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2016 (9) TMI 1262 - AT - Income TaxExemption u/s 11 denied - charging of fees for carrying activities - Held that:- Mere charging of fees for carrying activities will not loose the character of charity and in this case, the department has already granted registration treating the activities as charitable but has not declared under which activity whether under education or general public utility. The assessee has carried on the activities of imparting training to the bottom line employees and there is no element of profit in the said activity as the surplus generated out of the activities is again applied for the charitable activity only. Moreover, the assessee quoted various case laws in support of its claim that they are in the field of education. When analysed closely, all the institutions i.e. Ahmadabad Management Assocation, ICAI, Peter’s education society, are educating people more on structured manner and acknowledging by issuing proper certificates. In the present case, we are not sure if such activities are being carried on by the assessee. We are not inclined to adjudicate whether they fall into education activities in the absence of relevant material before us. However, assessee is imparting training to the bottom like employees, which may be similar to education. Hence, in our view, the assessee is involved in carrying on of charitable activities and not in any commercial activities as held by the AO. Thus, AO cannot deny the benefit u/s 11 of the Act. - Decided in favour of assessee Disallowance of 20% of expenditure due to the observation of the AO that assessee had not maintained proper books of account - Held that:- From the records, the books of the assessee was audited gives the impression that there exists books of account and we are in agreement with CIT(A) that because of books of account are audited, the AO has also a right to review the books of account. There is no dispute that the books of account was audited since, the assessee has submitted audited financial statement. Since the books are audited, there exists books of account. Considering the above, we find it appropriate to remit this issue back to the file of the AO to verify the books. We direct assessee to submit the books before the AO so that AO can verify the genuineness of the transactions and vouchers. We direct the AO to verify the books as per law and complete the assessment after giving proper opportunity to assessee in this regard instead of resorting to disallow on adhoc basis. Accordingly, ground raised by the assessee is allowed for statistical purposes.
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