Case Law Details
Ramsahaimal Sahuwala & Sons Charitable Trust Vs ACIT (ITAT Chennai)
ITAT Chennai held that corpus donations received by the Trust is income of the Trust when the Trust is not entitled for the exemption under section 11 of the Income Tax Act.
Facts- The appellant Trust is registered u/s.12AA of the Income Tax Act, 1961. A survey u/s.133A of the Act, was conducted in the business premise of the assessee on 23.01.2020. During the course of survey, it was noticed that the assessee’s Trust is running Kalyan Mandapam in Chennai & Coimbatore, and charging rent on par with the market rates. The predominant activity of the assessee’s Trust is running marriage hall and also major income comes from running of marriage hall and interest income, etc. The major expenses incurred by the assessee pertain to the activity of running of marriage hall only. It was further observed that the Trust is managing a temple called Bhawan at Kulod exclusively for the benefit of Sahuwala family.
Consequent to survey action u/s.133A of the Act, assessment has been re-opened u/s.147 of the Act. During the course of assessment proceedings, the AO noticed that the objects of the assessee’s Trust and activities carried out during these assessment years predominantly running of marriage hall. Further, Trust is not running any Educational Institution or Old Age Home as per the objects of the Trust. AO opined that the activity of running of Kalyan Mandapam by charging fees on par with commercial rates charged by any other private Kalyan Mandapam operator is in the nature of trade, commerce or business. Since, the receipts from the activity is in excess of the prescribed limit provided under the proviso, the assessee is not entitled for the benefit of exemption u/s.11 of the Act, and thus, rejected exemption claimed by the assessee and computed the income on commercial principle and taxed excess of income over expenditure.
CIT(A) upheld the action of AO. Being aggrieved, the present appeal is filed.
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