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2022 (3) TMI 1330 - AT - Income TaxExemption u/s 11 - Whether assessee is entitled to exemption of all its income, including rental income out of letting, interest income on investments and miscellaneous income, under Sec 11 & 13? - assessee has established Research Institute for learning and research and study in depth of all Vedas and effect of Vedic chants on human life, nature and universe. The trust also has objects of awarding scholarships to students and gives donation to any trust existing for charitable purpose etc. - HELD THAT:- Since the assessee was not able to carry out the activities for which it has obtained 12A registration, started construction activities and letting out to corporate houses and getting rental income out of which some portion of amount was donated to educational institution. The assessee has not carried out any activity relating to medical and education or any medical relief. Therefore, the activities carried out by the assessee cannot be said as charitable activity. The assessee was only constructing commercial complex and the same was given to long lease for 99 years. Therefore, there is no possibility that the assessee can again revive its main object of carrying out research on Vedas. We find that in the assessment years under consideration, the assessee has only carrying out construction of building and letting out it to the corporate houses. If the assessee has to claim relief under charity, it has to carry out charitable activities of relief to poor or education or medical relief. In the case in hand, the assessee neither carried out any activity relating to relief to poor nor education or medical relief. Therefore, the provisions of section 2(15) of the Act clearly attracts in the case of the assessee, i.e., other object of general public utility. Therefore, the Assessing Officer has rightly decided that the assessee has not carried out any charitable activity and not entitled for claiming deduction under section 11 to 13 - CIT(A), without examining any material documents and provisions of section 2(15) of the Act, simply reversed the order passed by the Assessing Officer. We find that the order passed by the ld. CIT(A) is without any material and any basis. Therefore, the order passed by the ld. CIT(A) has to be reversed. Donation given to the other charitable organization is concerned, only 10% of the assessee’s income was donated to other Trust/organization, which is only an incidental activity, though; it is not a main objective of the assessee. Once, the assessee has not carried out its main objectives and only carried out an incidental activity, it cannot be said that the assessee was carrying charitable activities and therefore, the provisions of section 2(15) clearly applies to the assessee’s case. The income earned out of construction of multi-storeyed building and leasing out to corporate houses was not at all applied for any of the charitable activity except payment of a small amount of donation. Out of the total income of ₹.3,58,21,185/- for the assessment year 2011-12, only ₹.36,06,166/- was paid as donation out of which, a sum of ₹.25 lakhs was paid to a trust which was managed by one of the trustee viz., Smt. Meena Muthiah. If payment of a small amount is treated as charity, then everyone who pays a small amount of donation may claim charity. The assessee can claim deduction under section 80G for the above payment of donation and not exemption under section 11 of the Act. Thus we set aside the order of the ld. CIT(A) for all the assessment years under appeal and that of the Assessing Officer is restored. Thus, the ground raised by the Revenue is allowed. Disallowance of depreciation claimed - HELD THAT:- We have perused the decision of the Hon’ble Supreme Court in the case of CIT v. Rajasthan and Gujarati Charitable Foundation [2017 (12) TMI 1067 - SUPREME COURT]as held that even though the cost of asset was allowed as application of income in the year of acquisition of asset, the charitable institution is still entitled for depreciation - the orders of the authorities below are set aside and the Assessing Officer is directed to allow the depreciation as claimed by the assessee for the assessment years 2010-11, 2012-13 and 2013-14. Thus, the ground raised by the assessee is allowed.
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