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3. The Tribunal on consideration of the several judgments on which reliance was placed by both the parties and also by looking into the objectives clause of the trust deed, after extracting the same and relying on the judgment of this Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income-Tax (Exemptions) reported in [2006] 285 ITR 327 (Karn) has held that the nature of the business is not the criteria to judge whether the provisions of Section 12A of the Act are complied with or not. The main test as held by the Hon'ble Apex Court is, that, the income of the business is utilised by the trust or institutions for the purpose of achieving the object of trust. There is neither any finding by the Director of Income Tax (Exemptions) nor any material was brought on record to show that the income from the business of housing project would not be utilised by the trust for attainment of objectives of the trust. On the contrary, the Director of Income Tax (Exemptions) has already accepted the fact that the objectives of trust are genuine and charitable in nature. The trust is engaged in various charitable activities like feeding poor children in schools etc. There is no material on record to show that the income from business as provided in Clause 10 of the original deed dated 17.05.2004 cannot be utilised by the trust for the purpose of achieving objectives of trust. Therefore, it held that the Clause 10 of the trust deed cannot be treated as a ground for refusal of the registration. Therefore, the order of the Director of Income Tax (Exemptions) was cancelled and he was directed to allow registration under Section 12AA of the Act. Aggrieved by the said order, the revenue is in appeal.

6. Per contra, learned Senior Counsel for the assessee submitted that objectives of the trust is for charitable purpose. No where in the objectives of the trust, it is mentioned that the trust was carrying on the business of acquiring properties, constructing residential flats and selling them. But in Clause 10 of the trust deed, the trustees are permitted to carry on business activity insofar as it is necessary, incidental and supporting to the attainment of the objectives of the trust. In that event, a separate books of accounts have to be maintained. It is in pursuance of this Clause, in order to raise funds for carrying on charitable activity, the assessee has taken up its construction activity and they have maintained separate books and therefore, he submits that the tribunal has rightly granted the benefit of Section 12 AA of the Act. The material on record discloses that the proposed amendment of trust is also duly registered and it is awaiting the approval from the Director of Income Tax.

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the original deed dated 17.05.2004 would not be utilised by the trust for the purpose of achieving objectives of the trust. There is a concurrent finding of fact by two authorities, to the effect that the trust is engaged in various charitable activities in terms of the objectives of the trust. It is clear from the material on record that in terms of Clause 10 of the trust deed, when particulars were sought for, the assessee has specifically stated that they would take up Group Housing Scheme to earn profits which would be the source of income for carrying on the charitable activities. In the absence of any material on record, the finding recorded by the Commissioner, that because of such activities, the trust is not genuine and it is a camouflage to suppress its business activities and the said business is not incidental to any of its objectives is contrary to the material on record and cannot be accepted. As held by this Court in Sanjeevamma Hanumanthe Gowda Charitable Trust's Case, what the Commissioner has to look into is not the source of income of the Trust but whether such income is applied for charitable or religious purpose. The satisfaction of the Commissioner should be regarding the application of the income of the trust for the aforesaid purposes which only entitles the assessee to claim exemption. For arriving at such

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satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application, the Trust has received income from its property, then the enquiry should be to find out how the said income has been expended. If no income has been received on the day of the application is filed, the question of going into the question whether the income generated in future would be applied for charitable purpose would not arise. As and when such income arises, if the income is not utilised for charitable purpose, then he has the power to cancel the registration after hearing the assessee. He cannot assume things without any basis as was done in this case by the Commissioner. Once the trust deed produced in the case shows the objectives of the Trust is charitable and the material on record, shows that the Trust is carrying on charitable activities, merely because they proposed to carry on the business in future to augment the income to support charitable purposes, the registration cannot be declined. Therefore, the tribunal was justified in passing the impugned order and directing the Commissioner to grant the certificate. Hence, the substantial question of law is answered in favour of the assessee and against the revenue.