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2016 (3) TMI 1443 - AT - Income TaxRevision u/s 263 by CIT - wrongfull allowance of exemption u/s 11 by AO - rental receipt from kalyana mandapam was understated in the return of income and it was falsely classified as corpus donation for the purpose of claiming exemption u/s 11 - as per CIT while letting out the community hall, the trust used to collect major portion of the rent as corpus donation and used to collect a minimum amount as rent, referring to the proviso to sec. 2(15) legislature took away certain activities of general public utility outside the purview of charity u/s 2(15) of the Act by inserting two provisos to sec. 2(15) - as per assessee he has utilized the entire money received on letting out of community hall for charitable activity, therefore, the AO has rightly allowed the claim of the assessee. HELD THAT:- When the AO has not examined the utilization of rent for charitable activity, this Tribunal is of the considered opinion that utilization of the income of the assessee-trust for charitable activity needs to be examined year by year for allowing the claim of the assessee u/s 11 - CIT(E) also has not examined the utilization of the fund for charitable purposes. CIT(E) proceeded as if the proviso to sec. 2(15) of the Act would make the assessee-trust not eligible for exemption u/s 11 of the Act. This Tribunal is of the considered opinion that proviso to sec. 2(15) is applicable in respect of the trust whose object is advancement of any other general public utility. In the case before us, it is not the object of the trust to advance any public utility service. The main object as per the trust deed is to establish educational and medical institution and also providing scholarship to the needy people. Therefore, proviso to sec. 2(15) may not be applicable at all. This Tribunal is of the considered opinion that the matter needs to be reexamined by the Assessing Officer in the light of the material available on record with regard to utilization of the income for charitable activity. Accordingly, while confirming the exercise of jurisdiction by the CIT(E), the Assessing Officer is directed to examine the utilization of the income of the assessee-trust in the light of the material available on record including the tax evasion petitions said to be received and thereafter decide the claim of exemption u/s 11, in accordance with law after giving a reasonable opportunity to the assessee - Appeal of the assessee is partly allowed
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