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TMI Blog2015 (1) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... le for exemption under Section 11 of the Income Tax Act, 1961. 2. The assessee is running several educational institutions and hostels for college girls and boys. The assessee is a Trust duly registered under Section 12A of the Income Tax Act, 1961 (for short, hereinafter referred to as the 'Act'). The assessee was also granted exemption under Section 11 of the Act. The assessee filed return of income on 31/10/2001 declaring 'nil' income by claiming its excess income over expenditure amounting to Rs. 1,04,59,578/-. In the course of examination of the assessee's application for renewal of recognition under Section 80G of the Act, the Director of Exemptions, Bangalore, informed the Deputy Director of Income-Tax (Exemptions)/AO regarding cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is that, all along the assessee has been carrying out the running of a charitable institute as per objects and did not involve in any commercial activity for making profits and therefore he held that the assessee-Trust is a charitable one and eligible to claim exemption under Section 11 of the Act. Therefore he directed the Assessing Authority to grant exemption under Section 11 of the Act. 3. Aggrieved by the said order, the Revenue preferred an appeal to the Tribunal. The Tribunal, on re-appreciation of the evidence on record, held the fact that the assessee was collecting developmental fee during the year under consideration, is not in dispute, but this factum alone, is not enough to deny the exemption claimed by the assessee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of collection of fees, generation huge surplus year after year contrary to Apex Court judgments, running the institutions on commercial lines and making payment to president/trustees will not violate Section 11 of the Act and the assessee would be continue to be a charitable Institution ? 2) Whether the Appellate Authorities were correct in ignoring the discrepancies in accounts detected and pointed out by the Assessing Officer which is contrary to Rule 46A of the Income Tax Rules would disentitle the assessee to claim exemption especially when cash deficits was pointed out and not explained ? 3) Whether the Appellate Authorities were correct in holding that a sum of Rs. 1,65,40,319/- and Rs. 2,83,83,830/-, in ITA 73/09 and 74/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted, whatever amount is collected by the assessee, is accounted for in their books of accounts and is spent for the purpose of the Trust. In fact the entire amount is spent towards the purpose of the Trust and therefore he submits, the Appellate Authorities were justified in granting the benefit under Section 11 of the Act. 7. In the light of the aforesaid materials and rival contentions, the short point that arises for our consideration is, whether if the assessee recovers amounts in excess of what is prescribed in law, either under a statute or by way of notification, it amounts to a commercial activity and take the case out of Section 11 of the Act ? 8. The material on record clearly establishes, the assessee is running educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charitable or religious purpose to the extent such income is applied to such purpose in India, then such an income shall not be included in the total income of the previous year of the person in receipt of the income. In fact, the Bombay High Court, in the case of COMMISSIONER OF INCOME TAX VS. BREACH CANDY SWIMMING BATH TRUST reported in (1955) 27 ITR 279 (BOM), held, the only essential factor to determine whether it is a charity or not would be whether there is any private gain by the setting up of the institution. If the gain derived by running the institution continues to be impressed with the trust which is a charitable trust, then it is immaterial whether the institution is run as a commercial institution or not, but if in the runnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t quota, as prescribed by the government, in the notification. From the students belonging to the management quota, they have collected the fees prescribed by the government and in addition, they have also collected developmental charges. All these amounts received, are accounted for in their books of accounts. All these amounts are invested in the activities of the Trust. In fact they have taken loan to the extent of Rs. 3,01,75,330/-, as the amount received by way of developmental charges, is not sufficient for the activities of the Trust. The said loan is also raised to carry out the objects of the Trust. As pointed out by the Tribunal, there is not even an iota of evidence in regard to mal application of the funds. Merely because the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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