TMI Blog2018 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the trust carried on the business of a newspaper and that business itself was held under trust. The charitable object of the trust was the imparting of education which falls u/s. 2(15) of the Act. The newspaper business was incidental to the attainment of the object of the trust, namely that of imparting education and the profits of the newspaper business are utilized by the trust for achieving the object of imparting education. In this case, there is no such nexus between the activities carried on and the objects of the assessee that can constitute an activity incidental to the attainment of the objects, namely, to promote cause of charity, mission activities, welfare, employment, diffusion of useful knowledge, upliftment and education and to create an awareness of self-reliance among the members of the public etc. Being so, we are inclined to hold that the assessee is not entitled for any exemption u/s. 11 of the I.T. Act. - Decided against assessee. - I.T.A. No. 45/Coch/2017 And I.T.A. No.111/Coch/2018 - - - Dated:- 26-10-2018 - SHRI CHANDRA POOJARI, AM AND GEORGE GEORGE K., JM For The Assessee : Shri R. Sreenivasan, CA, Shri Anil D.Nair, Adv. For The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the revised guidelines for selection of accredited agencies for execution of public works. As per the order, District Nirmithi Kendras can be entrusted with the execution of public works and in all the public works, the total estimate cost of the work will not exceed the cost being followed by State Public Works Department. According to the Ld. AR, the centage charge for the organizations undertaking the works will be as per the rate fixed by the Government and actual expenditure will also be as the contingency charges subject to ceiling fixed by the Central Government. The Ld. AR submitted that there is no profit element in the total estimated cost fixed for the public works. There will be only centage charges to the agencies undertaking the works including planning, designing, tendering, supervising and handing over. According to the Ld. AR, the centage charge is a percentage on the total estimated cost. 5.1. It was submitted that Finance Department, Government of Kerala vide its letter dated 13/1/2004 noted that the schemes executed by beneficiary committee and government accredited agencies like Nirmithi Kendras, Costford etc. under the Social Development Fund for MLAs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the terms of the Trust, the mere fact that the activities of the Trust would yield profit, will not alter the charitable character of the Trust. The test is the genuineness of the purpose tested by the obligation created to spend the money exclusively or essentially on charity. 5.3 It was submitted that if profit making results from the activities of public utility and if these profits can be utilized for charitable purposes then, the trust would be exempted from income fax. For this, the Ld. AR submitted that the judgment of the Supreme Court in the case of Sole Trustee Loka Shikshana Trust (1975) (101 ITR 234) has been followed in a number of cases both by the Supreme Court and the High Court. It was submitted that where the object is one of the general public utility and while some amount is received, the surplus need not be construed as violative of charitable nature of the institution. Thus, it was submitted that the assessee had utilized the surplus for meeting the objects of the trust. It was therefore prayed that the order of the Assessing Officer treating the assessee as an Association of Persons may be cancelled. 6. On the other hand, the Ld. DR relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inly to carry out charitable activities and not of general public utility. As such, the proviso of section 2(15) of the Act was not applicable to the assessee was erroneous and beyond the intention of the legislation. The activities carried out by the assessee were for the purpose of attainment of the objectives of the assessee. 7.3 As per the provisions of Section 2(15) of the Income Tax Act, 1961, the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business or any activity or running services in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. Provided further, that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ₹ 25 Lakhs or less in the previous year. Thus, provisions of sec.2(15) are abundantly clear and does not require any interpretation. 7.4 The activities carried on by the present assessee cannot be considered as activities of medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal activities and not incidental activities. Hence, it is not possible to hold that the construction activities carried out by the assessee is not protected by the provisions of setion 11(4A) of the Act. In view of this, we do not find any merit in the argument of the Ld. AR. Thus, this ground of appeal of the assessee is dismissed. 8. We now proceed to consider the question whether the said activities carried on by the assessee were incidental to the attainment of the objects of the Trust. We fail to see any connection between the activities relating to construction business and the attainment of the objects of the trust. The mere fact that whole or some part of the income from running of is used for charitable purposes would not render the business itself being considered as incidental to the attainment of the objects. We are in agreement with the Department that the application of income generated by the business is not relevant consideration and what is relevant is whether the activity is so inextricably connected or linked with the objects of the trust that it could be considered as incidental to those objectives. 9. It was contended by the Ld. AR that the surplus fun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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