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2016 (2) TMI 375 - AT - Income TaxNon-granting of registration u/s 12AA - main object of the assessee is to provide resources for advanced education for peoplewho deserve it - Held that:- The purpose of a trust or institution is relief of the poor, education or medical relief, the requirement of the definition of ‘charitable purpose’ would be fully satisfied, even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution. At this stage, it is also pertinent to note that the clause ‘not involving carrying any activities of profit’ were omitted from this definition by the Legislature by Finance Act 1993 with effect from 1st April 1983. Therefore, after such omission, the element of profit cannot be excluded from the definition ‘charitable purposes’ u/s 2(15) of the Act. According to this provision, if any educational institution is running on commercial basis, then the income of such educational institution cannot be exempted from taxation. However, such institution can claim exemption u/ss 11 & 12 of the Act if it involves charitable activities. After complying the requirement of sec. 11 of the Act, if there is any violation either in sec. 11 or 13, profit of such institution would be taxable because some profit has been earned by the institution, registration u/s 12AA cannot be denied so long as provisions of sections 11, 12 & 12 of the Act are complied with. So long as it is established that income of the institution has been applied for the purpose for which it was established in terms of sec. 2(15) of the Act and there is no violation of sec. 13, the assessee would be entitled to enjoy the benefit of registration u/s 12AA of the Act. If the assessee is established for charitable activities and in the course of carrying out charitable activities, the assessee earns profits, then such institution will not be debarred or disentitled for registration u/s 12AA. Therefore, registration u/s 12AA would not be relevant by itself for claiming exemption u/s 11 of the Act. The objects of the trust and its genuineness have to be examined by the DIT(E) while granting registration u/s 12AA of the Act. In view of the above discussion, the DIT(E) is directed to grant registration u/s 12AA of the Act to the assessee-trust. - Decided in favour of assessee
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