9911796707
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Issues Involved:
1. Whether the assessee-trust is eligible for exemption u/s 11 of the Income Tax Act, 1961. 2. Whether the activities of the trust fall under the category of 'general public utility' as defined in section 2(15) of the Act. 3. Whether the trust has violated the provisions of section 13 of the Income Tax Act, 1961. 4. Whether expenses incurred on the renovation and maintenance of Nagaur Fort and Ranvas Hotel are application of income for the purposes of section 11 of the Act. 5. Whether the foreign contributions received by the trust are taxable. 6. Whether the trust can set off brought forward deficit from past years against the surplus of the current year. Summary: Issue 1: Exemption u/s 11 The assessee-trust is a charitable trust registered u/s 12AA of the IT Act, 1961, and has been consistently pursuing its charitable activities. The AO and CIT(A) denied exemption u/s 11, holding that the trust's activities fall under the fourth limb of section 2(15) and involve commercial activities. However, the Tribunal found that the trust's primary objective is the preservation of monuments, which falls under the main limb of section 2(15) and does not involve commercial activities. Therefore, the trust is eligible for exemption u/s 11. Issue 2: General Public Utility The AO categorized the trust under 'general public utility' and denied exemption based on commercial activities like film shooting and hosting dinners. The Tribunal held that these activities are incidental to the main objective of preserving monuments and do not constitute business activities. Hence, the trust's activities do not fall under the proviso to section 2(15). Issue 3: Violation of Section 13 The AO alleged that the trust violated section 13 by benefiting the settlor and managing trustee. The Tribunal found that the expenses incurred on the renovation and maintenance of Nagaur Fort and Ranvas Hotel were in furtherance of the trust's objectives and did not benefit any specified person. Therefore, there was no violation of section 13. Issue 4: Expenses on Nagaur Fort and Ranvas Hotel The AO disallowed expenses incurred on Nagaur Fort and Ranvas Hotel, claiming they were beyond the trust's objectives. The Tribunal held that these expenses were in line with the trust's objective of preserving monuments and were application of income for charitable purposes. Hence, the expenses are allowable u/s 11. Issue 5: Foreign Contributions The AO taxed foreign contributions received by the trust, treating them as voluntary contributions. The Tribunal found that these contributions were corpus donations with specific directions for usage and are not taxable u/s 11(1)(d). Even if considered voluntary contributions, they are not income due to specific stipulations on their usage. Issue 6: Set-off of Brought Forward Deficit This issue was not pressed by the assessee and hence stands dismissed. Conclusion: The Tribunal allowed the appeal of the assessee-trust, holding that it is eligible for exemption u/s 11, its activities do not fall under the proviso to section 2(15), there was no violation of section 13, expenses on Nagaur Fort and Ranvas Hotel are allowable, and foreign contributions are not taxable. The appeal is partly allowed.
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