Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (10) TMI 714

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... uring the year, it was put in FDRs to earn interest thereon. No charitable activity as defined under the Act was undertaken by the assessee. In the light of these facts, it is of the considered view that the assessee has not undertaken charitable activity during the year, therefore, it is not eligible for exemption u/s. 11 of the Act. Accordingly find no infirmity in the order of the CIT(Appeals) and confirm his order. - ITA Nos.1483 & 1484/Bang/2013 - - - Dated:- 26-8-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER For The Appellant : Shri Suresh Muthukrishnan For The Respondent : Smt. Swapa Das, Jt. CIT(DR) ORDER Per Sunil Kumar Yadav, Judicial Member These are appeals preferred by the assessee against the separate orders of the CIT(Appeals)-V, Bangalore dated 02.08.2013 for the assessment years 2009-10 2010-11. They were heard together and are disposed of by this consolidated order. Common grounds of appeal are raised by the assessee in these appeals, for the sake of reference, the grounds raised in ITA No.1483/Bang/2013 are extracted hereunder:- 1. The order of the learned CIT[A] in so far as sustaining the additions and dismissing the appeal i .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... rther and consequently, the order passed requires to be cancelled, as one passed without any jurisdiction. 6. Without prejudice to the right to seek waiver with the Hon'ble CCIT /DG , the appellant denies itself liable to be charged to interest u/s 234-B, 234-C and 234-D of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 7. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 2. The facts in brief borne out from the record are that during the course of assessment proceedings, the Assessing Officer has noted from the accounts for the year ending 31.3.2009 that there was total receipt of ₹ 37,45,915 from kalyana mantapa hire charges, ₹ 3,51,334 from Samskritha Mandira and ₹ 1,75,500 from generator hire charges. Having noted that there is no element of charity or providing services free of cost and that assessee has earned ₹ 30,72,028 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... al of Form 10(Rule 17) dated 23.7.2009 shows that an amount of ₹ 19,29,9601- has been accumulated and set apart u/s 11 (2) for the purpose of construction of building for kalyan mandir and reading room, office room and Room for students, to be utilized before 31.03.2014. The assessee has also paid advance tax of ₹ 800,000/- . 8.2 The Assessing Officer in the light of amendment to S. 2(15) by the Finance Act, 2008, as explained in CBDT Circular No.11/2008 dated 19.12.2008 has held the assessee to be engaged in pursuing an object of public utility, and that most of the objects of the Mandali would fall under any other objects of general public utility , except the object of rendering the assistance and facilities to promote education for poor students, which will fall under the limb 'relief to the poor' as no formal education is imparted by the Mandali It has also been held by Assessing Officer that during AY 2009-10 this object was not pursued as no activity of rendering any assistance or providing facilities to promote education for the poor student of the community was carried out in Bangalore or elsewhere, and no expenditure was incurred towards this end. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ding donation fund of ₹ 749,000/- received during the year. Admittedly, there is no application of income or funds for the education, help or support of poor students. APPELLATTE DECISION 10. The appellant has argued in its submission dated 22.1.2013 that the income derived is from the Kalyan Mantaps, is not pursuant to any other object of general utility, and that it was constructed for alleviating the miseries of people in securing a place for performance of marriages and other functions and religious ceremonies, which many people cannot afford. Thus, it was for the purposes of helping the poor, who cannot afford to pay huge rents for luxurious Kalyan Mantaps, etc., which are run on commercial lines. It is simply income derived from the building. No activity is done while exploiting the same as a business by doing advertisement and soliciting the customers. It is also further submitted that no services are rendered and nominal charges are collected to meet the cost of maintenance. There is no profit motive at all, which is insignia of a business activity done systematically. Therefore, the receipts are not imprinted with the character of business receipts as no system .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... l category of charitable purpose, i.e. 'any other objects of general public utility'. 11. The other contention of the appellant is that the assessee was not carrying on any business, and that the rent received from letting out of the Kalyan Mantapas should be assessed as income from House property. It is argued that assessee's incomes in earlier years have been treated by Assessing Officer as income from 'other sources', and now it could not be assessed as business income. It is also submitted that the income for the year under appeal is also assessed under the head 'Other sources . While on this point the Hon'ble Madras High Court in the case of DIT [E] V. SAMYUKTHA GOWDA SARASWATHA SABHA reported in 66 DTR 211. 11.2 In my considered view, it is neither important nor relevant as to whether the income from letting out of Kalyana mandapa and other buildings, along with other assets such as generator, vessels etc. for the performance of marriage or other religious ceremonies, should be called as 'business income' or ' income from house property' or any other name. The decision of Hon'ble Madras High Court (66 DTR 211/ (2000) 245 I .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... that Mr. Devanathan, learned counsel for the assessee relied upon the decision of this Court in CIT vs. Samyuktha Gowda Saraswatha Sabha (2000) 245 ITR 242 (Mad) and an unreported decision of this Court in Director of Wealth-tax (Exemptions) vs. A.V.M. Charities (TC No. 235 of '1997, dt. 12th Nov., 2001), wherein it was held that the income derived from letting out Kalyanamandapam was not a business income and hence, the provisions of s. 13(l)(bb) of the Act were not applicable. On the other hand, learned counsel for Revenue strongly relied on the decision of this Court in CIT vs. Halai Memon Association (2000) 162 CTR (Mad) 373 : (2000) 243 ITR 439 (Mad) where this Court held that the letting out of Kalyanamandapam for marriages and other functions and thereby making the premises available to others for limited periods would amount to business activity and what was granted by the owner was only a licence for a specified period and the activity of the assessee would be described as business activity with the intention of earning income from the building. Though Mr. Devanathan, learned counsel for the assessee sought to distinguish the decision of this Court in Halai Memon Assoc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nsel for the assessee submitted that the deed was not referred to either by the AO, or by the CIT(A) or by the Tribunal and therefore, it is not open to the counsel for the Revenue to refer to the said document. We find force in the submission of the learned counsel for the assessee as the deed was not referred to by the Tribunal or by the CIT(A) or by the AO in their respective orders. Though the document was included as a part of the statement of the case on the basis of the directions given by this Court under s. 256(2) of the Act in TCP Nos. 411 to 413 of 1996 dt. 25th Feb., 1997, we are of the view, since the Tribunal or other authorities have not considered the said deed, it is impermissible for the learned counsel for the. Revenue to refer to the said document. 10. Learned counsel for the assessee therefore submitted that the matter may be remitted back to the Tribunal so that the Tribunal may consider the question, for such course of action the counsel for Revenue did not object. Hence, we return the reference without answering the question of law referred to us. The Tribunal is directed to consider the question afresh in the light of the principles laid down earlier a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s accumulated is for construction of kalian mantapa (marriage halls) which would only be for general public utility. The assessee has substantial deposits in the bank, which earns substantial interest. These have not been applied to any charitable objects, such as relief to the poor, education or medical relief, despite being rendered surplus after considering the expenses involved in running and maintenance of marriage halls and other buildings. The hold orientation of the trust seems to be construction of more marriage halls. As stated earlier, marriage halls run on commercial lines, are neither the means nor the end for providing relief to the poor, even if people of the Koota Brahmins may have been charged a concessional rate for such utilities. 5. Aggrieved, the assessee has preferred an appeal before the Tribunal and reiterated its contentions as raised before the CIT(Appeals). Whereas, the ld. DR has invited our attention to the Income Expenditure Account available at page 7 of the compilation of the assessee with the submission that out of total receipts of ₹ 76,13,788, the kalyana mantapa hire charges was of ₹ 37,45,915 and the interest on FDRs was ₹ .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates