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2015 (6) TMI 4 - AT - Income TaxEligibility of exemption u/s 11 - whether the activities of the assessee are charitable in nature? - Held that:- CIT(A) has categorically held that the provisions of sec. 2(15) of the Act will be seen that the proviso to section 2(15) of the Act will be applicable only if the entities carrying out any activity or rendering any services in the nature of trading, commerce or business and the most important feature of the business is being profit motive. After analyzing entire activities, receipts and its application, the CIT(A) correctly hold that activities of the assessee society are not carried out with profit motive. As we have respectfully noted earlier the observations of India Trade Promotion Organization vs. DGIT(E) ( 2015 (1) TMI 928 - DELHI HIGH COURT) that the expression “charitable purpose” as defined in 2(15) of the Act is read in the context of section 10(23C)(iv) of the Act and we would have to give up the strict and literal interpretation sought to be given to the expression “charitable purpose” by the Revenue and if an Institution established for charitable purpose did not receive an income at all then what would be need for taking any benefit u/s 10(23C)(iv) of the Act. Therefore, if the expression “charitable purpose” is given meaning that in case an Institution, with an object of advancement of general public utility, derives an income then it would be falling within the exception carved out by the first proviso to sec. 2(15) of the Act then no entity would qualify for the exemption u/s 10(23C)(iv) of the Act and this meaning obviously provide the effect that the provision of sec. 10(23C)(iv) of the Act would be rendered redundant. Thus we are unable to see any ambiguity or perversity in the order of the CIT(A) which granted relief for the assessee by directing the AO to allow exemption u/s 11 of the Act for the assessee. At this point, it is also pertinent to mention that the AO has not brought out any fact to support this allegation that the activities carried out by the assessee society were conducted or derived in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business and the dominant and prime objective of the assessee society was to earn profit i.e. activities of the assessee society was derived for profit motive. - Decided against revenue. Entitlement of depreciation to the assessee society - Held that:- On this issue we respectfully take note of the decision of DIT(E) vs. Indraprastha Cancer Society (2014 (11) TMI 733 - DELHI HIGH COURT), wherein it was held that where a charitable institution has purchased a capital asset and treated the amount spend on the said asset as application of income then the said charitable institution is entitled to claim depreciation on said assets utilized for the activities of the institution. As we have already approved the conclusion of the CIT(A) that the assessee society is eligible for exemption u/s 11 of the Act then we are of the considered view that the CIT(A) directed the AO to allow depreciation for the assessee society in both the assessment years. Therefore, this ground and objection of the ld. DR being devoid of merits is dismissed. - Decided against revenue
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