TMI Blog2013 (10) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... rust. "Incidental" means offshoot of the main activities; inherent by-product of principal activities. Activities to compliment and support the main objectives are not in the nature of incidental to the business. They are supporting activities, at the maximum. The genesis of incidental activities must be from the principal activities themselves. There cannot be one source for the principal activities and another source for incidental activities. In the present case, even if the activities of the assessee are stated to be relief of the poor, medical relief and education, it is not at all possible to hold that running of the business in the form of IGH and WWH are business incidental to the carrying on of main objective of the assessee-Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the activities such as running orphanages, old age homes, centres for rehabilitation of mentally ill women, day care of elderly, assistance to destitute women, rural development projects for relief to disadvantaged women and children, vocational training to girls from slums, etc. would clearly fall within the scope of relief of the poor . The assessee also runs a free nursery school for poor children and a community college for school drop outs and poor students registered with Indira Gandhi National Open University. 5. The assessee also states that the running of WWH and IGH are made on business line and the surplus arising out of running those institutions are also used for its charitable activities. 6. In the course of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief or relief to the poor. The CIT(A) has also erroneously claimed that the appellant's activities are in the nature of general public utility. 3. The CIT(A) failed to see that the objects as narrated in the memorandum of the society predate the Income Tax Act, and the charitable activities have been carried on since 1905, and a well-established obligation has come to rest upon the appellant to engaged in education, medical relief and relief to the poor. 4. The CIT(A) has disregarded the fact that registration under Section 12A(a) of the Act, has been granted to the appellant in 1974 on the basis of the objects and activities of the society, and since the objects have not been amended thereafter it is not open to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to the objects of the appellant and separate accounts are maintained for the same as required under Section 11(4A) should be noted, and that the income from this business which is permitted u/s. 11(4A) is wholly used to finance the charitable activities only. 9. We heard Smt. Pushya Sitaraman, the learned Senior Advocate along with Ms. J. Sree Vidya, Advocate, appearing for the assessee and Shri T.N. Betgiri, the learned Joint Commissioner of Income Tax, appearing for the Revenue. We heard them in detail and had an extensive discussion in the open court, at the time of hearing, on the scope of Section 2(15), especially, in the light of proviso added thereto and the impact of Section 11(4A) of the Income-tax Act, 1961. 10. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that a charitable institution may carry on business, which is incidental of carrying on of its main objectives and in such cases, there is no embargo against the assessee for claiming relief available under Section 11. She explained that running of IGH and WWH are incidental to the main activities carried on by the assessee and therefore, by virtue of Section 11(4A) also, the assessee is entitled for the benefit of relief under Section 11 for the entire income generated in the hands of the assessee in the previous year relevant to the assessment year under appeal. 12. We considered the case in detail. Generally speaking, the activities carried on by the assessee such as running orphanages, old age homes, rehabilitation centres, day ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness, unless the business is incidental to the attainment of the objectives of the assessee or as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business. 14. In the present case, there is no dispute on the fact that the assessee is carrying on the business of running an International Guest House (IGH) and Working Women's Hostel (WWH). Assessee is maintaining separate accounts for the above business activities. But, the crucial question is whether running of IGH and WWH is a business incidental to the attainment of the objectives of the trust or not. By any stretch of imagination, it is not possible to hold that the business of running IGH and WWH are inciden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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