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1 - 10 of 16 (0.46 seconds)The Assistant Commissioner Of Income ... vs Thanthi Trust Etc. Etc on 31 January, 2001
The Hon'ble apex Court in Asstt. CIT v. Thanthi Trust (supra) has dealt with the issue regarding the applicability and scope of Sub-section (4A) of Section 11 as amended w.e.f. 1st April, 1992 and the Hon'ble apex Court has held that provision is more beneficial to the trust or institution than was the scope of the section before the amendment w.e.f. 1st April, 1992. After the amendment of this section, it requires for the business income of a trust or institution to be exempt is that the business should be incidental to the attainment of objectives of the trust or institution. The income from the business which is utilized by the trust or institution for the purposes of achieving the objectives of the trust or the institution is, surely a business which is incidental to the attainment of the objectives of the trust or institution. This view has clearly been expressed by the Hon'ble apex Court as narrated above. In the present case in hand, the only issue is as to whether the income from these two auditoriums and ladies hostel including the rent, amenities and donations is for the purpose of achieving the objects of the trust or incidental to the objects of the trust. We are of the considered view that these incomes are for the attainment of the objects of the trust and these incomes are arising out of the properties held in trust. These properties are held as trust property and in no way this can be termed as profits and gains of the business which are not for the attainment of objects of the trust. In view of these facts and circumstances of the case, we feel that w.e.f. 1st April, 1992, even after amendment in Section 11(4A) of the Act, the assessee is entitled to exemption from excess income over expenditure from these two auditoriums and ladies hostel on account of rent, donations and amenities.
Section 13 in The Income Tax Act, 1961 [Entire Act]
Additional Commissioner Of Income-Tax ... vs Surat Art Silk Cloth Manufacturers ... on 19 November, 1979
13. Now, the issue arises whether running of two auditoriums, i.e. hiring them out and related amenities as well as running of ladies hostel would constitute the activity incidental to attainment of the objects of the trust. It is seen from the records that the main objects of the trust are charitable and the exploitation of the properties in question are incidental to attainment of the said objects. It is seen from the above facts that the properties are held in trust and their use and exploitation towards the fulfilment of the objects of the trust particularly having regard to the aims and objects, the activity should be considered as incidental to the attainment of the objects. We do not agree with the reasoning given by the AO that the properties are not held in trust and running the auditoriums is neither an activity as per the objects or incidental to the objects in holding that running of the auditoriums is independent and commercial/business activity for the reason that the hire charges received are high and the activity of letting out of the auditoriums and the related amenities are being carried out in a systematic and business manner. We also do not agree with the finding of the AO that apart from collecting rent from the auditoriums and the related amenities, the assessee also collected donations which should become part of the business income. It is seen from the resolution passed in 1992 for charges of the auditoriums as well as the ladies hostel, that the rate of hire of auditoriums and the related amenities have been fixed by taking into account the locality and the extent of space let out, the amenities/facilities provided and so on. It is a fact that hire charges have been fixed on a prudent basis so as to recoup the cost of the asset and if in that process, there is excess of income over expenditure, the same goes to augment the income for the application of incidental object, i.e. charitable purposes. For this, we have to go through the case law cited by the learned Counsel for the assessee wherein the Hon'ble apex Court in the case of Addl. CIT v. Surat Art Silk Cloth Manufacturers Association , wherein it was beautifully explained the meaning of activity for profit and charitable purpose which reads as under:
The Income Tax Act, 1961
Commissioner Of Income Tax vs Sivakasi Hindu Nadars Uravinmurai on 23 January, 1995
In the case of CIT v. Sivakasi Hindu Nadars Uravinmurai , Madras High Court remanded the matter to the Tribunal to find out whether the trust has spent the money for charitable purpose. In the present case, the appellant has opted for accumulating the income from letting out of the auditoriums for specific educational purpose and thus the facts are to be distinguished.
Commissioner Of Income-Tax, Madras vs N. V. Shanmugam And Co. And Others. on 30 November, 1965
In the case of CIT v. V. Shanmugam , the Madras High Court was concerned with the activity of running a lodging house and this judgment is not applicable to the facts of the present case as the appellant has no profit motive at all. The surplus earned in excess of income over expenditure is incidental and it should not be compared with the profit earned by a business entity.
Section 12 in The Income Tax Act, 1961 [Entire Act]
The Societies Registration Act, 1860
Sole Trustee Loka Shikshana Turst vs Commissioner Of Income Tax, Mysore on 28 August, 1975
At this stage, it will be appropriate to point out that the question whether a trust is created or an institution is established for a charitable purpose falls to be determined by reference to the real purpose of the trust or the institution and not by the circumstance that the income derived can be measured by standards usually applicable to a commercial activity. The quantum of income is no test in itself. It may be the result of an activity permissible under a truly charitable purpose for, as has been observed, a profitable activity in working out the charitable purpose is not excluded. I am unable to agree, with respect, with all that has fallen from H.R. Khanna and C.A. Gupta, JJ. In Sole Trustee, Loka Shikshana Trust v. CIT that the terms of the trust must impose restrictions on making profits, otherwise the purpose of the trust must be regarded as involving the carrying on of a profit making activity. On the contrary, I find myself in agreement with Beg, J. to the extent that he says, in the same case, that it is the genuineness of the purpose, that it is truly charitable, which determines the issue. It seems necessary to me that a distinction must constantly be maintained between what is merely a definition of "charitable purpose" and the powers conferred for working out or fulfilling that purpose. While the purpose and the powers must correlate, they cannot be identified with each other. Reference may, of course, be made to the nature and width of the powers as evidence of the charitable or non-charitable nature of the purpose.