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TMI Blog2014 (11) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... mission from various government organisations to have an Heritage Park constructed. To raise funds for the said project, they have also initiated a residential apartment project for which permission from the concerned authorities has been obtained. They are in the process of construction and marketing the same. On consideration of such documents / materials, a show cause letter on 18.11.2005 was issued to the assessee calling for the explanation regarding Clause 10 of the Trust Deed and Clause 4(o) of the proposed amendment. The Director of Income Tax (Exemptions) after consideration of the said submissions held that there is no doubt that the objects are charitable in nature and are covered under Section 2(15) of the Act. Clause 10 of the Trust Deed which is neither part of the objects nor incidental to the objects, vests power in the trustees authorizing them to carry on activities for profit. It is clear that its activities proposed to be carried out by the trust entirely falls out of the purview of its objects. Subsequently, through an amendment to the trust deed by delegating extraordinary power to trustees and also making more explicit intention to venture into such activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exemptions) was cancelled and he was directed to allow registration under Section 12AA of the Act. Aggrieved by the said order, the revenue is in appeal. 4. This appeal came to be admitted on 19.08.2008, to consider the following substantial question of law. "Whether the assessee who is carrying on business activity or indulging in developing the properties is entitled for registration under Section 12AA of the I.T. Act?" 5. Learned Counsel for the revenue assailing the impugned order contended, that, the assessee is in the business of acquiring land, constructing group housing, marketing the same and realising the profits. The said business cannot be treated as incidental to the objectives of the trust, namely the charitable purpose. Therefore, he submits that section 11(4A) of the Act, which was brought on the statute book or. 01.04.1992 is applicable only for the business carried on which is ancillary to the charitable purpose for which the trust is constituted. In the facts of this case, it is not an incidental business. It is the main business. Therefore, the tribunal was not justified in passing the impugned order. 6. Per contra, learned Senior Counsel for the assessee su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of income to the trust but whether such income is applied for charitable or religious purposes. The satisfaction of the CIT should be regarding the application of the income of the trust for the aforesaid purposes which only entitles the assessee to claim exemption. For arriving at such satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application the trust has received income from its property, then find out how the said income has been expended, and whether it can be said that the income is utilized towards charitable and religious purposes, i.e., towards the object of the trust. Therefore, for the purpose of registration under section 12AA of the Act, what the authorities have to satisfy is the genuineness of the activities of the trust or institution and how the income derived from the trust property is applied to charitable or religious purpose and not the nature of the activity by which the income was derived to the trust. 7. Sub-section (3) of Section 12AA of the Act provides that where a trust or an institution has been granted registration under Clause (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us charitable activities like feeding poor children in schools etc. and about 5,00,000 children are provided midday meals and food by the trust. They are also running Ayurveda Wellness Center and similar institutions affording treatment, cure, rest, recuperation and other medical relief to the public and therefore, there is no doubt that the trust is charitable in nature and covered by Section 2(15) of the Act and the activities of the trust are genuine. The trust is already engaged in various charitable activities for attainment of various objectives. There is no material on record to show that the income from business as provided in Clause 10 of the original deed dated 17.05.2004 would not be utilised by the trust for the purpose of achieving objectives of the trust. There is a concurrent finding of fact by two authorities, to the effect that the trust is engaged in various charitable activities in terms of the objectives of the trust. It is clear from the material on record that in terms of Clause 10 of the trust deed, when particulars were sought for, the assessee has specifically stated that they would take up Group Housing Scheme to earn profits which would be the source of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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