educational activities carried on by the tenant. The assessee is still in the status of a landlord. Therefore, in our considered opinion, Director of Income-tax (Exemptions) has rightly rejected the application of the assessee filed for seeking renewal of recognition available u/s 80G. Assessee is not entitled even to the benefit of section 11. We do not have materials or records before us to know whether the assessee was granted the benefits of section 11 by the assessing authority. Anyhow, we do not want to come to a premature conclusion on these aspects, but we will only direct the assessing authority to consider our finding that it is doubtful whether the assessee is entitled even to the benefits under section 11. In the result, this appeal filed by the assessee is dismissed.
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