TMI Blog2016 (3) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the claim of the assessee u/s 11 - CIT(E) also has not examined the utilization of the fund for charitable purposes. CIT(E) proceeded as if the proviso to sec. 2(15) of the Act would make the assessee-trust not eligible for exemption u/s 11 of the Act. This Tribunal is of the considered opinion that proviso to sec. 2(15) is applicable in respect of the trust whose object is advancement of any other general public utility. In the case before us, it is not the object of the trust to advance any public utility service. The main object as per the trust deed is to establish educational and medical institution and also providing scholarship to the needy people. Therefore, proviso to sec. 2(15) may not be applicable at all. This Tribunal is of the considered opinion that the matter needs to be reexamined by the Assessing Officer in the light of the material available on record with regard to utilization of the income for charitable activity. Accordingly, while confirming the exercise of jurisdiction by the CIT(E), the Assessing Officer is directed to examine the utilization of the income of the assessee-trust in the light of the material available on record including the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity hall was utilized for carrying out the objects of the trust. The ld. Sr. Counsel clarified that the assessee trust was also granted registration u/s 12AA of the Act and the Assessing Officer continuously allowed exemption on the rental income received from community hall on the basis of its utilization for the objects of the trust. 4. The CIT(E) in the guise of exercising his power u/s 263 of the Act, found that while letting out the community hall, the trust used to collect major portion of the rent as corpus donation and used to collect a minimum amount as rent. Referring to the proviso to sec. 2(15) of the Act, the CIT(E) found that the legislature took away certain activities of general public utility outside the purview of charity u/s 2(15) of the Act by inserting two provisos to sec. 2(15) of the Act. After considering the effect of the two provisos to sec. 2(15), the CIT(E) found that the proviso to sec. 2(15) would be applicable to the assessee, therefore, the exemption granted by the Assessing Officer u/s 11 of the Act was not based upon the correct interpretation of law. The CIT(E) has also found that rental receipt from kalyana mandapam was understated in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 52 lakhs as corpus donation during the year under consideration. If the corpus donation was taken as regular rental income, then the profit of the assessee would be exorbitant from running the community hall, therefore, at any stretch of imagination the activity of the assessee cannot be considered to be a charity. When this was brought to the notice of the assessee, the assessee was willing to file Form 10 for accumulation of income. 6. The ld. DR further pointed out that while filing the return under the Service Tax Act, the assessee has disclosed the so called corpus donation as rental income on letting out of the community hall. The assessee has also disclosed the receipt of corpus donation as if it was from regular commercial activity. Therefore, the annual receipt of the assessee exceeded the threshold limit of ₹ 10 lakhs for assessment year 2010-11 and under the second proviso to sec. 2(15) of the Act, the assessee is not eligible for exemption u/s 11 of the Act. Therefore, the CIT(E) found that there was an error in the assessment order which is prejudicial interest of the Revenue. Accordingly, the CIT(E) directed the Assessing Officer to apply second provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de of Civil Procedure prescribes a procedure to file an application for impleading. Therefore, by taking clue from the Code of Civil Procedure, Smt. Indra Subramaniam shall be impleaded as one of the party in the proceedings. This Tribunal is of the considered opinion that the Code of Civil Procedure is not applicable to the Income-tax proceedings. What is applicable in income-tax proceedings is clearly stated in sec. 131 of the Act. The Income-tax Authorities have the powers of Civil Court under the Code of Civil Procedure in respect of the matters which relates to (a) discovery and inspection (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath, (c) compelling the production of books of account; and (d) issuing commissions. Other than these four purposes, the Code of Civil Procedure is not applicable to the incometax proceedings. It is to be kept in mind that the proceedings before this Tribunal are continuation of income-tax proceedings under the Income-tax Act, 1961. In other words, the proceedings are summary in nature. The legislature established this Tribunal and other authorities under the Income-tax Act with a sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g this Tribunal to redress the personal grievances of the third parties to the proceedings. Therefore, the application filed by Smt. Indra Subramaniam has no merit at all. 11. Apart from Smt. Indra Subramaniam, one more trustee, Dr.P. Thiagarajan has also filed a petition dated 12.10.2015 praying for the dismissal of this appeal. As observed earlier, the object of the Income-tax Act is only to assess the income, levy tax thereon and collection of the tax. The person who filed the return of income has to file the appeal and that person alone has the right to argue before this Tribunal. The other trustees if at all want to support the case of the assessee, they can do so, through the trustee who filed the return of income. This Tribunal is of the considered opinion that the person who filed the return of income would have knowledge about the books of account, income and expenditure etc. A person who has knowledge about the income and expenditure and activity of the assessee has to file the return of income. By filing the return of income the person who is signing the declaration in the return is taking a risk of facing prosecution in case the particulars disclosed in the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as property under the trust. However, the assessee is expected to maintain a separate books of account and the business of the assessee-trust shall be incidental to the main activity. 13. In the case before us, the CIT(E) has received petitions regarding tax evasion by the assessee.The assessee was receiving corpus donation in the guise of letting out the community hall to the poor people. This fact was disclosed in the return filed by the assessee itself under the Service Tax Act. Therefore, the question arises for consideration is whether the assessee is carrying out the charitable activity in accordance with the objects of the trust or not? It is also needs to be examined whether the assessee-trust, in fact, utilized the income from community hall for charitable activity or not. The Assessing Officer simply found that receipts of rent from community hall are incidental to the carrying out of the objects of the trust. When the Assessing Officer has not examined the utilization of rent for charitable activity, this Tribunal is of the considered opinion that utilization of the income of the assessee-trust for charitable activity needs to be examined year by year for allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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