TMI Blog2022 (11) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... activity. The order passed by the CIT(A) that the assessee has carried charitable activity is without any basis and any evidence. Thus, we reverse the order passed by the ld. CIT(A). Accordingly, we restore the assessment order passed by the AO and allow the grounds raised by the Revenue. - I. T. A. No. 587/Chny/2015 - - - Dated:- 14-10-2022 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member Appellant by : Shri D. Hema Bhupal, JCIT Respondent by : Shri S. Sridhar, Advocate ORDER PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 17, Chennai, dated 12.12.2014 relevant to the assessment year 2011-12. The Revenue has raised the following grounds: Ground No.1 1. The order of the learned CIT (A) is contrary to the law and facts of the case. Ground No:2: 2.1 The Id CIT(A) erred in holding that the assessee is eligible for exemption u/s 11 of the Act and not hit by the amended provisions of Sec.2(15) of the Act, under the object of General Public Utility . 2.2 The Id CIT(A) failed to appreciate that the major ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said judgement, it was held that if the amount received from such activity is spent towards charity or not may be examined by the Assessing Officer, but such observations would not have any relevance after insertion of two provisos to section 2(15) of the I.T. Act, 1961, w.e.f. 01.04.2009 as the decision in the aforesaid case related to A.Y 1995-96 to A.Y 2005-06. Ground No.7: 7.1 The Id. CIT (A) erred in holding that the provisions of Sec.11 (3)(c) do not apply to the accumulated income of Rs.1.25 crore accumulated since A.Y. 2000-01. 7.2 The Id. CIT (A) failed to appreciate that as per provisions of Section 11 (3)(d) of the Act, no inter-trust donation can be made out of the accumulated income. This provisions stands introduced by the Finance Act, 2002 and hence, the order of the Id. CIT(A) on this issue is per incuriam and illegal. Ground No:8: (Disallowance of Depreciation): 8.1 The Ld. CIT(A) erred in allowing the claim of depreciation when the entire cost of acquisition of assets were treated as application of income for the purpose of claiming exemption u/s. 11 of the Act. 8.2 The Id CIT (A) erred in allowing the claim of deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish endowments for such purposes. (v) To provide relief for the poor and the distressed. (vi) To provide for the carrying out of protection or animals useful to mankind and generally to spend amounts for charitable purposes enuring for the benefit of the public. (vii) To collect and maintain a fund to be contributed by voluntary donations and subscriptions for the objects and purposes of the trust. (viii) To accept any gifts or property movable or immovable on such terms and conditions as may be agreed to between the donor or donors and the trust but so as not to incur any liability on the part of the trust or members of the trust Board and provided also that the conditions agreed to are of a charitable nature enuring for the benefit of the public. (ix) To act as trustees and managers of any institution or trust having similar objects in fit and proper cases. (x) To construct and maintain any buildings or works necessary or convenient for the purpose of the trust. (xi) To incorporate with itself any institution, society or association having objects wholly or in part, similar to those of the trust and are of a charitable nature enuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that 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 of rendering any service 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, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year; 3. On appeal, the ld. CIT(A) has observed that the assessee should have source of revenue to achieve its objects and in such process, it has constructed buildings, women s hostel and kalyana ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hostel S.No. Description Amount 1. Donation 12,000 i. Students in Rooms with AC/attached bathroom ii. Other Rooms 9,000 2. Term Fees (June to Sept. I term; Oct. To May II term Establishment Fee 6,000 Room Rent 2 in a room 5,000 3 in a room 4,000 4 in a room 3,000 5 in a room 2,000 6 in a room 1,750 7 in a room 1,500 Rooms with attached bathroom 2 in a room 6,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. Counsel for the assessee i.e., object No. (x) comes into operation only when the assessee constructs the building for the purpose of educational, technical or technological institutions for the benefit of the public. The building constructed by the assessee was not under use for any educational purposes, to support hospitals, cr ches and dispensaries or home for orphans. Therefore, the objects enshrined in the trust deed have not been carried out by the assessee. Therefore, on this count alone, it can be held that the assessee is not entitled for claiming exemption under sections 11 of the Act. 6.5 So far as accumulation of income in the assessment year 2011- 12 is concerned, the assessee has not filed Form No. 10. Therefore, it has to be taxed under the year under consideration. Thus, we find no infirmity in the order passed by the Assessing Officer. 6.6 The ld. Counsel for the assessee has submitted that in assessee s own case for the assessment years 2006-07, 2010-11, 2012-13, 2012-13 2013-14 in I.T.A. Nos.2984, 2985, 2986, 2987 2988/Chny/2016 dated 19.04.2018, the Tribunal has decided the issue in favour of the assessee by considering the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e done by the Assessing Officer within a period of three months from the date of receipt of a copy of this order. In fine, the orders passed by the Tribunal are hereby set aside and these appeals are allowed to the extent indicated above. 6.9 From the above, it is amply clear the Hon ble Madras High Court has directed the Assessing Officer to examine the income earned by the assessee has used for charitable purposes and also directed the Assessing Officer to examine the business activities incidental to the charitable activity carried by the assessee. In the present case, the assessee has not carried any charitable activity. That apart, the assessee not at all carried its activities in accordance with the objects. Therefore, the activity carried by the assessee is outside the scope of the objects and it cannot be said that activity carried by the assessee is charitable activity. Therefore, the Assessing Officer has rightly denied the claim of exemption under section 11 of the Act to the assessee. 6.10 We also find that the Tribunal, in assessee s own case in I.T.A. No. 2986/Chny/2016, simply upheld the order of the ld. CIT(A) without considering the judgement of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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