TMI Blog2006 (6) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... l question of law. "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee society was entitled to exemption u/s. 11 of the Income Tax Act merely on the ground that the registration u/s.12AA has been granted with effect from 1.4.1990, without noticing that no charitable activities have been conducted and the income from the letting out of Kalyana Mandapam assessable under the head business has not been applied for any charitable purposes like education or any other object of general public utility?" 2. The assessee is a Society registered under the Tamil Nadu Societies Registration Act. The relevant assessment years are 1994-95, 1 995-96, 1996-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the business, which was also accepted under Section 143(1)(a) of the Act. Therefore, the assessing officer issued notice under Section 148 of the Act. However, the assessee filed nil returns for all the years on 30.3.2001. 4. According to the assessee Society, it is a registered one established for charitable purpose and its income was exempted under Section 11/12 of the Act. But, the revenue rejected the explanation of the assessee on the sole ground that the assessee itself had admitted the income for the assessment years 1998-99 and 1999-2000 as income from business without claiming any exemption. The assessing officer further found that even though the object of the association was to constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and granted exemption under Sections 11 and 12AA of the Act, which was confirmed by the Income Tax Appellate Tribunal, on appeal at the instance of the revenue. Hence, the above appeals. 6. The learned Standing Counsel appearing for the revenue, placing strong reliance on the decision of this Court in CIT v. HALAI NEMON ASSOCIATION [2000] (243 ITR 439) contends that exemption for income of the charitable trust under Sections 11 and 12AA of the Act cannot be granted automatically inasmuch as each transaction has to be looked into to decide whether the income earned was assessable as business income or otherwise. It is his further contention that the assessing officer had given a clear finding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 9. In our considered opinion, the failure or non-diversion of the accumulated funds for any other charitable purpose, as referred to above, by itself, would not divest the right conferred on the assessee to claim exemption under Sections 11 and 12AA of the Act, for the simple reason that the activity of constructing Kalyana Mandapam and letting out the same after collecting nominal rent to meet maintenance, repairs and renovation expenses, sufficiently satisfies the object, viz. the benefit of local people, mainly weavers and agriculturists, which is a condition under the grant given by the Collector and failure to comply with the said condition would enable the Collector to take over the building along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and therefore, the same is entitled to be exempted under Section 11 of the Act. But the case on hand is more stronger than the case in CIT v. SAMYUKTHA GOWDA SARASWATHA SABHA [2000] (245 ITR 242). 13. This Court in the assessee's own case decided the similar issue in favour of the assessee vide order dated 28.02.2006 in T.C.Nos.252 to 256 of 2006, reported in [2006] 283 ITR 355. 14. In view of the admitted fact that the main object of the Trust itself is to construct Kalyana Mandapam for the benefit of the local people, mainly weavers and agriculturists, the land was also granted by the District Collector, Salem, to achieve the said object, viz. for the benefit of local people, upliftment of the poor, edu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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