TMI Blog2023 (1) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... ditorium in relevant AY 2010-11 is Rs.40,84,433/- minus expenditure of Rs.15,77,851/- and the net income receipts is declared at Rs.25,06,582/- as against gross total income from educational activity at Rs.2,03,13,541/-, which is only to the extent of 12.5% of total receipts. Once the assessee falls under the category of education in term of section 2(15) of the Act, assessee is eligible for exemption u/s.11 of the Act because letting out of auditorium is incidental to fulfilment of the object of the trust i.e., education. Hence, we allow the appeal of assessee. - ITA Nos.: 976, 977, 978 & 979/CHNY/2019 - - - Dated:- 11-1-2023 - Shri Mahavir Singh, Vice president And Shri g. Manjunatha, Accountant Member For the Appellant : Shri G. Sitharaman, CA For the Respondent : Shri AR.V. Sreenivasan, Addl.CIT ORDER PER MAHAVIR SINGH, VP: These four appeals by the assessee are arising out of common order of the Commissioner of Income Tax (Appeals)-17, Chennai in ITA Nos.252/13-14, 70 474/14-15 191/16-17 dated 07.02.2019. The assessments were framed by the DDIT (Exemptions)-1 / ITO (Exemptions), Ward-1, Chennai for the assessment years 2010-11, 2011-12, 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired the assessee to give the details of miscellaneous receipt declared by assessee s trust in its books of accounts. The assessee responded that the major portion of miscellaneous receipts pertain to income generated from let out of auditorium hall and for that purpose he submitted the details to whom the auditorium was let out and for what purpose it was let out. The AO has reproduced the details of receipts earned by assessee by letting out the auditorium. The AO noted that the auditorium has been let out to general public for a total of 227 days during the relevant financial year 2009-10 relevant to assessment year 2010-11. The AO noted that the income generated by the assessee by letting out the auditorium was to the tune of Rs.40,84,433/-. The AO noted in his assessment that auditorium has been let out to general public for conduct of dance programme, music programme, corporate meetings, corporate conference, corporate get together and family functions. According to him, the auditorium has been allowed for general public utility for their private functions and this letting out has been done with a profit motive and accordingly, net income was declared at Rs.25,06,582/- and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e net receipt of Rs.25,06,582/- as taxable and denied exemption u/s.11 of the Act. However, the AO allowed exemption u/s 11 of the Act on the receipts of school holding the same from educational activity. Aggrieved, assessee preferred appeal before the CIT(A). 3.1 The CIT(A) by common order for all the four years noted the details of gross receipts minus expenditure incurred on auditorium and total taxable income computed by AO u/s.143(3) of the Act as under:- 2010-11 2011-12 2012-13 2013-14 Rs. Rs. Rs. Rs. Auditorium Hall Let out income 40,84,433 25,50,104 30,75,820 40,30,066 Less: Auditorium expenditure 15,77,851 10,79,801 17,20,622 27,34,628 Total Income 25,06,582 14,70,303 13,55,198 12,95,438 Taxable Income (Rounded Off) 25,06,58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. 4. Before us the ld.AR for the assessee stated that the assessee is running a matriculation school since 1985 having an auditorium in its campus for school purposes. It was contended that outside the school hours and on holidays, it was let out on hire. The school is affiliated to matriculation board of Tamil Nadu State Government. The building was constructed after 1985 belongs to school but the land and the old building belongs to another charitable trust for which the assessee is not paying any rent or compensation. The assessee before us filed the details how the auditorium as part of its infrastructure is used and the details he filed is as under:- (i) conducting weekly meetings by the Educational Advisor / Principal and staff; (ii) monthly meetings of the parents and teachers. This is usually on all Saturdays in the fore-noon by dividing the students into 3 groups; (iii) Holding lecture meetings on school related subjects by inviting Guest Lecturers; (iv) Conducting Annual Day, Children s Day celebrations, etc. in batches; (v) Conducting inter-school competitions on various subjects, quiz, music, etc; and (vi) Conducting inter-school competiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 112 106 Meeting connected with Academics 23 15 8 8 School Annual Day 6 15 14 16 Corporate Meetings 2 2 3 - Corporate Conferences - - - - Gettogether - - - - Family Function 1 - - - Chief Minister Function 1 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely for the reason that the legislature has given the conscious use of or connecting the two. He argued that the meaning of the proviso is that if charitable trust carries on any activity in the nature of any business, trade or commerce, in the actual cause of fulfilling its object, the income from such business should not exceed the limit defined in sub-clause (ii) to the proviso. He argued that in the present case, there is a clear finding given by the AO and the CIT(A) and from the details filed by assessee before Tribunal even in its paper-book, it clearly reveals that the auditorium is let out to like example, on 20.05.2009 Bharathi Airtel Ltd., on 01.06.2009 Metropolis Entertainment and on 02.07.2000 Chemplast Sanmar Ltd., etc. It means that the assessee is letting out auditorium to general public and therefore it is clearly hit by proviso to section 2(15) of the Act and the issue is squarely covered in favour of Revenue by the decision of Hon ble Supreme Court in the case of Ahmedabad Urban Development Authority, supra. 6. We have heard rival contentions and gone through facts and circumstances of the case. We have gone through the indenture created this trust vide dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid purposes and for management of the Trust hereby constituted: (d) subject to availability o funds after providing or the aforesaid objects, to construct a school for education in Rama Vilas property and maintain and manage the school; 4) The Rama Vilas property will continue to be the property of the Thirupani Trust. The Board of Trustees are, however authorised to enter the premises, construct the hospital and school as aforesaid and manage the hospital and the school. The property tax and other outgoings in respect of the Rama vilas property shall be paid by the Board of Trustees out of the funds available with them. 7. Admittedly, the assessee is running a Matriculation School and it is also having an auditorium in its campus which is let out to various people for conducting meetings for school purpose or dance competition, music programme, etc., as contended by ld.AR for the assessee. From the records produced before us by the assessee in its paper-book and the details noted by the AO of list of parties from whom the assessee has received rent clearly reveals that the auditorium has been let out to general public also for conduct of dance programme, music p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the second proviso, the reference to ten lakhs was substituted, and the figure of rupees twenty-five lakhs, was inserted, by the Finance Act, 2011 (w.e.f. 01.04.2012). By Finance Act, 2015 (w.e.f. 01.04.2016), the first two provisos to Section 2(15) were deleted, and instead, the following proviso was inserted: 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; 7.1 From the facts of the case and above stated provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) (since this Court was dealing with AYs prior to 1975), the provision in Section 13(1)(bb) which prevailed then with effect from 01.04.1977 made the position clearer in that it permitted these per se category charities, in the course of their actual carrying on of their activities, to earn profits. Of course, this provision was deleted from 01.04.1984. Alongside, the restriction imposed on GPUs from engaging in activities for profit, was also deleted. We have noted from the above para, that if the assessee s activity or category for charity is education, the restriction imposed by parliament against charities as prescribed under the proviso to section 2(15) of the Act prohibiting them from carrying on activities of profit do not apply to the first six categories including education. 7.2 In view of the above fact situation that the assessee trust exist for the purpose of education and the auditorium which is within the school complex for the purpose of conducting guest lectures or topics to address the students in connection with the curriculum and this is incidental and to earn rental from conducting conferences, music, dance and letting out to general public for conferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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