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M/s The Association of Surgeons of India, C/o Shri S. Sridhar, Advocate Versus The Deputy Director of Income Tax (Exemptions) – I, Chennai

2016 (7) TMI 521 - ITAT CHENNAI

Cancellation of registration granted under Section 12AA - whether income generated out of the auditorium was used to the objects of the trust? - Held that:- After going through the provisions of Section 11(4) and 11(4A) of the Act, this Tribunal is of the considered opinion that trade or commerce is not totally prohibited. A trade or commerce or any property can be held under Trust for the purpose of carrying on the objects of the trust. In other words, for funding charity or carrying out the ob .....

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erred 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 expenditure. Even a charitable society needs money for the purpose of carrying out its charitable objects. Therefore, this Tribunal is of the considered opinion that letting out the auditorium for conducting .....

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s below are set aside and the Assessing Officer is directed to allow exemption under Section 11 of the Act. - Decided in favour of assessee - ITA Nos. 2238 & 2239/Mds/2014 - Dated:- 1-7-2016 - Shri N.R.S. Ganesan, Judicial Member For the Appellant : Shri S. Sridhar, Advocate For the Respondent : Shri M. Murugaboopathy, Addl. CIT ORDER Both appeals of the assessee are directed against the common order passed by the Commissioner of Income Tax (Appeals) - VII, Chennai, dated 16.06.2014 and pertain .....

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operty 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 Se .....

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irector of Income Tax (Exemptions) granted registration under Section 12AA of the Act. The Ld.counsel further submitted that merely because the auditorium was let out for coaching medical students for Post Graduate entrance examination that cannot be a reason to say that it was not in connection with the objects of the society. One of the objects of the assessee -society is to encourage and advance the study and practice of the science and art of surgery. Therefore, the assessee has to necessari .....

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IT(Appeals) is not 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 .....

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eals) has rightly confirmed the orders of the Assessing Officer. 4. I have considered the rival submissions on either side and perused the relevant material available on record. The assesseesociety is admittedly registered under Section 12AA of the Act by the Director of Income Tax (Exemptions). For the years under consideration, the Assessing Officer denied exemption under Section 11 of the Act on the ground that the activity of the society running the auditorium is in the nature of trade, comm .....

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an auditorium which was let out and earning rental income. The question arises for consideration is when the assessee was owning an auditorium and letting out the same, whether that would amount to carrying on trade or commerce? As seen from the objects of the 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 deri .....

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the provisions of Section 11(4) and 11(4A) of the Act, this Tribunal is of the considered opinion that trade or commerce is not totally prohibited. A trade or commerce or any property can be held under Trust for the purpose of carrying on the objects of the trust. In other words, for funding charity or carrying out the objects of the trust, the assessee-trust has to be necessarily generate funds. The funds can be generated in several ways. One of the ways of generating fund is by maintaining the .....

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