Search Results For: Charitable purpose


Association of State Road Transport vs. CIT (ITAT Delhi)

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DATE: May 8, 2015 (Date of pronouncement)
DATE: June 2, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Scope of proviso to s. 2(15) restricting deduction for charitable institutions explained

The expression “trade”, “commerce” or “business”, as occurring in the first proviso of section 2(15) of the Act, must be read in the context of the intent in purported of Section 2(15) of the Act and cannot be interpreted to mean any activity which is carried on in an organized manner. the first proviso to section 2(15) of the act does not purported to exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee and the object of introducing first proviso is to exclude organizations which are carrying on regular business from the scope of charitable purpose

Mumbai Metropolitan Region Development Authority vs. DIT(E) (ITAT Mumbai)

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DATE: April 10, 2015 (Date of pronouncement)
DATE: April 24, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S.12AA(3): The issue of withdrawal of s. 11 exemption in the light of s. 2(15) amendment is contentious and requires decision by larger Bench of the ITAT

No doubt, the assessee has relied on one decision by the hon’ble high court [CIT v. Sarvyodaya Ilakkiya Pannai [2012] 343 ITR 300 (Mad)], but then the said decision stands also considered by the tribunal in the case of Entertainment Society of Goa v. CIT [2013] 23 ITR (Trib) 636 (Panaji), relied upon by the Revenue, holding, with reference to decision by the hon’ble jurisdictional high court in CIT v. Thane Electricity Supply Ltd [1994] 206 ITR 727 (Bom), the decision by the non-jurisdictional high court as not binding. The rule of precedence, in case of conflicting views by the high courts, none of which is jurisdictional, is for the tribunal to follow that which appeals to its conscious. The appropriate course under the circumstances, even as indicated during the hearing in the instant proceedings – to no objection by either party, is that the matter be referred to the hon’ble President of the Tribunal for constituting a larger bench of the tribunal to decide the highly contentious issue raised by the assessee’s Ground No.1, decided differently by different coordinate benches of this tribunal, for uniform application across the tribunal

DIT (E) vs. M/s. Jasubhai Foundation (Bombay High Court)

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DATE: April 1, 2015 (Date of pronouncement)
DATE: April 8, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 10 & 11: In computing the income of charitable institutions exempt u/s 11, income exempt u/s 10 has to be excluded. The requirement in s. 11 with regard to application of income for charitable purposes does not apply to income exempt u/s 10

There is nothing in the language of sections 10 or 11 which says that what is provided by section 10 or dealt with is not to be taken into consideration or omitted from the purview of section 11. If we accept the argument of the Revenue, the same would amount to reading into the provisions something which is expressly not there. In such circumstances, the Tribunal was right in its conclusion that the income which in this case the assessee trust has not included by virtue of section 10, then, that cannot be considered under section 11

M/s Devki Devi Foundation vs. DIT(E) (ITAT Delhi)

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DATE: March 31, 2015 (Date of pronouncement)
DATE: April 6, 2015 (Date of publication)
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CITATION:
S. 11/12A: Assessee's plea that poor patients do not come forward to avail of free medical treatment is not believable. The overall conduct of the assessee suggests that it is conducting its affairs in a commercial manner & not in a charitable manner

The plea of the assessee that the poor people do not come forward and avail free medical services, the assessee could not be blamed, is not sustainable. It is a matter of common knowledge that the poor patients are not given admission for treatment by private hospitals as they cater to only the elite class of the society. These private hospitals have been made in a five star style and they do not allow even the entry to the poor people in its corridors. In the government hospitals, the poor patients are lying in verandahs and in open space in wait for their turn for admission for days together and it is not believable that they will not come forward for treatment in the hospital providing all modern facilities free of cost

Queens Educational Society vs. CIT (Supreme Court)

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DATE: March 16, 2015 (Date of pronouncement)
DATE: March 18, 2015 (Date of publication)
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S. 10(23C)(v) & (vi): Mere surplus does not mean institution is existing for making profit. The predominant object test must be applied. The AO must verify the activities of the institution from year to year

The 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great importance that the activities of such institutions be looked at carefully. If they are not genuine, or are not being carried out in accordance with all or any of the conditions subject to which approval has been given, such approval and exemption must forthwith be withdrawn. All these cases are disposed of making it clear that revenue is at liberty to pass fresh orders if such necessity is felt after taking into consideration the various provisions of law contained in Section 10(23C) read with Section 11 of the Income Tax Act

CIT vs. Muzafar Nagar Development Authority (Allahabad High Court – Full Bench)

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DATE: February 5, 2015 (Date of pronouncement)
DATE: March 12, 2015 (Date of publication)
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S. 12AA: Non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) would not result in deemed grant of registration. Assessee will have to file a Writ to compel CIT to consider application

Providing that an application should be disposed of within a period of six months is distinct from stipulating the consequence of a failure to do so. Laying down a consequence that an application would be deemed to be granted upon the expiry of six months can only be by way of a legislative fiction or a deeming definition which the Court, in its interpretative capacity, cannot create. That would be to rewrite the law and to introduce a provision which advisedly the legislature has not adopted

Kul Foundation vs. CIT (ITAT Pune)

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DATE: January 30, 2015 (Date of pronouncement)
DATE: February 9, 2015 (Date of publication)
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S. 12AA/80G(5): CIT, while granting registration or renewal, can only look at the nature of activities and is not concerned with potential violation of s. 11(5) or s. 13. Registration cannot be denied on ground that activities have not commenced

The allowability of the deduction under sections 11 and 12 of the Act is to be looked into by the Assessing Officer while completing the assessment in the hands of the assessee at the relevant time. Whether the said deduction under sections 11 and 12 of the Act is allowable or not to the Trust or the Institution by way of non-fulfillment of the conditions laid down in section 13(1)(b) of the Act is to be considered by the Assessing Officer while completing assessment in the hands of the assessee Trust or Institution. But the said violation by the Trust or Institution on account of provisions of section 13(1)(b) of the Act, if any, are not to be considered by the CIT while granting registration under section 12A of the Act

Army Welfare Placement Organization vs. DIT (E) (ITAT Delhi)

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DATE: January 22, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
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S. 2(15): Receiving fees simplicitor is not reason enough to hold that the activity is not a charitable activity. The fundamental essence of the activity has to be seen

The true test for deciding whether an activity is business activity is (i) whether the said activity undertaken with a profit motive, or (ii) whether the said activity has continued on sound and recognized business principles, and pursued with reasonable continuity. In a situation in which an activity is not undertaken with a profit motive or on sound and recognized business principles, such an activity cannot be considered to be a business activity

India Trade Promotion Organization vs. DGIT (E) (Delhi High Court)

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DATE: January 22, 2015 (Date of pronouncement)
DATE: January 23, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 2(15)/ 10(23C)(iv): If the definition of "charitable purpose" is construed literally, it is violative of the principles of equality & unconstitutional. If the dominant object is not to carry on business or trade or commerce, then an incidental or ancillary activity for which a fee is charged does not destroy the character of a charitable institution

The expression “charitable purpose”, as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running foul of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a ‘charitable purpose’. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes

Delhi & District Cricket Association vs. DIT (E) (ITAT Delhi)

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DATE: January 13, 2015 (Date of pronouncement)
DATE: January 21, 2015 (Date of publication)
AY: -
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CITATION:
S. 11 (charity) and 12AA (cancellation of registration): Important propositions of law laid down

s.12AA(3) has no retrospective effect as it is neither explanatory nor clarificatory in nature and the CIT has no power to rescind the order passed by the CIT prior to 1st Oct.2004. For an assessee to be classified as charitable under the residuary category i.e. “advancement of any other object of general public utility” u/s 2(15) of the Act, the following four factors have to be satisfied

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