Case Law Details
Jogdhian Hari Bhagwan Rastogi Charitable Memorial Trust Vs ACIT (ITAT Delhi)
The assessee society is registered u/s 12A of the I.T. Act. The trust was formed on 27.09.1966 with the primary aims of carrying out public charitable objects and purposes including relief of the poor, education, medical relief and advancement of any other object of general public utility not involving the carrying on any activity for profit. In accordance with the object of the trust, it is providing free education upto preparatory kindergarten to children from poor and economically weaker section of society.
In furtherance of its objects, the assessee has also given donation of Rs. 2 lakhs and claimed the same as application of income. There is no dispute that the assessee trust is carrying on its activities since its inception and has never been denied the claim of exemption u/s 11 of the Act.
The only reason why exemption has been denied to the appellant is that the expenditure incurred on school is very low. No other facts have been brought on record in support of the contention that no charitable activity in the form of providing preparatory/kindergarten education is provided to children of poor and economically backward classes. Further, it has been held that predominant motive of the assessee is to earn rental income.
In the case of DIT(Exemption) vs. Sahu ]ain Trust [(2011) 243 CTR 131(Cal.)] the Assessing Officer believed that assessee was earning rent from the property which was obtained under the tenancy rights and thus income earned from said exercise was not incidental to the objects of trust and accordingly such income was assessed as business income. It was observed that the question, therefore, which really arose is whether sub-letting of the tenanted accommodation available to assessee amounts to carrying on any business, i.e., is it carrying on any adventure or concern in the nature of trade, commerce or manufacture? It was held that if it was carrying on any adventure or concern in the nature of trade by sub-letting, then, section 11 (4A) would be attracted and that the true test is whether it is a simple letting out of the building or something more than letting out by brining the case within the meaning of “carrying on any adventure or concern in the nature of trade or commerce”. It was noted that there was no material which was available on record to justify the simple sub-letting done by assessee in order to continue its charitable activity to be branded as a “business activity” and CIT(A) and the Tribunal below rightly did not bring the case within the purview of section 11 (4A) and also in the past, assessee having received the benefit of exemption in respect of the rental income, there was no just reason for disallowing the relief claimed for the relevant assessment year when no fresh materials were brought in this year for coming to a different conclusion.
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