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2012 (11) TMI 235 - BOMBAY HIGH COURTEntitlement to exemption under section 11 - construction activity of World Trade Center, Centre 1 and IDBI Centre - denial of claim as the transaction was one of sale of lease-hold rights of use of space and not of leasing - Held that:- The Department sought and received from the assessee particulars of the expenditure incurred by the assessee towards scientific research & the details furnished in the table speak for themselves - hardly any expenditure worth mentioning was incurred on research and development. The assessee's reliance upon section 2(15) is of no assistance to it. The only object of general public utility that can be claimed by the assessee is on account of its main object in the Memorandum of Association. The assessee never engaged itself in any activity connected to the main object viz. to organize, sponsor, promote, establish, conduct or undertake the scientific research in any way or by any means whatsoever and in any area or field. Mr. Andhyarujina fairly stated that the lease transactions were the only business of the assessee. The income therefore, was entirely from the assessee's business unrelated to any charitable purposes whatsoever. An assessee that engages itself only or predominantly in activities relating to its ancillary or incidental objects which do not relate to any charitable purpose and does not carry on any activity relating to its main object which pertains to a charitable purpose is not entitled to an exemption under Section 11. The assessee's claim for exemption fails the first test viz. in establishing that its income was derived from the property held under trust wholly for the alleged charitable purposes. The assessee's claim for exemption under section 11 also fails the second test under section 11(1)(a). It has not been able to establish that such income was applied to such purposes viz. charitable or religious purposes. The assessee's claim is also not maintainable as it has not been established that the work in connection with the assessee's business is mainly carried on by the beneficiaries of the institution - against assessee. Whether only 1/60th of the advance can be assessed as its income for the year as the tribunal had rightly held it as transaction of lease and not of sale ? - Held that:- In the agreements, where the rent was divided into three components, the basis rent and parking space rent were to be paid in advance before execution of the lease in installments similar to those under the first set of agreements. Thus under both the agreements, substantial "rent" was payable in advance - the doctrine of diversion of income by over-riding title does not operate in the assessee's favour. The mere use of the term 'sinking fund' and the manner in which the assessee treats the same in its accounts is not decisive of the matter. The assessee is not a co-operative society in which case the question may well be answered entirely differently depending upon the facts of the case. The fact that depreciation has been claimed by the assessee in respect of the plant and machinery and other equipment required for extending the facilities indicates that the sinking fund was utilized for acquiring and maintaining the same for the benefit of the assessee. The income was, therefore, used by the assessee and for the assessee and the assessee retained the benefit arising therefrom - against assessee. Standard rent fixed by the Municipal Authorities as the annual value v/s - actual rent realized by the assessee - Held that:- The additional question for the assessment year 1990-91 is, accordingly, answered in favour of the assessee viz. that the Tribunal has itself held that the said income is to be taxed as income from "Profits and gains of business or profession". The issue of consideration received in respect of the transactions for the assessment year 1990-91 under the head "income from property" does not survive in view of the remand report made by the Tribunal in which it is expressly held that the same has to be assessed under the head "Profits and gains of business or profession" - in favour of assessee.
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