TMI Blog2016 (7) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... e necessarily generate funds. The funds can be generated in several ways. One of the ways of generating fund is by maintaining the auditorium under trust. In this case, the auditorium was held under trust of the society for the purpose of generating funds. The income generated out of the auditorium was used to the objects of the trust. Whether the assessee was charging heavy fees from medical students? - Held that:- The CIT(Appeals)has not referred any quantum of fees charged by the assessee-society. Charging fee by itself cannot be a reason to disallow the claim of the assessee. A charitable institution is not expected to do charity at free of cost. A charitable institution is entitled to collect a reasonable fee for meeting the expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety is registered under Section 12AA of the Income-tax Act, 1961 (in short 'the Act') as charitable institution. The assessee claimed deduction under Section 11 of the Act in respect of its income generated out of the property held under Trust. According to the Ld. counsel, the assessee has received rental income to the extent of ₹ 33,14,700/- from auditorium. According to the Ld. counsel, the assessee-society is using the auditorium for the object of the society and it was not let out for any commercial purpose. However, the Assessing Officer found that letting out the auditorium is in the nature of trade, commerce, business, etc. and found that the assessee-society is not eligible for exemption under Section 11 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified in confirming the orders of the Assessing Officer. 4. On the contrary, Shri M. Murugaboopathy, the Ld. Departmental Representative, submitted that the assessee s letting out auditorium and receiving rental income cannot be considered to be charitable activity. Referring to the coaching classes conducted by the assessee, the Ld. D.R. submitted that the assessee was charging heavy fees from medical students for conducting coaching classes, therefore, it is obvious that the assessee was letting out the auditorium on commercial line and there was no traces of objects of the assessee in conducting the coaching classes. Encouraging and advancing the students of art and surgery is one of the objects of the society. However, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society, maintaining the auditorium is not the object of the society. The main objects of the society are reproduced by the CIT(Appeals) at para 3.4 of the impugned order. Under Section 11 of the Act, the income of the Trust / society derived from property held under trust is exempted from taxation on application. Therefore, for the purpose of exemption, the income has to be necessarily generated from the property held under the trust. It is not in dispute that the auditorium can also be held as property under trust. When the auditorium was held under trust, the income generated out of that auditorium is exempted under Section 11 of the Act on application to the objects of the society for which it was formed. After going through the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-society. This Tribunal is of the considered opinion that letting out the auditorium for the purpose of conducting coaching classes for Post Graduate entrance exams is in furtherance of its objects. Therefore, the income generated out of letting out the auditorium has to be necessarily considered as income generated from the property held under the trust. 6. In view of the above, this Tribunal is unable to uphold the orders of the authorities below. The orders of the authorities below are set aside and the Assessing Officer is directed to allow exemption under Section 11 of the Act. 7. In the result, both the appeals of the assessee are allowed. Order pronounced on 1st July, 2016 at Chennai. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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