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TMI Blog2012 (8) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sheet declaring total deficit of Rs. 86,06,051/- after claiming benefit of accumulation of 15% as per section 11(1)(a) of the Income Tax Act, 1961 (the Act). During the course of assessment proceeding, the assessee was asked to show cause as to why claim of exemption u/s 11 Act should not be disallowed and the assessee's income be not treated as business income. In response, the assessee vide letter dtd. 14-12-2010 submitted a note on the activities of the trust and claimed that the assessee's activities are commensurate with its objects and donations given. Regarding the business activity carried out by it during the previous year, the assessee submitted that it is in the business of running of an eating house/restaurant. It was further submitted that the Income Tax Act does not prohibit a trust from running a business which is in accordance with its objects and/or incidental to its objects. However, the A.O. after considering the assessee's submission inter alia observed that assessee is not acting as a charitable organization. The entire character and focus of assessee has become totally commercial. There is generation of huge profits year after year a part of which is diverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... food habits and in this way the appellant is engaged in promoting the vegetarianism among people, which is undoubtedly a charitable object of the appellant. On the issue of disallowance of deduction u/s 80G of the Act, the ld. CIT(A) observed that the major portion of the income received by the appellant was donated to ISKCON which is a public charitable trust of worldwide recognition and reputation and any donation from one charitable trust to another constitute application of income for the charitable purposes. In this regard, the appellant has also placed 80G certificate received from the ISKCON and accordingly he held that in view of the clear cut provision of section 11(4A), the exemption u/s 11 has to be allowed to the assessee and hence he directed the A.O. to allow the same and to grant other consequential benefits of application and accumulation of income to the assessee trust u/s 11(1) of the Act. The ld. CIT(A) also directed the A.O. to delete the disallowance of donation and give the benefit of donation to the appellant as per provisions of the Act. 4. Being aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us taking the following grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asad. It was submitted by the ld. counsel for the assessee that by not using onion and garlic in the food preparations, the assessee is propagating the Vaishnavi principles, thereby furthering the principles of Krishna consciousness and promoting the vegetarianism. According to the A.O. the assessee is not acting as chartable organization. The entire character and focus of the assessee has become totally commercial. There is generation of huge profits year after year, a part of which is diverted to the related concern. Thus, the activities are being carried on commercial lines and also not in conformity with the objects of the assessee trust. However, we find that since the principal object of the trust includes promotion of vegetarianism, the business of preparing vegetarian food items and selling the same is very much incidental to the object of the assessee trust and such business can be conducted by a charitable trust as per provisions of section 11(4A) of the Act. 8. In the case of Sri Sri Radha Rasbihariji Prasadam Viniyog Trust (supra) on the similar issue the Tribunal has held as under:- "3. We have considered the arguments advanced by both sides and perused the orders pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ISKCON also helps to promote its own object indirectly. In view of the above discussion it is held that the appellant trust is conducting the business which is very much incidental to its charitable objects and the income from such business is applied for the fulfillment of charitable purposes and the appellant is eligible for the benefit of exemption u/s. 11. In view of the clear cut provision of section 11(4A), the exemption u/s 11(1) has to be allowed to the appellant. The Assessing Officer is directed to allow the same and to grant other consequential benefits of application and accumulation of income to the appellant trust u/s 11(1). However, the accumulation u/s 11(1) is hereby restricted to the extent of positive income which remain after allowing the expenses of the appellant trust for the application of income for its object. On a careful consideration of the matter, we fully agree with the reasoning given by the CIT(A) for coming to the conclusion that the assessee trust is eligible for the benefit of exemption under sec. 11 of the I.T. Act and uphold his order." 9. In absence of any distinguishing feature brought on record by the Revenue, we respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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