1995 (4) TMI 82 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee is engaged in the advancement of a charitable purpose.
2. Whether the income from subscription, application fees, and entrance fees is exigible to tax.
3. The appropriate modus for the computation of income.
4. Levy of interest u/s 234B.
5. Applicability of the principle of mutuality.
6. Allowability of set-off and carried forward deficit/loss of earlier years.

Summary:

1. Advancement of Charitable Purpose:
The CIT(A) concluded that the assessee is not engaged in the advancement of a charitable purpose, issuing a show-cause notice to deny the benefit of section 11. The assessee argued that its primary purpose is contained in sub-clauses (a), (b), and (bb) of the Memorandum of Association, which includes providing information to advertisers, Government, and other bodies, thus constituting an object of general public utility. The Tribunal held that the assessee's activities are of public consequence and not for profit, thus qualifying as a charitable organization entitled to the benefit of section 11.

2. Taxability of Income from Subscription, Application Fees, and Entrance Fees:
The jurisdictional High Court in Trustees of Shri Kot Hindu Stree Mandal and Film Federation of India held that such income is not exigible to tax. The Tribunal concluded that the subscription amount received by the assessee-trust is not liable to be included in the total income, following the binding decisions of the High Court.

3. Modus for Computation of Income:
The Tribunal found that the Assessing Officer applied the correct modus for computing income. Expenses were considered while working out the surplus, and the cost of assets was reflected as 'application of income' towards the object of charity. The assessee cannot claim depreciation on the same assets again.

4. Levy of Interest u/s 234B:
The ground regarding the levy of interest u/s 234B was stated to be consequential. The Tribunal directed the Assessing Officer to grant consequential relief in respect of the same.

5. Principle of Mutuality:
Given the Tribunal's decision on the exemption u/s 11, the ground concerning the principle of mutuality was dismissed as infructuous.

6. Set-off and Carried Forward Deficit/Loss of Earlier Years:
The Tribunal found no precedent or express provision in law supporting the allowability of set-off and carried forward deficit/loss of earlier years. The claim of the appellant was dismissed on this count.

Conclusion:
The appeal of the assessee was partly allowed, granting the benefit of section 11 but dismissing the claims regarding set-off and carried forward deficit/loss of earlier years.