TMI Blog2015 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee. Therefore, the view of the Ld. CIT (A) that the proviso of Section-2(15) will not be applicable to the facts of the assessee’s case is appropriate and justified considering the facts and circumstances of the case. Therefore, we hereby confirm the order of the Ld. CIT (A). - Decided in favour of assessee. - I.T.A.Nos.2251 & 2252/Mds./2014 - - - Dated:- 29-9-2015 - <!--[if gte mso 9]> <![endif]--> SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER For The Appellant : Dr.B.Nischal,JCIT,D.R For The Respondent : Mr.D.Anand,Advocate ORDER PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: These two appeals are filed by the Revenue against the common order of the Commissioner of Income Tax (A)-VII, Chennai dated 13.05.2015 in ITA No.169 1304/13-14 passed under Sec.143(3) read with section 250 of the Act for the assessment year 2010-11 2011-12. 2. The Revenue has raised six grounds in its appeal, however the crux of the issue is that the Ld. CIT(A) has erred in law by allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter saleable and also to realize better price. It may not be out of context to submit that this aspect had been thoroughly scrutinized in the assessment of earlier years and the assessee passed the test convincingly. 3. Section 11A of the income tax Act refers to Capital Asset being property held under trust wholly for charitable or religious purposes. As explained in the para 2 above, the land originally purchased for setting up medical colleges and old age homes ceased to be a property held under trust wholly for charitable purposes since the assessee abandoned the plan of setting up medical college and old age homes. Since then the assessee endeavored to dispose of the property and utilize the proceeds in the charitable activities of the assessee and true to the plan has been applying the sale proceeds from sale of plots to the charitable activities every year. It is therefore submitted that sale of plots of land was not out of the property held under trust wholly for charitable activities nor was it treated as capital asset by the assessee. Kind attention is invited to the Balance Sheet wherein the Land for Sale has been shown separately and not as part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer brought to tax the amount of ₹ 1,62,76,519/- ₹ 44,23,266/- under the head income from business for the assessment year 2010-11 2011-12 respectively. 6. On appeal, the Ld. CIT (A) held that the assessee is not liable to tax on the profit arising out of sale of land since the proceeds were utilized for the charitable activities of the Trust and also for the following reasons:- (i) The assessee s main activities were only providing education which is a charitable activity as defined in Section-2(15) of the Act. (ii) The provisions of the Act do not prohibit the assessee from doing business incidentally while complying with the charitable activities, the purpose for which the trust is formed. (iii) The newly inserted proviso to Section-2(15) of the Act will not be applicable to the case of the assessee, since the main activities of the assessee is education. (iv) The Ld. Assessing Officer has herself recognized the charitable nature of the trust and its genuineness. (v) The predominant object and purpose of the trust were charitable in nature and not for earning profit; however such characteristic of the trust will not alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the land was purchased only for the purpose of running medical college and the same remains undisputed. g) With respect to the activity of running colleges the assessing officer has categorically held that the assessee is engaged in charitable activity as defined in section 2(15) of the Act and has confined its addition only to issue relating to the sale of the immovable asset. 9. Ld. D.R vehemently argued in support of the order of the Ld. Assessing Officer and further submitted that the promotion of residential layout and sale of the same by plotting plots thereby deriving gain from real estate transactions cannot be construed as a charitable activity and therefore any income arriving out of the same should be taxed in the hands of the assessee trust under the head income from business . 10. We have heard both the parties and carefully perused the materials available on record. It is apparent from the facts of the case that the assessee had sold its unutilized land for pursuing its main objects viz., education. In order to secure maximum revenue, the assessee has indulged in commercial transactions. It must be kept in mind that such transactions were made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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