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2016 (4) TMI 708 - AT - Income TaxEntitlement to exemption u/s 11(4A) - Held that:- A perusal of the chart shows that against a gross revenue of ₹ 5,36,87,019/-, the assessee has expended a sum of ₹ 4,942,490/- and the net surplus comes to ₹ 42,62,079/- which is only 7.93% of the gross receipts. It is also seen that the assessee has incurred deficits in its Guest House at Delhi, Day Care Centre at Dehradun and Senior Citizens Accommodation at Dehradun which had to be funded from the surplus at other projects. Hence, it can be logically inferred that the surplus earned is only incidental to the charitable activities. Also, there is no finding by the AO about any diversion of funds for the individual benefit of any member of the association or for the benefit of his relative. Also there is no finding by the AO regarding any kind of violation of any other conditions by the assessee, as laid down in section 13 of the Act. Therefore, in view of the factual matrix of the case as well as the judicial precedents as aforesaid, we are of the considered opinion that the assessee is engaged in providing relief to the poor, education as well as medical relief. We have no hesitation in holding that the activities of the assessee association fall within the ambit of the first three limbs viz. relief to the poor, education or medical relief and it will not be hit by the newly inserted proviso to section 2(15). Moreover, CBDT Circular no. 11/2008 dated 19th Dec, 2008 states that the commercial activity of any charitable trust will not be subject to tax if along with commercial activities it is engaged in providing relief of the poor, education, medical relief. Proviso to Section 2(15) will apply ONLY to entities whose purposes is advancement of any other object of general public utility. We have already held that the activities of the assessee association fall within the ambit of the first three limbs viz. relief to the poor, education or medical relief and it will not be hit by the newly inserted proviso to section 2(15). Accordingly, the benefit of this circular should also accrue to the assessee and, therefore, the benefit of exemption claimed by the assessee u/s 11 cannot be rightfully denied - Decided in favour of assessee
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