9911796707
TMI Blog2024 (11) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the provisions of the Income-tax Act, 1961, from the year 1962 and the trust is carrying on the charitable activities without any violation as contemplated under the provisions of the Act and also in accordance with the byelaws of the trust. During the assessment year 2012-2013, the assessee filed `Nil' income after the income was applied for the charitable purposes. Thereafter, the return was processed u/s.143(1) of the Act and the case was selected for complete scrutiny assessment for which various details were called for by the Assessing Officer. The assessee also filed all the details sought for by the A.O. along with documents in support of the same, but inspite of that the A.O. made the assessment by treating the income received through kuri and finance business as business income on the ground that this is against sec.2(15) of the Act i.e. advancement of any other object of general public utility. The A.O. on that basis denied the exemption u/s.11 of the Act. Even though the earlier proceedings for the years were decided in favour of the assessee, the A.O. took a different view and denied the exemption claimed u/s.11 of the Act. 4. As against the said order, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be classified as "relief to poor & medical relief" as claimed by the appellant and therefore, the proviso to section 2(15) of the Act would be squarely attracted to the case of the appellant and hence, the appellant was not entitled to exemption u/s.11 of the Act. 8. The learned commissioner of Income Tax (Appeals) is also not justified in holding that alternatively the provisions of the section 11(4) of the Act were attracted to the case of the appellant and hence, the appellant was not entitled to exemption u/s.11 of the Act for violation of the provisions of section 11(4) of the Act, without appreciating that the main objects of the appellant related to providing relief to poor/ medical relief by providing low rated interest loans to members/ayurvedic treatment thus these activities carried on by the appellant cannot be termed to be business activities to invoke provisions of section11(4) of the Act under the facts and in the circumstances of the appellant's case. 9. The learned commissioner of Income Tax (Appeals) ought not to have rejected the plea of the appellant that the activities of the appellant were examined and admitted in course of earlier assessments frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R also relied on the judgment of the Delhi High Court reported in 447 ITR 99 in the case of PCIT v. Servants of People Society and the judgment of the Hon'ble Supreme Court reported in 247 ITR 785 in the case of ACIT v. Thanthi Trust, in support of his arguments that the income earned through kuri and finance business should not be treated as business income when the entire income was spent on the charitable activities. The learned AR also relied on the order of the Bangalore Tribunal reported in 2023 (9 TMI 256) in the case of Navodaya Gramin Vikas Charitable Trust v. DCIT and prayed to allow the appeal of the assessee. 8. On the other hand, the learned Departmental Representative relied on the provisions of sec.2(15) of the Act and contended that the assessee is earning income through kuri and finance business, and therefore, they are not entitled to claim deduction u/s.11 of the Act. 9. We heard the arguments of both the sides and perused the material available on record. On going through the byelaws furnished by the assessee, it is observed that the assessee trust is having somany objects which are classifiable as relief to poor and medical relief in which one of the object i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was held that the assessee being a charitable trust in nature, as the profit made by the assessee is being ploughed back for charitable purposes, it is eligible for deduction. 13. Similarly, the ITAT Cochin Bench in the order dated 08.03.2023 reported in 2023 (3) TMI 975 in the case of Malanadu Farmers Society Vs CIT(E) had held that the trust earned income from the sale of milk, milk cream etc. and the entire income earned through the said sales were utilized for the purpose of carrying out the charitable activities and hence they would come under the first three limbs of sec.2(15) of the Act, and therefore, they are eligible for deduction u/s.11 of the Act. We have also perused the Circular issued by the CBDT in Circular No.11/2008 dated 19.12.2008 in which the clarification with regard to the exemption claimed u/s.11 by the charitable institutions as well as mutual organizations were spelt out in which the Board had clarified that, when there is a charitable activity enumerated in the first three limbs of sec.2(15) of the Act, it will amounts to charitable purpose even if it incidentally involves carrying on of commercial activities. In the present case, as already stated, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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