TMI Blog2002 (12) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), following the decision of the Appellate Tribunal in the case of Tuluva Vellala Association v. CIT held that the nature of income of the assessee from Kalyanamandapam showed that it was an income from business and the conditions for exemption under section 11(4A) of the Act were not satisfied. He therefore held that the Assessing Officer was justified in not granting exemption under section 11 of the Act. 2. The assessee preferred further appeals before the Income-tax Appellate Tribunal. The Appellate Tribunal, however, on the basis of the decision of this Court in CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 and the decisions of the Madhya Pradesh High Court in Mahakoshal Shaheed Smarak Trust v. CIT [1983] 140 ITR 7951 and CIT v. Ganeshram Laxminarayan Goel [1984] 147 ITR 4682, held that the predominant object of the trust was to carry out the activity of general public utility and not to earn profit and the income derived by letting out the property of the trust was used to fulfil the object of the trust and therefore the income derived from the Kalyanamandapam was not its business income. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in Shamrao v. District Magistrate AIR 1952 SC 324 to hold that the substitution of the amended section 11(4A) of the Act was with effect from 1-4-1984 itself. 4. We have carefully considered both the decisions. The decisions were rendered with reference to the applicability of section 6 of the General Clauses Act and the Supreme Court and the Karnataka High Court have held that though the substituted section would take the place of the original section for all intents and purposes, both the Courts have not held that the substituted section would take effect from the date of insertion of pre-amended section. On the other hand, the reading of the Finance (No. 2) Act, 1991 shows the intention of the Legislature is that the existing section 11(4A) of the Act is to be substituted with effect from 1-4-1992 and not earlier. It is not advisable to attribute retrospective effect to the provision when the Legislature has expressly declared that the substituted provision should come into force from a particular date. As a matter of fact, the Supreme Court in Asstt. CIT v. Thanthi Trust [2001] 247 ITR 7852 considered section 13(1)(bb) and section 11(4A) of the Act and held that sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is subsequently included, such inclusion cannot be regarded as indicative of an intention on the part of the Legislature to have treated what is now included as having been included at all times. (p. 524) We are of the view that by applying the ratio of the decision the substituted provision of section 11(4A) of the Act by Finance (No. 2) Act, 1991 would operate with effect from 1-4-1992 and not from 1-4-1984 as held by the Appellate Tribunal. 6. The second mistake committed by the Appellate Tribunal was that the Appellate Tribunal has considered the question whether the activities carried on by the assessee trust in letting out the Kalyanamandapam would be business or not by applying the tests which are meant to determine whether the objects of the trusts are charitable objects or not within the meaning of section 2(15) of the Act. The Appellate Tribunal fell in error in holding that where the object of the trust was general utility and not to earn profit, it would not lose its character of charitable purposes, merely because some profit arose out of the activities. This Court in Madras Stock Exchange Ltd. s case (supra) and the Madhya Pradesh High Court in Mahakoshal Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gowda Saraswatha Sabha s case (supra) are the unreported decision of this Court in A.V.M. Charities case (supra) are concerned, learned counsel for the Revenue would contend that this court has held that the income derived from letting out Kalyanamandapam was not a business income and it was an income from house property with reference to the provisions of section 13(1)(bb) of the Act and not with reference to the provisions of the section 11(4A) of the Act. However, we are of the opinion that it is not necessary to express any opinion on the question as to whether the letting out of Kalyanamandapam was a business of the assessee as it would depend upon the intention of the assessee and whether it was systematically carried on by the assessee with intention to make profit out of the assets. The Income-tax Officer has, no doubt, observed that the Kalyana-mandapam was let out to general public at competitive rates and also on daily basis and hence, it was a business activity. The Commissioner of Income-tax (Appeals) also, following an earlier order of the Appellate Tribunal in Tuluva Vellala Association v. CIT dated 8-2-1950, held that the income from Kalyanamandapam was business i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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