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-419 ITR 561(Guj)- 12 A exemption is not an idle or empty formality- Addl typed set-I •Sec.2(15) w e f 01.04.2009 by F A (No.2) 2009 •2(15) Charitable purpose includes relief of poor, education, medical relief….and any other object of General Public Utility •Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on any activity , in the nature of trade, commerce or business… … •Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is 25 lakhs rupees or less in the previous year … •2(15)proviso is not attracted as the main object is education and hence not violated •TNCA(2014) 360 ITR 633(Mad); Gujarat Cricket 419 ITR 561(Guj)PB- II, DIT(E) v Chartered Accountants Study Circle 347 ITR 321(Mad) •Observations on “education” in Thanthi’ Trust’s reported cases. •Hon’ ble Justice G.Ramanujam and Hon’ ble Justice Sengotuvelan -137 ITR 735 (Mad) Pg 50 to 75 •(i) para 26 pg 66: In this case the founder of the trust has clearly evinced an intention to create a public charitable trust as seen from the preamble and cl3(k) of the original trust deed and the charitable objects referred to in the schedule to the decree in CS no. 90 of 1961 have to be fulfilled http://www.judis.nic.in from and out of the income from the business which is directed to be held under trust or other legal obligation. Those charitable objects fall within the first two categories referred to in S 2(15). Viz relief of the poor and education. It is to carry out and fulfill those objects the business is carried on.

•Thus the primary purpose is to carry out the charitable objects and the business is carried on as a means in the course of the actual carryng out that primary purpose and not as an end in itself. While the predominant object of the trust is the carrying out of the charitable objects referred to its two off the three categories of charitable purpose referred to in S 2(15), the carrying on of the business which is actually the property held under trust or other legal obligation is incidental and the profit resulting therefrom the business can be taken to be a by product. •(ii)Page 65 para 22 end. The principle laid down by the SC(121 ITR1) in the said decision seems to squarely apply to this facts of the case. In this case the property held under trust or under legal obligation is the business itself and the entire income from the business has to be utilised for the various charitable objects set out in the schedule to the decree in CS No.90 of 1061. Thus, the objects will clearly fall under the head ‘ relief of the poor,education, medical relief etc, and merely because the trust is carrying on the charitable objects referred to in schedule to the decree, it cannot be deprived of S.11.

37.Ultimately, the Court held that the objects of the assessee Trust fall within the first two categories referred to in Section 2(15) of the Act, by giving the following reasoning.

“26.In this case the founder of the trust has clearly evinced an intention to create a public charitable trust as seen from the preamble and cl 3(k) of the original trust deed and the charitable objects referred to in the schedule to the decree in C.S. No. 90 of 1961 have to be fulfilled from and out of the income from the business which is directed to be held under trust or other legal obligation. Those charitable objects fall within the first 2 categories referred to in s. 2(15), viz., relief of the poor and education. It is to carry out and fulfil those objects the business is being carried on. Thus, the primary purpose is to carry out the charitable objects and the business is carried on as a means in the course of the actual carrying out of that primary purpose and not as an end in itself. While the predominant object of the trust is http://www.judis.nic.in the carrying out of the charitable objects referred to in two of the three categories of charitable purposes referred to in s. 2(15), the carrying on of the business which is actually the property held under trust or other legal obligation is incidental, and the profit resulting from the business can be taken to be a by-product. In view of the said decision of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Mfs. Assn. , it is not possible to accept the case of the Revenue that the trust in this case cannot claim the benefit of exemption under s. 11 merely because it carries on a commercial activity for profit. We have to, therefore, agree with the conclusion of the Tribunal that the trust in this case can claim the benefit of s. 11, if 75% of its income has been applied for charitable purposes and answer questions Nos. 1 to 3 in the affirmative and against the Revenue.”

42.In the assessee's own case in [(2001) 247 ITR 0785 (SC)], the Hon'ble Supreme Court examined the claim of the assessee Trust for exemption for the assessment years 1979-80 to 1983-84, which was rejected having regard to the provisions of Section 13(1)(bb) of the Act. The rejection was challenged by the assessee by filing a writ petition before this Court, which was allowed vide decision reported in (1995) 213 ITR 626 (Madras). The Court while allowing the writ petition, took note of the decision in the assessee's case in (1981) 23 CTR 153 (Madras) = (1982) 137 ITR 735, which had become final and binding on the Revenue that the primary purpose of the Trust was to carry out its charitable objects and that the business is carried on only as means in the course of the actual carrying on the purpose of the Trust. The Revenue challenged the said order before the Hon'ble Supreme Court and it was held that the assessee Trust is entitled to the benefit of Section 11 for the assessment year 1992-93 and thereafter, it was specifically mentioned that it is not in dispute that the income of its newspaper business has been employed to achieve its objects of education and relief to the poor and it has maintained separate books of accounts in respect of thereof. Therefore, the Hon'ble Supreme Court had categorically http://www.judis.nic.in held that the primary purpose of the assessee Trust was to carry out charitable objects and the business of newspaper was only as means in the course of the actual carrying on the purpose of the Trust.