Sree Narayana Dharma Paripalana Appellant Youvajana Samithi Vs ITO (ITAT Cochin)
Income Tax Appellate Tribunal (ITAT) Cochin Bench has ruled in favor of Sree Narayana Dharma Paripalana Appellant Youvajana Samithi, a charitable trust, allowing its claim for exemption under Section 11 of the Income Tax Act, 1961, for income derived from its Kuri business. The decision overturns previous assessments by the Income Tax Officer (Exemption), Thrissur, and the Commissioner of Income Tax (Appeals)-5, Mumbai.
The case, pertaining to Assessment Year 2012-13, saw the appellant, a trust registered under Section 12A of the Act, declare a total income of Rs. 11,39,180/- after claiming exemption. However, the Assessing Officer (AO) completed the assessment on February 27, 2015, assessing a total income of Rs. 25,75,620/-, treating the Kuri business income as taxable business income. The AO rejected the trust’s argument that the business was held for charitable purposes.
This assessment was subsequently upheld by the CIT(A), who concluded that the operation of the Kuri business was not incidental to the attainment of the trust’s charitable objectives.
Before the ITAT, the assessee’s counsel contended that the Tribunal had previously allowed similar exemption claims for the trust in earlier assessment years. This argument was supported by reference to the Kerala High Court’s decision in the case of Biowin Agro Research v. ITO (Exemption). The High Court had held that business income utilized for genuine purposes of a trust or incidental to its objects is eligible for Section 11 exemption.
