TMI Blog2024 (2) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of 2(15) of the Act. The objects listed in the above trust deed have been continuously and consistently carried on by the assessee from year to year and there was no dispute on these facts by the AO. To serve a charitable purpose, it is not necessary that the objects should benefit the whole of mankind or all persons in a country or a state. It is sufficient if the intention to benefit a section of the public as distinguished from a specified individual is present. The section of community sought to be benefited must be sufficiently definite and identifiable by some common quality of a public or impersonal nature. CIT(A)/NFAC is taken a correct view in granting the exemption under sec. 11 of the Act to the assessee and same is confirmed. This ground of the appeals of the Revenue is dismissed. Corpus donation receipts - HELD THAT:- In this present case, the CIT(A) granted the exemption without verifying the records and also not called for remand report from the AO. In our opinion, it is appropriate to remit the issue to the file of AO to examine the issue afresh in the light of the judgment of jurisdictional High Court in the case of Sri Ramakrishna Seva As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the assessment year 2016-17, the assessee filed return of income on 02/02/2017 declaring Nil income and assessment has been completed after giving notice u/s 143(2) of the Act dated 18/09/2017 while framing the assessment u/s 143(3) of the Act dated 22/12/2018. Similarly, for the assessment year 2017-18, the assessee filed return of income on 10/10/2017 declaring Nil income. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 10/08/2018 and assessment order passed u/s 143(3) of the Act vide order dated 15/12/2019. For these assessment years, the assessee claimed exemption us/ 11 of the Act. However, the AO denied the exemption by observing that the assessee is not performing any charitable activity within the meaning of sec. 2(15) of the Act and he considered the contribution received from MYMUL as income of the assessee from other sources by denying exemption u/s 11 of the Act. 4. The assessee carried appeal before the NFAC, New Delhi. The NFAC, New Delhi observed that the assessee covered in the 4th limb of sec. 2(15) of the Act i.e advancement of any other objects of general public utility and assessee is entitled for exemption u/s 11(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er its amendment in 2008 and as it stands today, is that firstly a charity engaged in an object of general public utility cannot engage in any activity in the nature of trade, commerce, business or any service in relation to such activities for any consideration (including a statutory fee, etc.). This is emphasised in the negative language employed by the main part of section 2(15). Therefore, the idea of a predominant object among several other objects, is discarded. The prohibition is relieved to a limited extent, by the proviso which carves out the condition by which otherwise prohibited activities can be engaged in by charities carrying out objects of general public utility. The conditions are: (a) that such activities in the nature of trade, commerce, business or service (in relation to trade, commerce or business for consideration) should be in the course of actual carrying on of the object of general public utility and (b) the quantum of receipts from such activities should not exceed 20 per cent. of the total receipts. Both parts of the proviso : (i) and (ii) (to section 2(15)) have to be read conjunctively, given the conscious use of or connecting the two. This means t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Open educational institution and residential schools for the benefit of producers and employees of the societies d. By opening the stationery shop, and out of the income derived out of it, to conduct the affairs of this Trust e. Through the trust by taking up the work for the welfare of producers and employees of the Societies and to decide the other matters regarding mutual interest of the members. f. To take up rural development programmers, all the activities supplemental to the above objectives g. If the milk producer/Member dies to give financial assistance from the Trust to the husband/wife of his/her family. h. If the milk producer/cows of the Member dies accidentally or if dies from other reasons, to provide insurance facility. 13. It is to be noted that at the time of granting approval u/s 12AA competent authority was of aware of fact that the assessee has catering the needs of particular class of public and accordingly, approval authority found that objects of the trust constitutes charitable purpose within the meaning of 2(15) of the Act. The objects listed in the above trust deed have been continuously and consistently carried on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence the requirement of the section shall be satisfied once the donation is specifically for the corpus fund. Accordingly, the CIT(A) granted the exemption u/s 11 of the Act. 17. The ld.DR submitted that the CIT(A) not verified the records, the purpose for which the donation has been given and also not called for the remand report from the AO. The ld.AR relied on the judgment of Karnataka High Court in the case of Director of Income-tax Vs. Sri Ramakrsihna Seva Ashsram 357 ITR 731, wherein held that - The word corpus used in the context of the Income-tax Act, 1961, is to Ye Understood, in the context of capital, as opposed to an expenditure. If a voluntary contribution is made with a speck direction, it shall be treated as the capital of the trust for carrying on its charitable or religious activities. Then such an income falls under section 11(1)(d) and is not liable to tax. Therefore, it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the intention of the donor is to give that money to a trust to keep in trust the account in deposit and utilize the income there from for carrying on a particular activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation out of tide up grants. The claim of the assessee is that it has not been claimed as application of fund, the said amount cannot be taxed in the hands of the assessee. In our opinion, whether it was spent out of tide up grants or from assessee s corpus fund, it has not been used for charitable purpose and the benefit has been gone to the President and Secretaries of other Milk Producers Association. In our opinion, this is covered u/s 13(1) of the Act, as such, provision of sec. 11 or 12 cannot be applied. Since there was a contravention, this amount spent on mementoes given to President and Secretaries of Milk Producers Association to be taxed in the hands of assessee and the same was brought to tax by the NFAC, Delhi and we do not find any infirmity in the order of the NFAC, New Delhi and the same is confirmed and this ground of assessee in both the appeals is dismissed. 23. The assessee raised the grounds in both the appeals with regard to levy of interest u/s 234B of the Act, which is consequential and mandatory in nature to be charged accordingly. 24. In the result, the appeal of the Revenue in ITA No.996/Bang/2023 is dismissed and 923/Bang/2023 is partly allowed f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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