TaxTMI 
TaxTMI 
2014 (10) TMI 495
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.... society's main source of income was from sale of eggs, chicken etc. He, therefore, issued notice u/s.148 to the assessee. 2.1 During the course of assessment proceedings the assessee filed the various details as called for by the Assessing Officer from time to time. From the various details furnished by the assessee the Assessing Officer observed that it is running poultry farm in the garb of institution. Basically it is being run as business concern with profit motive. Therefore, the basic object to run educational institution for which the assessee came into existence is no more primary of the assessee. Thus, there is no element of charity in the activities carried out by the assessee. According to the Assessing Officer, the income and expenditure account revealed that the assessee's main source of income was from sale of eggs, broilers, culls, manure etc. Further, the assessee is charging tuition fee, hostel fee, exam fee etc. which result into considerable profit. Therefore, he was of the opinion that the assessee received fee in lieu of services rendered by it. Therefore, he was of the opinion that this income cannot be said as income from property held under the trust. He a....
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....15) of the I.T. Act, sec. 11(1) and sec. 11 (4) and sec. 11 (4A). These are quoted below : "Section 2(15) of the Income Tax Act, 1961 reads as under : "2(15) "charitable purpose" includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility." Relevant extracts of Section 11(1)(a) of the Income Tax Act, 1961 are reproduced below: "11. (I) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income -- (a) Income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property. (b) x x x x (c) x x x x (d) x x x x Section 11(....
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....icer, it is noted that the Assessing Officer has reopened this assessment u/s 148 of the I.T. Act. There is not much of discussion in respect of the cause of reopening, presumably because no objection was taken by the appellant for this action of the Assessing Officer. Since the appellant has raised a separate ground of appeal for this issue, this is not discussed in detail at this point of time. However, it is only reiterated that the Assessing Officer apparently reopened the case u/s. 148 as he formed his belief that the exemption was not available to the appellant from the materials available with him. Since not much discussion is available in the assessment order on the formation of such belief, it is presumed that the reasons for which the exemption has been denied, apparently was the cause of reopening of this assessment. Furthermore, it seems that the appellant did not take objection also, as this assessment was completed u/s 143(1). The Assessing Officer after recognizing the facts that the appellant is registered with Charity Commissioner and u/s.12A with the Income Tax Department and that it is carrying on the poultry farm and poultry related activities to impart the prac....
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....idering the aforesaid submissions of the appellant that he is not satisfied with the submissions of the appellant as the details furnished clearly show that the main activity of the trust is carrying out the business of poultry farming, whose income is claimed as exempt in the garb of income of an institution registered u/s 12A. The main cause of this proposition apparently was his inference due to the profit earned from this activity as per the Income and Expenditure account filed before him. Thus by holding that the activity of running the educational institution is not the main objective, the Assessing Officer concluded that the exemption cannot be granted. The Assessing Officer, for arriving at this conclusion has referred to the Income & Expenditure account to hold that the main source of the income of the appellant is from the sale of eggs, broilers, culls, manure etc. as compared to the receipts from tuition fee, hostel fee, exam fee etc. The Assessing Officer also referred to sec. 2(15), to say that a nominal fee concession given to students will not render the appellant to be involved in charitable purposes. It was concluded on that basis that the main and dominant objecti....
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....itute is the only institute of its kind in the Asia offering such practical oriented training and more than 6000 students from India and abroad have been trained so far. Post training-at IPMT the trainees take up positions of responsibility at poultry farms of larger capacities and therefore, unless they are exposed to the actual management of large poultry farms, requirement of farm operations, vaccination, debeaking etc., the trainees will not get proper placement. It has been claimed that the appellant, in addition to this also carries out other small trainings for rural employment of youth of financially weaker sections and after completion of these trainings either they get the job or carry out their own small enterprise in their places. The appellant also has given the details in respect of facilities maintained which are claimed to be of high standard so that the trainees are fully equipped with the knowledge and the knowhow and are ranked properly. The appellant has also given the fee structure for the different courses and it has been claimed that the same is very very small considering the facilities and materials provided. In that view of the matter the claim has been ma....
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.... engaged in the field of education, training and research. The appellant has produced ample evidences in their submissions and paper book, to establish that the trust is genuinely involved in these activities. Without this it is not possible to receive recognitions from various state governments, Govt. of India and other international organizations like FAO, NABARD, DSIR etc. Only because the receipts are more from the poultry activity, it is incorrect to conclude that the pre-dominant purpose of the activity is not education in poultry management. Requirement of poultry farm for the purpose of imparting the education has not been denied by the Assessing Officer also. His only objection apparently is on the size of the poultry farm. The appellant has demonstrated properly that the large size of poultry farms has helped the institute and its trainees to get proper training and higher rating in the job market as they are considered to be well equipped in managing large size poultry farms. In any case, nobody can deny that an exposure of working in a large size farm will not benefit students-to-get hands on inputs. Therefore, the emphasis of the Assessing Officer on this facts looks e....
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....nces of the case and in law the Ld.CIT(A) was justified in holding that the assessee is entitled for exemption u/s.11 without appreciating the fact that the poultry business of the assessee is the primary objective and hence not incidental to education? (ii) The Ld.CIT(A) should have considered the fact that the receipts from poultry business are more than Rs. 3 crores as against receipts from education of about Rs. 20 lakhs which proves that the main activity of the assessee is carrying on the business activity in poultry products and this activity is NOT incidental to the activity of imparting training. (iii) The Ld.CIT(A) should have appreciated the fact that assessee is not entitled to exemption u/s.11 as poultry business is not incidental to the attainment of the objective of assessee society and hence violation of sec.11(4A) of the Income Tax Act, 1961. 3. The Appellant prays that the order of the Ld.CIT(A) be vacated and that the AO's order be restored." 5. The Ld. Departmental Representative heavily relied on the order of the Assessing Officer. 6. The Ld. Counsel fo....
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....t the activities of the assessee in connection with the conducting of commercial courses are clearly business activities within the meaning of section 2(13) of the I.T. Act. In appeal the Ld.CIT(A) allowed the claim of benefit u/s.11 and on further appeal the Tribunal relying on various decisions has upheld the order of the CIT(A) and dismissed the appeal filed by the Revenue. 6.2 The Ld. Counsel for the assessee further submitted that during A.Yrs. 2004-05 and 2005-06 the Assessing Officer has passed orders u/s.143(3) and allowed the claim of benefit of provisions of section 11. No remedial measures have been taken by the Revenue either u/s.147 or u/s.263 of the I.T. Act. Even for subsequent years the claim of benefit of section 11 has not been disturbed by the Assessing Officer although no scrutiny assessment has taken place and orders have been passed u/s.143(1). Therefore, in view of the rule of consistency alone, the claim of benefit of section 11 has to be allowed. He accordingly submitted that the order of the Ld.CIT(A) being in consonance with law should be upheld. 7. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Office....