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2014 (2) TMI 601 - ITAT MUMBAIApplication of income for Charitable purpose - Business activity eligible for exemption u/s 11 of the Act – Held that:- The assessee was required to exhibit in the set aside the assessment proceedings was of the publication business as being incidental to the attainment of its other objects, i.e., as a fact, toward satisfaction of the requirement of the law u/ss. 11(4) and 11(4A), for the said business to be considered as property held under trust – the business does not by itself constitute a charitable object or purpose – The decision in IDEAL PUBLICATIONS TRUST Versus COMMISSIONER OF INCOME-TAX [2008 (2) TMI 297 - KERALA HIGH COURT] followed – there was no basis, nor any material on record, to justify the same, which also forms the basis of the orders by the Revenue. An elocution contest, even the subject of which is not known, as also the total expenditure involved, appears to be the only activity sponsored by the trust over the years, which again does not imply undertaking any activity per se - there is no charitable activity being undertaken, much less a regular activity toward charitable purposes, for the said business to be considered as an adjunct or incidental to the attainment or any specific objective - the claim of business expenses as or toward application of income would suggest non-maintenance of separate books of account, another qualifying condition u/ss. 11(4) & 11(4A) - even if the assessee's undertaking of publishing business was found as meeting the requirement of law and, as such, a property held under the trust, only its income to the extent applied for its charitable purposes would qualify for exemption u/s.11, which again is conspicuous by its absence – Decided against Assessee. There would be no surplus from the business as the profits generated would be required to meet the funding requirements of its capital expenditure as well as concomitant financial obligations, including servicing of debt - No wonder the assessee has not been able to generate a 'surplus' (for charitable purposes) in the two decades of its functioning, and despite being run on commercial lines - The plea of no surplus, which is even otherwise not maintainable, is false – Decided against Assessee.
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