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6. As regards the issue of membership fee we have to clarify that the Trust is meant for Indian youth and the membership is as per the trust Deed and is wide open to Indian youth. There is nothing wrong in prescribing a few because the Trust is interest in attracting more and more youth to become its member so that it can carry forward the movement of Indian youth for which it has been set up."

3.2. Apart from that the assessee made further written submissions on merits which is found reproduced in para 6 to para 6.6 of the impugned order. A perusal of the same shows that inviting attention to section 2(15) of the Income Tax Act, it was submitted that the definition of the charitable purpose is an inclusive definition which includes relief to poor, education, medical relief and advancement of any other object of general public utility; that the trust has been engaged in charitable activity all along and getting exemption; that there is no change of activity during the year; that the trust set up way back in the year 1961 with eminent persons who had the privilege of being the Prime Ministers of the country later on, as Trustees; that the object of the Trust was to establish, maintain and conduct national or international youth centres at suitable centres in India; that each youth centre is supposed to be multi-purpose in character; that as per its object the youth centre is to provide youth hostel and boarding house, auditorium for educational/cultural activities, sports centre, cafeteria; that in accordance with this object the trust has set up this Trust Centre at Chanakyapuri and using the same for the purpose of the objects of the Trust. It was submitted that a part of the youth centre has been let out and rentals are being received in respect of the same utilized for the objects of the trust and the receipts of cafeteria are also used for the youth hostel and utilized by it. It was submitted that the Assessing Officer has considered all these activities as commercial in nature ignoring the fact that income earned by way of interest, rentals and cafeteria to support the conference/hostel activities cannot be considered commercial in nature as it is utilized for the objects of the trust. 3.3. Inviting attention to page 2 para 3 of the assessment order, it was submitted that the main heads of income were hostel/canteen activities and auditorium and conference hall and the AO has concluded that the same are commercial in nature without verifying the details of such income. It was submitted that once the details are seen, it would show that the hostel/canteen activities which is forming part of the balance sheet schedule comprises of 2 components namely "boarding and lodging" and "food and beverage", the same is as under :-

3.9. Similarly, the judgement of the Hon'ble Delhi High Court in MCD vs Children Book Trust, it was submitted was not applicable as the said decision was rendered under the Municipal Corporation of Delhi Act and the issue was relating to house tax on the Children Book Trust. It was not a case under the Income Tax Act, 1961.

4. Considering the submissions, the CIT(A) referring to the objects of the trust founded in 1961 by the eminent personalities, Sh. Morarji Desai (Chairman), Smt. Indira Gandhi, Shri Naval H.Tata, Shri. Ravindra Varma, Shri Viren J.Shah and Shri Ram Krishna Bajaj (Managing Trustee) observed that the objects of the trust was to promote all round welfare of the Indian youth. He observed that the trust has been working in that direction only and is multi- purpose in character and functioning as a model Youth Centre in intellectual and recreational services to the youth. He also observed that the trust has a Youth centre along with a hostel for the youth and for the benefit of the hostel/ a canteen is also running where it is providing food to the youth staying in the hostel. The Conference Hall and Auditorium, it was observed was used for the purposes of organizing various programmes for the youth. He observed that in this manner it is raising, its revenue for meeting its obligation to carrying out its activities by way of renting out part of its premises and also earning interests on the deposits. It was further held by him that the funds generated have been deployed and used exclusively for the trust. The finding of the AO that the activities were commercial in nature were held to be incorrect as the activities were found to be in furtherance of the aims and cause of the objects of the welfare of the youth as such it was held that the view of the AO that it was not covered within the meaning of section 2(15) of the Act was found to be not correct. 4.1. The CIT(A) further elaborated the finding arrived at in para 6.2 by holding that the AO has not been able to appreciate the nature of the hostel and canteen activities and the AO had also not appreciated that the receipt on account of the auditorium and Conference Hall of Rs. 1.43 crore odd included the sum of Rs.1.02 crore odd on account of the rental and the balance amount represented the receipt on account of conferences organized in the auditorium. He held that all these activities were part of the objects of the trust and for the cause of the youth only. Considering the finding of the AO that the assessee had received money from corporate houses, he held that the receipts were in the nature of sponsorship fees received for organizing conference in the Auditorium as such could not be considered to be a commercial activity. Examining the allegations of the AO as per Inspector's Report that the food by the canteen was provided to everyone and there was no control on an outsider having food, the CIT(A) was of the view that merely because somebody here and there obtained a service because of the lack of control will not mean that the trust has become commercial and as such lost its charitable character. The objects and the activities continued to be charitable despite the stray instance and cannot be the ground for holding that the trust is not charitable. Similarly, the instances of sponsorship for which tax had been deducted by various corporates as per Form No.-26AS, it was held will not make the trust non-charitable. The reliance placed upon the decisions by the AO which were assailed by the assessee and argued to be distinguishable after discussion were found to be rightly objected to by the assessee. Addressing the advertisement in the newspaper objected to by the AO, the CIT(A) accepted the explanation of the assessee and held that there was nothing wrong in attracting more and more youths to become its members by way of advertisements. 4.2. Accordingly he held that the AO was not justified in denying the exemption claimed by the assessee under section 11 of the Act and directed the AO to allow exemption as claimed by the assessee under section 11. The CIT(A) further went on to examine the aspect of mutuality which was held to be academic in nature in view of the finding given on merit.

After enquiry we left the place.

Sd/-

Sushma Rani Inspector Trust Circle-II, New Delhi Witness

1. Omvir Singh, Sr. TA

2. Arun Kumar, TA 5.2. Ld. AR on the other hand heavily relying upon the impugned order contended that the CIT(A) has met each and every argument/objections of the AO with cogent reasoning. It was his submission that the AO on the other hand has failed to appreciate that the activities of the trust were towards the aims and objects of the trust alone. It was also his contention that undue emphasis has been laid upon the Inspector's Report by the AO as apart from that this which has been explained there are only suspicious which it was submitted cannot take the place of evidence. It was argued where the inmates of the hostel necessarily utilize the facility for short duration the hostel inmates frequently change in such a scenario it is practically impossible for anyone to ensure control to the extent that no stray incident of "outsider" eating occurs. It was argued that the assessee cannot be penalized to do the impossible based on suspicious. The very fact that the hostel is not situated in a commercial hub and is situated in a diplomatic area ensures that stray outsiders do not come unless they are residing in the hostel or attending seminars or conferences held towards the aims of the trust. Addressing the background of the trust the facts leading the creators of the trust whose aims and objects have continuously been considered to be charitable in nature as they aim to address, harness, channel and focus the energies of the youth aiming and preparing the youth to perform productive, gainful and responsible roles in the environment has all along been accepted and it cannot be doubted to be a non- charitable merely because the canteen staff in good faith allowed the Inspector and her team of two tax advisors to have a meal. The queries answered in good faith by the canteen staff also do not make trust to be operating on commercial lines. It was his submission that auditorium and seminar halls are made routinely available to Government Education Bodies etc. and NGOs having the same aims and objects as the assessee and stringent documentations is maintained by the assessee trust which he would address which has been before the AO and the CIT(A). Accordingly mere oral queries casually answered by canteen staff who definitely were not making the booking does not lead to any conclusion against the assessee's trust. It was his submission that the assessee trust started with a very humble corpus of Rs. 1000/- towards its laudable aim. The hostel facilities it was submitted are utilized by various students either from different parts of the country or the world and provides a platform where the youth can be exposed to conferences and activities in the auditorium which co-incide with the aims and objects of the assessee trust. It was submitted that as and when the same are not required by the assessee towards the same, they are available on rent to the corporate entities etc. and the receipts so generated are fully utilized only to meet the objects of the trust. The canteen/cafeteria facility is exclusively for the benefit of the students staying in the hostel facilities and considering the fact that the hostel cannot be in continuous use of more than 28 days the amounts vary. Looking at the sheer number of students who utilize the facilities it was submitted makes it impossible to monitor whether the person utilizing the facilities is actually a resident of the hostel or an outsider and if any stray person has utilized these facilities hoodwinking the serving staff than the assessee trust cannot penalized. Inviting attention to paper book page no-27 which contains the copy of the trust deed whose objects are enshrined at page 31, the said deed it was submitted underwent a change in regard to its name by way of a supplementary deed of trust copy placed at page 23-35 of the paper book. Addressing the same it was submitted that the name of the assessee trust was changed from "World Assembly of youth India" to "India Youth Centre". The objects continued to remain the same. Inviting attention to page 30 it was submitted that the trust was having a corpus of Rs.1000/- as the trust's funds and inviting attention to page 619-814 it was submitted that this contains a copy of list of the Organizations/NGOs, Members and the documents which have been submitted or collected showing their eligibility of membership and before the hostel facility or seminar halls/auditorium is allowed to be used evidence demonstrating the organization/trust etc. who is utilizing the services are always taken and they have been shown to the AO all along who chose to talk only of Inspector's Report. A sample copy of membership and enrollment form with pre-prescribed eligibility criteria, it was submitted was made available to the AO, attention was invited to page 517-590. Inviting attention to the paper book it was submitted copy of ledger of canteen sale and its break-up showing amount of sale made to members/member organizations and sales made to "others". The "others" included Directors and management staff, Auditors, Inspectors, Lawyers etc. The same is appearing at pages 607-618. All these documents it was submitted were filed before the AO vide letter dated 19.12.2011. 5.2.1. As an illustration from the list of membership of NGO's etc, attention was invited to page 650 which would show that the "Membership Registration Form"

6.1. The Inspector's Report reproduced in the earlier part of this order in para 5.1 has also been taken into consideration. It is seen that the AO has been guided by the fact that the assessee is charging fees for hostel facilities and has also in its income shown receipts from canteen facilities over and above receipts from hiring of conference hall/auditorium etc. Apart from that he has also been guided by the fact that the Inspector accompanied by tax advisors was allowed to utilize the canteen facilities without any effort or the part of the serving personnel to ensure that only inmates of the hostel were being served. The explanation of the assessee that its hostel facilities are utilized by NGOs and Government schools, Education Departments etc. who stay/attend for a few days as students, professors, scholars etc attending seminars, conferences and then move on thereby making it difficult for canteen staff to ascertain whether the persons are staying in the hostel or not has not been accepted. The chances of stray incidents where unconnected person may avail of services has not been accepted as sufficient compliance. The argument that canteen staff may not be in a position to identify whether the person availing the services is staying in the hostel or is merely attending conference or is a rank outsider has not been accepted. On account of this lack of full control by the canteen staff on their facilities being used as is evidenced by Inspector's Report, the Revenue would want to argue that the assessee trust through its canteen facilities is functioning on commercial lines. Similarly the Revenue has also assailed the impugned order on the ground that information as per the 26 AS is that certain corporate entities have utilized the facilities thereby leading to the presumption that the hostel and canteen facilities are being used on commercial lines. On the other hand, on behalf of the assessee, the contention has been that the assessee maintains very strict checks for making available its hostel facilities. Various pages in the paper book referred to show that the assessee requires the filling of Membership Form which requires the specific and relevant information of the organization making a booking. If it is a Trust/NGO etc., the copy of the Deed of Registration, financial statements, sources of fund, the purpose of the stay, the aims and objects the thrust area, the target group etc. are required to be mentioned. It has also been stated that the facilities are available to outsiders only when they are not being utilized by the assessee trust or NGO's etc. having identical aim and then too the receipts thereof are utilized for the objects of the trust as in response to the Sr. DR's objections based on paper book page -78. Ld. AR has pointed out that Bill No-26949 has been issued for NAWO giving customer No-12306 dated 07.09.2008. The specific organization had booked 15 rooms for 17 persons belonging to NAWO and the period of booking was 07.09.2008 to 10.09.2008. Details of this are available on the list at page 465 Sl. No-631 given again to the AO. Note mentioned at the bottom of the Bill has been pointed out showing that membership fee is valid only for 28 days and the Ld. AR has said that as per the Rules the hostel cannot be used for more than 28 days by the person/organization as evidently hostel inmates are not admitted for an academic year as is normally done in hostel of colleges etc. where students are studying for graduation and post-graduation courses. The hostel of the trust is only for students, scholars, professors attending seminars/conferences which aim to build leadership qualities in the youth; educate, inform, encourage and empower them by knowledge etc. by programmes/conference held by NGOs or by foreign visiting organizations whose aims are identical. Consequently at the time of admission it is seen that hostel facilities are made available only after the assessee trust is satisfied that the aims and objects of the charitable trust organizations are also for promotion of youth activities evidenced by relevant financial statement, certifications of registration narrating the purpose of visit etc and only then hostel facilities are made available for a maximum period of only 28 days which results at times where odd figures may be worked out depending on facilities used. We may reproduce for ready-reference from page 78 of paper book, the Note printed at the bottom of the Bill demonstrating the duration:-