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DATE: July 27, 2015 (Date of pronouncement)
DATE: August 27, 2015 (Date of publication)
AY: 2006-07
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CITATION:
S. 11: A charity is not entitled to exemption if it carries out activities not as per the objects. The fact that such ultra vires objects are also charitable is not relevant. Fact that CIT has granted registration u/s 12A does not preclude AO from examining compliance with s. 11. Incidental objects to attain the main object, even if significant in value, are permissible. Under principles of consistency, AO is not permitted to change view in the absence of a change in facts

The expression “such purposes” in s. 11 clearly refers to the purposes for which the property is held in Trust. Both the conditions i.e. the income should be derived from the property held in Trust for charitable or religious purposes and the condition that the income is applied for such purposes, are cumulative. The contention of the assessee that the expression “such purposes” would mean any charitable or religious purpose, even if the said purpose is not the purpose for which the property is held in Trust is not acceptable. The contention that as long as the Assessee applies the income from a property held in Trust for charitable or religious purpose, to any charitable or religious purpose, the exemption under Section 11(1)(a) of the Act would be available, notwithstanding that the purpose for which the income is applied is not the purpose for which the property is held in Trust, cannot be sustained as the same would be contrary to the plain language of Section 11(1)(a) of the Act. In order for any income to be excluded from the scope of total income, the same must be derived from a property held in Trust for a charitable or religious purpose and must also be applied for that purpose

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DATE: July 13, 2015 (Date of pronouncement)
DATE: July 15, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 10(23C) (iiiab): Law on treating an educational institution as running with a profit motive and treating the donations received by it as “capitation fee” on the basis of the allegation of the persons who have made the said donation explained

None of the persons who have deposed against the assessee by stating that they had given donation for the purpose of getting admission has complained to the Government for any such violation by the society. It is also to be noted that those persons have filled up the requisite proforma stating that they have given donation to the assessee voluntarily and not for seeking admission. Even some of them claimed deduction u/s.80G, a fact stated by the assessee and not controverted by the Departmental Representative. Therefore, changing the stands after their wards completed their education from the institutions run by the assessee trust are contradictory

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DATE: July 1, 2015 (Date of pronouncement)
DATE: July 4, 2015 (Date of publication)
AY: -
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CITATION:
S. 24-AA Surtax Act: Principles of interpretation of a law conferring an exemption or concession explained

The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption

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DATE: May 27, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 80-IC: The benefit of “substantial expansion” is applicable to units which were in existence at the time of announcement of scheme i.e. in AY 2004-05. Assesses who installed new units during this period and are now going for substantial expansion are not eligible to claim deduction u/s 80IC

If interpretation given by the assessee is to be accepted, the provision would become discriminatory for two classes of undertakings i .e. new units and old units. Because the old units would be entitled to 100% deduct ion on expansion for first five years and 25% thereafter whereas the new units would become entitled to deduction for 100% for first five years and again @ 100% on substantial expansion. Such discriminatory intention cannot be imputed to the Legislature.

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DATE: April 30, 2015 (Date of pronouncement)
DATE: May 2, 2015 (Date of publication)
AY: -
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CITATION:
S. 80-IB(10): Law on availability of deduction for "housing projects" explained

There was much debate on the answer given in para (b) above. It was argued by Mr. Gurukrishna Kumar, learned senior counsel, that a project which is cleared as “residential plus commercial” project cannot be treated as housing project and therefore, this direction is contrary to the provisions of Section 80(I)(B)(10) of the Act. However, reading the direction in its entirety and particularly the first sentence thereof, we find that commercial user which is permitted is in the residential units and that too, as per DCR. Examples given before us by the learned counsel for the assessee was that such commercial user to some extent is permitted to the professionals like Doctors, Chartered Accountants, Advocates, etc., in the DCRs itself. Therefore, we clarify that direction (b) is to be read in that context where the project is predominantly housing/ residential project but the commercial activity in the residential units is permitted

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DATE: March 12, 2015 (Date of pronouncement)
DATE: March 14, 2015 (Date of publication)
AY: -
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CITATION:
S. 10(23C)(via): Institution consistently generating surplus, utilizing the surplus to buy assets, spending meager amount on treatment of poor patients is not existing “solely for philanthropic purpose” and “not for the purpose of profits”. Fact that exemption has been allowed in the past does not mean exemption has to be continued

The intention of the legislature in making provisions of section 10 (23C)(via) is that an institution shall exist solely for philanthropic purpose and not for the purpose of profits. The expression “solely for philanthropic purpose” and “not for the purpose of profits” spells out a clear intention of the legislature that the institution should not merely exist for philanthropic purpose but existence shall not be for profits. Satisfaction of this twin test by an institution claiming a deduction would entitle it for the benefit of the provisions of section 10 (23C)(via) of the Act

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DATE: November 13, 2014 (Date of pronouncement)
DATE: March 3, 2015 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
S. 10B(4): All business profits of the undertaking are eligible for deduction and it is not necessary to show that they have a "direct nexus" with the undertaking

Sub-section (4) of s. 10B does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits

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DATE: October 18, 2010 (Date of pronouncement)
DATE: March 3, 2015 (Date of publication)
AY: -
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CITATION:
Chapter VI-A deductions are not limited to the business profits but are available to the extent of the Gross Total Income

The only question sought to be canvassed is that out of these deductions the admissible deduction under section 80-O ought to be limited to the extent of Rs.69,70,127 which represents business income. In other words, the income from interest and dividend shall not form part of the gross total income as defined under section 80B(5) of the Act. The submission is misconceived

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