2014 (8) TMI 1143 - AT - Income Tax

Entitled to exemption of income u/s 11 and 12 - proof of charitable activities - letting out the school building - Held that - The co-ordinate Bench in the case of the assessee, for Assessment Year 1994-95 has held that the assessee is entitled to exemption u/s 11 & 12 of the Act. It was held that letting out the school building was aimed at providing assistance in imparting education, which is undisputably for a charitable object. - Decided in favour of assessee

Summary

Issues:
1. Whether the activities of the assessee trust are charitable in nature and entitled to exemption of income under sections 11 and 12 of the Income Tax Act.
2. Whether the activities of the assessee trust fall within the expression of "education" read with the definition of "charitable purpose" as per section 2(15) of the Income Tax Act.

Analysis:
1. The main issue in this appeal was whether the activities of the assessee trust could be considered charitable and thus qualify for income exemption under sections 11 and 12 of the Income Tax Act. The Revenue contended that the trust's construction and letting out of properties, earning income from rent, and making profits did not align with charitable activities. However, the Tribunal referred to a previous decision for Assessment Year 1994-95 where it was held that letting out a school building for educational purposes was charitable. The Tribunal emphasized that providing assistance in imparting education was undeniably a charitable object. Additionally, the Tribunal noted that accumulation had been allowed to the assessee in earlier and subsequent years, indicating consistency in granting exemptions. Therefore, based on precedent and the absence of any change in circumstances, the Tribunal upheld the order of the CIT(A) allowing the exemption under sections 11 and 12 of the Act.

2. The second issue raised was whether the activities of the assessee trust could be considered falling within the scope of "education" for charitable purposes as defined in section 2(15) of the Income Tax Act. The Tribunal, in its analysis, reiterated the decision from a previous case for Assessment Year 2002-03 where it was held that letting out a school building to another educational trust was in furtherance of the trust's objectives and ideals. The Tribunal emphasized that the leasing activity aimed at providing assistance in imparting education, which was considered a charitable object. Citing the consistency in allowing accumulation under section 11(2) in earlier years, the Tribunal concluded that the assessee was entitled to the benefit of section 11 of the Act. As there were no changes in the facts and circumstances of the current case, the Tribunal upheld the order of the CIT(A) granting exemption under section 11 of the Act.

In conclusion, the Tribunal dismissed the Revenue's appeal, citing previous decisions and the consistent application of exemptions to the assessee trust over the years. The judgment reaffirmed that activities aimed at providing educational assistance could be considered charitable, leading to the trust's eligibility for income tax exemptions under sections 11 and 12 of the Income Tax Act.