TMI Blog2017 (5) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... of community hall and who paid the corpus donation were same. This is an act of quid pro for hiring the hall and no question of voluntary contribution in this payment. It is also to be noted that the dates exhibited in both cases were same. Being so, the provisions of sec.2(15) of the Act is squarely applicable as total receipts of rent from community hall exceeds ₹ 10 lakhs, and we do not find any infirmity in the order of AO in rejecting the claim of exemption u/s.11 of the Act. Accordingly, the order of Ld.CIT(A) is reversed and the order of AO is restored. - Decided against assessee. - ITA No. 2271/Mds/2013 - - - Dated:- 11-5-2017 - Shri Chandra Poojari, Accountant Member And Shri G. Pavan Kumar, Judicial Member Appellant by : Shri A.V.Sreekanth, JCIT Respondent by : Shri K.R. Raman, FCA ORDER Per Chandra Poojari, Accountant Member This appeal by the Revenue is directed against the order of the Commissioner of Income-tax(Appeals)-VII, chennai dated 03.09.3013. 2. The grievance of the Revenue in this appeal is with regard to granting exemption u/s.11 of the Act by the CIT(Appeals), though the assessee was earning income from letting out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of DIT v. Ahmadabad Mgt. Association, 366 ITR 85 (Guj) and the judgment of the Delhi High Court in the case of ICAI v. DGIT (Exemption), 260 CTR 001 (Del) and DIT(Exemption) vs. Sabarmati Ashram Gaushala Trust [362 ITR 539 (Guj.)] to support his view. 6. We have heard both the parties and perused the material on record. The issue before us is whether, on the facts and circumstances of the case and having regard to the terms of the Trust Deed, it can be said that the activities carried on by the assessee in the form of running of community hall, viz Chennai Kamawar Kalyana Mahal was itself held under the Trust. For this purpose it is proper to go through the objects for which assessee-Trust is formed. The objects for which the Trust established are enumerated in Trust Deed in clause 3 which reads as under:- 3. The Objects of the Trust are:- a. To establish and maintain educational institutions. b. To grant scholarships, donations and other incentives to benefit students and others in their education persuits. c. To establish, maintain and conduct orphanages. d. To establish and maintain hospital and dispensaries. e. To establish and main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. Though the business was commenced by the trust and it was carried on by the Trust after its formation, it cannot be said to constitute property held under trust. U/s. 11(4), it is only the business which is held under the trust that would enjoy exemption in respect of its income u/s. 11(1) of the I.T. Act and there is a distinction between the objects of a trust and the powers given to the trustees to effectuate the purpose of the trust. Though the objects of the trust were charitable, they were mere powers conferred upon the trustees to carry on the business and the profits from such business would benefit the charitable objects. The exemption u/s. 11 cannot be granted on the reason that the business itself was not in existence at the time of formation of the trust and the property held under trust at the time of formation of the trust was not spelt out in the Trust Deed of the assessee. The running of Community Hall was not at all in existence at the time of formation of the trust so as to say that the business is property held under trust. Thus, the activities relating to running of Community Hall was not even in the contemplation of the Trust Deed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business itself which is not at all property held under trust. This activity is a business activity and the provisions of section 11(4A) of the Act is applicable. 12. It was contended that if the profits of the business carried on by the trust are utilized by the trust for the purposes of achieving the objectives of the trust, then the business should be considered to be incidental to the attainment of the objects of the trust as observed by the Supreme Court in the case of ACIT vs. Thanthi Trust (2001) 247 ITR 785 which is as under: As it stands, all that it requires for the business income of a trust or institution to be exempt is that the business should be incidental to the attainment of objectives of the trust or institution. A business whose income is utilized by the trust or the institution for the purposes of achieving the objectives of the trust ..In any event, if there be any ambiguity in the language employed, the provision must be construed in a manner that benefits the assessee . 13. Prima facie the above observation would appear to support the assessee s case in the sense that even if running of Community Hall is held not to constitute a business h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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